“Disruption” Is For Fools

Every week there seems to be a news story on how an app has been developed to “disrupt” the healthcare industry.  I despise what this term has come to mean and as soon as I hear someone say it, I know I’m speaking with a fool.

“The Uber of Healthcare!”

“The Amazon of prescription drugs!”

“The Airbnb of social care!”

These ideas actually sound really good on paper.  The profitable business model has already been executed and refined in other industries.  So you just need to take the idea and implement it in a different industry and et voila, you’ll have a billion dollar business!

I can imagine the type of people who think that copying business ideas and implementing it in healthcare is a good idea.  Usually people in dark blue suits, rather than a hacker wearing a t-shirt.

I suppose there’s an aura of courageousness associated with carrying out a project that can potentially “disrupt” a given market place.  However, in my own experience I can see why these projects always fail and in most cases, fail really quickly.

What Is Disruption??!

Definitions are important.

Before “disruption” turned into a buzzword, it actually used to mean something completely different.  Nowadays, disruption means a piece of technology that’s designed to destroy a business or a business model.  The people who do not embrace disruption are accused of “protectionism” or not getting with the times.

“I can buy my groceries online, so I want to get all my doctoring online as well!”

This argument is obviously a non-sequitur.  But entrepreneurs in blue suits and the lay public are often incapable of critical thinking…

Disruption used to mean a piece of technology which would radically lower the price of a produced product.  For example, microprocessors allowed computers to get cheap and it allowed new businesses to flourish.  IBM had market dominance in the computer space by making mainframe computers.  They thought that microprocessors would have no significant effect on computers and so other companies came along and “disrupted” them i.e. other companies provided a cheaper alternative to mainframe computers and produced the Personal Computer.  Soon Microsoft made it their mission to “put a PC on every desk”.  The rest is history.

There is a big difference between this kind of disruption and the kind of disruption which is always talked about in the press.  Microsoft didn’t think “we want to destroy IBM and the other evil incumbents!”.  In fact IBM was the company that (mistakenly, in hindsight) gave Microsoft the rights to produce the operating system for their own computer systems.

It is quite interesting that the companies which have actually “disrupted” industries successfully often go unnoticed and are not really thought of as “disruptive”.

PayPal for example disrupted the financial industry with their online payment system.  At the time the financial sector didn’t want to go anywhere near online payments as they feared that the amount of fraud would destroy them.  There was a gap in the market and PayPal took on the risk.  As they grew they figured out ways to lower their fraud levels and made it a profitable business.  Peter Thiel (one of the founders of PayPal) went on to say that although they disrupted the sector their company was welcomed as they actually created a lot of business for companies such as VISA.

There’s a pattern here.  True “disruption” isn’t about creating a lot of noise and trying to destroy particular companies or industries.  It’s about creating technology which creates a meaningful impact in the world.  If certain incumbents fall by the wayside as a result, then so be it.  But that shouldn’t be the mission of the company.

Liberalism & Conservatism

I thought that an addendum would be apposite here.

Recently I’ve been thinking quite a lot about conservatism vs liberalism and its role in entrepreneurship.

I have found in my own experience that a lot of tech entrepreneurs / people who want to “disrupt” industries are more of the liberal type.  These are the t-shirt and jeans types, with strange facial hair and never more than a meter away from an Apple product.  Liberalism seems to go hand in hand with creativity.  Being open to new ideas, new ways of doing things, criticising old ways and paving the way for new ways of doing things is what liberalism is all about.

It’s easy to see why these people would find the idea of “disruption” quite romantic and heroic.  “Imagine if we lived in a world where these bureaucratic systems were not in place.  Technology, could supplant all of these unnecessary  systems.”.

Wait, so earlier in this post I was complaining about people in blue suits and now I’m complaining about people in t-shirts and jeans?!  Well, the worst types of entrepreneur are those in blue suits who are trying to be liberal and trying to act like they are innovators, when actually they’re just people looking to make a buck.

Like so many things in entrepreneurship, it seems to me that the perfect entrepreneur is a mix of liberalism and conservatism.

Entrepreneurs who embrace the past, work with well established institutions and companies, but are also able to embrace the future and lead us to the new world are the real deal.

Peter Thiel to me encapsulates the perfect entrepreneur.  He supported Trump, has quite a conservative outlook, but at the same time is working on AI and has successfully disrupted the financial sector.  He also wears suits, but with his top button undone…Perhaps the best dress code?

