An Andean, Tibetan and Ethiopian Walk Into A Bar

The Bar is at the top of a mountain.

Who has the most highly optimized genotype?

The Tibetan (probably):

You probably are aware that different populations have different tolerances for high altitudes. Himalayan sherpas aren’t useful just because they have skills derived from their culture, they’re actually rather well adapted to high altitudes because of their biology. Additionally, different groups seem to have adapted to higher altitudes independently, exhibiting convergent evolution. But in terms of physiological function they aren’t all created equal, at least in relation to the solutions which they’ve come to to make functioning at high altitudes bearable. In particular, it seems that the adaptations of the peoples of Tibet are superior than those of the peoples of the Andes. Superior in that the Andean solution is more brute force than the Tibetan one, producing greater side effects, such as lower birth weight in infants (and so higher mortality and lower fitness).

How To Be Ignored

Apple came out with a product yesterday called iBook Author. Is this the textbook killer that everyone’s been waiting for? Who knows.

But I noticed something interesting in Horace Dediu’s post crowing about how how he emailed Jobs on something like this a while ago. Here’s  his post:

My thoughts were expressed 20 months ago in a private email.

I did not get a response.

No kidding he didn’t get a response. I’m a sympathetic, interested reader and I had a hard time following that email. Everything about it is hard work, even the subject line.

It’s an excellent example of how to get someone to ignore whatever you’ve written. As my boss once told me about presenting something to busy people (no matter how intelligent): it’s got to be simple enough for a 5-year-old to understand.

I Like Reading Scott Sumner

If you don’t read him, read this.

I think it’s useful to think of people who are unemployment has being forced out of the high productivity sticky-wage sector where they can work with lots of expensive capital to make pick-up trucks, into the flexible-wage scrounging economy where they can pick up cans, play guitar for tips, do odd house repair jobs, babysit for money, prostitution, deal drugs, etc, etc. Because these jobs are less productive, RGDP falls. And because they pay less than regular jobs, some people who aren’t desperate will rationally choose to watch some TV instead of working. That would probably be my choice (internet, not TV.)

The Holy Grail

Want to be successful in life?

Be relentlessly resourceful.

Two Paul Graham essays crossed my screen today.

This caught my attention because earlier we’d noticed a pattern among the most successful startups, and it seemed to hinge on a different quality. We found the startups that did best were the ones with the sort of founders about whom we’d say “they can take care of themselves.” The startups that do best are fire-and-forget in the sense that all you have to do is give them a lead, and they’ll close it, whatever type of lead it is. When they’re raising money, for example, you can do the initial intros knowing that if you wanted to you could stop thinking about it at that point. You won’t have to babysit the round to make sure it happens. That type of founder is going to come back with the money; the only question is how much on what terms.

He earlier named that quality:

A couple days ago I finally got being a good startup founder down to two words: relentlessly resourceful.

From The Desk Of Tyler Cowen

Two posts I really liked today.

First:

“High intergenerational mobility” is sometimes a synonym for “lots of parental underachievers.”

Another way of putting this is that people with high general ability (which could just mean conscientious hard workers, mind) choose to either make their mark in the world or make their mark on their kids. The distinction between Steve Jobs (“I want a biography so my kids know who I was”) and Richard Feynman’s dad comes to mind.

Second, a link, from here:

This leads to a concept: A restaurant called Placebo. What do they sell? A 50% discount. Which is to say: The entire menu is framed with everything at about twice the price you’d otherwise expect to pay for it, but then your check gets a 50% discount. So say you have a steak roughly of the same quality as the $13 steaks at the Outback Steakhouse. The menu says $26, your bill when it arrives has a 50% discount. But everything you order feels expensive.

For extra credit, you could do interviews and arrange waiters to adopt personalities which suit the customers. Someone comes in who likes Good Wholesome Cooking? We can set you up with a waiter who thinks fancy food is ridiculous. Or, we can set you up with a waiter who is a total food snob, and you can have a wonderful meal knowing that the waiter is missing out on Good Wholesome Cooking. Your call.

