Thoughts on Fooled by Randomness
I finished Nassim Taleb’s Fooled by Randomness last night. Here’s some relatively unrelated thoughts:
1) Most of the anecdotal stories of trading failure in this book stem from people that thought they were making very safe, relatively small, repeatable profits… and doing so millions of times, unaware of the actual small probability of a catastrophic downside event. This was interesting food for thought in the context of my job. As a VC, the worst I can do in an investment is lose 100% of my investment, and unfortunately (with much emotional pain) this happens with reasonable frequency. In exchange for this risk, I am (hopefully) making investments with uncapped upside. In both upside and downside scenarios, my business of investing is contrary to many of Nassim’s fools.
However, I could still easily be fooled by randomness because I am only describing the possible end states of a given investment (1X loss, unlimited upside), and without a probability distribution to map against it. The distribution of these outcomes means *everything* to returns.
2) Nassim is a trader himself, analyzing his trading peers in a world of traders. He doesn’t believe in the value of technical innovation (he said something like (paraphrased) “for every innovation like the Automobile or Internet, there are thousands of failed technologies that waste our time.”) In trading Nassim is focused on reliably making money over the long run, without embracing underlying innovation or growth in production.
By contrast VC investing is different. VC is a much longer time horizon than most trading, and will only be successful if there is material growth in innovation and productivity in the startups being funded.
I’d love to see Nassim take his (highly skeptical) probabilistic lens and apply it to the world of investing as opposed to trading… perhaps he has already done that in a subsequent book I have not read.
3) Every time you hear mention of an average or expected outcome, this should trigger your Spidy senses that there is an implied probability distribution around this average and the shape of that distribution is far more informative than the average itself. Often times, the shape of this distribution will be Normal (aka Gaussian)… But when it isn’t, your assumption can bite back.
4) Nassim regularly gets up in front of his boutique investment firm and states quite simply (paraphrased): “We are idiots and know nothing. But we are blessed with the self-awareness of our limited knowledge, which makes us better than most other investment shops out there.”
I love this approach of perpetual humility as a “first principle” foundation to intellectual curiosity. I strive to be this humble when speaking of my own positions and ideas (and would not be so brash as to assume I hit my goals of humility all the time… I’m sure overconfidence slips past me on occasion).
5) Lastly, I took the whole book with a grain of salt because it must be exhausting to be a perpetual skeptic. Here’s Nassim on his own weakness in the face of an emotional response to randomness: “My humanity will try to foil me; I have to stay on my guard. I was born to be fooled by randomness.”
Push Notification Activation Best Practices?
The #1 way iOS mobile applications reactivate their userbase is through push notifications. But not all users are willing to turn push notifications on. Does anyone have best practices or examples of applications that do a *great* job of getting their users to allow push notifications?
I’ve seen a few examples of apps that use a page during the sign up flow to justify to a user why accepting push notifications is a good idea, and only once this page is completed does the app launch the “accept push notif?” modal dialogue box.
Anyone have tips or tricks beyond this smart (but simple) low hanging fruit?
The hardest part of getting your users to accept push notifs is that you only get one shot. If the user declines notifs initially, you cannot reprint the user later. You need to use copy to beg them to go into iOS Settings and manually enable notifs. It’s an incredible high hurdle of activation energy to clear and I imagine once a user initially declines notifs it much be nearly impossible to get them to activate later.
So, best examples or best practices anyone?
On Mozilla and Leadership
Brendan Eich stepped down last week from the CEO of Mozilla post, due to the controversy over his support of Prop 8, California’s anti-gay marriage legislation.
I don’t use Mozilla products anymore and have not for awhile. On a Mac my primary browser is Chrome and my secondary browser is Safari (for when I need new cookies, primarily). I know that Mozilla has done a lot to contribute to the open standards I use on the web, and they are a great voice for open source culture. But that said, the boycott of their products last week (such as OKCupid encouraging its users to drop Firefox), was a surprisingly impactful (from a media perspective) move given that Firefox seems to be ceding market share naturally anyway.
There is no shortage of political conservatives in the Valley, and the attention on this one conservative (Brendan) in particular is interesting to me, especially given that the larger problem at Mozilla is its waning influence. The focus landed on Brendan more than most Valley conservatives because he was trying to lead a company where his personal politics contrasted the politics of most of the employees, Board, and open source community he was trying to lead.
If Brendan were trying to build a company from scratch, there were be a natural process of selection where he would end up recruiting people that were ready to follow his lead. But, taking charge of an organization that has been infused from the start with a more liberal ethos proved too difficult.
This is instructive to any management change, and it’s not limited to issues of personal politics. A Founder infuses a company with his or her own DNA. Any future leader of the company has to make a similar impression upon the company (read “impression” as a molding of wet clay). The new leader must take the prior DNA, carry it forward, and simultaneously infuse some new piece to make the company reinvigorated and new.
The inheriting company leader can’t use just a partial piece of him or her to make the impression… it has to be 100%. There is little work/personal separation in leadership; what a leader does outside of a job is just as instructive to his or her employees as what happens in the workplace.
I have never worked at Mozilla and have no interaction with their employees, so I can’t really *know* anything about this situation, but observing from the outside, this feels like a failure to carry forward the company DNA.
The Mozilla I nostalgically like to remember is the one that pulled off the David and Goliath impossibility of dethroning Internet Explorer’s dominance in a completely scorched-earth market, battling uphill against monopolistic lock-in. The NYT two page ad was a high-water mark for me in this impossible mission. This is the Mozilla I’m rooting for, and I hope they can find a leader that can embrace this core founding DNA while also adding a bit of his or her own in the right direction.