The most powerful symbol in my life:
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(1)
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The (1) calls seductively from the taskbar. Such promise. Such mystery. It must be revealed. Without hesitation. Stop what you are doing immediately. Find out what lies behind the (1)?
(How does one kick a gmail addiction?)
Technological progress evokes images of log-scale charts shooting up into infinity. Your smartphone is roughly 100 million times more powerful than those room-sized computers of the 50s. These guys can sequence your genome for $5k. The first genome cost, completed 5 years ago, cost $2.7 billion!
It is also worth noting there are plenty of areas that have seen little real (net) progress in the last 50 years.
– Air travel: Average flight times between cities have been increasing over the past few decades.*
– Road travel: No faster than it was 50 years ago. This is clearly due to population pressure but has not been offset in any meaningful way by technology. Speed limits still 60MPH on open highway.
– Restaurants and bars: Haven’t materially changed the way they operate since the invention of fast food.
– Homes: Aside from the wiring that runs throughout and perhaps the materials used, does a home look or function substantially differently? Are homes as good as they will ever get? I doubt it.
Why is this? Smells like opportunity to me.
* Thanks ZKD.
Market failure makes me sad. Surplus stolen. Transaction thwarted. As Pareto would say: “Inefficient!”
There are few more persistent market failures I can think of in my daily life than social interaction. I like meeting new people. You like meeting new people. But…. put us in the same room and chances are we won’t meet.
Why not?
Say we are at a party standing on opposite sides of the room. There are three reasons we WON’T talk to each other. Let’s call these the “Three Why Nots“:
Why Not 1) Randomness: Do I want to meet this person? Is this person actually worth my effort?
Why Not 2) Uncertain intention: Does that person want to meet me / anyone?
Why Not 3) Initiative: One of us has to “make a move”
In economics language the first two “Why Nots” are instances of information asymmetry: Each party not knowing exactly what the other is offering and what the other is seeking. The third Why Not is an example of a transaction cost: The “transaction” of us meeting incurs a cost of one of us having to introduce ourselves, which causes discomfort.
Transaction costs and information asymmetries are well-established culprits in causing market failures. But fortunately, economists have devised a few ways to overcome these barriers. I have become increasingly interested in using social engineering and the economic principles of “signaling” and “screening” to devise ways to vanquish the Three Why Nots. Here’s one example (also see Building a Better Bar).
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“Mystery Guest” Events: Using signaling to overcome informational asymmetries and reduce transaction costs. I will describe two below.
(Like most edgy / genius ideas, this one came from Julia N.)
The Mystery Guest Dinner went like this: Julia, a third friend and I (the Hosts) each invited one friend that the others do not know (the Mystery Guests). The six people have a meal out. Each person either meets 2 or 4 new people that night.
The Mystery Guest Mixer went like this: Julia and I each asked 5 -7 of our friends that the other did not know (the Agents) to invite 2-3 of their friends (the Mystery Guests) to a wine cocktail party in my apartment. The result is a room full of people who know at most 4 other people (hosts excluded), but everyone knows at least one.
The elements shared by each event are a) no one knows anyone, b) everyone KNOWS that everyone wants to meet people, and c) each guest is hand-picked.
Let’s look at how these events help weaken the “Three Why Nots”
“Uncertain Intention” is easily overcome by d). Everyone in the room is there with the same intention and, just as importantly, everyone is aware of that fact. Compare this to a bar where a fraction of people are there to meet others and it is difficult to identity who is and who isn’t.
“Randomness” is also somewhat blunted by the invite-only premise of the event (c). You are maximum 4 degrees of separation from anyone in the room. And there is a strong social incentive to bring fun / cool / interesting / compatible Mystery Guests. Chances are good the Mystery Guests are worth your time.
“Initiative” is forced by a).There is no one to sit in the corner with! You have no choice but to talk to others. And it’s easier to meet others when everyone else is doing the same.
Overall, the events were a success. Everyone enjoyed themselves and I would guess most still have contact with at least one person they met that night. Compare that to your last night out in the Meatpacking.
