This time *is* different.

This is a post from the POV40IQ email. These are your mental stretch breaks. 

“This time is different,” is often more wrong than right.

But sometimes, “this time is different” is.

This came up in the Super Pumped book about Uber. What made 2008-start-ups different from 1998-start-ups were new tools. Specifically, author Mike Isaac points out; AWS servers, consumers’ online habits (half of all homes paid for broadband), and the iPhone. That new environment meant that Uber had to do a lot to succeed, but not as much as companies of the previous generation.

Think about sports odds. Forget one team being better (in some metric), and instead, think of even odds. This highlights the importance of a bye round. A team with a first-round bye has the same chance of winning ‘both’ games as a team that’s a 70/30 favorite but with two games to play.

Tom Brady’s playoff record isn’t really the official 30-11 but rather 42-11. By winning so many games in the regular season, and earning byes, Brady effectively won twelve first-round playoff games.

This time might really be different if a business needs fewer flips of a coin. Uber succeeded because they needed less to go right.


FIRE Figures

While surveys are sometimes off, they can be helpful. Based on the data from 1380 (ninety percent men) FIRE participants, via Reddit, here are a few findings. Though all we can say for certain might be that men who follow FIRE fill out Reddit surveys.

  • Average salary household salary is $143,500, median is $104,000.
  • Average mortgage is $94,000, median is zero.
  • Average investment portfolio (everything) is $380,000, median is $100,000.
  • Average savings rate is 46%, median is 50%.

Part-of-the-reason that personal finance is difficult is the lack of experience making large purchases. A wise friend once told me how she counseled her her younger colleagues about bonuses: avoid the three-r’s, rims, rocks, and racks. Morgan Housel offers the same advice noting how homes, educations, and vehicles make up a huge chunk of a person’s budget.

The FIRE folks figured this out. Whereas the national average (and national suggestion) spend on homes is about about 29%, FIRE folks only spend about 10% on housing.

There are a lot of ways to be efficient. Make a left across traffic to buy cheaper gas. Stock up on groceries during a sale. But these are often regular and salient. However these “daily lattes” really don’t matter.

If someone spends less on the big (non-salient cost) things, they’ll probably be fine financially. 

Source: Google Docs.


Baseline data

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One of the coronavirus problems, one of any system’s problems, is lack of good data. When data is precise and simple it’s just a math problem. This is why we have to gamble with coronavirus.

In mid-March I started to feel kinda ill. Did I have it? Everything pointed to yes.

I’d traveled through airports. I felt congested and achy. The news talked more about coronavirus than allergies. Wait. What? The noise of the news made me overlook the color of my car, which was a nicely tinged yellow thanks to an above average pollen count in central Florida. 

My problem was that the ‘fifth vital sign’ had overtaken all the others. Or put differently, the only data I was using was highly subjective. Instead of continuing my confoundedness I started counting. 


Regularly tracking my temperature showed nothing to worry about.

The other potential problem at the the time was toilet paper. 

Well before we were storming stores and short sheets I had stocked up. But watching the paper pandemonium I had no idea how long our stockpiles would last. So, I counted. Our  conservative count is two rolls per person per month. Prior to counting, I’d never have known.

Now do emergency funds

Good data is an objective tool to use alongside the subjective. If we kinda feel ill, we can take temperatures. If we see toilet paper rolling out of stores, we can use a rule of thumb. If we’re worried about finances, we can compare spending to savings. Good data is the base rate, our adjustments are the subjective. 

In any quantitative field three things matter: counts, computations, and communications.

Without accurate counts, we know nothing. 

Without accurate counts and computations, we infer nothing. 

Without accurate counts, computations, and communications, we do nothing. 

Sometimes we jump the gun. We build a model and share it to the world. #dataisbeautiful. Sometimes though we just need to start at the beginning and count. 

Thanks for reading. 


Temperature Design

From the daily POV40IQ email. The idea is that a change in POV can be worth forty IQ

Here’s a business idea. Take a piece of fitness equipment. Make some updates. Attach a monitor and wifi card. Offer a subscription fitness package (recurring revenue!).

Peloton is an amazing business. They took something people readily joked was for hanging clothes and collecting dust, upped the price, and upended long-established equipment manufactures.

One part of their success was design.

But not of the stuff.

Of the people.

