rushi

Explaining Bitcoin (through terrible science fiction)

by

On a Planet far away..

The planet of Isthar, in the outer reaches of the Delta Quadrant, was a dusty, arid, and sparsely populated world. Over the millennia, the original colonists split into tightly knit tribes and spread across the deserts and rocky canyons of the planet. What technology they had brought from their homeworld was soon forgotten in the face of the ongoing struggle to live in Isthar’s hostile environment.

When Isthar’s largest moon was full, the tribes would meet at an oasis to trade. A long history of bad blood, warfare, and mistrust had meant that these were often tense occasions. A fiercely independent set of people, they had little need for a central government or any sort of written laws. Trade meant barter without contracts, banks, or currency, with plenty of misunderstandings, violence, and theft.

During one of these gatherings, out of the western desert emerged a group of monks called themselves the Order of the Great Lizard. They claimed to have a way that would allow the tribes to trade peacefully without sacrificing their independence or indeed have to trust each other.

The monks produced a tablet made of stone. They called the tablet the Ledger. They claimed the Ledger would provide a tamper-proof way of recording what was traded and by whom. This would help reduce the sort of misunderstandings that often lead to bloodshed.

The Order of the Great Lizard had placed a spell on the Ledger that gave it some unique properties.

  1. Only a monk of their Order could write on the Ledger.
  2. Things once written could never be erased.
  3. While every monk could write to the Ledger, only one chosen monk could do so at a time.
  4. The chosen monk must have had a unique vision of the Great Lizard in a pose that a majority of other monks agreed was magnificent and one befitting the splendor of the Great Lizard.
  5. Once the monk wrote on the Ledger, the spell would cause a coin to appear. It was a token of benevolence from the Great Lizard, and out of respect, these were called Lizard Coins. The monk could do what they wished with their Lizard Coin.

The tribespeople were a little bemused. But the Order seemed harmless and willing to help, so they agreed to give this new way of trading a try.

The monks all sat in a large circle around the Ledger. Tribespeople would approach and shout out the trade they just had done.

“I Troopz of the tribe Gooners bartered my sand goat for a sack of salt and a bottle cap with Bubbles of the Hammers.”

Each monk would then contemplate the Great Lizard until the first one had a vision.

“I, Brother Chili, see the Great Lizard lying down with its right arm raised up.”

As long as more than half of the other monks agreed that it was indeed a splendid and unique vision, Brother Chili could record Troopz and Bubbles’ trade on the Ledger. He would then be rewarded with a Lizard Coin by the most magnificent and benevolent Great Lizard.

Once there was a record of Troopz bartering his sand goat to Bubbles on the Ledger, he would not be able to trade it to anyone else. Bubble’s ownership of the said sand goat was now backed by the Ledger.

And so, the Order of the Great Lizard made trade possible for the people of Isthar. There were some interesting consequences:

  • The visions could only include the Grand Lizard and nothing else. Hence it would become more challenging to develop new and unique visions as time passed. This meant the total number of Lizard Coins would also be limited.
  • Some folks tried bribing one or more monks to see if they could write false transactions on the Ledger, but this would not be possible without convincing a majority of the monks.
  • The Order of the Great Lizard was a genuinely open group. Anyone could join and become a monk provided they committed to contemplating the magnificence of the Great Lizard.
  • The monks used their coins to buy goods and services from the tribes. As the number of Lizard Coins increased, they became a useful and widely accepted currency on Isthar.
  • Very soon most transactions recorded on the ledger were transfers of Lizard Coin from one person to another.

Through their stone tablet and their magic spell, the Order of the Great Lizard had given the tribes a way to trade without having to trust each other. The Order was also open, so anyone could join provided they would spend their time and energy contemplating the magnificence of the Great Lizard.

The End.

Bitcoin Explained

Bitcoin was created to solve the problem of coordination in a trustless environment. This problem is also known as the Byzantine Generals problem.

In our story, the Order of the Great Lizard attempts to solve a similar problem for the tribes that did not have reason to trust one another.

The Ledger plays the same function as the blockchain in Bitcoin. It is an immutable (cannot be modified), append-only data structure. In a given period of time, only the first monk to come up with a unique, verified vision of the great lizard could write a new line to the ledger.

