Capitalogix

The Power of One Data Point

I love statistics.  But I also recognize how easy it is to be tricked by data.

Here is an example illustrating how factually accurate statistics can be misleading without proper context. 

Take a quick look at this chart showing Robotics funding in July 2023.

  

 

If you look at that chart, you might conclude that Pittsburgh is a Mecca of innovation in robotics.  Carnegie Mellon is there.  That makes sense, right?

However, there's an immediate red flag ... it's only for the month of July 2023. 

So the question becomes ... why? 

Turns out, that entire number is essentially the result of a single check to Stack AV to recapitulate what was Argo.  Argo is a Ford and VW-backed autonomous vehicle startup, and Stack AV is the founders' new self-driving startup. 

One significant move skewed the scale so strongly that it trumped major countries' expenditures that month. 

There's often an issue about not having enough data to be statistically significant.  Another common issue is confusing coincidence with causality.

This isn't meant to undermine the effect of one data point on a chart.  For example, think about Taylor Swift's impact on the economy.  Taylor's Eras Tour has already netted more than $100M but also reportedly has had a $5B impact on the economy.

Cincinnati reported that Taylor Swift's Concert Tour brought $90M to their city in two days.  Her 60,000 attendees pushed the city's hotels to 98% occupancy rates.  Beyond that, her concert-goers also consumed the city's restaurants, bars, tourism, and retail. 

Here is a different example of accurate data leading to an unusual conclusion, At a Genius Network meeting this week, the creator of OsteoStrong and the X3 bar spoke about people's misconceptions about fitness and workouts.  One point, in particular, caught my attention.  He claimed that most people only get stronger as a direct result of their workouts about ten times in their lives.  This isn't true of competitive athletes or weightlifters - but the average gym goer.  Why? His logic was you only get stronger when you take your muscle to failure, past its previous limits.  Most people rarely work out to exhaustion and don't keep track of their best.  They often stop one rep - or even half a rep - before there's a meaningful improvement. 

A good lesson for life. 

As entrepreneurs, we've all seen people get the "one big break" or the "one domino" that led to success.  The goal is often to be good enough that you only have to get lucky once.

While one data point can ruin a statistic, it can also change your life. The power of an inflection point. 

Hope that helps.

Here Are Some Links For Your Weekly Reading - October 8th, 2023

Reports of bed bug infestations in Paris are so bad the government is deploying sniffer dogs to inspect trains.

 

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• Why Collaboration With Generative AI is So Tricky—And How to Make It Work. (Fortune)
• AI-Assisted Decision-Making. (Every)
• 10 Questions to See If You Have a Great Idea. (Entrepreneur)
• At What Age Do You Hit the Peak of Your Career? (Economist)
• Rethinking Flow States by Introducing 9 Antecedents. (PsychologyToday)

 

Trading Links:

• Visualizing the Pyramid of Financial Risk. (Advisor)
• The Invisible Hand: AI in Financial Markets and Algorithmic Trading. (Medium)
• India Surpassed China as the World's Most Populous Country this Year. (UnitedNations)
• 10 Fast Food Chains Ranked by Average Sales Per Store in the U.S. (Infographic)
• Even Michael Lewis Can't Make a Hero Out of Sam Bankman-Fried. (NYT)

The Most Popular Spotify Artists

Time and technology march forward relentlessly. 

It is easy to keep up – until you pause or slow down.

Being an Early Adopter was a big part of my identity.  At this point in my life, I am still early with respect to new technologies, but I feel like I'm losing touch with a lot of today's culture. 

Perhaps this started over a decade ago?  I remember finding my sons' slang and music off-putting. 

As an aside, my youngest son, Zach, went through a phase where it felt like he used the verbal tic ... "Dude" in every other sentence.  Parenting trick – I broke his habit by screaming "FOOPDEEDOO!!" every time he said it, regardless of when it happened, where we were, or who we were with. 

