“Black Swan” Events. In operating our businesses, we’re quite certain about those dragons in plain sight. Their obvious danger causes us to pay attention to their moves. We spend significant time planning for and managing these dragons, recognizing that when we fail to do so, it can take us off course, or worse, imperil our business journeys. But what about those fanciful dragons whose shapes we don’t discern or ignore as mere clouds on the horizon, not the real fierce shapes capable of shaking our world?
Crisis management risk isn’t expressly on the checklist of most investors, but when they’re sizing up your startup team, there’s undoubtedly vetting underneath: does this founder team have the right stuff to “manage” those black swans which turn the business model upside down? Are these leaders prepared for those hidden dragons, such as unforeseen tariffs, unpredicted strikes, a terrorist attack, an antitrust investigation, an earthquake, or a military skirmish? Even the hint of their apparition is enough to shake macro-conditions and ruin well-conceived, rational forecasts of the best executive leadership teams… So-called black swans. In Nassim Nicholas Taleb’s prophetic book, The Black Swan: The Impact of the Highly Improbable, he notes,
“Before the discovery of Australia, people in the Old World were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence. The sighting of the first black swan … illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge. One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans. All you need is one single black bird.” [FN1]
Taleb’s Admonishment. Nassim Nicholas Taleb’s framework for thinking about “Black Swans” is an admonishment, warning us that what we don’t know—and can’t see—often becomes far more dangerous than what is in our plain sight. In business, we vigilantly track the dangerous dragons we can see, yet it’s the shadowy, mythical ones—the unexpected crises—that often cause the greatest havoc.
In business, it’s often what we don’t see coming—the Black Swans—that reshapes our world more than the threats we monitor daily. How do you defend your enterprise against something that’s not likely to take place …. such as the Fukushima nuclear reactor being swamped by a tsunami after a 9.5 earthquake?
💡 Recognizing and managing “black swans” is an oft-overlooked but essential skill for every business owner. Let’s face it: your outside investors might forgive you for failing to see the tidal wave that swamps the boat. But will you — as the leader, and a stakeholder in your own vision — find any solace in such reassurances? Your team’s inability to spot emerging risks, move decisively to contain the damage, or engineer a workable solution strike at your most vulnerable moment — not just for your business, but for the entire ecosystem that depends on it. Ironically, this fragility is exposed precisely when your investors are already scrambling for shelter from the same storm.
Building A Fortress Protecting Against Yesterday’s Crisis Doesn’t Work. What you think you know may be of very little value in managing “Black Swan” risks. In fact, relying too heavily on the past is the hallmark of the wrong approach: it blinds you to the signals you need to recognize and respond to the unexpected.
Quite frequently, we evolve defense systems to guard against yesterday’s catastrophe. Developing a fix for yesterday’s crisis rarely stops tomorrow’s threat. Consider the effectiveness of the Maginot Line built after the Great War to suppress the threat to France’s eastern front. At the outset of World War II, the invading German army didn’t break through it; they simply traversed around it. The Maginot Line harkens a warning for all businesses. Today’s threats – cyberattacks, grid vulnerabilities, and war - transpire much faster than the shock of the invading Blitzkrieg at the outset of World War II.
Unfortunately, large institutions are often slow in absorbing such lessons. Erecting defensive strategies ideally suited for the previous battle is certainly not uniquely French. We’re constantly installing “Star Wars” defense systems for yesterday’s problems – and in many cases, we do so in the heat of the moment of the last catastrophe. Consider the USA Patriot Act, which passed through the Senate with a 98-1 vote shortly after the September 11th attacks. Or the Dodd Frank legislation. Are we really such simpletons to honestly believe that a 13,000-page piece of legislation really makes our banking system “safer” from tomorrow’s existential macroeconomic threats? Has the world not changed since 2001 or 2008? Yet, the American legislative process is undoubtedly stuck in stasis when it comes to considering new realities and threats, a slow-moving ossified beast stuck in a past time. That’s a strong metaphor for most large companies when it comes to preparing for and managing upcoming threats.
💡 Like it or not, these Black Swans represent realities of our human condition. And for businesses, Black Swan events include those government interventions unanticipated by businesses, such as an Administration’s stiff resistance to a corporate deal on antitrust grounds or its imposition of tariffs on an industry’s supply chain.Unmonitored dragons.You cannot really count on your systems to track and monitor these dragons or repair their negative impact on your business until they step out of their lair.
Is there an anecdote for today’s founder grappling with Taleb’s admonishment? Let’s consider the lessons of Intel’s founder who famously wrote down a crisis management framework in his book, “Only the Paranoid Survive.” [FN2]
First Principles Thinking. The clearest guide to crisis management is first principles thinking: operators must recognize strategic inflection points — those moments when a company’s fundamentals shift — and respond decisively. [FN3] Grove’s lesson is simple yet profound: don’t bask in the sunshine of a beautiful day; instead, assume trouble is always just around the corner so you can detect threats early and reinvent before crisis hits. As he warned, “If you wait until a crisis is obvious, it’s already too late.” [FN4]
Andy Grove applied this mindset in the mid-1980s when Japanese semiconductor companies began flooding the market with cheaper, higher-quality memory chips. Grove famously asked himself: What would a new CEO do if I were fired tomorrow? Recognizing the incoming tidal wave early, he challenged his team to confront the threat head-on. As a result, Intel abandoned its core business — memory chips — and made a bold pivot to microprocessors, a decision that cemented the company’s multi-decade dominance in computing. [FN5]
Constructive Confrontation: Spot Early, Debate Aggressively and Act Decisively. Andy Grove didn’t just warn that “Only the Paranoid Survive.” Rather, Grove built Intel’s culture around what he called Constructive Confrontation — a discipline of spotting emerging threats early, debating them vigorously, and acting before competitors take decisive action. Grove believed that success breeds complacency, and complacency breeds failure. [FN6] If you’re winning, you should be the most paranoid — precisely because that’s when hidden dragons quietly slip in under your defenses.
