Excel

Excel is a remarkable piece of software. It is used by people from every walk of life. Whether you are developer, data scientist, statistician, analyst. You name it. You can have these wonderful tools that can spit out different kinds of data. Or have scripts to do complex calculations. But at the end of the day, you copy it to an excel workbook to send it off to someone or to do some simple tasks like extrapolation, sorting etc.

They even had to change a DNA naming convention due to a bug in Excel.

Excel is unbundling. SaaS like Airtable and Google sheets are the biggest of them. They connect a typical column-row sheet to the internet. Opening up lot more possibilities. And these services also connect to API services like Zapier. Making it possible to connect it to other applications to read, write or manipulate data.

Excel has a very peculiar architecture. Most pieces of software get more bloated with more features. However, the opposite is true for Excel. Over the years, the amount of features introduced strengthened and expanded it’s use-cases even more. That is a very hard thing to achieve in the software world.

Special Economic Zones

A special economic zone(SEZ) is a designated area in a country with special economic regulations to incentivize foreign direct investment. Usually these incentives are in the form of tax reductions, labour regulations, customs etc.

A SEZ became popular in the mid 20th century. The primary purpose were to attract foreign investments. Now they are being used to attract domestic investments and for eventually encouraging investments outside of the zone as well.

A second order outcome of having a special economic zone that attracts a lot of companies in the same geographical is the there are more chances of cross-pollination. In terms of employees, competence and technology. Synergies like having a large part of supply chains concentrated in a small area is attractive for businesses. It can save costs and both ends of the chain and improve the pace of innovation. A textbook example is the Shenzen Economic Zone. It really found the sweet spot for manufacturing electronic goods and soon dwarfed global supply chains.

The economic activity from a SEZ usually spills over outside of the SEZ too. SEZ that are big enough can eventually have cities built around them to facilitate the labour market and provide better logistical support for the SEZ.

Barnum Effect

Barnum Effect, also known as Forer Effect, is the tendency to take general statements and interpret it from a personal point of view. A very common example where the Barnum Effect is exploited is in horoscopes and fortune telling. You can commonly see sentences like “When something good lands in our lap, we frequently fail to appreciate it, because we immediately begin the process of protecting, coveting, and ultimately hoarding our treasures.” This sentence can have different meaning because as we read it we relate it to our life experiences.

The more personal input you give in the process, even stronger is the effect. Personality tests like MBTI can seem more accurate then they are. Especially if it is combined with confirmation bias. If the tests, for any reason tells you something that you knew or wanted to be true. It is highly likely that you will believe it. People won’t believe or pay attention to general statements that are considered negative.

Internet Money

One use case that will for sure be filled with cryptocurrencies like Ethereum in the coming years is that of internet money.

Just like we had an era of web-first applications and shops, which then became mobile-first. Internet-first money is yet be fully realized. Money that is not tied to a physical entity per se, but at the same time can store and be a medium of exchange of value over the internet.

Money, Paypal credits, Credit are all good forms of value individual users or businesses use to transfer wealth between each other. This can be done via online too but the underlying mechanism is still tied to bank accounts and balance ledgers maintained by different banks. The internet only acts as a proxy for the transaction.

Internet money, on the other hand has the capability to sustain the transaction and it’s underlying mechanism end-to-end within the internet. Imagine if API’s wanted to exchange money and not users or businesses. Internet money would be the default way to do it.

By the looks of it, cryptocurrencies are the most poised to fill in this use-case.

Casey Neistat Work Ethic

The Casey Neistat work ethic is breaking down what ever you want to be better at into a chunk that can be performed every day. And then doing it every day. No excuses. No ifs. No what ifs. Just do it. Every single day.

He famously started daily vlogging to put an impetus on himself to film something everyday.

The secret sauce is keeping the daily task at the boundaries of your current ability. That provides enough motivation to work on it and get better but at the same time not too easy or boring.

This won’t be easy. Doing something hard deliberately requires discipline. 

WYSIATI

What you see is all there is.

Coined by Daniel Kahneman. Even though we like to think of ourselves as rational and objective human beings when making decision. The truth is that we are very well affected by our psychological biases and emotions.

WYSIATI is the bias that leads us to make judgements and conclusions with the information that is available to us. Without considering what other piece of information might be missing. We have the tendency to bend the pieces of the information jigsaw puzzle when some key parts might be missing. Our brain chooses the path of least resistance to form the big picture. It is a machine designed to jump to conclusions.