If it's crazy and it works ... it's not crazy.  He certainly stopped saying "dude". 

OK, back to the point.  I realize that the Top 40 is basically a list of 40 songs that I don't know (and feel like I only randomly know some of the artists).  Meanwhile, my staff laughingly refer to my favorite stations on SiriusXM radio as old-man music.

To make the point further, my research assistant asked me if I knew about Bad Bunny.  To me, it sounded like a Disney cartoon for Halloween.  But, apparently, he is a Grammy-winning recording artist who won "Album of the Year" for music that I had never heard.

It didn't take long to get to the list of top Spotify artists.  For the record, I do know most of those artists – but admittedly few of their songs. 

Here is the list.  How did you do?

via StatsPanda

 

But as I said, listening to the Top 40 is getting harder for me.  Where's the rock (or songs with discernable melodies)?! 

Meanwhile, I'm about to start a new art exhibit. I call it "Jen Sleeps At Pop Concerts" 

So far, we've got Taylor Swift, Coldplay, Beyoncé, Ariana Grande, Bob Seger, the Eagles, and the Rolling Stones. In case you're curious, she did not fall asleep at John Legend, Queen, or Ed Sheeran. 

Times are changing ...

The Global Stock Market In One Chart

In 2021, we looked at the (then) $94 Trillion Global GDP. 

Today, I found a chart focusing on the $109 Trillion Global Stock Market.

While there are certainly still fears about recessions, downturns, and more, nonetheless, it's good to see some growth. To understand more about the market-cap-to-GDP ratio, check out this link. 

Unsurprisingly, the U.S. and China dominate the list, accounting for over 50% of the global market themselves. Even less surprisingly, emerging markets saw the most growth last year. 

Visual Capitalist points out that U.S. stocks have often outperformed other wealthy nations over the past several decades. 

If an investor put $100 in the S&P 500 in 1990, this investment would have grown to about $2,000 in 2023, or four-fold the returns earned in other developed countries.

The U.S. has been the leader in this space for as long as I can remember, but as emerging countries start to gain their footing, it's likely our percentage of the pie will decrease. Hopefully, the pie gets bigger as that happens. 

What do you think will happen?

Here Are Some Links For Your Weekly Reading - October 1st, 2023

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• The Sphere's First Show Looks Like It Was a Mind-Blowing Spectacle. (TheVerge)
• How to Use ChatGPT's New Image Features. (Wired)
• Nvidia Outlines Jensen 'Huang's Law' of Computing. (Tom's Hardware)
• They Studied Dishonesty. Was Their Work a Lie? (NewYorker)
• Sam Altman Says AI Systems Will Automate Some Tasks But Also Lead to 'New and Much Better Jobs'. (Insider)

 

Trading Links:

• Money Mentor Trading Podcast – Sunny Harris Interviews Howard Getson. (Podcasters)
• ‘AI is Not a Writer:' Why the Writers' Strike Deal Matters Beyond Hollywood. (TheHustle)
• How to Copyright Your AI Creations. (HackerNoon)
• Elon Musk Says One of His Ventures Will Reach a $1 Trillion Market Cap by 2030. (TheStreet)
• A Top Economist Who Studies AI Says It Will Double Productivity in the Next Decade: ‘You Need to Embrace this Technology and Not Resist It'. (Fortune)

How To Build A Business 101

My son attended Russell Brunson's annual Clickfunnels conference.  They produce some of the most accessible marketing content we've found.

 

Me and Russell at the Cowboys V. Texans Game in 2016

When attending a conference, the main goal is to extract one key insight and an actionable item to boost your business ... even if you're well-versed in the subject.

After events, we conduct debriefing sessions to distill our most significant takeaways and get alignment.

This year's central theme was integrating disparate elements (in this case, "funnels") into a cohesive system and cyclical approach to drive sustainable growth.  Russell made a compelling point: many so-called "businesses" are really just a string of promotions.  According to his definition, a true business requires recurring revenue and continuity.

