Category: fundaes

Hot hands in safaris

We entered Serengeti around 12:30 pm on Saturday, having stopped briefly at the entrance gate to have lunch packed for us by our hotel in Karatu. Around 1 pm, our guide asked us to put the roof up, so we could stand and get a 360 degree view. “This is the cheetah region”, he told us.

For the next hour or so we just kept going round and round. We went off the main path towards some rocks. Some other jeeps had done the same. None of us had any luck.

By 2 pm we had seen nothing. Absolutely nothing. For a place like Serengeti, that takes some talent, given the overall density of animals there. We hadn’t even seen a zebra, or a wildebeest. Maybe a few gazelles (I could never figure out how to tell between Thomson’s and Grant’s through the trip, despite seeing tonnes of both on the trip). “This is not even the level of what we saw in Tarangire yesterday”, we were thinking.

And then things started to happen. First there was a herd of zebras. On Friday we had missed an opportunity to take a video of a zebra crossing the road (literally a “zebra crossing”, get it?). And now we had a whole herd of zebras crossing the road in front of us. This time we didn’t miss the opportunity (though there was no Spice Telecom).

Zebra crossing in Serengeti

And then we saw a herd of buffaloes. And then a bunch of hippos in a pool. We asked our guide to take us closer to them, and he said “oh don’t worry about hippos. Tomorrow I’ll take you to a hippo pool with over a fifty hippos”. And sped off in the opposite direction. There was a pack of lions fallen asleep under a tree, with the carcass of a wildebeest they had just eaten next to them (I posted that photo the other day).

This was around 3 pm. By 4 pm, we had seen a large herd of wildebeest and zebra on their great annual migration. And then seen a cheetah sitting on a termite hill, also watching the migration. And yet another pool with some 50 hippos lazing in it. It was absolutely surreal.

It was as if we had had a “hot hand” for an hour, with tremendous sightings after a rather barren first half of the afternoon. We were to have another similar “hot hand” on Monday morning, on our way out from the park. Again in the course of half an hour (when we were driving rather fast, with the roof down, trying to exit the park ASAP) we saw a massive herd of elephants, a mother and baby cheetah, a pack of lions and a single massive male lion right next to the road.

If you are the sort who sees lots of patterns, it is possibly easy to conclude that “hot hands” are a thing in wildlife. That when you have one good sighting, it is likely to be followed by a few other good sightings. However, based on a total of four days of safaris on this trip, I strongly believe that here at least hot hands are a fallacy.

But first a digression. The issue of “hot hands” has been a long-standing one in basketball. First some statisticians found that the hot hand truly exists – that NBA (or was it NCAA?) players who have made a few baskets in succession are more likely to score off their next shot. Then, other statisticians found some holes in the argument and said that it was simply a statistical oddity. And yet again (if i remember correctly) yet another group of statisticians showed that with careful analysis, the hot hand actually exists. This was rationalised as “when someone has scored a few consecutive baskets, their confidence is higher, which improves the chances of scoring off the next attempt”.

So if a hot hand exists, it is more to do with the competence and confidence of the person who is executing the activity.

In wildlife, though, it doesn’t work that way. While it is up to us (and our guides) to spot the animals, that you have spotted something doesn’t make it more likely to spot something else (in fact, false positives in spotting can go up when you are feeling overconfident). Possibly the only correlation between consecutive spottings is that guides of various jeeps are in constant conversation on the radio, and news of spottings get shared. So if a bunch of jeeps have independently spotted stuff close to each other, all the jeeps will get to see all these stuffs (no pun intended), getting a “hot hand”.

That apart, there is no statistical reason in a safari to have a “hot hand”. 

Rather, what is more likely is selection bias. When we see a bunch of spottings close to one another, we think it is because we have a “hot hand”. However, when we are seeing animals only sporadically (like we did on Sunday, not counting the zillions of wildebeest and zebra migrating), we don’t really register that we are “not having a hot hand”.

