Travel budgets

Actions are the children of mindset and environment.

When running his document storage company, AJ Wasserstein created a travel budget. Budgets are good. Budgets are a design tool, and we are all designers.

Wasserstein’s budget wasn’t denominated in dollars, it was in days away from home

“One thing I did while working at Archives One was give myself a travel budget. I gave myself permission to travel a certain number of days a month. It wasn’t a financial budget, rather a nights-away-from-home budget. If I started to exceed that consistently, my role at the company needed to be cleaved and I had to hire someone to do part of what I was doing.” – AJ Wasserstein, Circle of Competence, June 2021

Wasserstein asked a different question. Rather than ask what was financially costly he asked what was socially costly and optimized for that. A lot of times we assume that the important is easily measured. Dollars? Yes. But other things too.

From field to city to car to circuit

This is a podcast episode covering the consumer journey from field to city to car to circuit.

The consumer journey has been one where a business shares information to a consumer depending where they are. That started at the farm with the creation of the Sears catalog, a moved to the city with the creation of stores, then moved to the car with the creation of malls and large big box centers like Walmart, and finally our story is at the point where it is on the Internet with online brand Zappos, Amazon, Warby Parker.

The selling, at least to the American consumer, is remarkably consistent. There has to be a way to talk directly to consumers whether in a store on the pages of a catalog or via an Instagram account. There has to be a way to get the product to the consumer, whether that is the new railway system, the rural mail delivery, or two day shipping.

This episode was a little less organized than normal and recorded outside. Thank you for your patience.

The podcast is available as Mike’s Notes: Apple, ListenNotes, or Overcast.

Curated Creativity

Broadly there are 3 ways to spend a day online.
– trends, the algorithm or human generated headlines
– feeds, the self selected sources
– search, the internet queries of Wikipedia articles, travel plans, and what-is-my-kid’s-teacher’s-email

Articulating the ways helps distinguish when we are, or aren’t in a helpful place. On days when it’s time to work it isn’t helpful to spend too long in the trends. Naming also helps us establish healthy habits. Jason Zweig uses the fire hoses and tea cups system.

The 3 ways aren’t good or bad. They are more helpful or less helpful depending on the work to be done. Here’s some help for the feed type of work, two curated podcast feeds.

Economics. Tyler Cowen is a wonderful thinker we have looked at many times: how to eat well, how to argue well (with yourself!), and how to consider incentives. Cowen is a podcast host and frequent guest but more importantly, he shares many potential podcast people on his blog Marginal Revolution.

Periodically I cull through the blog for the MR Mentions podcast feed. These are guests or ideas mentioned by Cowen. It’s not a comprehensive list and it runs through my own filter, but it is a way to think a bit more like an economist.

Behavioral Science. Rory Sutherland is a wonderful thinker too. We’ve probably looked at his ideas even more: the room or Zoom, marathon lottos, and ambiguity aversion are just some places his ideas percolate. Sutherland has hosted Nudgestock, a B.S. conference since 2014 (the presentations are on YouTube!), a great index of thinkers.

Periodically I cull through a Twitter list of Nudgestock guests to find podcast episodes for the Behavioral Listenings podcast feed.

The pitch. These feeds are free and both contain potentially valuable ideas. The main cost is the time to listen, however with the advantages of 1.5x speed, wireless headphones, asynchronous listening, and portability those costs are reduced. Plus there’s no psychological baggage (sunk costs) to make you stick around. This is my list, not yours, so passing on an episodes is a reflection of my (poor) choices.

Happy listening and cheers to the long-tail of content. Before the fire hose it felt good to “stay abreast”. In 2021 it’s about timing: what do I need to know and when. A good feed is one internet tool.

Free Meals

At the start of Dan Levy’s book Maxims for Thinking Analytically, a book about Richard Zeckhauser’s tools for thought, is this riddle: “Mary and Jim want to paint a room together. If Mary painted alone it would take her 2 hours, and if Jim painted alone it would take him 3 hours. How long would it take to paint the room if they paint together?”

It’s not 2.5 hours.

Zeckhauser’s first maxim is: “When you are having trouble getting your thinking straight, go to an extreme case”. We used this maxim to ask: was the Ohio vaccine lotto a good idea? And it probably was.

Danny Meyer uses a version of this maxim too. One of the most important factors for a restaurant’s success is the location. (Overall it’s a hard business). Meyer wants to avoid errors of commission. Even if a restaurant proves successful it is “stuck with” the location. So Danny explores many locations to find something that works and ask an extreme question:

“Sometimes a space says, don’t plant anything here, this place should not be a restaurant. The first question I ask myself when I look at a restaurant space is: would I want this even if it were free?” Danny Meyer, July 2021, The Knowledge Project

Another way to consider this kind of framing is the expression you couldn’t pay me to. One advantage to living in the south, where football rules the roost, is the access to football. If you like it that is. One friend uses you couldn’t pay me to to express her feeling about SEC football games, the same games where tickets can be hundreds of dollars.

