There are a lot of commonalities between successful tech companies. Pretty much all of them attempt to leverage software to do jobs that would be too expensive, too boring, or virtually impossible to do otherwise.
Obviously, technology is a huge force factor impacting the success of a company. As a result, there is an arms race to get to "next" ...
Research and Development has always been a key in growing companies. Now, that is truer than ever. As tech improves faster and more dramatically, technologies become relevant and irrelevant faster than ever.
Challenging ... sure, but a great problem to have.
What a great time to be an entrepreneur!
Good luck with your 2018 plans. I'd love to hear what you are focusing on next year.
Today's investors have access to data and information that would have been unheard of 10 years ago ... and unfathomable 20 years ago. In the past, investors relied on information and experience from their real lives, from counterparties, and from fastidious attention to CNBC and stock tickers.
While the games, the rules, and the players have all changed, the goal hasn't ... more alpha ... more money ... more reliably.
What's Changed?
Algorithmic trading isn't new, but there is a shift in who's making the algorithms. For example, you can crowdsource development through Quantopian ... or let machines do the heavy lifting through A.I.-based firms like Sentient.
But I'd argue that's only true if you look at the same data, the same way.
The Future of Trading
One of the reasons A.I. is a great option for trading is that it takes away the human element of fear, greed, and discretionary mistakes.
Sentient's founder says:
"For me, it's scarier to be relying on those human-based intuitions and justifications than relying on purely what the data and statistics are telling you." - Babak Hodjat
In addition, people tend to get similar results because they do things similarly. As A.I. matures (and more researchers become better versed in what's possible) solutions will evolve.
It won't be a Ph.d. writing an algorithm ... it will be machines and code trying unthinkable combinations and finding edges that otherwise would remain invisible and unused.
Currently, most people train their algorithms on markets, or with human intervention, but there are more data sets that can be used to build more robust models.
Alternative Data
Alternative data, to most, means tracking Twitter and Facebook sentiment, but confining your definition to that limits potential alpha.
New sources of data are being mined everywhere, and are letting investors understand trends "before they happen".
For example, mobile devices, low-cost sensors, and a host of new technologies have led to an explosion of new potential data sources to use directly for predictive insight or indirectly to help improve models.
In addition, private company performance, logistics data, and satellite imagery are becoming popular data sets in a data scientist's alpha creation toolbox.
There are often concerns about the cost and completeness of these datasets, but as we get better at creating and using them, both will improve.
Finding more ways to train algorithms on new data can help traders once again find an edge on their competition.
The thing about "sustainable alpha" is that while one might be able to achieve it, you can't expect to have it doing the same thing everyone else, or that you've always done.
Markets change, and what worked yesterday won't necessarily work today or tomorrow. Trading is a zero-sum game, and as we move toward the future, this only gets more apparent.
Behavioral Game Theory shows that human choices don't necessarily reflect the benefits they expect to receive. That's no longer the case with algorithms.
For more on Big Data and its potential, here's access to the full panel discussion I participated in recently at The Trading Show in New York.
This post seems like it is about football ... but it is really a playbook of things we can do in business.
What Can Business Learn From Football Teams?
If you get a chance to watch an NFL practice ... I highly recommend it. It is an awesome experience and opportunity for a businessperson.
Each time I've watched a practice session I've come away impressed by the amount of preparation, effort, and skill displayed.
The Cowboys' coach is Jason Garrett. He is detail-oriented and intellectual. His pedigree ... he is a Princeton graduate who played quarterback in the NFL.
During practice, there's a scheduled agenda. 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 was scripted. You could tell there was a long-term plan ... but, there was also a focus on the short-term details (many details).
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 the skillsets as well (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, bio-metric 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 tablet as soon as they leave. It is a process of constant feedback, constant improvement, or constant renewal.
How you do one thing is how you do everything. So, they try to do everything right.
Pro football is one thing. College football is another. But, even in high 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 choice to fill certain roles.
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. 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).
Imagine how easy that would be to do in business. Imagine how much better things could be if you did those things.
I'm getting cynical, I understand planned obsolescence ... but has it occurred to you that Apple could make their phones act sluggish just before the launch of a new version?
My phone has been driving me nuts. So, (as I write this) I'm up at 2 am to place my order for the new iPhone X.
On one hand, it satisfies my desire for the new and shiny ... but, on the other hand, it makes it harder for my wife.
Buying gifts is often hard. But it gets harder when the giftee already has everything (or buys it himself).
Every year since 1959, Neiman Marcus has published a Christmas Book. Primarily comprised of normal Neiman Marcus offerings ... the book also contains pretty amazing "fantasy" gifts. For example, who doesn't want a rose-gold Cobalt Valkyrie-X private plane (worth $1.5 million) ...
