How to Play in Someone Else’s Band

Posted on by David Wright

the principle rule to remember: your number one job above all else is to make the leader sound good, look good and feel good. {read that again. we will come back to it over and over. we will refer to this as the rule.}

ask yourself, “okay..self….who is The Dude here?” most likely, it is not you. {depending on the size of the band, the odds are one in four, or five.}
who is the dude? who is the person that comes up with the ideas, signs the checks, negotiates the deals, writes the music, does the interviews, provides the credit for all the travel arrangements, keeps the books, collects the receipts, pays the taxes, mails the checks out, has likely spent years starving and building his scene before you ever got there, and as well takes the heat if things go in the crapper? that’s probably the dude. identify him or her and make sure they are happy. if they are happy, things stand a chance of going great. if they are pissed off or depressed, you are screwed. {you may be operating under a band name, but that doesn’t mean that there isn’t a dude. and just because the dude is mellow and easy going, or a zillionaire, that doesn’t mean the rule isn’t in place.}
if you want to participate in making some art, get along with other musicians, get other jobs, make some bread, travel with some like minded souls, learn something, contribute in the lifting up of the battered human spirit, and otherwise maximize your opportunity, figure out who the dude {or dudette} is, and apply the rule. it’s pretty simple.

More here. Outstanding piece.

Sales Is For Everyone

Posted on by David Wright

Consider this joke:

“Martinis are like women’s breasts, one is not enough and three are too many.”

Let’s assume you found this joke funny. Now I’ll give you a task: you must tell this joke to three people: your best friend, your grandmother and a 6-year-old child.

I bet you your reaction to this task is surprise. Maybe your grandmother would think the joke hilarious or maybe incredibly rude. Maybe your friend is a woman who has had a mastectomy and would be really uncomfortable, etc, etc.

In most circumstances you’d choose who to deliver this joke to. But if you HAD to deliver it to all, you’d probably deliver it differently to each (“I know this joke isn’t funny, but just bear with me, this blog told me to do it”). If you understand those two points, you understand sales.

The key skill of a salesperson is identifying exactly how to deliver a message to an audience. And even the best salesperson in the world may not tell that joke to your grandmother as well as you could. That’s because he/she wouldn’t know her as well as you.

The greatest asset a salesperson has is *knowing the market*. Not the gift of the gab, not high intellect and not anything else. If you understand the people you are delivering your message to you can sell.

And understanding people is the most fundamental quality of human intelligence.

Disruption Defined

Posted on by David Wright

In order to overcome the massive inertia associated with a dominant platform technology, two conditions must exist. First, there must be new, overwhelmingly important functionality that the old platform cannot support in a reasonable way. Second, the new platform must be able to coexist and interoperate with the old.

That’s Ben Horowitz.

Violence in America

Posted on by David Wright

I saw this interesting chart suggesting violence in the US is on the decline (original image here):

This is via Krugman who doesn’t hesitate to grind his political ax a bit:

And that’s one reason I find all these laments about declining values among non-elite Americans hard to take seriously. If things like single parenthood were as bad as they say, how can social pathologies have declined so much?

Ugh, I say, politics and sociology. What a mess!

So I thought I’d like to tickle a bias of mine with the graph, too. Notice that the trend is the same in all OECD countries? They’re dwarfed by the scale of the US data. Oh, the statistical tricks we can play!

For a quick and dirty analysis, let’s just see what the demographics of the era have looked like (source):

You’ll see that society is aging pretty remarkably since the 70s. Common to almost all OECD countries.

Angry youngsters killing each other!

Business Acumen Didn’t Help The Missing Link

Posted on by David Wright

First caveat, this research was all done before the dawn of the reproducibility movement, so take all of this with a grain of salt. Some day hopefully all discussion of science requires considering this. Anyway, onto the show.

There seems to be this common finding in psychology literature: people make accurate snap judgments about certain social qualities of others.

The term thin slice comes from a frequently cited article by Nalini Ambady and Robert Rosenthal, in which subjects evaluated thirty-second silent video clips of instructors teaching a class.’ Subsequent analysis found that these brief evaluations predicted the instructors’ end-of-semester student ratings. Their work built on earlier research that found a similar predictive power in job interviews,’ where the first impressions were critical for the eventual hiring decision.