Levy’s riddle is easy once we slow our thinking. Thinking fast we average the work, and get 2.5 hours. Thinking slow(er), like Zeckhauser, and we notice that Mary alone would take two hours. That’s the extreme.

F1 CAC

Customer Acquisition Costs might be the most fun business topic because it offers a lot of room for creativity and a CAC near zero makes the unit economics much easier.

One way to think of CAC is like a Nigerian Prince: how do I find my ‘customers’ cheaply so that the resource intensive activities are focused on the ones most likely to ‘buy’.

Via Business Breakdowns:

“This is probably the area where Liberty has done the most in the shortest amount of time, where what’s going on behind the scenes has changed quite a bit. They’re fine with paid TV but also want to make sure there is access to live TV to keep the F1 fan base engaged.” – Arman Gokgol-Kline

There is an opportunity cost to giving away content, but that must be balanced with the customer acquisition costs down the line.

We’ve highlighted some fun CAC ideas like viral marketing (Zillow), email signatures (Hotmail), coupons (Netflix, AOL) and bundling and reframing (McDonald Happy Meal). One addition here is beauty.

This isn’t brand new. One insight that led to AOL CD proliferation was that people will open (direct) mail that feels substantial. Rory Sutherland harks on this too: no one has ever thrown away a substantial 9 x 12 package addressed to them.

This is Todd Synder’s angle. His catalogs are purposefully beautiful and meant to be left out. The aim, said Snyder, is to have the recipient’s partner see it and say something like ‘You would look great in these clothes’. This catalog angle is decades old. Sears supposedly make their catalog’s footprints slightly smaller than the competitors so that when the housewife tidied up, the Sears one came out on top.

It’s easy (but not cheap) to buy customers. It’s not simple (or easy) to have customers find you. But a low CAC has a high value.

Thanks to Tren Griffin for repeating the ideas of CAC and LTV so many times they’re a well-worn mental model.

‘Good’ numbers

This summer my kids were not going to watch too much YouTube. But, things changed. My eleven-year-old got into Moriah Elizabeth, a YouTuber into decorating and painting. Her channel is good. It’s interesting and entertaining. It, for me, avoids the overreactions and clickbait present on YouTube. She’s super positive and if not teaching kids how to be creative at least she shows them that it’s okay to mess up, laugh it off, and try again.

She wrote a book, Create this Book where each page is a prompt to draw only with polka dots, or draw a structure, or draw something without lifting your pencil from the page. We bought it. It’s fun. We do a page a day and laugh at or admire our drawings after.

This is to say that not all screen time is equal. But it’s easy to count and present equally. Apple offers a Sunday notification that your screen time was higher/lower than last week. That’s not really helpful. It would be like if a refrigerator displayed the calories consumed but not what exactly someone ate.

It also happens, says Betsey Stevenson, at the macro level during each jobs report. There’s the unemployment number and the initial response is that more workers are better. However it kinda depends on the timescale.

“When we see the ‘quits’ numbers really high that seems bad. In the short run we’re going to see fewer jobs. But it’s actually an optimistic time.” – @BetseyStevenson The Ezra Klein Show

People tend to quit their jobs when times are good and the next job is immediate. As people move about in the economy it follows that wherever they land will probably be a better fit, a win-win for everyone. But that’s hard to quantify.

One way to flip this problem is to restructure the counts. Basketball coach Todd Golden will redraw the lines on a basketball court. If a player shoots from inside the arc it’s worth one point. Shots outside the arch are worth four. That’s clever counting. Restructuring the way a player perceives the points is a way to find the ‘good’ numbers.

Fire hoses and tea cups

There are three ways to spend your days online. The broadest consumption of information is the Trend. A curated collection of information is the Feed. A laser focus is the Search. The best way depends on the situation. An ‘end of’ moment has more Search. A start has more Trend.

It’s not simple to know which way to spend a day but Jason Zweig beautifully addresses the balance of the three ways, the feeling of FOMO, and offering tactical advice on how to spend your day.

“If you’re drinking from a fire hose, which we all are, then the only sensible thing you can do is let it run. There’s no point in trying to put your face in front of the fire hose and open your mouth as wide as you can and take it all in. What I do is let the fire hose run and then once or twice a day take a little tea cup and dip it into the fire hose and pull it out and see if I like what I found.” – @JasonZweigWSJ, The Long View

This style of checking in feels slow. But then again, what does the work need? “Any recommendation to take action,” Zweig told Shane Parrish, “has to be compelling enough to overcome the inherent intrinsic advantage of just sitting there.” We design our own performance architecture and metaphors like fire hoses and tea cups helps us think — at least like Jason Zweig.

Landslides

One idea (Rory Sutherland and Nassim Taleb talk about it most) that’s perpetually interesting is that in real life 2 x 5 does not equal 5 x 2. One perk of Central Florida is the theme park day trip. Going to the theme parks seven days during the year is different from a seven day vacation once a year.