Miners play the same role in Bitcoin as the monks of the Order. The first miner to solve a complex mathematical puzzle that can be verified by a majority of other miners can write a new block to the Bitcoin chain. The monks get rewarded by a Lizard Coin and the miners get rewarded by a Bitcoin. This concept is also known as Proof of Work. The idea is to incentivize the miners to compete to solve puzzles to be able to generate and write a block to the Blockchain. The intrinsic value of Bitcoin comes from the energy expended in solving mathematical puzzles.

Transactions on the Bitcoin blockchain are limited to moving a fraction of Bitcoin from one address to another. On Ishtar, the transactions could be anything but eventually become mostly moving Lizard Coin from one person to another.

The Bitcoin protocol is represented by the spell cast on the Ledger. It provides the rules for recording transactions as well as rewards for the monks (miners) who are the fastest to have a unique vision of the Great Lizard. In Bitcoin, the magic spell is written in publically available and vetted code.

Our story also doesn’t cover the important roles that cryptography plays in Bitcoin. While we watched Troopz and Bubbles exchange a goat for salt and bottle caps, participants on the Bitcoin network can only be identified by the public key corresponding to their wallets. Hence, participants are pseudonymous.

But.. why bother?

Bitcoin and cryptocurrencies are complex. Skeptics often call them technologies looking for problems. My attempt at using terrible science fiction to explain how Bitcoin works is an attempt to explain how the technology works at a high level to folks who are not in the crypto ecosystem 24X7. I hope you were amused and somewhat enlightened. Drop me a line if you have any comments or questions!

Further Reading

The problem with Web 3.0 – It’s the Stories

by
  • Image by Cayetano Gil on Unsplash

We tell stories and learn by analogy. A good story maps the abstract to the concrete. For the story to function, it has to fall back to a base of shared understanding.

When learning a new technology, I try to map what I am learning to my mental model of the world. I tell myself how this new technology fits into the stories I know and try to imagine what other stories I would tell once I learn it.

I have been struggling with learning about cryptocurrencies and Web 3.0.

As someone looking to explore the nascent Web 3.0 developer landscape, I keep getting lost in layers, tokens, protocols, DApps, and DAOs. Applications (technically Protocols) like Aave have access to billions of dollars in liquidity but trying to understand how things work leads to a maze of smart contracts, oracles, and tokens interspersed with more familiar words like liquidity, interest, collateral, virtual machines, etc. Like trying to make sense of a world through a fogged-up window.

Besides me being a little slow, I think the reason is that the stories are terrible. There are plenty of grand visions of censorship-resistant platforms, the possibilities of generating life-changing wealth, but these are built on self-referential and confusing foundations. Turtles all the way down.

It is early days and the world of cryptocurrencies is still a frontier. This frontier is being explored by a rag-tag bunch of clever programmers, mathematicians, financial wizards, resourceful scammers, and brazen hustlers. 

But in order for a frontier to be settled, you need not just explorers but also settlers willing to uproot their lives to claim their 160 acres. You need developers to build mundane applications that solve mundane, but important problems. You need salespeople who can articulate the value proposition of building on this new frontier. You need good stories.

To stretch this tenuous analogy: we are now in the gold rush, but along with the gold rush you also need good weather and fertile land in order for the Wild West to turn into Sunny California.

Those passionate about the emerging world of cryptocurrencies and decentralized applications need to do a better job in bringing the rest of us plebs along. Otherwise, the gold rush will be over soon and all that will be left is a barren wilderness of abandoned protocols, orphaned DAOs, and blind oracles.

I am hopeful though. The infrastructure of Web 3.0 is still under construction. I hope strong, secure, and performant platforms emerge from the current Cambrian explosion of web technology. I am inspired by the likes of Chris Dixon, Balaji Srinivasan, and others who are bringing Web 3.0 concepts to wider audiences. But will it translate into wider developer adoption and mindshare? Time will tell.

Adventures in Web 3.0 #1 – Say My Name!

by

I bought my first NFT today – I am the proud owner of rushiluhar.eth. It was an interesting experience. Quite similar, in some ways, to creating my first website almost twenty years ago.