Aspiring entrepreneurs often impulsively shift from one idea or product to the next.  They hastily launch their ventures, make a modest profit, and swiftly move on to the next endeavor, trying to stay on top of trends.  Unfortunately, they neglect product development and fail to maintain their existing promotions in their haste to get to "next."  Consequently, their businesses become incredibly fragile, susceptible to external shocks such as the unexpected disruptions of events like COVID-19, sudden market crashes, or social media platform crackdowns, which can ultimately lead to their demise

Like most great lessons, it's fractal.  If you've been paying attention, you'll see how we've shared this idea before.  So, I want to tell the same story from those other perspectives. 

Selling Picks and Shovels

Most of us have heard the old adage about selling picks and shovels during the gold rush.

During a gold rush, many people rush to the goldfields to strike it rich by finding valuable gold nuggets.  However, most gold rush participants do not find gold.

 

Often, the people who make the most money are the ones selling picks and shovels (goods and services) to the speculators.  Said a different way, profits often flow to people who provide the systems and infrastructure that enable others to dream of a bigger and better future. 

It's not sexy, but it's reduced risk, consistent demand, and a long-term perspective.  When the mine dries up, you move on to the next mine and patiently stack your gold nuggets. 

And, there's a plethora of opportunity that isn't selling picks and shovels.  You can build temporary lodgings, open a bar, and of course, you can't forget the world's oldest profession ... trading. 

 

Leveraging AI

It's easy to compare the AI race to the gold rush, but it's much more than that.  Both the AI race and the gold rush generated significant hype and excitement.  In both cases, there's a sense of a potentially life-changing opportunity, which attracts a herd of energized early movers looking for their big break.  Just as gold prospecting was a risky and uncertain endeavor with no guarantee of success, the AI race is characterized by uncertainty and fear.  Many are afraid, not just of losing their jobs, but of how to best use the technology. 

As a result, you see a sea of people adopting every new app they can find, all to continue treading water in their business. 

This occurs because people forget that AI is simply a tool – not the goal.  They get blinded by the bright shiny objects, those glitters of gold near the top, that they don't do the hard work to find the bigger nuggets below the ground.  All those tools are great, just like the promotions Russell mentioned.  However, they're often distractions from building or buying something custom to your needs and focused on your bigger future. 

To raise the stakes a bit, one of the biggest difference between the AI race and the gold rush, is the lasting impact.  While the gold rush did lead to some lasting economic and infrastructural changes in certain areas, the AI race is going to significantly transform entire industries, economies, and societies over the long term.

The Capitalogix Advantage: A Solid Platform For Success

In our office, we think of this idea as the difference between a capability, a prototype, a product, and a platform.  Building a platform (and a community) is how you become an institution and a game-changer.

When you start with that mindset, you can be the picks and shovels, you can be the hotels and hospitals, but you can also be the miner looking for the next big thing.  That's what Capitalogix does for ourselves and our joint venture partners. 

Continuity and recurring revenue create the bandwidth for innovation and ideation. 

We have developed a fault-tolerant infrastructure because we have experienced fires, floods, Internet failures, the Snowpocalypse, bad data, missing data, and human error … not to mention Trump Tweets or COVID-19.  That means our tools are built on a solid infrastructure supported by extensive experience. 

And, while we've pivoted since inception, our vision and our "why" haven't.  Joint ventures and new technologies are steps on our journey to our vision, not short-term promotions and distractions. 

It's a small distinction with a massive impact. 

When you're exploring the Wild West, whether it's in a gold rush, an AI boom, or in the world of e-commerce, your chances of success rise rapidly with a goal, a why, and a plan. 

Hope that helps.  

Industrial Automation: Back To Robots

We talk a lot about automation – but tend to focus on the less tangible robots.  Meaning, we talk about algorithms and AI, quantum computing, and how entrepreneurs can benefit from these new technologies.

