Risk

If you take risks and face your fate with dignity, there is nothing you can do that makes you small; if you don’t take risks, there is nothing you can do to that makes you grand, nothing.  And when you take risks, insults by half-men (small men, those who don’t risk anything) are similar to barks by a dog: you can’t feel insulted by a dog.

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Life Isn’t Fair, But If You Don’t Get This Simple Point You’ll Always Be A Sucker

Life is very unfair.  As much as we all wish that the success we enjoy in life is a direct consequence of our well thought out actions and intentions, it probably isn’t.  If you were born poor in rural Bangladesh, could you still confidently say that your quality of life would be as good as it is now?

You’re not pretty enough, thin enough, tall enough, rich enough, you were born to poor parents, you went to a bad school, you were born in the wrong part of the country, you’re the wrong colour…This list of excuses is endless.  It’s undeniable that these characteristics and ones upbringing does indeed have a large impact on your life’s trajectory.

This post isn’t about “victimhood”.  Everyone is aware that you have to hustle to get ahead in life and that without hours of hard work, you simply won’t get anywhere.

This post also isn’t about being “stoic” and just accepting that you can work hard, toil away and yet still achieve very little in life.

This post is about how we can embrace the randomness and entropy that surrounds us every day and use it to our advantage.  In short, this post will teach you how to win at life.  But first, a few illustrations are necessary.

Estimated Time of Arrival

Google Maps has replaced my Sat Nav machine.  I don’t know when it happened, but it definitely beats using a stand alone machine.  I was particularly put off using stand alone Sat Navs ever since someone broke into my car to steal one!  The burglar probably sold it for £20 at the local pawn shop, but left me with a repair bill of £120 for my car.

A few days a week I make a 60 mile commute to my clinic to see patients and make sure everything is running properly.  Get in the car, put my phone in my phone holding thingy and set the destination; “Estimated time of arrival 10.30AM”, it says.

It seems that Google Maps and lots of other navigation apps try to figure out the “quickest route to destination”.  We’ve all probably had instances where we’ve put the navigation on in a familiar neighbourhood and have blindly followed its instructions, even though we just know that if we went our usual route we would have gotten to our destination quicker.

This minor gripe is merely annoying, but the worst kind of problem with Sat Navs is when we go on those longer journeys.  “Estimated time of arrival 10.30AM”, it says, but why is it that most of the time I get to my clinic a few minutes after the ETA?  The worst is when something unforeseen happens, such as an accident on the motorway and I end up at my destination an hour or more late!

Why is it that I never get to my destination an hour or more early?

In England we have roads called “M” roads, which are the largest roads with the highest speed limits.  We then have other major types of roads such as “A” roads and “B” roads.  As you can imagine “A” roads are the next quickest after “M” roads.  Interestingly enough, Sat Nav systems always tend to pick routes with “M” roads whenever possible.

This is an interesting way to get to your destination.  “M” roads are definitely faster, but if there is an accident, then you’re doomed to suffer hours stuck in traffic wondering why that annoying Audi behind you is driving so close when there’s clearly a traffic jam ahead.

“A” roads on the other hand have plenty of tributary roads.  Traffic jam?  No problem, just turn off and join another road and you’ll be on our way with a merely slight delay.

Satellite navigation systems are missing out on a trick in my opinion.  Instead of being able to pick the “fastest route” it should actually give you two options;  “Fastest route, but if something happens on the road you’ll be REALLY late” or “Slower route, but you don’t need to worry about being too late if something goes wrong.”

I wonder how many people would choose the slower route with less variability when it comes to important journeys such as getting to the airport on time to catch a flight?

The Doctor-Patient Relationship

When I used to work as an acute general surgical doctor, we used to quip that it would be more cost effective to carry out a whole body CT scan as patients were carted on to the ward.  Almost, like those body scans at the airport!  It certainly would have made our lives as doctors much easier if we could simply just get the scan done and see whether there was something worrying to operate on straight away, instead of having to sit down with the patient and get their history.

The acute surgical ward was a stressful place to work.  Patients got referred in by the Emergency Department or Community Doctors and then we had to assess the patients and figure out if they needed an emergency operation.

The problem on this ward was that it meant you would have to spend at least 30-40 minutes with the patient, listening to their story, taking blood tests and then you’d have to wait for several hours for the blood tests to come back.  Once the blood tests were back, unless it was an obvious appendicitis or cholecystitis, you would have to organise a CT scan.  If you consider that many patients end up staying in the hospital overnight at a cost of £400, only to be told the following morning that all the investigations were normal and that they can go home, then having a CT scanner placed at the door doesn’t sound like a bad idea as a scan costs around £100 per patient.