It is as if you are playing a game of coin tosses, where you register all the heads but simply ignore the tails, and theorise about clumping of heads. When a low probability event happens (multiple sightings in an hour, for example), it registers better in our heads, and we can sometimes tend to overrepresent them in our memories. The higher probability (or “lower information content”) events we simply ignore! And so we assume that events are more impactful on average than they actually are.

Ok now i’m off on a ramble (this took a while to write – including making that gif among other things) – but Nassim Taleb talks about it this in one of his early Incerto books (FBR or Black Swan – that if you only go by newspaper reports, you are likely to think that lower average crime cities are more violent, since more crimes get reported there).

And going off on yet another ramble – hot hands can be a thing where the element of luck is relatively small. Wildlife spotting has a huge amount of luck involved, and so even with the best of skills there is only so much of a hot hand you can produce.

So yeah – there is no hot hand in wildlife safaris.

Animals in motion and animals at rest

We are back in moshi now after a 4 day safari across northern Tanzania. We did one safari each in tarangire national park and ngorongoro crater, and two whole days of safari at Serengeti. During that time we even spent the nights in (luxury) tents inside the Serengeti park.

In terms of animal “sightings” there was absolutely no comparison to what we’ve seen in india (Bandipur / kabini / Bhadra). Back home we’ve failed to see a single big cat in the wild, across 10 safaris. We very easily went into double digits on this trip.

The main difference I think is the terrain. Karnataka is all thick forests which means that visibility is low. An animal needs to be within a couple of tens of metres from the road for you to be able to see it.

In the African savannah (will come to that in a bit, or in another blogpost), though, you can literally see for miles and miles and miles and …

https://open.spotify.com/track/64SFBGTQvXgEHds3F01rpc?si=_sYbcLzZQ5eCaJGGZ1T09Q&context=spotify%3Asearch%3Ai%2Bcan%2Bsee%2Bdor%2B

On the first day in tarangire I spotted an elephant from at least a kilometre away. Turned out it was a herd, drinking water from the tarangire river stream. And we could keep our eyes on it while our driver-guide navigated the paths and bends to take us close to them. This kind of visibility would have been impossible in the Karnataka forests.

It was more stark with the big cats. If you go on any safaris in Karnataka and ask the guides about potential sightings they talk about it in terms of “movements”. Stuff like “there has been good movement of tigers in the last two days but not so much of leopards” etc.

This is important because in the thick forests of Karnataka pretty much the only time you can spot big cats is when they are moving. When they are at rest (as big cats are wont to be a lot of the time) they are resting away from the roads, and because of the terrain they are impossible to spot.

Things can’t be more different in the East African savannah. Our first sightings of lions, on Saturday afternoon, for example, was of a pack sleeping right next to the road.

My fingers added for context, to show how close they were

Even when the animals are resting away from the tracks, the nature of terrain means that you can still spot them. And this – the fact that you can see for miles in the savannah – means that the chances of spotting an animal at rest are significantly higher.

We saw at least four other packs of lions resting under bushes. Our only leopard sighting was of one sleeping on a tree (from what I hear it was there for so long – obviously, since it was sleeping – that pretty much everyone who was in Serengeti on Sunday afternoon managed to see it). Our first cheetah sighting was of one resting on a termite hill. And so on.

So the main reason you see more big cats in Tanzania, compare to india, is that the terrain allows you to see them at rest. And the cat lifestyle is based on short hunts followed by long periods of rest, which means this massively ups the chances of seeing them.

Now I wonder how it is in grassy areas in india, such as Assam.

Cross docking in Addis Ababa

I’m writing this from Addis Ababa bole international airport, waiting for my connection to Kilimanjaro. We arrived here some 3 hours back, on a direct flight from bangalore.

The flight was fine, and uneventful. It was possibly half empty, though – the guy in the front seat had all 3 seats to himself and had lay down across them.

Maybe the only issue with the flight was that they gave us “dinner” at the ungodly time of 3am (1230 Eastern Africa time). I know why – airlines prefer to serve as soon as they take off since food is freshest then (rather than reheating at the end of the flight). And if they serve two meals the second one is usually a cold one (sandwiches cakes etc)

The airport here is also uneventful. There are a couple of bars and a few nondescript looking coffee shops. It is linear, with all gates being laid out in a row (reminds me of KL, and very unlike “star shaped airports” such as Barcelona or Delhi).

