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  1. May 2020
  2. Apr 2020
    1. Goldman, however, had taken the equivalent of its own short position in Luckin’s shares. At the end of the fourth quarter, its filings show it held a put-option to sell 7.9 million Luckin shares. Like a short position, put options also make money as a stock falls. The filing suggests that Goldman may have been hedging its position as a lender holding some of the Luckin collateral shares. The put position was a sizable insurance policy against a drop in the stock. Goldman declined to comment for this story. 

      Goldman held a put option against a company it lend to???

    2. Qian’s comments reflected Luckin’s obsessive drive to overtake Starbucks, one of the most successful U.S. companies in China. Starbucks opened its first coffee shop in the country in 1999 and now has 4,300 of them. By the time of its initial public offering, not even two years after its founding, Luckin was more than halfway to matching the market leader.

      “We have done what most people do in 15 or 20 years,” Luckin Chief Financial Officer Reinout Schakel told CNBC on the morning of the Nasdaq debut.

      China consumes nine times as much tea as coffee, but Qian saw that statistic as an opportunity. According to an account in Xinhua, the official state news service, she was drinking more and more coffee during long hours at her previous job and grew interested in why coffee hadn’t caught on in China as in other countries and why its cost was so high.

      Until 2017, neither Qian nor Luckin’s chairman and largest shareholder, Charles Zhengyao Lu, had much to do with coffee shops. Lu studied industrial electric automation at the University of Science and Technology in Beijing and worked for the government in the northern city of Shijiazhuang for three years before getting the business itch. He started and ran a string of companies in information technology, telecommunications and automobile services.

      “Entrepreneurship is like a marathon without an end,” he said at an award ceremony for China’s biggest business names in 2016.

      His most successful venture at the time was CAR Inc., a car-rental company that had U.S. financing from Hertz and Warburg Pincus, the private equity firm. It listed on the Hong Kong stock exchange in 2014, and within eight months, its stock value had nearly doubled. The boom was short-lived — the share price dropped below its initial offering price by the beginning of 2016 — but by then Lu, along with Hertz and Warburg Pincus, had sold the bulk of their stakes.

      When Qian stepped up to the Nasdaq podium on May 17, 2019, Luckin had been in operation for just 20 months. Its $17 a share public offering raised another $645 million, and its underwriters included CICC, Morgan Stanley and Credit Suisse.

      On January 7, the company said it had more than 4,500 stores, enough to overtake Starbucks in China.

      Howard Penney, an analyst for the online financial program Hedgeye Risk Management, summed up the optimism surrounding the company’s story line. On Jan. 15, he said that Starbucks would never be able to compete with Luckin in China, and might as well try to acquire it. Penney called Luckin “the most digitally savvy company in the world.”

      Two days later, Luckin’s stock hit its all-time high, just above $51 a share, pushing its market value past $12 billion.

      “China is to stock fraud,” he likes to say, “as Silicon Valley is to technology.”

    1. The company was founded as WeatherBill in 2006 by two former Google employees, David Friedberg and Siraj Khaliq. The company began as a startup focused on helping people and businesses manage and adapt to climate change, by providing weather insurance to ski resorts, large event venues, and farmers. In 2010 it decided to focus exclusively on agriculture, and launched the Total Weather Insurance Product in fall 2010 for corn and soybeans.[2][3] On October 11, 2011, WeatherBill changed its name to The Climate Corporation.[4] In June 2013 the U.S. Department of Agriculture's Risk Management Agency authorized the Climate Corporation to administer federal crop insurance policies for the 2014 crop year.[5] In October, 2013 Monsanto announced that it was acquiring the company for approximately $1.1 billion.[6]

      The Climate Corporation is a digital agriculture company that examines weather, soil and field data to help farmers determine potential yield-limiting factors in their fields.

      "That first year, in 2011, the Climate Corporation generated $60 million in sales, just from selling weather insurance to farmers. Three years later they were insuring 150 million acres of American farmland—the bulk of the Corn Belt—and teaching the farmers how to farm them more efficiently. Six years after venture capitalists valued David Friedberg’s new company at $6 million, Monsanto bought it for $1.1 billion." The Fifth Risk

    1. If paralysis ended once you walked out of the Capitol, we wouldn’t have a housing crisis. We’d have better social insurance infrastructure. We’d have better infrastructure, period. But it doesn’t. Report Advertisement To put the question simply: Why is Penn Station, the flagship rail station in New York City, such a dump? Why can’t the richest city in the richest nation in the world have, at the very least, a train station with seating, some nice restaurants, working elevators, and an absence of human waste falling through the ceiling? Marc Dunkelman spent years cataloging the many failures to revamp Penn Station, a number of which came complete with hefty doses of federal funding. Each time, the story was the same: Plenty of people who wanted to build, and plenty of money with which to build, but too many people with vetoes who simply didn’t want the building to happen.

      "vetocracy"

    1. This is a perfect environment for gold to take center stage. Fanatical debasement of moneyby all of the world’s central banks, super-low interest rates and gold mine operation and extractionissues(to a large extent related to the pandemic)should create a fertile ground for this most basic of all money and storesof value to reach its fair value, which we believe is literally multiples ofits current price. In recent months,goldhas gone up in price to some degree, but we think that it is one of the most undervalued investable assetsexisting today. There is nothing else that has its historical and fundamental characteristics,and we think that itis only beginning its inexorable, but 11impossibletotimeand placeboundaries around, uptrend.The fact that it is so under-ownedby institutional investors is astonishing to us in light of the obsessively inflationary policies being pursued by central banks around the world

      Elliot Management April 16 2020

    2. Most readers will say,“How caninflation possibly move up? It is a depression out there.” As a first-order effect, we mostly agree with that, but there are aspects of this peculiar crisis thatcould produce upside inflation surprises. There are significant disruptions in the global food supply chain, and those disruptions (which could include or produce export controls, labor disputes and outages, border issues preventing labor workers from harvesting crops and other disruptions) could cause significant pockets of high foodprice inflation and limited availability,which in turn could cause social unrest and further disruption. Nobody is prepared for this kind of inflation, and if it develops, financial repression is not going to hold bond prices up at the stupid yields currently prevailing.

      Elliot Management April 16 2020

    3. The potential opportunity setis primarily in credit. Of course,equities thathave fallen 20%, 30%or50% in a very short time can provide substantial upside, but in periodslike this one, we prefer the additional downside protection of carefullyresearched debt. The Holy Grail(which presented itself in size in 2008)is to have credit positions in which we have so much confidence andwhich have so muchconvexity (asymmetric return profiles; much more upside than downside) that hedges are either not needed or can be relatively small.A great example wasauto finance unsecured debt in 2008, which at the bottom was trading at levels thatanticipated many more defaults than at any time in history.Such credit positions fell in priceto many points below our “scientificallyderived”bedrock-bottom prices, but we had a lot of confidence in the ultimate repayment of the debt

      Elliot Management April 16 2020

      • also Buffett's GS/BOA preferred stock deals
    4. While it is near-universally believed that the global, particularly the American, economy was humming on all cylinders before being slugged flat by the virus, we believed that the pre-virusfinancialassets landscape was toward the high end of the riskiness scale. The record-high global leverage, the record-low government-manipulated interest rates, the $20 trillion of purchased bonds and stocks still on the books of the major central banks from the non-stop emergency policies pursued for 10 years after the emergency was over, presented a highly risky and unsound picture. It is on thatterrainthat the virus landed.

      Elliot Management April 16 2020

    1. Once this securitization accelerates, ARR securities will become the next bond-like asset class for both institutions and individuals – irresponsible not to have some in your portfolio, as a fixed income product and a balance against equities. And who will make this market? Sand Hill Sachs.

      "As Alex Danco highlighted in his recent article Debt is Coming, it is clear that recurring revenue securitization – the notion of selling your future ARR bookings at a discount – is the future. "

    2. Put another way, as happens in every maturing industry before it, Internet company revenue will become zero-sum.
  3. www.lionscrestadvisors.com www.lionscrestadvisors.com
    1. Modern Portfolio Theory tells us to mitigate risk through diversification, but this tends to lower CAGRs (in the name of higher Sharpe ratios); one is then forced to apply leverage to raise the CAGR back up, which just adds back a different risk by magnifying the portfolio’s sensitivity to errors in one’s spurious correlation estimates. Diversification is unfortunately not “the only free lunch in finance” that it has been made out to be. So much risk mitigation is simply about moving from concentration (or typically beta) risk to levered model risk

      So much risk mitigation is simply about moving from concentration (or typically beta) risk to levered model risk

    1. The company has humble beginnings. Lim started off with little more than a fishing boat supplying diesel to other vessels. More comfortable speaking his native dialect of Hokkien than English or Mandarin, he was one of the first traders outside China to start doing business with the mainland, shipping fuel to southern Chinese provinces since the 1980s.Hin Leong grew in parallel with Asia’s recovery after the 1997-98 economic crisis. As Indonesia, Malaysia and others rebounded, so did demand for diesel and fuel oil, the staples in which Hin Leong traded. When China’s growth accelerated over the following decades, more ships stopped in Singapore to take on fuel, and Hin Leong became a giant of the industry, an empire with stakes in an oil terminal and tanks capable of holding millions of barrels of oil.Its domination of the market gave rise to the quip that anyone wanting to start a ship fuel business in Singapore had better get an “OK” from OK Lim’s company. His trading plays, often bullish, and more often than not targeting either fuel oil or diesel became the stuff of legend in the city. While others stumbled, Lim appeared to always persevere.
    1. Over the past 40 years, two people have stood out for their fixation on what Forbes estimates their net worth to be: Prince Alwaleed bin Talal and President Donald J. Trump. This year, Kanye West joins that vainglorious trinity. Over the past few months, he has steadily taken his complaints up the Forbes editorial ladder (“you’re snubbing me and avoiding the truth at all cost”) while publicly waxing for the validation. “When people say it’s crass to call yourself a billionaire, I might legally change my name to Christian Genius Billionaire Kanye West for a year until y’all understand exactly what it is,” West explained in November. “It will be on the license plate.”
    1. "As an aside, the idea that we live in a time where Apple is telling Europe what forms of exposure notification will be permitted is basically the entire thesis behind / pitch for the existence of this newsletter. Not because I believe Apple abused its power, but because the world is still catching up to the idea that Apple and a handful other tech giants have this power."

      One country that has been persuaded of the companies’ approach is famously privacy-conscious Germany. Germans were instrumental in devising the (tongue twister alert) Pan-European Privacy-Preserving Proximity Tracing project, an effort to do exposure notification in a way that protected citizens from their governments. But the project would have required operating system-level changes to Apple’s iOS by making Bluetooth available to public-health apps that sought to process exposure notifications on a central server controlled by the government. For privacy reasons, Apple said no, and now Germany has signed on with Apple’s system. Here are Douglas Busvine and Andreas Rinke in Reuters: Germany changed course on Sunday over which type of smartphone technology it wanted to use to trace coronavirus infections, backing an approach supported by Apple and Google along with a growing number of other European countries. […] Germany as recently as Friday backed a centralised standard called Pan-European Privacy-Preserving Proximity Tracing (PEPP-PT), which would have needed Apple in particular to change the settings on its iPhones. When Apple refused to budge there was no alternative but to change course, said a senior government source.

    1. Significant paper on the cost of misinformation. Basically, one standard deviation more viewership of Sean Hannity (denied seriousness of COVID) versus Tucker Carlson (took the pandemic seriously) is associated with in 20% more deaths at the county-level. https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_202044.pdf…

      Mindblowing

    1. Using the MIT study’s data, Turner co-authored a 2015 paper published in the Journal of Industrial Ecology, estimating that “it takes more than 100 times the energy to manufacture an alkaline battery than is available during its use phase.” And when the entirety of a battery’s emissions are added up — including sourcing, production, and shipping — its greenhouse gas emissions are 30 times that of the average coal-fired power plant, per watt-hour.All of which is to say: An appliance powered by an alkaline battery consumes more carbon than an appliance that’s plugged into an electrical outlet, according to the study.
    1. In one instance, Amazon employees accessed documents and data about a bestselling car-trunk organizer sold by a third-party vendor. The information included total sales, how much the vendor paid Amazon for marketing and shipping, and how much Amazon made on each sale. Amazon’s private-label arm later introduced its own car-trunk organizers. “Like other retailers, we look at sales and store data to provide our customers with the best possible experience,” Amazon said in a written statement. “However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch.”

      Case study:

      • build a marketplace
      • get other companies to figure out which cakes are the hottest to sell
      • sell those cakes yourself
      • charge other companies to advertise and get favorable placement "Fortem spends as much as $60,000 a month"
      • put your products on top... because you own the platform

      Amazon’s private-label business encompasses more than 45 brands with some 243,000 products, from AmazonBasics batteries to Stone & Beam furniture. Amazon says those brands account for 1% of its $158 billion in annual retail sales, not counting Amazon’s devices such as its Echo speakers, Kindle e-readers and Ring doorbell cameras.

    1. 1 in 5 people in NYC may already have immunity to Covid19, suggesting that the CFR is much lower... as of today it's ~10k deaths / 150k cases => 7%

      But if 20% of NYC have it => 1.7m cases => 10k/1.7m => .6% CFR

    1. In early 2009, on her first trip to Asia as Barack Obama’s secretary of state, Hillary Clinton thanked Chinese policymakers for their “confidence in United States Treasuries” amid the global financial meltdown, adding that human-rights disagreements shouldn’t “interfere” with crisis-fighting efforts.Then, suddenly, relations started going downhill. China grew more assertive as President Hu Jintao came to the end of his term, moving to assert claims to disputed territory in the South China Sea and the Sea of Japan over strenuous American objections. It was also becoming much more confident in the superiority of its economic model, which had come through the crisis relatively unscathed. When Biden visited Beijing in August 2011—shortly after S&P’s Global Ratings downgraded the U.S.’s credit rating—then-Premier Wen Jiabao gave him a mini-lecture on the importance of fiscal prudence, according to a person familiar with the exchange. Wen, the person said, also delivered a thinly veiled threat, saying he hoped China wouldn’t need to find an alternative to parking its wealth in U.S. bonds. Biden replied that Wen’s government was welcome to sell its holdings—plenty of global investors would be happy to buy them. No one, the person recalled Biden saying, had ever won by betting against the U.S. economy.