You might be thinking that all these tests sound totally unnecessary.  I would agree with you.  The problem in medicine is that when a patient gets referred to you by another doctor, the onus falls on the accepting physician to ensure that nothing is wrong.  In other words the buck stops with you.

What do physicians with this onus do?  Test, test, test!  Do all the blood tests under the sun.  Does this patient actually sound like she has a simple urinary tract infection which can be treated with three days of oral antibiotics?  Doesn’t matter!  We can’t risk it!  We must do all the blood tests which will make sure her bowels, kidneys, liver, pancreas, anaemia levels are all normal and if these all come back normal then she must have a scan of her abdomen as well (exposing her to more than 500 times the radiation of a chest x-ray) to just be safe.

How did medicine get this way?  There seemed to have been a simpler time in medicine, which I personally didn’t get to experience.  My father on the other hand reminisces about those times frequently.  “There used to be a time where doctors were respected and decisions were made mutually with the patient”.  I, unfortunately have been trained and continue to practice medicine in an era of litigation and suspicion.

The threat of litigation and the risk of potentially losing your medical licence with every patient you see causes you to practice medicine a lot more “defensively”.  Even if doing more is potentially harmful, it is often better to be seen to do something (which is defensible in court) than not carrying out an intervention (which is indefensible).  “We might as well as take out that gentleman’s appendix, just in case.”.  If you don’t take out the appendix and then it does turn out to be an appendicitis, then set aside a date for court my friend.

Is This a Good Idea??!!

“Is this a good idea”.  Every budding entrepreneur mutters those words.  Usually, so often that it drives loved ones near to the edge of sanity.

When they ask “is this a good idea?”, what thy are really asking is “will I make tons of money from this?!”.  Many entrepreneurs say ideas don’t mean a thing, but that the execution of the idea is the main thing.  I agree with this sentiment….to a certain extent.  If the person I’m talking to isn’t an action taker, then for definite it doesn’t matter what idea he has, because they’ll never do anything.  Ideas by themselves are meaningless.  But, if I’m talking to a really smart person, who consistently takes action, then yes ideas do matter.

The number of businesses is growing every year.  What’s interesting is how few are successful and how little money most businesses make.  I mean they’re all businesses after all and a lot of them do pretty much the same thing, but why is there such a large difference in revenue between them?

Why is Starbucks so profitable while that small cafe ran by that pleasant family down the road is struggling to make ends meet?

Or better yet, why will that coffee store never become the next Google?  Now obviously, Google are providing a completely different service, but what are the factors that set apart your average family run coffee store to an Internet company based in San Francisco?

The anatomy of a good idea goes a long way to explain whether an idea is worth pursuing or not.

The World Is More Random Than You Realise

The world is a very random place.  We as human beings are predisposed to create narratives to help us make sense of the world.  It gives us the feeling that we can predict the future.  Daniel Kahneman, the Nobel Prize winner, has written about how our brains are wired this way.

I remember when I was in high school and my music teacher played a piece of music to me.  It was a recording of a flute playing random notes, in a random order, with no time signature.  What was interesting about listening to this totally random barrage of notes was how my brain couldn’t help but construct melodies out of thin air.  It was the musical equivalent of “don’t think of a purple elephant!”.  Your mind will construct thoughts automatically and come to conclusions as a reflex.

Apart from my own anecdotes, there have been many studies which have proved how truly random the world is and how poor, we as humans are at predicting outcomes and making decisions.

Philip Tetlock, from the University of Pennsylvania made a landmark study: “Expert Political Judgement: How Good Is It?  Can We Know?”.  In this study he asked 284 political experts to make 80,000 predictions.  In the study he gave the political experts a topic to consider and then gave them three options to choose from.  He later looked at if the predictions were correct.

The experts turned out to be worse than random.  Meaning that if he had gotten a monkey to randomly pick an answer, the predictions would have been more accurate.  One of the reasons that expert predictors get it wrong so often seems to be a result of knowing too much.  Experts seem to over complicate their predictions by looking at too many factors and making too many outlandish correlations.

For business owners / CEO’s and entrepreneurs, the news isn’t too great either.  I love entrepreneur books and biographies of successful people.  But they do for the most part seem more like fairy tales, rather than scientific studies of success.  Which is fine if you’re into that sort of thing.  However, studies have shown that the strength of a CEO and the success of the company that they are running are not well correlated at all.