In any case I’ve been doing the rounds since morning looking for information of my flight gate. The last time I saw it hadn’t yet been published. But there was something very interesting about the flight schedule.

Basically, this airport serves as a cross dock between Africa and the rest of the world, taking advantage of its location in one corner of the continent.

For example, all flights that have either departed in the last hour or due to depart in the next 2 hours are to various destinations in Africa (barring one flight to São Paulo and Buenos Aires).

Kinshasa. Cape Town. Douala. Antananarivo. Entebbe. Accra. Lubumbashi via Lilongwe. Mine to Kilimanjaro (and then onward to Zanzibar). Etc. etc.

No flight that goes north or east, barring one to Djibouti. And no take offs between 6am (when we landed here) till 815 (Cape Town). And until around 8, people kept streaming into the airport (and the lines at the toilets kept getting longer!)

Ethiopian’s schedule at bangalore is also strange. Flights arrive at 8am 3 days of the week and then hang in there idly till 230 am the next morning. Time wise, that’s incredibly low utilisation of a costly asset like an aircraft (that said it’s a Boeing 737Max).

After looking at the airport schedule though it makes more sense to me. Basically in the morning, flights bring in passengers from all over Asia and Europe, and connect them to various places in Africa.

In the evenings, flights stream in from all around Africa and cross dock people to destinations in Europe and Asia. Currently the cross dock is one way – out of Africa in the evenings and into Africa in the mornings.

This means that there are some destinations where, given time of travel, the only way to make this cross dock work is to keep the aircraft idle at the destination. In African destinations for example, I expect shorter turnarounds – this morning I noticed that the first set of departures were to far away locations – Cape Town, Johannesburg, Accra, Harare and then to Lusaka, etc.

I don’t expect this to last long though. In a few years (maybe already delayed by the pandemic) I expect ethiopian to double its flight capacity across all existing destinations. Then, it can operate both into Africa and out of Africa cross docks twice in a day. And won’t need to waste precious flight depreciation time at faraway airports such as bangalore.

PS: so far I haven’t seen a single flight from any other airline apart from Ethiopian at the airport here.

Missionaries and Mercenaries

When a company gets founded, it does so by a bunch of “missionaries”. Founders seldom are in it solely for the money (though that is obviously one big reason they are there). They found companies because they are “missionary” about the purpose that the company wants to achieve (it doesn’t matter what this mission is – it varies from company to company).

As they start building the company, they look for more missionaries to help them to do it. Rather, among early employees, there is a self selection that happens – only people who are passionate about the mission (or maybe passionate about the founders) survive, and those in it for other purposes just move on.

And this way, the company gets built, and grows. However, there comes a point when this strategy becomes unsustainable. A largish company needs a whole different set of skills from what made the company large in the first place. And some of these skills are specialist enough that it is not going to be easy to attract employees who are both good at this specialisation and passionate enough about the company’s mission.

These people look at their jobs as just that – jobs. They are good at what they do and capable of taking the company forward. However, they don’t share the “mission”, and this means to attract them, you need to be able to serve their “needs”.

For starters, they demand to be paid more. Then, they need the recognition that the job is just a job for them – they need their holidays and “benefits” and “work life balance” and decent working hours and all that. These are things people who are missionary about the business don’t necessarily need – the purpose of the mission means that they are able to “adjust”.

The choice to move from a missionary organisation to a more “mercenary” organisation (not just talking of money here, but also other benefits and perks) needs to be a conscious one from the point of view of the company. At some point, the company needs to recognise that it cannot run on missionary fuel alone and make changes (in structure and function and what not) to accommodate mercenaries and let them grow the business.

The choice of this timing is something a lot of companies don’t get right. Some do it too late – they try to run on missionary fuel for way longer than it is sustainable, and then find it impossible to change culture. This leads to a revolving door of mercenaries and the company unable to leverage their talents.