However, a significant segment of automation is industrial (and often robotic process automation).  Henry Ford and the assembly line revolutionized the world when they took the time to make a car from over 12 hours to just over 90 minutes. 

It's interesting to think about more classic automation, and how different it is today from 1913 ... Of course, the level of machinery has grown exponentially, but so have the processes and the capabilities we expect.  I flashback to Kanban and Toyota and what that did not only for the automobile industry ... but for corporations and small businesses around the globe. 

Who's Winning the Robot Race?

 

MSCI via visualcapitalist 

Unsurprisingly, this is where China thrives.

In 2021, China installed more industrial robots than all other countries combined... Crazy.

Industrially, it's primarily automobiles and electronics that drive those numbers up.  Japan also makes massive investments in those two industries. 

Interestingly, America is more evenly distributed with metals, plastics, and food, each seeing over 10% allocation. 

Something To Think About 

One of the fears I often hear is that AI will take our jobs, and what do we do when that happens?  Here are my thoughts on that from a blog post called, Will Robots Take Your Job?

New industries are also creating new jobs.  With that said, recognize that people are increasingly resistant to doing the work we tend to automate.  That is part of why it got automated in the first place.  Another reason is that birth rates are dropping globally, and we always strive to do more with less. 

Think about countries like Japan - which rely heavily on manufacturing ... but are seeing their already small populations decline.  What do they do when their plants sit empty due to labor shortages?

Or, what about agriculture?  We've already seen an exodus of youth who don't want to be involved in farming due to the long hours and grueling work... How do you keep up with the production necessary to feed the world?

We often think about robotics as taking our jobs, but the reality underpinning today (and the paradigm that will drive the future) is that automation sustains industries. 

When labor can't keep up with demand, robotics fills the gap, whether it occurs in manufacturing, agriculture, or medicine.

As robotics get more capable, it won't be long before that's robotic surgeons are a normal part of a hospital's medical suite. 

The same is true for AI.  It will supplement gaps in countless industries. 

These technologies are coming to your industry.  It's inevitable.  If you fight it, you'll feel strife and stress about the changing workforce.  If you get ahead of it, you'll find endless opportunities to pursue your passions.  As society shifts, I hope we see an influx of entrepreneurs to help drive the next era of innovation. 

What do you think will happen?

P.S. Do you get my weekly round-up of links and thoughts on AI, exponential technologies, markets, and other interesting stuff?  Or my new AI-curated newsletter? I believe you'll find them useful and fun.  Happy to add you or anyone else you want to get it. Click here for the sign-up link.

A Fun NFL Statistic, and an AI GM?

I love football.  As such, it is fun for me to watch the games.  But I also like the business of the game as well. 

Over time, I've become a fan of the league ... and how deliberate they are about building teams and developing players.

Last week, I got to give a series of talks to a high-level entrepreneur group called Breakthrough Mastermind.  Some of the other speakers included NFL Hall of Famer Mike Singletary and a starter on the league-leading Dallas Cowboys Defense, Osa Odighizuwa.  Here is a picture of us from the event. 

Let me know if you want a link to the actual presentations.  I talked about AI and how it frees you to be your best.  Osa spoke about what it takes to be a Pro, and Mike talked about teamwork and building teams.

It is Football Season.  And, if you know me, then you know I'm a Cowboys fan (despite being raised in Philly, with season tickets to the Eagles – and Boston, with season tickets to the Patriots).

So, the week one 40-0 victory over the NY Giants was fun to watch. 

It was even more fun after I saw some stats about this loss. 

According to ESPN Stats & Info:

• The 40-0 win was the largest shutout victory in Dallas's history.

• Dallas is the fifth team in NFL history to open their season with a 40-plus-point shutout on the road, and the first since the 1999 Steelers.

• The Cowboys are the first team in NFL history to open the season with a 40-plus-point shutout of a team that made the playoffs the previous season.

But feeding my occasional need for Schadenfreude ... the stats get worse for the Giants. 