You know, trust your gut and all that. Here’s some more of the same theme:

Judgments made after a 100-ms exposure correlated highly with judgments made in the absence of time constraints, suggesting that this exposure time was sufficient for participants to form an impression.

Great. So here’s my question: why the hell is it so hard to figure out whether a job candidate will be any good? Consider the findings of employment-related thin-slice research: it can predict whether the person is hired or not. It cannot predict if the person will be any good on the job. Here’s a quote from this paper:

DeGroot and Motowidlo (1999) found that actual performance ratings of managers in a news-publishing company were associated with naive raters’ judgments. Ratings of 10-second clips of interviews of 22 managers on liking, trust, competence, dominance, persuasiveness, influence and willingness to help the manager, when combined into a composite, were significantly positively correlated with job performance ratings by their supervisors.

In contrast, a study on the vocal characteristics of direct salespeople found a relation between certain microtraits and actual sales performance, but no relation between thin-slice trait judgments and actual sales performance (Peterson, Cannito & Brown, 1995). Twenty-one direct salespeople gave audiotaped, scripted sales-pitch introductions, which were five sentences and 64 words long. Speaking rate, average pause duration, loudness, variability and fundamental frequency (the vibration rate of the vocal folds in the throat) were measured and a sample of housewives who were representative of the target audience, rated the salespeople on questions related to the salespeople’s personality characteristics and rated their own receptivity toward the salespeople. The housewives were able to detect difference in speaking rates, but this was not related to differences in their perceptions of the salespeople. In addition, the housewives judgments of attitude and receptivity were not correlated with sales performance.

What can we learn from all this? Why don’t we have a basic intuition for business ability? It seems that business skills are simply not something that mattered in the evolutionary crucible. Idle speculation here but maybe things like social status and dominance are good things to snap judge because they help avoid costly conflict.

Business, though? Cro-Mangon man says: “Meh”.

Psychology Fights BS

Posted on by David Wright

I like the idea of psychology because it lets me anchor intuition about others in something more concrete. Perhaps unsurprisingly for a field so deeply susceptible to BS, psychology research is currently at the forefront of the reproducibility movement. Consider Ed Yong’s reporting work:

“Some people are concerned that this will damage psychology as a whole and the public will perceive an epidemic of fraud,” says Simonsohn. “I think that’s unfounded.” He notes that retractions are common in many fields, and cites the case of anaesthesiologist Yoshitaka Fujii, who was recently found to have fabricated data in at least 172 papers.

“We in psychology are actually trying to fix things,” he says. “It would be ironic if that led to the perception that we are less credible than other sciences are. My hope is that five years from now, other sciences will look to psychology as an example of proper reporting of scientific research.”

It’s important to realize that much of scientific research is BS. At least psychology, unlike economics, has real experiments to reproduce!

The Singularity Is Here

Posted on by David Wright

Singularity is a tongue-in-cheek, of course. Read this if you’re unfamiliar with the idea.

Ok now start here with Thiel vs Schmidt. I’ll just blockquote Alex Tabarrok with the meat of the debate and the deathblow from Thiel:

PETER THIEL: …Google is a great company.  It has 30,000 people, or 20,000, whatever the number is.  They have pretty safe jobs.  On the other hand, Google also has 30, 40, 50 billion in cash.  It has no idea how to invest that money in technology effectively.  So, it prefers getting zero percent interest from Mr. Bernanke, effectively the cash sort of gets burned away over time through inflation, because there are no ideas that Google has how to spend money.ERIC SCHMIDT: [talks about globalization]

The moderator repeats Thiel’s point:

ADAM LASHINSKY:  You have $50 billion at Google, why don’t you spend it on doing more in tech, or are you out of ideas?  And I think Google does more than most companies.  You’re trying to do things with self-driving cars and supposedly with asteroid mining, although maybe that’s just part of the propaganda ministry.  And you’re doing more than Microsoft, or Apple, or a lot of these other companies.  Amazon is the only one, in my mind, of the big tech companies that’s actually reinvesting all its money, that has enough of a vision of the future that they’re actually able to reinvest all their profits.

