June 2013 – akbar's blog

Like is the new Subscribe

First there was print media. Next came the Internet revolution and it got the 4th estate all riled up and they started out their websites. Blogs started complimenting the news and then came Twitter. People started to talk to each other using tweets and then the idea coalesced into leaders within Twitter providing information. The media was late to it but it joined eventually. The news started getting disbursed in 140 characters matching the 10 seconds attention span. Then came Facebook – colonizing the friendship graph. They pulled in all of us and all our friends and everyone we knew. Enticed us to “Like” each other’s stuff and encouraging activity, eyeballs and addiction. The media was late there as well, but now it’s catching up.

Facebook announced 2 major things last week. In video side of it’s 1 billion dollar acquisition of Instagram. Perfectly timed 15 secs (as opposed to 6 seconds on Vine) – matching the advertisement requirement, videos in your feed. Another thing is about Mark Zuckerberg’s passion to make Facebook as a place to get all your news. I think this is a genius move on Facebook’s behalf. I have literally stopped going to websites to read news – all I do is like them on their site when I visit them first time – and lo and behold I get all my news on my wall. Facebook turned it’s “Like” button into a “interested”, “permission to invade”, “subscribe me” button.

Pretty soon we will have news media saying – “Only available on Facebook“, “Watch it first on Facebook” – because that is where the action is. Because that wall you take for granted on Facebook is definitely a wall – a wall where you put your virtual TV on, a wall where you pin your address book on, a wall where you have your calendar on. Facebook wall is the new Desktop – it’s just that we are not aware of it yet. It’s here and it’s slowly creeping on us.

I feel sorry for Google and Apple – both companies still stuck in the old thinking and investing in good old media hardware – Google TV, Apple TV(the actual TV which is rumored). I feel sorry that Google dropped it’s Google reader which could have competed with Facebook wall. I feel sorry for Youtube Channels because you are way too far from my wall and need a new tab to visit you. It’s just a matter of time before we see HBO exclusive on Facebook wall.

This is how a simple Like turned into a mass consumption channel. A pathway to new consumers.

Sunday Book Review – Think Twice

2 years back when I was visiting India – I came across this cool book. I was more surprised to see Jeff Bezos saying some good words about this book. I believe Jeff Bezos is one of the smartest business man out there. I admire him for doing so much with so little (well until, Amazon started turning profits). I was kinda surprised to see him saying some good words about this book. I bought it but never got around to read it till now. I love this book. It does boil down some common thinking pitfalls and how to use counter intuition to overcome it. I wanted to write a review for it but I don’t want to write a long write up on it and use different tools to enhance the core concepts of this book. So here we go…

This book gives you 8 counter intuitive thinking tools. To make it simple I have them tabulated them. The author uses a lot of examples of sports and financial world throughout the book but I think these strategies can be employed anywhere.

1. The Outside View

Intuitive Thinking: Thinking that the problem you have is unique and needs a unique solution

Counter Intuitive Remedy:

Collect these kinds of problems
Check the success rate of solution
If required draw a histogram
Pick/Predict a solution

2. Open to Options

Intuitive Thinking: Tunnel vision, not considering alternatives. Incentives may enforce tunnel vision further.

Counter Intuitive Remedy:

Explicitly consider the alternatives
Seek Dissent
Keep a log of previous decisions
Don’t decide with emotions
Check the incentives – for you, for others.

3. The Expert Squeeze

Intuitive Thinking: Our uncritical reliance on experts and their opinions

Counter Intuitive Remedy:

Match the problem you face with most appropriate solution
Seek diversity in solution space
Use technology when possible – again, like creating a sample data and studying it.

4. Situational Awareness

Intuitive Thinking: Role of context in decision making. Not knowing how others influence us in picking a solution. Thinking that you are in control of the problem and only you decide everything.

Counter Intuitive Remedy:

Be aware of the situation
Consider the situation first and individual second
Watch out for the Institutional Imperative – coined by Warren Buffett – implies how companies blindly copy other companies.
Avoid inertia – periodically revisit the processes.

5. More is Different

Intuitive Thinking: Pitfalls of understanding complex systems at a wrong level

Counter Intuitive Remedy:

Consider the system at the correct level
Watch for tightly coupled systems
Use simulations to create virtual worlds

6. Evidence of Circumstance

Intuitive Thinking: Predicting cause and effect for system based on attributes rather than circumstances.