Others – such as Twitter – do it way too early. One thing that seems to be clear (to me) from the recent wave of layoffs at the company, and also having broadly followed the company for a long time (I’ve had a twitter account since 2008), is that the company “went professional” too early.

There was a revolving door of founders in the initial days, until Jack Dorsey came back to run the company (apart from running Square) for a few years. This revolving door meant that the company, from its early days, was forced to rely on professional management – mercenaries in other words. Over a period of time, this resulted in massive bloat. The company struggled along until Elon Musk came in with an outlandish bid and bought it outright.

From the commentary that I see on twitter now, what Musk seems to be doing is to take the company back to “missionaries”. Take his recent letter for example. He is demanding that staff “work long hours at high intensity“. A bunch have resigned in protest (in addition to last week’s layoffs).

The objective of all these exercises – abrasive management style, laying off half the people first, and then putting onerous work conditions on the rest – is to simply weed out all the mercenaries. The only people who will agree to “work long hours at high intensity” will be “missionaries” – people who are passionate about growing the company and will do what it takes to get there.

Musk’s bet, in my opinion (and based on what I’ve read elsewhere), is that the company was massively overstaffed in the first place, and that there is a sufficient quorum of missionaries who will stay on and take the company forward. The reason he is doing all this in public (using his public twitter account to give instructions to his employees, for example) is the hope that these actions might attract potential missionaries from outside to beef up the staff.

I have no clue if this will succeed. At the heart of it, a 16 year old company wanting to run on missionaries only doesn’t make sense. However, given that the company had been listing (no pun intended), this might be necessary for a temporary reboot.

However, one thing I know is that this needs to be an “impulse” (in the physics sense of the term). A short and powerful jab to move the company forward. At an old company like this, running on missionaries can’t be sustainable. So they better fix the company soon and then move it on a more sustainable mercenary path.

Signalling, anti-signalling and dress codes

A few months back, I read Rob Henderson‘s seminal work on signalling and anti-signalling. To use a online community term, I’ve been “unable to unsee”. Wherever I see, I see signalling, and anti-signalling. Recently, I thought that some things work as signals to one community but anti-signals to others. And so on.

I was reminded of this a couple of weekends back when we were shopping at FabIndia. Having picked up a tablecloth and other “house things”, my wife asked if I wanted to check out some shirts. “No, I have 3 FabIndia shirts in the washing pile”, I countered. “I like them but maintenance is too hard, so not buying”.

The issue with FabIndia shirts is  that they leech colour, so you cannot put them in the washing machine (especially not with other clothes). Sometimes you might get lucky to get a quorum of indigos (and maybe jeans) to put in the machine at a time, but if you want to wear your FabIndia clothes regularly you have no option but to wash them by hand. Or have them someone wash them for you.

That gave rise to the thought that FabIndia shirts can possibly send out a strong signal that you are well to do, since you have domestic help – since these shirts need to be hand washed and then pressed before wearing (the logistics of giving clothes for pressing near my house aren’t efficient, and if I’ve to do it consistently, I need help with that. I end up wearing Tshirts that don’t need much ironing instead).

On the other hand, the black T-shirts (I have several in various styles, with and without my company logo) I wear usually are very low maintenance. Plonk them into the washing machine with everything else. No need of any ironing. I don’t need no help to wear such clothes.

And then I started thinking back to the day when I would wear formal shirts regularly. Those can go into the washing machine (though you are careful on what you put in with them), but the problem is that they need proper ironing. You either spend 20 minutes per shirt, or figure out dynamics of giving them out for ironing regularly (if you’re lucky enough to have an iron guy close to your house) – which involves transaction costs. So again wearing well cleaned and ironed formals sends out a signal that you are well to do.

I think it was Rob Henderson again (not sure) who once wrote that the “casualisation” of office dress codes has done a disservice to people from lower class backgrounds. The argument here is that when there is a clear dress code (suits, say), everyone knows what to wear, and while you can still signal with labels and cufflinks and the cut of your suit, it is hard to go wrong.

In the absence of formal dress codes, however, people from lower class are at a loss on what to wear (since they don’t know what the inherent signals of different clothes are), and the class and status markers might be more stark.