In a tangent on the Daring Fireball podcast, Ben Thompson and John Gruber said about temperature scales:

(Gruber) “I staunchly believe that Fahrenheit is the better scale for weather because it’s based on the human condition. Who gives a crap about what the boiling point of water is, it’s the most ridiculous thing I’ve ever heard in my life.”

(Thompson) “The other thing is that Celsius is not precise enough. In the car it adjusts it by point-five because a single degree of celsius is too much for the car. Fahrenheit is more finely grained in a positive way.”

Fahrenheit is easier for humans to use. Peloton is easier for humans to use.

For individuals in organizations, the goal is to make the Job To Be Done as easy as possible.

Note, I’m not taking anymore JTBD clients right now, but you can read an overview of the approach.


Book Review: Schtick to Business

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Peter McGraw and Shane Mauss joined up to write Schtick to Business, a pop-science-pop-culture look at the ways comedians can force business people to see things with fresh eyes. While most books should be blog posts, this one felt about right.

McGraw, and it’s mostly McGraw’s voice, focuses on the idea that business is mostly hunting, then harvesting. Businesses exist to find areas of need (hunt) and then serve customers over those needs (harvest). Business owners are collar-shirt-wearing truffle hunters.

Typically, and where comedians excel, is in the hunting part. It’s finding the Zero to One ideas that make the difficult act of business slightly easier. McGraw writes that you won’t be funnier after reading the book, but “I want you to think funny. That is, I want you to start thinking differently.”

When we say that people aren’t creative, we’re saying that we err towards confirmation bias, myopia, and narrow thinking. We will always do education a certain way because that’s the way we do eduction. Well, until something happens (see: a quarantine education).

Part-of-the-reason creativity is missing is career risk. McGraw’s solution to this is shitstorming. It’s brainstorming, but inverted. Instead of coming up with good ideas, a group comes up with bad ones. This isn’t necessarily a waste of time because sometimes bad ideas can lead to good ideas. Sometimes changing one part of a bad idea, is a great idea.

For example, how does an investment advisor in a medium-size town get more clients? Her weaknesses include lack of resources in staffing, lack of high-income-residents, lack of marketing resources, lack of continuing education opportunities, and so on.

However, those same drawbacks can be advantages. Chuck Akre likes being in a small town with one stoplight. Investors want LPs that stick with them. Inverting the question leads us to avenues of advantage. Jokes are a kind of inversion.

“My mom has learned everything from Martha Stewart, about cooking, and cleaning, and withholding affection.” Nikki Glaser

Comedians see the world differently and it’s why we’ve looked at so many of them; Judd Apatow, Jenna Fischer, and Penn Jillette for example.

Once a comedian hunts down a new idea they need to harvest it and McGraw gives tools and tips for that but it’s mostly just boils down to ‘work really hard and maybe get lucky.’ That’s business.

Words mean competition. Once there is a category like ‘theme-park-vacation’ or ‘miles-per-gallon’ every Tom, Dick, and Sally can compete on that feature. Making it salient means consumer will compare on it—even if it doesn’t really matter to their decision making.

When stand up stand-up comedians work on their set; writing observations, testing jokes, and refining material they are hunting innovation. They are looking for something new. It’s creative.

Then, for a very brief time, for a very fortunate few, they get to harvest and share their ‘set’. Comedy, Luisa Diez told McGraw on his podcast, is the fastest art form. Comedians are inspired, share, then a joke expire. Comedy is the fruit fly of the hunt to harvest dichotomy.

Business owners have a longer cadence, but they can learn from comedians. Some will be inspired from McGraw’s book. Most will laugh. I did.


Personal Finance Research #1

cash coins money pattern
Photo by Pixabay on

What’s so interesting about decision making is the variability. Change a condition change an outcome. Here are a few examples.

What would you do with $500? A grain-of-salt study because it asks about what people say they’ll do rather than what they will do. Notable is the role of time and quantities regarding promising windfalls.

They hypothetical prompt led one-in-five to say they would spend nearly five-hundred dollars. As the amounts offered increased, the amount spent increased, mostly in non-durable things. However, if people were promised the amount was coming in three months, seven-in-ten of that twenty percent said they would not ramp up spending.

Takeaway: to stimulate spending send larger sums faster. 

In the red, the effects of color in investing. Thanks to Dan Egan for assisting researchers on the effect of color on investing. Through evolution and culture, people associate certain colors with certain meanings. To most Americans, red is bad. When researchers showed one anonymized stock line in red, rather than black, propensity to purchase fell by twenty-percent.

