Let’s define exposure as I perceive it in my mental model. Exposure refers to the experience of encountering various phenomena or situations, which may range from favorable to unfavorable, or positive to negative. These experiences can be comfortable or uncomfortable, often suggesting a potential outcome, though whether that outcome will be good or bad remains uncertain.
So, how does this play out in real-life scenarios?
Exposure to oxygen and nitrogen provides a clear example. As humans, our bodies interact with these elements regularly. Breathing in air, which contains both oxygen and nitrogen, is essential for metabolism and bodily functions. Oxygen is transferred into the bloodstream, where it is transported throughout the body, supporting the metabolism of molecules and generating energy. This energy powers critical organs, such as the brain and heart.
Thus, exposure to oxygen and nitrogen is profoundly beneficial. Environments lacking these elements, such as underwater or in space, are harmful. This type of exposure is fundamental to human life, from birth to death.
The iPhone could have made your grandchildren rich
There are more nuanced examples of exposure: those experienced by participants of the markets. Placing financial bets on the performance of a company or its prospects over a specific period is what some do day in and day out. Their bets may favor or oppose a particular company, index, or commodity. Yet, this is a very interesting example I am just realizing. This scenario presents the double-edged sword of exposure.
Consider a trader who invested in Apple stock in 2007, around the launch of the iPhone. As Steve Jobs unveiled the device, many traders were elated by the potential market impact. If you had anticipated a positive market response to such a breakthrough, your financial investment would have exposed you to this significant event.
This exposure to a technological milestone through the financial markets could profoundly impact not only your life but also the futures of your descendants. However, exposure depends on the decisions you make, shaped by a blend of luck and your understanding of technology.
Conversely, imagine being exposed to the same technological event but choosing to short Apple stock. You might have believed that Apple had not introduced a groundbreaking product in years, lacked innovation, and was poised to fall behind Microsoft and its engineers. And then:
iPhone is a revolutionary and magical product that is literally five years ahead of any other mobile phone.
Like any individual using the markets to engage with technological advancements, you experienced the same level of exposure. However, your decision was different. By shorting Apple, you positioned yourself to be negatively affected by any positive developments for the company.
Exposure is multifaceted. It can be unequivocally or conditionally good or bad. At its core, exposure means being present in a situation where you can be impacted, either positively or negatively, by the events unfolding before you.
The Levantine aura
I was inspired to reflect on and write about exposure after encountering the works of Nassim Nicholas Taleb, an intriguing figure who could be described as a flâneur.
Taleb’s work primarily focuses on probability, exploring how luck influences markets and business, and examining the role of probabilities in socio-economic events. His tools of choice are philosophy, mathematics, and empiricism.
For my tastes, Taleb’s work is captivating. My first exposure to his writings introduced me to several thought-provoking concepts.
I enjoy constructing frameworks that not only integrate abstract knowledge but also help me understand the underlying principles. These frameworks are particularly valuable to me, as they provide a structured approach to navigating life. While not perfect, they certainly help calm my restless mind.
In this context, let’s explore the concept of “Mediocristan,” a term Taleb frequently uses. For those unfamiliar with his work, “Mediocristan” represents a metaphorical realm where luck, probabilities, and possibilities influence events, but extreme occurrences—those capable of dramatically altering the global landscape—are rare. These are the types of events that can catapult a businessman to billionaire status or turn a writer into a renowned figure.
In Mediocristan, luck’s impact is constrained, influencing day-to-day life without leading to significant, life-altering changes.
People operating in Mediocristan include bakers, doctors, convenience store workers—anyone who exchanges time for money. These individuals provide services or products that, while essential, cannot be infinitely scaled without requiring additional capital or time.
Now, let’s contrast this with “Extremistan.” This realm is defined by professions or activities that involve risk, rarity, or unpredictability. Startup founders, bloggers, authors, traders, musicians, actors—those who create something that doesn’t require mass production and doesn’t need extreme amounts of capital or time to replicate—operate in Extremistan.
For instance, a startup founder creating a consumer product only needs to build the product once, yet their success can lead to substantial rewards. A baker, however, must bake hundreds of loaves to serve a similar number of customers, meaning their work is more predictable and requires more incremental effort.
In Extremistan, a single event of chance can have a dramatic effect. Consider a startup founder who develops a financial app. After gaining media exposure, the app’s popularity skyrockets, leading to investor interest and a lucrative acquisition. This success, driven by luck rather than expertise or effort, contrasts sharply with the predictable, incremental work of the baker. Both individuals may be equally diligent, but they operate in different realms, facing different challenges and opportunities for luck.
