Slate Magazine has a great interview with Victor Niederhoffer based on an upcoming book by Kathryn Schultz, titled, Being Wrong: Adventures in the Margin of Error. I have referenced Niederhoffer and his blog, Daily Speculations, once before.

While the entire interview is fascinating, I particularly liked this passage:

…I think a much better view is that the stock market never rises unless there’s a wall of fear it has to climb. When the public is most frightened, only the strong are left, and that’s when the market is in the best possible hands. I call it taking out the canes. Whenever disaster strikes, the very sagacious wealthy people take their canes, and they hobble down from their stately mansions on Fifth Avenue, and they buy stocks to the extent of their bank balances, and then a week or two later, the market rises, they deposit the overplus in their accounts, invest it in blue-chip real estate, and retire back to their stately mansions. That’s probably the best way of making money, to be a specialist in panics. Whenever there’s panic hanging in the air, that’s a great time to invest.

The above reminds me of what I have heard was one of JFK’s favorite sayings:

When written in Chinese, the word “crisis” is composed of two characters. One represents danger and one represents opportunity.

From the most recent GOOD Magazine:

Esther Dyson notices the present in a way others don’t. Take a building, for example. “One will say it’s red with two stories,” she says. “Another will say it’s made out of wood, two hundred years old, with a pointed roof. And I will say, ‘Here’s the building. This is where the stresses are and here is where the floor is sagging.’”

Much of Dyson’s skill in spotting tensions can be traced back to her early economics studies at Harvard. “I felt it was a good way to understand the world. Economics is a fundamental mover, and it has helped me concentrate on the structure and dynamics and interactions of things.” She says one of the problems in business right now is its short-term thinking, which is spurred by the speed of the stock market. “When you can measure economic activity minute by minute, it makes it difficult, unfortunately, to not sacrifice long-term investment for short-term results.”

If it were up to Dyson, slowness would be invited into business and define gross domestic product differently, especially in relation to education and health care. “Our health-care system right now is all about repair. If you thought long-term, you’d be good to your body, which is good for the economy.”
Maybe the best way to slow down
is to sleep a little more, and pay more attention when you’re awake.

Dyson, a cosmonaut in training with a background in journalism and IT start-ups, is good to her body—and to her mind. She spends an hour swimming laps every morning while considering the things she didn’t have time for the day before. “It’s not about delaying thinking. It’s about assigning a time to things when I can give them my full attention.”

Sleep is also part of it, she says. “People aren’t getting enough. They say they were up late watching TV, but TV doesn’t force you to watch it. It’s a choice. Maybe the best way to slow down is to sleep a little more, and pay more attention when you’re awake.”

This past weekend while at Johns Hopkins for alumni council meetings I heard a lecture by highly esteemed Professor and Author, Dr. P.M. Forni. Dr. Forni studies and assesses the significance of civility, manners and politeness in contemporary society. I find Dr. Forni’s work fascinating. [The photo above is pat of a campaign adopted in Howard County, MD based on the principles of Dr. Forni's first book].

The Professor started with a story. Each fall, with his new crop of students, Dr. Forni holds a lunch where he asks one student to “pass him the salt.� Inevitably the student does just that: they pass him the salt.

Dr. Forni than asks the others what that student did wrong?

The correct answer is that you never pass only the salt – you also pass the pepper. Now to those of us familiar with Emily Post, this seems obvious. But what’s interesting is that the underlying logic of the rule is not at all about etiquette or conventions; it’s actually about ethics and compassion.

Thinking ahead to realize that the person may want to use both the salt and pepper is a subconscious effort to put anothers‘ needs ahead of our own. Passing both the salt and pepper is also done so that others who later want the salt and pepper need not chase two separate items around the table.

So what? Maybe etiquette isn’t totally arbitrary, but how does it really help you? Well, Dr. Forni’s findings strongly suggest that the people who are most successful in life are those who excel in social skills and “civility,â€� as opposed to say, IQ-level. In fact over time at a job, all else being equal, a person with superior social skills will ultimately progress further and faster than a person with higher IQ but less civility.