Some observations:

1. You need to know what you are doing 🤔.
The world of Web 3.0 is confusing and the UX .. leaves a lot to be desired. I used the most popular wallet – Metamask and bought rushiluhar.eth from ens.domains. None of these applications are for the faint hearted.

2. You need to be patient ⏳. 
I wanted to use the domain to point to my newly created Ethereum wallet address. This involved two separate steps. First buying the NFT (yes, each eth domain address is a NFT), and then another step to link the domain to my ETH wallet. Each step involves a transaction, and each transaction takes at least a minute to complete. And given the costs involved (see below), the lack of feedback or clarity is .. perplexing.

3. You need to be rich 🤑. 
ENS is run as a non profit, but you have to pay transaction fees. Which are crazy high, and change all the time. Buying a domain (like rushiluhar.eth) costs 0.001 ETH + the number of years you want to register the domain. So for 5 years, it costs 0.006 ETH – roughly $25 today. Not bad! *But* – the gas fees were (quoted at most) 0.043 ETH – almost $200! Making it my primary ENS domain involved another ~$85 in transaction fees. Ouch.

4. You need to be an exhibitionist 😬. 
The blockchain is public! Every single transaction is visible. If you want to laugh at me paying exorbitant gas fees for buying a worthless vanity NFT, just hop on over to Etherscan and search for rushiluhar.eth. 

5. You need to be slightly delusional 🤪.
The poster child of Web 3.0 (Ethereum) claims to become the World Computer. *But* current transaction fees put doing anything interesting on it out of reach of 99.9% of the world’s population. Something does not compute.. 

Also feel free to send a couple of ETH my way, you know the address..

Some Notes

Domain – You can buy your very own eth domain at ENS Domains but you will need a wallet, some crypto and a basic understanding of how ENS works and why you should bother.

Wallet – Metamask has integrations with a bunch of different Web3.0 sites like OpenSea, Foundation, ens.domains, etc. Its the easiest way to setup a wallet, just don’t forget your password.

Crypto – I would suggest using a reputed exchange like Coinbase to buy or sell crypto and then transfer a small amount to your Metamask wallet.

Why bother – A brief explainer of what else you can do with an ENS domain.

If you are interested in why I decided to spend a good bit of money on a ENS domain (apart from bragging rights on LinkedIn..) , check out this thread by Balaji Srinivasan.

Obesity, Second-Order Consequences & ..Molds?

by

I came across this series of posts on the root causes of Obesity by Slime Mold Time Mold, a delightfully weird pseudonym for the team behind the posts. The posts are long, well researched, and, despite the weighty content (haha), quite fun to read.

The blog series is not complete, and I am fascinated to see what comes next.

The writers start with the observation that we have seen a startling increase in obesity rates from 1980 to the present day as seen in the animation below from Our World in Data.

As of 1980, around 11% of the population of the Americas was obese. In 2016, this went up to a staggering 28%. What has caused this?

The team at Slime Mold Time Mold (SMTM) reviews research and data spanning the last 150 years. From studies done on the BMI of Civil War veterans to looking at rates of obesity in Macaques – they cover an incredibly wide range of material. Their thesis is that 1980 was an inflection point – after 1980 we see soaring rates of obesity across the industrialized world.

Strangely, this increase does not seem to be driven by a big change in the total number of calories consumed or in the way that we live our lives. Indeed, the diets in the early 20th century were more calorific and unhealthy than present-day diets.

Just think of all the big dinners on Downton Abbey.

Carbs, glorious carbs..

We eat fewer carbs today than we did a hundred years ago. While the research does show an increase in the total number of calories consumed, the data does not support the increase in obesity rates being driven by an increase in calorific consumption.

SMTM’s thesis is that environmental contamination is an important driver of the increase in obesity rates since 1980.

They look at a number of different culprits – Lithium, a group of chemicals called PFAs as well as the presence of antibiotics in livestock.

If indeed environmental contamination is a primary driver of the obesity crisis, we are looking at a public health scandal that will be bigger than smoking or lead in gasoline. The jury is still out, but SMTM’s work seems to point to a strong correlation.