My counterargument is that the effort to maintain the sort of clothes most dress codes demand is significant, and imposing such codes puts an unnecessary burden on those who are unable to afford the time or money for it. The lack of a dress code might make things ambiguous, but in most places, the Nash equilibrium is most people wearing easy-to-maintain clothes (relative to the image they want to portray), and less time and money going in conformity.

As it happened, I didn’t buy anything at FabIndia that day. I came home and looked in the washing bin, and found a quorum of indigo shirts (and threw in my 3-month old jeans) to fill the washing machine. My wife requested our domestic helper to hand-wash the brown FabIndia shirts. While watching the T20 world cup, I ironed the lot. I’m wearing one of them today, as I write this.

They look nice (though some might think they’re funny – that’s an anti-signal I’m sending out). They’re comfortable. But they require too much maintenance. Tomorrow I’m likely to be in a plain black t-shirt again.

Luxury and frugal managers

You remember very random things from business school, nearly two decades on. Usually none of this is academic – the lessons are only “internalised”, not “learnt”. A lot of it is from outside the classroom, silly things someone said or did or posted on the internal bulletin board. Most of the stuff you remember are rather arbitrary things that professors said, and made it seem like something profound.

“Management is like making music”, one professor lectured to us in the first week of classes at IIMB, back in 2004. “First you make music with what you have, and when you don’t have that, you make music with what you have left”. It was rather random, but random enough to stick in my head 18 years on.

It has been another disappointing season beginning for Liverpool. I didn’t watch the Crystal Palace game last night, but I clearly remember feeling at multiple points during the draw at Fulham that this was “like 2020-21 all over again”. The sort of mistakes that Virgil Van Dijk made. The length of the injury list. More players (Thiago) going off injured midway through the game. Nat Phillips starting. And add some new issues – like having your shiny new striker getting himself sent off and suspended for 3 games for a stupid show of anger.

I see the list of substitutes.

  • 2
    Joe Gomez (s 63′)
  • 8
    Naby Keita
  • 13
    del Castillo Adrian
  • 14
    Jordan Henderson (s 63′)
  • 21
    Konstantinos Tsimikas (s 63′)
  • 28
    Fabio Carvalho (s 79′)
  • 43
    Stefan Bajcetic
  • 72
    Sepp van den Berg
  • 42
    Bobby Clark

Yes, there are youngsters (unlike 2021-22) but that is fully understandable. What I don’t understand is seeing youngsters I’ve never heard of. Two games in, I’m already getting the feeling that this will be a really hard league campaign.

I wonder if Klopp is more of a “luxury manager” than a “frugal manager”. These are two very different management styles, requiring very different skillsets. The names are fairly descriptive.

Luxury managers need luxury. They need resources for “option value”. In the corporate context, they need large budgets and space and little control over how they operate. And given all of this, a lot of the time, they deliver big. Yes – there are cases where they spectacularly fail (in which case they don’t stay on in their management jobs), but when they do deliver they deliver big.

Frugal managers don’t need any of this luxury. They are experts at making the most of whatever they have been given. In Ramnath’s words, they are adept at “making music with what they have left”. Any kind of luxury, any kind of optionality, seems like a waste to them. Why pay the option premium when you can get the same payoff through a complicated basket of one deltas?

And just like any other dichotomies (think of studs vs fighters, for example), luxury and frugal managers struggle in the opposite settings. Without the luxury, luxury managers are simply out of their depth. They are necessarily wasteful (a bit like Salah) and cannot produce if they are not able to waste some. However, they win big when they do.

Frugal managers are good at eking out solutions in terms of adversity, but abundant resources can overwhelm them. They won’t know what to do with it. More importantly, they are unable to deal with the expectations of delivering big (which come with the luxury) – they have been experts at delivering small against nonexistent expectations.

What about teams though? If you’ve been used to working for a luxury manager, what happens when you get a frugal manager? And the other way round? I don’t have immediate answers for this but I suppose you will struggle as well?

