L.P. Jacks —
A master in the art of living draws no sharp distinction between his work and his play; his labor and his leisure; his mind and his body; his education and his recreation. He hardly knows which is which. He simply pursues his vision of excellence through whatever he is doing, and leaves others to determine whether he is working or playing. To himself, he always appears to be doing both.
Seth Godin reminds us today that the critical mass of users depends on the idea.
For a site directed at consumers whose tastes pass quickly, critical mass may be millions of users; for a site directed at professionals who are herd-like, critical mass may be in the single digits of the right people. Seth says:
In the idea business, critical mass is the minimum size of the excited audience that leads to a wildfire. People start embracing your idea because, “everyone else is…”
For every idea that spreads, it turns out that the critical mass is different. For example, if I want to start a yo-yo craze at the local elementary school, critical mass might be as small as a dozen of the right kids yo-yo-ing during lunch. In an environment that small and tightly knit, it’s sufficient.
On the other hand, the critical mass for a better word processor is in the gazillions, because the current standard is so deeply entrenched and the addressable market is both huge and loosely knit. The chances that you will launch a new word processor that catches on because everyone else is using it are small indeed.
Creating that reaction also requires smarts from the entrepreneur. Godin says, reminiscent of Paul Graham’s “building something a small number of people want a large amount”:
If your idea isn’t spreading, one reason might be that it’s for too many people. Or it might be because the cohort that appreciates it isn’t tightly connected. When you focus on a smaller, more connected group, it’s far easier to make an impact.
It is amazing/fascinating that so much value in commodity markets is captured by the trader intermediary. From the FT recently:
Critically, the documents reveal profit growth more redolent of the explosive development of Silicon Valley start-ups than the centuries-old business of trading. The world’s top 20 independent commodities traders posted a record net profit of $36.5bn in 2008, soaring about 1,600 per cent from $2.1bn in 2000. Over the past decade those 20 trading houses posted profits of $250bn – more than the world’s top five carmakers combined….
All this has been built on revenues that have reached extraordinary highs. Sales from 10 of the world’s largest independent commodities trading houses – Vitol, Glencore, Trafigura, Cargill, Mitsubishi, ADM, Noble, Wilmar, Louis Dreyfus and Mitsui – last year hit $1.2tn, roughly equivalent to the gross domestic product of Spain or South Korea. Vitol alone had revenues last year of $303bn, slightly less than the GDP of Denmark….
Competitors are also daunted by the companies’ extensive intelligence networks. The traders monitor supply and demand worldwide – data that they then use for arbitrage trading. At its most basic level, they deploy people to count cocoa stocks in Ivory Coast or set up cameras to film coal stocks at Japanese power stations – all to determine the inventory fluctuations and price discrepancies through which they make their millions.
An even more controversial advantage for the trading houses, which now sets them apart from the big banks, is that they are largely unregulated. This too is causing consternation, particularly as the houses step into a funding void vacated by western banks. The government of Switzerland, the main hub of the trading titans, recently acknowledged the challenge in unusually candid language for an official report: “Physical commodities traders are, in principle, not subject to any oversight.”
Forbes reports on the accelerating trend of using programming contests to smoke out the best talent even when it is not looking for a job:
A few years ago such out-of-the-way stars were invisible to U.S. recruiters. Today it’s much easier to spot them. Thanks to a flurry of online programming contests that attract entrants worldwide, it’s possible to identify coders who do Caltech-quality work, even if they live halfway around the world and earned their degrees at Ural State University…
InterviewStreet was the ticket out of Siberia for Yakunin, the programmer from Ekaterinburg. He wowed the hiring engineers at Quora, a knowledge-sharing website in Mountain View, Calif., by being the only person out of more than 700 respondents to win a perfect score on a CodeSprint challenge it sponsored. Often the best coders aren’t eager to apply for a job. They just want to prove their mettle against all comers. Mindful of this dynamic, InterviewStreet moved the bulk of its contests to a website called HackerRank, where most entrants log in with pseudonymous user names. Job hunters authorize the site to reveal their real names to potential employers.
Crowdsourcing is competing against central law enforcement. Compare pictures here with delayed press conferences by law enforcement in releasing pictures of the suspects.