Neiman Marcus
I don't know about you, but it's a little feminine for me.
Or, there is a private Submarine (worth $20,000,000).
Neiman Marcus
But that is only good if you don't have one already.
You can check out NM's 2017 Fantasy Gift List, here, and get a personal trip to Champagne, France or a pair of specially commissioned His and Hers Rolls Royces.
Let me know if you have any good gift ideas. I'm always looking for them.
But, what it means is up for interpretation. For example, one of the top digital marketers remains largely unfazed. Below is a video I did with Ryan Deiss, who has a different perspective on AI than I do.
Check it out:
Ryan understands that marketing relies heavily on data-analytics and automation ... but he believes that it is also reliant on the personal touch.
I agree that people are still a vital aspect of many businesses, and can't be fully replaced. However, I am dramatically more bullish on AI and its future and impact.
In many instances, today, what passes as AI is just an elegant use of brute force.
Nonetheless, AI is great at solving problems ... and is becoming increasingly able to digest and perform complex tasks (including tasks formerly thought of as done exclusively by humans).
Ryan believes that the best AI makes a conversation more human (in regards to selling and retail) and allows humans to be more human. In other words, as technology frees people up – they are free to spend their time on more valuable tasks and processes.
This has happened many times in society. Fewer people work in farming or manufacturing ... and yet there are more people doing more jobs.
So, obviously, in the same way that mechanization freed up workforces for better jobs, AI can do the same.
Realize, however, that human perception is linear ... while technological growth is exponential. Consequently, we probably do not know what AI will give (or take from) humans.
Only time will tell.
Meanwhile, some of the biggest companies are making big bets on R&D.
Alan is a wealth manager to the ultra-wealthy. His American Dreams show is very popular in Silicon Valley.
It's a show about finding your path in life, and making businesses thrive through adversity and challenging economic times.
We talked about my career path and how I went from a young lawyer to spending over 25 years running tech companies ... and we talked about the lessons I learned along the way.
It is different than other interviews I've done. Take a look.
There's a lot of "hype" these days. Social media and tools like Kickstarter would have you believe that every new idea is the "next big new thing".
In contrast, Gartner's Hype Cycle Report is a considered analysis of market excitement, maturity, and the benefit of various technologies. It aggregates data and distills more than 2,000 technologies into a succinct, contextually understandable, snapshot of where various emerging technologies sit on the hype cycle.
Understanding this hype cycle framework enables you to ask important questions like "How will these technologies impact my business?" and "Which technologies can I trust to stay relevant in 5 years?"
What's a "Hype Cycle"?
As technology advances, it is human-nature to get excited about the possibilities we imagine ... and then to get disappointed when those expectations aren't met.
At its core, the Hype Cycle tells us where in the product's timeline we are, and how long it will take the technology to hit maturity.
This year, according to Gartner, there are three overarching "mega-trends" to watch.
AI Everywhere shows the transition towards a ubiquitous AI experience, from self-driving cars, to machine learning, and to smart robots. Consider the impact on traffic/accidents with the adoption of autonomous vehicles, or the ability of machine learning to process more data faster.
Transparently Immersive Experiences shows our transition towards human-centric contextual and fluid technological experiences. - like Connected Homes or Virtual Reality. Consider the impact of Augmented Reality on advertisements or gamification.
Digital Platforms shows the transition of emergent platforms into adoption. Platforms like Blockchain, IoT, and Quantum Computing. Consider the effects of bitcoin and other blockchain initiatives, as well as the opportunity for new business models centered around these platforms.
Here is the chart. You can click the image to see it larger.
The hype cycle gives us an idea of which of these technologies will likely survive the market hype and have a potential to become a part of our daily life.
Peak of Inflated Expectations (Success stories through early publicity),
Trough of Disillusionment (waning interest),
Slope of Enlightenment (2nd & 3rd generation products appear), and
Plateau of Productivity (Mainstream adoption starts).
Which technologies do you think are over-hyped ... and which ones might survive the hype?
I find this stuff fascinating. Consider some of the interesting technologies just starting their hype cycle:
Human Augmentation has the potential to enhance our bodies and minds using electrical currents, chips, or exoskeletons, but also raises ethical and legal questions.
Smart Dust opens up the possibility of monitoring essentially everything by creating a vast network of minuscule sensors that can detect various inputs.
Here Are Some Links For Your Weekly Reading - December 3rd, 2017
Here are some of the posts that caught my eye recently. Hope you find something interesting.
Lighter Links:
Trading Links:
Posted at 07:57 PM in Books, Business, Current Affairs, Healthy Lifestyle, Ideas, Just for Fun, Market Commentary, Personal Development, Science, Trading, Trading Tools, Web/Tech | Permalink | Comments (0)
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