The most valuable thing you do is provide a basis for intuition in the topics you teach. Getting people to understand the "big picture" early on actually increases the appetite for curiosity, makes topics less intimidating and easier to learn.
I don't need all the facts, but I do need an understanding of why certain historical events (or any other topic) are important. Having that latticework in my mind allows me to kickstart learning the details, and synthesizing all that information.
Criticism of various learning models will always be around. Its important to listen to it, but at the same time, these ideas are coming straight out of people's heads - about what they "think" is a better approach. On the other hand, Khan Academy's success is a direct function of its wide-spread adoption. If it didn't work as well as, if not better than, what people learn in a classroom, people simply wouldn't watch. Not only that, I'm sure feedback (positive and negative) from actual users is much more useful than from someone ingrained in the old model (and most likely views himself as teacher only, and not a learner).
I'm an avid user of the site and I see this all the time:
Sal- "In the last video, I seemed to have confused people about so and so.. let me clarify that now." The videos and site are developing iteratively, and they have data to understand what people need/having trouble with.
Please continue to teach in this manner. Anyone who grew into, and succeeded in an academic environment (as virtually all professors have) will not see how transformative KA is for people who do not learn that way.
The NYT article is inflammatory, makes factual errors, and is even a bit trollish at times. A simple analysis or opinion piece would have been fine.
"Since then, Buffett has been subject to criticism of a kind he has never before faced."
“'It makes you question Warren’s judgment,'” - author who happens to have a new Warren Buffet book out.
"What moved him to pre-emptively clear Sokol, who had so clearly violated Berkshire’s code of conduct, of wrongdoing? What does that tell us of possible flaws in Buffett’s character?"
"He often buys companies with very little due diligence;"
Architecture would be the perfect field for this guy. Specifically at those firms that dabble with digital fabrication technology.
There's been a major transformation in the industry. Designers using CAD-based software that interfaces with 2D/3D cutting and welding machinery has allowed custom structures to be created in a cost effective way.
There are some nice images/videos here showing the process (albeit on a smaller scale): http://workshopsfactory.com/past-workshops/
Frank Gehry was one of the pioneers in this space. His buildings would be completely unfeasible without the use of digital fabrication. Consequently, his firm was one of the first to package together a platform (based on CATIA) to allow architecture firms to manage mass customized components within the confines of building lifecycle management:
http://www.gehrytechnologies.com/index.php?option=com_jportf...
They didn't cover this one, which I think is pretty common as well:
"You're probably going to [exaggerate other person's negative reaction], but..."
This will usually dampen the other person's negative reaction. You've presumed the person will react unfavorably to whatever it is you're about to say. You, in a way, have suggested the person will have a bias to be negative, before you've even stated anything.
No one likes to hear that about themselves, so people will tend to overcompensate by being even more dispassionate than they normally are. Before anything is ever said.
"You're probably going to hate me for saying this, but..."
"You're going to think this is silly, but..."
"You're going to think I'm a jerk, but..."
I think in each case, you'll find the listener consciously or subconsciously suppress their reactions so as to not to come off as hating the other person, or thinking they are silly or a jerk.
Warren Buffett - Sun Valley 1999 (excerpt from Snowball):
"I would like to talk today about the stock market," he said. "I will be talking about pricing stocks, but I will not be talking about predicting their course of action next month or next year. Valuing is not the same as predicting.
In the short run, the market is a voting machine. In the long run, it's a weighing machine.
Weight counts eventually. But votes count in the short term. And it's a very undemocratic way of voting. Unfortunately, they have no literacy tests in terms of voting qualifications, as you've all learned."
"This is half of a page which comes from a list seventy pages long of all the auto companies in the United States." He waved the complete list in the air. "There were two thousand auto companies: the most important invention, probably, of the first half of the twentieth century. It had an enormous impact on people's lives. If you had seen at the time of the first cars how this country would develop in connection with autos, you would have said, 'This is the place I must be.' But of the two thousand companies, as of a few years ago, only three car companies survived. [21] And, at one time or another, all three were selling for less than book value, which is the amount of money that had been put into the companies and left there. So autos had an enormous impact on America, but in the opposite direction on investors."
"Now the other great invention of the first half of the century was the airplane. In this period from 1919 to 1939, there were about two hundred companies. Imagine if you could have seen the future of the airline industry back there at Kitty Hawk. You would have seen a world undreamed of. But assume you had the insight, and you saw all of these people wishing to fly and to visit their relatives or run away from their relatives or whatever you do in an airplane, and you decided this was the place to be.
