Risk Theories

Butterfly effect theory
Edward N. Lorenz (American meteorologist: 1917-2008)

Invented “to highlight the possibility that small causes may have momentous effects.”

Predictability: Does the Flap of a Butterfly’s Wings in Brazil Set a Tornado in Texas? Presented at: American Association for the Advancement of Science, December 29, 1972 [Link]

Black swan theory of unexpected surprises
Nassim Nicholas Taleb (2010)

[extraordinarily unexpected events: we did not see them coming]

[Oops, didn’t see that one coming!]

The title is a metaphor to describe “an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term is based on an ancient saying that presumed black swans did not exist – a saying that became reinterpreted to teach a different lesson after black swans were discovered in the wild.”

The Black Swan: The Impact of the Highly Improbable [Link]

Gray rhino theory of giant known misses
Michele Wucker

[highly probable events: we ought to have known what will happen]

[“How did that happen?”]

Gray Rhinos is Wucker’s variation of Black Swans, defined as “a highly probable, high-impact threat: something we ought to see coming. Wucker believes that the problem is systemic: the political and financial world rewards short-term thinking, and it’s difficult for institutions to pivot quickly when necessary.

With so many recent examples of failures to respond to obvious threats, we ought to have a better handle on why we miss them, but cognitive biases make this difficult. Wucker explores the denial that keeps us from seeing threats, the panic that occurs when we don’t make decisions in time, and ways to implement solutions and take reparative action “after the trampling.”

The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore [Link]

Grey Swans theory of potential although unlikely horrendousities
Daniel Liberto for Investopedia.

[An event of high significance whose possible occurrence is predictable although the “probability is considered small.”]

[It is possible that a Planet-Killer might hit us someday…”]

Grey Swans is another variation of Black Swans. Greys are predictable. Black Swans are unpredictable.

What is thought to be possible, but improbable, whose appearance might spark globally significant change? Examples include: Brexit, the impact of the internet to news’ facts validation , and a political outsider winning a country’s Presidency. Grey Swans is similar to an event “in electrical engineering, (where) gray swan refers to the kind of events that rarely happens but have great impact on power systems.”

Grey Swan: What it is, How it Works, Examples [Link]

Planet Killers theory of avoidable impossibles
David Huer, 2014-forwards.

[highly probable but seemingly impossible events, with momentous consequences, that we can plan for]

[That Planet-Killer is coming in 2032...”]

David Huer has been seeding the Planet Killers/”Own the Asteroid” concept since 2014. It is possible, indeed probable, that Black Swans and Gray Rhinos can be avoided – and Grey Swans planned for – and Butterfly Effects nurtured – by acquiring access to private earliest-stage disruption sources. Before competitors have the glimmering that momentous change is coming.

Own the Asteriod© when Planet Killers strike.
Don’t be the Dinosaur.

Asteroid Artwork by David A. Hardy: http://www.astroart.org/

Grey Swan image by : Arcaion

Disrupting M&A

the deepest root becomes
the ancestor of the future

Investment Thesis: Long-game investors identify & partner with game-changing serial disruption innovators. Adding Ancestor Root Innovations to portfolios. And then introducing each disruption and each of its spin-offs to their desired timetable. Across all markets. Across all patent and trademark and data regimes. At all desired price-points. From earliest adopters to the latest laggards. Over years and decades and centuries.

Zuxian’s Unique Value Proposition: First Principles analysis = Identifying deeply disruptive game-changers = Solutions that become ancestors of the future.

Making them ready for investors wanting that rarest of opportunities – faster and simultaneously long-scalable routes to ROI – by adding IP to one of their Series A, B, or C positions, or a Buy & Never-Sell long-game investment, or…

WHY #1? The ‘business implications of accurate early prediction are huge’:

  • Change-fearing short-play incumbents want to anticipate and block changes or remove threats.
  • Change-fearing long-players aim to kill innovations, to slow them down to decades or more. This is the bureaucracy of an organization (private, public, or hybrid). If private, these ones kill their company’s own future to protect the seemingly safe today.
  • Change-embracing long-play investors aim to dominate the anticipated new market fundamentals, post-shift, but still have to navigate a tangle of threats.
  • Even large players require capital, maneuvering time, patience, and a deft hand to execute future dominance positioning strategies across the depth and breadth of gameplay.

WHY #2? The old R&D system used in Western countries is glacially slow. Created by already aging Industrial Age players to block swift innovation. Which might have made sense, before instantaneous communications’ nets and remote private business data hacking developed in parallel.

But it is a millstone, ignoring the hard modern reality of swift global technical change. It blocks private incentive to innovate. And you can see the fearful attempts of taxpayer-owned universities setting up political alliances – parasitically trying to kill or slow down rapid change to protect what has been a rich slow gravy train.

But it is too late: the Tsunami is here. A tsunami of their own making. Computing and M/L and Ai. Used by legions of skilled engineers and scientists and technicians with the skills, knowledge and tools to execute disruptive innovation – without subsidizing all the layers of bureaucratic waste and slowness that cuts into the personal ROI of every innovator, investor, and acquirer.

WHY #3? Many “new” Tech Incubators feed the old way. Many insist on equity to support startups that need to be built, staffed, assetted, amortized, taxed, and tax credited.  We question the value.

All this extra cost cuts the spread opportunities of investors, long-game acquirers and disruption founders. Adding wasteful cost and feeding hangers-on. Cutting into our wallets and ROI.

And startups step into this mix, embarking on an extraordinary search for capital. Navigating through thickets of potentially risky advisors and demanders. Innovating to survive but rarely possessing access to smart money, secure communications, trusted advisors, early customers, partners and supporters.

The Zuxian Model: There is a better business.

Find & partner with “ancestral root” innovators.

Qualify and purchase solutions from the innovations’ pipeline.

Cut bureaucratic R&D dead weight out of the middle.

Take later market share early.

Use intelligence and capital capacity to purchase control – years before slowpoke laggards timidly step forth to start comprehending the spin-offs of the ancestor root opportunity.

Are you an ARI Innovator? Are you an M&A Investor Bridge Builder?