Advertisements

Your Perception Of Money Is Why You’re Poor

 A Quick Anecdote About Getting Into Shape

When I was a Junior Doctor, I would often say bye to the receptionists and admin team on my way out for the day.  They’re usually sat near the exit of any given ward or clinic, so it would be awkward to not at least nod and smile.  This was my usual method of exit.  However, sometimes even if you’re in a rush and have had a grueling shift there’s an unspoken expectation that you should spend some time to speak with the rest of the team.

On one of these occasions the conversation turned to my eating habits.  Now I’m a bit of a fitness guy, so I can look at a piece of food and guesstimate it’s caloric content and macronutrient composition.  Anyone serious about reaching fitness goals are aware of these basic concepts and are mindful about what they introduce into their system.

When I was explaining that I had a nice chicken stew with beans waiting for me at home that evening, the receptionist said:

“If I were as slim as you, I wouldn’t watch what I eat…”.

I didn’t think much of it at the time, but I think this single sentence perfectly sums up why so many people are clinically obese, unhappy and poor.

The simple truth is that I am in shape and fit because of my diet and lifestyle.  The very fact that the person I was speaking to would not watch what she would eat if she herself was slim is the very reason she will never be slim.  The outcome is a result of the process.  The process will change the way you perceive food and your relationship with food.  Food for me is a source of energy to allow me to function at a higher level.  Yes it is also a pleasurable experience, but the overall benefits I can feel by consuming wholesome foods far outweighs any short-lived dopamine burst from a diet entirely composed of McDonald’s.

Being healthy doesn’t mean you can’t still derive pleasure from food…

Your Perception of Money

Here’s the thing.  The attitude towards diet illustrated above is the same reason why people don’t get rich.  How many times have you heard people say the following:

“If I were rich I would stop working!”

The very fact that you would stop working is the reason you will not get rich.  Your relationship with money is a destructive, warped one.  In the same way that most people eat for pleasure, most people only use money for consumerism i.e. buying creature comforts.

If one can accept the fact that perhaps people in rural India perceive money in a radically different way to how the majority of the west perceive money, then it is reasonable that the very rich perceive money in a very different way to the majority of the west.

People in rural India see money as a means of survival.  To put food in their stomachs and provide the essentials for their family.

The majority of people in the west see money as a means of consuming ever more products and services.  Most of what is consumed by the majority in the west are non-essential.

How Rich People Perceive Money

I’ve had this conversation many times with different people.  Most people get defensive when I point out that they are not as frugal as they claim to be.  People may believe that the clothes they buy are “essentials”, but when asked how many shirts they have which they do not wear or have not ever worn, they go quiet.  They go quieter still when I ask where they buy their shirts.  “You bought your shirt from Zara?  Why didn’t you get your shirt from the supermarket for a much cheaper price?  Why do you buy branded cereal when the supermarket own brands are basically the same and are much cheaper?”.

If you can answer these questions objectively then you’re getting much closer to how to perceive money.

Most people at this point have a knee jerk reaction.  “Shirts from the supermarket aren’t as durable…..I can taste the difference between supermarket branded cereal and the branded cereal”.  Really?  Have you carried out double-blind randomised trials to prove this point?

Most of the time the difference is zero.  In fact, I know some factory owners who manufacture clothes in Bangladesh (the second largest textiles producer in the world) and most clothes – even a lot of the high-end designer products come from the same place with a different brand stamped on at the end.

No, the reason you purchase the higher end stuff and not the cheapest option is your perceived value of what you are buying.

And this is the closest to the truth.

Money is the exchange of perceived “value”.

And when you realise that “value” is not the cost of the bare components of a product – but the branding, the feel, the service you receive, the customer support etc it becomes apparent that you can actually create value.

What Does This All Mean??!

The point I am trying to make is that money is used by rich people as a means to an end.  It is not the end goal in and of itself.  America as a nation gets this much more than anywhere else in the world.

Money is used by rich people to exchange value.

They hire people with money (aka value tokens) to create their products and services.

These workers create even more value, which society then consumes.

More value for society results in more income for the business which results in more job and more money (value tokens) for everyone in society to create more wealth and value.

Value tokens are used by most people in society to just consume, but this is the same as eating pizza to get slim.

Henry Ford

Henry Ford once famously raised the wages for his workers to $5.  This at the time was double the minimum wage.  The other factory owners were outraged.  “If Henry Ford raises wages, then all our workers will leave!  We’ll also have to raise our wages too!” they said in outrage.

