"Jimmy got a job at Google"

The Movie "21 - The movie" references my employer at the beginning.

Current blog cloud

Authors@Google: Dan Ariely

I missed Dan Ariely but thankfully his presentation at Google was recorded on YouTube.

Why Free! is great

Have you ever grabbed for a coupon offering a free! package of coffee beans—even though you don’t drink coffee and don’t even have a machine with which to brew it? What about all those free! extra helpings you piled on your plate at a buffet, even though your stomach had already started to ache from all the food you had consumed? And what about the worthless free! stuff you’ve accumulated—the promotional T-shirt from the radio station, the teddy bear that came with the box of Valentine chocolates, the magnetic calendar your insurance agent sends you each year?
It’s no secret that getting something free feels very good. Zero is not just another price, it turns out. Zero is an emotional hot button—a source of irrational excitement. Would you buy something if it were discounted from 50 cents to 20 cents? Maybe. Would you buy it if it were discounted from 50 cents to two cents? Maybe. Would you grab it if it were discounted from 50 cents to zero? You bet!
What is it about zero cost that we find so irresistible? Why does free! make us so happy? After all, free! can lead us into trouble: things that we would never consider purchasing become incredibly appealing as soon as they are free! For instance, have you ever gathered up free pencils, key chains, and note pads at a conference, even though you’d have to carry them home and would only throw most of them away? Have you ever stood in line for a very long time (too long), just to get a free cone of Ben and Jerry’s ice cream? Or have you bought two of a product that you wouldn’t have chosen in the first place, just to get the third one for free?
What is it about free! that’s so enticing? Why do we have an irrational urge to jump for a free! item, even when it’s not what we really want?
I believe the answer is this. Most transactions have an upside and a downside, but when something is free! we forget the downside. Free! gives us such an emotional charge
that we perceive what is being offered as immensely more valuable than it really is. Why? I think it’s because humans are intrinsically afraid of loss. The real allure of free! is tied to this fear. There’s no visible possibility of loss when we choose a free! item (it’s free). But suppose we choose the item that’s not free. Uh- oh, now there’s a risk of having made a poor decision—the possibility of a loss. And so, given the choice, we go for what is free.

Source: Daniel Ariery, http://g-ecx.images-amazon.com/images/G/01/books/a-plus/Predictably-Irrational-Excerpt.pdf

Online Dating & Disappointments

Daniel Ariely is closing the gap on why we are more disappointed the more we know about a person.

School of life

Award-winning British short-movie

Graphs used in Emergency Rooms

The Back of the Napkin

Fishing, Competition and Strategy

Sport fishing is one of my interests and one can wait a long time for some action while doing it. Eventually I had so much time that I started thinking about fishing in a broader context and wondered if you can draw anything away for it on a strategic level: fishing and strategy!
Like in many business situation you compete also while fishing. Most obviously you and the fish compete about who keeps the 'worm' (Note that even the worm competes for a resource, unless it's plastic, to stay away from the angler and any fish). Certainly you compete with other fishermen and nothing is probably more exciting and less close to reality than answering another fellow fisherman's question of "any bites" ? Don't forget that you are also competing with other creatures (fish, turtles and birds) who enjoy fish like you and the other anglers do.
Last but not least you compete with yourself. Once you become more successful and fished nearly every fish out there it becomes increasingly more difficult to stay successful. One might even argue that the smartest fish is the most experienced and oldest fish who is a) biggest and b) probably in the pond until the very end. How do you get him?
Let's look at means of fishing. A fishing rod helps but there are other things. Be a little bit more creative when it comes to means! Of course you can use a net with a varying 'threat-count'. What do you want to catch? A net seems like an easy way to catch any fish that is larger than the openings in your net but it's also very costly. A net is nothing else than a capital investment and it will take a long time to be successful and recoup the investment. A faster and much cheaper idea is to use dynamite. Boom and that's it. Note that this practice is usually not legal, it's more dangerous and you have no control over the result unless you like to eat fish-pieces only. This very effective method is neither sustainable nor will you earn the respect of your competition. You are running into trouble in the long-run also because everything in the pond has been wiped out and you will have to find another lake to fish in the future. Your idea with the net seemed not too bad after all and you might want to consider to put a much smaller net upstream on a connecting river. Larger fish will travel up the stream through your net - if they could. Your investment is much smaller, it's targeted and you will see results sooner exactly where you expect it. Draining the lake is another way to catch a fish. It might not be totally destructive and make it easier for you to find fish. One more option comes to mind. If you life in certain areas and like to focus on catfish you might decide to forget about a rod and net altogether. Catfish noodling is very popular and you basically use your hand to fish for catfish 1x1.



So don't limit yourself to just one method of fishing, i.e. the rod method and think creatively about what might be an appropriate fishing method. Effectiveness might not always be the way to go.

Of course you have to do your 'hygiene', i.e. your homework before you start fishing. Prepare yourself and find out everything you can about the area, the lake (depth, temperature, etc.) the containing fish and best time of fishing. This will not guarantee that you will catch anything but increase the likelihood of winning. You might be better of to experiment at the lake. Can you change a) your position, b) bait, c) means of fishing and d) time of fishing? If you are more successful at dawn there's probably a reason for it so keep fishing at dawn if it works out. A little espionage - only if it's legal! - can help too. Are there other people, what's on their hook and in their buckets?

