Honestly, the fact that we’re at the top of the food chain is pretty miraculous.
We’re slow, we’re weak, and we’re famously bad at understanding large numbers and exponential growth.
Our brains are hardwired to think locally and linearly.
It’s a monumental task for us to fathom exponential growth … let alone its implications.
Think how many companies have failed due to that inability … RadioShack didn’t foresee a future where shopping was done online. Kodak didn’t think digital cameras would replace good ol’ film. Blockbuster dismissed a future where people would want movies in their mailboxes because they were anchored to the belief that “part of the joy is seeing all your options!” They didn’t even make it long enough to see “Netflix and Chill” become a thing.
Innovation is a reminder that you can’t be medium-obsessed. Kodak’s goal was to preserve memories. It wasn’t to sell film. Blockbuster’s goal wasn’t to get people in their stores; it was to get movies in homes.
Henry Ford famously said: “If I had asked people what they wanted, they would have said faster horses.” Steve Jobs was famous for spending all his time with customers but never asking them what they wanted.
Two of our greatest innovators realized something that many never do. Being conscientious of your consumers doesn’t necessarily mean listening to them. It means thinking about and anticipating their wants and future needs.
Tech and AI are creating tectonic forces throughout industry and the world. It is time to embrace and leverage what that makes possible. History has many prior examples of Creative Destruction (and what gets left in the dust).
I tend to focus on the themes that are impacting industry and the world ... but when I started this blog back in 2008, I was much more focused on investment themes ... why were markets doing what they were doing, both on the micro and the macro scale?
Based on data from Morgan Stanley, visualcapitalist just put together a chart that looks at the key investment themes from each decade since 1950. It's a great retrospective.
In the 1950s, we saw a post-war boom in European stocks, followed by a shift into "blue chip stocks."
When I grew up, my grandparents advocated for blue chip stocks, and they held their investments until the day they died ...
By the 1990s, when I started paying attention to markets, tech startups were taking over, and stocks weren't primarily held for years and years. Instead, they were getting calculated in weeks and months; people were trying to capitalize on a "quick trend."
Now, a quick trend can last under a day, and the average holding time for a stock (based on trading volume) is calculated in seconds.
Where will investments go in the '20s? We're currently seeing massive investment in tech, specifically the platforms that enable burgeoning tech, like NVIDIA. We also see a disconnect in U.S. equity markets, with 43% of global investment, but 26% of the world's economic output.
I think that, plus the growth in emerging markets, will result in a massive shift. Time will tell.
We're now midway through the Cowboys Season, and despite injuries plaguing the team, we just had a fantastic 43 - 20 victory over the Rams.
At every game, I run into this guy, and every game he wears a different creative, and well-thought-out costume. He sits on the 50-yard line. He wears Ferragamo shoes and a nice watch. For his day job, he is the Head of Psychiatry at a well-known hospital in the area. Yet, something about this game captures his imagination.
Jerry Jones does a lot right in how he builds his "Disney Ride." But this post will focus more on what the coaches and players do.
I'm regularly surprised by the levels of innovation and strategic thinking I see in football.
Football is something I used to love to play. And it is still something that informs my thoughts and actions.
Some lessons relate to being part of a team, while others relate to the coaching or management side of things.
Some of these lessons stem back to youth football ... but I still learn things watching games – and even more, from watching Dallas Cowboys practices at The Star.
Think about it ... even in middle school, the coaches have a game plan. There are team practices and individual drills. They have a depth chart, which lists the first, second, and third choices to fill certain roles. In short, they focus on the fundamentals in a way that most businesses don't.
The picture, below, is of my brother's high school team way back in 1989.
To re-state, most businesses are less prepared for their problems than an 8th-grade football team. Now, that might sound offensive to some of you – but if you think about it ... it's pretty accurate.
Losing to an 8th Grade Team
I shot this video right before the COVID-19 shutdown. I encourage you to watch it. I think it's 3 minutes well spent.
Football teams think about how to improve each player, how to beat this week's opponent, and then how to string together wins to achieve a higher goal.
The team thinks of itself as a team. They expect to practice. And they get coached.
In addition, there is a playbook for both offense and defense. And they watch game films to review what went right ... and what they can learn from for use later.
Contrast that with many businesses. Entrepreneurs often get myopic ... they get focused on today, focused on survival, and they lose sight of the bigger picture and how all the pieces fit together.
The amount of thought and preparation that goes into football - which is ultimately a game - is a valuable lesson for business.
What about when you get to the highest level? If an 8th-grade football team is equivalent to a normal business, what about businesses that are killing it? That would be similar to an NFL team.
Let's look at the Cowboys.
Practice Makes Perfect
How you do one thing is how you do everything. So, they try to do everything right.
Each time I've watched a practice session, I've come away impressed by the amount of preparation, effort, and skill displayed.
During practice, there's a scheduled agenda. The practice is broken into chunks, and each chunk has a designed purpose and a desired intensity. There's a rhythm, even to the breaks.
Every minute is scripted. There's a long-term plan to handle the season ... but, there was also a focus on the short-term details and their current opponent.