      WOW

    1. The most extraordinary statement from an audit firm after missing a $800 million hidden loss: "We stand behind the quality of our work". That's Deloitte & Touche LLP's response on the collapse of oil trading house Hin Leong |

      Remind anybody of the Big Four's complicity in '08?

    1. The World Health Organization’s internal corruption became palpable to most people in late March. That is when this video, in which a Radio Television Hong Kong journalist conducts an interview with WHO official Bruce Aylward, came to light. To be fair, Dr. Aylward – a senior advisor to the Director-General – had been put in an awkward position when asked if the WHO will reconsider Taiwan’s membership. He is not the person who makes this determination.
    2. For decades, we have permitted the financial services industry to repeatedly force us into Hobson’s Choices at the end of every market cycle. Every cycle, Wall Street levers up and empowers cyclical sectors of the economy to lever up. When they do, they improve their returns in the interim, extract as much cash as possible and subject us all to systemic risk in the process. When that risk manifests, and it always does in some way “no one could have predicted”, we are then told we must all share the burden for it, since now is not a time for blame! Real businesses and families are hurting, and not helping Wall Street right now would hurt them, too.

      Wow

    3. Doug Parker has pocketed more than $150 million through his sale of 3.6 million shares in American Airlines. These sales were particularly egregious in 2015 – 2016, not coincidentally the period of American’s greatest stock buyback activity. How egregious were the stock sales? For a twelve month period from mid-2015 through mid-2016, Doug Parker pocketed between $4 million and $11 million in stock sales per month. How large were the stock buybacks? Two-thirds of American’s $13 billion in stock buybacks over this six year period occurred over these same months.Here’s another fun fact about Doug Parker. For a brief shining moment, American Airline’s stock price went above $50 in early 2018. Wouldn’t you know it, Doug just happened to choose that moment to sell 437,000 shares of stock, more than twice as much stock as he had ever sold before and almost 5x the usual size of his stock sales. Barf.
    4. We are talking about Whiting Petroleum, and Brad serves as both its Chairman of the Board and Chief Executive Officer. On March 26, 2020, that board paid him and his fellow executives $14.6 million in bonuses. Holley himself pocketed $6.4 million. Six days later, that same board sent Whiting Petroleum into Chapter 11 bankruptcy with a proposal that would wipe out 97% of the equity in the company. According to the Board of Directors of the Whiting Petroleum Company, these bonuses were “intended to ensure the stability and continuity of the company’s workforce and eliminate any potential misalignment of interests that would likely arise if existing performance metrics were retained.” If you are a layperson, this explanation may sound to you like a very large crude carrier full of horseshit. I understand why you might think that. But let me assure you as a non-layperson that this explanation is an ultra large crude carrier full of horseshit.

      Disgusting

    5. Classic Epilson Theory, this time on the “Common Knowledge” (read: myth) of the value of a college education

      The importance of post-secondary education in America IS a myth – one of our most powerful.

      We hold up our ‘Yay, College’ signs in the same way as we do ‘Yay, Military’, ‘Yay, Capitalism’ and ‘Yay, Equality’ signs, because not doing so is to say that we oppose the right-sounding principles that form the basis of the myth. And just like ‘Yay, Capitalism’, well…capitalizes on our desire to signal our deeply held belief in the power of rewarding economic risk-taking to convince us to permit distortions in economic risk-taking, ‘Yay, College’ exploits our belief in equality, innovation, merit and education to convince us to permit distortions in the capacity of our university and degree system to deliver ANY of those things.

      The Myth of College is that it grants invaluable life experience, broadened horizons and deeper skills that no other 4-year experience for a young adult could match.

      The Zeitgeist of College is that it is now (grudgingly) really about preparing workers for long and prosperous careers.

      The Reality of College is that it sells a license to use a credential.

      What do I mean by a credential? I mean the portfolio of Useful Signals that are sent by the achievement of a university degree. Beyond the attachment to the ideals of the Myth of College, much of that signal, I think, exists in our Common Knowledge about what traits a student needs to be admitted to that particular degree-granting institution. You know, intelligence, creativity, breadth of talents, work ethic, having the correct parents and grandparents, things like that. Much of whatever is left exists in the signal from completing the degree. Can you follow instructions? Are you comfortable pulling all-nighters? How do you feel about sitting at a desk with a laptop for 60 hours a week?

    1. A Dutch water bond from 1624 still generates interest— though it's unclear if anybody collects... the owners of this one from 1648, Yale University, do OTOH

    1. Solve problems/engage with the world

      So if you want to start a startup one day, what should you do in college? There are only two things you need initially: an idea and cofounders. And the m.o. for getting both is the same. Which leads to our sixth and last counterintuitive point: that the way to get startup ideas is not to try to think of startup ideas.

      I've written a whole essay on this, so I won't repeat it all here. But the short version is that if you make a conscious effort to think of startup ideas, the ideas you come up with will not merely be bad, but bad and plausible-sounding, meaning you'll waste a lot of time on them before realizing they're bad.

      The way to come up with good startup ideas is to take a step back. Instead of making a conscious effort to think of startup ideas, turn your mind into the type that startup ideas form in without any conscious effort. In fact, so unconsciously that you don't even realize at first that they're startup ideas.

    1. Prologue:

      Federalism => competition between states => one (small) state, S. Dakota, abolishing long-standing laws that prevented usury => growth of trillion dollar credit card debt industry

      See also Little South Dakota (pop. 833,000) holds $2.5 trillion in bank assets — more than any other state. Here's why. (The Atlantic, 2013):

      • But when state leaders, desperate to attract outside businesses during the economic recession of the early 1980s, changed South Dakota's usury laws to eliminate the cap on interest rates and fees, Citibank came calling...The deal was breathtakingly quid pro quo, with then-Gov. Bill Janklow's chief-of-staff leaving to become president and CEO of Citibank South Dakota.

      AND then the abolishing of laws against perpetuities

      In 1983, he abolished the rule against perpetuities and, from that moment on, property placed in trust in South Dakota would stay there for ever. A rule created by English judges after centuries of consideration was erased by a law of just 19 words. Aristocracy was back in the game.

      The Tax Justice Network (TJN) still ranks Switzerland as the most pernicious tax haven in the world in its Financial Secrecy Index, but the US is now in second place and climbing fast, having overtaken the Cayman Islands, Hong Kong and Luxembourg since Fatca was introduced. “While the United States has pioneered powerful ways to defend itself against foreign tax havens, it has not seriously addressed its own role in attracting illicit financial flows and supporting tax evasion,” said the TJN in the report accompanying the 2018 index. In just three years, the amount of money held via secretive structures in the US had increased by 14%, the TJN said.

      Here is an example from one academic paper on South Dakotan trusts: after 200 years, $1m placed in trust and growing tax-free at an annual rate of 6% will have become $136bn. After 300 years, it will have grown to $50.4tn. That is more than twice the current size of the US economy, and this trust will last for ever, assuming that society doesn’t collapse altogether under the weight of this ever-swelling leach.

      If the richest members of society are able to pass on their wealth tax-free to their heirs, in perpetuity, then they will keep getting richer than those of us who can’t. In fact, the tax rate for everyone else will probably have to rise, to make up for the shortfall caused by the wealthiest members of societies opting out, which will just make the problem worse. Eric Kades, the law professor at William & Mary Law School, thinks that South Dakota’s decision to abolish the rule against perpetuities for the short term benefit of its economy will prove to have been a long-term catastrophe. “In 50 or 100 years, it will turn out to have been an absolute disaster,” said Kades. “Now we’re going to have a bunch of wealthy families, and no one will be able to piss away that wealth, it will stay in the family for ever. This just locks in advantage.”

      All effected by one man

      And upheld by this 1978 SCOTUS case which allowed banks to export interest rates based on where they were "headquartered," — sound similar to the Irish tax dodge? (based on where the IP was owned)

    1. The unintended consequences of interventionism @Nassim Taleb? + America's ridiculous healthcare system

      About four peanut-allergic children die every year in the United States from a reaction to peanut.

      Kids’ lack of exposure to peanuts, however, seems to have an unintended consequence: more peanut allergies. In the United States, the latest estimates find that 2 to 5 percent of American kids have a peanut allergy. The number of visits to emergency rooms due to anaphylactic reactions to peanuts more than doubled from 2008 to 2012.

      In 2016, Vickery left Duke to work full time for Aimmune, where he oversaw a clinical trial of the peanut flour. Two groups of about 250 people with peanut allergies took the peanut pill or placebo every day and were monitored over the course of a year. At the end of the experiment, the participants all ate small, gradually increasing doses of peanut, up to about two peanuts. The researchers measured how much it took to cause a reaction. Almost everyone in the placebo group had a reaction before reaching the full amount. But among the people taking the peanut-flour pill, two-thirds could safely eat two peanuts.

      In a small 2018 study, researchers reported safely giving 1/125,000th of a peanut to allergic kids and very slowly working all the way up to 12 whole peanuts.

      “Well, I suppose they could,” Casale said. But he went on to explain that the real value is billing codes. When peanut flour is an FDA-approved drug, that means doctors can be reimbursed for prescribing it and overseeing its administration. The process can be covered by insurance. As it is, practitioners who offer their own versions of oral immunotherapy have to be paid out of pocket. This makes it inaccessible to many patients. So, essentially, in order to make the therapy accessible, it has to become part of the system. The system is what allows pharmaceutical companies and doctors to charge insurers thousands of dollars for peanuts.

      In April, a meta-analysis in The Lancet confirmed the same: There was “high-certainty evidence” that peanut oral immunotherapy considerably increases allergic and anaphylactic reactions, compared with avoidance or placebo treatment. The FDA committee lists the intended use of the drug as “to reduce the risk of anaphylaxis after accidental exposure to peanut in patients.” Yet in people who’ve taken the drug, this risk has been shown to go up, not down.

      “It’s impossible to know if the increase in anaphylaxis was due to increased exposure to peanuts because people felt protected, or if it was due to the drug itself,” Tice notes. This sort of semi-protective treatment can have the complicating effect of making a person feel more protected than they are in the real world. Letting one’s guard down, even a little, can cause any benefit of desensitization to be quickly outweighed.

      The old standard was that a drug could not be taken to market until it had proved to be safe and effective in two trials with meaningful end points—ideally treating or curing a disease, or at least alleviating symptoms. Over the past decade, the FDA has loosened standards, requiring only some evidence of an effect that may or may not be meaningful.

    1. Fascinating especially in discussing how use of data science allows psychological distancing from the actual task: predatory loaning

      Capital One collects $23 billion in interest per year—an average that works out to $181 from each family in America. Of course, not every family has a Capital One account, and most public surveys say roughly half of people with credit cards pay them in full and accrue no interest. So simple math tells you that many families are paying Capital One at least $800 in interest every year.

      People at Capital One are extremely friendly. But one striking fact of life there was how rarely anyone acknowledged the suffering of its customers. It’s no rhetorical exaggeration to say that the 3,000 white-collar workers at its headquarters are making good money off the backs of the poor. The conspiracy of silence that engulfed this bottom-line truth spoke volumes about how all of us at Capital One viewed our place in the world, and what we saw when we looked down from our glass tower. This is not meant to offer a broad-brush indictment of business at Capital One; it is hardly the only corporation that has been ethically compromised by capitalism. It is, however, meant to shine a few photons of light on the financial industry in a post-crisis age of acute inequality.

      Amid the daily office banter at Capital One, we hardly ever broached the essence of what we were doing. Instead, we discussed the “physics” of our work. Analysts would commonly say that “whiteboarding”—a gratifying exercise in gaming out equations on the whiteboard to figure out a better way to build a risk model or design an experiment—was the favorite part of their job. Hour-long conversations would oscillate between abstruse metaphors representing indebtedness and poverty, and an equally opaque jargon composed of math and finance-speak.

      If you were not familiar with the almanac of metaphors—many of which, as I understand it, were specific to Capital One—you would not follow the conversations. The “bathtub,” for example, denotes a loan portfolio, because it’s like water down the drain when you lose customers—either because they have closed their account or were fed up with Capital One or have involuntarily defaulted on their loan. When you spend tens of millions of dollars on marketing, that’s turning on the spigot for new water in your “bathtub.”

      It was common to hear analysts say things like, “I just love to solve problems.” But what they were really doing was solving something closer to puzzles. It’s clear to me, for example, that the janitor at my middle school solved problems when she cleaned up trash. It’s far less clear whether analysts at Capital One are solving problems or creating them. In either event, the work culture at this well-appointed lender of dwindling resort is pretty much designed to encourage former students of engineering or math to let their minds drift for a few years and forget whether the equations in front of them represent the laws of thermodynamics or single moms who want to pay for their kids’ Christmas gifts without having to default on their rent or utilities payments.

      Before I managed Capital One’s secured card product, I worked on what we called “Mainstreet proactive credit limit increases” or “Mainstreet pCLIP” for short. Mainstreet was yet another piece of euphemistic in-house jargon; it meant subprime. As for proactive credit limit increase, it meant raising the cap on how much someone is allowed to borrow—without getting their permission to raise the cap.

      The emails we used to send these “Mainstreet pCLIP” customers would go as follows: “Elena Botella, you’re a valued customer, and we want you to get more out of your card. So recently, your credit line was increased to $6550.00. This gives you more in your wallet, which gives you more flexibility. Thank you for choosing Capital One®. Enjoy your higher credit line.”

      At any bank, if you have a low credit score, you’re only likely to get a credit limit increase if you’re getting close to your existing credit limit. So if you got that email, you probably had a few thousand dollars of Capital One credit card debt at an interest rate of at least 20 percent. That implies you were probably paying Capital One around $40 in interest per month or more. You might want or need to borrow more money on top of what you’ve already borrowed, but I always thought it was a little bit sick for us to be telling people to “enjoy” their higher credit line. It felt more than a little like shouting, “Enjoy getting into more debt, suckers!” before disappearing in a cloud of smoke and speeding off in a Tesla.

      Capital One’s culture of experimentation also acted as a kind of buffer. Fast Company has reported that Capital One runs 80,000 experiments per year. As Christopher Worley and Edward Lawler III explain in the journal Organizational Dynamics, a bank like Capital One can randomly assign differing interest rates, payment options, or rewards to various customers and see which combinations are most profitable for any given segment of people. It’s not so different from how a pharmaceutical company might use a randomized control trial to test whether a new drug is effective, except that the results of the bank’s experiment will never get published, and instead of curing diseases, the bank is trying to extract more money from each customer. The use of experiments is itself an act of psychological distancing; it allows the analysts controlling the experiment to resolutely apply its findings as a profit-maximizing mandate without giving the strategy a name such as, oh, “predatory lending.”

