Non-Linear Thinking Lessons from Freakonomics

If you have read the book, you would have probably been intrigued in a very amusing way. The insights and findings are shocking, the relationships and parallels drawn are a clear sign of genius. Very interesting to know certain statistics (like the fact that sending your kid to a friend's house who has a pool is more dangerous than having them go to a friend who's father owns a gun!). Apparently, more kids die drowning in a swimming pool, than from accidents related to guns. The main lesson in all the findings is almost the same. Don't rely on your gut feeling, or any heuristics you may have about a certain decision, but look at data.

Great information, a big hit to our instinctive thinking, and a reminder that the facts can be completely different from what we feel they are.

The problem is that it ends there. You learn the facts and know that you should be more concerned if your kid wants to go swimming at a friend's house. Most of the stuff is like this. It is a great display of genius and insight, but it hands us ready-made facts based on years of study and data analysis. It gives us a fish, but doesn't teach us how to fish. It's just like if I tell you that eating potatoes is more beneficial than you thought, and that research shows that if you have 5 potatoes per week, you are 27.5% less likely to get a heart attack. Ok, so I start eating more potatoes, if I have the discipline, and that's it.

I'm much more interested in lessons that can become tools for thinking and can be used in other situations. I'm interested in becoming a fisherman. 

There was one really valuable thinking tool that I was able to extract, and is really helpful in explaining many personal and economic behaviors. This is basically the non-linear (on non-absolute) way we take positions toward a certain topic.

This lesson / tool struck me through the Sumo wrestlers study. It shows that the wrestlers are willing to lose certain fights in certain situations. When the stakes are high (determining whether or not a wrestler goes down to the lower levels), things aren't as straightforward as they seem. Wrestlers are likely to have a tacit arrangement, whereby "I let you win this time if you let me win the next time I'm in need". Since one of wrestlers doesn't have much to lose by loosing, they gain a future favor from their opponent who is desperate for winning.

The important learning it gave me is to stop dealing with people's positions in an absolute manner. "This consumer is loyal", "this person loves me", "my boss is really into this project", "the company wants me". All these statements are wrong regardless of whether or not they are true in the moment. The reason is that they are incomplete descriptions of the positions of these people.

To complete these arguments, we need to mention the conditions under which they remain true. The company is really into this project, as long as ... is a more complete argument. The 'as long as' part is crucial, because it might get the other person to have a completely different position, even against their initial position, because their incentives have changed.

Online vs. Offline Marketing: Whatever you Think, Think the Opposite

Whatever You ThinkHaving dealt with many traditional marketers entering the online world, and having gone through the transition myself, the best advice that I could share with anyone joining this world (and everyone will, eventually) is the title of this book. Whatever You Think, Think The Opposite is a brilliant book that doesn't have to do anything with online or offline, but the advice makes a lot of sense to me because almost everything that we do online is counter-intuitive to the thinking of traditional economics. Paul Arden presents his ideas by using the medium he is best at, advertising. The pages of the books have the structure of an ad. A big image with a headline and some descriptive text. Each page can be read separately without having to read other pages for context. The only difference between these pages and ads are brand and logos. So, me easy advice would be to think the opposite of the way you think. Most of the thinking and planning works the other way round; big becomes small, one becomes many, decide become discover, etc. Here I outline some of the main differences in doing marketing online compared to the thinking offline.



  Offline   Online
General Implementation: Planing, planning, planning, and then you have one big bang.   Start small, very small, extremely focused, based on results improve, expand, optimize, and grow. Start spending big ONLY when you have good results.
Time to analyze resuts:  Takes several weeks, if not months, needs a different process of a sampled group of people to give their feedback.   Almost immediate results on your campaigns, per creative, per placement.
Restuls Analysis: Based on people's feedback.   Based on actual usage (clicks, impressions, conversions, etc.).
Campaign Analysis:  A separate process, involving additional cost and research.   An integral part of the campaign.
Campaign Cycle:  Ends when the ad is seen, and there is no direct link to the customer behavior based on the ad.    full cycle is measured from impression, to click, to landing pag, to funnel, and finally the 'thankyou' page.
Targeting:  Usually one big market, at best segmented based on medium   Extremely fragmented, potentially every keyword is a segment. 
Customization:  Fixed messages can only be changed in different campaigns or editions of a publication.   Can be tailored to each segment, and can be based on previous performance data. 