It also makes me think, again, that we are very poor at thinking through the second-order consequences of our actions. I think we are tinkerers by nature and are biased to action. This has helped us make a lot of progress in a short time – but we are also continuously fixing (or abandoning) things that we have broken along the way.

Environmental contamination and obesity are just another of a variety of different examples of “progress” messing things up. Maybe the research will identify a smoking gun and the problem will be regulated away.

We are strikingly poor at figuring out how complex systems operate and how they may trigger feedback loops. Global warming, disinformation on social media, and many other modern ailments can be tracked to us not being able to think through the consequences of our actions.

So what is the solution? One way is a monastic retreat to the wilderness. But when even remote Alaska is contaminated with PFAS chemicals, retreat does not seem to be a viable option. Maybe we need to push regulatory bodies for stricter enforcement of laws and punitive measures for those who do not comply. But the revolving door between big government and big chem does not fill me with confidence that this is an avenue that holds much hope.

The one, teeny-tiny, ray of hope comes from us being able to deploy massive computational power to model and simulate the world a little better. Perhaps we could get better at figuring out how complex systems interact and that might help towards a more thoughtful and considered approach to change?

One can live in hope. Until then, I wait for my next SMTM fix.

Footnote

The work by SMTM is worth reading (and following) in full. It is a great example of just some “random people on the Internet” using open data to think through and attempt to answer difficult questions.

Reading SMTM reminded me of the early, pre-social media engagement-driven, Internet. I remember stumbling upon blogs such Naked Capitalism (Still going strong), The Epicurean Dealmaker (RIP), and Slate Star Codex (also RIP) and enjoying reading about topics that were outside my areas of work or of study.

The death of Google Reader and the rise of Social Media has made the Internet a much less surprising place.

Digital Transformation

by

Benedict Evans, as usual, provides an insightful view of the “Digital Transformation” story. While crypto, machine learning, NFTs, and drones may generate the most headlines, we are also in the midst of a generational shift in how we do business. This shift is happening in boring corners of the B2B Enterprise software market but will have an impact bigger than some of the other, more alluring, technology trends.

Companies like UiPath (process automation) have successfully targeted the dull areas of enterprise software that are ripe for automation and streamlining. The software in “software eats the world” may include headline-grabbing items such as machine learning and distributed ledgers. But, much more significant changes are being brought about by the adoption of SaaS applications and workflows. Twenty years ago, you couldn’t add a new software application without going through procurement and IT. Now, all you need is a corporate credit card.

Demographic changes and shocks such as Covid are only accelerating the technology megatrends for which “Digital Transformation” is a catch-all term.

The concept of “generational shift” also works on multiple levels. Prolonged and painful migration projects can last for a generation (or longer). But we also have an entire generation of programmers and systems administrators who are now retiring, and you can’t find the talent to keep workhorse systems going. 

I am thinking about the second-order consequences of this shift to a software-first world. There is going to be more efficiency, more competition, and a chance for aggressive upstarts to ride the technology wave and displace (rather than disrupt) less agile incumbents. But, we will also have a generational loss of knowledge that cannot really be replaced by software.

As every aspect of our economy is driven by software, we start seeing some of the characteristics of software show up. We have seen shortages of food, supply chain issues across industries as well as an incredible increase in ransomware attacks as overly optimized systems break under unexpected disruptions like the Covid pandemic, or insecure systems are targeted by malicious actors.

So, while I think this trend towards more Digital Transformation is good – in aggregate; there are also serious consequences that we may not being much attention to as we continue to be driven by software to optimize.

On Resumes

by

The team at Jeavio just completed our Campus hiring drive for 2021. We processed over 500 applications from talented, enthusiastic and hard working students looking to start their careers in 2022.

I looked through a number of resumes as part of our screening process. It was a surprising and (sometimes) frustrating process. 

A consistent problem was students using the same (or very similar) single-page resume format. A good percentage of the resume also included personal details such as addresses etc. which are not really relevant at this stage of the recruitment process. I also have noted an explosion in folks including their CodeChef or HackerRank scores – again taking up crucial real estate that could have been used to try and differentiate themselves.