      The rise of data science, machine learning, and artificial intelligence means that you don’t need venal corporate tycoons wearing Monopoly Man hats to grind the faces of the poor into the dirt. Under the data-driven directives of Capitalism 2.0, you can have a bunch of friendly data scientists who don’t think too deeply about the models they’re building, while tutoring low-income kids on the side. As far as they’re concerned, they’re refining a bunch of computer algorithms.

    1. The magic word you should use more:

      Want to learn one magic word that will immediately make year writing better? Meanwhile. Why? Most people, when they string thoughts and ideas together, rely on joining words like “so”, “then”, “therefore”, “however”, or “except”. There’s nothing wrong with them, but what they do is establish a chain of thinking that goes, “A, then B, then C, then D.” It’s linear. Even counterfactual joining words like “however”, “but”, “nevertheless”, even though they establish opposition, are still doing so in a one-track fashion.

      Meanwhile does something else. It establishes parallel tracks of thought. A, therefore B. Meanwhile, C, yet D is a more powerful way to communicate complex ideas than one-track linear writing. When the punchline eventually comes, and those lines of thought collide into something interesting, you can make a better point than if you only had one track to work with.

      Just write more:

      A pottery teacher has two students. On Monday he tells the first student: “Your job this week is to try to create one perfect pot. Spend as much time as you need. Make it perfect.” Then he tells the second student: “Your job this week is to make as many pots as possible. I don’t care if they’re nice. Crank ‘em out.” Then on Friday, he comes back. What does he find?

      Not only has the second student produced hundreds more pots than the first student (who’s laboured over his one shot at glory); every single one of her pots is better. The way you learn how to make a perfect pot is by making a lot of pots. Period.

      Go make some pots.

    1. 'Summary' (still 30m of reading LOL) of Sapiens; tl;dr: cooking + language + imagination + industrialization => progress/ society => collapse of the family

      Some scholars believe there is a direct link between the advent of cooking, the shortening of the human intestinal track, and the growth of the human brain. Since long intestines and large brains are both massive energy consumers, it’s hard to have both. By shortening the intestines and decreasing their energy consumption, cooking inadvertently opened the way to the jumbo brains.

      Yet the truly unique feature of our language is not its ability to transmit information about men and lions. Rather, it’s the ability to transmit information about things that do not exist at all.

      The first millennium BC witnessed the appearance of three potentially universal orders, whose devotees could for the first time imagine the entire world and the entire human race as a single unit governed by a single set of laws. Everyone was ‘us’, at least potentially. There was no longer ‘them’.

      The first universal order to appear was economic: the monetary order.

      The second universal order was political: the imperial order.

      The third universal order was religious: the order of universal religions such as Buddhism, Christianity and Islam.

      Since all social orders and hierarchies are imagined, they are all fragile, and the larger the society, the more fragile it is. The crucial historical role of religion has been to give superhuman legitimacy to these fragile structures. Religions assert that our laws are not the result of human caprice, but are ordained by an absolute and supreme authority. This helps place at least some fundamental laws beyond challenge, thereby ensuring social stability.

      The Industrial Revolution turned the timetable and the assembly line into a template for almost all human activities. Shortly after factories imposed their time frames on human behaviour, schools too adopted precise timetables, followed by hospitals, government offices and grocery stores. Even in places devoid of assembly lines and machines, the timetable became king. If the shift at the factory ends at 5 p.m., the local pub had better be open for business by 5:02.

      This modest beginning spawned a global network of timetables, synchronised down to the tiniest fractions of a second. When the broadcast media – first radio, then television – made their debut, they entered a world of timetables and became its main enforcers and evangelists.

      The state and the market approached people with an offer that could not be refused. ‘Become individuals,’ they said. ‘Marry whomever you desire, without asking permission from your parents. Take up whatever job suits you, even if community elders frown. Live wherever you wish, even if you cannot make it every week to the family dinner. You are no longer dependent on your family or your community. We, the state and the market, will take care of you instead. We will provide food, shelter, education, health, welfare and employment. We will provide pensions, insurance and protection.’

    1. Statistics are not cold hard facts – as Nate Silver writes in The Signal and the Noise (2012): ‘The numbers have no way of speaking for themselves. We speak for them. We imbue them with meaning.’ Not only has someone used extensive judgment in choosing what to measure, how to define crucial ideas, and to analyse them, but the manner in which they are communicated can utterly change their emotional impact. Let’s assume that £350 million is the actual weekly contribution to the EU. I often ask audiences to suggest what they would put on the side of the bus if they were on the Remain side. A standard option for making an apparently big number look small is to consider it as a proportion of an even bigger number: for example, the UK’s GDP is currently around £2.3 trillion, and so this contribution would comprise less than 1 per cent of GDP, around six months’ typical growth. An alternative device is to break down expenditure into smaller, more easily grasped units: for example, as there are 66 million people in the UK, £350 million a week is equivalent to around 75p a day, less than $1, say about the cost of a small packet of crisps (potato chips). If the bus had said: We each send the EU the price of a packet of crisps each day, the campaign might not have been so successful.

      The second problem is that we are carrying out repeated significance tests, as each year’s new data are added and another test performed. Fortunately, it turns out that there is some remarkable but complex theory, delightfully known as ‘the law of the iterated logarithm’. This shows that if we carry out such repeated testing, even if the null hypothesis is true, then we are certain to eventually reject that null at any significance level we choose.

      Fortunately, there are statistical methods for dealing with this problem of sequential testing. They were first developed in the Second World War by teams of statisticians working on industrial quality-control of armaments and other war materiel.

      Armaments coming off the production line were being monitored by steadily accumulating total deviations from a standard, much in the same way as monitoring excess mortality. Scientists realised that the law of the iterated logarithm meant that repeated significance testing would always lead eventually to an alert that the industrial process had gone out of strict control, even if in truth everything was functioning fine. Essentially, if we keep on checking on a process, in the end something will look odd just by chance alone.

      This last part reminds me of Buffet: "If a cop follows you for 500 miles, you're going to get a ticket”

    1. Anachronisms of the Constitution + consequences of an aging democracy => a legislature/politics built for "show"

      In a provocative June 2018 essay in Commentary, the political scientist Yuval Levin posited that 231 years on, Congress had acquired a problem James Madison never anticipated: a reluctance to compete with the other two branches of government in the exercise of power. Partisanship, he concluded, had displaced ambition to legislate. Senators and representatives, he wrote, now “see themselves as players in a larger political ecosystem the point of which is not legislating or governing but rather engaging in a kind of performative outrage for a partisan audience.” Levin didn’t put it this way, but he seemed to be suggesting that Congress had grown decadent, like fin de siècle Vienna, but without the solace of Sacher tortes.

      The U.S. doesn’t have a Politburo, but if you calculate the median age of the president, the speaker of the House, the majority leader of the Senate, and the three Democrats leading in the presidential polls for 2020, the median age is … uh … 77.

      None of this means a septuagenarian can’t function effectively as a political leader. House Speaker Nancy Pelosi and Mitch McConnell are 79 and 77, respectively, and by all reports they’re operating at peak mental capacity. But to affirm that not all elderly people are impaired cognitively is very different from affirming that none is.

      Wisdom may be more valuable in the digital age than ever before, because the velocity of information and normative judgments on social media, cable news and elsewhere constantly threatens to make glib idiots of us all.

      But here’s the rub: The aging of America’s ruling class does not automatically increase its experience level. In presidential politics, notes Brookings Institution senior fellow Jonathan Rauch, political experience, which “used to be a selling point,” has “become a liability. Voters and the public have come to see experience as inauthenticity.”

      In a November 2015 Atlantic article, Rauch plotted experience level for presidential candidates from 1960 to 2012. His graph showed a clear increase in experience level among the losers and a corresponding decrease among the winners. Gerald Ford lost to Jimmy Carter. George H.W. Bush won with more political experience than Michael Dukakis, but four years later lost to Bill Clinton, who had less. John McCain lost to Barack Obama, who’d been in national politics a mere four years.

      Donald Trump, who is 73, entered the Oval Office with no political experience at all. The single greatest mental compensation that age provides was therefore unavailable to the oldest president in American history.

      Old people really like to vote. In 2016, for instance, 71 percent of eligible elderly voters reported to the Census that they voted. For other age cohorts, the turnout percentages were 67 percent (aged 45-64), 59 percent (aged 30-44) and 46 percent (aged 18-29).

      You often hear older Americans complain that the younger generation, with its fixation on social media, can’t distinguish between fact and opinion, making it difficult for them to apply the critical thinking necessary to consume news and be responsible citizens. A 2018 Pew survey found that Americans do indeed experience great difficulty telling these two things apart: Given five factual statements and five statements of opinion, a majority of Americans couldn’t identify them properly.

      But younger Americans actually scored better on this test than older ones. Thirty-two percent of 18-49 year-olds were able to identify all five factual statements, and 44 percent were able to identify all five statements of opinion. Among the over-50 cohort, only 20 percent identified all five factual statements correctly, and only 26 percent did the same with the statements of opinion.

      The list of the Constitution’s anachronisms and ambiguities is long.

      Article One says Congress may “regulate Commerce with foreign Nations, and among the several States,” phrasing that strictly limited the regulation of private business at the federal level until the New Deal, when the Supreme Court reversed itself and concluded the federal government’s power to regulate private business was pretty vast. Had the Founders grasped that the modern economy would all but eliminate purely local commerce—and that it could, unchecked, alter the very climate of planet earth—they might have had more to say on the subject. As things stand, the powers of the regulatory state are the subject of endless legal combat.

      Article Two says you must be a “natural born Citizen” to be president, which excludes for no apparent reason Arnold Schwarzenegger and Jennifer Granholm, who previously governed two of the nation’s most populous states. The racist “birther” movement that challenged the legality of Barack Obama’s presidency (and that ushered Donald Trump onto the national political stage) wouldn’t have been possible without Article Two.

      Article Two also established that presidents be elected through the Electoral College, an antique mechanism borrowed from the Holy Roman Empire that twice during the past two decades delivered the presidency to the popular-vote loser. Some people have a problem with that.

      The Second Amendment frames the right to bear arms within the context of “well-regulated” state militias that no longer exist, an ambiguity that the Supreme Court interpreted in 2008 to mean the Constitution protected the right to bear arms, after holding for the preceding seven decades that it did not. Had the Founders known the extent to which the nation would tear itself apart over the regulation of firearms more deadly than they ever imagined, they might have laid down a few broad parameters.

      And so on. None of this would matter much if our government were more amenable to reconsidering first principles, but that’s getting harder, too. The Constitution can be amended, and it has been, 27 times. But growing political polarization in recent years has made that difficult. Only two constitutional amendments were ratified during the past half-century (one giving 18-year-olds the right to vote and another, more anodyne amendment that makes it a little harder for Congress to give itself a raise).

    1. From the eponymous Dunning of the Dunning-Kruger effect

      In our work, we ask survey respondents if they are familiar with certain technical concepts from physics, biology, politics, and geography. A fair number claim familiarity with genuine terms like centripetal force and photon. But interestingly, they also claim some familiarity with concepts that are entirely made up, such as the plates of parallax, ultra-lipid, and cholarine. In one study, roughly 90 percent claimed some knowledge of at least one of the nine fictitious concepts we asked them about. In fact, the more well versed respondents considered themselves in a general topic, the more familiarity they claimed with the meaningless terms associated with it in the survey.

      An ignorant mind is precisely not a spotless, empty vessel, but one that’s filled with the clutter of irrelevant or misleading life experiences, theories, facts, intuitions, strategies, algorithms, heuristics, metaphors, and hunches that regrettably have the look and feel of useful and accurate knowledge. This clutter is an unfortunate by-product of one of our greatest strengths as a species. We are unbridled pattern recognizers and profligate theorizers. Often, our theories are good enough to get us through the day, or at least to an age when we can procreate. But our genius for creative storytelling, combined with our inability to detect our own ignorance, can sometimes lead to situations that are embarrassing, unfortunate, or downright dangerous—especially in a technologically advanced, complex democratic society that occasionally invests mistaken popular beliefs with immense destructive power (See: crisis, financial; war, Iraq). As the humorist Josh Billings once put it, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

      The way we traditionally conceive of ignorance—as an absence of knowledge—leads us to think of education as its natural antidote. But education, even when done skillfully, can produce illusory confidence. Here’s a particularly frightful example: Driver’s education courses, particularly those aimed at handling emergency maneuvers, tend to increase, rather than decrease, accident rates. They do so because training people to handle, say, snow and ice leaves them with the lasting impression that they’re permanent experts on the subject. In fact, their skills usually erode rapidly after they leave the course. And so, months or even decades later, they have confidence but little leftover competence when their wheels begin to spin.

      In these Wild West settings, it’s best not to repeat common misbeliefs at all. Telling people that Barack Obama is not a Muslim fails to change many people’s minds, because they frequently remember everything that was said—except for the crucial qualifier “not.” Rather, to successfully eradicate a misbelief requires not only removing the misbelief, but filling the void left behind (“Obama was baptized in 1988 as a member of the United Church of Christ”). If repeating the misbelief is absolutely necessary, researchers have found it helps to provide clear and repeated warnings that the misbelief is false. I repeat, false.

    1. "What if most rich assholes are made, not born?"

      What if the cold-heartedness so often associated with the upper crust—let's call it Rich Asshole Syndrome—isn’t the result of having been raised by a parade of resentful nannies, too many sailing lessons, or repeated caviar overdoses, but the compounded disappointment of being lucky but still feeling unfulfilled? We’re told that those with the most toys are winning, that money represents points on the scoreboard of life. But what if that tired story is just another facet of a scam in which we’re all getting ripped off?

      In New York, I’d developed psychological defenses against the desperation I saw in the streets. I told myself that there were social services for homeless people, that they would just use my money to buy drugs or booze, that they’d probably brought their situation on themselves. But none of that worked with these Indian kids. There were no shelters waiting to receive them. I saw them sleeping in the streets at night, huddled together for warmth, like puppies. They weren’t going to spend my money unwisely. They weren’t even asking for money. They were just staring at my food like the starving creatures they were.