Counter Intuitive Remedy:

Ask whether the theory behind your decision making accounts for circumstance
Watch for the correlation-and-causality trap
Balance simple rules with simple conditions

7. Grand Ah-Whooms

Intuitive Thinking: Phase transitions, assuming that small changes to a system don’t mean anything

Counter Intuitive Remedy:

Study the distribution of outcomes for the system you are dealing with.
Look for ah-whooms moments – the small changes that lead to big ones.
Beware of forecasters
Mitigate the downside and capture the upside

8. Sorting Luck from Skill

Intuitive Thinking: Not knowing the role of skill and luck in outcomes and to what measure.

Counter Intuitive Remedy:

Evaluate the mix of skill and luck in the system you are analyzing
Carefully consider the sample size
Watch for change within the system or of the system
Watchout for the halo effect

Books

I am a little nuts about books. I buy a lot of them, read a lot of them and always keep thinking about what that book I saw other day is trying to say. But what I noticed is that I read books for 2 reasons – one is just for pleasure (like 2001 Space Odyssey) and another is to learn more about certain thing. The 2nd part is where I am having some issues off late. I mean I read it, write down and take notes but then after a while I forget all about it. I always wanted to do book reviews and use that as an anchor to retain certain stuff with me. I am going to do that starting from tomorrow. Every Sunday I will write-up a review of a book. I know 50 books is a way too small a number for the amount of books I own, but it’s a start.

Microfinance – Good, Bad and Ugly

Microfinance is a one of those ideas which has been around for a long time but people have shown a lot of interest in it only recently (trend link). Now a days most people understand what it is and usually have lot of positive things to say about it. But like any other idea, it has those 3 sides – good, bad and ugly. I stumbled up on the last 2 only in the past few weeks. After reading Yunus‘s book – it was very inspiring to learn about Microfinance and how it is going to pull a lot of people out of poverty. I was a very firm believer in that. But I think the reality is far different than what we find in books.

The other 2 books in context are – “A fistful of rice” by Vikram Akula and “Confessions of a Microfinance heretic” by Hugh Sinclair.

Vikram Akula was a poster child of Microfinance – couple of years back, in 2007 when I learned about him – I was so inspired and I had dreams of going back to India and working for SKS Microfinance. I sent emails to SKS Microfinance about it but never heard back. The technology stack was all .NET so I couldn’t find a way to work for them. Later in 2008 I attended a talk by Vikram Akula at University of Chicago and was completely inspired. As I read his book – which showcases all the troubles he faced to start his firm – it stuck me how he was forgetting the basic tenets of Microfinance. He has been working in it for almost 10 years and was dreaming up to connect Microfinance with capitalistic market based profit making companies. His idea is cool on paper, but the implementation is wrong.

When you get to poor people who are way below the poverty line and you offer them these micro-loans – the core idea should be helping them. Just helping them. Not even thinking in terms of “Oh, I am here to rescue you out of your poverty-ness”. No. Just helping them and showcasing them certain best practices is what one can do. There is no way one person, one system can massively move people out of poverty. If you think a little deeper – the systems which we have in place are enablers of this poverty and poor people. Nothing within the system can really fix it. But if we go around trying to do so – it would be a failure.

Which is exactly what happened to Vikram Akula’s SKS Microfinance. Even though Yunus never liked linking Microfinance with for profit making companies – he couldn’t stop Akula. And in 2010 – SKS collapsed. When a lot of poor people who borrowed money and couldn’t pay back – started committing suicides – the AP Govt passed a law to ban all microfinance activity in the state, thereby bringing down SKS. When you bring in investors who are looking for returns there is going to be a pressure on the company to churn profits always. This in turn will put pressure on the micro lenders to perform better which is passed on to the poor people who are already struggling to survive.

Hugh Sinclair explains it much better in his book. He worked in various microfinance firms for about 10+ years and saw how the reality mismatches with the fantasy story that everyone is weaving around him. Poor people are struggling but they are also human. They have desires as well – the money they started to borrow – got used for one time entertainment values rather than use it as an investment. If you are poor and hungry, a entertainment is far more distracting than a entrepreneurial thought. They do want to get better but after their basic needs are met. So any money thrown at them will first go towards their basic needs and then to uplift yourself. Maslow talked about this so long ago. Sinclair also talks about how big banks have gotten into microfinance which is a $70 billion market and trying to make hay day out of it. In all this Grameen Bank (not Grameen Foundation – checkout the comment by Hugh below!) is an exception. It also functions as a bank, because of some laws passed in Bangladesh and may be that is the way to go. A Microfinance company can become a bank after certain time or reaching targets and then start thinking of profits- rather the other way around where the big banks get in with sole motive of making profits on the back of struggling poor.

My next book I am planning to read is – Fortune at the Bottom of the Pyramid – which Akula says was his inspiration to try to make a profitable public company on top of idealistic mico lending company.