Nassim Taleb Explains How Minorities* Dictate You Purchasing a Lighted Vanity Mirror

Nassim Nicholas Taleb has authored a series of books he labels Incerto, that Amazon tells us is “an investigation of opacity, luck, uncertainty, probability, human error, risk, and decision-making in a world we don’t understand.” The best known work in the series is “The Black Swan,” which teaches that highly improbable things happen frequently. His most recent work is “Antifragile,” which explains how successful systems deal with the random disorder of reality.

A recent essay by Taleb on Medium talks about how a small minority* of just 3 or 4 percent of a greater population can force accommodations by the majority. Taleb uses a broad range of examples — business, cultural, political, religious and culinary — to make the point that if a minority is large enough and intransigent enough in its needs or wants, that what it wants in specific doesn’t really matter to the majority, that minority’s wishes will prevail.

What does this have to do with cars? How many customers really want an illuminated vanity mirror in their sun visor?

Using the examples of kosher or halal food, there are maybe 15 million Jews and Muslims in the United States, less than 5 percent of the total population — and not all Jews keep a kosher diet nor do all Muslims only eat halal.

While I happen to care very much that all of Hershey’s candy products made in Hershey, PA, are kosher, there are hundreds of millions of Americans who don’t care one way or another. The cost of paying for rabbinic supervision and certification that the products are kosher is relatively minimal when amortized over their entire production. However, it wouldn’t make financial sense to produce and inventory two different Zero bars, one certified as kosher and one without the little symbol on the package.

So I get to buy a kosher candy bar, more than 70 percent of the lamb meat imported to the UK from New Zealand is halal, and my son — my only son, Moshe, whom I love — was just able to buy his wife a nice refrigerator that comes with Sabbath mode, even though the vast majority of consumers don’t care about any of those things.

Paul Elio, the founder of startup Elio Motors doesn’t wear makeup so he has no need for a lighted mirror in his car. He knows, however, that about half of his potential customers do wear makeup and he wants to offer a lighted mirror as an option on the Elio trike. To offer that option, or something like a heated seat, it’s cheaper over the long run to make a single version of the wiring harness that has all the connectors needed for potential options than it is to make multiple variants of said harness and make sure you install the correct harness in the correct car. On a multi-thousand dollar purchase, most consumers don’t care if there is two or three hundred dollars worth of infrastructure they don’t know about.

Taleb even brings up the automobile industry. He says:

Another example: do not think that the spread of automatic shifting cars is necessarily due to the majority of drivers initially preferring automatic; it can just be because those who can drive manual shifts can always drive automatic, but the reciprocal is not true

Once you have a critical mass of 3–4 percent, that can be enough to shift a market — or a culture. As it happens, there happened to be huge customer demand for automatic transmissions before they were widely available because way more than 4 percent of the population had trouble shifting a manual transmission — including the guy who ran GM, Alfred Sloan. Taleb’s point perhaps unintentionally ignores the fact that “the majority of drivers” wasn’t the same as “the majority of consumers.” Before automatics, by definition, 100 percent of drivers could shift a manual. However, the quick acceptance of the automatic (I’ll have to check Aaron Severson’s Ate Up With Motor, but I think Oldsmobile had a 92-percent take rate a year or two after their its Hydramatic was introduced) and today’s almost complete dominance of automatic transmissions supports Taleb’s point. Driving an automatic inconveniences no stick shift enthusiast, at least from a practical standpoint.

Since the majority of drivers today cannot drive a stick shift, manual transmission fans may exceed 4 percent of the driving population, but since what they like does affect other drivers, they don’t have the leverage that Taleb’s intransigent minorities have, so the manual transmission is likely going away. Stick shift enthusiasts are on the wrong side of Taleb’s theory: what they want or need indeed impacts the general population and companies have to manufacture and inventory variants that are more expensive than making everything the same. Car companies have many incentives to discontinue manual transmissions.

Taleb’s theory can apply to option packages. Not everyone wants feature A, but enough people do that it’s a factor in some purchases, transactions that would be profitable. Not everyone wants feature B etc. Manufacturing and stocking individual variants is expensive, so if you want navigation, you’re going to have to get a lighted vanity mirror.

* Taleb uses the word “minority” in its original definition, a subset of a larger population, not a politically correct term for racial, ethnic, or religious groups.