ERIC SCHMIDT:  They make less profit than Google does.

PETER THIEL:  But, if we’re living in an accelerating technological world, and you have zero percent interest rates in the background, you should be able to invest all of your money in things that will return it many times over, and the fact that you’re out of ideas, maybe it’s a political problem, the government has outlawed things.  But, it still is a problem.

ADAM LASHINSKY:  I’m going to go to the audience very soon, but I want you to have the opportunity to address your quality of investments, Eric.

ERIC SCHMIDT:  I think I’ll just let his statement stand.

ADAM LASHINSKY:  You don’t want to address the cash horde that your company does not have the creativity to spend, to invest?

ERIC SCHMIDT:  What you discover in running these companies is that there are limits that are not cash.  There are limits of recruiting, limits of real estate, regulatory limits as Peter points out.  There are many, many such limits.  And anything that we can do to reduce those limits is a good idea.

PETER THIEL:  But, then the intellectually honest thing to do would be to say that Google is no longer a technology company, that it’s basically ‑‑ it’s a search engine.  The search technology was developed a decade ago.  It’s a bet that there will be no one else who will come up with a better search technology.  So, you invest in Google, because you’re betting against technological innovation in search.  And it’s like a bank that generates enormous cash flows every year, but you can’t issue a dividend, because the day you take that $30 billion and send it back to people you’re admitting that you’re no longer a technology company.  That’s why Microsoft can’t return its money.  That’s why all these companies are building up hordes of cash, because they don’t know what to do with it, but they don’t want to admit they’re no longer tech companies.

ADAM LASHINSKY:  Briefly, and then we’re going to go to the audience.

ERIC SCHMIDT:  So, the brief rebuttal is, Chrome is now the number one browser in the world.

And now for Bryan Caplan:

Schmidt is pretty clearly stumped. Here’s what I would have said if I were in his shoes:

The reason we’re not investing more in new technology isn’t that we’re out of ideas. It’s that we’re out of ideas that we think will make money. Why are we out of ideas that make money? Because millions of people keep giving away incredible innovations to everyone for free!

Challenge for the audience: Think of something you want. Now use Google to locate whoever’s already providing it for free. I could do this all day.

Google’s “problem,” in short, is what I call consumption-biased technological change:

Sure, high-skilled workers’ incomes have risen a lot faster than other people’s over the last forty years. But iPods, Google, Twitter, and much of the Internet demand virtually zero workers of any skill level. From this perspective, “skill-biased technological change” is a major misnomer. A much more accurate description is consumption-biased technological change. Firms are figuring out ways for small numbers of workers to create tons of value – then give it away to consumers for pennies or less. And as far as I can tell, the CPI totally ignores these benefits.

CPI bias: Now worse than ever. Quality of life: Now better than ever.

Lightning

Posted on by David Wright

I find it weird that we don’t know what causes lightning.

There are two hypotheses noted by Wikipedia:

Cloud particle collision hypothesis

According to this cloud particle charging hypothesis, charges are separated when ice crystals rebound off graupel. Charge separation appears to require strong updrafts which carry water droplets upward,supercooling them to between -10 and -40 °C (14 and -40 °F). These water droplets collide with ice crystals to form a soft ice-water mixture called graupel. Collisions between ice crystals and graupel pellets usually results in positive charge being transferred to the ice crystals, and negative charge to the graupel.[14]

Updrafts drive the less heavy ice crystals upwards, causing the cloud top to accumulate increasing positive charge.Gravity causes the heavier negatively charged graupel to fall toward the middle and lower portions of the cloud, building up an increasing negative charge. Charge separation and accumulation continue until the electrical potential becomes sufficient to initiate a lightning discharge, which occurs when the distribution of positive and negative charges forms a sufficiently strong electric field.[14]

Polarization mechanism hypothesis

The mechanism by which charge separation happens is still the subject of research. Another hypothesis is the polarization mechanism, which has two components:[34]

  1. Falling droplets of ice and rain become electrically polarized as they fall through the earth’s magnetic field;
  2. Colliding/rebounding cloud particles become oppositely charged.