The good news is this: being a jerk is a choice we make and can change, IQ is not.

Also interesting was Dr. Forni’s observation that two circumstances contribute more than any other to the disintegration of civility: a) stress and b) anonymity. I thought this interesting as the web is certainly an environment where stress and anonymity run high and often in tandem. Blog comments and reviews are a great example of online environments where people are free to act like asses with no moral consequence.

Just something to ponder.

——You can order Dr. Forni’s first book here.

Want to See Something Cool? Check out this visual IQ test made by students at Yale University.

Apologies for my blogging absence. I have been cranking away on a few projects that have involved a bunch of travel and unfortunately its left me with little time.

I wanted to highlight a few of my favorite bookmarkers on Del.icio.us. These folks are really my lifeblood for inspiration. They are my private research army. Just as many people check their Google Reader daily, I constantly check my Del.icio.us network for updates. Often times these links and comments become the starting point for conversations and/or blog posts. Without my network, I would be decidedly less knowledgeable. I could go into detail here about each person, but instead, I encourage you to simply add them and then explore their collections for yourself:

5. Nivi
4. Bokardo
3. Jessesaves
2. Finnstones
1. Mediaeater

Jonathan Harris has launched his new project, The Whale Hunt, building on his use of the web as a medium for story telling.

I love Jonathan’s work, especially We Feel Fine.org.

In fact, I believe We Feel Fine has game changing potential as a next-generation data mining tool. The future possibilities of such technology are simultaneously frightening and exhilarating. Since We Feel Fine was intended as a piece of art I think the value of its technology and application have never been given due credit and I hope to change this!

Before reading further, I highly suggest playing with We Feel Fine and also listening to Jonathan’s Ted Talk where he explains his creation and its intended uses.

Next, consider a few facts: digital, non-verbal communications are growing exponentially (from Twitter to Facebook status updates to blog posts). In addition, people are embracing these forms of communication in droves and also becoming increasingly comfortable with exposing themselves in an unprotected and unrestricted manner. Search engines continue to index all these digital interactions, mining both data and emotions.

In essence, We Feel Fine is one of the most complex and sophisticated real-time search applications in existence. What it does is to offer a snapshot into the emotional state of groups of people, sortable by everything from geographical to gender.

To understand its potential, consider this scenario: A government uses a more sophisticated platform than We Feel Fine to harvest and data mine the emotional reaction of key demographics and regional populations to events such as terrorist attacks and/or political campaigns. Then using regression analysis to analyze the emotional state of said populations pre and post event, we have the data to create uber predictive models. These emotional models could then be used to strategically plan initial air strikes during a war, or to spin political announcements during particularly opportune times.

Scary and real all at the same time. I think there is much more to We Feel Fine than appears on the surface, hidden beneath its amazing flash and brilliant design. The question is: does anyone else see the same thing?

You might also enjoy my posts on Information Day Trading and Information Sifting. Also be sure to check out a use-case of We Feel Fine from the 2008 Presidential Race

There are some very interesting posts going around that are starting to touch on something that became very apparent to me yesterday ’“ history is repeating itself. Normally I consider my parents a lost-cause when it comes to social media and web 2.0, but this weekend my father blew me away with some off-hand comments about what I had thought were the latest in innovative ’2.0 thinking’ and architecture.

When my father was younger he was a hippie — one of many. My dad was so swayed by the ideas of the then ‘counterculture’ that he packed up his bags and hitchhiked to the epicenter of hippie counterculture activity; San Francisco. Here is where it gets interesting. While my generation often assumes our parents were simply out smoking dope and tossing Frisbees, it turns out that much of the 1960′s movement was rooted in the same concepts we are talking about now in the 2.0 space: social networks, community building, and innovative technology (gasp!).