      The social distance separating rich and poor, like so many of the other distances that separate us from each other, only entered human experience after the advent of agriculture and the hierarchical civilizations that followed, which is why it’s so psychologically difficult to twist your soul into a shape that allows you to ignore starving children standing close enough to smell your plate of curry. You’ve got to silence the inner voice calling for justice and for fairness. But we silence this ancient, insistent voice at great cost to our own psychological well-being.

      When volunteers in their studies placed the interests of others before their own, a primitive part of the brain normally associated with food or sex was activated. When researchers measured vagal tone (an indicator of feeling safe and calm) in 74 preschoolers, they found that children who’d donated tokens to help sick kids had much better readings than those who’d kept all their tokens for themselves. Jonas Miller, the lead investigator, said that the findings suggested “we might be wired from a young age to derive a sense of safety from providing care for others.”

      Psychologists Dacher Keltner and Paul Piff monitored intersections with four-way stop signs and found that people in expensive cars were four times more likely to cut in front of other drivers, compared to folks in more modest vehicles. When the researchers posed as pedestrians waiting to cross a street, all the drivers in cheap cars respected their right of way, while those in expensive cars drove right on by 46.2 percent of the time, even when they’d made eye contact with the pedestrians waiting to cross. Other studies by the same team showed that wealthier subjects were more likely to cheat at an array of tasks and games. For example, Keltner reported that wealthier subjects were far more likely to claim they’d won a computer game—even though the game was rigged so that winning was impossible. Wealthy subjects were more likely to lie in negotiations and excuse unethical behavior at work, like lying to clients in order to make more money. When Keltner and Piff left a jar of candy in the entrance to their lab with a sign saying whatever was left over would be given to kids at a nearby school, they found that wealthier people stole more candy from the babies.

      Books such as Snakes in Suits: When Psychopaths Go to Work and The Psychopath Test argue that many traits characteristic of psychopaths are celebrated in business: ruthlessness, a convenient absence of social conscience, a single-minded focus on “success.” But while psychopaths may be ideally suited to some of the most lucrative professions, I’m arguing something different here. It’s not just that heartless people are more likely to become rich. I’m saying that being rich tends to corrode whatever heart you’ve got left. I’m suggesting, in other words, that it’s likely the wealthy subjects who participated in Muscatell’s study learned to be less unsettled by the photos of sick kids by the experience of being rich—much as I learned to ignore starving children in Rajastan so I could comfortably continue my vacation.

      What we’ve been finding across dozens of studies and thousands of participants across this country,” said Piff, “is that as a person’s levels of wealth increase, their feelings of compassion and empathy go down, and their feelings of entitlement, of deservingness, and their ideology of self-interest increases.”

      Institutions seeking to justify a fundamentally anti-human economic system constantly rebroadcast the message that winning the money game will bring satisfaction and happiness. But we’ve got around 300,000 years of ancestral experience telling us it just isn’t so. Selfishness may be essential to civilization, but that only raises the question of whether a civilization so out of step with our evolved nature makes sense for the human beings within it.

    1. Subscription credit lines— a tactic to inflate IRR

      Over the past two years, however, the accuracy of IRR has been called into question thanks to the increasing ubiquity of subscription lines of credit. These loans, also known as commitment facilities, have long been used in the private capital industry to finance transactions before investor capital is called in, easing limited partners’ liquidity needs and making it possible for general partners to jump on deals more quickly. But lately, fund managers have been using subscription credit lines differently — and with greater frequency.

      According to alternatives data provider Preqin, the use of commitment facilities among private equity funds has more than tripled in the past decade, with 47 percent of funds launched in 2010 and later having utilized the financing tool, compared with 13 percent of funds launched before 2010. And it’s not just that more private fund managers are taking out these loans. Preqin also reported that these once short-term instruments are now being used to delay capital calls longer — which investors, researchers, and other industry experts claim is leading to artificially inflated IRRs.

      Two recent papers — one from a pair of Carnegie Mellon business school professors, one co-authored by two German researchers with a BlackRock private equity director — have explored the effects of subscription credit lines on IRRs and arrived at the conclusion that the loans have meaningfully improved IRRs without increasing the actual amount of money that investors take home.

      The German researchers, Pierre Schillinger and Reiner Braun of the Technical University of Munich, worked with BlackRock Private Equity Partners director Jeroen Cornel to simulate how real buyout funds would perform if they had hypothetically used subscription credit lines. Simulating commitment facility use for less than six months resulted in only a 47-basis-point increase in IRR on average, or a 20bp improvement at the median. But increasing the time frame of the loan to a year led to an average IRR bump of 120 basis points — a median increase of 57bp.

      “If used extensively, [subscription credit lines] can indeed lift fund returns substantially,” they concluded.

    1. Great strategic investments + avoiding taxes + stiffing supplies with a longer payment cycle = cheaper capital + huge and growing FCF

      Free cash flow (yellow line) is a bit like profit, except it doesn’t assume that Amazon has to pay for everything in the same time frame it sells it. And thanks to how Amazon’s payment cycle works, it usually gets money for selling an item long before it has to pay for that item. Last quarter, for example, it took Walmart on average two days to receive payment for goods after it paid its suppliers, while Amazon on average received payment 20 days before it paid its suppliers, according to cash conversion cycle data from the financial research platform Sentieo.

      Amazon keeps profit and free cash flows artificially low by investing money right back into its business in the form of capital expenses, like building data centers, upgrading distribution networks, and creating wind and solar farms. It can do so without having to borrow money, which means it won’t incur interest costs.

    1. Irony and unintended consequences, awesome article

      The battle between the authorities and drug traffickers is now more of an arms race than a game of cat and mouse. The global war on drugs has enriched organized crime around the globe; efforts to curb the drug business, at huge financial cost, have merely ended with more drug routes, more drugs, and more deaths. It’s no wonder drug trafficking is the lifeblood of organized crime, and that the market in drug trafficking now has an estimated annual global value of between $426 and $652 billion.

      Peter Andreas, a professor of international studies at Brown University and the author of Border Games: Policing the U.S.-Mexico Divide, put it more simply: “The future is synthetic.” Andreas said this will have all sorts of repercussions for border controls. “It is already extraordinarily difficult to interdict a portable, durable, and profitable product such as heroin or cocaine. But even more concentrated and potent synthetic drugs make reliance on border interdiction as a cornerstone of drug control even more irrational. Focusing more on demand than on supply becomes more urgent than ever.”

      The U.N. has warned that the global rise of methamphetamine—the world’s most prevalent illegal synthetic drug—has been “unprecedented” and “remarkable,” with global seizure quantities growing more than six times since 2008. Why? Meth is highly addictive, for one thing. But it’s also a whole lot easier to build an illicit lab than to start up a coca plantation.

      The U.S. government has identified China as the “principal source” not only for the fentanyl that has created the U.S. overdose crisis, but also for the precursor chemicals used by Mexican gangs to make methamphetamine. The same goes for the meth labs in the Golden Triangle, which are all equipped with Chinese precursor chemicals, which end up going back to China in the form of finished meth. China is also a key source of fake prescription pills, and is where most of the world’s new psychoactive substances are produced.

      And as these kingpins find new ways to skip border interdiction, American authorities find themselves largely unable to respond. The U.S. has no extradition agreement with China, and the U.S. does not have sway over Beijing like it had over the Colombian government’s attempts to tackle its major cocaine traffickers. The U.S. cannot send troops and military hardware to China to fight drug traffickers. And the more Trump rubs China the wrong way, the less likely it will assist in clamping down on people like Hong Kong Zaron. In the new drug trade, sucking up to China could prove more fruitful in stemming drugs coming into America than building a Mexican wall.

      The world’s second biggest economy—a nation that, ironically, was forced to import British opium or be bombed by gunboats during the Opium Wars in the mid 19th century—could soon become the world’s biggest illegal drug exporter.

      Analysis in the RAND report found that for illicit drug suppliers, “fentanyl’s potency and price make it an economically attractive alternative to heroin.” It said that, according to the U.S. Drug Enforcement Administration, “one kilogram of fentanyl, after being pressed into pills, could generate between $10 and $20 million in retail sales. After factoring in the minimal $3,500 per kilogram of product purchased online from China, dealers are attracted to the drug’s profitability. In comparison, heroin wholesales at $50,000 to $80,000 per kilogram and is a fraction of the potency, generating a profit of perhaps $200,000.”

      “It’s a bit of a nightmare how operationally simple it is for a single individual to be able to introduce so much fentanyl into the market using China and the internet,” tweeted Bryce Pardo, an associate policy researcher at the RAND Corporation. “At this rate with several years of declining life expectancy in the U.S. it’s not unreasonable to categorize this as a mass poisoning.”

    1. The browser is the new OS.

      And Google controls it

      Standardization on something like Chrome/V8 is actually very useful for us, in this sense. We have a pretty good sense of how our Javascript will execute, where and how we can tighten up performance, and simulate the kind of experience most of our users will have.

      That said, I’m always conscious that we are living on someone else’s standards. Sure, Chromium and the V8 engine are open-source, but they still belong to Google in a way that, say, TCP/IP or IMAP does not.

      Google can distribute products on the web better than any other single company. When it placed a callout link to download Chrome right under its search bar, it effectively sealed IE’s demise. Nothing that Microsoft could do would ever reach as many potential users, or drive adoption, at anywhere near the same scale, and they eventually came to understand this.

      Google is paying Apple a cool $12 billion in 2019 to remain Safari’s default search engine, because the amount they make from all those searches (and the ads they support) is far greater.

    1. The secret behind gift cards— companies recognise 10% of all stored value cards as never being redeemed in any year and book it as profits

      Each year Starbucks recognizes that a portion of its stored value liabilities will be permanently lost. This is known as breakage. Starbucks recognizes this amount as profit. In 2018 the company recognized $155 million in breakage, around 10% of all stored value balances. Wow! Starbucks already pays just 0% on its debts to customers, but add in breakage and that equates to a roughly -10% interest rate!

      Starbucks is really good at harvesting seigniorage. Walmart's annual sales are 20x larger than Starbucks sales (~$500b vs $25b). But Walmart only has $1.9 billion in unredeemed gift card balances, not much more than Starbucks.

    1. “A phone number is worth more on the dark web than a Social Security number. Your phone is so much more rich with data,” says J.D. Mumford, who runs Anonyome Labs Inc. in Salt Lake City.

      “Facial recognition technology is now cheap enough where you can put it in every Starbucks and have your coffee ready when you’re in the front of the line,” says Lorrie Cranor, a computer science professor at Carnegie Mellon University who runs its CyLab Usable Privacy and Security Laboratory in Pittsburgh. In March, the New York Times put three cameras on a rooftop in Manhattan, spent $60 on Amazon’s Rekognition system, and identified several people. I took an Air France flight that had passengers board using our faceprints, taken from our passports without our permission.

      Private companies such as Vigilant Solutions Inc., headquartered in the Valley, have cameras that have captured billions of geotagged photos of cars on streets and in parking lots that they sell on the open market, mostly to police and debt collectors.

      Project Kovr runs a similar workshop at schools, in which it assigns some kids to stalk another child from a distance so they can create a data profile and tailor an ad campaign for the stalkee. Baauw has also been planning a project in which he chisels a statue of Facebook Chief Executive Officer Mark Zuckerberg as a Roman god. “He’s the Zeus of our time,” he says.

      Until people demand a law that makes privacy the default, I’m going to try to remember, each time I click on something, that free things aren’t free. That when I send an email or a text outside of Signal or MySudo, I should expect those messages to one day be seen.

    1. Quite long but plenty of amazing advice in here from the founders of Looker (acquired by Google)

      “My biggest piece of advice to early-stage founders on fundraising is don't try to raise money too early,” says Tabb. “I see so many founders out there trying to raise with just an idea on a slide. We waited almost a year to raise money, until we knew it was a venture business — not every startup is, and you don’t want to get locked in. We were cranking along with customers and revenue. And it wasn’t all nailed down, but we had figured out enough of how go-to-market might work to know that it was workable. That made our seed raise in the summer of 2012 so much easier. If you build value, it takes the fundraising process from how good you are at pitching yourself to a place where you can simply say ‘Ask the people who are using us for their opinion about it.’”

      As the investor on the receiving end of that fundraising tactic, Trenchard agrees that it was effective. “When we were deciding whether or not to invest in their seed round, Lloyd sent me a list of 10 customer references — many of them were First Round-backed companies. I talked to each and every one during diligence, and I was blown away. The love they had for the products was off the charts, they would have been very disappointed without it,” says Trenchard.

      Learning a new language. “I created LookML to serve as the basis of our platform. It’s an abstraction layer, the sequel to SQL. My thought was that if we could simplify the problems with SQL and evolve the data language, it would be easier to use,” says Tabb. But banking on data analysts learning a new language was anything but a surefire move. “This was a scary one,” says Porterfield. “I remember those early existential questions: ‘Can analysts learn this language? Will they want to?’ Looking back now, it seems more obvious that developer-style tooling and workflows would be embraced. These days, there’s a lot of discussion that any time you can provide tools that increase someone’s leverage, they will adopt them. But that wasn’t clear at the time.”

      “For most companies in the data space, pre-sales folks are like plumbers, they're just hooking stuff together. We tried to take a different approach at Looker by asking prospects for a dataset and then putting economics or math majors to work. In the early days, they wore all the hats: They were pre-sales, post-sales, customer support. Eventually, those became separate roles as we scaled,” says Bien.

      “In the early days, Margaret had a habit of saying ‘We'll be successful when we have 1,000 true fans.’ That was our driving force — figuring out how to build a fanbase in enterprise software,” says Tabb. “If you make a product that customers love, your customers will love you back. It may seem cheesy, but it was really about love — that’s the emotion we wanted to evoke in our customers. We call customer success our ‘Department of Customer Love.’ We made ‘Love Looker Love’ one of our values. I had early customers tell me that life at their company was now divided into two eras: ‘Before Looker’ and ‘After Looker.’ That’s the reaction we were always chasing,” he says.

      “Back in my college days, I was really into the ideas of Robert Greenleaf, who kicked off the concept of servant leadership. Today, as a CEO, that philosophy carries forward — I view myself as a steward,” says Bien. “My role is to remove obstacles for other people and remove ownership for myself.”

