Perhaps, most readers would rather spend their time with the literary works of connoisseurs with proven track records; but I strongly disagree with the pragmatisation of this approach. We are okay accepting young actors, comedians, musicians, and athletes, but somehow in the intellectual ground we have to clear some extra barriers before anybody will listen.

Guess what? That will not stop you or me or anybody from sharing our ideas in all and every field. An engineer is allowed to have novel ideas in the field of psychology, a mathematician in sexuality, and a shoemaker can discuss the beginnings of our universe. Does that mean they will be right? Not likely. Does it mean they will be wrong? – NO! So let’s go ahead and share our ideas for those who still believe great thoughts can sometimes be built out of pure creativity and reason.

It is perfectly fine for others to look for credentials before listening to what we want to say. And even if it wasn’t fine, it is the way the world works and there is no point in trying to deny it. What is not okay is for us to believe that our thoughts are worthless unless we have some fancy degree or an incredible life story. Every day, we are brought into the conjoint delusion that we must first learn “the basics” before we can go ahead and make/do/build/write something worthwhile. If you want to be a writer, you must first read every book in Umberto Eco’s library; if you want to innovate in engineering, you should pursue a PhD and then a post-doc; and if you want to run a business you need to get your MBA. Excuse my language, but that is a load of crap.

The worst part is that we see counterexamples every single day. More and more often, young and inexperienced people are shaking the world. So why is it that the general population seems to still be trapped by the status quo? Recently, the term entrepreneur has been used more and more to describe not only people starting their own business ventures, but also those who are able to escape the limits imposed by our slow-adapting, structured society. Maybe entrepreneurship is the main ingredient in the recipe for escaping a social construction with many positive aspects, but that ultimately will hold the fastest ones back. What do you think?

A real call option, like the name implies, is the right but not the obligation to make a certain decision in real life. For example, a real option could be whether to attend or not to Law School. But here is the conundrum: what is the the monetary cost in going to Law School? Of course there are a couple numbers than can be derived quickly, such as the actual tuition cost, the additional living expenses, the financial loss due to no or little work for the duration of the studies, etc.

But what about the cost of not having followed being a dancer, which was your childhood passion? What about the cost of delaying having children, or marrying for another three years? How can this be valuated? It certainly has a value, given that people would consciously delay or abandon certain opportunities in exchange for a monetary value- but what is this value? Well, it’s different for every person, and even then it is very hard to determine what the correct amount is. However, the main point is that there is a financial gain or loss every time we chose from a variety of options- every time we make a decision.

Now, in line with Schwartz’s thoughts, I started to think about emotional hedging (1). What if I wanted to hedge real life- emotional- risks by going long on such risk? In other words, I could bet that an undesired situation will happen, so that if it does a financial compensation equivalent to my emotional loss will be provided. For example, during the last Football World Cup, Argentina lost to Germany 0-4 (this was a very painful game to watch). In this situation I could have been a patriot and make a bet that Argentina would win. If my bet comes true, I will be emotionally satisfied, and in addition I would receive a sum of cash (the bets for that game were 1.65 to 1 for Argentina). Conversely, if I lost, my misery would double as well.

A second strategy would be to bet on Germany winning. In this scenario, if Argentina wins, I’m happy enough that I don’t mind the economic loss- and this is key- because my bet was low enough to not bother me enough to ruin the glory of the win. If Argentina looses, I will be given a financial compensation- again the key point- high enough for me to drink or buy enough ice-cream to drown my sorrows. All we would have to do is pick the right prices, and we could prevent the kind of mood swings caused by things beyond our control.

Maybe someone should device a startup which allows people to hedge emotions, and helps them decide the right amount to bet based on what other people have done. Of course whoever founded such startup would have to figure out how to price the bets.

(1)I might not be the first one to come up with this, and I haven’t look around to see if anyone else has been working on this topic.

TED (short for Technology, Entertainment, Design) is a U.S. private non-profit foundation[1] that is best known for its conferences, now held in Europe and Asia as well as the U.S., devoted to what it calls “ideas worth spreading”.[2] Its lectures or TED Talks, widely disseminated on the Internet, are subject to an eighteen minute time limit.

TED was founded in 1984 as a one-off event, and the conference was held annually from 1990. TED’s early emphasis, consistent with a Silicon Valley center of gravity, was largely technology and design. Its co-founder was Richard Saul Wurman, credited with having coined in 1976 the term information architect. As popularity of the talks has spread, so has the range of subject matter, to cover almost all aspects of science and culture. Those who have given TED talks include Bill Clinton, Al Gore, Gordon Brown, Richard Dawkins, Bill Gates, the founders of Google, the evangelist Billy Graham and various Nobel Prize winners.[3]

TEDxSF was hosted by the wonderful California Academy of Sciences, and the main stage was inside the planetarium – indeed a very interesting setup for watching some amazing speakers.