Specifically my father mentioned the Whole Earth Catalog a publication he likened to a Google; a publication to help “find inspiration and shape one’s own customized environment.” Well, doing some research into this — some other notables have made the same connection (see end of speech). Not only that, but the Catalog was founded by Stewart Brand the creator of the first online community called Whole Earth ‘Lectronic Link (or The WELL). What’s more, Stewart’s partner-in-crime was author Kevin Kelly who also happens to be founding editor of Wired Magazine. Oh and all this happened in Cali. Thus when Fred Wilson states in relation to California, I felt that Kurt was writing about today instead of 150 years ago’ he knows what he’s talking about.

So my father is out in California at the epicenter of all this community building. As the viral philosophies spread, events like Woodstock which attracted 500,000+ (makes Burning Man look like a joke) came to inspire a nation of young people who thought they could design a better culture of open communications in the face of oppressive politics. Wow, sound familiar?

Listen to this classic 1960′s rhetoric:

“Today, working hard is about taking apparent risk. It’s hard work to tell your boss that he’s being intellectually and emotionally lazy. As the economy plods along, many of us are choosing to take the easy way out. We’re going to work for the Man, letting him do the hard work while we work the long hours [we must take risks] Not a crazy risk like betting the entire company on an untested product. No, an apparent risk: something that the competition believe is unsafe but that you realize is far more conservative than sticking with the status quo.”

Wrong! That was written yesterday on a blog by none other than Seth Godin!

The thing I find particularly interesting is that while in the 60′s many of these same concepts existed, they were absent a monetizable model. However in 2007, thanks to the internet and 2.0 tools, finance people can monetize all this revolutionary talk and entrepreneurs can act on it. Still, the underlying themes are extremely similar.

So what happened to those crazy hippies? What happened to my dad?

Well my father certainly kept up his notions of community building, but did so from a non-tech and non-profit standpoint.

What about the merry pranksters? Well, Stewart Brand now lives on a Tugboat in Sausalito and is surrounded by a hand-picked crop of innovative intellectual geniuses (“remarkable people“) at the Global Business Network — an organization that may answer Brad Feld’s questions as to the whereabouts of Galt’s Gulch. The best part is that these guys are not yet done with their revolutionizing. Through the Long Now Foundation the former hippies work on more modest goals: “We hope to creatively foster responsibility in the framework of the next 10,000 years.”

…And here we are in 2007 thinking history ‘repeating itself’ only applies to bubbles…

Love it! Thanks Dad!

More to come!
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As the New York Times recently highlighted, a business student (or CEO’s) best friend is a well-constructed library. The following are the books that I highly recommend to any current, aspiring, or ’damn, why did I go to law school!’ MBA student. Certain titles may be a bit ‘atypical’ at first glance; indeed they are anything but.

[Note: each title links to the listing on Amazon.com]

The Power of Productivity

Atlas Shrugged

Against the Gods

The Little Prince

WSJ Guide to Understanding Money & Investing

Wikinomics

The Art of War

The Long Tail

George Soros on Globalization

When Genius Failed

Guns Germs & Steel

Beating the Street

The Pyramid Principle

Innovator’s Dilemma

Art of the Start

Tufte on Envisioning Information

Handbook of Alternative Investments

Apologies to my boys Cramer, Friedman and Welch. You’ll be in round two.

I have come to the conclusion that there are three types of bloggers: Proactive, Reactive and Insight.

Proactive bloggers are people consistently posting original and innovative ideas. They may post about personal observations, research, develop theories, or keep online journals. A good example is Noah Kagan from Okdork. I enjoy Noah’s blog immensely because he doesn’t write about the same stuff everyone else does ’“ he develops original content.

Reactive bloggers are the people who provide value to readers by aggregating and hyper-linking. This is probably the least popular form of blogging because it provides (IMO) the least value to readers. The New York Times blogs are good examples.

Insight blogs are far and away the most popular as they combine Proactive and Reactive. An Insight blogger reacts to events, news, or analysis and then providing his or her own insight/opinion. The boundary between Insight blogs and the others can be minimal. For example, Valleywag posts a ton of original material and uses syntax to convey its insight (usually an opinion).