In this game, they lost 40-0, got sacked seven times, to the Dallas Cowboys zero, they also lost the turnover margin 3-0, and had their opening drive field goal attempt blocked (and then returned for a touchdown), and their QB, Daniel Jones, then threw a pick-six. 

Supposedly, no team has done that in a single season - let alone a single game. 

via The Athletic

See, math can be fun!

Week Two was similar for the Cowboys against the NY Jets.  My friend and lifelong Jets fan, Brian Kurtz, attended and wrote this well-thought-out blog post on the experience.

And for some additional contrast and dynamic tension ... ponder this!

Jerry Jones Is Going to Live Forever.

As if the Cowboy's experience wasn't enough to bring people in, Jerry has now immortalized himself as the mirror from Sleeping Beauty, excuse me, I mean as a virtual AI screen at AT&T Stadium. 

It's a truly interactive experience where you can ask Jerry questions, and get responses in his voice - from an AI trained on the real Jerry Jones. 

NEW at #ATTStadium: Meet Jerry Jones – An Interactive Experience. Ask @dallascowboys' Owner Jerry Jones questions and get his responses generated by AI technology for a unique, interactive experience.

Learn More ➡️ https://t.co/JZYtOdLgj1 pic.twitter.com/b6V9AbZ8wj

— AT&T Stadium (@ATTStadium) September 7, 2023

And this is only the beginning. 

People joke that new technologies are always adopted by porn first, gambling second, and then the entertainment industry after.  These technologies have made their way to the NFL which means they are on their way to much broader adoption sooner than you might expect. 

We do live in exciting times! 

Media Bias and You in 2023

Information is Power.

Consequently, your choice of information source heavily contributes to your perceptions, ideas, and worldview.

Coincidently, news sources are a lightning rod for vitriol and polemic.

I am still somewhat surprised by the abject hatred I hear expressed toward a particular news source by those who hold an opposing bias.  This often leads to claims of fake news, delusion, and partisan press.  Likewise, it is common to hear derision toward anyone who consumes that news source.

Perhaps the reality is that most sources are flawed – and the goal should simply be to find information that sucks less?

It's to the point where if you watch the news, you're misinformed, and if you don't watch the news, you're uninformed. 

News sources aren't just reporting the news ... they're creating opinions and arguments that become the news.  Moreover, many consumers don't care enough to think for themselves or to distinguish facts from opinions.

Here's a chart that shows where news sources rank on various scales.  It has default options and over 1400 sources you can add to the interactive version.  You can click the image to go to an interactive version with more details.  It gets updated every year, and this year's just got released.

via Ad Fontes Media

I once spent fifteen minutes arguing about how you know whether the information in this chart is accurate.  If you're curious about their methods, click here. 

The "new normal" is to distrust news agencies, big companies, the government, and basically anyone with a particularly large reach. 

Perhaps even more dangerous is the amount of fake news and haphazard research shared on social media.  Willful misrepresentations of complex issues are now a "too common" communication tactic on both sides ... and the fair and unbiased consideration of issues suffers.  

Social media spreads like wildfire, and the damage is done by the time it has been debunked (or proven to be an oversimplification).  Once people are "convinced," it is hard to get beyond that. 

In reality, things aren't as bleak as they seem.  People agree on a lot more than they say they do.  It is often easier to focus on "us" versus "them" rather than what we agree upon jointly.  This is true on a global scale.  We agree a lot.  Most Democrats aren't socialists, and most Republicans aren't fascists ... and the fact that our conversation has drifted there is intellectually lazy.

This idea that either side is trying to destroy the country is clearly untrue (OK, mostly untrue).  There are loonies on the fringes of any group, but the average Democrat is not that unlike the average Republican.  You don't have to agree with their opinions, but you should be able to trust that they want our country to succeed. 

I don't know that we have a solution.  But there is one common "fake news" fallacy I want to explain at least a little. 

It's called the Motte and Bailey fallacy.  It's named after a style of medieval castle prioritizing military defense.