    1. Technologies are not simply objects but architectures that organize our bodies in space and time.

      New technologies require us to develop new literacies. By developing such literacies, we train our bodies into habitual choreographies. When you learn to write, you are learning not just symbols but the hand motions that turn lines into letters. When you learn to type, you tether your hands to a keyboard, defining your motions in ways that have neurological and physiological effects. Research shows that writing in print, in cursive, or by typing are each associated with distinct brain patterns and significant learning outcomes. How we use our hands profoundly affects how we think.

      Digital interfaces exercise similar demands on our bodies. When you first acquire a smartphone, the interface is clunky. Each interaction feels contrived, each gesture an intrusion on your consciousness. But as you rehearse these movements, they become second nature. Like the alphabets your hands write into existence, each of these gestures has assigned meanings. As you achieve fluency with them, these gestures become units of the communication structure you form with your device. When you reach instinctively for your phone, it only takes a few unconscious flicks of your thumb to navigate past the lock screen and into your web browser or messaging app. At the same time, you attain a fluency particular to that brand—when your fingers know an iPhone, it’s pretty jarring to use a friend’s Galaxy.

    1. Authors of Empty Planet argue global population will start to decline in 30Y, versus UN estimate of 11B in 2100 (40% growth)

      UN forecasting model inputs three things: fertility rates, migration rates, and death rates. It doesn’t take into account the expansion of education for females or the speed of urbanization (which are in some ways linked). The UN says they’re already baked into the numbers. But when I went and interviewed [the demographer] Wolfgang Lutz in Vienna, which was one of the first things we did, he walked me through his projections, and I walked out of the room gobsmacked. All he was doing was adding one new variable to the forecast: the level of improvement in female education. And he comes up with a much lower number for global population in 2100, somewhere between 8 billion and 9 billion.

      Lutz has this saying that the most important reproductive organ for human beings is your mind. That if you change how someone thinks about reproduction, you change everything. Based on his analysis, the single biggest effect on fertility is the education of women. The UN has a grim view of Africa. It doesn’t predict much change in terms of fertility over the first quarter of the century. But large parts of African are urbanizing at two times the rate of the global average. If you go to Kenya today, women have the same elementary education levels as men. As many girls as boys are sitting for graduation exams. So we’re not prepared to predict that Africa will stagnate in rural poverty for the rest of the century.

      We polled 26 countries asking women how many kids they want, and no matter where you go the answer tends to be around two. The external forces that used to dictate people having bigger families are disappearing everywhere. And that's happening fastest in developing countries. In the Philippines, for example, fertility rates dropped from 3.7 percent to 2.7 percent from 2003 to 2018. That's a whole kid in 15 years. In the US, that change happened much more slowly, from about 1800 to the end of the Baby Boom. So that’s the scenario we’re asking people to contemplate.

    1. An amazing read/insight into how Ping An, the world's #1 insurer is using big data to reduce costs (>$750M/y) and save customers time (62% of claims handled automatically)

      In 2017, Ping An, China’s second-largest insurer and its biggest non-state-owned company by revenue, rolled out a “Superfast Onsite Investigation” system—enabling policyholders to submit claims by simply opening a smartphone app and answering a few questions. But the app’s niftiest feature offers the option to not even wait for an inspector. Instead, customers can snap photos of a damaged vehicle and send them to a Ping An computer, which can respond with a repair estimate in three minutes or less. If the customer accepts the estimate, then wancheng! (“Done!”) Ping An can transfer funds immediately. Last year, Ping An’s customers used this feature to settle 7.3 million claims, or 62% of the total. The service saves the company more than $750 million each year by reducing bogus claims and human error. But its simplicity belies the extraordinary sophistication of the artificial intelligence and data-processing operations that make it possible. To generate accurate estimates, Ping An matches photos of vehicle damage against a database of 25 million parts used in the 60,000 different auto makes and models sold in China. The system assesses whether those parts can be repaired or must be replaced, then calculates the cost of parts and labor in more than 140,000 garages. Ping An integrates all that information with face-, voice- and image-recognition tech and a complex matrix of anti-fraud rules. Ping An chief scientist Xiao Jing says it took a team of A.I. experts, data scientists, and insurance managers three years to design, develop, and integrate the new service. It is, he exults, “the only one of its kind in the world.”

      These products and services have a vital feature in common: They match online data, generated by China’s digitally native consumer masses, with a vast storehouse of “offline” data and insight amassed over three decades in the insurance business.

      Ping An’s leadership foresees the day when the company’s technology businesses contribute as much as half of its earnings, up from only 6% today, and compete head-to-head with pure technology plays like Alibaba Group and Tencent Holdings.

      Ping An earmarks 1% of revenue for investments in innovation. Over the past 10 years, the group has plowed more than $7 billion into research and development, and Ma has vowed to invest $15 billion more in the decade to come. That endowment has nurtured 11 technology affiliates, of which two—Good Doctor and Auto­home, a platform for car buyers—are publicly traded and three are privately held “unicorns” with multibillion-dollar valuations For now, only two of those five are profitable. Even so, the combined value of the group’s tech ventures tops $70 billion. (See the “Star Pupils” sidebar.)

      Schulte estimates that the BAT (China’s troika of Baidu, Alibaba, and Tencent) processes at least 10 times as much data every day as Ping An has acquired in its entire existence. But Ping An executives argue that quality matters more than quantity. The data its businesses collect is richer than that gleaned by the BAT, they claim, because it involves big-ticket transactions relating to health, wealth, and property—among the most meaningful decisions in customers’ lives.

    1. They built the brand initially by using targeted Google search ads and marketing on Facebook; they eschewed television adverts, which they could not afford anyway. But the most important channel for building the brand was Instagram, the photo-sharing app. Halo Top gave free samples to thousands of “influencers” — athletes, gym trainers and healthy-living gurus — with a critical mass of followers the company thought might like the product. “We were constantly reaching out to people to try to get the word out about Halo Top,” explains Bouton.

      A viral news story in early 2016 was a catalyst for the brand: a science journalist for GQ magazine ate nothing but Halo Top for 10 days and lost more than 4kg. Sales took off.

    1. An online-only sportswear retailer that targets younger customers, it doubled annual sales this year and last, taking its turnover to about £200m.

      PwC will be its strategic adviser to help bring in external funding, which could include either the sale of an equity stake or debt.

      The company was founded in 2012 but now employs more than 400 people. It sells to 180 countries from its headquarters in Solihull, competing with brands like Nike and Under Armour.

      It has no high street presence and does not use traditional marketing, promoting the brand instead through events and a network of social media health and fitness “influencers” with large numbers of followers.

      The company is aiming to raise more than £100m, according to those familiar with the process, but will work with PwC over the next few months to decide what it needs. Until now, the business has funded its expansion from cash flow and has no debt on its balance sheet.

      Ben Francis, who founded the company as a student in Birmingham to sell the sort of affordable gym wear he was looking to buy, said it generated about half its sales in the US. He wants to keep the focus on North America for the next stage of its growth.

    1. “The first thing he told me to try was a Vasper machine, which we have here at Upgrade Labs. We call it the Cold HIIT machine,” Tobias says in a phone interview. The Vasper manufacturer claimed that the contraption—resembling a recumbent bike with pressure- and cold-wrap sleeves for the arms and legs—could double your testosterone in two weeks. “I said that sounds pretty attractive, but it also sounds like bullshit. It sounds like Suzanne Somers and the freaking Ab Blaster or the Thigh Master thing. You've heard this in fitness a lot of times, you can do nothing and get the benefits. And so I'm pretty skeptical.”

      Tobias had his blood testosterone level tested and then did the machine three times a week for two weeks. After a total of two hours on the machine—the company recommends 21-minute high-intensity workouts—Tobias said that his testosterone went from 468 nanograms per deciliter to 1,098. (The normal range for men is between 300 and 1,100.)

      Blond influencer-types sit next to septuagenarians in plaid. Business attire blurs with athleisure. Some people look ready for Burning Man, others to present pitch decks. It’s a strange mix, but it seems fitting for a conference that offers cacao ceremonies and talks on stem-cell treatments.

    1. Although widely held, the belief that merit rather than luck determines success or failure in the world is demonstrably false. This is not least because merit itself is, in large part, the result of luck. Talent and the capacity for determined effort, sometimes called ‘grit’, depend a great deal on one’s genetic endowments and upbringing.

      In competitive contexts, many have merit, but few succeed. What separates the two is luck.

      In addition to being false, a growing body of research in psychology and neuroscience suggests that believing in meritocracy makes people more selfish, less self-critical and even more prone to acting in discriminatory ways. Meritocracy is not only wrong; it’s bad.

      Perhaps more disturbing, simply holding meritocracy as a value seems to promote discriminatory behaviour. [Researchers] found that, in companies that explicitly held meritocracy as a core value, managers assigned greater rewards to male employees over female employees with identical performance evaluations. This preference disappeared where meritocracy was not explicitly adopted as a value.

      However, in addition to legitimation, meritocracy also offers flattery. Where success is determined by merit, each win can be viewed as a reflection of one’s own virtue and worth. Meritocracy is the most self-congratulatory of distribution principles.

      Despite the moral assurance and personal flattery that meritocracy offers to the successful, it ought to be abandoned both as a belief about how the world works and as a general social ideal. It’s false, and believing in it encourages selfishness, discrimination and indifference to the plight of the unfortunate.

    1. Our phones and computers deliver unto each of us a personalized—or rather, algorithm-realized—distillation of headlines, anecdotes, jokes, and photographs. Even the ads we scroll past are not the same as our neighbor’s: a pair of boots has followed me from site to site for weeks. We call this endless, immaterial material a feed, though there’s little sustenance to be found.

      As reading materials—not just books, but newspapers, magazines, and ephemera—proliferated, more recent centuries saw the rise of reading “extensively”: we read these materials once, often quickly, and move on. Birkerts coins his own terms: the deep, devotional practice of “vertical” reading has been supplanted by “horizontal” reading, skimming along the surface. This shift has only accelerated dizzyingly in the time since Engelsing wrote in 1974, since Birkerts wrote in 1994, and since I wrote, yesterday, the paragraph above.

      Horizontal reading rules the day. What I do when I look at Twitter is less akin to reading a book than to the encounter I have with a recipe’s instructions or the fine print of a receipt: I’m taking in information, not enlightenment. It’s a way to pass the time, not to live in it. Reading—real reading, the kind Birkerts makes his impassioned case for—draws on our vertical sensibility, however latent, and “where it does not assume depth, it creates it.”

      We know perfectly well—we remember, even if dimly, the inward state that satisfies more than our itching, clicking fingers—and we know it isn’t here. Here, on the internet, is a nowhere space, a shallow time. It is a flat and impenetrable surface. But with a book, we dive in; we are sucked in; we are immersed, body and soul. “We hold in our hands a way to cut against the momentum of the times,” Birkerts assures. “We can resist the skimming tendency and delve; we can restore, if only for a time, the vanishing assumption of coherence. The beauty of the vertical engagement is that it does not have to argue for itself. It is self-contained, a fulfillment.”

    1. An insight into how social networks work

      Let's begin with two principles: (1)People are status-seeking monkeys, (2) People seek out the most efficient path to maximizing social capital.

      Why do some large social networks suddenly fade away, or lose out to new tiny networks? What ties many of these explanations together is social capital theory. Classic network effects theory [that a network’s utility increases with the number of users who use it] still holds, I’m not discarding it. Instead, let's append some social capital theory. Together, those form the two axes on which I like to analyze social network health. When modeling how successful social networks create a status game worth playing, a useful metaphor is one of the trendiest technologies: cryptocurrency.

      How is a new social network analogous to an ICO?

      (1) Each new social network issues a new form of social capital, a token.

      (2) You must show proof of work to earn the token.

      (3) Over time it becomes harder and harder to mine new tokens on each social network, creating built-in scarcity.

      (4) Many people, especially older folks, scoff at both social networks and cryptocurrencies.

      Perhaps you've read a long and thoughtful response by a random person on Quora or Reddit, or watched YouTube vloggers publishing night after night, or heard about popular Vine stars living in houses together, helping each other shoot and edit 6-second videos. While you can outsource Bitcoin mining to a computer, people still mine for social capital on social networks largely through their own blood, sweat, and tears.

      Almost every social network of note had an early signature proof of work hurdle. For Facebook it was posting some witty text-based status update. For Instagram, it was posting an interesting square photo. For Vine, an entertaining 6-second video. For Twitter, it was writing an amusing bit of text of 140 characters or fewer. Pinterest? Pinning a compelling photo. You can likely derive the proof of work for other networks like Quora and Reddit and Twitch and so on. Successful social networks don't pose trick questions at the start, it’s usually clear what they want from you.

      If you've ever joined one of these social networks early enough, you know that, on a relative basis, getting ahead of others in terms of social capital (followers, likes, etc.) is easier in the early days. Some people who were featured on recommended follower lists in the early days of Twitter have follower counts in the 7-figures, just as early masters of Musical.ly and Vine were accumulated massive and compounding follower counts. The more people who follow you, the more followers you gain because of leaderboards and recommended follower algorithms and other such common discovery mechanisms.

      Young people, with their much higher usage rate on social media, are the most sensitive and attuned demographic to the payback period and ROI on their social media labor. So, for example, young people tend not to like Twitter but do enjoy Instagram.

      It's not that Twitter doesn't dole out the occasional viral supernova; every so often someone composes a tweet that goes over 1K and then 10K likes or retweets (Twitter should allow people to buy a framed print of said tweet with a silver or gold 1K club or 10K club designation to supplement its monetization). But it’s not common, and most tweets are barely seen by anyone at all. Pair that with the fact that young people's bias towards and skill advantage in visual mediums over textual ones and it's not surprising Instagram is their social battleground of preference (video games might be the most lucrative battleground for the young if you broaden your definition of social networks, and that's entirely reasonable, though that arena skews male).

      The gradient of your network's social capital ROI can often govern your market share among different demographics. Young girls flocked to Musical.ly in its early days because they were uniquely good at the lip synch dance routine videos that were its bread and butter. In this age of neverending notifications, heavy social media users are hyper aware of differing status ROI among the apps they use.

      TikTok is an interesting new player in social media because its default feed, For You, relies on a machine learning algorithm to determine what each user sees; the feed of content from by creators you follow, in contrast, is hidden one pane over. If you are new to TikTok and have just uploaded a great video, the selection algorithm promises to distribute your post much more quickly than if you were on sharing it on a network that relies on the size of your following, which most people have to build up over a long period of time. Conversely, if you come up with one great video but the rest of your work is mediocre, you can't count on continued distribution on TikTok since your followers live mostly in a feed driven by the TikTok algorithm, not their follow graph.