Communication with (LPs, or any stakeholder) is crucial and getting buy-in makes cutting checks easier. To paraphrase Seth Klarman, work with people who cash checks when you write them and write checks when you ask for them.

Takeaway: regular, consistent communication matters a lot, even in color. 

Financial Incentives Beat Social Norms. Part of the problem of any ‘free’ service is getting people to use it. If needs aren’t salient people don’t do it. In this study, researchers looked at how to incentivize employees to select a 401k strategy.  When researchers offered a chance to win a ~$25 gift card, employees logged in and investigated their plan options. That outperformed all social norm conditions.

Takeaway: whether dollars or feelings, incentives matter.  In this case dollars proved more effective. 

Failure to Refinance. Rightly, Tom noted that refinancing a home is well past dealing with credit card debt but these findings fit with the idea of salience affecting behavior.

Researchers looked at how much people might save if they were to refinance their home. On average it was $160 per month. Even conservative estimates around taxes, moves, and options yielded re-fi savings over one-hundred-dollars each month.

Taking their research to the street, the researchers mailed homeowners a letter offering help (and no upfront costs, those would be rolled into the new loan) to no avail. A quarter failed to open he mail, a third planned to call but didn’t, and a third didn’t think the savings were worth it.

Takeaway: the less everyday salience a behavior has, the more effort it takes to make it seem important. 

Businesses exist to serve customers. Bob Moesta’s JTBD (my overview) framework (push, pull, inertia, anxieties) offers a way to see things from the customer’s perceptive. Let’s test that framework using the re-fi ideas.

  • Push. Often the current situation works—or else people would have already changed. It easy to think that a current budget, just is the budget. Things, are fine.
  • Pull. How much does a customer want to make the change? Refinancing a home falls prey to the ‘Gas Price Delusion.’ Things that are salient, like filling up the tank and seeing price changes in two-foot numbers, matter a lot relatively but not a lot absolutely. Refinancing a home mortgage matters could be a large budget slice, but it’s also a quiet one.
  • Anxieties. Will a re-fi affect my credit? How much is it *really* worth? What if I do change my choice to live here long-term? There’s probably a larger emotional weight on a place of residence than on most anything else.
  • Inertia. It’s easy to just-keep-paying the mortgage. What would motivate someone to research rates, apply to a lender, fill-out-paper-work, go through another inspection and so on.

Moesta’s Force Diagram along with some behavioral finance research shows that people are not rational and not rational for good reason. Conditions matter.






Fat Bottom Tails Make the Complex World Go Round

This is an attempt at understanding R0 (reproductive number) as more than a numbing number. View these notes as less definitive. 

In his (2014) paper Risking It All: Why are public health authorities not concerned about Ebola in the US?, Yaneer Bar-Yam writes about why R0 isn’t an even distribution.

One April report noted the coronavirus reproductive number was 5.7 but offered a range of 3.8-8.9. In January the estimate was 2.6. There’s many reasons but one is that the reproductive number varies by the individual in the network.

Humans form the same (power-law graphed) networks over and over again. In research about Wikipedia edits, the graphs of posts per user was nearly identical across languages. It holds across time too, we can imagine that church members knew their parson but not every other member. It’s on TV too.


Image from Funkhauser.

These networks are so common, they may be part of our evolution, like ten fingers. Nicholas Christakis said, “Maybe natural selection had something to do with the topology of human networks.”

Christakis looks at networks to seed interventions like a farmer who avoids the arid or soaked parts of a his field. In lab research, Christakis found that when one person is nice to another person (via monetary rewards) then that person is nicer to the next. Courtesy is contagious.

In other studies, Christakis changed the visibility of charity (or selfishness) and the  contagion changed too. Visibility of inequality mattered a lot, unseen inequality mattered very little. That’s kinda interesting.

Christakis has found three features which influence how things spread through networks.

  1. Connections, more lines between hubs
  2. Contagions, faster spread between hubs
  3. Positions, different originations hubs

If Larry David gets an idea for his television show and he wants Julia Louis-Dreyfus to guest star he can ask her (#1), but if it’s someone he doesn’t know he’ll have ‘his people call your people’. He could pitch Julia via text (#2) or write her a letter. If it’s Jeff Garlin that has the idea and not Larry David, (#3) then the idea has to wind through Larry to get onto the show.

