Tyler is telling Jack to become more of a masculine person, and not care about assets and possessions anymore. When Jack is explaining how he is lost without all of his belongings, Tyler says, "It could be worse; a woman could cut off our penis in the middle of your sleep and throw it out of a moving car." The only type of person who would declare that as being worse is someone of male dominance, someone who believes their masculinity would be taken away if their penis was severed. That is a dominant stereotype in the media today; the male penis is where all masculinity lies. .
After the bar conversation, the movie really begins - Fight Club begins. Jack asks Tyler if he can stay at his place; Tyler obliges with one condition: that Jack hits him as hard as he can. Tyler goes on to explain himself saying, "I've never been in a fight .you?" Jack responds by saying, "NO that's a good thing!" Tyler validates his thoughts by announcing, "No, it's not - how much can u really know about yourself if you've never been in a fight?" Does one really have to partake in a fight in order to know and understand themselves? This is male testosterone beginning to emerge. Tyler Durden will only be seen as more masculine after this scene - a simulation of course - because he fought. Only "tough-guys" fight. This is Durden's first attempt of making a better person out of Jack. This also can be seen as a representation (or simulation) of male masculinity: the Fight. This is evident in many movies, T.V. shows and televised sports as well. After the fight has finished, Jack concludes the scene by saying to Tyler: "We should do this again sometime.".
Fight Club as a film does mock male masculinity as it is portrayed in the media. For example, near the middle of the movie, Tyler and Jack are getting on a bus. While on the city bus, Jack notices a "Gucci Underwear" ad, and it depicts a male midsection with tight undergarments on.