Uber Winners

Who wins with Uber, other than consumers.

On the positive side, the so-called sharing economy allows workers to use their time more flexibly. Drivers can earn money without working full time, and without having to wait around at taxi stands for the next passenger. The workers can use their newly acquired spare time for other purposes, including studying for college, teaching themselves programming or simultaneously offering themselves out for different sharing services: If no one wants a ride, go help someone with repairs around the house.

In short, these developments benefit those workers who are willing and able to turn their spare time to productive uses. These workers tend to be self-starters and people who are good at shifting roles quickly. Think of them as disciplined and ambitious task switchers. That describes a lot of people, but of course, it isn’t everybody.

That’s where some of the problems come in. Uber drivers are much more likely to have a college degree than are taxi drivers or chauffeurs, according to the Hall and Krueger study. It found striking differences between the two groups: 48 percent of Uber drivers have a college degree or higher, whereas that figure is only 18 percent for taxi drivers and chauffeurs.

If I’m interviewing you, not being a self starter is a deal killer. We can’t afford not to take advantage of this world. Sorry (sorta).

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When I cried after a math test

I had been failing exams for about 9 months straight. 4 in a row from July 2012 through March 2013. The humiliation, the self doubt. The guilt!

With a full time job, a new baby and nearest parents a 7 hour drive away, me studying put an incredible strain on my wife (who pulled me out of the emotional gutter more than once). And sitting for an exam every 3 months or so is a brutal pace. There are no breaks. Every evening, every weekend, on the commute, at lunch. Always studying. One exams ends (fail) and literally the next week I have to be back at it.

Yes they’re hard. These things are famous for being hard. So I give it everything I’ve got thinking, ‘hey, you’re a smart guy, you can do this’. Fail, fail, fail, fail. I begin to lose hope. Now the self talk is more like ‘maybe you’re just not cut out for this’. And the window is closing. More work responsibility and more kids means if I don’t do this now I will never do it.

A couple months later I finish another one and am flying through the post-exam survey (come on come on come on, give me the damn result) and click ‘submit’. The screen goes blank. Calculating. It probably only last 2 seconds but I’m not breathing at this point.

Pass. I burst out in tears. No kidding. Shaking. Sobbing. Not sad, not happy even, not relieved, not any emotion I’ve ever felt elsewhere in life. It’s like… a release. Like there was some kind of energy stored somewhere and it just all fell out at once.

And I am in this prometric testing center full of people. Security cameras everywhere. Trying to pull myself together (desperately, quietly). It takes like 5 full minutes. They must have wondered what on earth I was doing. Or maybe it happens all the time. It probably happens all the time.

Fast forward to today and I’m done. Like done done. I just found out I passed my latest exam and so have completed all the requirements to be a credentialed actuary. There’s some paperwork to get through before it’s all official but formalities aside it’s over.

Whew.

Time to reflect. Uh, I don’t know what to say. On paper I wasn’t cut out for this. Even in some big picture sense I’m a weirdo for this profession. You know those people who love math? Who play number games and logic puzzles and like learning shortcuts for calculating square roots in their heads? Not me.

How about the mega brains who learn effortlessly and cruise through exams? Ha. This has been an exercise in feeling stupid every single day. Of feeling that you understand something and then receiving humiliating proof you don’t have a clue.

No, I did it because I like business and want desperately to understand the inner workings of my industry. If I was in tech I’d probably do night courses to become an engineer.

Dont get me wrong, I understand the world is full of successful people who didn’t need to know how the sausage was made to cook it. My method is almost certainly a dumber way to succeed. It takes too much time and energy. But I’m such an intellectual wuss that I don’t have enough confidence to be a leader without a truckload of deep background knowledge.

So now I’m free. There are more exams of course. The fellowship level is a possibility but I doubt I’ll go there. Too many other things to learn. Things that won’t make me cry!

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Why Does Superman Listen To Music When He Studies?

All great achievement, argues Steven Kotler, founder of something called the flow genome project and author of The Rise of Superman: Decoding the Science of Ultimate Human Performance, starts with Flow.

What is flow? One way of defining flow is as the compete absorption in what you are doing. It was named and popularized by someone with the strangest looking name possible to an English speaking person: Mihaly Csikszentmihalyi. Here’s Wikipedia on flow.

Why should you care about flow?
Another way of thinking about flow is that it is what’s happening in your head when you are at your best. The key question then is: how do I get into a state of flow? Let me obnoxiously rephrase that in tech jargon: how do I hack flow?

