THE BLACK SWAN BOOK SUMMARY
One of my favorite books is @nntaleb’s “The Black Swan: The Impact of the Highly Improbable”
It teaches how to protect yourself against (and gain from) improbable events.
Want to hear – in my own words – the highest-impact ideas from the book?...
One of my favorite books is @nntaleb’s “The Black Swan: The Impact of the Highly Improbable”
It teaches how to protect yourself against (and gain from) improbable events.
Want to hear – in my own words – the highest-impact ideas from the book?...
What is a Black Swan?
A Black Swan is a highly-improbable event. A Black Swan can be negative, or positive.
-Negative: The terrorist attacks of 9/11
-Positive: I got my first book deal, from a blog post
Why the term “Black Swan”?...
A Black Swan is a highly-improbable event. A Black Swan can be negative, or positive.
-Negative: The terrorist attacks of 9/11
-Positive: I got my first book deal, from a blog post
Why the term “Black Swan”?...
Why the term “Black Swan”?
Imagine you live in a world where you’ve only seen white swans. You might believe black swans don’t exist.
You’ve mistaken an absence of evidence for an evidence of absence.
What’s it like to experience a (negative) Black Swan?...
Imagine you live in a world where you’ve only seen white swans. You might believe black swans don’t exist.
You’ve mistaken an absence of evidence for an evidence of absence.
What’s it like to experience a (negative) Black Swan?...
Imagine you’re a turkey. Each day, humans come and feed you.
A graph of your opinion of humans might look like this: Each day, you get new information confirming humans are great.
Then, Thanksgiving comes...
A graph of your opinion of humans might look like this: Each day, you get new information confirming humans are great.
Then, Thanksgiving comes...
Black Swans have these three qualities:
1. Black Swans are outliers: Events from the past don't predict a Black Swan.
2. Black Swans have extreme impact
3. We backwards rationalize Black Swans: We invent explanations for how it happened (from the events that don't predict it).
1. Black Swans are outliers: Events from the past don't predict a Black Swan.
2. Black Swans have extreme impact
3. We backwards rationalize Black Swans: We invent explanations for how it happened (from the events that don't predict it).
Jeff Bezos walks into a bar.
On average, everyone there is a billionaire.
Jeff Bezos is from “Extremistan.” Our concept of average is from “Mediocristan”...
On average, everyone there is a billionaire.
Jeff Bezos is from “Extremistan.” Our concept of average is from “Mediocristan”...
...Mediocristan is about “the collective, the routine, the obvious, and the predicted.”
Extremistan is about “the singular, the accidental, the unseen and the unpredicted."
Black Swans happen in Extremistan. We try to explain the world as if it were Mediocristan.
Extremistan is about “the singular, the accidental, the unseen and the unpredicted."
Black Swans happen in Extremistan. We try to explain the world as if it were Mediocristan.
Mediocristan is about variables within a predictable range.
No man in recorded history has been 100 feet tall. Height falls along a bell curve.
Yet there’s no known limit to wealth. Jeff Bezos has 10x the highest point of wealth shown on this graph.
No man in recorded history has been 100 feet tall. Height falls along a bell curve.
Yet there’s no known limit to wealth. Jeff Bezos has 10x the highest point of wealth shown on this graph.
Your edge as a human is not in Mediocristan. That's where the robots are taking over.
Your edge as a human is in Extremistan – doing something nobody expects (not even yourself).
The success graph isn't up-and-to-the-right. It's a few Black Swans.
Your edge as a human is in Extremistan – doing something nobody expects (not even yourself).
The success graph isn't up-and-to-the-right. It's a few Black Swans.
As a creative, I’m in the business of breeding Black Swans.
In 16 years, I’ve written 500+ posts on my blog. TWO have hatched Black Swans.
1. My first book deal.
2. Working with @danariely on a company Google bought (& idea for my latest book).
How to breed Black Swans...
In 16 years, I’ve written 500+ posts on my blog. TWO have hatched Black Swans.
1. My first book deal.
2. Working with @danariely on a company Google bought (& idea for my latest book).
How to breed Black Swans...
To breed Black Swans, avoid that which blinds you to Black Swans.
For example, “Platonicity”: We can’t help but define things. We then focus only on things that we've defined.
We miss out on the messier stuff that isn’t easy to define (but that actually runs the world).
For example, “Platonicity”: We can’t help but define things. We then focus only on things that we've defined.
We miss out on the messier stuff that isn’t easy to define (but that actually runs the world).
The gendered bathroom debate is a product of Platonicity.
We broke gender into two categories, then built bathrooms based upon that. (Turns out it’s not that simple.)
"Platonic" is top-down, formulaic, close-minded.
"A-Platonic" is bottom-up, open-minded, skeptical, empirical.
We broke gender into two categories, then built bathrooms based upon that. (Turns out it’s not that simple.)
"Platonic" is top-down, formulaic, close-minded.
"A-Platonic" is bottom-up, open-minded, skeptical, empirical.
Doctors in the 60s “platonified” breast milk. They made artificial milk based on what they could see in breast milk.
