We’re not the only bloggers working here at blogger alley. There’s a team from Perceptive Pixel and from Autodesk, who’ve got a gorgeous multitouch display. They’re filling it with computer-generated sketches, summarizing these sessions. It’s a lovely interface and I’m glad we’re getting some Peter Durand-style graphic summaries of these sessions as well.
The afternoon begins with a product demonstration from Jim Marggraff. He asks some large, goofy salesman questions:
“What would you say to yourself as a child? What if a severely aphasic person could learn to speak better?
What if you could learn a second language for les than $50? What if you could instantly recall anything you wrote or spoke?”
His new product, Livecribe, is a computer in a pen. It captures what you write and records what you speak, using audio inputs and 1 or 2 gigabytes of memory. Hook the pen up to a computer with a USB cable, and you can do lovely things, like hear what you were saying when you wrote a certain phrase, or translate words on the page into different language and hear them read to you. It will launch in a month for $149, and with a toolkit designed to help developers build novel applications around it.
Nassim Nicholas Taleb has a thing against randomness. In his book, the The Black Swan, offers a very simple argument. To prove it’s simplicity, he tells us that Israeli investor Yossi Vardi challenged him to explain what he was talking about while standing on one foot. He’d had a bunch to drink, so he declined. But he offers his argument no:
“Everything I talk about is the difference between Mediocristan and Extremistan. In Mediocristan, the median matters. In Extremistan, the extremes matter.” The rest of his book, he tells us, is simply driving that message home. He explains further – take a group of a thousand people. Add one really fat guy. How much does the median weight change – not much. This is the basic principle of science, the law of large numbers. Add a very wealthy person to the mix – he changes the mean a great deal. That’e extremistan.
Nassim is formerly a wall-street derivatives trader. He argues that stock option trading is all about extremistan. Unfortunately, financial people believe we live in mediocristan. But no one believed there were black swans until someone discovered one in New Zealand.
He offers a difference between industries. A dentist has to drill teeth – even if you’re very good, you’re not going to drill 2-3 million teeth in a year and make a huge amount of money. But authors can – JK Rowling wrote one book, but made immense amounts of money because people kept printing copies. “Information is from extremistan – it’s subject to winner-take-all effects.” Five to forty-five novel a year are responsible for half of all book sales. Eight to 250 companies combined have half the total market capitalization. And this appears to be getting worse.
Nassim speaks of “the ludic falacy” – the real world is not random like dice. People fall victim to
“the turkey fallacy”. The butcher lets you live for a thousand days, but he kills you on the final day – it’s a surprise for you, a black swan. But it isn’t a surprise for the butcher. The moral is, ‘Don’t be a turkey.'”
in finance, past rare events don’t predict future rare events. He tells us that investors make money for ten years, then lose it all in year 11 – they claim they faced a “once in ten thousand years scenario”. But actually, they’re in a turkey industry, an industry subject to lots of black swans. “Banks have never made money – they give up all their money in ‘rare events'” like the 1982 banks crash. He urges us to invest in reverse-turkey businesses, ones that benefit from black swans.
Most of his scorn is reserved for economic pundits. “Never take advice from someone wearing a tie – the experts are not experts.” He believes that economic forecasting is totally unbelievable. “We live in a world that’s like driving a car blindfolded.”
His advice – don’t disturb a complex system. “You don’t see the links between action and consequences” – you invade Iraq and you can’t possibly imagine what happens. Leave nature alone, and lean on people with wisdom and great age to help navigate the shoals of history. He closes with images of Plato and Marx. “They wanted to force us to use our knowledge to make decisions. I want us to use our lack of knowledge, our understanding of our ignorance.”
Chris Anderson is frustrated with the talk, and asks for concrete advice on how to tell mediocristan from extremistan – he doesn’t get much help working through those questions.