Well, you’ve probably hacked flow tons of times in your student life, maybe without knowing it, by listening to music while studying. More on that later.

We’re told there are actually 17 ways of getting into flow and this podcast, an interview of Kotler by James Altucher, has a lot of good observations

For example Kotler talks about how you need to be at the crossover point between boredom and anxiety. Best way to do that is tackle something hard enough to focus your mind but easy enough that you can dispatch of it without stressing out and breaking your concentration. Hilariously, there’s even a point estimate of the percentage that a task’s difficulty needs to exceed your capability: 4%.

And there’s the chemistry part. Apparently you are looking for a dopamine surge that comes from being challenged a bit. But only a bit. Too much stimulus and you get overloaded into a fight or flight adrenaline surge. Flow, we are told, is actually shown to reduce stress.

Back to studying, which looks now like one of the most flow destroying of all activities. It’s usually boring, sometimes terrifying (I’m going to fail!) and when you need it the most, when you totally don’t understand something, you are more like 50% underwater than 4%.

Music, though, can give you a lifeline of dopamine that might get flow kickstarted. Here’s the NYT.

we found that listening to what might be called “peak emotional moments” in music — that moment when you feel a “chill” of pleasure to a musical passage — causes the release of the neurotransmitter dopamine, an essential signaling molecule in the brain.

But what may be most interesting here is when this neurotransmitter is released: not only when the music rises to a peak emotional moment, but also several seconds before, during what we might call the anticipation phase.

Music is fun and that good feeling can put you in the moment, even before you get to your favorite song. Translating that surge to the work at hand isn’t always easy. I know I’m prone to spacing out with tunes when I should be focusing, but it helps my chances.

Of course it’s not just studying. Anything that puts extra demands on our minds can benefit from flow. Look at what athletes are doing before big games: immersed in music, getting into the moment, preparing themselves for maximum performance. Now we know why!

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Why BlackBerry failed

Although the market rejected his initial touch-screen approach, Mr. Lazaridis believed the four pillars of BlackBerry’s success—good battery life, miserly use of carrier’s spectrum, security and the ability to type—still ruled in the new smartphone world and gave his company its competitive advantage. Two years after Apple’s launch, it still amazed Mr. Lazaridis that iPhone users had to cart around adapters to power up depleted batteries. His early prediction that Apple would cause AT&T headaches by using up its network bandwidth also proved right.

But there was no going back. Apple was setting a new agenda for the wireless industry. RIM, like others, were now followers. “We built a perfectly evolved, optimized service and product offering that made the industry take off,” says Mr. Lazaridis. “There was a point where the carrier, by changing the rules, forced all the other carriers to change the rules eventually. It allowed Apple to reset what the expectations were. Conservation didn’t matter. Battery life didn’t matter. Cost didn’t matter. That’s their genius. We had to respond in a way that was completely different than what people expected.”

More here. What a gold mine.

RIM never had a chance. None of the carriers of the day did. Their whole decision making structure had the wrong focus (efficiency, security) and the wrong view of customers (carriers, enterprise) to compete with Apple.

The lesson I guess is that organizations for the most part cannot change who they are. The article paints an interesting mix of blaming the carriers for changing the rules and yet an implicit buy in to the immorality of those rules.

It’s a very common thing to see things that are perhaps changing about the world and say “no chance!” for no reason other than that real change doesn’t come along all that often. It sure makes me feel smart to play the odds on an uncomfortable new technology, trash it and be right. But let’s be honest, my mental models of all the things I feel like an expert in are just as vulnerable to iPhone style disruption as RIM was.

It doesn’t mean that I should become a fanboy of every new thing either, the constant failure would be exhausting. Rather to be aware. It happens. Be ready, react quickly.

Worst of all, know that incumbents are probably all screwed.

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Groupthink

The problem is that central banks tend to follow the conventional wisdom of economists.  So when central banks screw up, the conventional wisdom of economists will never blame the central bank (at the time); that would be like blaming themselves. They’ll invent some ad hoc theory about mysterious “shocks.”

The other night at dinner my wife told me that the Chinese sometimes say, “If you cannot see the true shape of Lu Mountain, it’s because you are standing on Lu Mountain.”

That’s Scott Sumner. He distinguishes himself by being consistent. I remember a post he wrote early in 2009 saying he was baffled that he felt he was in the majority of economists on his beliefs about the causes of the crisis but as soon as the crisis bit everyone else retreated to some vague wacky model that had been discredited in the literature.

