The Black Swan pt. 2

I pushed through the end of Nassim Nicholas Taleb's The Black Swan this week, and while I can say I really enjoyed it, by the end the disparaging tone he takes whenever talking about traders or economists wore a little thin. I have no stake in either of those professions, but once a point has been made and an opinion established (neither of which are crucial for the book's central argument), reiterating it at every conceivable opportunity insults the readers who have come along for the ride. OK, we get it Nassim, you don't respect (for the most part) economists and traders, but I didn't pay the price of admission to wade through you settling personal vendettas, that was achieved when I bought your book and not your rival's.

Having said that, there is a lot of value to be gleaned between the book's covers. It rambles in places but the central idea which I've been summing up as (rightly or wrongly, feel free to offer an alternative viewpoint) "the distinction between two sentences: "there is no evidence of black swans" and "there is evidence of no black swans". Whatever issue I take with the author in the above paragraph, I find that idea and the way at which we arrive at those sorts of statements fascinating.

Nassim also hits a couple other great points which are tackled in a much more straight forward fashion in the next book I picked up, Made to Stick: Why Some Ideas Survive and Others Die. Written by two brothers, Chip and Dan Heath, it explores, well, exactly what it says. Both brothers have spent time as educators in some fashion, and convey their thoughts in indelibly straight forward terms.

The cross-over between the two books comes in the emphasis both place on the power of narrative. As human beings we love a story! We have told them throughout history, sometimes for lessons, all of the time for entertainment. Stories are much more powerful than facts; that notion gets played out every night on the evening news. Made to Stick talks a lot about using that to your advantage, citing screenwriting guru Robert McKee as opposed to a litany of philosophers and thinkers who add limited value without extended research. Nassim attempts to use his own journey as a way of taking the reader through to his point, but an idea that comes up in the first hundred pages of Made to Stick is one he could have benefited from: simplifying a message can give it more impact and not dumb it down.

I'm not even halfway through Made to Stick yet so bear with me on it. I'm already making moves to apply it to my daily work habits though and enjoying the "Clinics" interspersed through the book, an opportunity to apply the thinking you've just learnt. If like me you love learning and hate the classroom, consider this one, so far, indispensable.

Nassim Nicholas Taleb's The Black Swan

I had thought that when I got to the end of the afore-mentioned book I would review it and post my thoughts on it, however it seems every few pages there are a raft of new ideas, ones that suggest new trains of thought, undo previous ones, and generally beat you over the head should you be caught sleeping. The book itself is more essay than anything else, but I mean that in the best possible way. Personally I had never heard the word vitiate before (it means to reduce or impair the quality of, just FYI...), which is a challenge in itself, but it certainly isn’t the kind of book you start reading if you’re not up for an exchange of big ideas. 

So, rather than wait until the end and try to disseminate what I’ve learned, I thought I would use this blog as a place where I could dump my thoughts for the day, a reading diary and would serve as the notes I’ve taken along the way. I’m not quite half way through, a page into chapter 9. If you haven’t read it yet don’t worry, there aren’t spoilers to be had, and I welcome the thoughts of anyone who cares to share, whether you’ve read the book or not.

The idea that is sticking with me most right now (and that could be because I just finished a chapter on it) is referred to as silent evidence. Taleb uses a myriad of examples of this throughout the chapter, I’ll relay a summation of what gamblers refer to as “beginner’s luck”. Simply put, if a thousand people sit down and start gambling, odds are that one among them will strike it better than any other because of the unpredictability of games like roulette. There will be no rhyme or reason, and 999 people may go back to what they were doing.

That one person though will continue to gamble, convinced their success has been preordained, the silent evidence of the other 999 you won’t find out about, because their experience gave them nothing to share. The notion of beginner's luck exists because you only hear about it from people who experience it, not the vast majority who lose their money and leave, thus giving the false impression that all people who start gambling kick it off with a string of lucky breaks.

In the book, Taleb warns against forming opinions on events based on the evidence directly presented. He is far more concerned with the statistics that aren’t being told. If a drug came out that cured cancer but potentially also killed 1 in 10 people, a doctor would never prescribe it; the potential law suits would make it an untenable position.

“A life saved is a statistic; a person hurt is an anecdote.” (pg. 112)

A previous point he had made along those lines was a fictional account of two men flying to New York, one a local, one planning to visit Central Park for the first time. The local gets drunk and regales the visitor with a stor about how his wife’s brother’s co-worker’s 2^nd cousin’s nephew had a friend who was mugged and killed in the park, leaving behind a wife and two young children. The visitor could be greeted with a myriad of statistics espousing the safety of walking through the park, but in all likelihood would be consumed with the image of a man lying in the park, bleeding to death, and a family with no husband or father.

As in the cancer-curing drug example above, anecdotes are much more powerful than statistics.

I could cite a dozen more pieces from the book where Taleb paints a compelling argument for the Black Swans, however it really is worth your time reading it yourself. If you want an overview, stay with me over the coming week or so as I move through the rest of it. As I said above you need not have read the book to share your thoughts on the ideas; one of the first points he makes early on is the best and most disruptive ideas often come from people unaware of the rules of the game.

More as it arrives…

Figuring out what is wrong (as opposed to what is right)

I was quoted over at Chris Wilson's Fresh Peel in response to a question he asked: what companies really listened in 2007? Facebook cropped up a few times, and while it can be argued they were forced to listen, the outcry against Beacon paled in comparison to the dissent that rose up against the news feed when it was first introduced. Back then Facebook hadn't become the media darling it is now, and cries of injustice on a still-emerging social networking site were treated with the same gravitas that gets associated with stories about property being stolen in virtual worlds. Were it still operating in that same void, personally I think it would have gotten far less attention and been able to go about it's business. Whether or not that is a good thing is up for (continued) discussion, personally if advertising can be distilled down only to things I am actually interested in, then maybe it simply becomes information, and that is fine by me.

There's more to this though. Online strategies are increasingly being formed not around what is right, but what is least wrong. The idea itself is nothing new and gets discussed exhaustively in Nassim Nicholas Taleb's The Black Swan (shameless plug: I'm part way through and thoroughly enjoying it). It's something I encounter in my day job too; the fact of the matter is if you're working in this space you are almost always trying new things. Can I say for certain that "Idea X" is right? No, but I can tell you it is less wrong than "Idea Y".

My thoughts here are well and truly still forming, but the beauty of this medium is you're allowed to share them before they become concrete, in the hope they become something better. At the risk of going out on a limb, I'm going to say for certain that that is right.