When it comes to watermelons, you never know. How to tell if a product is good without trying it? Let’s say you want to buy a pizza. You can accidentally see some ads on tv or, more likely, social media. I don’t know about you, but for me ads add zero or even negative credibility to products. Ads help to get known, but can it convince you about quality? I doubt it.
Let’s say you are on the street. Luckily, you see two places:
- “Joe’s Pizza circa. 1951” - Who’s Joe, some local guy?
- “Aunt Gloria Diner” - they have pizza picture on their building too
I can say that Joe is doing a good job in the pizza domain. Why? Joe is serving only pizzas right along with Gloria, while she serving a large list of things.
Joe wouldn’t survive that long if his pizza was bad or even similar to Gloria’s. While Gloria can serve mediocre pizza and survive by selling other meals. Joe can’t. His place is about pizza. If Joe’s pizza is bad, no one will go there again.
If Gloria’s pizza is bad, you can give her one more try for pancakes or steak.
In other words, when it comes to pizza, Joe and Gloria have different skin in the game. Joe’s pizza must be good or Joe is doomed. This concept was popularised by Nassim Taleb in his Skin In The Game book.
You can see it everywhere. Watermelon stand can’t survive selling bad watermelons, that’s the only item it sells. A large supermarket can sell rotten watermelons and still be ok.
Don’t buy watermelons at supermarkets.