If CEO’s were really the rock stars they are made out to be in the popular press then there should be a direct correlation between the success of their companies and their skill level.  If you took a really bad CEO running a company in a certain industry and then took a really good CEO running a company in the same industry, you should expect to find that the better CEO’s company is always outperforming the one ran by the worse CEO.  But the correlation hardly exists!  If the correlation was perfect (i.e. a good CEO always producing the best outcomes and beating the competition) then the correlation coefficient would be 1.  In reality, the best estimates place the coefficient at around 0.3, which is only very slightly better than random!

My point is that skill and knowledge clearly exist, but the world is an incredibly random place.  Most people’s ability to make decisions affecting their future are random at best and worse than average at worst.

How To Not Be A Sucker

What do motorways, being an acute surgical doctor and good business ideas have in common?  One word: asymmetry.

Asymmetry means that there is an unequal relationship present.  To compound this, as the world is so random and unpredictable, you never know when the asymmetry is going to hit you and how much of an impact it will have in your life.

Motorways for example have an asymmetry in terms of getting to your destination on time.  Either you’ll be a little early, on time or if something goes wrong on the roads, such as an accident, then you’ll be extremely late i.e. an asymmetry is present here.

In the world of medicine / surgery, there is an asymmetrical relationship between the physician and the patient.  Theoretically if a doctor makes a mistake with any patient they ever see, they can lose their medical licence.  Patients may genuinely come to harm in some cases, however in the UK, the GMC (General Medical Council) have stated that over 90% patient of complaints / litigation made by patients is unwarranted and unfounded.  There is an asymmetry in the relationship as patients can make a complaint which may be false, but there are no repercussions if their complaint is found to be based on a lie.  Patients do not get any financial repercussions or penalties if their complaint doesn’t get upheld.

These asymmetries exist in a lot of different domains in life.  For whatever reason most people are blind to this and are unaware of such relationships.  But if you are aware of these relationships it will cause you to make better decisions.

The two examples we’ve talked about above are what I call negative asymmetries.  Meaning that if a random even occurs then it will make your life worse.  But, you can also use asymmetries to your advantage!

Take for example business ideas.  Good business ideas have asymmetries present which could result in exponential / unlimited financial returns.  Most business owners simply aren’t aware of these principles.  This is the reason why that small coffee store down your road will always continue to struggle and why that pleasant family will never be financially free – even though they could be.

I could speak a lot about great business ideas, but the two main principles in good business ideas are the ability to scale and detach your own time from your business.

Say that you open a coffee store.  Part of your business mission should be to put systems and protocols in place so that every cup of coffee is produced in the same way at the same standard, the store should always be cleaned in the same way up to a certain standard, the way items are procured and how much they should cost should be standardised, the way customers are greeted and treated should be standardised.

Basically every aspect of the business should be run with protocols in place.  This way, if you, the business owner decide to leave for a couple of months for a holiday, your business will keep on chugging along as usual.  In other words, you’ve created a system which is not attached to your time or presence – you’ve just created a money printing machine, which is exactly what businesses are meant to be.

If you can detach your time from your business, then inevitably you have created a business model that is scalable.  There is no reason why you can’t open up another coffee store usinng the exact same training protocols you have already created in your first store to expand your empire.

Business success is random as we have already demonstrated.  But, if you have a well thought out business which can be scaled then randomness can have a positive impact on your business and life.  As businesses which are designed to scale have asymmetrical returns then you could win big and be financially free.

In life if you don’t set yourself up to win and use randomness to your advantage, then you will always be at the mercy of randomness and asymetries.  You will always lose and be a sucker.

Baby Boomers Vs Millennials!! (They’re both wrong….)

I have seen this conversation played out many times.  Both in the press and in real life.

The Baby Boomer generation often accuse the younger generations of being lazy, flippant with their money and devoid of the grit that is needed to succeed in life.

The Baby Boomers often argue that leading a happy, financially stable life is not all that hard.  Just work at a job, work your way up the corporate ladder, put money aside for a rainy day, invest in a house and you’ll be set for life.

The Millenials on the other hand often talk about how things have changed compared to a few decades ago.  Jobs are harder to come by, you require a degree for most things nowadays, people also accrue a lot more debt due to going to University, the cost of living has gone up as well as house prices etc.

