Research library Required reading Reading the numbers
The Average Doesn't Live Here.
Nassim Nicholas Taleb's The Black Swan is about rare events with huge consequences, and about the world where a single observation can outweigh all the rest. Customer revenue lives in that world.
Nassim Nicholas Taleb · The Black Swan · 2007
What it is
A book about the events that matter most and that our methods are worst at seeing. Taleb defines the Black Swan in the prologue by three attributes, then sums them up:
“rarity, extreme impact, and retrospective (though not prospective) predictability.” Prologue, “On the Plumage of Birds”
The first edition came out in 2007; the second, in 2010, added a new section, “On Robustness and Fragility.”
What we took from it
His two countries. In Mediocristan, no single observation changes the total much: one unusually heavy person barely moves the average weight of a thousand people. In Extremistan, one observation can dominate everything: put a billionaire among the same thousand and their average wealth stops describing any of them. As he put it in a 2008 essay:
“In Extremistan, exceptions can be everything (they will eventually, in time, represent everything).” Taleb, Edge, September 14, 2008
Where it shows up in our work
Most marketing math assumes Mediocristan: an average customer, an average deal, a cost per acquisition compared to an average value. Customer revenue lives in Extremistan. A small share of customers carries most of the value, and the average describes almost nobody.
That’s why we read results by tier instead of by average, and why a campaign that lowers your cost per customer can still be losing you the customers that matter.
Next on the shelf Wilhelm Wundt, Principles of Physiological Psychology