Your positioning might help or hurt you. If you are close to your competitors (i.e. the other fishermen) you will compete for the same fish that is coming by and might end-up fighting. You can hide on the other side of the lake and stay 'under the radar'. You are also staying out of trouble. Avoid confrontations if you can: it's not giving you any more fish! In fact, fish don't like noise so it WILL hurt both of you. If you have more money try to buy a boat. This will put you on a different spot (on the middle of the lake!) where there might be bigger fish in the depth. Remember that the big fish is big for a reason: probably it stayed away from the edge of the lake for a long time and is safe in the middle in the depth.That's your chance especially since there are not many other people usually fishing here. If you are smart you will not buy a boat but rather rent or even better loan one.
Technology, another small investment, can be your friend. With a fish-finder you can 'see' the fish even if YOU can't see it. You can safe a lot of muda (japanese for 'waste') in terms of time, effort and bait if you know where the fish a) is and where it b) is not.
Finally experience will help you a LOT! Experience means you see things that other people don't see. You will know that those little bubbles and waves on the top are from fish which will show you their location. Your experience will also tell you not too fish for trout in small lakes with a lot of sunlight as trout likes cold water. So don't fish for trout but for bass who likes warm water!
You will find more analogies if you leave your business situation and compare it to other areas in life. Of course you will also find many situations where the comparisons breaks-down and that's where it's getting interesting. Why can't you compare this situation with another one and what can you take-away from this insight?

P.s.: Eventually you find that fishing is a very competitive situation and it would be nice to get to the fish without all the 'hassle'. Especially if you are in an area where are no lakes at all you might run into a problem or challenge. Is there anything you can do except than giving up i.e. leaving the market? Often there is and you should use it to your advantage. Fish-farming is a huge business e.g. in Israel and it turns out that you can achieve magnificent yields in what one would think unproductive areas.

Loser's versus Winner's game

Simon Ramo identified the crucial difference between a Winner's Game and a Loser's Game in his excellent book on playing strategy, Extraordinary Tennis for the Ordinary Tennis Player. Over a period of many years, he observed that tennis was not one game but two. One game of tennis is played by professionals and a very few gifted amateurs; the other is played by all the rest of us.
Although players in both games use the same equipment, dress, rules and scoring, and conform to the same etiquette and customs, the basic natures of their two games are almost entirely different. After extensive scientific and statistical analysis, Dr. Ramo summed it up this way: Professionals win points; amateurs lose points. Professional tennis players stroke the ball with strong, well aimed shots, through long and often exciting rallies, until one player is able to drive the ball just beyond the reach of his opponent. Errors are seldom made by these splendid players. Expert tennis is what I call a Winner's Game. Amateur tennis, Ramo found, is almost entirely different. Brilliant shots, long and exciting rallies, and seemingly miraculous recoveries are few and far between. On the other hand, the ball is fairly often hit into the net or out of bounds, and double faults at service are not uncommon. The amateur duffer seldom beats his opponent, but he beats himself all the time. The victor in this game of tennis gets a higher score than the Opponent, but he gets that higher score because his opponent is losing even more points.
As a scientist and statistician, Dr. Ramo gathered data to test his hypothesis. And he did it in a very clever way. Instead of keeping conventional game scores---"Love," "Fifteen All," "Thirty-Fifteen," etc.-~amo simply counted points won versus points lost. And here is what he found. In expert tennis, about 80 percent of the points are won; in amateur tennis, about 80 percent of the points are lost. In other words, professional tennis is a Winner's Game--the final outcome is determined by the activities of the winner--and amateur tennis is a Loser's Game---the final outcome is determine d by the activities of the loser. The two games are, in their fundamental characteristic, not at all the same. They are opposites.
From this discovery of the two kinds of tennis, Dr. Ramo builds a complete strategy by which ordinary tennis players can win games, sets and matches again and again by following the simple strategy of losing less, and letting the opponent defeat himself.
Dr. Ramo explains that if you choose to win at tennis--as opposed to having a good time--the strategy for winning is to avoid mistakes. The way to avoid mistakes is to be conservative and keep the ball in play, letting the other fellow have plenty of room in which to blunder his way to defeat, because he, being an amateur (and probably not having read Ramo's book) will play a losing game and not know it.

Rule of the game (example tennis)

When we watch a sporting event like a tennis tournament we might hope for a favorite player to win and even feel upset if he loses. However, we don’t often question the rules of the tournament. Lewis Carroll, better known as the author of Alice in Wonderland, explains why the typical tournament structure often fails to award best players the top prizes and offers an alternative method.

In an elimination tournament, each player can only advance along a certain path toward the final. As each player moves through this space, the field is narrowed, until the top prizes are determined. The structure of the space critically influences who finishes well in the tournament. A competition that seems at first glance to be fairly structured to filter out the weaker players may, in fact, not be good at all at selecting the best competitors. In any competition it is not just skill and lucky breaks that determine the winners; the rules of the competition itself determine who will finish well. Many competitions are structured to correctly determine only first place; the second and third prizes are very much subject to chance.