      Why copying proof of work is lousy strategy for status-driven networks… Most clones have and will fail. The reason that matching the basic proof of work hurdle of an Status as a Service incumbent fails is that it generally duplicates the status game that already exists. By definition, if the proof of work is the same, you're not really creating a new status ladder game, and so there isn't a real compelling reason to switch when the new network really has no one in it.

      I once wrote about social networks that the network's the thing; that is, the composition of the graph once a social network reaches scale is its most unique quality. Copying some network's feature often isn’t sufficient if you can’t also copy its graph, but if you can apply the feature to some unique graph that you earned some other way, it can be a defensible advantage. Nothing illustrates this better than Facebook's attempts to win back the young from Snapchat by copying some of the network's ephemeral messaging features, or Facebook's attempt to copy TikTok with Lasso, or, well Facebook's attempt to duplicate just about every social app with any traction anywhere. The problem with copying Snapchat is that, well, the reason young people left Facebook for Snapchat was in large part because their parents had invaded Facebook. You don't leave a party with your classmates to go back to one your parents are throwing just because your dad brings in a keg and offer to play beer pong.

      I think the Stories format is a genuine innovation on the social modesty problem of social networks. That is, all but the most egregious showoffs feel squeamish about publishing too much to their followers. Stories, by putting the onus on the viewer to pull that content, allows everyone to publish away guilt-free, without regard for the craft that regular posts demand in the ever escalating game that is life publishing. In a world where algorithmic feeds break up your sequence of posts, Stories also allow gifted creators to create sequential narratives. In the annals of tech, and perhaps the world, the event that created the greatest social capital boom in history was the launch of Facebook's News Feed. Before News Feed, if you were on, say MySpace, or even on a Facebook before News Feed launched, you had to browse around to find all the activity in your network. Only a demographic of a particular age will recall having to click from one profile to another on MySpace while stalking one’s friends. It almost seems comical in hindsight, that we'd impose such a heavy UI burden on social media users. Can you imagine if, to see all the new photos posted in your Instagram network, you had to click through each profile one by one to see if they’d posted any new photos? I feel like my parents talking about how they had to walk miles to grade school through winter snow wearing moccasins of tree bark when I complain about the undue burden of social media browsing before the News Feed, but it truly was a monumental pain in the ass.

      By merging all updates from all the accounts you followed into a single continuous surface and having that serve as the default screen, Facebook News Feed simultaneously increased the efficiency of distribution of new posts and pitted all such posts against each other in what was effectively a single giant attention arena, complete with live updating scoreboards on each post. It was as if the panopticon inverted itself overnight, as if a giant spotlight turned on and suddenly all of us performing on Facebook for approval realized we were all in the same auditorium, on one large, connected infinite stage, singing karaoke to the same audience at the same time.

      It's difficult to overstate what a momentous sea change it was for hundreds of millions, and eventually billions, of humans who had grown up competing for status in small tribes, to suddenly be dropped into a talent show competing against EVERY PERSON THEY HAD EVER MET.

      Incidentally, teens and twenty-somethings, more so than the middle-aged and elderly, tend to juggle more identities. In middle and high school, kids have to maintain an identity among classmates at school, then another identity at home with family. Twenty-somethings craft one identity among coworkers during the day, then another among their friends outside of work. Often those spheres have differing status games, and there is some penalty to merging those identities. Anyone who has ever sent a text meant for their schoolmates to their parents, or emailed a boss or coworker something meant for their happy hour crew knows the treacherous nature of context collapse.

      Add to that this younger generation's preference for and facility with visual communication and it's clearly why the preferred social network of the young is Instagram and the preferred messenger Snapchat, both preferable to Facebook. Instagram because of the ease of creating multiple accounts to match one's portfolio of identities, Snapchat for its best in class ease of visual messaging privately to particular recipients. The expiration of content, whether explicitly executed on Instagram (you can easily kill off a meme account after you've outgrown it, for example), or automatically handled on a service like Snapchat, is a must-have feature for those for whom multiple identity management is a fact of life.

      Many types of social capital have qualities which render them fragile. Status relies on coordinated consensus to define the scarcity that determines its value. Consensus can shift in an instant. Recall the friend in Swingers, who, at every crowded LA party, quips, "This place is dead anyway." Or recall the wise words of noted sociologist Groucho Marx: "I don't care to belong to any club that will have me as a member."

      The Groucho Marx effect doesn't take effect immediately. In the beginning, a status hierarchy requires lower status people to join so that the higher status people have a sense of just how far above the masses they reside. It's silly to order bottle service at Hakkasan in Las Vegas if no one is sitting on the opposite side of the velvet ropes; a leaderboard with just a single high score is meaningless.

      Snapchat— Snapchat opens to a camera. If you want to text someone, it's extra work to swipe to the left pane to reach the text messaging screen. Remember Snapchat's original Best Friends list? I'm going to guess many of my readers don't, because, as noted earlier, old people probably didn't play that status game, if they'd even figured out how to use Snapchat by that point. This was just about as pure a status game feature as could be engineered for teens. Not only did it show the top three people you Snapped with most frequently, you could look at who the top three best friends were for any of your contacts. Essentially, it made the hierarchy of everyone's “friendships” public, making the popularity scoreboard explicit.

      As with aggregate follower counts and likes, the Best Friends list was a mechanism for people to accumulate a very specific form of social capital. From a platform perspective, however, there's a big problem with this feature: each user could only have one best friend. It put an artificial ceiling on the amount of social capital one could compete for and accumulate. In a clever move to unbound social capital accumulation and to turn a zero-sum game into a positive sum game, broadening the number of users working hard or engaging, Snapchat deprecated the very popular Best Friends list and replaced it with streaks.

      Social Arbitrage— Because social networks often attract different audiences, and because the configuration of graphs even when there are overlapping users often differ, opportunities exist to arbitrage social capital across apps. A prominent user of this tactic was @thefatjewish, the popular Instagram account (his real name was Josh Ostrovsky). He accumulated millions of followers on Instagram in large part by taking other people's jokes from Twitter and other social networks and then posting them as his own on Instagram. Not only did he rack up followers and likes by the millions, he even got signed with CAA! When he got called on it, he claimed it wasn't what he was about. He said, "Again, Instagram is just part of a larger thing I do. I have an army of interns working out of the back of a nail salon in Queens. We have so much stuff going on: I'm writing a book, I've got rosé. I need them to bathe me. I've got so many other things that I need them to do. It just didn't seem like something that was extremely dire." Which is really a long, bizarre way of saying, you caught me. Let he who does not have an army of interns bathing them throw the first stone.

    1. I can't count the number of times I've heard a nature > nurture argument for intelligence (which leads onto many other conclusions) based on a similar sounding argument to...

      The argument that “some races are better at running” hence [some inference about the brain] is stale: mental capacity is much more dimensional and not defined in the same way running 100 m dash is.

    1. Someday soon, every place and thing in the real world—every street, lamppost, building, and room—will have its full-size digital twin in the mirrorworld ... We are now building such a 1:1 map of almost unimaginable scope, and this world will become the next great digital platform.

      The first big technology platform was the web, which digitized information, subjecting knowledge to the power of algorithms; it came to be dominated by Google. The second great platform was social media, running primarily on mobile phones. It digitized people and subjected human behavior and relationships to the power of algorithms, and it is ruled by Facebook and WeChat.

      We are now at the dawn of the third platform, which will digitize the rest of the world. On this platform, all things and places will be machine-­readable, subject to the power of algorithms. Whoever dominates this grand third platform will become among the wealthiest and most powerful people and companies in history, just as those who now dominate the first two platforms have.

    1. Interesting idea and anecdotal evidence (from awkward founders) that social skills can be learnt, and as a result that those without natural social skills may actually be at an advantage.

      To an extreme introvert, or to someone on the Asperger’s spectrum, social cues are easy to miss because they’re subtle. So awkward people learn to explicitly model them; they develop a body of theory around how to distinguish polite boredom from intense interest (I used to firmly believe that “Oh, yeah,” and “I see” were 100% reliable indicators that I should keep talking), or how to differentiate intellectual interest from outrage (the answer to “Wait, really?!” should not necessarily be “Yeah, and furthermore…”).[1]

      Having an explicit rather than implicit model of human behavior is generally a liability. In Kahneman’s terms, you’re using System Two to patch over deficiencies in System One. But this has one advantage: it lets you break down interactions into their atomic components. So when the same interactions happen over a different medium — friendship, hatred, jealousy, love; all of these have moved online in a big way — the System Two people are working off a formal spec, while System One people are looking at a black box.

      The best evidence for this is the fact that most of the awkward-founder stories I’ve mentioned are a decade old. If you watch interviews with these executives today, you hear a polished, well-rehearsed, in-control executive. They’re not naturals, but they practiced, and practice is just the art of putting effort into making something look effortless. If you’re a natural public speaker and a good conversationalist, you’re probably already at the ceiling for your skills, but if you’re not a natural, you’ll consistently improve — you’re not just doing things, you’re trying things and seeing what works.

      It might seem like a liability if social cues and norms are opaque to you. But think of it this way: if they weren’t opaque, you wouldn’t see them.

    1. Acton's $850M moral stand and the $122mn fine for deliberately lying to the EU Competition Commission

      Under pressure from Mark Zuckerberg and Sheryl Sandberg to monetize WhatsApp, he pushed back as Facebook questioned the encryption he'd helped build and laid the groundwork to show targeted ads and facilitate commercial messaging. Acton also walked away from Facebook a year before his final tranche of stock grants vested. “It was like, okay, well, you want to do these things I don’t want to do,” Acton says. “It’s better if I get out of your way. And I did.” It was perhaps the most expensive moral stand in history. Acton took a screenshot of the stock price on his way out the door—the decision cost him $850 million.

      Despite a transfer of several billion dollars, Acton says he never developed a rapport with Zuckerberg. “I couldn’t tell you much about the guy,” he says. In one of their dozen or so meetings, Zuck told Acton unromantically that WhatsApp, which had a stipulated degree of autonomy within the Facebook universe and continued to operate for a while out of its original offices, was “a product group to him, like Instagram.”

      For his part, Acton had proposed monetizing WhatsApp through a metered-user model, charging, say, a tenth of a penny after a certain large number of free messages were used up. “You build it once, it runs everywhere in every country,” Acton says. “You don’t need a sophisticated sales force. It’s a very simple business.”

      Acton’s plan was shot down by Sandberg. “Her words were ‘It won’t scale.’ ”

      “I called her out one time,” says Acton, who sensed there might be greed at play. “I was like, ‘No, you don’t mean that it won’t scale. You mean it won’t make as much money as . . . ,’ and she kind of hemmed and hawed a little. And we moved on. I think I made my point. . . . They are businesspeople, they are good businesspeople. They just represent a set of business practices, principles and ethics, and policies that I don’t necessarily agree with.”

      Questioning Zuckerberg’s true intentions wasn’t easy when he was offering what became $22 billion. “He came with a large sum of money and made us an offer we couldn’t refuse,” Acton says. The Facebook founder also promised Koum a board seat, showered the founders with admiration and, according to a source who took part in discussions, told them that they would have “zero pressure” on monetization for the next five years... Internally, Facebook had targeted a $10 billion revenue run rate within five years of monetization, but such numbers sounded too high to Acton—and reliant on advertising.

      T he warning signs emerged before the deal even closed that November. The deal needed to get past Europe’s famously strict antitrust officials, and Facebook prepared Acton to meet with around a dozen representatives of the European Competition Commission in a teleconference. “I was coached to explain that it would be really difficult to merge or blend data between the two systems,” Acton says. He told the regulators as much, adding that he and Koum had no desire to do so.

      Later he learned that elsewhere in Facebook, there were “plans and technologies to blend data.” Specifically, Facebook could use the 128-bit string of numbers assigned to each phone as a kind of bridge between accounts. The other method was phone-number matching, or pinpointing Facebook accounts with phone numbers and matching them to WhatsApp accounts with the same phone number.

      Within 18 months, a new WhatsApp terms of service linked the accounts and made Acton look like a liar. “I think everyone was gambling because they thought that the EU might have forgotten because enough time had passed.” No such luck: Facebook wound up paying a $122 million fine for giving “incorrect or misleading information” to the EU—a cost of doing business, as the deal got done and such linking continues today (though not yet in Europe). “The errors we made in our 2014 filings were not intentional," says a Facebook spokesman.

      Acton had left a management position on Yahoo’s ad division over a decade earlier with frustrations at the Web portal’s so-called “Nascar approach” of putting ad banners all over a Web page. The drive for revenue at the expense of a good product experience “gave me a bad taste in my mouth,” Acton remembers. He was now seeing history repeat. “This is what I hated about Facebook and what I also hated about Yahoo,” Acton says. “If it made us a buck, we’d do it.” In other words, it was time to go.

    1. All startups say they’re ambitious. You better be if you take venture funding!

      Stripe’s insight was that tackling ambitious problems doesn’t just make the potential prize bigger. Ambitious efforts are often more feasible than smaller ones, because the strongest people want to work on the most ambitious efforts. In our experience this positive talent effect was stronger than the negative effect of problem difficulty. So, paradoxically, tackling a bigger problem could be both more rewarding for the company and in a sense more tractable.

      This probably needs to be qualified. Stripe is set up so that we’re successful when our customers are successful (in real, economic terms). Ambitious problems for Stripe look like enabling more internet businesses and supporting entrepreneurs in more countries, not getting more ad clicks. The talent effect of ambition certainly applies to Stripe-style problems, but I’m not sure if it’d work for something like ads.

      Again all startups say “our team is our most important asset”; leaders say “the hardest part of my job is hiring good people”. But what most companies actually do day-to-day on recruiting is disastrous: generic job ads, clueless outside recruiters, screening on brand name, candidate-hostile interview processes, slow response times, etc. The poor recruiting results of most companies reflect the work they put in.

      Stripe was different in two respects: effort and thoughtfulness.

      In terms of effort, Stripe’s recruiting was absolutely relentless. On the front of the pipeline this meant investing in potential candidates that wouldn’t apply for years, through genuine 1:1 relationships as well as many small events that introduce Stripe and its team. Once candidates were active, Stripe tried to move very quickly. Ideally we'd turn around recruiting steps on the same day: respond to the candidates inbound email the same day, and even decide on and give them an offer on the same day as their interviews. We could close candidates before Google replied to their initial emails.