Criticizing Google. Does Anyone Dare

Apparently Ken Auletta dares, and with very precise and detailed observations on the company's weaknesses, contradictions, and lack of human touch. It wasn't a negative talk, but well balanced, and based on deep analysis, citing actual conversations with the founders and top management. He was introduced by Google's CEO, Eric Schmidt, who also mentioned how detailed Ken was in his research and reporting.
It's refreshing to see something negative about Google, calling them 'cold engineers', as opposed to the Microsoft people who were labeled 'cold businessmen'.
The weaknesses and opportunities of Google are very important to me also, both as a fan of the company, and as someone who's work relies mostly on their products.
The disruptive force of the company was discussed and its effect on several industries, especially with the 'everything for free' model. Interestingly, Ken says that he doesn't have an answer to the new business challenges posed by this model, and that's a very tough question.
A very good talk and should be a wake-up call for their engineers. Maybe they'll get to their senses one day and hire some designers!

Why, How, and When to Quit

The Dip Book
Most of the business advice I've been reading in the last three years is really refreshing. More humanity, intuition, beauty, and self actualization are not only welcomed, they are increasingly becoming competitive advantages for people and organizations. Technology is creating almost everything for us, and we are to do the things that technology cannot achieve; beauty, style, design, creativity, spontaneity.
The dip, by Seth Godin is one more refreshing piece of advice, about (again the opposite of what is traditionally advocated in business) quitting. The main idea is that we should quit often, as a strategic tactic, and that we should choose when to persevere.
I also had this strategy, and I often use it in new endeavors. I focus on one thing, and almost isolate myself from many other things in life. This is to ensure enough focus is given to what I'm doing. Eventually, when things are stable, I can go back and include the other things I like to do.
The new thing for me in The Dip was paying attention to what is it that I want to quit, and what it is that I need to persevere at. Although I usually focus when I quit other things, I seldom make the effort to make sure it's the right thing for me.     
"Being the best in the World" is another key notion Seth goes on to explain. Of course "world" means somebody's world. It also means how they perceive their world, and being the best is about being the best for them (your prospective client / market) now.
The whole book, or "program" as Seth likes to call it, is around this one idea. That we should chose the things that we are the best in the world at, and abandon everything else. The main reason is that being the best has dramatically higher benefits than being second or third. The benefits are disproportionately higher than any other position in the hierarchy.
Not only is it advisable to be the best in the world at what you do, Seth argues that is also becoming necessary to be the best. I a long tail of micro niches, you are probably in one niche and need to be the best there, or else! "In a Google world, the competitor is only one click away." There is good news though. If you think seriously about your strengths, you probably are the best in the world at what you love to do, you just need to focus, make the strategic decision and go for it. This idea echoes the main strategy of Squidoo, "everyone is an expert at something."Sisyphus
The Dip immediately brings Sisyphus to my mind. This character is known for the frustration he has to endure every day. He was condemned by the gods to push a heavy rock up a mountain, only to find it roll back to the bottom on a daily basis. Albert Camus provides a fresh perspective on how to view Sisyphus. Although used as a metaphor for futile activity, Camus argues that the "struggle itself toward the heights is enough to fill a man's heart." He also explains how valuable it is to face the absurdity of life the modern worker has to live with, and to remember that "no fate is insurmountable by scorn." His article is also a reminder that life is a series of dips that we have to endure. Seth mentions in his interview with Guy Kawasaki that But the "book is about investment and effort, in doing things not just for the pleasure of doing them but because you expect something in return."
I tend to side more with Camus's method of learning how to embrace the dip not because of the gains you might get, but because it is an inevitable part of life and work. If you start embracing (and loving) the dip, you can easily use Seth's arguments to choose the right ones to engage in.
My criticism is that Seth says that we should choose which dips to engage in, as if it is always up to us. The dip is there, we always find ourselves in difficult situations, and we are always faced with challenges. He should have mentioned this also, while selling the reader on the importance of going into dips. 
I'm now faced with three ideas:
1. Chris Anderson's Long Tail, which shows that a large enough number of little niches, amounts to a total greater than the few hits.
2. Seth's dip, arguing that you need to be the best in the world (a hit not a miss) in order to really thrive. You have to be focused on the head of the graph instead of the tail.
3. My own idea that we should remember that small things amount to a considerable total, that being the best does have great benefits to it. But...
How can you be the best at something with out being average at the components of that "thing". More on that in "The Long Tail Person."