Reader, I ask two things of you. Comment / email me more ideas to outmaneuver the “Three Why Nots.” And also email me if you want in on the next Mystery Guest event.
1) I’m thinking about trading in my wardrobe for a set of custom-made commemorative t-shirts. Each would have an event and date written on the front (i.e. “Invisible Hand in Your Pants Launch”) and a commemorative quote on the back: (i.e. “The world is now grooved“). Every day wear a different shirt, fondly remember an event in your life, and start a conversion about it with someone. Then send your regrets to Banana Republic.
2) People do a really bad job retaining information and ideas. I craft brilliant speeches in the shower and have forgotten them by the time my pants are on. For every 10 interesting articles I read, I remember fewer than 2 a week later. Three ideas to better retain and capture information: 1) Keep a running list of ideas or interesting stuff on your computer and sync it to a Google Doc in the cloud. The act of writing it down and an occasional scan is enough to keep it in your mind 2) Get voice note software on your mobile device to record those fleeting ideas as they come 3) If you must be old school, carry one of those reporters notebooks around everywhere.
3) What would you do if you had 2 months off from work (voluntary or otherwise)? If you can’t answer that question you need to take a day off and do some self-reflection.
4) Not to get all Tyler Cowen on you, but here’s a sentence to ponder:
Given that human beings are invariably diverse and that the knowledge at thier disposal is invariably limited, it would seem to follow that even societies in which unsophisticated people obey rudimentary rules will produce surprises and discontinuities — events that cannot be foreseen either through intuition or through the more conventional sorts of social science.
It’s from a thoroughly rewarding article that Catherine sent along here. The most famous example is the Schelling Model that predicts that even non-racists will still form segregated neighborhoods.
5) “Heisenberg was here… maybe” is the best piece of bathroom graffiti I’ve seen this month.
6) The fact that Chicago mantains a large human population in spite of the weather is a giant testament to how great the city is. San Diego would be abandoned within a month it were in the plains.
I’ll go out on a limb and say that common sense should have steered the (reputable) likes of Citi, AIG and Merrill down a different path of less exposure to defaulting assets. Same for Standard and Poor’s, Moody’s, and Fitch, whose ratings models declared packaged tranches of toxic sub-prime mortgages to be practically risk free. To understand what a tremendous gaff this was, consider that Standard and Poor’s default models didn’t have parameters to model declining house prices. They modeled scenarios of only flat or increasing prices, which is idiotic for a risk model. Wall Street isn’t stupid, but they were socialized to make stupid assessments of default risk for sub-prime mortgages.
The first conclusion is TRUST NO ONE. Or at least trust very selectively. Given the dangers of herd behavior, the premium on independent thinking seems drastically higher today than it did six months ago. In fact, showing a track record for independent thinking may be a way to become “trusted selectively.”
The second conclusion is a question: what comes next? The public ownership structure that dominates our economy depends on trust: trust between big corporations, owners of those corporations, and the investment bankers that often broker the relationships between the two. But what happens (besides the market crash) when that trust evaporates?
I predict a stronger role for private capital. One manifestation of this role may be smaller privately held companies. Another possibility is the rise of enormous funds of the likes of Berkshire Hathaway that will either buy companies outright or control large chunks of them and steer management. The managers of these funds will be people to be “trusted selectively” (e.g. Buffet).
This is not the end of public ownership. But it is a strong blow. Are there other ways that private capital can sneak in play a stronger role?
… of the auto industry, how about a $25 billion Treasury-managed automotive venture fund?
The new ventures would claw back some of the jobs that Detroit is shedding. And it would position the US as the center of 21st century automotive technology and innovation.
And, hey, if GM/Ford are indeed the best recipients of capital for innovation (especially green innovation), as some of the bailout supporters claim, they would still win the funds. But they are probably not, of course.
Seth Godin agrees, I think.
Just spent a day doing college interviews, which is consistently enjoyable in aggregate if not always for each particular interviewee.