"As of a couple of years ago, there had been zero money made from the aggregate of all stock investments in the airline industry in history.
"It's wonderful to promote new industries, because they are very promotable. It's very hard to promote investment in a mundane product. It's much easier to promote an esoteric product, even particularly one with losses, because there's no quantitative guideline. But people will keep coming back to invest, you know. It reminds me a little of that story of the oil prospector who died and went to heaven. And St. Peter said, 'Well, I checked you out, and you meet all of the qualifications. But there's one problem.' He said, 'We have some tough zoning laws up here, and we keep all of the oil prospectors over in that pen. And as you can see, it is absolutely chock-full. There is no room for you.'
"And the prospector said, 'Do you mind if I just say four words?'
"St. Peter said, 'No harm in that.'
"So the prospector cupped his hands and yells out, 'Oil discovered in hell!'
"And of course, the lock comes off the cage and all of the oil prospectors start heading right straight down.
"St. Peter said, 'That's a pretty slick trick. So,' he says, 'go on in, make yourself at home. All the room in the world.'
"The prospector paused for a minute, then said, 'No, I think I'll go along with the rest of the boys. There might be some truth to that rumor after all.'
I think this is a great example of Apple's "design strategy" being completely end-to-end.
They don't just focus on the tiniest details of industrial design; the aluminum chassis, the battery layout, the screws, friction coefficients on the trackpad, etc.. they have also designed their entire supply chain with the same attention to detail.
There was a post on HN a while ago about Apple's patent on a new headphone jack design - they redesigned what is pretty much a commoditized component (and never seen by the customer), to unlock more value in the form of greater maneuverability and internal space. I imagine the supply chain is also very commoditized, and Apple is the kind of company to take that process apart and refine it in the same way, to unlock value in the form of greater margins.
EDIT: Another area where their attention to detail is apparent is their manufacturing tolerances. They've pretty much perfected the art of physically manufacturing precision components. I've not been able to find another product, luxury or otherwise, that comes close to the fit and finish of Apple's devices - and thats including things like rolexes, ferraris, etc.
Charity is most needed for problems that have no other natural source of funding. If the government/private sector can solve certain problems, then charities are perhaps not the best vehicle for solving those particular problems.
Buffett and Gates specifically focus on the former. Trying to reduce extreme poverty, provide healthcare, and educational opportunities. They also believe every life is of equal value. So the challenge then becomes helping the most people per dollar invested.
Some of the most well developed medical technologies/ solutions exists because their's a lot of wealthy people with those problems. A lot of male baldness and not so much malaria.
Malaria is a treatable disease. Millions die because they don't have access to care. You can't say these people would be better off employed, as if their health is not a factor in their economic output. Hence, the goal of trying to eliminate malaria is a valid philanthropic activity.
Buffett also donated through one of his children's foundations, to help solve/minimize the potential for a nuclear event. His view is pretty grim: the information is already out there, getting into more hands, and so the probability approaches 1 that an event will occur at some point in the future. What other natural funding exists for trying to solve this? It might be futile, it might be incredibly hard, but you need smart capable people working on this.
Furthermore, helping the rest of the world become a little bit more prosperous might reduce hostility, and violence that desperate people can be induced into. While businesses have had a great history of introducing wealth into the world, its always done with a profit motive. Where there is no profit potential, there is no interest of a business to be involved. A lot of these problems don't have those profit potentials. Hence, charity works in these areas.
1/. Videos are short, 10-15min digestible bits. Long enough to teach a concept, short enough not to lose my attention.
2/. He's a huge advocate of teaching intuition behind concepts instead of memorization. This makes learning less stuffy and more informal.
3/. Everyone has "holes" in their knowledge, but they are in different areas. Schools have a hard time to individually address weak points in each student's knowledge (particularly if you should have learned them in a prerequisite course). Videos organized by concepts allow you to address these weaknesses systematically.
4/. He makes mistakes! Those mistakes are quite insightful and give a glimpse into an art of solving problems that usually isn't presented in most lectures. You usually see a problem, and a solution thats a finished product.
5/. He doesn't have an ego. He's not breathing down your neck or thinking you're an idiot if you don't understand anything the first time. You can pause, google something, repeat, watch it anytime, etc.
Key quote:
"This is not about the revenue streams Facebook has; it’s about the revenue streams they’re about to have."
