If you haven’t yet read it, I would recommend Nassim Taleb’s book The Black Swan. Taleb defines a “black swan event” as something both unlikely and unpredictable that has a huge impact within whatever area it occurs. Part of the impact is due to the way we think about extremely unlikely events; most of us tend to equate “extremely unlikely” with “it will never happen.” Thus, we fail to adequately prepare for extreme events, and the negative impact of the event is magnified. We build levees strong enough to withstand 50 year storms, and a 100 year storm comes along. We think we have an adequately balanced portfolio, and one bad month in the market wipes out half of our net worth.
One reason human beings have an optimistic bias (we tend to underestimate the chances of very bad things happening. and overestimate the chances of good things happening) is because it’s a drag to behave in any other way. Taleb describes his own experience of taking bear positions in the market on behalf of his clients, and suffering chronic long-term stress as his positions are whittled away day after day. Ultimately Taleb and his clients win big (the market crashes, they all get rich, and Taleb gets to say “I told you so”) but in the end Taleb concludes the stress isn’t worth it. There have to be easier ways to make a living (Taleb seems to be doing fine as a writer/philosopher/tweeter these days).
Taleb also describes “positive black swans” — unlikely bouts of extreme good fortune. He suggests a few ways we can increase our exposure to such events. One suggestion is “dumbbell investing”; investing the bulk of your money in very secure investments and a good chunk in very speculative investments that have a chance of paying off handsomely (and avoiding more “middle of the road” investments like the S&P 500). Another Taleb suggestion is “go to parties” (so you can meet new people, expose yourself to new ideas, create more connections in your life, etc.).
These are great suggestions. I’d like to share a few more that have worked in my own life.
Create/Invent Exactly What You Want
If you can envision something that doesn’t yet exist, something you have a distinct need for, then you may be on to something. If you can create it — whatever it is — and use it to positive effect (enjoyment, efficiency, whatever) then you might have something that could really take off.
Paul Graham discusses how this idea relates to technology startups in this essay, but there are ways to apply it beyond starting a company, or creating a product or service. Following your own taste, rather than what you imagine other people will like, is also the best way to proceed in artistic pursuits. This might sound obvious, but most entrepreneurs and artists don’t apply this principle. Instead, they pander to what they believe the public wants, or what they believe will be a commercial success. This strategy might slightly increase the odds of mild success in the short-term, but it will squash any chance of wild, break-out success (black swan success). For that, you need to invent (or create) for yourself.
My music and business partner Spesh invented the concept for a party called Qoöl — an after-work electronic music happy hour. Pounding club music at 5pm, really? He chose a weekly time slot of Wednesday, 5-9pm, because it was personally convenient for him (he had a 9-5 job at the time, and wanted to have a weeknight when he could DJ immediately after work, somewhere close by in downtown San Francisco). We partnered with the forward-thinking 111 Minna Gallery, and within a year we had a wild success on our hands. Lines around the block every week, all via word-of-mouth. Our weekly event at 111 Minna continued for fifteen years, and over that time we raised tens of thousands of dollars for charity (mostly The SETI Institute — we have our name on a telescope at the Allen Telescope Array), hosted hundreds of talented local and international DJ’s, and created the Qoöl event brand which continues to this day (these days we’ve been throwing the occasional party at the Project One Gallery).
Some people thought Spesh and I were “brilliant promoters.” For a long time I thought we were just incredibly lucky. Now, with hindsight, I think most of our success came from Spesh inventing an event that perfectly suited his own needs. It turned out there were a lot of people who wanted to party right after work, without going home and changing their clothes. A few hours of clubbing, mid-week, in a convenient, beautiful location, was something that thousands of young people in San Francisco turned out to want.
Invest In What You Enjoy Doing
“Follow Your Bliss” — you hear that often enough. But what does it mean? Some jump off the cliff, quitting their jobs and relying on personal savings and income from their fledgling business or artistic career (often to see the former evaporate quickly and the latter grow slowly). There’s something to be said for that approach — committing 100% from the beginning — and once in awhile it succeeds. And if it doesn’t, that’s not the end of the world — you can usually get back into the job market.
Another approach is to proceed gradually, consistently investing time and resources into whatever it is you enjoy doing, building skills, resources, connections, etc. With this steady, gradual approach you might lose the fear-induced intensity that jumping into the deep end brings. I’ve tried both approaches at various times in my life, with mixed results on both the cliff-jumping side and the more gradual approach. While I haven’t yet reached the level of artistic success I aspire to (does anyone?) I do know that whatever time or money I’ve invested into music production and writing has paid off (in terms of enjoyment, financially, broadening of experience, and self-identity and self-worth).
In college I bought a $2500 keyboard (95% of my net worth at that time). It sat, unused, in my dorm room for a few months until I learned to connect it to my Mac Plus (dating myself, I know). My roommates thought I was crazy, or at least foolish. I had no musical training beyond learning to play “Good King Wenceslas” on the recorder in elementary school. Within a year I signed my first dance track (to Megatech records) and released my first EP (as “DJ JD”). The record didn’t sell very well, but it was the start of a bootstrap music career (see Albums). I got lucky, but I set myself up for luck by making a go of it.
What’s the takeaway? If you’re lucky enough to have an activity that excites and inspires you, then put in the time and put in the money. There’s zero risk if you enjoy the activity itself (the means is the end), and you expose yourself to the possibility of luck and success. Success comes unevenly, so 99% of your efforts might yield zero rewards. But that 1% — the black swan event — can make it all worth it.
A special note on financial rewards; don’t underestimate the amount of money you can make by consistently investing in your “enjoyed activity” over time, and at the same time don’t underestimate how long it will take. I often receive unexpected royalty and licensing revenue from tracks published five or ten years ago. If you manage to create something of decent or above quality, but don’t have a high-powered international marketing campaign behind your product, it can take a long time to get noticed or yield any kind of tangible result.
Be Good To People
Obvious, but worth mentioning. A near universal human trait is the desire to punish cheaters and assholes, matched by an equally strong desire to reward people who treat you decently. This doesn’t mean you have to be nice all the time, or always be friendly (that sounds exhausting, doesn’t it?). It just means you have to treat people fairly, and not be a dick. The Golden Rule is the ultimate positive black swan generator.
How you treat others, not just your family and friends but everyone you have any kind of interaction with, is a source of black swan events, both negative and positive. You never know when someone you’ve just met once or twice might put in a good word for you to the right person, thus leading to a great job, new relationship, or other major life event. It can happen the other way too — nobody wants to date a bad tipper.
Have you heard the story about the guy that stopped to help a limo with a flat tire, and it turned out to be Donald Trump, and Trump paid the guy’s mortgage? Well, according to snopes, it never happened — the story was a media stunt on the part of Trump’s PR team. That’s too bad, because otherwise it would be a great anecdote to illustrate my point.