I can’t evaluate the evidence on that claim but I think there is something different about how people think about difficult, complicated situations when they’re in them than they do looking back.

For example, in my business there are cycles of high and low margins, called hard and soft markets. Many firms adopt an explicit strategy of ‘waiting out’ the soft market. Sounds easy.

Yet when hard markets come, being defined as rapid increases in prices after a big cycle changing event, they say instead, wow the new normal is riskier than ever and even with these price increases we can’t make money. So we’ll keep sitting out until we are sure. And they miss out.

The phenomenon is captured in the title of the Reinhardt and Rogoff book “This time it’s different”. We are able to distill the essence of complex situations in hindsight. In the moment we can’t see the forest for the trees.

Because we are scared.

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Bye Bye Truckers

the replacement of truckers is inevitable. It is not a matter of “if”, it’s only a matter of “when.” So the question then becomes, how long until millions of truckers are freshly unemployed and what happens to them and all the rest of us as a result?…

According to the American Trucker Association, there are 3.5 million professional truck drivers in the US, and an additional 5.2 million people employed within the truck-driving industry who don’t drive the trucks. That’s 8.2 million trucking-related jobs.

We can’t stop there though, because the incomes received by these 8.2 million people create the jobs of others. Those 3.5 million truck drivers driving all over the country stop regularly to eat, drink, rest, and sleep. Entire businesses have been built around serving their wants and needs. Think restaurants and motels as just two examples.

More here.

I read this and think a few things:
1. Wow, stuff delivered by truck is about to get a WHOLE lot cheaper.
2. Rail is going to take a beating. Berkshire’s investment in rail looks bad.
3. Commercial auto insurers will be the first to suffer the coming Armageddon of auto insurance that many of my clients worry about. I’ll have more on this eventually.
4. What about roadside service centers that are so crucial for road trips?
5. I wonder, on the theme of the article but in a slightly different spirit, what the economy is going to do with all those people. Time to read more Tyler Cowen.

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Hamming on Leadership

Hamming sees leadership as command and control, a simplistic view I disagree with. My thinking on leadership is much more heavily influenced by Dan Rockwell who emphasizes leadership as service. In that frame the led do the work; the leader enables them do amazing things. Here’s Hamming:

A man was examining the construction of a cathedral. He asked a stone mason what he was doing chipping the stones, and the mason replied, “I am making stones”. He asked a stone carver what he was doing, “I am carving a gargoyle”. And so it went, each person said in detail what they were doing. Finally he came to an old woman who was sweeping the ground. She said, “I am helping build a cathedral”.

And another quote about the same cathedral:

You may claim in both cases the larger aim was so well understood there was no need to mention it, but I doubt you really believe it. Most of the time each person is immersed in the details of one special part of the whole and does not think of how what they are doing relates to the larger picture. It is characteristic of most people they keep a myopic view of their work and seldom, if ever, connect it with the larger aims they will admit, when pressed hard, are the true goals of the system. This myopic view is the chief characteristic of a bureaucrat. To rise to the top you should have the larger view—at least when you get there.

Someone needs to guide our hands. That’s the leader. Here’s my three-part definition of leadership:

  1. Vision: what should I do next?
  2. Mediation: I want this and she wants that. Can’t do both. Both are important. What’s the compromise? Could also call this politics.
  3. Coaching: how do I get better?

One more observation: cleansed of human interaction, my definition of a leader is a lot like Hamming’s Systems Engineer:

Systems engineering is the attempt to keep at all times the larger goals in mind and to translate local actions into global results. But there is no single larger picture. For example, when I first had a computer under my complete control I thought the goal was to get the maximum number of arithmetic operations done by the machine each day. It took only a little while before I grasped the idea it was the amount of important computing,not the raw volume, that mattered. Later I realized it was not the computing for the Mathematics department, where I was located, but the computing for the research division which was important. Indeed, I soon realized to get the most value out of the new machines it would be necessary to get the scientists themselves to use the machine directly so they would come to understand the possibilities computers offered for their work and thus produce less actual number crunching, but presumably more of the computing done would be valuable to Bell Telephone Laboratories. Still later I saw I should pay attention to all the needs of the Laboratories, and not just the Research Department. Then there was AT&T, and outside AT&T the Country, the scientific and engineering communities, and indeed the whole world to be considered. Thus I had obligations to myself, to the department, to the division, to the company, to the parent company, to the country, to the world of scientists and engineers, and to everyone. There was no sharp boundary I could draw and simply ignore everything outside.

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