I am the interviewer that the good candidates love and the bad candidates hate. I revel in asking the tough questions far from a candidate’s comfort zones and seeing them squirm — forcing them to engage their own minds in something they’ve never thought about. That’s where you learn who’s a thinker and who’s just well rehearsed. Those who play ball and lean closer when answering are the ones you want to admit and will become dining hall and seminar all-stars. Those who are uncomfortable and tense up get the red stamp of disapproval. One question from today that helped draw that line was:
What is the single worst thing about our world?
And then when they think they are in the clear:
Why?
I was sitting on my high throne of interviewer invincibility when a particularly sassy girl fired back at me: “How about you? Can you answer that?”
…
Oh shit
..
“I ask the questions here, Lady,” I respond half-jokingly.
But she pressed on and I was forced to run my own gauntlet. My answer was a jumbled mess. A surefire ding if I was in her shoes
Consider this post my mulligan.
My answer to the first question is simple: Global poverty. The “why” is what I want to comment on here.
The common answer is because poverty causes suffering – and that’s certainly a good one and plenty sufficient to take action. My real reason is a tad more selfish.
(With few exceptions) the extreme poor don’t contribute. I’m not talking about the poor in the US. I’m talking extreme poverty, primarily subsistence farming in rural areas.
They don’t invent. They don’t govern. They don’t write books. They don’t produce art. They don’t innovate in a way that matters for the rest of us. They don’t make the wider world a better place. They may have talent – but it’s wasted and ground down in the fight for subsistence. This is the real tragedy. Wasted human potential down the drain, and with it, a better world that could have been.
This is the topic of one of my favorite poems – Thomas Gray’s “Elegy Written on a Country Churchyard.” Standing over the buried dead in a poor rural graveyard, Gray laments and marvels at the wasted potential. The following stanzas in particular drive straight to the point:
Let not Ambition mock their useful toil,
Their homely joys, and destiny obscure;
Nor Grandeur hear with a disdainful smile
The short and simple annals of the Poor.
….
Perhaps in this neglected spot is laid
Some heart once pregnant with celestial fire;
Hands, that the rod of empire might have sway’d,
Or waked to ecstasy the living lyre:
But Knowledge to their eyes her ample page,
Rich with the spoils of time, did ne’er unroll;
Chill Penury repress’d their noble rage,
And froze the genial current of the soul.
Full many a gem of purest ray serene
The dark unfathom’d caves of ocean bear:
Full many a flower is born to blush unseen,
And waste its sweetness on the desert air.
Some village-Hampden, that with dauntless breast
The little tyrant of his fields withstood,
Some mute inglorious Milton here may rest,
Some Cromwell, guiltless of his country’s blood.
Less than half the earth’s population is included our globalized world. The rest are isolated, taking nothing from us and also giving nothing back. Bringing them into the fold so that their talents can be put to use while simultaneously improving their lot ….
…that’s The Why.
Google has announced it’s support in the fight against the flu. The premise is that it can use it’s database of user searches for “flu” or “flu symptoms” to predict outbreaks 7-10 days ahead of time, giving public health officials time to react.
However tracking the flu is just one of many valuable applications for Google’s rich databases. In fact Google provides a portal for users to download data on searched keywords through Google Trends. I recommend spending some time at this site. Here are two of many interesting graphs I found:
It’s interesting that Google has released this data, which likely has proprietary value. Rather than forecasting flu outbreaks or enabling my election analysis, Google could forecast consumer trends and trade stocks based on the findings, hoping to profit when the flu hits. Consider Google’s initiative to predict flu outbreaks 7-10 days ahead of time; what if Google kept their data secret and traded drug companies based on the findings. Before you shoot down this investment idea, consider that there are hundreds of similar ideas lurking in the Google data – some are certainly viable as investment theses.
Alternatively, if Google didn’t want to run a hedge fund, they could probably sell their search engine data to those who do. I’m guessing it’s worth a lot of money, even on the scale of their ~$5B in yearly earnings.
So why does Google give up this info for free? It may be because using it for proprietary profit would incite public outcry and contradict Google’s credo of free information. It also may be that Google does plan to use it – they’re just waiting for the right time. They control the terms on which they release the data and could control the most valuable and timely nuggets for themselves.