This mindset turns a strong team into an early-warning radar system: you encourage your people to surface uncomfortable truths, clash ideas openly, and question assumptions while you still have time to respond. In Grove’s view, the best crisis managers harness conflict constructively to test plans, stress-test risks, and shape better decisions before a looming threat becomes obvious — because by then, it’s often too late. Grove’s approach anticipates the coming tsunami. It is a blueprint for surviving success!
Modern Success Stories. Andy Grove wasn’t alone in championing this disciplined approach of constant vigilance. Jeff Bezos, echoing the same spirit decades later, famously told Amazon shareholders, “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” [FN7] For Bezos, like Grove, sustained success demands a culture that stays alert — always questioning assumptions, challenging complacency, and confronting threats before they become existential.
Tesla and SpaceX are modern reminders of Grove’s principles in action. Both survived near-death spirals during the global financial crisis, when even larger rivals like GM and Chrysler went bankrupt. Elon Musk’s relentless willingness to question assumptions and double down on core engineering breakthroughs carried each company through existential threats.
Apple’s dramatic turnaround in the late 1990s is another instructive case. When Steve Jobs returned, he radically streamlined Apple’s bloated product lines and rekindled a fading brand by insisting the company “think different.” A decade later, he killed off one of Apple’s most successful products — the iPod — by introducing the iPhone, despite iPod sales being a major revenue driver at the time. [FN8] Likewise, in 2012, Mark Zuckerberg drove Facebook to pivot aggressively to mobile before it was obvious the desktop era was dying. Zuck’s adroit move ensured Facebook’s (now Meta) ongoing relevance and growth. [FN9]
💡 Across these business stories, the lesson holds: when you think from first principles, you don’t merely react to change. You stay a step ahead of the incoming wave!
Unlocking Entrepreneurial Mindset to Manage Your Crisis. When your business faces its next inevitable dragon, it will be best positioned if your leadership team pays homage to its early roots. Indeed, rekindle your startup roots for relief!
First principle thinking, adaptability, flexibility and iterative problem solving are often the best means for working through those unanticipated dragons – unexpected government action, a cyberattack, an ISP disruption, or other unforeseen calamity -- than those meticulously planned solutions. Black swans are real events. And likely inevitable, even if we can’t make out their finely defined contours. To overcome them, keep applying an “Entrepreneurial Mindset.” Doing so will not only impress your investors, but it might also just keep your business alive when your competitors fall by the wayside.
Change Mandates for Today’s Fast-Paced Business World. In today’s fast-paced world, don’t underestimate the difficulty of slaying such unforeseen dragons. A new kind of situational awareness—one rooted not just in human intuition, but in algorithmic precision. In the 2020s, with AI accelerating and quantum computing on the rise, human-only responses may no longer be fast or flexible enough. Instead, we may rely first on agentic AI systems, primed to act with custom-built logic drawn from our own organizational DNA. These AI agents will be tuned to detect, decide and deploy based upon solutions tailored to our own organizations responding to such surprises. Mastery of these AI agents may unlock solutions to more nimbly respond to the next crisis!
💡 In business, the greatest strength against Black Swans is likely not a fortress mentality but an adaptive mindset rooted in first principles thinking. The businesses that survive are those that embrace agility, experiment fearlessly, and iterate their way through uncertainty. The unknown can’t be predicted—but it can be outpaced. You cannot foresee every one of these dragons lurking around the next corner, but you can face and overcome those unexpected ones with flexibility and an adaptive mindset.
© 2025. The Savvy Startup Advisor, LLC. All rights reserved.
About the Author: Kevin R. Davis is a 2x General Counsel who offers business stakeholders strategic guidance aimed at optimizing their operations, including implementing lean legal systems, improving risk management processes, undertaking business transformations, fundraising, engaging in strategic planning and handling exits. Kevin publishes a weekly newsletter, The Savvy Startup Advisor™, which provides guidance for startup success. Earlier in his career, Kevin worked as a corporate attorney with Kirkland & Ellis, LLP and as a legal executive of Publicis Groupe. Kevin is a graduate of Northwestern University School of Law and Northwestern University.
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Nothing contained in this article should be construed as legal or investment advice. This article does not create an attorney-client relationship between any reader and its author. Neither the author nor the publisher is responsible for updating this publication to consider any changes in applicable laws. Nothing in this article is based upon the author or publisher’s experience with any specific individual or organization; any resemblance to actual persons, places, or events is purely coincidental. If legal advice or other professional assistance is required, the services of a competent professional should be sought.
References
FN1 / Taleb, N. N. (2007). The Black Swan: The Impact of the Highly Improbable. Random House.
FN 2, 3, 4, 5 and 6 / Grove, A. S. (1999). Only the paranoid survive: How to exploit the crisis points that challenge every company. Crown Business.
FN 7 / Bezos, J. (2017, April 12). 2016 Letter to Shareholders. Amazon.com. Retrieved from https://www.aboutamazon.com/news/company-news/2016-letter-to-shareholders.
FN 8/ Isaacson, W. (2011). Steve Jobs. New York, NY: Simon & Schuster.
FN 9/ Blodget, H. (2012, September 12). ATTENTION FACEBOOK INVESTORS: Mark Zuckerberg Just Said Several Important Things… Business Insider.
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