The theme of this particular instance of TEDxSF was “Courage and Resilience”. The speakers represented those who had persisted through some of the most difficult times anybody can imagine, and many of them went on to achieve great things.

But with TED the theme can never be revealing enough – the fact that TED stands for Technology, Entertainment, and Design, doesn’t even make justice to the breath and diversity of the speakers and their stories.

We had the pleasure to hear entrepreneurs, who not only had to struggle with their own financial survival for years, but also with disbelief and sometimes betrayal portrayed by the VC’s that backed them. Within this topic, we got to hear Jonathan Abrams, the founder of Friendster, who go later kicked off as the CEO of his own company (and replaced by a fast-moving sequence of other 6 CEO’s). Jonathan, however, did not succumb to this event, he went on to found other startups, including socializr, and his own night club in the city of San Francisco. Although he didn’t have the fortune to produce another hit as big as Friendster, Abrams remains as the “godfather of social networking” and I am sure he will continue on to great things.

The second speaker in entrepreneurship, was Charles Huang, the co-founder of Red Octane. For those of you who don’t know, Red Octane is the startup gaming company that created the ever popular game “Guitar Hero“. After the successful launch of the first in a series of games, Red Octane got acquired by the beefy amount of $100 Million dollars (a bargain considering that they bootstrapped the company and their total revenues as of today broke the $2 Billion barrier). Although Charles and his brother ended up creating the third largest franchise in video games history (after Mario Bros. and Madden NFL), VC’s were reluctant to see the potential of their endeavor and failed to recognize the paramount opportunity. The brothers had to take a second mortgage in both of their homes in order to be able to release the first version of the game to stores. Initially, only 3 brand stores in all of the USA, agreed to put the game in their shelves.

A second group of speakers could only be referred as fighters. Speakers included Captain Paul Watson and UFC fighter Nate Quarry.

All the TEDxSF videos will be available in about a month, but I was able to find the one for Captain Paul Watson, so I will let him introduce himself, rather than pollute his talk with my own interpretation.

Part 2
Part 3
Bonus: Southpark episode about Whale Wars

Nate Quarry grew up in a Jehovah’s Witness house, which forced him to live in a sheltered “bubble”. He was not allowed to interact with outsiders, including something as trivial as participating in organized sports. Until the age of 24, he had never participated in any serious sports. But after watching an airing of the ultimate fight championship, he decided that is what he wanted to do. That week, he went to the closest gym and fought everyone there, and he got his a** kicked. But he pronounced that he would be back again and again until he could beat everyone there – so he did… A few years later, after his father passed away, Nate decided that it was time for him to pursue his dreams. With only $3000 in the bank and a daughter to take care of, he quit his job and became a top UFC fighter. Quarry made it to the championship final, where he got knocked out in the first round. To make it worse, he got diagnosed with a degenerateness condition affecting his back. True to his resilience, however, Nate Quarry came back from the ashes, after a dangerous back surgery, and today he continues to fight in the UFC.

It is clear (from this angle) who would win in a fight

There were two more speakers, David Shenk, author of “The Genius In All Of Us” and other three best sellers, and Celina Realuyo, who works as a counter-terrorist in Washington DC. Additionally, we had the pleasure to listen to two beautiful musical performances by Loop!Station and Bhi Bhiman.

This was overall one of the most interesting events to which I’ve had the pleasure to attend. I sincerely recommend anyone who is interested in meeting fascinating individuals to go to a TED event near your location.

Friday, Mar 12:

• Program or be Programmed: Ten Commands for a Digital Age
• Securing Web Behemonths: Web Applications that are large
• Party: Tocquigny Martini and Beer Marketing Mixer

Saturday, Mar 13:

• Can you teach entrepreneurship?
• Banking 2.0: financial services driven by people and emerging technologies
• Keynote: Danah Boyd (Microsoft Research) on Privacy

Ashton had it coming

Sunday, Mar 14:

• All day Google hackathon
• HTML5: Tales from the development trenches
• Beyond algorithms and the future of search
• Party: Mashable’s Mash-Bash

Me at SXSW 2010

Monday, Mar 15:

• Who needs venture capital?
• Keynote: Twitter CEO
• Seed Combinators: Startup Incubators 2.0

Tuesday, Mar 16:

• Bing: behind the scenes of the decision engine
• Getting funding for your startup
• Getting your company funded

You can contact Jeffrey here.