Children not breast fed were at increased risk of cancer. Mothers had increased risk of breast cancer.
Focus on the seen blinded doctors to the unseen.
Children not breast fed were at increased risk of cancer. Mothers had increased risk of breast cancer.
Focus on the seen blinded doctors to the unseen.
We're also blinded from Black Swans by The Triplet of Opacity:
1. The illusion of understanding: We think we know what's going on.
2. The retrospective distortion: We backwards-rationalize.
3. The overvaluation of information: That which we "Platonify" blinds us to the unseen.
1. The illusion of understanding: We think we know what's going on.
2. The retrospective distortion: We backwards-rationalize.
3. The overvaluation of information: That which we "Platonify" blinds us to the unseen.
Black Swan breeding (1/4): Tinker.
The reason free markets work isn’t so much because they drive incentives. Rather, they allow people to get lucky through trial and error.
Discoveries come from searching for what you know, and finding what you don’t expect.
The reason free markets work isn’t so much because they drive incentives. Rather, they allow people to get lucky through trial and error.
Discoveries come from searching for what you know, and finding what you don’t expect.
Black Swan breeding (2/4): Be patient.
Positive Black Swans happen slowly. The computer, the internet, and the laser all had huge impacts, but were under-appreciated after initial discovery.
(Just because the graph isn't going up-and-to-the-right doesn't mean it's not working.)
Positive Black Swans happen slowly. The computer, the internet, and the laser all had huge impacts, but were under-appreciated after initial discovery.
(Just because the graph isn't going up-and-to-the-right doesn't mean it's not working.)
Black Swan breeding (3/4): Denarrate.
We’re wired to come up with stories of why things happen (the Narrative Fallacy).
More information makes us more confident, without making us better at predicting (h/t @PTetlock)
How @nntaleb dennarrated...
We’re wired to come up with stories of why things happen (the Narrative Fallacy).
More information makes us more confident, without making us better at predicting (h/t @PTetlock)
How @nntaleb dennarrated...
...@nntaleb dennarrated as a stock trader.
He realized any news he could read would instantly be priced into the market. No way to get an edge.
So, he stopped reading the news.
He realized any news he could read would instantly be priced into the market. No way to get an edge.
So, he stopped reading the news.
Black Swan breeding (4/4): The Barbell Strategy
The Barbell Strategy protects against negative Black Swans, while exposing oneself to positive Black Swans.
Think of a barbell, with weights on either side. 85% of resources on sure bets, 15% of resources on wildcards.
Like this:
The Barbell Strategy protects against negative Black Swans, while exposing oneself to positive Black Swans.
Think of a barbell, with weights on either side. 85% of resources on sure bets, 15% of resources on wildcards.
Like this:
“Sure bets”: You have little chance of losing (investing: bonds)
“Wildcards”: You may lose it all, but you have unlimited upside (investing: highly-leveraged options)
(@nntaleb hates gambling analogies b/c odds & payoffs are known in gambling, but you get the idea.)
“Wildcards”: You may lose it all, but you have unlimited upside (investing: highly-leveraged options)
(@nntaleb hates gambling analogies b/c odds & payoffs are known in gambling, but you get the idea.)
.@danariely uses the Barbell Strategy. When I interviewed him for my podcast he said he "gambles" with his time.
Dan purposefully says "yes" to some opportunities that don't make sense.
(Again, @nntaleb hates gambling analogies but...)
Dan purposefully says "yes" to some opportunities that don't make sense.
(Again, @nntaleb hates gambling analogies but...)
Part of the Barbell Strategy is ignoring the "middle."
@nickkokonas had invested $800k building a restaurant. It was doing okay. But it wasn't doing great.
He made the tough decision to start over. What he told me:
@nickkokonas had invested $800k building a restaurant. It was doing okay. But it wasn't doing great.
He made the tough decision to start over. What he told me:
The Barbell Strategy in other areas:
-Career: 85% secure corporate job, 15% novelist.
-Content Marketing: 85% SEO, 15% crazy ideas. (Ignore conversion optimization.)
-Reading: 85% research papers, 15% philosophy. (Ignore watered-down business books.)
85% sure bet, 15% wildcard.
-Career: 85% secure corporate job, 15% novelist.
-Content Marketing: 85% SEO, 15% crazy ideas. (Ignore conversion optimization.)
-Reading: 85% research papers, 15% philosophy. (Ignore watered-down business books.)
85% sure bet, 15% wildcard.
That's it! I hope you enjoyed the thread.
The highest compliment you can pay is a like or retweet of the first tweet in the thread 👇
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https://twitter.com/kadavy/status/1326908065048915973
The Black Swan is full of ideas that have been important to navigating my career as an author.
Including concepts such as "Mediocristan" (height distribution) vs. "Extremistan" (wealth distribution).
Here’s a full summary – in my own words.
kadavy.net/blog/posts/bla…
Including concepts such as "Mediocristan" (height distribution) vs. "Extremistan" (wealth distribution).
Here’s a full summary – in my own words.
kadavy.net/blog/posts/bla…
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