The long tail is the colloquial name for a long-known feature of statistical distributions (Zipf, Power laws, Pareto distributions and/or general Lévy distributions). The feature is also known as heavy tails, power-law tails, or Pareto tails. Such distributions resemble the accompanying graph.

In these distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually "tails off." In many cases the infrequent or low-amplitude events—the long tail, represented here by the yellow portion of the graph—can cumulatively outnumber or outweigh the initial portion of the graph, such that in aggregate they comprise the majority.


I have been pondering about the possibility of an upstart services company with a new business model. As part of my analysis I have been looking into the financial statements and annual reports of companies and this is what I found from the annual report of one such company.

-The bulk of the clients are between $1 million and $ 5 million  but they contribute to less than 6% of the revenue.
-72% of the revenue comes from 28% of the clients and these are not small clients (> $10M).
-Truly large clients are not many.


Note: The data used for analysis has undergone some approximation.