Entrepreneur 2 be

Freakonomics
by
Steven D. Levitt & Stephen J. Dubner

ISBN-13: 978-0061234002

I bet that 90% of you have seen Freakonomics in one of the zillion bookstores around you. To be honest I was slightly disappointed since I didn’t find any firm, solid knowledge explaining today’s economics but rather a collection of random interesting economics-related facts. I did like some of them though so here we go:

• Crack dealers actually have extremely bad jobs - they make anywhere between $3.3 and $7 with a chance of getting killed of 1/4th! Why do they keep doing it? They play in a highly competitive field where the sweet life is only the top 1%, which is what everybody wants. Sounds familiar, doesn’t it?
• We often seem to oversimplify the situation. That causes us to be wrong, because the simplest explanations doesn’t get to the root of problems. When crime went down significantly in the 1990 (NY) people thought this is the result of random things - “gun control”, “clever police strategies”, and “better paying jobs”. However truth now discovered is quite unexpected: since most crimes were committed by teenagers and kids in their 20’s that were badly raised with no families and future, it was the Supreme Court’s legalization of abortion in 1973 that drastically reduced unwanted children so by 1990’s crime suddenly disappeared for unknown reasons. If you don’t step back to look at a huge picture, collect massive data, and analyze to the last detail you keep thinking that it was the “clever police strategies” that killed the crime in New York City.
• Authors make a good note on people’s incentives for… uh…anything. So basically if you want to motivate someone, you have to attack in all three areas:
  • Economic motivation…paycheck, duh!
  • Moral - you have to make someone believe that what they are doing is right and good for everybody. Painful example - Army.
  • Social - we want to be approved by other people so it is important that they accept our actions. Bring A’s from school and your parents are happy and you feel good about that.

  That being said now, we have to be careful not to create wrong incentives through others. Ex. In a daycare center, parents that are late picking up their kids started being charged $3. Surprisingly, after that surcharge was introduced many more parents started coming late. Why? Because the moral incentive has been replaced by the economic, but the economic wasn’t large enough to hold. So parents basically assumed that it is OKay to leave the kid longer and pay the money - “daycare center makes more”

• Somewhere around the book I saw a wonderful analysis of risk and people’s reactions to it. It looks like that:
  RISK = HAZARD + OUTRAGE
  (How dangerous) + (how much people are excited about it, and talk about it)
  OUTRAGE is significantly higher if risk occurs NOW - terrorist attack vs heart attack (more people die from heart attack, i don’t have to say it)
  OUTRAGE is significantly higher if we have NO CONTROL - plane accidents vs car accidents (as you might expect, chances of being in a car accident are many times higher than being in an airplane accident)
  So if the hazard is high and outrage is low - people under react
  But if the outrage is high and hazard is low, then people overreact
  So here is another fascinating example - rate of kids drowned in a residential pool is much higher than kids that shot themselves with guns. More specifically 11,000 to 1! So why are parents freaking out about guns and barely caring about their own swimming pools?

As a whole it was fun to read, but little helpful knowledge to be learned except this one lesson: Dig deep when you research, you’ll find amazing answers…

Decoding the Universe
by
Charles Seife

ISBN-10: 067003441X

This one is somewhat a sidetrack from the entrepreneurial nature of his blog but I am still putting it since it has got some quote interesting points about… everything. It is a little technical but bearable. Here’s a few highlights:

• It used to be that scientists believed energy was the one unit, building block of the universe. Since we knew that matter turns into energy and vice versa, that seemed understandable. This book has a new proposition for building block - information. Anything contains information about itself and the surroundings and also can be reduced to bits and qubits.
• No information can be transmitted magically for free. It takes time and energy to do so…or rather it takes more information.
• You can’t measure information without altering what you are measuring. If you are measuring light you have to use some of its photons to trigger your measuring device.
• Quantum supposition means that one coin falls heads and tails and rolls at the same time until someone (or something) decides to check the result. At this point all the possible outcomes, by which he defines entropy, collapse into 1 single outcome.
• Charles Seife also proposes a reductionist view of the purpose of our existence: all we are is an organism that keeps randomness from happening by methods (DNA replication) powered mostly by the sun.
• One neuron of a fly can transmit 5bits per millisecon. (: how fascinating!

On a slightly off topic - he also talks of speed of light and why it can’t be overreached and I wonder why this method of transporting information can’t surpass c(c is speed of light): you have 2 bars extremely long, crossed at a very very small angle like so:

As you move bar1 the crossing point will travel along from one end to the other.

The angle of the bar crossing determins basically the speed of travelling of intersection point (information). Now we have a cap which we want to achieve and surpass (speed of light) but we don’t have any limitations on how small the angle is (I mean we are thinking theoretically here). So why can’t we reduce the angle (keeping the movement constant) till we get speed higher than c?