      Stripe was also thoughtful in recruiting processes. This signaled to candidates that the company was clueful and understood the candidate’s perspective. One example is Stripe’s capture the flag program, which not only put Stripe on the radar of a lot of candidates, but also gave them a sense of the strength of the engineering team. Another example was Stripe’s guidance on what to expect for interviews. We’d send candidates a PDF describing exactly how their interviews would be conducted, how they’d be evaluated, and how to prepare. These certainly helped candidates present their best work in the interviews. But they also showed that Stripe actually cares about this, which candidates knew from experience many other companies did not.

    1. Fascinating results of an experiment (n=500) with Mechanical Turk workers.

      ‘Taken together, this total pattern of data supports Maslow’s contention that self-actualised individuals are more motivated by growth and exploration than by fulfilling deficiencies in basic needs,’ Kaufman writes. He adds that the new empirical support for Maslow’s ideas is ‘quite remarkable’ given that Maslow put them together with ‘a paucity of actual evidence’.

      Maslow always contended that it is only through becoming our true, authentic selves that we can transcend the self and look outward with compassion to the rest of humanity. Kaufman explored this too, and found that higher scorers on his self-actualisation scale tended also to score higher on feelings of oneness with the world, but not on decreased self-salience, a sense of independence and bias toward information relevant to oneself. (These are the two main factors in a modern measure of self-transcendence developed by the psychologist David Yaden at the University of Pennsylvania.)

      Kaufman said that this last finding supports ‘Maslow’s contention that self-actualising individuals are able to paradoxically merge with a common humanity while at the same time able to maintain a strong identity and sense of self’.

    1. Whenever I think of entrepreneurship, I'm drawn to a few of the slides (23, 24, 34) from Eric Schmidt's "How Google Works"

      First you have to attract your smart creatives. They aren't easily fooled.

      This starts with culture. Smart creatives need to care about the place they work.

      Never forget that hiring is the most important thing you do.

      I also think back to how Jack Welch was famous (ignoring what he was infamous / the final performance of GE) for was spending more than 50% of his time:

      getting the right people in the right places and then helping them to thrive. He would involve himself in hiring decisions that most global CEOs would delegate.

    1. Brought here from Steven Pinker x Farham Street on "What A Broad Education Should Entail"

      “Super People,” the writer James Atlas has called them—the stereotypical ultra-high-achieving elite college students of today. A double major, a sport, a musical instrument, a couple of foreign languages, service work in distant corners of the globe, a few hobbies thrown in for good measure: They have mastered them all, and with a serene self-assurance that leaves adults and peers alike in awe. A friend who teaches at a top university once asked her class to memorize 30 lines of the eighteenth-century poet Alexander Pope. Nearly every single kid got every single line correct. It was a thing of wonder, she said, like watching thoroughbreds circle a track.

      These enviable youngsters appear to be the winners in the race we have made of childhood. But the reality is very different, as I have witnessed in many of my own students and heard from the hundreds of young people whom I have spoken with on campuses or who have written to me over the last few years. Our system of elite education manufactures young people who are smart and talented and driven, yes, but also anxious, timid, and lost, with little intellectual curiosity and a stunted sense of purpose: trapped in a bubble of privilege, heading meekly in the same direction, great at what they’re doing but with no idea why they’re doing it.

      Excellence without direction -> virtue signalling

      A young woman from another school wrote me this about her boyfriend at Yale:

      Before he started college, he spent most of his time reading and writing short stories. Three years later, he’s painfully insecure, worrying about things my public-educated friends don’t give a second thought to, like the stigma of eating lunch alone and whether he’s “networking” enough. No one but me knows he fakes being well-read by thumbing through the first and last chapters of any book he hears about and obsessively devouring reviews in lieu of the real thing. He does this not because he’s incurious, but because there’s a bigger social reward for being able to talk about books than for actually reading them.

    1. Walmart can be thought of as a bounded search for the optimal selection, inventory, and pricing of SKUs that a local market could support. It was bound, or constrained, by the characteristics of the local economy, and so each Walmart location was a direct reflection of the local market dynamics. The immensely difficult job of the local management team was to predict and implement the optimal mix that could theoretically have been found if every possible permutation were tested by the local economy. Undershooting or overshooting – that is, having too few or many SKUs, or too little or much inventory – would be a costly mistake. By the same token, higher-level managers were responsible for estimating the optimal size and location of the building itself, and for choosing the best associates to manage it, and so on. Each level of management, then, was tasked with managing their own level of the algorithm.

      Bezos, in other words, wanted to build an unbounded Walmart. By removing the constraint of geography – and therefore the local economy – and by adding search functionality, the new formula became simpler: the more SKUs it added, the more items would be discovered by customers; the more items that customers discovered, the more items they would buy. In this world of infinite shelf space, it wasn’t the quality of the selection that mattered – it was pure quantity. And with this insight, Amazon did not need to be nearly as good – let alone better – than Walmart at Walmart’s masterful game of vendor and SKU selection. Amazon just needed to be faster at aggregating SKUs – and therefore faster at onboarding vendors.

      To make sense of what started to happen after Amazon rolled out Marketplace, you have to understand that things get really weird when you run an unbounded search at internet-scale. When you remove “normal” constraints imposed by the physical world, the scale can get so massive that all of the normal approaches start to break down.

      So, what is Amazon? It started as an unbound Walmart, an algorithm for running an unbound search for global optima in the world of physical products. It became a platform for adapting that algorithm to any opportunity for customer-centric value creation that it encountered. If it devises a way to keep its incentive structures intact as it exposes itself through its ever-expanding external interfaces, it – or its various split-off subsidiaries – will dominate the economy for a generation. And if not, it’ll be just another company that seemed unstoppable until it wasn’t.

    1. Big Towel vs Big Hand-dryer. Another weird Big Thing: Big Raisin. Really drives home the point that good writing can turn anything into a melodrama worthy of TV.

      Public bathrooms offer three primary options to dry a pair of wet hands. First, there is the venerable crisp-pleated paper towel. Second, the old-style warm-air dryer: those indestructible metal carapaces that, through their snouts, breathe down upon our hands. And finally, the jet dryer sub-species of the sort Dyson makes, whose gale-force winds promise to shear away every drop of moisture rather than slowly evaporating it. In the quest to dominate the world’s restrooms, Campbell discovered, Dryer v Towel is a pitched contest of business strategy and public relations. “Expect to be lied to a lot,” Campbell told me. “It’s almost like the cola wars. You have Pepsi v Coke, and you have hand dryers v paper towels.”

    1. Selecting a college is one of the most high-stakes financial decisions a person will ever make, right up there with buying a house. And yet every year, millions of people do it on the basis of shockingly little information. College rankings are notoriously unscientific. There’s no form of independent quality control, since every school decides for itself what students need to do in order to pass courses. Accreditors assess the administrative practices of schools, but they are indirectly funded by colleges themselves. And the biggest financier of higher learning, the federal government, can’t force a school to reduce tuition if it believes students are being overcharged. What all of this means is that colleges essentially approve one another to be eligible for government money.

      Nor can students expect “the market” to help them figure it out. Universities aren’t like restaurants that rely on repeat customers: pretty much nobody gets two bachelor’s degrees. If you choose the wrong place, as many students do, it’s not easy to signal your dissatisfaction by transferring to a competitor. Besides, every year, colleges are practically guaranteed a fresh supply of high school graduates and adults looking for new skills. The result is a profiteer’s paradise: millions of highly motivated, naive, overwhelmed consumers loaded up with armfuls of government money.

      There are two main reasons most online degrees are so expensive. The first is that middlemen like 2U spend enormous sums on marketing, a cost that is then passed on to the student. In materials it provides to investors, 2U helpfully estimates what happens to every $100 in revenue for a typical program that's not being launched or expanded. Approximately $15 is spent on actual teaching. Developing and administering the courses costs around $23. Marketing and sales eats up $19. And the cost of buying ad words and search terms on Facebook and Google keeps on rising, as OPMs compete with each other and with colleges running their own online programs.

      1. Writing is rewriting. Write down your thoughts in a stream of consciousness. Don’t get hung up on diction. Then spend most of your time rewriting and reorganizing—sweat the details. I’m still rewriting posts days after I’ve published them.

      2. Writing is a design problem. Example: never use the idiom of ‘the former or the latter.’ It forces the reader to go back and figure out what you’re referring to.

    1. Aeon essay from an archaeologist/writer that unwinds how (the relatively new idea of) “cultural heritage” is often used as a front for vested interests, and other unintended consequences.

      Cases such as Mosul’s highlight a key fact about cultural heritage: it is not primarily about the past – as counterintuitive as that might be. It is about the present. Heritage harnesses the power of the past to justify present social relations, especially relations of power. Governments trample over the lives and needs of individuals and communities, the wealthy convert their dubiously acquired wealth into cultural capital, all in the name of that heritage. And in our conviction that we must protect the remains of the past, the rest of us are often swept up in the enthusiasm. We don’t even question the relatively new idea of cultural heritage – that the remains of history are to be unquestionably treasured as our inheritance from the past and must be preserved in their original state. Or that what typically counts as cultural heritage are major historic buildings and monuments, perfectly suited to be exploited as symbols of the powerful.

      Governments increasingly looked to remains of the distant past to bolster national identities and a sense of greatness, or to marginalise disfavoured groups. Saddam Hussein used the ruins of Babylon to spread ideas of Iraq’s greatness as well as his own, even portraying himself as a modern Nebuchadnezzar. China’s leadership has used archaeology to project national greatness onto the distant, semi-legendary past. Today, India’s prime minister Narendra Modi’s Hindu nationalist government has worked to use archaeology to prove that modern Hindus can trace their descent from the earliest inhabitants of India.

      Inscription of a site on the World Heritage List brings increased prestige and tourist dollars. With these comes increased pressure to remove longstanding communities. From Petra in Jordan, to Wuzhen and the old town of Lijiang in China, to Casco Viejo in Panama City and many more cases, World Heritage listing has brought evictions. In Chikan in China, thousands of residents are being forced out of their homes by a $900 million development plan to turn the old town into hotels and boutique shops for tourists visiting the nearby World Heritage site of Kaiping. But the houses of Chikan are themselves historic.

      Whether we look at political, economic or military capital, one thing is clear. Heritage is a top-down idea – it is defined and used by the most powerful members of society, rather than by society as a whole. Cultural heritage tells people – it does not ask them – what they should care about.

    1. Not a week goes by that someone doesn’t mention Zuckerberg’s 14-year-old messages about his first 4,000 users: “they ‘trust me... [dumb f**ks]’” as proof of his venality.

      A variety of polls—and disses by other CEOs—over the last year have shown the company has become increasingly unpopular, both in Silicon Valley and more broadly. Zuckerberg, as the metonym for the company, has been dragged, too. Whether or not it is fair, a CEO must be a company and vice versa, because that’s how things that are too big and too complex become understood. And so a vastly complicated health-care law becomes Obamacare.

      No matter what happens to Zuckerberg over the next few years, or how Facebook does or does not restore its image, Zuckerberg’s long-term fate is easy to predict. You, and most everyone else, will end up loving him. That may be hard to believe, but he has a close adviser who followed a startlingly similar path: Bill Gates.

      Dogged by European regulators and American competitors, accused of brutal business practices, Microsoft was the evil empire. The list of issues people took with Microsoft is as long as it is forgotten. The company was “undoubtedly the most hated company in its industry for three decades, and detested by many of its business customers, as well,” Harvard Business School professor emeritus Thomas Craw told The Daily Beast.

      Like Carnegie and Rockefeller, Stanford and Vanderbilt, if you give away enough money, your name eventually becomes synonymous with goodness, charity, wisdom, competence, even warmth.

    1. Also see Social Capital's 2018 Annual Letter which noted that 40c of every VC dollar is now spent on Google, Facebook, and Amazon (ads)

      The leaders of more than half a dozen new online retailers all told me they spent the greatest portion of their ad money on Facebook and Instagram.

      “In the start-up-industrial complex, it’s like a systematic transfer of money” from venture-capital firms to start-ups to Facebook.

      Steph Korey, a founder of Away, a luggage company based in New York that opened in 2015, says that when the company was starting, it made $5 for every $1 it spent on Facebook Lookalike ads.

      They began trading their Lookalike groups with other online retailers, figuring that the kind of people who buy one product from social media will probably buy others. This sort of audience sharing is becoming more common on Facebook: There is even a company, TapFwd, that pools together Lookalike groups for various brands, helping them show ads to other groups.

    1. “The most important thing is that we are not a news business. We are more like a search business or a social media platform,” Zhang said in a 2017 interview, adding that he employs no editors or reporters. “We are doing very innovative work. We are not a copycat of a U.S. company, both in product and technology.”

      The story of how Bytedance became a goliath begins with news site Jinri Toutiao but is tied more closely to a series of smart acquisitions and strategic expansions that propelled the company into mobile video and even beyond China. By nurturing a raft of successful apps, it’s gathered a force of hundreds of millions of users and now poses a threat to China’s largest internet operators. The company has evolved into a multi-faceted empire spanning video service Tik Tok -- known as Douyin locally -- and a plethora of platforms for everything from jokes to celebrity gossip.

      “The predominant issue in China’s internet is that the growth in users and the time each user spends online has slowed dramatically. It is becoming a zero-sum game, and costs for acquiring users and winning their time are increasing,” said Jerry Liu, an analyst with UBS. “What Bytedance has created is a group of apps that are very good at attracting users and retaining their time, in part, leveraging the traffic from Jinri Toutiao.”

      What Zhang perceived in 2012 was that Chinese mobile users struggled to find information they cared about on many apps. That’s partly because of the country’s draconian screening of information. Zhang thought he could do better than incumbents such as Baidu, which enjoyed a near-monopoly on search. The latter conflated advertising with search results, a botch that would later haunt the company via a series of medical scandals.

    1. New media makes good literature (defined in relation to portrayal of character/human spirit) harder and as important as ever to find.

      Modern readers know more and more about psychology, and to them a writer’s explanations often seem unnecessary, false, or old-fashioned. They reads plenty, and no theme is shocking enough to surprise them. They get the facts from newspapers, magazines, radio, television, or movies. They’re connected to all the corners of the world — and nothing invented by the mind can compare with what takes place in reality. There’s still a chance that, in our day — or yours — humankind will reach the moon, or one of the planets. All the fantasies of so-called “science fiction” will pale in comparison with footage shot on the moon or on the other planets.