They alternate between individual and group drills. Moreover, the drills run fast ... but for shorter time periods than you'd guess. It is bang-bang-bang – never longer than a millennial's attention span. And they move from drill to drill – working not just on plays, but also on skillsets (where are you looking, which foot do you plant, how do you best use your hands, etc.).
They use advanced technology (including advanced player monitoring, biometric tracking, and medical recovery devices ... but also things like robotic tackling dummies and virtual reality headsets).
They don't just film games, they film the practices ... and each individual drill. Coaches and players get a cut of the film on their tablets as soon as they leave. It is a process of constant feedback and constant improvement. Everything has the potential to be a lesson.
Beyond The Snap
The focus is not just internal, on the team. They focus on the competition as well. Before a game, the coaches prepare a game plan and have the team watch tape of their opponent in order to understand the tendencies and mentally prepare for what's going to happen.
During the game, changes in personnel groups and schemes keep competitors on their toes and allow the team to identify coverages and predict plays. If the offense realizes a play has been predicted, they call an audible based on what they see in front of them. Coaches from different hierarchies work in tandem to respond faster to new problems.
After the game, the film is reviewed in detail. Each person gets a grade on each play, and the coaches make notes for each person about what they did well and what they could do better.
Think about it ... everyone knows what game they are playing ... and for the most part, everybody understands the rules and how to keep score (and even where they are in the standings). Even the coaches get feedback based on performance, and they look to others for guidance.
Imagine how easy that would be to do in business. Imagine how much better things could be if you did those things.
Challenge accepted.
And, in celebration of a Cowboys win ... here's me doing a cartwheel. I'm sure my body will feel great tomorrow ...
Some Professors put together IKEA-inspired instructional booklets for their algorithms and data-structures lectures. The idea was to make easy-to-understand explanations by removing words, and only using images. Ideally, this would allow them to be understood regardless of their native language or culture.
This is a pretty cool idea, or at least I thought so. My youngest son said, "I don't particularly understand IKEA directions or algorithms .... so this is basically the worst of both worlds for me." Finally, we agree about something!
Hopefully, you find it helpful. If not, there's always Wikipedia.
Data is the fastest-growing commodity, and is today’s “wild west” and the battlefield of today’s tech titans. We talk about AI as this gold rush, but data is the underpinning of it all.
A staggering 328.77 million terabytes of data are created daily, which means around 120 zettabytes of data will be generated this year.
Rapid growth means little time to create adequate rules. Everyone’s jumping to own more data than the next and to protect that data from prying eyes.
As a great example of this, I often warn people to keep their intellectual property off of ChatGPT or other hosted language models.
I also see it trading, but it’s pervasive in every industry and our personal lives as well.
Collecting basic data and using basic analytics used to be enough ... but not anymore. The game is changing.
For example, traders used to focus on price data ... but there has been an influx of firms using alternative data sets and extraordinary hardware and software investments to find an edge. If you’re using the same data sources as your competitors and competing on the same set of beliefs, it’s hard to find a sustainable edge.
Understanding the game others are playing (and the rules of that game) is important. However, that’s only table stakes.
Figuring out where you can find extra insight, or where you can make the invisible visible, creates a moat between you and your competition and lets you play your own game.
Here is a quick high-level video about Data as fuel for your business. Check it out.
It is interesting to think about what’s driving the new world (of trading, technology, AI, etc.), which often involves identifying what drove the old world.
History has a way of repeating itself. Even when it doesn’t repeat itself, it often rhymes.
With that said, the key to unlocking the pathway to the new world often comes from a new or alternative data set that lets you approach the problem, challenge, or opportunity from a different perspective.
Before e-mails, fax machines were amazing. Before cars, people were happy with horses and buggies.
These comparisons help explain the importance of data in today’s new world economics.
Petroleum has played a pivotal role in human advancement since the Industrial Revolution. It fueled (and still fuels) our creativity, technology advancements, and a variety of derivative byproducts. There are direct competitors to fossil fuels that are gaining steam, but I think it’s more interesting to compare petroleum to data due to their parallels in effect on innovation.
Pumping crude oil out of the ground and transforming it into a finished product is not a simple process. Yet, it is relatively easy for someone to understand the process at a high level. You have to locate a reservoir, drill, capture the resource, and then refine it to the desired product – heating oil, gasoline, asphalt, plastics, etc.
The same is true for data.
You've got to figure out what data you might have, how it might be useful, you have to figure out how to refine it, clean it, fix it, curate it, transform it into something useful, and then how to deliver it to the people that need it in their business. And even if you've done this, you then have to make people aware that it's there, that it's changing, or how they might use it. For people who do it well, it's an incredible edge. – Howard Getson
In a sense, data fuels the information economy much like oil fuels the industrial economy. The amount of power someone has can be correlated to their control of and access to these resources. Likewise, things that diminish or constrain access or use of these resources can lead to extreme consequences.
Why Data Is Better Than Oil
The analogy works, but it’s just that, an analogy, and the more you analyze it, the more it falls apart. Unlike the finite resource that is oil, data is all around us and increasing at an exponential rate, so the game is a little different:
Data is a renewable resource. It’s durable, it’s reusable, and it’s being produced faster than we can process it.