Waiting for comments…

Stumbling on Happiness
by
Daniel Gilbert

ISBN-13: 978-1400042661

Every now and then you stumble on a book most randomly that overturns the way you think about something in life. In this brilliant explanation of why people are poor at predicting what makes them happy, the psychology professor Daniel Gilbert brings tons of evidence and research that will blow you away. I urge you to get that book and read it no matter what you do in life. Here’s a few reasons why:

• What is interesting about optical illusions is not that we all make mistakes but that we all make the SAME mistakes. Trying to predict how you will feel about something in future happens to abide the same “lawful, regular, and systematic” mistakes. In other words, there are reasons why we are bad at knowing what makes us happy.
• Phineas Gage is a guy whose head got pierced with a metal bar. He survived but had partly damaged frontal lobe but functioned normally. Subsequent studies led to the understanding that removing this part of brain could calm people down. 1930’s this became a practice for angry bipolar patients. And it worked until someone discovered that those patients had no concept of future. They blank out when they have to plan ahead and think of future. The connection here, “The key to happiness, fulfillment, and enlightenment, the ex-professor argued, was to stop thinking so much about the future.” Makes sense doesn’t it? Why think about crashing plane if it won’t crash? Why think of being victim of terrorist attack if you won’t? Most of our lives we deal with useless worrying about stuff that never happens.
• He explains that our ability to imagine future and remember past are quite flawed and super-influenced by our present moment. You overeat and you tell yourself, “I will never eat so much again, my stomach hurts” and your future of not eating so much is influenced by the current pain in the stretching stomach. But wait till tomorrow only and you are ready do devour the new meal with no traces left of your previous vows. He explains it really well.
• I already wrote a post the amazing observation that we are horribly bad at dealing with ‘negative’ information. Information that is not in front of us and is not easy to see.

one more

• “Because those interpretations [of the world by our brain] are usually so good, because they usually bear such a striking resemblance to the world as it is actually constituted, we do not realize that we are seeing an interpretation” and “…because we do not consciously supervise the construction of these mental images, we tend to treat them as we treat memories and perceptions - initially assuming that they are accurate representations of the objects we are imagining.”

The book is filled with fantastic observations about our miserable wretched prediction of what makes us happy. Buy it here. Oh, and btw, he also says that it turns out people feel much worse about not trying something than trying and getting it wrong.

[not spam]

The more I read what he writes (blog), what he says (eg. interview w/ Jessica Livingston from Founders At Work), or watch videos of him (with Guy Kawasaki) the more I think he is really amazing. Firm thinking, good decisions, awesome philosophy. I really want to meet him and maybe ask a few questions.

Turns out though I can’t find his email (I guess he took it down so crazy girls don’t bother him). The only way seems to be registering on hotornot.com and click “Meet James Hong” but invitations from a guy on hotornot is going to be way too awkward (if not spammed anyway).

So here I ask of you: send one email to the most likely of your good friends that might know someone, that might know someone else that might know….James Hong(’s email) and paste as text this entry. Let’s see how long (how many hops) it takes if it ever gets through. I will report results in an update.

Thanx a bunch,
Petar Petrov
mgpepe@gmail.com
http://www.entrepreneur2be.com/2007/11/20/getting-to-james-hong/

Trigger: I went for another weekend to Boston. I was thinking about Artificial Intelligence and how I can make a simple Artificial Neural Network to learn some simple concept. How could I get in touch with someone that knows how to do that? I am in Boston after all, there are plenty of amazing colleges (MIT, Harvard blah blah) that have professors teaching this stuff. And as a matter of fact as I am walking around the streets of Boston, I am probably seeing them all around…except, I don’t know it.

The Problem: The big problem, I thought, was that no one knows anything about anyone on the streets. These are people that just come and go without giving you one bit of information (the look of a person is exception, which if you think about it is the prime way of meeting people online - pictures). At the same time, plenty of people that go past you in the grocery store are probably very interesting people with whom you can connect very well. The only way to find anything about strangers is to talk to them. But how do you know who to talk to? Should you act like a nuts job and talk to anyone?

The Idea: It would have been nice therefore to have a website where you can put specific information you are characterized with and information you are looking in other people. In my case I am looking for someone that is working with ANN. Once I setup those preferences I walk out to the open world. I carry a phone/watch/device that connects wirelessly to other such devices, checks the preferences of two people walking by each other and beeps if they match.