This place is infected with Patagonia vests
The principle at play here is that in Mediocristan, outcomes are stable and predictable, directly correlating with the effort you put into your work. On the other hand, in Extremistan, the returns on your efforts are far more unpredictable and often unstable. Startup founders serve as a prime example of this. While many might present themselves as success stories, the reality is that the majority of them don’t achieve significant success.
In the startup world, even skilled founders are adept at framing their journeys as triumphs, often portraying themselves as visionary or emphasizing how failure helped them grow or led to future opportunities. But if you dig deeper, you’ll find that the vast majority of startup founders fail to reach their desired outcome. Out of the millions of founders worldwide, only a tiny fraction ever attain the success that is deemed exceptional—think Mark Zuckerberg-level success.
Even when you lower the bar, the outcome doesn’t improve significantly. Success in the startup world is concentrated in the hands of a very few individuals. Most founders, despite their efforts, will never achieve the status of multimillionaire or billionaire entrepreneurs. The success stories of the startup world are outliers, not the norm.
This disparity highlights the central concept of Extremistan: a world where outcomes are highly skewed, and the successes of a few overshadow the struggles of many. There is no predictable “bell curve” of outcomes; instead, you see a sharp concentration of success at the very top.
Can I have some cookies?
The scenario contrasts the stability of Mediocristan with the volatility of Extremistan. If you gathered a group of bakers instead of startup founders, you’d find a different dynamic. While the startup founders might have grand aspirations or exaggerated stories of success, the bakers would likely share a more grounded reality. Most bakers, even if they aren’t running multimillion-dollar businesses, are probably doing well enough to support themselves and their families comfortably. They might not be changing the world or making headlines, but they are consistently making a living and sustaining a business over time.
The difference here lies in the consistency of outcomes. In Mediocristan, the success is more predictable, stable, and tied to the effort put in. A baker, despite not achieving celebrity status or massive wealth, is likely to find steady success, with few surprises. Their earnings are relatively stable, and they can plan for a secure future.
In contrast, Extremistan operates on the whims of luck, scale, and randomness. Startup founders may experience massive successes or devastating failures, with few in-between. The same work ethic and dedication that sustains a baker’s business won’t necessarily yield such predictable results for a startup founder. The extreme outliers—like billionaires or wildly successful entrepreneurs—are the exception, not the rule. So, while the baker might not reach the same heights of wealth or fame as a successful tech founder, they are much more likely to achieve consistent, stable returns from their work.
If only for the tip, the Titanic would be in New York City
The allure of Extremistan lies in the potential for extraordinary outcomes, such as immense wealth or fame. People are drawn to the idea that success can be exponential, fueled by stories of unicorn startups or individuals who seemingly came from nowhere to change the world. The promise of extreme rewards for minimal effort or time invested is seductive, and it’s amplified by the visibility of success in popular culture and media. People are often conditioned to chase this narrative, believing that taking big risks can lead to big wins.
However, the reality of Extremistan is much more brutal. The high potential rewards come with the cost of extreme unpredictability and a significantly higher probability of failure. Most individuals who venture into this realm will not achieve extraordinary success. The fact is, the narrative of the successful startup founder is an outlier, and behind every success story is a vast sea of unnoticed failures. The majority of startup founders and entrepreneurs will not strike it rich, and many will face considerable setbacks or even ruin.
On the other hand, Mediocristan offers stability and predictability. Here, success is more assured, and while the rewards might not be as glamorous or extreme, they are consistent and sustainable. Choosing Mediocristan might mean sacrificing the possibility of becoming a billionaire, but it also means avoiding the extreme volatility of Extremistan. You’re more likely to succeed in Mediocristan, even if the outcomes are more modest.
The key is understanding that success is often a function of where you choose to play. Instead of chasing the extreme ups and downs of Extremistan, we can learn to leverage the stability of Mediocristan to create a more balanced life. By focusing on what’s within our control, understanding risk, and aligning our choices with predictable, sustainable efforts, we can find a more stable path to success without gambling on extraordinary outcomes.
Dialogue
The key idea here is balancing the stability and predictability of Mediocristan with the transformative, high-risk potential of Extremistan. Mediocristan offers consistency and sustainability. It’s a domain where hard work, time, and skill yield steady returns. For example, if you’re a baker, your returns are predictable—you bake a set number of loaves each day, and your income is relatively stable. In this environment, the opportunity for radical transformation is limited; you’re unlikely to experience a dramatic shift in fortune.
On the other hand, Extremistan is where the big swings occur—the transformative “black swan” events that can radically change one’s life. This could be the launch of a groundbreaking product, or the unexpected rise to fame or wealth. However, as we’ve seen, operating in Extremistan is highly volatile and often riddled with failure. The potential for extreme outcomes—both positive and negative—is significant, but the odds are typically stacked against you.