Later on Ford was taken to court for wanting to reduce the dividends provided by his company to certain shareholders and grow his company further.  He understood that giving higher wages would encourage his workers to give their best and that paying less dividends would allow him to create even more value.

There is a transcript from court which illustrates precisely how successful business people view money (Henry Ford in this instance) and how the majority of people perceive money (Attorney Stevenson).  If more people could view money in the way Henry Ford did, then the world would be a much better place.

Attorney Stevenson (AS): “Now, I will ask you again, do you still think that those profits were “awful profits” (Stevenson was quoting Ford from a Detroit News interview)?”

Henry Ford (HF): “Well, I guess I do, yes.”

AS: “And for that reason you were not satisfied to continue to make such awful profits?”

HF: (Ford looking apologetic) “We don’t seem to be able to keep the profits down.”

AS: “…Are you trying to keep them down?  What is the Ford Motor Company organised for except profits, will you tell me, Mr Ford?”

HF: “Organised to do as much good as we can, everywhere, for everybody concerned.”

AS: Stevenson again asked what the “purpose” of Ford’s company was.

HF “Give employment, and send out the car where the people can use it… and incidentally to make money…Business is a service, not a bonanza.”

AS: “Incidentally make money?”

HF: “Yes, sir.”

AS: (In a sarcastic tone) “But your controlling feature…is to employ a great army of men at high wages, to reduce the selling price of your car, so that a lot of people can buy it at a cheap price, and give everyone a car that wants one?”

HF: (Ford destroys the argument by agreeing with it) “If you give all that, the money will fall into your hands; you can’t get out of it.”

Artificial Un-Intelligence

Before I started my tech startup Artificial Intelligence (AI) really wasn’t on my radar.  I was somewhat aware of autonomous driving vehicles, but apart from that I didn’t see how AI was going to have an impact in my life.

Even now when I meet with other tech entrepreneurs, the discussion surrounding AI often causes me to go quiet.  I think that part of the reason I go quiet is that people talk about AI as if it has already happened – and if you’re not involved in the scene then you’re missing out.

Even the almighty Elon Musk often talks about how AI is one of the greatest threats to mankind.

So, what reason do I have to think AI isn’t really a big deal?  After some further reading over the last few months I think there are a few main reasons why I am not convinced of the AI apocalypse just yet.

lfuakgdwiz8wgwtqwi8m

Robot Apocalypse!!!

Defining Intelligence

What actually is intelligence?  I think this is a good starting point in this discussion.

Intelligence as we currently know it has three components.  A stimulus which results in >>> a process >>> which results in an outcome.

As a doctor, I have a pretty good overview of how this type of response architecture works in humans.  If for example we see a cat, the image of the cat is focused by our eyes (the lens, cornea, small muscles of the eye etc) and an image is projected on to our retina.  The optic nerve then transmits the image to our brain.  Having studied some basic neuro-science and neuro-anatomy in school, I  can reassure everyone that we have no idea what happens with the said image at this point.  Sure, we know some of the pathways that the neurons in our brain use to transmit the image around.  If for example you have a lesion at the optic chiasm then part of the image we see of the aforementioned cat will be missing.  But, we have no idea how our brain interprets the image and results in the outcome i.e. what we do next.

In other words we have no idea how the image of the cat results in us dismissing the cat or going to pet it, or shouting at that damn cat to get off our car!

There is another factor in this architecture.  The “outcome” is different for all of us.  Humans have free will and agency.  We are not simple creatures with certain inputs and outputs.  Someone may see the cat and get terrified as they suffer from ailurophobia, someone may feel sorrow as they remember their deceased pet cat from childhood.

Human intelligence is very nuanced.  In actual fact this simple observation was only recently acknowledged by the scientific community in the last few decades.  Previously scientists had the view that intelligence was simply: Input >>> Output.  Meaning that a certain input would result in certain predictable output.  This was the “Behaviourist” point of view which has been superseded by the more nuanced view of intelligence discussed above.

The way we learn language is another example of the nuances of human intelligence.  It’s quite interesting that infants and toddlers pick up the prevalent language around them so easily.  If you think about it, when you are born there’s a lot of noise.  It must feel like a complete sensorineural attack for babies.  In this environment how is it that they are able to pick out words and start developing speech?  It has also been shown that infants are able to pick up languages and start speaking fluently despite not hearing all the words in any given sentence.  So they are able to pick out words and work out the syntax with ease.  On top of this – if they have started to develop a language, they can happily ignore foreign languages as they can tell that this is not their language.