Aamir Khan and Alcohol Buddies

Over the weekend I was watching Koffee with Karan, the episode featuring Aamir Khan and Kareena Kapoor. It was one of the better episodes in the season, along with the one featuring Ranveer Singh and Alia Bhatt (I did not finish watching any of the others, they were damn boring).

The thing with Koffee With Karan is that it is highly dependent on how interesting the guests are, and not all bollywood stars are equally interesting. Even in this episode, Kareena Kapoor came off as a bit of a bore, refusing to answer most questions, but Aamir Khan was great.

In the early part of the episode, both Kareena and Karan accused Aamir of being “boring”. “You come to a party stand alone and just leave; You catch one or two people and just hang out only with them for the full party”, they said. And then a bit later, one of them (I now forget who – possibly Kareena) said “when I meet you in small groups of 5-6 or less you talk a lot and you are such an interesting person, but why is it that you are such a bore at parties?”

Then Aamir went on to talk about a party at Karan’s house where the music was so loud everyone had to shout to be heard. Nobody was dancing to the music. Nothing was happening. “What is the point of such a party?” he asked.

My friend Hari The Kid has this concept of “alcohol buddies”. These are basically people who you can hang out with only if at least one of you is drunk (there are some extreme cases who are so difficult to hang out with that the only way to do it is for BOTH of you to be drunk). The idea is that if both of you are sober there is nothing really to talk about and you will easily get bored. But hey, these are your friends so you need to hang out with them, and the easiest way of doing so is to convert them into alcohol buddies.

Bringing together this concept and Aamir Khan being “boring”, we can classify people into two kinds – those that are fun when drunk, and those that are fun when sober (some, I think, are both). And people who prefer to have fun when drunk consider the sober sorts boring, and people who prefer to have fun sober think the “alcohol buddies” are boring.

Aamir, for example, appears to be a “have fun when sober” guy, who likes to hang out in small groups and make interesting conversation. Most of Bollywood, however, doesn’t seem to operate that way, hanging out in large groups and not really bothering about conversation.

Yesterday, my wife and I were talking, after an event, about how if you are the sort that likes to hang out in small groups and make conversations, large parties can be rather boring. The problem is that you would have just about started making a nice conversation with someone, when someone else will butt in (hey, this is a party, so this is allowed) and change the topic massively or massively bring down the interest level in the conversation. Every conversation ultimately goes down to its lowest common denominator, leaving you rather frustrated.

And if you are the types who likes large parties and alcohol buddies, small conversations will drain you. You struggle to find things to talk about, and there are only so many people to talk to.

PS: Alcohol and good conversations are not mutually exclusive. Some of my best conversations have happened in very small groups, massively fuelled by alcohol. That said, these have largely been with people I can have great conversations with even when everyone is sober.

Structures of professions and returns to experience

I’ve written here a few times about the concept of “returns to experience“. Basically, in some fields such as finance, the “returns to experience” is rather high. Irrespective of what you have studied or where, how long you have continuously been in the industry and what you have been doing has a bigger impact on your performance than your way of thinking or education.

In other domains, returns to experience is far less. After a few years in the profession, you would have learnt all you had to, and working longer in the job will not necessarily make you better at it. And so you see that the average 15 years experience people are not that much better than the average 10 years experience people, and so you see salaries stagnating as careers progress.

While I have spoken about returns to experience, till date, I hadn’t bothered to figure out why returns to experience is a thing in some, and only some, professions. And then I came across this tweetstorm that seeks to explain it.

Now, normally I have a policy of not reading tweetstorms longer than six tweets, but here it was well worth it.

It draws upon a concept called “cognitive flexibility theory”.

Basically, there are two kinds of professions – well-structured and ill-structured. To quickly summarise the tweetstorm, well-structured professions have the same problems again and again, and there are clear patterns. And in these professions, first principles are good to reason out most things, and solve most problems. And so the way you learn it is by learning concepts and theories and solving a few problems.

In ill-structured domains (eg. business or medicine), the concepts are largely the same but the way the concepts manifest in different cases are vastly different. As a consequence, just knowing the theories or fundamentals is not sufficient in being able to understand most cases, each of which is idiosyncratic.