Another of what is becoming periodic posts with wisdom from Taleb’s Antifragile:
This one involves seeing opportunity: being a turkey in reverse:
“A turkey is fed for a thousand days by a butcher; every day confirms to its staff of analysts that butchers love turkeys “with increased statistical confidence.” The butcher will keep feeding the turkey until a few days before Thanksgiving. Then comes that day when it is really not a very good idea to be a turkey. So with the butcher surprising it, the turkey will have a revision of belief — right when its confidence in the statement that the butcher loves turkeys is maximal and “it is very quiet” and soothingly predictable in the life of the turkey. This example builds on an adaptation of a metaphor by Bertrand Russell. The key here is that such a surprise will be a Black Swan event; but just for the turkey, not for the butcher.
“We can also see from the turkey story the mother of all harmful mistakes: mistaking absence of evidence (of harm) for evidence of absence, a mistake that we will see tends to prevail in intellectual circles and one that is grounded in the social sciences.
“So our mission in life becomes simply “how not to be a turkey,” or, if possible, how to be a turkey in reverse — antifragile, that is. “Not being a turkey” starts with figuring out the difference between true and manufactured stability.”
Being a turkey in reverse is about seeing beyond stability in life and markets, stability that is usually manufactured, but that has terror and disorder lurking right under the surface. That’s where the opportunity might be.
Yep – the Chinese have one.
They have already demonstrated this by cutting off the Internet for ten months or so to the Muslim Uighur region of Xinjiang. The Economist explains how the central government has the capability to do this for the entire country, and how it would go about doing so:
The Great Firewall could easily block the foreign internet for most users in China; an unexplained glitch actually made this happen by accident one day last year for a couple of hours. Some large enterprises, banks and foreign companies have leased their own lines out of China, which might need to be shut down separately. As for the domestic internet, which would be of most concern to the party, shutting down the country’s home-based internet service providers, and with them access to microblogs, video sites, bulletin boards and the rest, should be within its capabilities.
While data is a game-changer, it’s also important to remember that half-assed data tools are not better than no data tools. A good example are the horrible software algorithms used to sort through resumes over the last decade:
Algorithms and big data are powerful tools. Wisely used, they can help match the right people with the right jobs. But they must be designed and used by humans, so they can go horribly wrong. Peter Cappelli of the University of Pennsylvania’s Wharton School of Business recalls a case where the software rejected every one of many good applicants for a job because the firm in question had specified that they must have held a particular job title—one that existed at no other company.
Competition works.
Here is a great example. In response to the spread of retail health clinics (Walgreens/CVS) and urgent care centers which provide basic services, the American Academy of Family Physicians is advising their doctors to expand their hours to see patients on weeknights and weekends.
Our pedetrician takes our cell phone calls. Just around the corner is seeing us via FaceTime. If not, someone else is going to come and do it.
Jeff Bezos’s latest shareholder letter — a guide to proactively disrupting yourself:
One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader...
I can keep going – Kindle Fire’s FreeTime, our customer service Andon Cord, Amazon MP3’s AutoRip – but will finish up with a very clear example of internally driven motivation: Amazon Web Services. In 2012, AWS announced 159 new features and services. We’ve reduced AWS prices 27 times since launching 7 years ago, added enterprise service support enhancements, and created innovative tools to help customers be more efficient. AWS Trusted Advisor monitors customer configurations, compares them to known best practices, and then notifies customers where opportunities exist to improve performance, enhance security, or save money. Yes, we are actively telling customers they’re paying us more than they need to. In the last 90 days, customers have saved millions of dollars through Trusted Advisor, and the service is only getting started. All of this progress comes in the context of AWS being the widely recognized leader in its area – a situation where you might worry that external motivation could fail. On the other hand, internal motivation – the drive to get the customer to say “Wow” – keeps the pace of innovation fast…
As proud as I am of our progress and our inventions, I know that we will make mistakes along the way – some will be self-inflicted, some will be served up by smart and hard-working competitors. Our passion for pioneering will drive us to explore narrow passages, and, unavoidably, many will turn out to be blind alleys. But – with a bit of good fortune – there will also be a few that open up into broad avenues.
takingpitches 