Three Drastically Different Links

1. Datacenter review by James Hamilton. Random, I know, but isn’t engineering so cool? Ductless cooling, direct current power… A geek’s delight!

2. Jumping to another planet, here’s an interesting thought on networking.

After you identify your key contacts, think about how you first met them. In the center column of the work sheet, write the name of the person who introduced you to your contact (if you met the person yourself, write “me”). This column will reveal the brokers in your network and help you see the networking practices you used to connect with them.

These are the people you already know who are clearly able and willing to help you branch out. They should be the first people you call and where you invest a disproportionate amount of your time and energy.

Who are the super connectors in your life?

3. And, finally, Paul Graham has another essay out:

Most hackers who start startups wish they could do it by just writing some clever software, putting it on a server somewhere, and watching the money roll in—without ever having to talk to users, or negotiate with other companies, or deal with other people’s broken code. Maybe that’s possible, but I haven’t seen it.

One of the many things we do at Y Combinator is teach hackers about the inevitability of schleps.

The question, then, is this: if you cranked up your willingness to ‘schlep’ by a few percent, would the value of your activity go up exponentially? The answer here is normally ‘yes’. One way I like to think about this is that people are only willing to pay someone to do things they either cannot themselves do or do not want to do. These obviously aren’t mutually exclusive, but finding a problem most people couldn’t solve and none of those who could are willing to even try would be quite the business.

Here’s another interesting observation:

Frankly, the most valuable antidote to schlep blindness is probably ignorance. Most successful founders would probably say that if they’d known when they were starting their company about the obstacles they’d have to overcome, they might never have started it. Maybe that’s one reason the most successful startups of all so often have young founders.

In practice the founders grow with the problems. But no one seems able to foresee that, not even older, more experienced founders. So the reason younger founders have an advantage is that they make two mistakes that cancel each other out. They don’t know how much they can grow, but they also don’t know how much they’ll need to. Older founders only make the first mistake.

Take The Money And Run

When I was in high school I received a mark in a class that, to this day, I think was an error. An error in my favor.

It was really high. I remember mentally tallying up all of in-semester marks to try to estimate my score on the final exam. When I realized it was probably near 100% and might even have exceeded it I did something strange.

I immediately stopped thinking about it.

I felt horribly guilty and was terrified someone might find out. At the same time, I wasn’t about to turn myself in to the principal’s office because I got an unfair deal on the upside. All I wanted was for everyone to forget about it so that number would stick on my transcript.

With that in mind, have a read of this article that breaks down the top 1%. This part refers to the top half of the top 1%:

Membership in this elite group is likely to come from being involved in some aspect of the financial services or banking industry, real estate development involved with those industries, or government contracting.

Recently, I spoke with a younger client who retired from a major investment bank in her early thirties, net worth around $8M… I asked if her colleagues talked about or understood how much damage was created in the broader economy from their activities. Her answer was that no one talks about it in public but almost all understood and were unbelievably cynical, hoping to exit the system when they became rich enough.

By the way, I’ve heard this line before. The majority of people in these businesses figure out pretty quickly that they’ve hit the jackpot and immediately focus on the exit. They’ve won the lottery and want to extract everything they can as quickly as they can and then GTFO.

Without ruinous leverage distorting the financial system, you’d wind up with the top half of the top 1% filled exclusively with people who have build businesses and sold them. Much of those would be tech businesses (ie the drivers of innovation in our economy). I’d argue that’s just.

For the bottom half of the top 1%, life is like this:

The 99th to 99.5th percentiles largely include physicians, attorneys, upper middle management, and small business people who have done well.

Since the majority of those in this group actually earned their money from professions and smaller businesses, they generally don’t participate in the benefits big money enjoys. Those in the 99th to 99.5th percentile lack access to power. For example, most physicians today are having their incomes reduced by HMO’s, PPO’s and cost controls from Medicare and insurance companies; the legal profession is suffering from excess capacity, declining demand and global outsourcing; successful small businesses struggle with increasing regulation and taxation. I speak daily with these relative winners in the economic hierarchy and many express frustration.

