Life Has Huge Amplification Effects

This thought is borrowed from Malcolm Gladwell’s ‘Outliers’. We wrote recently about how the best product does not always win, but the winning product becomes the best product due to the benefits gained from being the winning product.

So the bigger point there is this: Life has huge amplification effects. For example, skill differences between two people, as life progresses, gets amplified so much (partly due to the benefits provided by the system to the guy with better skills), that in a very short time, the two are no longer even comparable on the same scale.

As an example, consider two candidates A and B, applying for a programming job at Google. Say, A is slightly better than B when they appear for the interview, and A gets in and B does not, since it is 2008 and Google wants to play it safe.
Candidate B then goes on to become a software development engineer at some other company (it is 2008, so Facebook and Microsoft are not hiring as well).

Fast forward 5 years, and you can understand what we mean by “amplification effects” – the opportunities provided to candidate A at Google would make him magnitudes better than candidate B in five years. VCs would be chasing candidate A to take their money, whereas candidate B would still probably be waiting for a call from Google. The one point we need to understand is the magnitude of the amplification. It is huge – people move to different ‘leagues’ as a result of such effects.

The funny thing is, this amplification effects apply to everything in life. And our systems introduce so much bias in opportunities (Outliers has this example of a soccer team full of people born in January, February or March since the selection was just based on Age) that life just becomes a demonstration of such amplification effects and nothing more.

Sad, but definitely true. Look around. Everything you see is a result of such amplification.

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Bitcoin: Taleb’s Thanksgiving Turkey?

We spotted Bitcoin at some 7 dollars. Today its at 14. Here are some Bitcoin statistics we spotted (its already outdated).

Extrapolating this to argue that bitcoins will continue to go through the roof, would be a classic case of the problem of induction (Taleb).

“One of Taleb’s favourite allegorical tales is the story of the turkey and the butcher. As previously described by Bertrand Russell, a turkey may get used to the idea of being fed but when, the day before Christmas, it is slaughtered, it will incur ‘a revision of belief’.”

The case with Bitcoin might have some similarities. Is it really possible for an alternative currency with no legal supervision to exist?

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Jobs: Thanksgiving Turkey?

For the third straight month, the unemployment numbers have fallen: it was 9.8% in November and it is 8.9% now. Extrapolating this to argue that the economy is on the right track, would be a classic case of the problem of induction (Taleb).

“One of Taleb’s favourite allegorical tales is the story of the turkey and the butcher. As previously described by Bertrand Russell, a turkey may get used to the idea of being fed but when, the day before Christmas, it is slaughtered, it will incur ‘a revision of belief’.”


In the new job numbers then, do we have a Turkey at hand?

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