Instead, study in these professions comes from “studying cases”. Business and medicine schools are classic examples of this. The idea with solving lots of cases is NOT that you can see the same patterns in a new case that you see, but that having seen lots of cases, you might be able to reason HOW to approach a new case that comes your way (and the way you approach it is very likely novel).

Picking up from the tweetstorm once again:

 

It is not hard to see that when the problems are ill-structured or “wicked”, the more the cases you have seen in your life, the better placed you are to attack the problem. Naturally, assuming you continue to learn from each incremental case you see, the returns to experience in such professions is high.

In securities trading, for example, the market takes very many forms, and irrespective of what chartists will tell you, patterns seldom repeat. The concepts are the same, however. Hence, you treat each new trade as a “case” and try to learn from it. So returns to experience are high. And so when I tried to reenter the industry after 5 years away, I found it incredibly hard.

Chess, on the other hand, is well-structured. Yes, alpha zero might come and go, but a lot of the general principles simply remain.

Having read this tweetstorm, gobbled a large glass of wine and written this blogpost (so far), I’ve been thinking about my own profession – data science. My sense is that data science is an ill-structured profession where most practitioners pretend it is well-structured. And this is possibly because a significant proportion of practitioners come from academia.

I keep telling people about my first brush with what can now be called data science – I was asked to build a model to forecast demand for air cargo (2006-7). The said demand being both intermittent (one order every few days for a particular flight) and lumpy (a single order could fill up a flight, for example), it was an incredibly wicked problem.

Having had a rather unique career path in this “industry” I have, over the years, been exposed to a large number of unique “cases”. In 2012, I’d set about trying to identify patterns so that I could “productise” some of my work, but the ill-structured nature of problems I was taking up meant this simply wasn’t forthcoming. And I realise (after having read the above-linked tweetstorm) that I continue to learn from cases, and that I’m a much better data scientist than I was a year back, and much much better than I was two years back.

On the other hand, because data science attracts a lot of people from pure science and engineering (classically well-structured fields), you see a lot of people trying to apply overly academic or textbook approaches to problems that they see. As they try to divine problem patterns that don’t really exist, they fail to recognise novel “cases”. And so they don’t really learn from their experience.

Maybe this is why I keep saying that “in data science, years of experience and competence are not correlated”. However, fundamentally, that ought NOT to be the case.

This is also perhaps why a lot of data scientists, irrespective of their years of experience, continue to remain “junior” in their thinking.

PS: The last few paragraphs apply equally well to quantitative finance and economics as well. They are ill-structured professions that some practitioners (thanks to well-structured backgrounds) assume are well-structured.

Goldilocks and Barbells

Most children learn the story of Goldilocks and the Three Bears. Goldilocks finds the bears’ home, and tries out random things there. Pretty much for everything she tries, there will be three versions (each belonging to one of the bears), with one being <too extreme>, the second being <too extreme at the other end> and the third being “just right”.

The basic message can be summarised as “extremes bad, means good”. In fact, even if you didn’t learn the story as a child (I didn’t), the message of “doing everything in moderation” gets impressed upon you from various quarters. “Don’t eat too much, don’t eat too little, eat in moderation” is possibly the most prominent example of this.

And in some way we have all internalised this messaged. That both too much and too little of everything is bad, and it’s the middle path that is the right one.

And then on the other side, a concept that has always existed but formally articulated fairly recently, is the “barbell“. First articulated by Nassim Nicholas Taleb as an investment strategy, it talks about investing in a combination of extremes and eschewing the means. In Taleb’s original case, it was about an investment strategy that is a mix of low-risk bonds and high-risk (long) out-of-the-money options, that together give a low-risk winning portfolio in the long run. This ran contrary to “modern portfolio theory” that tries to get a mix of assets that maximise expected returns and minimise standard deviation (note I’m saying standard deviation and not “risk” – they’re not the same).

And this strategy applies pretty much everywhere in life. There are a lot of things where the only way you can benefit is by “being all in”. Doing things in moderation can actually be hurtful, and combinations that have a “little bit of everything” can be suboptimal to a simple superposition of extremes.