A real example of virality is the Zillow Zestimate. Co-founder Rich Barton wanted to advertise. That had worked for Barton at Expedia. But Bill Gurley said, “If you’re buying ads to sells ads, then you’re arbitraging traffic and that dog don’t hunt very long.” Barton wanted to focus on spreading the message (#3) far and wide. What worked better was creating something people would share (#2) among themselves.

Bar-Yam warns about an average R0 when he writes about Ebola:

“However, in a complex interdependent society it is possible for the actual number due to a single individual to dramatically differ from the average number, with severe consequences for the ability to contain an outbreak when it is just beginning.”

Ebola needs to be a disease of more concern, he wrote in 2014, because the prediction models used the connections, contagions, and positions of Africa — a different structure. “One person is not likely to be in close contact with much more than about 10 or 20 family members.” That is, the rural African figures for 1, 2, and 3 are quite different from the urban African figures. “In urban areas in Africa and in the US, the nature of the contact network is different.”

Ebola is a hot virus and should be treated with extreme caution. Richard Preston’s book, The Hot Zone is about the mid-90s almost crisis when the Ebola virus was spreading through the air in a monkey research facility just outside of Washington D.C.

(Here’s Preston in 2019)

In the book Preston writes about the history of research. Recalling one trip in the mid-80s:

“Occasionally they (researchers) came to villages, and at each village they encountered a roadblock of fallen trees. Having had centuries of experience with the smallpox virus, the village elders had instituted their own methods for controlling the virus, according to their received wisdom, which was to cut their villages off from the world, to protect their people from a raging plague. It was reverse quarantine, an ancient practice in Africa, where a village bars itself from strangers during a time of disease, and drives away outsiders who appear.”

Some strands of Ebola pass through he air (#2). Some do not. African villages follow the precautionary principle.

Thanks to Tim H and Tim B for the suggestions and trailheads for this post. For thinking about position (#3) check out the Friendship Paradox


Nearby Solutions

Solutions to your problems may not be under your nose but they’re probably not further than next door, next block tops. 

Creative ideas work for two reasons, neither of which is inherent creativeness.

  1. There’s an untapped JTBD. Consumers have a latent need. Current solutions are ‘fine’.
  2. There’s limited competition for a new product. But the market responds rapidly, and similar people in similar places at similar times make similar things.

One way to wrangle a creative idea is to find areas where something is already being done but not done in your particular industry. There’s only so many things consumers need; ease, trust, consistency, etc. It’s likely that a creative solution for you is old hat to someone else. 

Scott Alexander brought this up writing about the Amish health system. There are multiple reasons the Amish system is more cost effective than the English (non-Amish-but-American) system, but one is how they’ve dealt with the costs.

From Alexander:

“Much of the increase in health care costs is “administrative expenses”, and much of these administrative expenses is hiring an army of lawyers, clerks, and billing professionals to thwart insurance companies’ attempts to cheat their way out of paying. If you are an honorable Amish person and the hospital knows you will pay your bill on time with zero fuss, they can waive all this.”


“Doctors around Amish country know this, and give them the medically indicated level of care instead of practicing “defensive medicine”. If Amish people ask their doctors to be financially considerate – for example, let them leave the hospital a little early – their doctors will usually say yes, whereas your doctor would say no because you could sue them if anything went wrong.” 

Amish medicine costs less because it’s less costly to provide.


But this obviousness was SoFi’s insight.

When SoFi started, the company looked at the loan default rates across a variety of metrics. Where did someone go to college? How much money do they earn? What degree does this person have? Which default more, art or vocational degrees? (Art). SoFi realized that some people defaulted less and paid promptly more. With lower costs for collections, SoFi could offer these customers a better rate. 

 Waitress At A Lunch Counter To Customer. 
Food Wood Print featuring the drawing We Use The Cheapest Ingredients And Pass by Robert Weber

This can be any insurance that’s sliced and diced. And it’s been happening all along.

What’s common between the Amish, the SoFi Henrys, and homes in floodplains since 1968? Legibility. 

We don’t know a solution exists until we see it.

Tony Hsieh succeeded enormously in the early days of the internet. Before joining Zappos, Hsieh sold an advertising network to Microsoft for hundreds of millions. Like anyone else who’s young, wealthy, and (maybe) smart, Hsieh started angel investing. Which is where he met Nick Swinmurn. 

