How Young Professionals Can Use “Black Swans” to Their Advantage
Nassim Nicholas Taleb’s “Black Swans” provide insights beyond the stock market.
I recently read The Black Swan by Nassim Nicholas Taleb. Aside from the book being a generally interesting read, I thought it provided a useful framework through which to view two issues that commonly face young people: whether or not to chase their creative aspirations out of college and how to become the types of people that other people want to be around.
Before getting into either topic, a quick overview of Taleb’s theory. In the book, Taleb divides the world into two fictional realities: Mediocristan and Extremistan.
The aspects of life that occupy Mediocristan are stable, they exhibit little to no variance, and single events cannot sway their collective average. As an example, teachers salaries: if you surveyed 100 teachers, one of those salaries is unlikely to impact the average of the 100. There aren’t any billionaire teachers to swing the average. Same goes for blood pressure or the height of trees. They all exist in Mediocristan.
Extremistan, on the other hand, is the world of extreme volatility. Anything with high variance where a single moment or action or measurement can significantly sway the average belongs here. The net worths of a random set of people (because a small number of people own a majority of the wealth), the stock market (with it’s huge booms and massive crashes) and skydiving (the most exhilarating experience or death) all exist in Extremistan. And those big swings are what Taleb refers to as Black Swans.
Taleb argues that, if you play the game of life the right way, you can use the safety of Mediocristan as a safety net as you take calculated risks in Extremistan. The result is taking small loses along the way in hopes of hitting a windfall when a Black Swan hits. To do that, Taleb says (using finance as an example):
“…your strategy is to be as hyper conservative and as hyper aggressive as you can be…you need to put a portion, say 85 to 90 percent, in extremely safe instruments….the remaining 10 to 15 percent you put in highly speculative bets…” and he continues, “…no Black Swan can hurt you…instead of having medium risk, you have high risk on one side and no risk on the other…” with a “positive exposure to the Black Swan…”
So there is some sound financial advice: place most of your money where it is safe and take only small calculated risks that could result in huge winnings.
But what does that have to do with pursuing creative dreams?
Safely Pursuing Creatives Aspirations Without Risking it All
Though in the above example Taleb is discussing finance, this approach can easily be used as a fantastic strategy for young creatives.
Rather than risk it all as a starving artist, this strategy suggests getting a good, secure job with low volatility (Mediocristan) out of college and then working on a Black Swan hobby as a side hustle. This allows you to have a consistent flow of money coming in (protecting you against the early struggles of trying to monetizing your art) while still leaving yourself open to the benefits of a potential positive Black Swan (the unlikely but sweeping success associated with creative endeavors i.e. landing a book deal or becoming an Instagram lifestyle influencer).
Of course, some will scoff at this advice. If you really wanted to be a true creative or artist, they will say, you should starve and suffer for your art.
And that’s fine. They may even be right. But I also don’t think Taleb’s strategy is a total excuse to not “go all in on yourself.” His strategy is just a smart one. You can allow yourself the safety of Mediocristan through a conventional day job while keeping the door open for the potential windfall that is possible only in Extremistan. And being that positive Black Swans are inherently rare, not relying on them for daily sustenance should come as a relief.
Mediocristan isn’t there only to protect against the ills of Extremistan either. The Black Swan activities you pursue outside of your day job can also benefit your career by gaining you more visibility in your industry, helping you make important professional connections, and give you a more diverse skill set.
They also have the power to make you a more interesting, complex, and textured person.
Mediocristan and Extremistan are Also Found in Personalities
We can take Taleb’s idea even further and use it to help guide us to become the types of people we want to be.
Framing personality with the idea of Mediocristan and Extremistan provides some interesting insights. Think of someone who has a Mediocristan personality: they are predictable, quiet, and reliable. Those are pretty positive traits! But they also don’t make for a very interesting person.
But a personality exclusively from “Extremistan” is no good either. These people are completely unpredictable, unstable and even dangerous. No one wants to be around that level of volatility, at least not for every long.
The perfect personality — as everyone who has found themselves engrossed in a new acquaintance at the bar knows — is someone who is mostly predictable but who also has a little Extremistan in them. The person is complex and interesting, continuously revealing new truths about themselves. They are the jock who likes sports and motorcycles… but also loves slam poetry and volunteers with children. 80% of his personality is predictable so you generally know what you are getting, but that 20% from Extremistan adds some complexity and depth to their character.
If you are living 95%-100% in Mediocristan, allocate some of your energy to explore Extremistan. Start the blog you always wanted to, publish your art, slam your poetry. Put yourself in the position to benefit from a good Black Swan, should one come your way.
And If you are living full-time in Extremistan, just know that you are vulnerable to bad Black Swans.
How safe or dangerous you decide to play life is up to you. But, however you play it, make sure you are honest with yourself about your strategy. Do not convince yourself you are playing it safe when you know that deep down you playing it risky, or vice versa. If you are honest with yourself, at least you will able to weigh the consequences.
And if you fool yourself, then you are simply hopeless.
Got a hankering for more? You can read more of my posts on Letters to a Young Professional, you can check out my blog 12HourDifference.co for my thoughts on launching an international career and you can connect with me on LinkedIn or Twitter to chat about…whatever you’d like!
