What We’re Reading
A few good pieces the Collab team came across this week …
Governance
Some of the directors displayed a fawning devotion to Holmes — in effect becoming cheerleaders rather than overseers. [Director] Shultz helped his grandson land a job; when the kid reported back that the place was rotten, Grandpa didn’t believe him. There is a larger moral here: The people in the trenches know best. The V.I.P. directors were nectar for investor bees, but they had no relevant expertise.
Hubris
A lesson after a downfall:
After I finished teaching my personal tale of woe during the recent bootcamp, one of my students asked a wonderful, simple question: “What steps can I take to prevent this from happening to me?”
My quick answer was: “Don’t become successful.”
After the laughter subsided, I added: “And don’t go to Harvard … and graduate with high honors …twice!” (More laughter.)
But I was actually serious, as I explained:
I think being super successful educationally, and then being super successful in the first part of my investing career led to my downfall in many ways. An overabundance of hubris (going to Harvard tends to instill that) led me to launch my fund in January 1999 with almost no relevant experience — I had a good general business and entrepreneurial background, but hadn’t worked a day in the finance or investment industries.
Limitations
Daniel Kahneman on algorithms:
In general, if you allow people to override algorithms, you lose validity because they override it too often. Also, they override on the basis of their impressions, which are biased, inaccurate, and noisy. Decisions may depend on someone’s mood at the moment.
Brands
This is what loyalty is:
Loyalty is a word that inherently conjures up those who hold steadfast beliefs. Knights who will serve their King to the very end, unquestioning and with fervor.
A better word, is convenience. A word that I believe encompasses all the fundementals of Marketing. Product, price, place and promotion. That is why I shop at Sainsburys, it is around the corner from my house and is open almost 24/7.
Following directions
The explanation for why an Amazon Echo recored and sent a personal conversation is crazy:
Echo woke up due to a word in background conversation sounding like “Alexa.” Then, the subsequent conversation was heard as a “send message” request. At which point, Alexa said out loud “To whom?” At which point, the background conversation was interpreted as a name in the customers contact list. Alexa then asked out loud, “[contact name], right?” Alexa then interpreted background conversation as “right”. As unlikely as this string of events is, we are evaluating options to make this case even less likely.”
Supply and demand
The economics of drone pilots:
Andy Trench made $2,000 a day in 2015 taking sky-high photographs along the East Coast with a drone he made himself. Now, that same work fetches about $175.
“It’s apparent that a lot of this industry is a race to the bottom,” said Trench, a Rhode Island entrepreneur who’s been operating remote-controlled aircraft for more than a decade.
Have a nice weekend.