Launceston Castle via Chris Shaw, CC BY-SA 2.0

On the left is a Motte, an artificial mound often topped with a stone structure, and on the right is a Bailey, the enclosed courtyard.  The Motte serves to protect not only itself but also the Bailey. 

As a form of argument, an arguer conflates two positions that share similarities.  One of the positions is easy to defend (the Motte), and the other is controversial (the Bailey).  The arguer advances the controversial position, but when challenged, insists they're only advancing the moderate position.  Upon retreating, the arguer can claim that the Bailey hasn't been refuted or that the critic is unreasonable by equating an attack on the Bailey with an attack on the Motte. 

It's a common method used by newscasters, politicians, and social media posters alike.  And it's easy to get caught in it if you don't do your research. 

Conclusion

As a society, we're fairly vulnerable to groupthink, advertisements, and confirmation bias. 

We believe what we want to believe ... so it is hard to change a belief (even in the face of contrary evidence). 

But, hopefully, in learning about these fallacies, and being aware, we do better. 

I will caution that blind distrust is dangerous – because it feels like critical thought without forcing you to think critically.

Distrust is good ... but too much of a good thing is bad. 

Not everything is a conspiracy theory or a false flag.

Do research, give more credence to experts in a field - but don't blindly trust them either.  How well do you think you're really thinking for yourself?

We live in a complicated world that is getting more complex. 

Hopefully, knowing this encourages you to get outside your bubble and learn more about those with whom you disagree.

Who knows ... Something good may come from it?

The Illusion of Choice

What happens doesn't matter nearly as much as what you make it mean ... and what you choose to do. 

For example, Dallas has been 100+ degrees almost all summer, and nothing stops.  You'll see people running outside, dogs walking, sports being played.  My son plays 8+ hour rugby tournaments in that heat, and no one bats an eye. 

Growing up in New England, we were woefully underprepared for that heat.  The world would stop.  On the other hand, 8 inches of snow was nothing, but a little bit of ice ... and Texas shuts down. 

Snow isn't 'good' or 'bad' … and neither was the change of plans.

Perspective.

Fund managers recognize the importance of sensibly diversifying risks and opportunities.

Be that as it may, as Mother Jones reported in the wake of the 2009 financial crisis, the nation's ten largest financial institutions held 54% of our total financial assets (compared to the 20% they held in 1990).  Meanwhile, the number of banks has dropped from almost 15,000 to barely 4,000. 

via Statista

Many people are shocked by a chart like this.  It must be 'bad' to have so much controlled by so few, right? 

But it isn't hard to find a version of this story playing out in other industries:  Print Media,  Music,  Broadcast Channels, and Consumer Products … this type of consolidation happens for a reason.

A firm that marshals more resources gains a competitive advantage and has more ways to win.

They benefit from economies of scale, transactional leverage, better distribution and partners, and more ways to diversify risks.  In addition, if they work to communicate, collaborate, and coordinate their actions (and data), they can unlock opportunities that others don't have (or can't see).

Here is a Chart Showing Some of the 'Winners' at that Game.

The following chart highlights our "Illusion of Choice."  A surprisingly significant portion of what you buy comes from one of these ten mega-companies (Kraft, Coca-Cola, PepsiCo, Kellogg's, Nestlé, Proctor & Gamble, Mars, Johnson & Johnson, General Mills, and Unilever).

It's amazing to see what these giants own or influence.  Click the picture to see a bigger version.

via visualcapitalist

Here is a more specific example.  You probably think you are familiar with Nestlé.  It is famous for chocolate.  But did you realize it was an almost $300 billion corporation … and the biggest food company in the world?  Nestlé owns nearly 8,000 different brands worldwide and takes a stake in (or is partnered with) many others.  This network includes shampoo company L'Oreal, baby food giant Gerber, clothing brand Diesel, and pet food makers Purina and Friskies.

Kind of cool?  Mostly terrifying...