The heart of this idea is the balance of effect and time. Sun-skin damage is like this. It’s much worse to get sun burnt twice a year than it is to get the equivalent amount of sun spread over many days outside. Stress follows this pattern as well, and sleeping on it tends to always make things better.

This (via Reddit) is the best visual representation of the idea. The same amount of material flows down but it reaches the town at different times. We used to live in Athens Ohio which would periodically flood and it was the same idea: effect over time. Five inches of rain in one day was not equal to one inch of rain over five days.

Marc Andreessen commented on this too with regards to the culture of work: “I’ve never really got the water cooler conversation thing at the office. Maybe it’s because I’m too introverted but I always thought the water cooler conversations were so facile, light, and substance free…I wonder if the in-person setting of an off-site, over a meal, over a drink where we aren’t under pressure or in between meetings or emails, where we actually get to know somebody might actually create much stronger relationships than someone you see at the water cooler everyday.

If the mechanism is effect over time, we can consider how to extend, delay, compress, or shift some impact in time.

Liberty addressed this in edition #149 regarding self-driving cars: “If they’re all communicating at very low latencies, it’s trivial to make micro-adjustments to avoid animals, and all other cars around would know what your car is planning on doing before it does it…To a computer, it’s all happening in super-super-slow motion.”

March 28, 2022 update: This idea continues in the 20,000×1!=1×20,000 post.

Not just OK OKRs

Sarah Tavel told Share Parrish:

“At Pinterest our growth team decided their OKR was monthly active users, a lowest common denominator thing. But if you choose the wrong metric you end up optimizing for the wrong thing, you’ll build the wrong features. Startups are incredibly resource constrained and you waste a lot when you focus on the wrong things. When the team realized this and changed the OKR to Weekly-Active-Pinners the entire roadmapped changed and we were able to serve the users much more successfully.” – @SarahTavel The Knowledge Project.

Tavel’s quote could be about 2000s baseball as well. The early days of baseball Moneyball were an era of what Tavel calls vanity metrics. At one point in the Michael Lewis bestseller, protagonist Billy Beane yells: We aren’t selling jeans! His point was that classic metrics like hits, home runs, or even body-type weren’t the optimizations he was looking for.

The problem that Tavel’s and Beane’s teams faced was a data collection problem. These metrics were mostly right and easy to collect.

“I have an allergy for vanity metrics. I can see a vanity metric a mile away. It comes down to intellectual rigor and being honest with yourself: what are you measuring and is it the right long term thing?” Sarah Tavel

Really wrong metrics push behavior in absurd directions. For instance, records used to earn certifications (Platinum, Gold, etc.) based on shipments not sales. Sgt. Pepper’s Lonely Hearts Club Band soundtrack (1978) was a Platinum album but was a sales bust. That’s what happens with an OKR based on shipments, not sales.

To their credit, the RIAA changed the rules for certifications in 1979. That’s what Beane did too. Tavel too. It’s a good reminder to ask: am I using this information because it is helpful or easy?


Moneyball might be the best way to win in sports but sports is a story and stories need narrative. I loved the Tim Duncan Spurs but the media didn’t. It’s why there’s only one honest sport.

Weekly active pinners? Hold my beer.

Earned or eligible?

“We were trying to motivate vets to take advantage of an education employment benefit that they were entitled to after returning to the United States after their time serving in the military overseas. The office of Veterans Affairs had very little budget and could only send one email to veterans to market this program…We changed just one word in the email. Instead of telling vets they were eligible for the program, we reminded them that they had earned it through their years of service.” – Maya Shankar, Inside the Nudge Unit

Another way: a vaccination dose has been reserved for you.

Behavioral scientists call this the endowment effect, all things being equal we value the thing we have more than the alternative.

Cade Massey observed (2018) this in the NFL. One year a team would refuse to trade down, noting the value of a high draft pick, but the next year refuse to trade up, noting the value of multiple lower picks. All things equal is never quite true so the question is how unequal is this case?

The first step to any problem is admission and articulation. We had a derelict iMac on our kitchen desk for a long time. A few times a year the kids played Roblox and sometimes it streamed music. One day I logged in to the Apple trade-in program and discovered it was worth $240. Click, fill, submit the form and three days later a box showed up. Pack, seal, ship. Ten days on I had an Apple gift card. There’s no way I would spend $240 on an old iMac and so trading it in was an easy exchange.

If that was the whole story.

You see, this was the second time I did this. Almost two years early I did the same thing. Click, fill, submit. The box came, I procrastinated and the return, recycle, and reward never came. Why not? The transaction costs.

The endowment effect is a helpful human habit because it shields the owner from transaction costs. Exchanges have middle-men, asymmetric information, ambiguity, and egos. But words like ‘reserved’ and ‘earned’ reduce some of that mental accounting.


Another way to think about this is to ask is this a compromise or a coin flip??