Everyone who's been defending Facebook's $33B valuation is projecting the success of some yet-to-be-developed or nascent product at Facebook. Projecting growth based on past earnings and current growth rate is one thing. But imagining hypothetical revenue streams of yet-to-be validated products is batshit crazy. It doesn't matter how obvious or inevitable people think it may be or what the trends are. There's no track record with any of these if-they-wanted-to-they-could-do-this-tomorrow-and-make-billions products.
"Facebook Credits are poised to be this generation’s American Express"
Am I the only one that thinks Facebook isn't as omnipotent and in total control of its user-base as people like to think? Everyone is making these projections about users just falling inline with Facebook's potential revenue models, but they forget the shitstorm that was Beacon. Clearly, Beacon was a direct grab at a sustainable business model and it violated many of their user's trust. Facebook may act like its a benevolent dictatorship, but there's always been an element of democratic decision-making at the behest of angry users. And those concessions always occur at the boundary between potential profitability and privacy.
So many are quick to use Google as a benchmark when Google itself was an extraordinary circumstance. It was recently mentioned that Larry and Sergey were willing to part with their company for $750,000.[1] Now, you could argue if Bill Gross never existed, Google would never have be Google because they wouldn't have developed Adwords and have a perpetual license to Overture patents. And Google's advertising is its flagship product, accounting for 97% of its revenue.[2]
Google was a net win for the internet. It helped structure and organize the majority of information available on the net, and combined the best interest of their users (accurate, quality search) with the best interest of businesses (targeted advertising, purchasing intent). They unlocked tremendous wealth on a new platform and reaped the rewards.
Facebook has clearly had a social impact. Just like text-messaging and AOL Instant Messenger did. But the question of if it has unlocked any huge wealth the way Google has is yet to be seen.
This makes a lot of sense. Investing seems to be a specialized skill, and finding talent isn't the same as hiring "generally bright people" (the top ivy league kids).
I think I'm paraphrasing Burry, who said if any one school had figured out how to pump out great investors, it would be the most expensive school in the world.
I really hope other industries consider this type of approach, cherry picking standout/non-traditional talent, that independently build some type of track record. Actually, I believe YouTube eventually hired the student who created instant, so it might already be happening.
Do you know how things look on the operational side? For a fund with $1M AUM, how much of the costs are legal or for getting the business up and running? It would be interesting to see a breakdown of the process involved in starting a hedge fund and how similar it might be to starting a startup YC-style.
I understand what you're saying. But don't you have to consider the number of times Buffett exercised his investment decision, and not only when he's put money up?
You'd have to consider all those deals he passed up, as using his investment strategy, no? He may make 1-2 investments a year, out of maybe 200 investments available to him that he's analyzed. Thats still 200 investment decisions, not 1 or 2, which I'm assuming Taleb is using.
Wouldn't a thorough analysis consider four possible outcomes? The first event is the decision to invest (Y/N). The second event is whether their decision worked in their favor (+/-). (Y+, Y-, N+,N-) Y+ and N- are successful use of strategy. Y- and N+ are failed strategy. Same for Soros.
Example: Consider all of the investments that were passed up, that would have been terrible investments. That could be considered successful employment of an investment strategy. Buffett inherently (based on his style and risk profile) has a larger proportion of these.
"[Soros] made a lot more decisions. Buffett followed a strategy to buy companies that had a certain earnings profile, and it worked for him. There is a lot more luck involved in this strategy."
I don't buy that. Even the shallowest read of Buffett's investment history, you'll find he's always followed a very concentrated portfolio strategy. He waits for the fat pitch, and loads up when an opportunity comes along. He's mentioned that if you were to take away his top 20 best investments, Berkshire would have a pretty average record.
Does Taleb believe more decisions increase the likelihood of reverting to the mean (ie: average returns in this case)? And by that logic, Soros has made more decisions, so that must suggest its less random, and more talent? This is a classic case of man with a hammer syndrome.
By only deploying capital when the odds are disproportionately in your favor, you are LESS likely to make errors. The less decisions, the more deliberate your actions are. Inactivity isn't a measure of luck.
The present valuation isn't as important as intrinsic value if you're talking about the long term. Of course the valuation is a multiple of its trading price. With that definition, its worth whatever people are trading shares think its worth. But that's only 3% of the shares.
But what I think the 37signals post is addressing is how directly tied this valuation is (or isn't) to the company's intrinsic value. price-to-earnings, a guess at its margins, durable competitive advantage etc etc. In that sense, is facebook truely worth $33B? That's a different question than what's its current valuation. Its subjective, to be sure, but its still fundamentally different.