This way, I can walk around in CompUSA and meet ‘randomly’ a professor in ANN that was looking for a flat screen, he would probably be more than happy to talk about it, since he posted it on his profile for that specific reason. This taps into a totally new way of dating/meeting services, because it has the following very important advantages:
. . . (1) It is much more natural. There is a very big problem with dating sites: it’s the notion that if you are signing up on one, you are probably doing it out of despair b/c you have tried all your real life alternatives (or so you think). This moral underlying guilt prevents many people from using such services. But if you could meet someone in such a natural random way (on the street while shopping) then things look a whole lot different.
. . . (2) Confidentiality of information. There are many cases in which you want to make a piece of information available to the public but at the same time really only to certain people and not to others. Take a weird but true example - HIV positive person. He wants to find a date (most probably HIV positive too) so he has to state that fact and make it available to public. However it would have been nice if only the other HIV positive people new, rather than just about anyone that can exploit that information. Thus your device will only beep on the right occasions.

Difficulties: I discussed it for few days with Alek. We had the idea of making it work with cell phones because it will be easier to start the service. However, it turns out GPRS and bluetooth will not be a very likely option. Wifi could work if the area is fully covered, but again, I think cell phones are at a disadvantage. Also anything else that is more practical (a watch or a device specifically designed for the purpose) will be too expensive and will require investment and experience, neither of which we have. You got better ideas on execution, get in touch with me! You have that ready? I will definitely sign up!

I have always wanted to draw a parallel between a computer game and life/entrepreneurship. Here comes it:

I have been playing the awesomest game - Portal (trailer here) for some time - it’s a mind-bending first-person action-puzzle game. The challenge levels require some serious thought and flawless execution. The game kept reminding me of two very important things:

I. PUSHING LIMITS - as you complete any benchmark the bar is raised usually twice as high. This forces the following pattern of thinking:
(1) “This is impossible!” - after you just did your best to barely finish the level within 40 steps, you are now required to do same in 20! Hell it’s impossible!
(2) “This game has been tested this must be possible…”
(3) “What can be done?” - now starts the real thinking! Can you skip some parts of he whole puzzle? If not, can you execute them in a more efficient way? etc..
Every time you think you have reached the top this game reminds you, “No way buddy, not even half way!” stThen you keep climbing until you solve it. We don’t do this in real life. Most of the times we don’t push at all…

II. GIVING UP — in portal it is considerably easy to complete a challenge for one particular reason: every time you get to (1) , you immediately realize that (2) therefore you really don’t have problem (1). However in real life, when get stuck somewhere no one comes to tell you that what you think is actually impossible. It’s actually very unfortunate because as soon as people come against a problem that looks like impossible, they give up. It seems to me that the solution is to ask yourself, “Is there a chance that anyone can ever solve this problem in any way?” If the answer to this is NO then move on quickly to the next thing, but if the answer is yes, then you might want to consider if it’s worth trying to find the solution…

The secrets and experience of 5 successful entrepreneurs. Worth every second. Found it on Guy Kawasaki’s blog post. It is a MUST SEE.

1h40m

http://video.google.com/videoplay?docid=-547…

James Hong is awesome!

Trigger: I was walking on Times Square and I saw a huge advertisement that looked like a canvas with random drawings on it. I don’t remember what it was exactly, but I thought, “What if I could make a huge gynormous or endless canvas where everybody would be able to draw whatever they want. Somewhat like an endless graffiti? How about if you could purchase of your area? how about if you could add multimedia? How about if you allow user created flash applications? How about if you make it a real estate business?…”

How: I wanted to make it on my own, but needed time and money. Requires extensive communication with server and the mouse movements need to be well sync-ed with users. My friend Alek needed to help me with the backend, I was going to make the fronted with flash.

Mistake: It was nearly impossible to explain it. It takes me hours and hours to explain the complicated idea and the possibilities that arise. I need paper to draw, I need then to always answer many questions and often by these questions I would think that the person facing me totally does not understand what kinda of digital world I am talking about.

The Story: As we thought we had to get some funding. One of the few things we did was apply for Ycombinator.com. Paul Graham did ask me some stuff after we submitted the application (which didn’t surprise me, given the very limited paragraphs in which we had to explain the idea). We didn’t get accepted for one reason or another. Between the feeling of rejection, the ambition, and the excitement we decided that we should try it out even if we didn’t get the funding. And so we started. It took us only 2, 3 days to give up. Over those days, we argued each trying to impose their own vision of how this idea can be done and what it should be like. It turns out it was so complicated in terms of concept that both of us founders had different idea to the point we didn’t even write one line of code before we let go. After all PG had made a good choice.

There was thousand ways of explaining it. “Social networking with a spatial perspective”, “Facebook on 3d”, “Drawing canvas where you could lay your web page at coordinates 300:320″, or “The useful Second Life.”