One way to combat this is to have a structured thinking process and a system to evaluate decisions. Deliberate decision-making can be practiced and it takes time and effort.

Big Mac Index

Different currencies around the world have different purchasing powers. Purchasing power is defined as the amount of goods or service you can buy for the same amount of money. Purchasing power not only varies from country to country, but also varies over a period of time.

The amount of goods you could buy for 10$ now is very different from what you could buy in the 1950’s.

Different countries have different interest rates, budget deficits, inflation/deflation, import/exports, GDP. And all of these factors contribute to different purchasing power.

One common way purchasing power is compared across countries is buy calculating purchasing power parity(PPP). PPP is a measurement done across the world that uses the price of specific goods in each country.

To avoid large errors in this calculation a basket of goods is chosen. The categories include Food and Beverage, Housing, Transportation, Medical Care, Education, Apparel, Recreation etc.

The Economist introduced the Big Mac Index on 1986. This became an informal way to measure the difference in purchasing power in various countries. The Big Mac index is the price of Big Mac in the respective country compared to a reference to give an idea of what the purchasing power of the currency is.

However, the index can only be calculated in countries that have a McDonalds. Another limitation is that the Big Mac Index can end up measuring the local willingness to pay for a fast food burger.

Hindsight Bias

Hindsight bias is a tendency to look back at past events and perceive events as more predictable then they actually were. For example, there are many ways a global pandemic could have played out, and there was a lot of uncertainty at the beginning. But now it would seem more predictable as there was no other probable course of action.

When looking at your own past decisions, it might seem that you made the right decisions but for the wrong reasons. We don’t want to be critical of ourselves. And our brain takes a shortcut to avoid that and to explain it in a much easier way with the information of the outcome that you have now.

The only way to keep a check on this is to keep a record of how a decision was made. And evaluating them at a future point of time.

If all else equals

A common shortcut our brain takes during comparing two options is to, at least for the moment assume everything else is the same between the 2 options. Hoping to get a more objective judgement of the situation.

Occam’s razor, if all else is equal, the simpler explanation is preferred over a complex one. However, it is rare in the real world to have to decide between 2 options where they only differ in one dimension.

This mental model can backfire if not used with care in the real world. It is important to understand what are the other parameters that is assumed to be constant. Whether it is possible in the real world where a scenario would exist with similar options in all dimensions but one. The bottom line is that the comparison should be made between 2 possibilities that have a chance of existing in the world. It doesn’t help if the comparison is done between 2 hypothetical situation and using that judgement to choose a real world option.

Figuring out which parameters of the system affect it directly and indirectly is a good exercise to perform. Comparing indirect parameters is a recipe for a disaster. And by direct parameters, I mean parameters that are fundamental to the characteristics of the system. Fundamental, also read as, first order implications instead of derived aspects. For a business, it could be profit after tax, for a business loan it could be interest and time period.

That said, sensitivity analysis uses this principle and is a good method to get a better understanding as to how different variables affect the outcome and behaviours of the system under question.

Theoretical World Generator

A term I came across from Mental Models Vol. 1. But this is something that I have found myself doing and has been useful in helping me make decisions.

When presented with a decision that is a) affected by a lot of uncertainty the future holds b) a large set of possible outcomes can be guessed, then having a theoretical world generator helps.

Having a checklist of aspects to consider is a good idea. A set of checklists covering different dimensions. Maybe they can be classified as internal or intrinsic aspects and external ones. Or can be classified in terms of time.

Thinking about the possibilities in a form of a tree can also help.

After mapping out most of the outcomes and possibilities. The next step is to individually think about the probability of each outcome from happening.

Now here is the kicker. What makes this a really neat is that we have to start thinking about the different outcomes and work our way backwards to the event&decision. Thinking forward and backward through a possibility tree.

This exercise can easily backfire too. So figuring out on what problems this approach works and doesn’t is key. This takes a lot of trial and error, increasing domain knowledge and in general being able to ingest a large amount of information before running the TWG.

TWG is a good way to evaluate your past decisions. Given the information that you had at the time and if you run a TWG now for this decision, how would your decision change.

“I rather be roughly right than be precisely wrong”. Avoid the craving to go into details of outcomes of trigger that should happen. Keep it as broad as possible. When it comes to figures and statistics, look at ranges and trends not at actual figures down to decimal