Unicorns are fragile, while proficorns are antifragile. To understand this very important difference, let us first understand what Taleb means when he talks about something being antifragile. Here is an excerpt from his book:
Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better. This property is behind everything that has changed with time: evolution, culture, ideas, revolutions, political systems, technological innovation, cultural and economic success, corporate survival, good recipes (say, chicken soup or steak tartare with a drop of cognac), the rise of cities, cultures, legal systems, equatorial forests, bacterial resistance … even our own existence as a species on this planet. And antifragility determines the boundary between what is living and organic (or complex), say, the human body, and what is inert, say, a physical object like the stapler on your desk.
The antifragile loves randomness and uncertainty, which also means— crucially—a love of errors, a certain class of errors. Antifragility has a singular property of allowing us to deal with the unknown, to do things without understanding them— and do them well. Let me be more aggressive: we are largely better at doing than we are at thinking, thanks to antifragility. I’d rather be dumb and antifragile than extremely smart and fragile, any time.
Crises make unicorns weaker and proficorns stronger. Unicorns are fragile, while proficorns are antifragile. It is the stresses that makes the proficorns who they are.
Netcore faced a big crisis around 2007-8. For a while, I too was taken up by the chase for valuations. Before I realised it, we were losing Rs 1 crore a month, chasing a mythical valuation of an SMS-led, capital-fed consumer business. It was at that time that my wife, Bhavana, returned to Netcore after a 3-year break following the birth of our son. She was aghast at what she saw and gave me an ultimatum: be profitable in a year, or shut the business down. Her training in accounts — she is a CA — did not allow her to see money just being burnt at the altar of something as ephemeral as valuation! That was what opened my eyes. It was a lesson in financial management that I did not forget.
Tomorrow: Proficorns vs Unicorns (Part 6)