My breakfast is a barbell, for example. I either skip it completely (nearly zero calories from black coffee only), or have a big breakfast with at least two eggs. A light breakfast completely messes up my day.

My exercise is a barbell (no pun intended). I either lift heavy weights (attached to a barbell) or do nothing. Exercises with light weights make me feel miserable.

In my nearly eight month long return to corporate life, I haven’t taken many days off. My philosophy there is that if I take off, I should be able to completely take off (no “one email here”), and have done so only when it’s easy to do so.

You can think of corporate strategy and a company’s focus being a barbell.

The list goes on. The point is – life is full of barbells, or we can make the most of life by using barbell strategies. Do either this extreme or that extreme, but don’t get confused and do something in the middle.

The problem, however, is that we get brought up on goldilocks, not barbells. And think that the middle path is superior to the extremes. It isn’t always so.

More on status and wealth

Playing zero-sum status games is down to our animal instinct. We have evolved to play those. But the way we can be more human is to seek wealth.

Last week, an old friend from high school sent me this podcast, based on all that I’ve been writing here of late on status-seeking, wealth-seeking, and zero and positive sum games.

I haven’t listened to the full conversation, but only a small snippet (the bit that my friend asked me to listen to, from minutes 20 to 30).

Then, on Sunday night, I started re-reading Jordan Peterson’s 12 Rules For Life. I’m in the middle of the first chapter now (one of my favourites from the first reading, and which I’ve read multiple times). This is the one about depression and serotonin. And that triggered further thoughts on status and wealth and all that.

So some pertinent observations based on these:

  • Mating is a status game. Across species, creatures desire to mate with the highest status members of the opposite sex. And you maximise your chances of that by increasing your own status.

    A high status individual (of whatever species) will have greater access to mates, and greater access to high-quality mates, and thus greater chance of propagating their genes.

    Thus, we have evolved to seek status, not wealth

  • You may argue that in human society, wealth is also an avenue for getting superior mates. However, the problem with this is that we are simply using wealth to buy status in this case. The fundamental reason your mate wants to mate with you is your status, which, in this case, you have got on account of your wealth.
  • Status seeking is zero sum, as Naval Ravikant says in that viral podcast. As the above linked podcast (which is about Rene Girard and mimetic desire) says, when we seek status, we seek to imitate people with higher status than us.

    There are two problems with this kind of approach. Firstly, by doing things that higher status people have done, we don’t necessarily get that kind of status. Especially when the things we do are things that involve power-law payoffs.

    Secondly, if everyone imitates the same kind of high status individuals, everyone ends up seeking the same thing. If you and I are seeking the same thing, we don’t trade with each other. And thus we don’t make each other better off.

    If we are seeking wealth (an unnatural thing, as explained above), rather than status, we go about it in our own ways, and that makes it easy for us to trade and all get ahead towards our respective goals.

  • The podcast talks about how people with conditions such as Asperger’s (or anything on the spectrum, or anything that reduces empathy) have inferior empathy, and that means they see less need to conform, or to imitate. And this can lead to them achieving superior outcomes since they do things their own way (I add that this can also lead to them achieving inferior outcomes – basically “vol goes up”).

    Sounds good to me 😛

  • When we imitate others too much, they become rivals to us. Whether you consciously think of them that way or not. And this can lead to misery to all parties (unless you are high-status, or wealthy, enough to not care)
  • At the beginning of Pink Floyd’s Keep Talking (Division Bell), Stephen Hawking comes on and says “for millions of years, mankind lived just like the animals. Then something happened which unleashed the power of our imagination. We learnt to talk”.

    And when we learnt to talk, one of the powers of our imagination that got unleashed was the ability to trade. We figured out that by trading, we can build wealth. And by building wealth, we have an easy means of cooperation. And the ability to play positive sum games. And not having to futilely play status games all the time.

In some sense, trade, commerce and wealth are the fundamentals of what makes us human. It just happens that we’ve evolved to seek status instead, and so we keep pulling each other down.