Large N, small p (cancer, Netflix)

In addition to the first post, we can add two more ideas of small probability times a large number yielding a significant result.

In the first instance, our large N is t (time), and the small probability event is genetic mutations which lead to cancer. Jason Fung writes about mutations: “This small likelihood of success explains why cancer often takes decades to develop, and why cancer risk rises sharply in people over the age of forty-five.”

The second is an idea from Mario Cibelli about accumulating advantages. Cibelli told Patrick O’Shaughnessy that he visited a Netflix distribution center during their DVD heyday.

“I think what we saw essentially was an operation that was very, very hard to replicate. They had years and years of finding and bumping into bottlenecks and eliminating them, and getting more and more and more efficient. That would range from how labor was used, the lack of storage of DVDs. They actually didn’t store them anywhere, they always remained on the desks. The manager explained to us how the DVDs were always looking for a home. They weren’t trying to find the DVD that the home wanted, they would have the DVD in hand and say, “Hey, which home wants this?” To a bunch of machines that they bought that sorted the material that didn’t work, that destroyed a number of DVDs, and that they had to customize.”

Each obstacle was small, take many small improvements and you’ve got a business. Netflix’s small p large N effort was how they won the TiVo Race.

Large N Small p

Is it more likely for an infected football player to transmit a disease to their teammates or their competition? Adi Wyner:

"I would expect intrateam transmission by far. Not only huddle time, but the time on the bench, in the locker room, and while they travel. It’s a small chance of any given pairing but it’s lots of pairs. Anytime you multiply a large number by small odds you get a large number."

That’s via Wharton Moneyball and demonstrates the large N, small p principle. It’s the idea behind TikTok too. Ben Thompson said:

"What’s interesting thinking about Quibi and TikTok is that Quibi was such an arrogant idea, that professionally produced content is always going to be better. Are we sure about that? The vast majority of TikTok is garbage and that’s always the case with user generated content. But as it turns out, .1% of a massive, massive amount of content is super compelling. You find that one-percent not by being a picker, you find it by sourcing it."

Large N, small p is why something is always happening.