Every time I tried to explain it with a different term, it would confuse the listener even more. If I had it built maybe people would get the idea. But I can’t do it on my own, which is why I am posting it. It would look like a mix of GE’s drawing site,
http://www.imaginationcubed.com
Eric Deis’s experiment which works better when there are more people:
http://ericdeis.com/content/beautyandchaos/beautyandchaos.php
Google Maps:
http://maps.google.com/
and SwarmSketch:
http://www.swarmsketch.com/

If you could post a music player on Boston and hear it everywhere on the canves within a radius of 1000pixels it would be quit fun. If Nike posted an add at 400:400, then the value around it would appreciate due to traffic. And little by little, according to the content around, cities, villages of virtual information would emerge. A new market for spatial website management emerges. Instead of domains that are virtually attached by links, everything would be like in real world marked by dependency of distance.

This is how we tried to explain it at YC: “A spatial application in the form of an unlimited interactive whiteboard, that is divided in X and Y coordinates. People will not only be able to freely roam and draw, but also upload music, images, videos as well as Flash applications anywhere on the surface. This way, users will be able to upload media, and also tools to modify it. As they create new content they will want to keep it by purchasing physical space on the X:Y plane. In time, popularity of owners, physical positioning, and content of the ‘land’ will create dependencies among the citizens of the now populated ‘cities’. Hopefully, we will be able at a later point to introduce Z dimension for 3D.”

I think its a cool idea, but its difficult to be done and its almost impossible to be explained. If you can get the idea, or if it sparks something similar of yours, and you think you can do it - please feel free - make it. I’d love to see it alive. Tons of money there!

Moral: Sometimes simple things may turn out to be a better choice…

Good to Great
by
Jim Collins

ISBN-13: 978-0066620992

I bought this one because it was too red and it was EVERYWHERE. Every single BN and bookstore had it. So I finally wanted to get it and know that I am through with it. It actually is not bad. Jim Collins did a HUGE research to try to figure out why some companies are Great and why the rest of the companies are Good. By the former definition he means the companies that had a huge success/breakthrough and kept it for at least 15 years. A few very good points I want to highlight:

• “[Executives that ignited transformation] first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.” This is profound. We know that people are important, but this is truly taking it to the end. Not that it doesn’t matter what you do, but that if you have the right people on the bus, they will know what to do and where to drive it.
• “We found no systematic pattern linking executive compensation to the process of going from good to great.” This is related to the previous bullet, because if you have the right people, the motivation will be coming from within and you wouldn’t have to waste money and energy in motivating them. Interesting, you would think that more money means more success…
• He says something very important about the focus of the company - you need to figure out the one thing you can be best at, and drop everything else. Expanding business should be done only through expanding your core business [what you are already best at]. He calls that the hedgehog concept. True. Seth Godin says the same thing in the Dip. My review here.
• For outsiders the jump in price of stock that doubles triples or quadruples market index seems fantastic, amazing, and instantaneous, but for the company, that breakthrough is just another small step in the many years of hard work and preparation. Jim Collins gives example with an egg - for people, the breaking up of the egg seems so exciting and momentary, but from the chick’s perspective, cracking the shell is just one little thing after all the transformation than went about to convert a yoke to a chicken. That reminds me of one of Marc Cuban’s posts in which he says that you have to work had in preparation. One day when the opportunity comes, you will be able to grab it because you prepared for so long. True, true.

Those are all very good points. Collins also gives an abundance of examples that help illustrate and prove the points.

It seems that every time you build a product that has some level of innovation or daring vision, you get to discover things you never could imagine.

While I still haven’t tested this with web products, I made myself a gorgeous 5 bulb lamp that is sliding on strings stretched across the length of my room. It’s got a dimmer and a remote control for it. Here is how it looks.

It’s awesome, and it completely satisfies my light desires during day and night. But I want to share one observation that popped up - this lamp is now 16 months old and I haven’t had to change 1 bulb ever since it was made.

Have you ever sat in a room and suddenly a bulb goes…BANG! Nope. Bulbs just don’t like that. They emits light by running electricity through its thin filaments. Those filaments wear away after a while, and one day, when you switch the light with a click, the bulb explodes. This is because of the sharp influx of electricity that floods it when you switch the light. My lamp has a dimmer instead of an ON/OFF switch and this dimmer doesn’t have the option of switching ON instantaneously. That keeps the bulbs away.

Another reason, as stated on wikipedia is that 5% reduction in voltage more than doubles the life of a bulb.

Whatever the reason my bulbs are alive, there is no reason why people should be using regular switches instead of dimmers that will make their lives more comfortable, spare bulbs, and save electricity.

USE DIMMERS!