‘Polarize People’

That is some logic that flies in the face of all the groupthink enthusiasts out there – and kicks kickstarter big time as well. This one is from Bill Gurley, via AVC.

‘You can’t make money with a consensus accurate prediction’

We don’t know about investment, but this would be a golden statement for startup ideas – you will probably never come up with a solid idea if you go for a consensus accurate prediction. There are two supporting points that come to mind:

1. Guy Kawasaki’s advice: “Don’t be afraid to polarize people. Most companies want to create the holy grail of products that appeals to every demographic, social-economic background, and geographic location. To attempt to do so guarantees mediocrity. Instead, create great DICEE products that make segments of people very happy. And fear not if these products make other segments unhappy. The worst case is to incite no passionate reactions at all, and that happens when companies try to make everyone happy.” Source

2. PG’s advice: “A startup just starting out can’t expect to excavate that much volume. So you have two choices about the shape of hole you start with. You can either dig a hole that’s broad but shallow, or one that’s narrow and deep, like a well. .. In practice the link between depth and narrowness is so strong that it’s a good sign when you know that an idea will appeal strongly to a specific group or type of user.” Source

So like Fred, consider putting this on your office wall: ‘You can’t make money with a consensus accurate prediction’.

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Selling Apple Stock In Jan 2009

Confirmation Error Definition: “you look for instances that confirm your beliefs, your construction (or model) –and find them.”

“The story on Apple is Jobs and his health. There were eight of us in all at dinner and not one of us, I mean nobody, that believed Jobs is healthy. And none of us believed the Apple’s PR team is being straight on this issue. As good as the company is, I just can’t own a stock when I don’t believe the company is being straight with investors. So I am selling my entire position in Apple this morning including the stock I bought earlier than last fall. My average price on my entire position in Apple is $96, so I’ll take a small loss on this and a small gain on the stock I bought during the meltdown last fall.”

Source: AVC

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Why Google Missed The ‘Social’ Bus

An interesting video clip to watch: Sergey Brin, talking to UC Berkeley Class in October 2005:

(skip to 16:25)

“I think that tagging and semantics are great as long as the computers are doing the tagging and semantics. Because if people are doing tagging and semantics for the computers then there’s something a little bit inverted about the relationship between the man and machine there. I’m a big believer in creating lots of innovative algorithms that can extract this kind of structural knowledge from lots of text that’s out there created by people all the time. But I’m not a big believer that… you know, you’re just gonna have lots of people enter the data very carefully so machines can then process it.”

And then, we have .. Google +1. wow. Thats the same as Sergey Brin saying “I was wrong about Semantics”

But here is the bigger point – until Facebook actually scaled to more than 400 million users or so, the top decision makers at Google probably still underestimated the power of connecting people – they would rather get an algo figure out the social graph than wait for people to share stuff on a network to figure it out. Turns out, it was a costly mistake.

Thanks also to OrangeHues

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Basab Pradhan: Classic Confirmation Error

[Update] Well, the error was on our side – Basab confirms this was a joke. Missing Smiley Exception, Basab :-)

Confirmation Error Definition: “you look for instances that confirm your beliefs, your construction (or model) –and find them.”


So this Tweet from Basab Pradhan: China surreptitiously injects liquidity into Germany . Which explains the red hot German economy. | BBC http://t.co/u9SjBlk #fb is a classic example.

Basab seems to have just gone looking for some evidence for the fact that German Economy is hot for non-obvious reasons, and has found this one.

Where has he gone wrong? Obviously, how can just 6Million Euros – 8.6 Million USDs make the 3.3 Trillion USD red hot?

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“High Oil Price Due To Demand”

Looking for a solid example of confirmation error? How about this one – “He blamed the rise in oil and global commodities prices on strong demand from fast-growing countries such as China, not on the Fed’s stimulus policy”.

And this one too: “Political upheaval in the Middle East, Bernanke said, has caused oil and gasoline prices to march higher.”

Confirmation Error Definition: “you look for instances that confirm your beliefs, your construction (or model) –and find them.”

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