Its a private company. I doubt many outside the company know its financials. Information scarcity leads to pricing inefficiency. For all we know, speculators might be driving up the price to cash out sooner.
Another point I mentioned before: Everyone is incentivised to see the valuations go higher. The VC's, employees with shares, the founding team, etc. They can cherry pick talent from the competition with such valuations. Since I don't think you can short SecondMarket stock, there's no way to bring negative information into the market to keep prices rational.
To your last point, facebook has certainly figured out how to make money off its current users. But it has radically changed the underlying user-conventions to get there. It started out as a college-yearbook and photo storing site with no profit-motive. In order to become profitable, its iterated on that simple concept with such a pace that the majority of users have yet to catch on with how things have changed beyond photosharing and posting on friends walls. The majority of people have no idea what is being tracked. For them to squeeze out further revenue, it follows that more fundamental changes must take place to get there.
Whats one thing that could absolutely destroy facebook? Overnight? If they started making public which users were viewing which profiles, and with what frequency. That could kill it pretty easily, I think. Of course, they would never do it, but I think if a terrible scandal or crime occurs, involving sensitive user data, and people are compromised in such a manner, that would be a problem for facebook.A billion dollar company shouldn't be so easy to kill.
Can someone explain to me Facebook's value? And please understand, I don't ask that to be antagonistic - from what I understand and have read, I've yet to take a side on whether facebook is the new king in SV or if its a sign of another bubble. If someone can calmly explain what value they provide, their prospects for future growth, and future competitive advantage, I'd seriously be grateful.
Here is what I understand:
Facebook earned $650M in revenue in 2009. Most of that came from brand and performance-based advertising. $50M from Microsoft ads alone. $10M on virtual goods. [1]
Their biggest revenue share comes from advertising. Now, again, from what I understand, their ad targeting isn't as focused as, say, Google. I'm going to make an assumption, but it makes sense to me that Google users demonstrate more purchasing intent, which is why they can charge high CPC. I've never found a Facebook ad relevant to my purpose for being on the site, but regardless, I can understand the value for any company to spend money on brand awareness, getting views on a high traffic site with quantifiable demographics.
Performance advertising is interesting in facebook's case. When I type in 'Digital Camera' in google, I'm voluntarily giving out a query in exchange for information. Ads for digital cameras, photography books, etc would in fact be quite welcome for a decent percentage of people. But the search-engine user controls that exchange of service. Its akin to using a hammer. Google is the tool. The functionality is in your hands.
Facebook's model is more of an extraction process. Someone has opened a coffee shop with free coffee - but its only free if you hang around the place. Over time, they are trying to develop a model of you based on information that is overheard and asked of you. This is where I'm unsure if its sustainable. I'd also say a great majority of facebook users don't realize how the site has changed since its inception. A large majority of my non-technical friends have no idea how information is being analyzed. I'm not sure how robust facebook's brand is if some terrible scandal/event breaks out and people become really sensitive to what they share with the site. This "social contract" between users, facebook, and advertisers is something I don't think the majority of users understand. They just see it as a site with their friends. And its to facebook's benefit for users not to fully understand.
The last point I want to make is about Social Media. I understand how its shifted interaction and all that. But my concern is with its ties to the capitalistic sense of value. Technological progress does not always = making a ton of money. There are a lot of major technologies that changed the world . There were 2000 car companies at one point, and now only 3 american companies remain. Cars changed everything, city planning, etc, but investors, in aggregate, got fucked. The airline business is a similar story. There was also the tech bubble.
EDIT: I also want to add that since it is a private company, it is in almost everyone's favor to drive up its valuation. Founders, investors, and employees with stock, etc all benefit. When a company is public, there is an incentive to introduce negative information (hence the utility of short sellers).
Now, I'd love to hear an explanation on why its such an 800lb gorilla in the valley.
>The posing makes a difference. Whatever you feel inside, you can move and shake things with the illusion. Then, somewhere along the lines, you believe in the illusion, have molded yourself into it. You pretended to be an alpha, and then you became it.
I find this quite interesting. I'm curious if you have any articles/links to something that expands on this idea? Especially this:
>Getting into the habit of a particular mindset CAN change you. Forcing a smile will eventually result in a real smile. Sure, your self-esteem can rise, purely on this.
During the last week of high school, my favorite teacher pulled me aside. It was a po-dunk high school and I had gotten into one of the top engineering universities in the US, so I was pretty satisfied with myself. But I was also a geek, incredibly coy, and completely one-dimensional.