After many hours spent combing through hundreds of resumes – here are a few thoughts and tips for making an effective resume for someone just starting their career!

  • First impressions matter! Use a spelling and grammar checker to catch typos, misspelled words and poorly constructed sentences. Google Docs is free and does a fine job.
  • If you put a GitHub link in your resume, make sure it includes work you have done! Just a forked repo with no contributions is useless as a signal.
  • Your CodeChef or HackerRank score is not interesting. Most resumes I looked at this year had these scores and they don’t make your resume stand out.
  • A fancy resume layout is less important than the ability to write clearly. Typos in a beautifully formatted resume are an immediate disqualification from me.
  • Think about what makes you different. Interesting experiences, hobbies and an online portfolio is way more interesting than simply stating your GPA or your school projects.
  • Create a personal website – it’s easy! Use GitHub pages, Medium or any of a number of free services. Use the website to highlight your interests, passions, work and what you are looking for as you start your career. Use video, photos, writing – anything to make you stand out from the crowd!

On Modern Web Development

by

Tom MacWright wrote a much discussed article on the state of modern web development a couple of weeks ago.

He states that the current default of building a Web Application as a SPA using React, or something similar, in the frontend and an API on the backend is overkill.

This is both an opinionated survey on the current state of web development and an extremely contrarian take on current accepted wisdom on how to build modern web applications. It’s worth a read.

His premise is that we are adding additional levels of abstraction such as Virtual DOMs, Server Side Rendering, Bundle Splitting, etc. He even goes on to say that trying to generic, purely REST-ful APIs is a bit like tilting at windmills, since we end up having them tightly coupled with frontend code anyway.

I am sympathetic to this point of view — mainly because I am rapidly transiting to “grumpy old man” phase of my career, and I find modern web development workflow terrifying complex. I had to work on a React application a couple of years ago. It made me want to run back into the warm embrace of Java Swing development (oh beautiful Java Swing).

The pure beauty of Java Swing

But, I also want to note that software engineering is pretty fashion driven where we bounce around between too much and too little abstraction. Every generation has this battle — Java didn’t have enough features so we ended up with Java EE, Java EE was too bloated so we ended up with Spring, the Java language was too complex so we built Go. Go is missing Generics so we will go ahead and add them. The pendulum keeps swinging and we have a complexity crusade every 5–7 years or so. Unsurprisingly, it has been just about 5 years since React has become the defacto way of building web applications. Time for the backlash!

I am sure we are going to be back at folks writing pure HTML and FTP-ing to an Apache server day now 😉

The Psychology of Money – Morgan Housel

by
The Psychology of Money

I read Morgan Housel’s “The Psychology of Money” towards the end of last year. I found it an insightful book that took a more personal and nuanced look at money and building wealth. It is not a “how to get rich quick book.” 
Its core advice is to take advantage of compounding and take a reasonable approach to risk — hardly rocket science. However, it explores some of the more common pitfalls and anti-patterns when people think of money. 
While I would strongly recommend everyone to read the book — it is fantastic, here is a quick summary of my notes from reading (and enjoying) the book. I hope you find it helpful!

A more personal view of money

People think of money as an abstract. We think about and are taught about money like we are taught physics. We assume that money is governed by rules and laws. Yet, psychology, with its study of emotions and nuance, may offer a better way to think about money.

Most people make financial decisions by taking the information that they have access to and plugging it into their mental model of how the world works. But these mental models are driven profoundly by personal experience.

Mr. Housel’s book takes a personal and intimate approach to understand how money works and illuminates some of the difficulties we face when making money decisions.

How to get rich and stay rich

Compound growth is the key to growing wealth. There is plenty of material available that describes viable strategies for becoming wealthy. However, Mr. Housel states that there is only one way to stay wealthy — “some combination of frugality and paranoia.”

If one can stick around for a long time without wiping out or being forced to give up, the power of compounding comes into play and helps generate wealth.

The key to a successful investment strategy is to not risk what you have and need for what you don’t have and don’t need.