Because it’s not a scarce resource, there’s no urge to hoard it – you can use it, transform it, and share it knowing that it won’t diminish.
Data becomes more valuable the more you use it.
As the world’s oil reserves dwindle, and renewable resources grow in popularity and effectiveness, the relative value of oil drops. It’s unlikely that will happen to data.
Also, while data transport is important, it’s not expensive the way oil is. It can be transported and replicated at light speed.
Using alternative data gives traders an advantage, but it doesn’t always have to be confidential or hard-to-find information. Traders now have access to vast amounts of structured and unstructured data. A significant source that many overlook is the data produced through their own process or the metadata from their own trades or transactions.
In the very near future, I expect these systems to be able to go out and search for different sources of information. It's almost like the algorithm becomes an omnivore. Instead of simply looking at market data or transactional data, or even metadata, it starts to look for connections or feedback loops that are profitable in sources of data that the human would never have thought of. – Howard Getson
In a word of caution, there are two common mistakes people make when making data-driven decisions. First, people often become slaves to the data, losing focus on the bigger picture. It’s the same mistake people make with AI. Both are tools, not the end goal. Second, even the most insightful data can’t predict black swans. It’s important to exercise caution. Prepare for the unexpected.
The future of data is bright, but it’s also littered with potential challenges. Privacy concerns and data misuse are hot-button topics, as are fake news and the ability of systems to generate misleading data. In addition, as we gain access to more data, our ability to separate signal from noise becomes more important.
I think one of the biggest problems facing our youth - and really all of us - is how much information is thrust at us every waking moment of the day. No previous generation has had this much access to data. As a result, many are actually less informed than in the past. Soundbites become the entire news story, and nuance gets lost in the echo chambers.
The question becomes, how do you capitalize on data without becoming a victim of it?
There seems to be a mismatch between businesses, the economy, and the public.
Many businesses are seeing record profits and a massive amount of innovation, but inflation and interest rates are high, and many people are struggling.
There's a lot of fear, uncertainty, and doubt.
With that in mind, here is an infographic showing the 2024 Projections for What's Next for the U.S. Economy.
Before I get into the chart above, I want to remind people that the U.S. is resilient, and it seems like public sentiment is moving in a positive direction.
That said, 84% of CEOs and 69% of consumers think we're headed toward a recession. Meanwhile, the Fed is positive we won't ... and banks are almost positive we won't.
It seems like they know something we don't ... or maybe vice versa.
To lend some credence to the bullish sentiment, consumer spending is still high despite inflation and interest rates. In addition, Retailers are still posting solid earnings.
Unfortunately, we're increasingly seeing consumers resort to borrowing (including short-term lending options) to pay for goods. Household debt has hit a record high of $17 trillion in March.
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.
The Cost Of Thinking Linearly In Today's Age
Humans can’t do a lot of things.
Honestly, the fact that we’re at the top of the food chain is pretty miraculous.
We’re slow, we’re weak, and we’re famously bad at understanding large numbers and exponential growth.
Our brains are hardwired to think locally and linearly.
It’s a monumental task for us to fathom exponential growth … let alone its implications.
Think how many companies have failed due to that inability … RadioShack didn’t foresee a future where shopping was done online. Kodak didn’t think digital cameras would replace good ol’ film. Blockbuster dismissed a future where people would want movies in their mailboxes because they were anchored to the belief that “part of the joy is seeing all your options!” They didn’t even make it long enough to see “Netflix and Chill” become a thing.
via Diamandis
Human perception is linear. Technological growth is exponential.
There are many examples. Here is one Diamandis calls “The Kodak Moment.”
In 1996, Kodak was at the top of its game, with a market cap of over $28 billion and 140,000 employees.
Few people know that 20 years earlier, in 1976, Kodak had invented the digital camera. It had the patents and the first-mover advantage.
But that first digital camera was a baby that only its inventor could love and appreciate.
That first camera took .01 megapixel photos, took 23 seconds to record the image to a tape drive, and only shot in black and white.
Not surprisingly, Kodak ignored the technology and its implications.
Fast forward to 2012, when Kodak filed for bankruptcy – disrupted by the very technology that they invented and subsequently ignored.
via Diamandis
Innovation is a reminder that you can’t be medium-obsessed. Kodak’s goal was to preserve memories. It wasn’t to sell film. Blockbuster’s goal wasn’t to get people in their stores; it was to get movies in homes.
Henry Ford famously said: “If I had asked people what they wanted, they would have said faster horses.” Steve Jobs was famous for spending all his time with customers but never asking them what they wanted.
Two of our greatest innovators realized something that many never do. Being conscientious of your consumers doesn’t necessarily mean listening to them. It means thinking about and anticipating their wants and future needs.
Tech and AI are creating tectonic forces throughout industry and the world. It is time to embrace and leverage what that makes possible. History has many prior examples of Creative Destruction (and what gets left in the dust).
Opportunity or Chaos … You get to decide.
Onward!
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