I admired the guy a lot. He never bull-shitted any of the students. If he didn't like you, he'd say so. But me and him hit it off, even though he was a history teacher and I was a hard science guy. I think he always saw me for the person I could be, rather than who I was at the time. He pulled me aside, and he said "promise me in college you'll live you're life fully." And I knew what he meant. After getting into college, I kind of collapsed. All the work paid off, but I had so much free time, I didn't know what to do with it towards the end of high school. Hadn't asked any girls out. Never played any sports. Never found a good group of friends. I completely neglected major parts of my life.
So in college, I sort of reinvented myself. Joined a bunch of social clubs, even became president of one, asked girls out, got shot down, asked girls out some more, didn't get shot down, played sports, made a great group of friends (who all studied different things), and also did well in school. I became much MUCH happier (and I was already pretty happy).
Getting shot down - man, I learned more about myself from that experience than I have all of the science I studied combined. His point was to live through experience, not just knowledge. Up until college, I was someone who had filled his head/life with books and studying, and stuck to what I was good at.
What I realized was, in high school, you can't possibly know who you are. You might know a few subjects you're good at, and try to reinforce your confidence by sticking only to those subjects and hanging out with the people who do the same. Thats how you get geeks, jocks, cheerleaders, emo kids. Each group follows their own limiting ideology. You'll never see geeks into sports, or cheerleaders into science, etc, etc. At least at the school I was at.
But its the perfect time to just explore. To NOT get stuck in any particular group. "Who you are" should be a very fluid concept when you're young. And as far as I'm concerned, after graduating recently, its still a useful way to look at yourself. "Sticking to what you're good at" may be the way to rack up success. But you don't live through a diversity of experience that might ultimately define who you can become.
Everyone has hobbies. Auto-racing just happens to be one where the cost can range from a few thousand to a realm of unlimited funds. I'm sure John Carmack's rocketry escapades aren't cheap either.
I'm not sure what's self-indulgent or flashy about it. The costs involved are perhaps at a scale that you and I are not use to, but its just another level up. And then there's the Jeff Bezos's and Richard Bransons, who have their own hobbies, done at the stratospheric cost scale.
You're talking about conspicuous consumption, buying things for the express purpose of displaying wealth. You don't exactly buy a bespoke 680hp barely street-legal race car that can't even be driven in your own country for that purpose.
Thats an article from 2002. The late model Zondas are different beasts. Probably near 7 figure price tags. Its in the same class as the Ferrari Enzo and Bugatti Veyron. The first 09 Zonda Cinque, sold for about $2Million US. And the Zonda F clubsport is in the $650,000+ range.
It's one of my favorite cars, and its beautifully engineered. Kudos to DHH. I've read he's an avid autocrosser so its nice to know this isn't a going to be a show piece.
Great article. The author coins the term "tiny pony" to describe the tendency of becoming acclimated to certain exceptional things. ie: There's a pony in the apple store and no one seems to care. Because its always there..
Maybe its because we're so focused on ourselves? I still have a regular brick-type cell phone. So its a lot of fun for me to play with an iPhone or iPad whenever I'm at the store, or when my friends let me play with theirs. I always get an urge to buy one - it could totally make my life better (especially mobile internet).
But if I buy it, I know the magic will go away. It's particular exceptional-ness will become an expectation, and even a frustration when it doesn't work correctly. And after a certain period, I'd likely refer to it as just another brick-type object, compared with whatever relatively exceptional technology is out then.
I don't need all the facts, but I do need an understanding of why certain historical events (or any other topic) are important. Having that latticework in my mind allows me to kickstart learning the details, and synthesizing all that information.
Criticism of various learning models will always be around. Its important to listen to it, but at the same time, these ideas are coming straight out of people's heads - about what they "think" is a better approach. On the other hand, Khan Academy's success is a direct function of its wide-spread adoption. If it didn't work as well as, if not better than, what people learn in a classroom, people simply wouldn't watch. Not only that, I'm sure feedback (positive and negative) from actual users is much more useful than from someone ingrained in the old model (and most likely views himself as teacher only, and not a learner).
I'm an avid user of the site and I see this all the time: Sal- "In the last video, I seemed to have confused people about so and so.. let me clarify that now." The videos and site are developing iteratively, and they have data to understand what people need/having trouble with.
Please continue to teach in this manner. Anyone who grew into, and succeeded in an academic environment (as virtually all professors have) will not see how transformative KA is for people who do not learn that way.