      The new era, in a sense, brought a radical change. Readers get endless information from the radio, from film, from the press, from television. They hear lectures on psychology and psychoanalysis. They watch travel shows, often enough travel themselves, and have knowledge of the world. If literary fiction and theater were to continue playing their old role, they would need an audience with a strong interest in human character and individuality, independent of all these other byproducts and external concerns. But the number of such connoisseurs is small. Real and pure connoisseurs of art are nearly as rare as real and pure artists.

      Precisely because people today are surrounded by a sea of information related to all kinds of fields, genuine modern artists have to deliver more and more artistic purity, more substance, a greater focus on the portrayal of character and individuality. But for this one has to have exceptional gifts. It is, simply put, harder than ever to be original and creative in new ways.

    1. Neopets” was the wireframe for a community of girls that continuously expanded its expressive reach. Not bound by the limitations of a traditional open-world game built on a console system, “Neopets” began a collaborative building exercise for those that played it. Even in the aspects of play that were regulated by “Neopets” developers, users provided input: A player could publish reported and researched stories or opinion pieces in the in-game newspaper, The Neopian Times, or build out shops that filled Neopia’s marketplace. Players gathered in forums and in guilds – partly responsible for the “Neopets” DIY media scene – to forge relationships and share experiences. Communities of storytellers, artists, reporters, designers, and poets emerged, alongside an economy that fed off its collaborators.

      Garcia and other girls like her, including Madison Kanna, now a software engineer, looked outside “Neopets'” set system to earn Neopoints, capitalizing on the skills that drew them to the site. “I would build profiles for people with HTML and CSS and exchange that for goods and supplies,” Kanna says. “Just going on and knowing I could create anything I wanted was huge.” Both women taught themselves as girls to design and code websites for their “Neopets,” and, in turn, started “businesses” designed to use those skills. “I designed my profile page, my shop,” Garcia says. “I coded everything. And what came out of that was my first tutorial site where I was teaching people – other girls, mostly – to code. I had a ‘staff member’ when I was 14, also writing tutorials. That’s what I was doing in my spare time.”

    1. Keeping a goal in mind and using it to direct our actions requires constant willpower. During times when other parts of our lives deplete our supply of willpower, it can be easy to forget our goals. For example, the goal of saving money requires self-discipline each time we make a purchase. Meanwhile, the habit of putting $50 in a savings account every week requires little effort. Habits, not goals, make otherwise difficult things easy… While goals rely on extrinsic motivation, habits are automatic. They literally rewire our brains.

    1. In my book The Life of Dad (2018), I argue that fathers approach their role in myriad different ways dependent upon their environment but, when we look closely, all are fulfilling this teaching role. So, while Western dads might not appear to be passing on overtly practical life-skills, they do convey many of the social skills that are necessary to succeed in our competitive, capitalist world. It is still very much the case that the wheels of success in this environment are oiled by the niceties of social interaction – and knowing the rules of these interactions and the best sort of person to have them with gives you a massive head start, even if it is just dad’s knowledge of a good work placement.

      in Crowley, et al. (2001), parents were 3x more likely to explain science to boys than to girls

      Where parent-child attachment is concerned, the attachment between a mother and her child is best described as exclusive, an inward-looking dyad based on affection and care. In contrast, a father’s attachment to his child has elements of affection and care, but it is based on challenge.

    1. The importance of self-compassion in tempering the brittleness of self-efficacy

      The main reason is that most people’s risk tolerance is very low, because self-efficacy (defined as “a person’s conviction or confidence about his or her abilities to mobilize the motivation, cognitive resources or courses of action needed to successfully execute a specific task within a given context”) is remarkably fragile. When it comes to trying and learning new things, people have difficulty transferring success in one arena to even highly related ones. Even small failures lead to learned helplessness so quickly, we learn to protect against that eventuality by not trying new things unless success is guaranteed.

      The primary risk of entrepreneurship and other free agent lifestyles is not financial or even social — it is the risk to a person’s very self-concept as someone who does what they set out to do.

      What we need if we want to change behavior at this fundamental level is to replace predictive models of behavior change—do this and you’ll get that —with exploratory models.

      Stories may actually be a more accurate way of describing how people think about and use mental models of behavior change. Stories, like emergent systems, only move in one direction. They cannot be rolled back and played again. This irreproducibility suggests the importance of another form of psychological capital that is also highly correlated with successful behavior change: self-compassion. They are two sides to the same coin — you need self-efficacy to believe you can do it, but you equally need self-compassion to be ok when you don’t. Self-compassion aids change by removing the veil of shame and pain that keeps you from examining the causes of your mistakes (and often, leads you to indulge in the very same bad habit as a way of forgetting the pain). Self-forgiveness is the first step in fostering an invitational attitude that is open to feedback and learning, from yourself and others.

      There is something about the turning of this coin — between efficacy and compassion — that I believe lies at the heart of the experimentation framework I’m envisioning. And the more I think about it, the more I suspect compassion is the far more radical and important side.

    1. Spontaneity is the big thing you'll miss

      Forget the calendar invite. Just jump into a conversation. That’s the idea powering a fresh batch of social startups poised to take advantage of our cleared schedules amidst quarantine. But they could also change the way we work and socialize long after COVID-19 by bringing the free-flowing, ad-hoc communication of parties and open office plans online. While “Live” has become synonymous with performative streaming, these new apps instead spread the limelight across several users as well as the task, game, or discussion at hand.

    1. Properly defined, a startup is the largest group of people you can convince of a plan to build a different future. A new company’s most important strength is new thinking: even more important than nimbleness, small size affords space to think.

      If your product requires advertising or salespeople to sell it, it’s not good enough: technology is primarily about product development, not distribution. Bubble-era advertising was obviously wasteful, so the only sustainable growth is viral growth.

    1. Taken from a graduation address delivered at West Point, which is just so good and worth quoting many sections of at length

      That’s really the great mystery about bureaucracies. Why is it so often that the best people are stuck in the middle and the people who are running things—the leaders—are the mediocrities? Because excellence isn’t usually what gets you up the greasy pole. What gets you up is a talent for maneuvering. Kissing up to the people above you, kicking down to the people below you. Pleasing your teachers, pleasing your superiors, picking a powerful mentor and riding his coattails until it’s time to stab him in the back. Jumping through hoops. Getting along by going along. Being whatever other people want you to be, so that it finally comes to seem that, like the manager of the Central Station, you have nothing inside you at all. Not taking stupid risks like trying to change how things are done or question why they’re done. Just keeping the routine going.

      We have a crisis of leadership in America because our overwhelming power and wealth, earned under earlier generations of leaders, made us complacent, and for too long we have been training leaders who only know how to keep the routine going. Who can answer questions, but don’t know how to ask them. Who can fulfill goals, but don’t know how to set them. Who think about how to get things done, but not whether they’re worth doing in the first place. What we have now are the greatest technocrats the world has ever seen, people who have been trained to be incredibly good at one specific thing, but who have no interest in anything beyond their area of exper­tise. What we don’t have are leaders.

      What we don’t have, in other words, are thinkers. People who can think for themselves. People who can formulate a new direction: for the country, for a corporation or a college, for the Army—a new way of doing things, a new way of looking at things. People, in other words, with vision.

      That’s the first half of the lecture: the idea that true leadership means being able to think for yourself and act on your convictions. But how do you learn to do that? How do you learn to think? Let’s start with how you don’t learn to think. A study by a team of researchers at Stanford came out a couple of months ago. The investigators wanted to figure out how today’s college students were able to multitask so much more effectively than adults. How do they manage to do it, the researchers asked? The answer, they discovered—and this is by no means what they expected—is that they don’t. The enhanced cognitive abilities the investigators expected to find, the mental faculties that enable people to multitask effectively, were simply not there. In other words, people do not multitask effectively. And here’s the really surprising finding: the more people multitask, the worse they are, not just at other mental abilities, but at multitasking itself.

      One thing that made the study different from others is that the researchers didn’t test people’s cognitive functions while they were multitasking. They separated the subject group into high multitaskers and low multitaskers and used a different set of tests to measure the kinds of cognitive abilities involved in multitasking. They found that in every case the high multitaskers scored worse. They were worse at distinguishing between relevant and irrelevant information and ignoring the latter. In other words, they were more distractible. They were worse at what you might call “mental filing”: keeping information in the right conceptual boxes and being able to retrieve it quickly. In other words, their minds were more disorganized. And they were even worse at the very thing that defines multitasking itself: switching between tasks.

      Concentrating, focusing. You can just as easily consider this lecture to be about concentration as about solitude. Think about what the word means. It means gathering yourself together into a single point rather than letting yourself be dispersed everywhere into a cloud of electronic and social input. It seems to me that Facebook and Twitter and YouTube—and just so you don’t think this is a generational thing, TV and radio and magazines and even newspapers, too—are all ultimately just an elaborate excuse to run away from yourself. To avoid the difficult and troubling questions that being human throws in your way. Am I doing the right thing with my life? Do I believe the things I was taught as a child? What do the words I live by—words like duty, honor, and country—really mean? Am I happy?

      So it’s perfectly natural to have doubts, or questions, or even just difficulties. The question is, what do you do with them? Do you suppress them, do you distract yourself from them, do you pretend they don’t exist? Or do you confront them directly, honestly, courageously? If you decide to do so, you will find that the answers to these dilemmas are not to be found on Twitter or Comedy Central or even in The New York Times. They can only be found within—without distractions, without peer pressure, in solitude.

      “Your own reality—for yourself, not for others.” Thinking for yourself means finding yourself, finding your own reality. Here’s the other problem with Facebook and Twitter and even The New York Times. When you expose yourself to those things, especially in the constant way that people do now—older people as well as younger people—you are continuously bombarding yourself with a stream of other people’s thoughts. You are marinating yourself in the conventional wisdom. In other people’s reality: for others, not for yourself. You are creating a cacophony in which it is impossible to hear your own voice, whether it’s yourself you’re thinking about or anything else. That’s what Emerson meant when he said that “he who should inspire and lead his race must be defended from travelling with the souls of other men, from living, breathing, reading, and writing in the daily, time-worn yoke of their opinions.” Notice that he uses the word lead. Leadership means finding a new direction, not simply putting yourself at the front of the herd that’s heading toward the cliff.

      So solitude can mean introspection, it can mean the concentration of focused work, and it can mean sustained reading. All of these help you to know yourself better. But there’s one more thing I’m going to include as a form of solitude, and it will seem counterintuitive: friendship. Of course friendship is the opposite of solitude; it means being with other people. But I’m talking about one kind of friendship in particular, the deep friendship of intimate conversation. Long, uninterrupted talk with one other person. Not Skyping with three people and texting with two others at the same time while you hang out in a friend’s room listening to music and studying. That’s what Emerson meant when he said that “the soul environs itself with friends, that it may enter into a grander self-acquaintance or solitude.”

      Introspection means talking to yourself, and one of the best ways of talking to yourself is by talking to another person. One other person you can trust, one other person to whom you can unfold your soul. One other person you feel safe enough with to allow you to acknowledge things—to acknowledge things to yourself—that you otherwise can’t. Doubts you aren’t supposed to have, questions you aren’t supposed to ask. Feelings or opinions that would get you laughed at by the group or reprimanded by the authorities.

      This is what we call thinking out loud, discovering what you believe in the course of articulating it. But it takes just as much time and just as much patience as solitude in the strict sense. And our new electronic world has disrupted it just as violently. Instead of having one or two true friends that we can sit and talk to for three hours at a time, we have 968 “friends” that we never actually talk to; instead we just bounce one-line messages off them a hundred times a day. This is not friendship, this is distraction.

    1. Why the Golden Rule isn't enough

      Mengzian extension models general moral concern on the natural concern we already have for people close to us, while the Golden Rule models general moral concern on concern for oneself.

      Ilike Mengzian extension better for three reasons. First, Mengzian extension is more psychologically plausible as a model of moral development. People do, naturally, have concern and compassion for others around them. Explicit exhortations aren’t needed to produce this natural concern and compassion, and these natural reactions are likely to be the main seed from which mature moral cognition grows. Our moral reactions to vivid, nearby cases become the bases for more general principles and policies. If you need to reason or analogise your way into concern even for close family members, you’re already in deep moral trouble.

      Second, Mengzian extension is less ambitious – in a good way. The Golden Rule imagines a leap from self-interest to generalised good treatment of others. This might be excellent and helpful advice, perhaps especially for people who are already concerned about others and thinking about how to implement that concern. But Mengzian extension has the advantage of starting the cognitive project much nearer the target, requiring less of a leap. Self-to-other is a huge moral and ontological divide. Family-to-neighbour, neighbour-to-fellow citizen – that’s much less of a divide.

      Third, you can turn Mengzian extension back on yourself, if you are one of those people who has trouble standing up for your own interests – if you’re the type of person who is excessively hard on yourself or who tends to defer a bit too much to others. You would want to stand up for your loved ones and help them flourish. Apply Mengzian extension, and offer the same kindness to yourself. If you’d want your father to be able to take a vacation, realise that you probably deserve a vacation too. If you wouldn’t want your sister to be insulted by her spouse in public, realise that you too shouldn’t have to suffer that indignity.

    1. I finally realized today why politics and religion yield such uniquely useless discussions.

      "the best plan is to let as few things into your identity as possible"

      I think what religion and politics have in common is that they become part of people's identity, and people can never have a fruitful argument about something that's part of their identity. By definition they're partisan.

      More generally, you can have a fruitful discussion about a topic only if it doesn't engage the identities of any of the participants.

      The most intriguing thing about this theory, if it's right, is that it explains not merely which kinds of discussions to avoid, but how to have better ideas. If people can't think clearly about anything that has become part of their identity, then all other things being equal, the best plan is to let as few things into your identity as possible.

    1. Based on all of these approaches, it seems like a reasonable lower bound is that cases are at least 10x underreported, likely more than 20x underreported (according to several researchers), and potentially as much as 100x underreported.It seems reasonable, then, to assume that it’s not 1 out of every 10 people with COVID-19 who will need hospitalization -but rather 1 out of every 100 -500.Similarly, rather than 1 -4%, it seems likely that true CFR for COVID-19 will be well under half a percent, and potentially well under 0.1%for most of the population.