Don't underestimate the little dots that can be connected to make a meaningful total, and don't forget that dots are what make shapes. So go on and draw the best shapes in the world!

The Long Tail

I'm the kind of person who constantly needs intellectual stimulation. I always need to have long tail booka major mental adventure going on in my life. The more the adventure requires me to learn and discover new things, the better. The most boring times in my life, are the moments spent doing or talking about something I really mastered. You can really drive me crazy if you can put me in such a situation. This book is one such endeavor, if I may say. It's the kind of book that gives you a totally new direction to move in, and I'm quite comfortable doing this. Not only does it show you the untapped direction in which to go, the books explains how to make use of totally new markets, and how to understand, capitalize, and ,most importantly for me, enjoy the new worlds unfolding to us. There are numerous new tails created, and existing tails are elongating.
What exactly is the "long tail"?
long tail picture

According to Hellen Keller,"The world is moved not only by the mighty shoves of the heroes, but also by the aggregate of the tiny pushes of each honest worker." This, in a nutshell, is The Long Tail.

Hits and Misses

The culture and economy we are used to live in, depends on the Pareto Principle, more known as the 80-20 principle, which basically states that 80% of the results produced are from the "mighty shoves" of the mighty 20%. If the hits are the products, songs, movies etc. that make it to the top lists, the "misses" are the ones that missed them. A closer look on these two types of products shows that they only missed the shelves, and not necessarily the value we give them. Many products are valuable enough for us to buy them, but we didn't buy them because they were just not available, due to the tyranny of geography and physical constraints, as Chris Anderson explains.

The culture and economy we are used to live in, depends on the Pareto Principle, more known as the 80-20 principle, which basically states that 80% of the results produced are from the "mighty shoves" of the mighty 20%. If the hits are the products, songs, movies etc. that make it to the top lists, the "misses" are the ones that missed them. A closer look on these two types of products shows that they only missed the shelves, and not necessarily the value we give them. Many products are valuable enough for us to buy them, but we didn't buy them because they were just not available, due to the tyranny of geography and physical constraints, as Chris Anderson explains.

The Three Forces of The Long Tail

1. Democratize Production: The means of producing goods and services have been dramatically made easy with the new technologies. And since it is easy to produce almost anything (especially intellectual property) the challenge is in the mind of the producer. If you are creative and hard working, you can do some cool stuff.
The means of producing goods and services have been dramatically made easy with the new technologies. And since it is easy to produce almost anything (especially intellectual property) the challenge is in the mind of the producer. If you are creative and hard working, you can do some cool stuff.

2. Democratize Distribution: Making the misses available to whoever wants them, is a key to pushing demand down the tail. Online sales of less-known titles is one of the key drivers. Amazon is one of the prominent examples on this, where they have millions of titles that sell less, but together, they amount to a significant total.

3. Connect Supply and Demand: The ways in which we are making purchase decisions are dramatically changed by these forces. We have recommendation engines, mainly fueled by the history of people's past decisions. At the same time, those "long tail aggregators" are giving the chance for people to share their reviews, and post their comments for whichever product they have tried. This way, we can get a good amount of information about a certain product in minutes.
I was really surprised to know that Sears had a very long tail of products and an affiliate program back in the beginning of the twentieth century. My initial thought was that such a thing can only be facilitated through the Internet, especially with physical products. There is a detailed explanation of this in the beginning of the book.