Dima can be contacted here

Now to the point.

Below, you can see a Gaussian distribution, which you might also know as a bell curve. Since probability and statistics is a field in which I feel very comfortable, I am going to wrap this discussion around it. But first some notes.

The Gaussian:

The Gaussian distribution has been horribly misused by a lot of people for a long time (read: Recipe for Disaster: The Formula That Killed Wall Street). So please, don’t assume what I am about to describe can actually be characterized using a Gaussian distribution. In practice, probability distributions and mathematical models that try to describe how a socioeconomic process works are incredibly complex (and almost always incorrect). However, this distribution is a good tool to explain how how probability affects our everyday lives.

Risk (finance) or Variance (math):

In practice, it is very hard (rather impossible) to come up with a numerical value to measure the variance of complex processes, such as the ones involved in the financial markets. However, in conjunction with the Gaussian distribution, it allows us to envision the real world with a simple probabilistic model.

Now that the weak points of what follows have been covered, for simplicity’s sake, I am going to continue writing as if the Gaussian was in fact a perfect representation of the world.

So here is how the model works. For every process that we can image (which has a large sample space*), there is a perfectly symmetric Gaussian distribution, with a known mean and variance. The mean is the value that lives at the center of the distribution (x-axis point of symmetry). The variance determines the width of the distribution, and therefore, the likelihood of an extreme event happening. We will call this extreme events “outliers”.

As you can see in the picture above, the larger the variance (represented as sigma squared), the wider the distribution. Note how the width grows equally in both ends of the distribution, meaning the distribution always stays symmetric. We will call the right side of the distribution “the upside” and the left side “the downside”.

It should be clear by now that in order to have a really high upside, we will have to accept the possibility of a really bad downside as well. Given this model, we have two ways of running our lives. One would be to minimize risk (again, I am assuming we know what those risks are), we don’t go climbing, we don’t take too many courses, we don’t eat too much red meat, we don’t travel, etc. In this manner, we are guaranteeing ourselves the mean. We will most likely achieve an average result in everything we do, and it will be very unlikely we will ever fail.

The other option is to take a lot of risks. We would travel the world for a year, take 8 classes a semester, learn how to fly planes, and go to a concert the day before a final exam. This strategy will widen the range of possible results, but we won’t get to pick between upside and downside results. We might meet Richard Branson in our trip and start a profitable relationship with him, or the plane we are learning how to fly might fall on our first attempt.

Of course these situations are extremes, but they do a good job at illustrating the point. But how can we exploit this duality and benefit from it? I will provide my own version of this answer in my next post.

Recommended Books:

The Black Swan
Super Crunchers
Probability and Stochastic Processes

* A large sample space means that the range of possibilities is not a small number. For example, in a test I can get a score between 0 and 10 and the material that will go into the exam is also very defined. So the more I study, the better I will perform—this is not the kind of process being discussed here. But if the grading scale was very large or if the material was more than anybody can study, then it would become more of a random process.

At a Business Today International Conference, I had the pleasure to hear many distinguished keynote speakers. I honestly can’t remember any of the speeches, but there was one that I always think about and quote to other people. The speaker was the CEO of a middle-man-fuel-trading type company—I don’t recall his name. He stood up in the podium and said something like the following:

you guys are young, you have a lot of time and your minds have not yet been polluted by society. You guys should spent much of this time figuring out what your world views are: Do you believe in God? Why? Would you get an abortion? Why? Do you feel you owe to your country? Your family? Why? Don’t just follow a belief just because the people around you follow it. Allow yourself the opportunity to explore ideas and find which world views best match you—a unique individual […]

Note 2: As you can tell from my previous posts, I don’t organize my thoughts before writing them, but I think that is my value proposition: I write just like I would talk.

That speech had a big impact on my life. I was in sophomore year of college, trying to figure out what was my next big thing. There are two ways one could deal with a “figuring out” stage in life:

1. You can be random and adventurous and allow yourself to explore everything around you and beyond.
2. You can plan every remaining minute of your life in order to maximize opportunities and make sure you don’t miss any chances.

My strategy, which is common throughout most successful college students, was to carefully plan my next two years in college and my career beyond that. It made sense, there was little time left and too much to do. I kept hearing this cool keynote speakers talking about their origins (sounds like a mythical tale) and wondering how in heavens (hell) were they able to accomplish all that.