By focusing on exposure, you’re intentionally seeking situations where the potential upside is transformative, while being mindful of the risks involved. The filtering questions you use, such as assessing whether a situation is favorable or comfortable, help ensure that you’re only investing your time and energy in scenarios that have the potential to yield significant returns, without being blindsided by negative outcomes.
However, the real challenge is knowing how to play the game in both Mediocristan and Extremistan. In Mediocristan, success is about long-term consistency, mastering your craft, and making steady progress. In Extremistan, it’s about positioning yourself for opportunities that could lead to massive, life-altering rewards.
The intersection of these two realms—where you leverage the stability of Mediocristan to fuel your exposure to the volatility of Extremistan—is where true success lies. It’s about building a foundation of stability and consistency, and then strategically entering high-risk, high-reward environments where the potential for transformative outcomes exists. This hybrid approach allows you to benefit from both the security of Mediocristan and the upside potential of Extremistan.
Vocational orientation
In Mediocristan, success often boils down to creating high-value, premium products or services that can command premium prices. This is where the true difference lies between simply working hard and genuinely succeeding. It’s not enough to work tirelessly; you must ensure that what you’re offering stands out in a way that justifies high prices. High-value products and services appeal to a select group of people willing to pay for exclusivity, quality, or luxury.
The concept of high-value extends to services as well. Think of luxury service providers—real estate agents, personal consultants, or corporate advisors. These professionals don’t necessarily create the products they sell, but they use their network, skills, and charisma to facilitate high-value transactions. Their success comes from their ability to connect the right people to the right opportunities, and this ability to command high fees often places them outside the everyday grind. They are involved in high-stakes deals but aren’t caught up in the complexities of the businesses themselves. This model leverages personal expertise and relationships, positioning oneself as an indispensable external resource rather than a cog in the wheel.
For those who aren’t inclined to cater to billionaires or ultra-wealthy individuals, there are still opportunities to engage with large companies. In some cases, corporations have vast amounts of cash, especially during periods of low interest rates or when they’ve achieved operational efficiencies. For these companies, bringing in external specialists, consultants, or contractors can offer them flexibility and added expertise without the long-term commitments of hiring full-time employees. By carving out a niche as a contractor in fields like accounting, legal services, or strategic consulting, you can leverage these companies’ cash surplus and offer services that add value to their operations.
The real advantage here is positioning yourself as an essential part of a larger system but without being absorbed into it. You aren’t just another employee; you are a specialized resource that adds value in a way that isn’t tied to the rigid expectations of traditional corporate roles. By focusing on these high-value roles and being strategic about where you invest your time and effort, you can thrive in Mediocristan, benefiting from the stability and opportunities it provides.
The crossover
Achieving success in Mediocristan while living a comfortable life and fulfilling dreams hinges on understanding how to navigate the stable, predictable environment of Mediocristan and then strategically stepping into the volatile, high-reward space of Extremistan. The beauty of Mediocristan is its predictability and steady returns, and by maximizing your success within this domain, you free up resources to expose yourself to events in Extremistan, where the true potential for life-changing opportunities lies.
Let’s continue with the example of the tech contractor. By trading your time and expertise for substantial income, you secure financial stability. In this scenario, you’re not taking on the risks that startup founders face in Extremistan, but you’re also not limited to the traditional career ladder. Your high-paying job allows you to accumulate wealth, which can then be strategically deployed to open up new opportunities.
With sufficient capital from your contracting role, you can invest in various assets—real estate, stocks, or index funds—each of which offers a certain degree of stability. These are the safer bets, in line with the Mediocristan philosophy, providing predictable returns. However, these traditional investments won’t yield the game-changing results that events in Extremistan can provide. To truly leverage exposure, you need to venture into the riskier, more unpredictable domains of Extremistan.
High-risk investments—such as venture capital, startups, cryptocurrencies, or speculative stocks—are where the potential for outsized returns resides. These investments are volatile and unpredictable, much like the events in Extremistan. The likelihood of failure is high, but so is the potential for life-changing success. For the contractor with disposable income, engaging in these kinds of investments opens the door to uncharted opportunities that could dramatically shift their life trajectory.
The key takeaway here is that once you’ve achieved a level of stability and success in Mediocristan, you have the flexibility and resources to expose yourself to the chaos and high-reward events of Extremistan. With proper strategy, you can navigate the inherent risks and increase your chances of benefiting from these extreme events, effectively leveraging the best of both worlds.
Chicken dinner
Reaching a point where you have surplus capital and no immediate concerns about its return is the threshold for stepping into high-risk, high-reward opportunities that reside in Extremistan. The freedom to invest in uncertain ventures—where the potential for failure is high but the chance for life-altering success is equally potent—is what makes Extremistan enticing.
