In Search of Black Swans

I recently read the book, “The Black Swan: The Impact of the Highly Improbable” by Nassim Taleb.  The concept it portrays is interesting about how extremely unlikely (and therefore usually not considered) events can impact our lives, our finances, our country, and everything.  I want to discuss how searching for “black swan” websites, ideas, or businesses can be hugely profitable.

But first, I want to explain what a black swan is.  For example, one of the highly unlikely events that was never considered before was the terrorist attacks on the World Trade Center of 9/11/2001.  Of all the possibilities that governments and other highly trained individuals considered, having 2 planes fly into these buildings was not one of them.  The impact was devastating and even more so because it was never considered in the realm of possibility.

Here is the reason these highly unlikely events are called black swans.  Not too long ago there was no such thing as a black swan.  When you said “swan” everyone pictured a white swan.  No one had ever seen a black swan and in fact the phrase “black swan” was never used because well it didnt exist.  That was until someone discovered some black birds in Australia.  At first they didn’t know what they were, until closer examination they discovered these were swans!  Only they were black!   If someone has asked this individual before going to Australia what kind of birds they might expect to see, they never would have listed a black swan…because it didnt exist.

The book itself becomes a bit boring as the author tends to throw in his own personal life and (boring) philosophy on life.  The author is a “quant” and specializes in calculating the risks associated with major events occuring on the financing markets.  His entire business is based on the HUGELY unexpected drops that occur in financial markets due to black swan events.  Most firms don’t properly calculate the downside risk associated with such events (such as the financial crisis of 2008), because they are “statistically” insignificant.

One more example to drive home what a black swan is.  A turkey is fed by the farmer 364 days out of the year.  The bird is well taken care of.  The bird is happy.  The bird is fat and happy.  The farmer must really love the turkey, the bird thinks!  Then on Thanksgiving the farmer slaughters the bird.  This is a black swan event.  There was absolutely no evidence in the turkey’s past that would lead it to believe that the farmer would kill it.

Okay, so up to this point I have talked about negative black swans.  Well, just the opposite can be true about unexpected good events.  What about a small little website that you expected to make $1 a day that ends up making $50 a day?  That’s a good black swan event.

This happens in business all the time. A small little startup company, like Facebook for example that is started in some kids dorm room in college, becomes the most visited website on the internet! No major players saw this coming, nobody expected a digital yearbook to become the biggest website…but it happened!

So, how do you find black swans?  Well, its not easy, because its impossible to predict what the next big thing will be.  But one of the keys to success is diversification.  Don’t just try one thing and give up.  Try lots of niche webistes, or create a product, or sell something else online.  Start a quirky business that seems too goofy to possibly work.  You never know, you might hit on something huge!

So, even though I don’t really know which of my adsense sites will be a big earner, I keep creating them because I know eventually I will find a black swan.  Your first 10 sites might all be failures, but if you try something a little different, or choose better keyword, or try a new strategy; you might even surprise yourself and accomplish something totally unexpected.

I am personally implementing this “black swan” mentality.  My 100 niche sites are not earning quite as much as I was hoping.  But I am reinvesting every penny into new ideas.  Right now I am working on 2 pieces of software that I am hoping will earn me some extra income.  But who knows maybe one of them will be a homerun.

The key is to think big, try new strategies, and don’t be afraid to go against what the crowd is saying!  If you are getting all of your business ideas from forums and other people, you might never discover the biggest undiscovered idea out there that is right between your own ears.  I have always found my biggest success when I think of my own ideas and try to do things a little differently.

How can you be a black swan if you do what all the white swans are doing?

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6 Responses to “In Search of Black Swans”

  1. Great post! Some people play the lottery for the Black Swan to bad the odds are like 1 in 200 million.

  2. What a great way to take advantage of Black Swans?

    That is one of my favorite books.

    DarkOneToo (WarriorForum.com)

  3. Nice post, Spencer. Very thought provoking. And it’s true – in this business you need to think big. The internet is such a huge place and it’s like the ocean – it’s basically uncharted territory still. There is no right or wrong way to do anything and you’re only limited by your own imagination.

    I’m glad you haven’t given up on your Adsense sites because I’m finally getting in a position where I can try it myself. Can’t wait to see what your software is, too.

    Cheers!

  4. Great Mindset you have, Spencer… I am sure you will hit the home run soon!
    Yes, you keep on trying on new things and you never know which
    one will hit the jackpot.

    All the best in your software product venture.

  5. Thank you for this blog. Thats all I can say. You most definitely have made this blog into something thats eye opening and important. You clearly know so much about the subject, youve covered so many bases. Great stuff from this part of the internet. Again, thank you for this blog.:)

  6. Awesome post….ahhh, I wish you would keep up this blog, but I understand the need to move on. I like your perspective on things and look forward to your IM insight on the new blog. I am so excited for your new blog and your new life away from the corporate world. You have earned it! Raleigh :)