The problem is that in order to plan my life I had to have my world views already figured out. Should I focus on money, happiness, health, or expression (these are not necessarily exclusive) ? Of course, I told myself I could do them all. But this goes against the idea of planning. Let’s think about one of the greatest planners in history, Napoleon. When he went to battle he had one single goal: to defeat the opponent. Anything and everything in his plan was purposed to accomplish this goal. Now if he had wanted to be healthy (sleep well, have a balanced diet, and laugh a lot) he could have not accomplish what he did.

So there is a contradiction between planning and doing many things. Planning for success is not very compatible with trying to find oneself. One cannot explore the world and succeed at everything at the same time—I decided to follow this man’s advice. I would spent the next two years in college exploring and adventuring.

If you know me, you could easily say I actually didn’t explore the world. As a matter of fact I worked really hard to get good grades and finished college with a gold standard. My answer is that exploring and adventuring doesn’t imply to be a slacker who has absolutely no obligations in life. Adventuring is more of a mindset. It means you take more risks, you go to Canada and back in one long ride just because, or you go to watch the Star Wars premiere at 1am before a physics final at 7am. You could go to interesting conferences around the country, even if you miss a homework or a test.

You can coordinate the life of an explorer with a successful college experience—but in order to accomplish this, success cannot be the primary goal. You see, I did well in school in part because I am smart, in part because Jeff Little helped me out in group works, in part because of my personality, and in part because of luck. But I could have never allowed myself to explore the world if my primary goal was to get A’s—that would compromise my plan.

As the semesters went by, I kept falling back into this idea of planning for success. Someone would tell me they worked at an investment bank, and I would feel I should plan for it as well—and for a while I did. But with a lot of self-discipline (this will sound moronic to anybody who slacks by nature and needs discipline to try hard) I was able to switch myself back into adventure mode.

Note 3: by this point, the title of the post has become a poor choice, but I will leave it there because this is a conversation and cannot be retracted.

I decided being an investment banker was a bad idea, but I had read a lot about the stock market and found that interesting, so I signed up for a second degree in financial mathematics—Boom adventure mode at it’s best. I didn’t generally participated in community service activities (it’s not common in Argentina), but then I found out 50 girls from Smith College were going to New Orleans to build houses for Katrina victims and I decided to go—Boom adventure. Then someone told me that you could apply for a thing called 21st Century Leaders Award, which would allow you to walk in a stadium with 40’000 people looking at you, and I decided to apply (and got it)—Adventure!

So yeah, one can have an adventurous personality and an open mind, and still achieve things that people who spend their life planning do. The difference? I never over do it. If I will apply for an award or a conference, I sit down, write what I really feel like writing and send it. I don’t check the email for responses everyday. If I am sending an email to a person I would like to meet, I run the spell checker once and send it. If they are interested in me, the sentence structure and the word choice for salutation won’t make a difference. Furthermore, if things like those make a difference and I don’t get a response (I can NEVER get replies from German professors), then that enriches the adventure in my life. I don’t want detail to rule my life, and I don’t want to be so detailed that I will know exactly what I’ll get. Maybe I will do that later, once I have figured out my world views and I have meaningful goal that I absolutely want to achieve.

Balance? You don’t need a balance. That is just a keyword for people who are unhappy and pretend to be mature by ‘balancing’ the elements in their life. Success (whatever that is for you) takes actions, adventure is a mindset. Planning is for projects. Are you a project or are you a unique human being? Measurable results help you keep track of your progress and can be a motivating factor to continue working hard, but again, I think this is just a self imposed gimmick that allows us to be unhappy while trying to achieve our goals. Achieving goals should not make us unhappy! Our ultimate goal should be happiness, and all other goals should be a subset of that.

My final thoughts: In college I came across the modern concept of a hippie. The stereotype depicted people who like to smoke marijuana, have “deep” conversations, skateboard, have long hair, are pro-choice, and pro-Palestinians. What struck me, was that hippie culture affiliates tried really hard to fit this mold. I have always disagreed with society judging a group based on a stereotype, but until that time I never realized how social groups will judge themselves based on such stereotypes. What I am trying to say here is that just because you are pro-choice, doesn’t mean you can’t like George W. Bush, or just because you are Jewish doesn’t mean you have to be pro-Israel. This means that just because you feel identified with part of someone’s life (ie: you’d like to be a rapper), doesn’t mean you should agree with all aspects of this person’s life. So don’t limit yourself based on social stereotypes of success. After all, the biographies and wikipedia articles about your heroes are just a recount of events made look like it was all planned. But the truth is that they didn’t plan it. Historians have a good hypothesis of what triggered the World War II, but any intelligent person would realize that the amount of events involved in this final result is so large that one could only theorize after the fact. In other words, nobody believed World Ward II was about to happen a couple years in advance, even though historians can link events that span decades before the fact. So again, don’t feel compelled to imitate the life of someone you admire. Let yourself find your own path and make your own mistakes. If you had never felt a burn, because your mom always kept you away from fire, wouldn’t you be jealous when someone else talks about their painful burn?—so go ahead and get burn before you heal.