The importance of sensible optimism

Successful investors take an optimistic view that, in the long run, the odds are in their favor, and over time things will balance out to a good outcome even if what happens in between is filled with misery.

But the optimism must be balanced with a healthy dose of paranoia. This means accepting nuance and understanding that the key to exploiting long-term optimism is survival.

It is critical not to get swept up in short-term momentum or get giddy about short-term gains or losses. The most effective long-term strategy is to not get overly influenced by short-term events.

Understanding wealth

When most people think about becoming a millionaire, they think of the ability to spend a million dollars. However, the true meaning of wealth is the ability to deploy money towards living a life that lets you do what you want, when you want, with who you want, where you want, for as long as you want. So, true wealth is financial assets that haven’t yet been converted into consumption.

The ability to save is also critical to building wealth. Savings are a hedge against life’s inevitable ability to surprise the hell out of you at the worst possible moment. The most potent way of increasing savings is not to raise your income but to raise your humility.

Making reasonable financial decisions

Financial decisions making is thought of as making coldly rational decisions in the light of available information and knowledge of the past. However, history is primarily the study of unanticipated events.

Therefore, relying on history as an unassailable guide to the future is risky. It is important to consider the past but to look at it in terms of generalities.

So, one must not be overly influenced by history and take a reasonable and pragmatic approach when making financial decisions. Having savings gives a buffer to absorb short-term volatility. Having a realistic and flexible approach to financial decisions makes it likely to stick with your investment strategy in the long run.

The role of skill and of luck

Money constantly changes returns. If an asset has momentum, a group of short-term traders will assume it will keep moving up. We have seen this play out in recent times with the GameStop saga.

It is not an unreasonable strategy for the short term. Executing such short term strategy doesn’t really require much skill but does need some luck in timing the strategy just right. Plenty of traders both lost and made huge amounts of money trying to time their GameStop trade. It was all about momentum.

The mistake we are susceptible to is focusing solely on what we want to do and have the ability to do. We ignore the plans and skills of others whose decisions might affect our outcomes. We also focus too much on the causal role of skill and neglect the role of luck. This makes us overly confident in our beliefs.

Less Certainty, More Enquiry

by

Lessons from Maria Konnikova’s The Biggest Bluff: How I Learned to Pay Attention, Master Myself and Win

The Biggest Bluff by Maria Konnikova

Maria Konnikova is a journalist, writer, and professional poker player. I came across her an interview with her on the excellent Knowledge Project podcast. She intrigued me enough to want to know more about her journey, so I picked up her book, “The Biggest Bluff: How I Learned to Pay Attention, Master Myself and Win.”

The Biggest Bluff is Ms. Konnikova’s account of going from being a complete poker novice to a tournament-winning pro. The book is not a “how-to” guide to making millions in Vegas. It is instead a meditation on learning, paying attention, and making decisions.

I enjoyed following Ms. Konnikova on her journey. Here are some things I took away from the book.

Paying Attention to the Present

Poker is a game of simple rules but complex behaviors. Success relies on luck and the ability to understand and predict what other players on the table might do. Ms. Konnikova had to pay attention to the cards on the table and how the other players had played throughout the day and tried and figured out what their tells were.

She also had to learn to pay attention to herself and identify when she was fatigued, and take appropriate action when going off course.

John Von Neumann describes poker as the perfect game of incomplete information. But, by paying attention, it is possible to identify when emotions get in the way of sound decision-making and to try and predict your competitors’ actions and consequences.

In life, just like in poker, paying attention to the present is table stakes.

Intuition vs. Process

Ms. Konnikova is dismissive of intuition or “gut feeling.” She says we have intuitions all the time, but we are terrible at telling the right ones from wrong. She suggests that we trust our intuition only if we are an expert in the area.

As a novice poker player, she had to work hard to identify and suppress false confidence. She did this by learning to distinguish the action and the outcome from the thought process. In the short term, it didn’t matter if she won or lost a hand provided she was thinking through things correctly. In the long run, this focus on process meant that she would have better inputs and eventually the right conclusion with more experience.

I agree with the author that we are terrible at linking outcome to process. Luck, both good and bad, always adds noise. But by having a thought-through strategy, we can avoid false confidence and learn to avoid the pitfalls of relying on unreliable intuitions.