Why this matters.

It matters because knowing what type of blogger you are can help to develop your community and overall strategy. I tend to split between Proactive and Insight. Proactive is the most difficult because you must generate your own ideas. Insight is easier because you can simply react to happenings and opinions. However because of it’s ease, Insight is also the most popular, and thus, the most difficult to differentiate or find a niche.

Just my two cents ’“ what kind of blogger are you?

I have been reading a lot of Duncan Watts recently and I’ve been getting into network analysis theory. Duncan wrote Six Degrees, a book I will review at a later date, and he also penned a recent article in the New York Times discussing ’cumulative advantage,’ or the idea of the rich getting richer. The point of this post is to suggest renaming this concept the ’Mahalo Principle.’ Here is why’

Undoubtedly you have heard someone allude to the ’rich keep getting richer’ – It sure seems that way. Turns out that there is a factual basis for this relating to network analysis theory. Duncan recently ran an experiment at Columbia where he asked people to listen, rate and (if they wanted to) download songs by bands they had never heard of. Some of the participants saw only the names of the songs and bands, while others also saw how many times the songs had been downloaded by previous participants. This later group thus had elements of ’social influence.’Â�

So what happened?

Just as Duncan theorized, social influence played a large a role in determining the market share of successful songs. As Duncan states, ’the long-run success of a song depends so sensitively on the decisions of a few early-arriving individuals, whose choices are subsequently amplified and eventually locked in by the cumulative-advantage process.’Â�

On to Mahalo.

Mahalo will not fail largely because it has already succeeded. Mahalo’s most critical juncture occurs before anyone even uses it. These early days determine its ultimate popularity and things are looking good. Over the past two days glancing at my RSS reader, it really doesn’t matter whether the reviews were positive or negative because Mahalo is everywhere. Contrast that with any number of startups that have killer patented technology but don’t have the stage presence.

From the ’cumulative advantage’ perspective Mahalo has been hugely aided by bloggers in a unique way. Mahalo has some key investors who also happen to be big-time bloggers (social influence anyone?). For example, let’s say I am Joe Schmo Bloggerguy and I decide to write an entry about Mahalo (I want to get jump on the band wagon and capture some traffic). Well, I see that Fred Wilson has great things to say about its potential, so I also blog positively since Fred’s a rich guy and that means he probably knows what he’s talking about. The next guy who goes to blog about Mahalo looks at his RSS 10 hours later and there are 30 posts about Mahalo, 80% positive and 50% linking back to Fred. Better join the bandwagon’ network effect.

Furthermore, Mahalo exemplifies cumulative advantage on another level ’“ its business model. The search engine expects to generate something like 80% of its profit from 20% of the searches because those ’hits’ generate the big bucks (think anti-longtail). For example, if I went to Mahalo and searched for Sam Huleatt ’“ whoops, nothing! But I search for iPhone and ’Oh Wow!’ What effect does this have on me? I will now use Mahalo to search for anything popular, or pop-culture based because the results are better from a pop-culture standpoint. And, since pop-culture is where the money is, Mahalo could ink lucrative deals to exclusive content, yada, yada. You can bet that if Mahalo has a vested interest in getting people to search for certain terms, it is going to exploit those terms and network effect will be in full force.

Simply put, Mahalo is in the right place, at the right time, with the right team and a crap load of money. If Mahalo had launched when Google launched, would it get any traction? No ’“ but it’s operated by Jason, supported by Fred and backed by Sequoia (all the ’right’ social influencers)’ plus, they don’t even try to compete against Google’ in fact, Mahalo features Google results on pages where Mahalo hasn’t yet worked its magic. I wonder what would happen if Ask.com took the approach of Mahalo and focused only on the 80% of popular searches (i.e. pop culture garbage?) would Ask be tearing it up?

Another variation of network effect also explains why Facebook will crush MySpace and I will explore that over the weekend…