Let us take, as an example of the present method, a Tournament of 32 competitors with 4 prizes.

On the 1st day, these contend in 16 pairs: on the 2nd day, the 16 Winners contend in 8 pairs, the Losers being excluded from further competition: on the 3rd day, the 8 Winners contend in 4 pairs: on the 4th day, the 4 Winners (who are now known to be the 4 Prize-Men) contend in 2 pairs; and on the 5th day, the 2 Winners contend together to decide which is to take the 1st prize and which the 2nd -- the two Losers having no further contest, as the 3rd and 4th prizes are of equal value.

Now, if we divide the list of competitors, arranged in the order in which they are paired, into 4 sections, we may see that all that this method really does is to ascertain who is best in each section, then who is best in each half of the list, and then who is best of all. The best of all (and this is the only equitable result arrived at) wins the 1st prize: the best in the other half of the list wins the 2nd: and the best men in the two sections not yet represented by a champion win the other two prizes. If the Players had chanced to be paired in the order of merit, the 17th best Player would necessarily carry off the 2nd prize, and the 9th and 25th best the 3rd and 4th! This of course is an extreme case: but anything within these limits is possible: e.g. any competitor, from the 3rd best to the 17th best, may, by the mere accidental arrangement of pairs, and by no means as a result of his own skill, carry off the 2nd prize. As a mathematical fact, the chance that the 2nd best Player will get the prize he deserves is only 16/31sts; while the chance that the best 4 shall get their proper prizes is so small, that the odds are 12 to 1 against its happening!

Therefore don't assume that the rules of the game favor the best. The rules of the games are oftentimes predetermined and one can either influence those or even change the entry point into the competition.

Source: BCG, Strategy institute

Fishing and startegy

The pike is one of the most efficient, lean predating machines in freshwater. If you put a small pike in an aquarium with a bunch of minnows it will demonstrate its predatory skills with frightening efficiency. If you separate the pike from the minnows using a sheet of perspex the pike will continue to launch its attacks for a little while. And then it will just give up. You can then remove the sheet of perspex and the pike will still believe that it can no longer catch its prey - and will simply starve to death.

This little tale is similar to the "Learned helplessness" theory which can also be found in my blog and is posted at an earlier date.

Flies, Bees and strategy

Imagine putting half a dozen house flies and half a dozen bumble bees in glass bottle. The bottle is placed with its base towards a window and the open end towards the middle of the room. The bees are strategically aligned to fly towards the sunlight. The presence of the glass is a mystery to them. They buzz and buzz away at the bottom of the glass driving towards the sunshine - until they too die. The flies on the other hand are much less ’strategically aligned’. They fly in far more random patterns and within a few minutes most of them will have found their way to freedom.

Are you thinking aligned liked bees towards the goal or are you trying various options, some which seem to be absurd?

Hiring and landlords

Whenever you hire someone be cautious if you speak to their current employer as a reference. If the candidate is a non-performer chances are that the current employer dislikes him/her and is likely to get rid of the person. Consequently, the reference would be good to expedite the transition out of the company. Therefore don't only ask the current employer but the one before (!) the current position. That employer is much more likely to give you the unbiased truth. Same holds true for renters that want to move into one of your properties. Don't stick to checking their current landlord. If they are messies chances are that their current landlord wants to get rid of them and is giving you a great reference for them.

Robert Frank @ Google

Data centers and airports

How would you create an effective network from scratch? Sure, you could experiment and then evolve over time. But what if you had to build a good network right now and couldn't experiment?
One idea came to my mind on my bike on the way to work: could you copy the size and location of airports for the efficient placement of distributed data centers? This might be a good predictor for suitable places. Why? One assumption is that airports are located at places where there is a need, either direct need or indirect need as a hub. One can also argue that over time more effective and better located airports grew whereas airports at unpopulated areas decreased in size and vanished. Finally, the cost structure is similar: high fixed costs and little variable costs.
Here are two examples: my previous hometown Charlottesville has only about 40.000 inhabitants and has a small airport. Considering the fixed costs of an airport (btw, you can compare those costs to a data center) one would only invest if there's enough return, i.e. traffic. Smaller town won't probably have an airport or only for recreational purposes. Of course large cities such as San Francisco have large airports to serve the local population. Now let's look at hubs. For hubs the economics are similar and to a part totally different from regular airports. Hubs channel traffic and require a larger size. Hence, location between centers and size are important. It is no surprise that Atlanta and Chicago are major hubs. Certainly real estate prices are cheaper than in Manhattan than in Georgia and it helps that both airports are in the middle of the country.
So why should we care? Both categories (data centers and airports) are totally different but share in their core the same characteristics. One can certainly draw useful conclusions from the case above and I challenge you to find similar cases for your business / situation.

Cablecar

USD 5 / person / ride

Driving to work in Hyderabad

Departure Beijing to Singapore

Starbucks Beijing