Avoiding going Full Tilt

In poker parlance, “tilting” is when a player lets irrelevant emotion cloud their thinking. You start tilting when another player or an aggravating circumstance gets under your skin and makes you emotional.

As one of very few professional female poker players, Ms. Konnikova dealt with misogynistic behavior from her fellow players. From being called “little girl” to being propositioned on the poker table — these unpleasant experiences did end up getting under her skin and affected her game.

She came up with techniques to become mindful of her emotions. She wanted to experience them but be self-reflective and not let them affect her thought process.

Humans are emotional. We experience life through emotions and can never be purely rational. Ms. Konnikova says the key is to identify irrelevant feelings and develop strategies to ignore them — avoiding going full tilt.

Making Good Decisions

Poker forces a player to place a monetary value on the opinions driving decisions at the table. Having a flawed decision-making process makes going broke a likely outcome.

As she became a better poker player, Ms. Konnikova became less confident in her opinions. This may seem counter-intuitive — surely becoming more experienced means becoming more confident in your opinions! But Ms. Konnikova made better decisions when she forced herself to question her assumptions. Her decision-making process relied on paying attention, not relying on flawed intuition, and having a well-practiced process.

Judging the success or otherwise of a decision-making process is more straightforward in poker than in real life. If you lose money consistently, you might want to either stop playing or take a close look at how you are playing. Judging success in other domains may not be easy, but having a clear decision-making process remains crucial.

Conclusion: Less Certainty, More Inquiry

We often end up making decisions on auto-pilot. We take received wisdom and our intuitions for granted. When bad things happen, we attribute them to bad luck, crappy circumstances, or other external factors.

But, as Ms. Konnikova’s mentor advises her, it is better to be less certain about things and always inquire, ask questions, and to think through things for yourself.

To have any chance of success in complex domains, it is essential to be aware of blind spots, pay attention to what is happening, and have a deliberate and well-understood decision-making process.

The Biggest Bluff is an entertaining, well-written, and thought-provoking book. Ms. Konnikova’s journey pushed me to take a closer look at how I make decisions and to ponder where my blind spots lay.

Cultivating Range: Lessons for Startups in a Wicked World

by

Introduction

I recently read David Epstein’s book Range: Why Generalists Triumph in a Specialized World. The book focuses on how to cultivate broad thinking strategies to learn effectively. Epstein’s focus is on individuals. As I made my way through the book, I saw that the points made in this book apply equally well to teams.

Range by David Epstein

I work with and advise early stage technology startups. I learnt a lot while reading “Range”. In this post, I explore how the lessons from “Range” can benefit technology startups or teams looking to launch a new product.

Thriving in Wicked Environments

Epstein introduces the concept of Kind and Wicked environments. A chessboard is a kind environment: the rules are clear, and actions are deterministic. Strategies that work in one situation should work well in similar cases. However, in the real world there are feedback loops and second-order consequences that are difficult to predict. It is a rapidly changing Wicked environment. Strategies that worked well in the past can stop working due to changes to the external environment or the market’s reaction to your previous actions.

We see this pattern repeatedly in the world of startups. Ideas that seem destined for success fail because they attempt to solve a problem that is no longer important or serve a market that no longer exists.

To thrive in a Wicked environment, a team may need to take conceptual knowledge from one problem domain and apply it to an entirely new one. The ability to think broadly and to be able to deploy flexible solutions to complex problems could be the difference between a successful product launch and complete failure.

Creating Innovative Products Through Analogical Thinking

Epstein describes Analogical Thinking as —

“The practice of recognizing conceptual similarities in multiple domains or scenarios that may seem to have little in common on the surface.”

Barriers to entry in the information economy are low. While anyone can launch a software product or service, successful companies frequently bring together ideas from different fields to build a compelling product.

Uber brought together logistics, mapping, mobile experiences, and access to an entirely new labor market to create a transformational service. Snowflake’s recent success is another example of a business built on the convergence of industry and technology trends. They successfully executed a simple, in hindsight, idea — cloud-only data warehouses.