No matter the case, this is a gray frontier for Google between their fiduciary profit motive and their avowed sense of public good. Sound familiar?
One the greatest source of unrecorded, unorganized yet useful sets of information is the movements and activites in one’s life.
That data dies when you forget it.
I now know I emailed my college dean 4 times in April 2006, withdrew $60 from my checking account 10/12/2005, searched for “MTA map” on Google last Tuesday.
Just like Microsoft indexes my mail, BOFA indexes my bank account and Google indexes my searches, I want someone to index my life. This should be possible with a gps-enabled smartphone.
Does anyone know any efforts in this space? There’s Brightkite — the best of a underutilzied crop of geo-aware social networking iPhone apps. But those are too focused on socialization. I want to know more about myself, what I do, when I do it. I want a life dashboard. I want my personal history to be searchable.
If Google isn’t 2 years down this road already, there’s a big opportunity out there.
Conservative NYT columnist David Brooks has nice analysis about Obama’s debate style:
When Bob Schieffer asked him tough questions during the debate Wednesday night, he would step back and describe the broader situation. When John McCain would hit him with some critique — even about fetuses being left to die on a table — he would smile in amusement at the political game they were playing. At every challenging moment, his instinct was to self-remove and establish an observer’s perspective.
Given all Obama has faced from Clinton and McCain, defensiveness could have poisoned his presidential chances. In response to McCain’s attacking debate style, Obama could have produced anger or indignace, simultaeniously lowering his stature and obscuring his core messages. Instead, detatchment, serenity, and presidential stature.
In business, defensiveness can be similarly toxic. In a recent internal meeting, I was presenting analysis on the size of the restaurant industry. My boss wasn’t convinced. “The numbers look low,” he said. But I had reasons for my numbers. I had analysis. I countered: “it surprises me that you think they are low.”
I responded defensively. All of a sudden, the focus of the conversation shifted from constructively understanding opportunities in the industry to defending my numbers as bulletproof.
There are several correct responses to my boss’s comment. “Why” would have sufficed. If I had stepped back from the situation and suppressed the defensive instinct, I could have steered the conversation in a productive direction.
The bottom line: if Obama can detatch – to his advantage – from the mudslinging and personal attacks, we can rise above the much milder criticism we face on a daily basis. Passion can be useful to inspire, but keeping cool is the right response in 99% of situations.
Words and phrases that will go into hibernation starting Nov 5th and reassert themselves again in 2012
Others?
The World Confederation of Business (WORLDCOB) presents The Bizz Award to leading businesses worldwide for various categories of global business excellence. The award looks sexy and accepting entails “walking down the red carpet” to receive a statue that is uncannily similar to an Oscar. How curious though that…
A friend who runs a medium-sized business in Costa Rica was contacted and offered “nomination” for the Bizz Award. He turned it down because he didn’t know who they were, why they were contacting him, or by what criteria he was nominated. He also guessed that accepting would eventually require paying a big chunk of change and was probably in essence an (ineffectual) publicity stunt more than a legitimate award.
A couple of lessons:
p.s. CFO Magazine named Andy Fastow “CFO of the year” just before the Enron debacle. Fastow is now in prison for stealing from shareholders. This just proves that even legitimate magazines can misttep with awards
The move by the billionaire investor Kirk Kerkorian is a sign of slumping confidence in America’s auto industry.
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The move by the billionaire investor Kirk Kerkorian‘s counterparty is a sign of slumping growing confidence in America’s auto industry.
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… “in theory Capitalism works. In theory.”
What will the economic crisis do to:
1) The age at which we “settle down,” marriage or otherwise? (Jana’s question)
2) The allocation of talent between industries and professions?
3) The rate of innovation, financially or otherwise?
4) Worldwide economic integration?
My initial guesses would be 1) reduce it slightly 2) better align it to the optimal 3) stagnation over the next year, rapid acceleration of the next five 4) further integration as worldwide capital gushes to shore up financial institutions everywhere.
It is not immediately obvious to me that a dislocation and rebuilding of our economic infrastructure is necessarily a bad thing. Although it certainly won’t be pretty in the short term.
The Invisible Hand, in your pants 