Anderson goes on to explain the details of the tail, and its relation to the head. How it behaves in certain industries, and where it might best thrive.

The great thing about this new phenomenon is that it's not only showing a new way of doing things, this new way is right in the opposite direction of where we were heading in the past. Going for small niches is a really new concept, in contrast to "think big". The fact that the customers down the tail are people who have special requirements, also means that they are willing to pay a premium to get what they are looking for.
Another important empowerment that these forces provide, is the empowerment for user-generated-content. Again, the first thing that comes to my mind when talking about it, is intellectual content; videos, text, design etc. but there is a great example about LEGO and how they are enabling this. LEGO is giving anyone the option of designing their own pictures or models, uploading them to their website, and getting a map of how the bricks should draw this picture. There is more; this "product" is shipped to the creator, with the picture on the box. This also becomes one of the products that LEGO offer through their website, and they even pay some royalties for the creator of the product if it sells well. Wow!
There is also a great explanation of the long tail of articles, and Wikipedia. An interesting analogy was drawn between Wikipedia and evolution, and the fact that they work extremely well on the macro level, and not necessarily that well in every incident on the micro level. The open source model, makes it a great encyclopedia in terms of flexibility, or more importantly, resilience. There are millions of people contributing, and constantly the articles are updated and improved on by all of us. It's a great system, and it has this wonderful mechanism that runs it, but, that doesn't mean that you won't find crappy articles with very low quality. The best way to use Wikipedia? It is the starting point in your endeavor to understand something, and not the final definitive say on that particular topic. This approach resonates with what Squidoo is actually doing. You provide some links and short summaries related to something you know about, and give the user a starting point and a guide on how to proceed with their quest.

Although these new phenomena seem to just negate our old thinking about the world, they actually don't. The only thing they do, is that they put some limitations to the theories that we know. Einstein did not negate what Newton taught us. He just proved that these theories apply on the physical level. They just simply are not descriptive of the world on the quantum level.
A paradox seems to pop up when discussing the long tail, and the rise of niches as opposed to hits. Anderson challenges the theory that says that abundant choice is oppressive and leads to less sales. This is based on a study that showed that when people are given six types of jam to taste, they buy more than when they are presented with twenty four. The solution to this, are the recommendation engines. People's reviews about a certain product give the new comers a glimpse about how well this product is performing. So, if you want to choose the best jam, you can just ask Amazon to give you top selling ones.
But, doesn't that mean that we are going back to the hits? We are actually asking for the hits this way.
Chris's answer? This is a hit within a very small niche. The best selling jam, is a hit in the jam category and has nothing to do with food, or general merchandise. Now, a hit is really a meaningful thing, within that niche.
My own theory on this attempts to utilize a group of niche skills, each being average, and maybe the aggregate of these skills amounts to a high quality "long tail person".

There's a video discussion done about this book by Anderson, hosted by Google, where he also has an interesting Q&A session that talks about his book.

Slashing the Crap From Your Life by Adding More Slashes

This is a seriously inspiring video by two authors who have met because their books wereOne Person/Multiple Careers: A New Model for Work/Life Success extremely similar. This is also a part of the Authors@Google series.
Marci Alboher, author of One Person/Multiple Careers: A New Model for Work/Life Success and Tim Ferris, author of The 4-Hour work Week: Escape 9-5, Live Anywhere, and Join the New Rich talk about how to live and balance your life and career(s) and share really cool stories about people who are doing this. They also Escape 9-5, Live Anywhere, and Join the New Rich share how they themselves are doing this in their lives.
They validly questioned (threw away, and replaced) some of my basic assumptions about what can and what cannot be done. What should and what should not be approached as possible.
This is very important for me, because I'm always interested in two million things at one time, and this especially resonates with my idea of "The Long Tail Person".
A very important distinction was drawn by Tim, which I knew before but this time it sunk in more; the distinction between being busy and being productive. If you confine your thinking to your working hours, you will inevitably find ways of filling that time, and be "busy". If, on the other hand you really focus on what it is you are trying to achieve and do that, you might really be creating more time and space for the things that you want to do.
One of Tim's main ideas was to think about what you really want to do, and design everything around that.
"Well, what if you don't know what you want?" asked one of the people. Marci was actually "waiting" for that question, and they both shared some tips:

1. Go back to your childhood, which is the time you did things without being paid for doing them. "Interview your parents". This is a really nice and easy way of doing this. You immediately discover the things you would love to do when there is nothing you have to do.

2. Experimenting: taking classes that just seem to be interesting to you. This is actually how Marci changed her career from law to writing. She took a course on writing and found out that this something she would really love to do. Tim also points out some insights from his own experimentation. One of the most important is that the experiment is not the same as doing the work. Surfing two hours on Sunday is a lot different from surfing forty hours every week. Keep this in mind during the experiments. Is this something I would like to do throughout the week?

3. Pursuing happiness: Tim gives a very nice way of getting rid of the pursuit of happiness, because it's just a mental abstraction that might simply not mean anything. Instead, you should pursue excitement. Things that keep you awake at night, and make you really wonder how this might be possible. Another awakening realization for me (by Tim) was that you don't really need that much money to do the things that you want to do. He shared a cool anecdote about one of his friends, who wanted to work in a field he hated, just because if he worked hard enough for some years, he'd be making 3 - 5 million dollars a year. Tim's question,"what are you going to do with all that money?". His friend didn't have an immediate answer, he made up a goal about "having a long trip to Thailand". I could have been that friend. Actually I felt it was me talking. Time for action!

Wikinomics Explained

As part of Google's series "Authors@Google", the CEO Eric Schmidt has recorded an interview with Don Tapscott the coauthor of "Wikinomics: How Mass Collaboration Changes Everything". They discuss the main points in the book and talk about the massive changes we are living with, because of technologies that allow a huge number of unrelated people to collaborate in interesting and highly useful ways to produce real economic value.
A great example discussed is about a Goldcorp, company that specialized in gold mining. In this industry, the main asset a company owns, is the data they collected regarding gold and its locations. This company committed the unimaginable "sin" of disclosing all its data to the public, by posting it on their website, and asking people for help in finding gold. They would give a prize of $500,000 for the top 3 submissions.
To everybody's surprise, the company got several unrelated responses from unexpected fields. Chemists sharing chemical tests that help in finding gold, mathematicians and computer scientists contributing with algorithms that make things easier.
The company that was about to close down grew in value from $90M to $10B!
Another striking example is about the most difficult thing to manufacture: airplanes. Boeing took the concept to the extreme and manufactured a plane by creating an atmosphere of mass collaboration to create their new great product.

There is more about the book by Dan in his interview with

Can't wait to get a copy of the book!

Adsense and Blogging Secrets From the Pros

I enjoy writing, I love to learn, Web 2.0 stuff is just irresistable, and it's great to be able to make money out of all this.
So I've decided to learn everything there is to learn, reach out as close as possible (to people) and earn some bucks:)
It's been a while since I've been learning about the basics, trying many things, facing a lot of frustration, and feeling the exhilaration that comes with this great medium.
Last week, I bought "Six Figure Blogging" a course by Darren Rowse and Andy Wibbels. I am seriously considering exploring all the related materials there is to learn and implement.
I'm half way through, and had some important things considered and changed in this site. It seems promising, more interesting and fun.
I'll share my thoughts on the course when I finish and implement it.
What's next?
Joel Comm's "What Google Didn't Teach You About Making Money With AdSense". Lots of great resources come with it; a one-month free entrance to the coaching club, some exclusive downloads and software. Didn't read it yet, but it seems really advanced and fun to read.