Building a Successful Team

In Superforecasting, Philip Tetlock quotes the Greek poet Archilochus: “the fox knows many things, but the hedgehog knows one big thing.” Hedgehogs are specialists — they love to focus on one problem and usually work within their specialty’s confines. Foxes tend to work across various disciplines and work under ambiguity and contradictory conditions.

Epstein cites Tetlock’s research in forecasting and shows that in the face of uncertainty, individual breadth is critical. Similarly, teams that were open-minded and embraced a wide range of experience outperformed teams of narrow specialists.

A Team of Foxes may be more effective in a startup

Early-stage teams need to be open-minded and willing to change their assumptions and pivot when circumstances demand it. As a company matures, it may become useful to include specialists to refine a product and idea. However, having too many specialists at an early stage could lead to tunnel vision.

Choosing a Technology Stack

Gunpei Yokoi was a legendary video game designer at Nintendo. He designed the Game Boy. In Range, Epstein talks about Yokoi’s concept of “Lateral Thinking with Withered Technology.”

The heart of his philosophy was putting cheap, simple technology to use in ways no one else considered. If he could not think more deeply about new technologies, he decided, he would think more broadly about old ones.

You can still see this philosophy in play at Nintendo today.

The Nintendo Gameboy — A Lateral Application of Withered Technology

This lesson is of particular importance for startups with technical founders. It is tempting to be on the cutting edge of technology. But few customers will pay to use a product because it uses a fashionable technology stack. The ability of the company to solve the customer’s problem is way more important.

It may be more productive and faster to build a product using battle-tested, well-understood technology that is quickly and cheaply available. Just like Nintendo, a startup must cultivate a relentless focus on delighting the customer. Technology choices should come second.

Deploying Data Carefully

Startups are encouraged to be data-driven. They optimize for metrics such as customer behavior metrics, sales funnels, infrastructure costs, etc. The danger for the startup here is relying too much on data to make decisions without considering the market or whether the data is relevant to the vision of the company. As Epstein says — the critical question to ask is:

‘Is this the data that we want to make the decision we need to make?’

A dogmatic data-driven approach may lead to doing the same thing in response to the same challenges over and over until the behavior becomes so automatic that it is no longer recognized as a situation-specific tool.

An over-reliance on data can lead to actions that may improve the metrics the team relies on, but may not help the company in the long run to achieve their strategic objectives.

Making the most of External Advisors

Formal or informal advisors can play a critical role to the founding team in a startup. The most effective advisors are outsiders who may be removed from the company’s problem but may help reframe the problem that unlocks the solution.

Epstein notes —

‘A key to creative problem solving is tapping outsiders who use different approaches so that the “home field” for the problem does not end up constraining the solution.’

An outside advisor may offer solutions to a problem the founding team may not even consider because they are too close to the problem.

Knowing when to Give Up

Thirty percent of startups will go under within two years. Fifty percent will fail within five. Running out of money is the most common reason for failure. If a startup keeps trying to execute the same plan despite not gaining traction, it will fail.

Startup culture venerates hard work and not giving up. But here, Epstein provides an essential quote from Seth Godin:

‘We fail when we stick with tasks we don’t have the guts to quit.’

The best, most thought-through plan may fail when it comes up against external conditions — like a global pandemic. Persevering through difficulty can be a competitive advantage, but knowing when to quit can also be a significant strategic advantage. As a startup, it is vital to define and understand the conditions in which it is clear that Plan A has failed, and it is time to try something else.

Conclusion

Building and running a startup is exciting, scary, and can be extremely challenging. It rewards being able to adapt to complex, changing environments. It is vital to pick the right problem to solve, identify the correct tools to solve the problem, and build a team that learns how to make the most of diverse skill sets. Leveraging data and being metric driven can help guide, but must not constrain decision making. Leaning on external advisors and investors is essential to help keep the team grounded and provide different perspectives to solve tricky problems.

Finally, success is not just about persevering through difficult times; it also involves knowing when to quit and when to pivot. A battle may be won simply by disengaging at the right time.

Range is a fantastic book and one that I strongly recommend. The lessons in the book are important not just for individuals but also for teams.