Entrepreneuship as herding Black Swans

If you dig under any entrepreneurial success story, you will inevitably find some trigger events that could not have been anticipated and that are crucial for the unfolding of the story the way it did. Think of Kiva’s being featured on DailyKos on October 27, 2005 or being the subject of a PBS Frontline documentary on October 31, 2006. Both were watershed events for attracting lenders and proving the viability of the concept. Their effects are clearly seen on this exciting visualization of Kiva’s growth.

Or think of Paul Terrell’s placing an order for 100 Apple I computers (worth $50,000) for his Byte Shop Computer Store, having seen Steve Wozniak’s demonstration of the computer at Homebrew Computer Club meetings. Up to that point, Jobs and Wozniak’s business concept had been to sell printed circuitboards to fellow club members.

When thinking of such events, Nassim Taleb’s idea of Black Swans comes to mind. These are rare, unanticipatable events with extreme impact that are relatively easy to explain retrospectively. One of the key examples is that the ten best days account for around half of US stock market returns over the past 50 years.

It seems plausible then to think of (successful) entrepreneurship as herding Black Swans. No matter how skilled or ambitious the herder, without a few of these rare birds in the flock, the entrepreneurial journey may never turn out to be historic or exciting.