Consider the example of investing in a startup that delivers food to your doorstep. On the surface, it might seem like a dubious investment—startups are notorious for their high failure rates. But with capital to spare and the comfort of knowing you can afford to lose the $10,000, you make the leap. Your investment is small enough to be a manageable risk, but the payoff could be enormous. In this scenario, you’re essentially participating in a “black swan” event, betting on an unforeseen event that could dramatically alter the trajectory of the startup’s success.
Take a real-world example: you make this investment in 2019, right before the world changes due to the COVID-19 pandemic. At that time, the company might have been struggling with modest growth, competing against dining options that people were more accustomed to. However, the pandemic shifts everything—lockdowns, travel restrictions, and health concerns make home delivery services explode in demand. The very circumstances that once seemed like a hindrance are now the key factors that enable this startup to thrive.
Suddenly, what was once a small, struggling business gains massive traction. The demand for home-delivered food spikes, and the startup’s ability to meet that demand positions it for rapid growth. Investors pour money into the business, the company scales exponentially, and the founders see their net worth skyrocket. What started as a $10,000 investment in a company valued at just a few million dollars could now be worth millions as the company expands and gets closer to an IPO.
This is the essence of Extremistan—highly unpredictable, but when the right opportunity aligns with an external, unforeseen event, the rewards can be monumental. The risk of loss is always present, but the potential for outsized returns—often with life-changing consequences—is what draws individuals to this volatile space. When you have the capital to expose yourself to these types of events, you’re not only betting on the success of a business, but you’re also placing your bets on the random, external factors that could dramatically change the game.
The president
Opening yourself up to the opportunities in Extremistan requires a deep understanding of your strengths and a relentless focus on honing those skills. The key to success in Extremistan is not just working hard but strategically refining your abilities until you can offer something of exceptional value—whether it’s a service that commands high fees or a product that can be sold at a premium. It’s this high-value offering that grants you access to the world of extremes, where the potential for extraordinary success exists.
There are several ways to tap into this realm. One is through direct investment, where you place your money behind a venture or startup that you believe in. The risk is high, but so too are the potential rewards if the venture succeeds. Alternatively, you could choose to take a leap and venture into starting your own company. While the chances of failure are statistically high, the potential for a breakthrough success is immense, offering you the possibility of reaching billionaire status.
Another way to access the events of Extremistan is by leveraging your network to gain entry into environments where the likelihood of transformative opportunities is greater. Your network could open doors to the kinds of events that have the potential to change your life.
Politics is a prime example of an arena where luck, bold decisions, and extreme circumstances converge. When looking at successful politicians, it’s often clear that their success is less about extraordinary talent and more about the extreme luck of being in the right place at the right time. Their initial decisions to engage in politics, their willingness to navigate its complicated and sometimes murky waters, and the random factors that shape their rise to power can create positions of significant influence. This is the essence of Extremistan: risks, bold moves, and a lot of luck leading to extraordinary, often unpredictable outcomes.
Whether through investment, entrepreneurship, or leveraging your connections in a high-stakes field, the world of Extremistan rewards those who are willing to take risks and position themselves where transformative events are more likely to occur. But make no mistake: while luck is a significant factor, it’s the preparation, insight, and timing that set the stage for extraordinary success.
Don’t leave the cinema early
The pursuit of success in Extremistan isn’t a one-time gamble; it’s about maintaining a consistent, persistent presence in environments where extraordinary opportunities exist. It’s not merely about purchasing a ticket to a high-stakes event, observing from the sidelines, and walking away. The strategy is much more enduring: you need to be there regularly, keeping yourself open to the unpredictable nature of the opportunities that might arise.
Just like Colonel Sanders, who found his moment of extraordinary success in his later years, or Mark Zuckerberg, who turned an idea into a billion-dollar empire from his dorm room, the key takeaway is that success can come at any time. Your breakthrough could happen at 70 or 20. The timeline is uncertain, but your commitment to consistently showing up and engaging in extreme environments is what increases your chances of success.
The most critical factor here is exposure—putting yourself in positions where the potential for life-changing opportunities exists and being present long enough for the right moment to strike. It’s not about luck alone; it’s about persistence and resilience, staying engaged until the right circumstances align in your favor.
However, while pursuing these high-risk, high-reward ventures, it’s essential to protect your well-being and security. Balancing the pursuit of these opportunities with a mindful approach to your overall safety and stability is crucial. This isn’t just about gambling—it’s about endurance, showing up time and time again, and being present in the world of extremes for the long haul. When your moment arrives, you’ll be prepared to seize it.
⚠️ **I spend most of my time in bubbles** : Be very careful when reading and practicing what has been written here.