Do it for me.

Cheers

Powerful ideas have an intuitive name and can be explained to most people in 60 seconds. But contrary to popular belief, I think that a good idea will only be fully appreciated by the epiphaneer. As a matter of fact, I don’t think ideas are worth anything without people with the knowledge, the commitment, and the perseverance to make them happen—this is my assumption. From this, we can derive the following question: If ideas are worthless, then why should anybody see any value in them?

You see, an idea ‘feels’ like the perfect solution to a problem, but the truth is 180° away. An epiphany will be presented in a highly utopian manner (hence, it can be explained in 60 seconds to most people). But in order to develop an implementation, the creators will have to solve a series of complex issues. As a matter of fact, the final result will probably look’n’feel (and function) very different from the original mental blueprint.

This is not just my opinion. Think about the word idealistic. This is the term that we, as a society, use to refer to a person who has a vision of the world (generally positive) that cannot be achieved as a series of practical and realistic steps. An idealistic person will expect too many changes to happen too quickly and to have too many resources to fund this change. An idealistic person is not a doer, but more of a talker (and, of course, a thinker).

Most people who claim to want to be entrepreneurs are actually idealistic. They are always waiting “to have a great idea” before they move on to conquer the world of start-ups. They think and talk big, and they do little. Most people confuse being an entrepreneur with daydreaming. In fact, most people let ideas get in the way of them becoming successful entrepreneurs—this, again, is my assumption. But bear with me.

So if ideas aren’t worth a penny, and if ideas keep getting in the way of success; what is the whole fuzz with them?

Here is what I think: ideas are the light at the end of the tunnel. When undertaking an arduous endeavor, we need to have a clear goal. We need to make this projection and we need it to be simple, beautiful, and utopian. Otherwise, we would not be able to invest months or even years of our lives pursuing this goal. A successful startup requires precise execution, and at no point we are allowed to slow down or have doubts. This is where ideas are great. The idea-maker is committed to his idea, like a sports fan is committed to the Red Sox—commitment will encourage them to stick with a team, even after a bad season (or 70).

I suggest that when you have an epiphany, you let it grow big and beautiful. Don’t be scared of the technical or strategic challenges that this realization might present. Fly with it, share it with people, and use it to get excited enough to go ‘All In’. After this point, grab your idea (a sketch or a paragraph written on a napkin) and put it in the wall—this will be your inspiration. From then on, forget about the bells and whistles and get on to the hard work. Don’t be stubborn, let your idea morph into a complete different being. Look for advice, explore technical challenges, and find a business model. And when you are feeling the battle is being lost, look up to the wall and remember how great you felt the moment it sparked your mind.

Cheers.

However, in practice Corporations are rarely able to achieve this modus operandi. The problem: it is very hard to track the amount and worth of work produced by an employee. The end result is that most companies end up following a more conservative reward system influenced by factors such as the amount of time an employee has been with the company, rapport with manager, or other forms of visibility such as the completion of an online MBA.

In fact, there is such a lack of meritocracy, that employees need to dedicate some of their working time to advertise the work they have created. This kind of broadcasting could be done using Web 2.0 technologies, such as blogs, Twitter, and Wiki entries; by walking around the office and personally sharing what one has been working on; or by Spamming people with emails at late hours of the night.

Furthermore, it seems to be that many of the employees perceived as “rising stars” actually spend more time promoting their work than doing it. I am not saying this is an unethical behavior. It might very well be that the success of a corporation is more dependent on the ability to share information than on the creation itself. Maybe this is a virtuous circle, where short periods of innovation are interrupted by extensive periods of public exposure and resource gathering (venture capital, talent recruiting, etc).

The bizarre part, is that our family values, our academic institutions, and our work ethics, dictate that “hard work” should be the legitimate pursuit, while games and politics should be left to phonies. Maybe there is a social equilibrium, where most dedicate their lives to output-producing work, while a few are able to cross the chasm and live a more dynamic lifestyle.

Clearly, there exists a contradiction between theory and practice, and there is a trade off between the production and the advertisement of one’s work. But at the end of the day, the choice is yours. So what will you do?