I’ve had many discussions in the last few years with clients with “only” $5M or under in assets, those in the 99th to 99.9th percentiles, as to whether they have enough money to retire or stay retired. That may sound strange to the 99% not in this group, but generally accepted “safe” retirement distribution rates for a 30 year period are in the 3-5% range, with 4% as the current industry standard. Assuming that the lower end of the top 1% has, say, $1.2M in investment assets, their retirement income will be about $50k per year plus maybe $30k-$40k from Social Security, so let’s say $90k per year pre-tax and $75-$80k post-tax if they wish to plan for 30 years of withdrawals. For those with $1.8M in retirement assets, that rises to around $120-150k pretax per year and around $100k after tax. If someone retires with $5M today, roughly the beginning rung for entry into the top 0.1%, they can reasonably expect an income of $240k pretax and around $190k post tax, including Social Security.

While income and lifestyle are all relative, an after-tax income between $6.6k and $8.3k per month today will hardly buy the fantasy lifestyles that Americans see on TV and would consider “rich”. In many areas in California or the East Coast, this positions one squarely in the hard working upper-middle class, and strict budgeting will be essential.

So much of the burden of retirement is borne by pensions and health care. The top physicians and lawyers in the country enjoy the retirement of a high school teacher. Not saying that’s a problem, but it ain’t rich.

Study Tips

Well, I waited until I was 30 before I finally figured out how to study.

The first step for me is controlling presence. Presence is this ridiculously useful concept my wife taught me from her acting days.

The point here is to be ‘in the moment’. In an acting context this means that you need to react to your environment from your ‘crotch’. Great actors believe what’s happening to them for pretend, even though they’re on a set or in front of a blue screen and have people and microphones and gadgets around. That takes focus.

And so does studying. You need to be completely consumed by the material you’re learning in THAT moment, not thinking about dinner, not thinking about your wife or girlfriend or kid or some TV show. Your mind cannot wander, particularly for difficult subjects, or you won’t actually learn anything. Recognizing when you are and are not focused is the first key. Next is learning techniques for creating presence and retrieving it once it’s lost. The power of these skills simply cannot be overestimated.

Next are some practical tips. Some are from this Barker post.

1. Don’t copy down notes, make your own. This means listen to an idea, understand the idea, then write the idea down in your own words. Most of the time you’ll realize you don’t actually understand the idea, which means you go back and learn it right. Then you write it down.

2. Write questions and answer them. If you truly understand a concept then you understand how to ask questions about it that make sense.

3. Think about the things that you’re studying. Think about how they might interact with the real world. In my math exams, I can link a lot of what I’m learning back to concrete examples at work. When might I use the Hypergeometric distribution? Bit of a stretch, sometimes, but it’s useful. This is where programming, specifically the ML class, has helped me learn math immensely. I understand much better how to actually translate math language into a more useful programming implementation, which helps me better understand how it works in life.

4. Forgetting is important. Weird, I know, but the more times you learn something the more likely it is to stick. Know that you’re going to forget stuff and plan for it.

5. Plan. Overestimate the time it takes to learn things. This is every mediocre student’s downfall, I think. They procrastinate and try to crunch it all in at once. Not how you learn.

6. For god’s sake don’t cram.

7. Sleep in a routine. Exercise in a routine. Don’t drink. Be a warrior monk.

8. Change your location! This is a funny one. But memory cues matter and you’re going to be testing in an unfamiliar location. Be ready for that.

9. Always remember that learning is HARD. Learning is PAINFUL. You feel stupid, you get frustrated, you waste time. Be ready for that and when you get discouraged, realize that you’ve just lost your presence, get it back and crank away. Then go work out.

The Problem

David Merkel nails it:

The problem is this: there are entities that made bad loans in the past that expect to be paid back in full. They assumed the future would be far better than it turned out to be. There is no way that the loans will be paid back in full. The solution is paying back at a discount, whether through compromise or insolvency.

When everyone wants to pretend they didn’t destroy their wealth, guess what you need?

Inflation. Or, more accurately, expected inflation. At the very least this will raise asset prices and perhaps get things moving again.

I think that Merkel hates this answer but write-downs aren’t happening. That’s a slippery slope that might end in insolvency!