It’s 1999. Everything internet was hot. It’s the year Webvan started taking orders for groceries in San Francisco. We can imagine Swinmurn meeting Hsieh.

‘Footwear is a forty-billion-dollar a year market and there’s no good way to buy shoes online.’ 

‘Of course, why would someone buy shoes online?’

‘Because of the selection!’

‘I just don’t see it.’

‘It’s already happening!’

‘People are buying shoes without trying them on first?’


‘Prove it.’

‘Have you ever opened a catalog?’


‘Weren’t shoes in there?’


‘There you go.’

‘Sure, but how many?’

‘Right now, five percent.’

Hsieh’s problem had already been solved. Now he just had to solve it better—and he did, selling Zappos to Amazon a decade later. 

During the coronavirus quarantine (or whatever we’re calling this) there’s been a lot of trouble with the data. Part of the problem is a collection issue. But part of the problem is a heterogeneity issue. The data is fine it’s just that the conditions are different. There’s culture, ethnicity, practice, government and so on. It’s hard to compare one place to another. 

But what makes the pandemic devilishly confusing makes business slightly easier. Your answers are out there. 

Note, in a related post we addressed this idea through sports. Our Jenn Hyman post addressed this too. Thank you for reading.


Button Skills


My daughter made this.

The button popped off my pants. Not due to quarantine snacking so much as use. These shorts are so old that the faded parts are a different hue from the non-faded portions.

I found the button separated from the shorts in the bottom of our washing machine. I put both aside for a day and when I came back with needle and thread the button was gone. Now the button lives on as art.

We have a button jar and I found a grey one, instead of blue, and sewed it on the shorts. I’m not great at sewing, and my stitching is uneven, but it’s functional. Attaching the button took the shorts from waste to my waist. The small act of attaching the button made them useful.

A lot of life is probably like this.

There is some range of easy-to-acquire skills that are like sewing a button. Being able to save the function, if not the form, is helpful.

No code. Being able to build small recipes for scripts using a service like IFTTT.

Productivity. Setting up folders, filters, and canned responses in emails.

Cooking. Knowing how to make a few healthy, inexpensive, sustainable meals.

Home repair. Access to a basic set of tools and the understanding of how to use them

Personal health. Maintaining a body type that matches a lifestyle.

Personal wealth. Spending, saving, investing.

Interviewing. Listen to people and hear what they say.

When my daughters were little kids, the most common advice was to read to them. This was binary advice. Or, Just Do It. We did a lot of that. Just reading is probably a button skill too.

Though I learned to sew face masks, I can’t imagine learning to sew clothes. But knowing a little bit can certainly go a long way.

Thanks for reading, and don’t tell my wife these shorts were saved—again.

The POV40IQ email list has been restarted. If you’d like a short email each weekday you can sign up and read them. The idea is that a change in point-of-view is worth more than forty-IQ when solving a problem.


A Need to Know Basis

I was reading a journal article. Well, actually I was skimming it. I now skim articles because there is a lot I don’t need to know. I only know this because Tyler Cowen told me so.

When Cowen was asked how he can read so much he said something like, read for forty years. The gist is that if you’ve read a lot about one subject area you get it. For example, research on personal finance often addresses the three big questions.

In addition to the literature review is the math. Often it’s the sigma of some Greek letters which I’ve long forgotten. It’s the chef sharing her recipe for the other chefs. I’m a diner and so I skip it.

What does someone need to know, has been top-of-mind as we continue our quarantine education. Or, how fast can someone learn to fly a helicopter?

A friend is moving to South Korea and she’s been learning the language. It’s difficult but she’s persistent. However, it’s not necessary. Augmented reality, the universality of English, and western culture mean that navigating a foreign country is easier. Speaking Korean has moved from the need/don’t-know box to the don’t-need/don’t-know box.

Another way to frame the question is to ask, what is just-in-time knowledge and what is warehouse knowledge?


The internet allows an infinite JIT system to be a few keystrokes away. Repetition moves tasks from left to right, neglect moves tasks from right to left.

I asked my twelve-year-old daughter what she thought sixth grade should teach: “How to read, not world history, and whatever your job requires.” My own world history is JIT knowledge.

Want the best paying jobs? Warehouse your science knowledge.

James Holzhauer said he read children’s books to compete on Jeopardy. If knowledge is Pareto, does that mean we can follow his lead?

We’ve settled on the mantra to learn facts, make things.