There are several hypotheses for the origin of charge separation.[35][36][37]

Here’s a cool video of lightning captured at 7,207 images per second. Light travels at something like 300,000,000 meters per second so it doesn’t break down the ‘big flash’, but it shows a lot.

Here’s another quote:

How does lightning form? Evidently we’re still trying to figure it out! It all starts in the clouds where both ice crystals and hail stones form:

Scientists believe that as these hail stones fall back through the rising ice crystals, millions of tiny collisions occur. These collisions build up an electric charge which is stored in the cloud like a battery. ”A cloud is very much like a battery, but a battery with a much higher voltage than your typical flashlight battery… not 1.5 volts but 100 million volts.”

But what scientists don’t know is exactly how this electric charge generates lightning. “What remains a major meteorological mystery is how it is that ice particle collisions result in the generation of lightning. We’re very much in the middle ages on that problem.”

From the Discovery Channel’s “Raging Planet” series.

From the Front Lines of Finance

Posted on by David Wright

In a post titled: would you give his small business a loan?

Once we dug deeper, however, we learned some things about the borrower that created problems. First of all, she was on payment plans with three government entities. This immediately knocked her out of the running for an S.B.A. loan — you have to be current on all of your taxes before you can benefit from an S.B.A. guarantee. We can sometimes solve this situation by paying off the back taxes with a six- or 12-month merchant cash advance loan before the borrower gets the S.B.A. loan. But in this case the back taxes were too large, more than she could borrow on this kind of loan.

The hairdresser’s second problem was that she had called her mortgage company a few months earlier and explained that she was having a tough time. She asked the company if she could make interest-only payments for a while. This was an honorable thing to do, but it is likely to give any potential new lender pause. And that was now an issue.

The hairdresser did have some options. For example, she might qualify for a “hard money” real estate loan — a bridge loan in which the lender takes five points upfront and then charges 12 to 14 percent interest for one year until the borrower can refinance through a more traditional source. While this might be her most appealing option, it would come with significant risk — the interest payments alone could destroy her business. As an alternative, she could sell the building, pay off the current note holder, and take the cash. If she took this approach, she would lose the tax advantages of owning her property, but at least she could focus on running her shop and generating cash flow.

Now consider the context of the Great Recession. If your bank is sitting on a stack of non-performing loans it simply cannot afford any more losses lest it need to realize the writedowns of its mortgage book.

Now imagine that because this hairdresser can’t get a loan her business closes. Those people are out of work. And now her suppliers are worse off. A bit a negative feedback loop develops and NGDP expectations are revised downward. Back to the banks and their new nancy-boy risk appetite who pull back even harder on the brake. And on it goes.

That’s a way a financial crisis might contribute to an overall economic downturn.

But remember that in order for a complex system to fail, many many underlying failures are necessary. This is not THE cause of the Great Recession, but it is A cause.

Patents Roundup

Posted on by David Wright

Here’s Posner, here’s the ruling on Samsung. Don’t even get me started on genetic patenting. That’s outrageous. I’m outraged.

There’s some great stuff by Posner:

There are a variety of measures that could be taken to alleviate the problems I’ve described. They include: reducing the patent term for inventors in industries that do not have the peculiar characteristics of pharmaceuticals that I described; instituting a system of compulsory licensing of patented inventions; eliminating court trials including jury trials in patent cases by expanding the authority and procedures of the Patent and Trademark Office to make it the trier of patent cases, subject to limited appellate review in the courts; forbidding patent trolling by requiring the patentee to produce the patented invention within a specified period, or lose the patent; and (what is beginning) provide special training for federal judges who volunteer to preside over patent litigation.

Patents are abused, notably by Apple, but don’t hate the player, hate the game. It’s silly that judges are the ones driving change.

Incidentally, though, it’s interesting that judges ARE a channel for real regulatory / legal change. I was really surprised at how Russ Roberts and Stiglitz mostly agreed with each other in this podcast, except that Stiglitz is optimistic of our ability to change society through the government and Roberts isn’t.

Will someone sue the Federal Reserve in court claiming that they aren’t fulfilling their dual mandate? Is that even possible?