What this example of learning language implies is that humans have an inherent ability to learn languages.  There’s something within our brains that wire us to pick up languages and communicate with one another.  This was a ground breaking insight by the linguist Noam Chomsky.  He scientifically showed that the principles underlying the structure of language are biologically determined in the human mind and hence genetically transmitted.

Again, how we are genetically determined and how the human mind works is largely still a mystery.

Coming from a bilingual background myself, I do find it interesting how I have managed to learn two languages while growing up and have never mixed the two up or gotten them confused with one another…

Artificial Behaviorism

So now that we have a basic understanding of what intelligence actually is, what is the state of artificial intelligence as we know it?

AI as we know it right now is basically statistical analysis.  It sticks to the (now-defunct) behaviorist view point that input >>> output.

Give a computer a bunch of inputs, feed it a ton of data.  The computer can now process all that data due to increasing RAM and CPU power.  Then the computer will give you an outcome.

As a result people like IBM can analyse the chess moves of every chess game ever played, feed it into a computer and the computer will make moves which will lead to an outcome that will mean it is likely to win.

Or you implant a computer into a car which can analyse its inputs (images of the environment, the behaviour of surrounding cars etc) and the car will drive and manoeuvre so that you don’t crash.

In other words:  Data in >>> Statistical analysis >>> Outcome.

This is not intelligence as we know it by any stretch of the imagination.  This is statistical analysis and has been touted as a revolution since before the 1960s, but has yet to make much of a dent in the world.

Note that in the cases of chess playing and driving, that it is the humans who have already done all the interesting work.  It is the chess masters of years gone by that the computer then goes on to analyse.  Without the human input there is no useful output.  So, the statistics which are analysed to lead to a useful outcome are always created by humans.

This technology may be useful in certain fields.  It does seem that work which is mundane, doesn’t require much human input, creativity, thought etc can be automated.  However, let us not confuse “automation” with “artificial intelligence”.  I think automation will be massively disruptive to the world of work, but not the type of creative work that matters in the world.  Not the type of work where human interaction takes place, where empathy is required, where original thought takes place.

Statistical Analysis & Big Data

There are a ton of startups and established companies who have been going on about big data for years now.

This is the stuff that people in Silicon Valley are always talking about; “Imagine if we could create AI and allow it to analyse all the data on the Internet”, or “Imagine if we could get our hands on patient medical records and allow AI to analyse all that data”.

For some reason people think that statistical analysis of large data sets will reveal new compelling information and automate and improve how, for example, medicine is practiced.  It is thought by pseudo-scientists that medicine is not scientific enough.  “Maybe if we analyse all the data, medical records, blood work, etc then we can detect diseases before they have even occurred / just about to occur!”.

Well the problem with statistical analysis to reach a conclusion only works when you are looking for one specific outcome.  For example, the NSA do this the right way.  They analyse data to figure out one thing: “Should we be suspicious of this person or not?”.  When it becomes more complex than a yes or no answer we run into trouble analysing data-sets.

Let’s look at medicine again.  If we look at a patients whole medical record and run it through a ton of statistical analysis and find correlations, you will draw more and more false conclusions.  It will look like an exponential curve:

 

screen-shot-2015-05-12-at-5-46-11-pm1

 

Let’s say that data points run across the X-axis and the correlations found run on the Y-axis.  It’s clear that the more data you feed it the more false meaningless correlations you will reach.

In fact you’ll get very random correlations which are meaningless such as the consumption of chickens being correlated with the amount of US Crude Oil being imported:

chart

 

Skeptical Empiricism

In fact this is only the beginning of real science and knowledge.  Medicine is an interesting topic as it treads the line between science and real world skeptical empiricism.  What I mean by this is that if you get something wrong in the world of medicine then it can cause real patient harm.

Medicine over history has made progression with continuous experimentation and then observing the results of a given treatment or intervention.  It doesn’t work the other way round.  You can’t come up with a statistical correlation that says something along the lines of; “If you eat eggs, then you will get diabetes” and expect it to be at all meaningful.  Is it because people who eat eggs are also more likely to smoke and not exercise?  Is it the actual cause of diabetes?  Does it affect all populations?  And so on.

In fact statistical analysis such as this is likely to cause more harm than good due to increased interventionism being carried out which themselves will carry a larger list of adverse effects.

So in effect only a very foolish person would take any kind of correlation seriously and change their clinical decision-making due to random correlations, over the already well-tested evidence based empiricist medicine which already exists.

In effect, I don’t think that AI right now is anywhere close to what people have been claiming it is capable of just yet.