The public discourse is interesting.  The Baby Boomers are right to an extent.  There are millenials who are fine (like myself).  I worked a lot harder than most people of my age and I already feel financially stable.  I also made sure that I did a degree which would definitely lead to a stable job (medicine).  Others who I grew up with are in a much worse state and this could be partially explained by their laziness and extravagant expenditures even when being dirt poor.

However, I disagree with Baby Boomers on a lot of things.  Advice such as “work hard, save money, don’t spend money on silly things” is obvious advice.  Young people are aware of these sentiments and it doesn’t explain how a whole generation is financially so well off and another generation is doing so badly.

The Baby Boomers got used to a different world where wages increased year on year for doing the same work.  They got used to a world where with a small amount of effort they could buy a house due to their increasing wages.  But what Baby Boomers don’t seem to realise is that their increasing wages had very little to do with anything that they were actually doing.  The reason that they became wealthy was actually due to technological advancements and massive economic growth during their working years.

As older generations don’t realise that this was actually the reason they became financially stable, they keep giving the same advice; “Do well at school, get a degree, get a job, work your way up the corporate ladder, save money, invest in a house…”.

The millennials that follow the classic advice are obviously not getting the same results as the older generations.  But what no one ever talks about is where wealth comes from and how it is created.

This is what is missing from the argument that is always played out.  Millennials (such as myself) should not be demanding house prices to be reduced, or more handouts from the government – because this is unrealistic and economically non-viable.  Millennials should be concentrating on creating new wealth by creating value.  This is the answer that they’ve been looking for.

“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?

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.

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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.

Why Your Degree Is Useless, Why The Company You Work For Is Full Of Idiots & Why Nothing Works!!!

It seems that further education is not producing productive graduates with a valuable skill set.  As a result, young graduates are not able to find jobs and a lot of them are having to do unpaid internships.

Just the other day when I was out for dinner I had a quick chat with a waitress.  She said that she had a degree in “Conservation Management” and that she was not able to find a job.  “The jobs are very competitive to get, because it’s such a needed skill set”, she said.  As a result she was doing an unpaid internship “to gain experience”, which would hopefully allow her to get a job.

I didn’t say anything at the time, but I couldn’t help but think that the skill set she had acquired really was not valuable or needed.  If your skill set is really needed by society then there would be plenty of jobs and you wouldn’t have to work for free – you’d be getting paid a premium!

For example, if you’re a doctor – you will never be out of a job in this current climate.  Your salary will also be in the upper percentiles of society.

Equally, people who are good at computer science and software engineering are very much-needed at present.  People can teach themselves Code online and after a few months they can get quite lucrative jobs – again this is a needed skill set.

So what’s going on here?  Why have people gotten into their mid 20’s only to realise that they haven’t got a skill set which can get them a job?  In short, I think it’s because education has been massively dumbed down in the last few decades.

When I was in Primary School, I used to make frequent trips to Bangladesh with my mother.  She was born and raised there.  I remember hanging out with my cousins while there.  I used to get amazed at how much maths they would know and how they had been taught to speak English at such a young age.

The maths I was taught in England was nothing in comparison.  In Primary school my cousins were already studying algebra which I would only encounter 5 years down the line in England.

Not only did this disparity in knowledge shock me, but the whole education system in Bangladesh was alien to me.  It turned out that you could fail a year!  In England, this never happens.  Everyone starts the year at the same time and they finish the year at the same time.  Sure there are tests, but these are more so for parents and teachers to be aware of.  There is no negative consequence in doing badly in a test in England.  And it certainly won’t result in you being held back a year.

This type of education – where you can’t fail – continues all the way up to people are eighteen years old in England – when they are then gently coerced into going to University.

In Bangladesh, if you fail, then you fail.  If you keep failing and end up being 18 years old in a class full of ten years old, then you are told that perhaps it’s best to give up on this education malarkey and go get a job instead of aspiring to be a University graduate.

What happened in England and the rest of the Western World is that society as a whole couldn’t tolerate people not being educated.  It seems that part of the reasoning was that if existing successful people and people who create wealth went to University, then surely the more people we get to go through the whole system, the more wealth and jobs we can create.

The problem is that “Conservation Management” and “Media Studies” are not the same as “Law” or “Medicine”.  This is very clear now.  If you don’t have a skill set that is valued by society then you won’t be able to get a job or generate wealth.

However, there is one more factor which has resulted in the education system being dumbed down and one that I have never heard mentioned.  This factor has not only destroyed the education system, but it affects all organisations and is the source of many inefficiencies and dysfunction.

Say for example we take a class full of Year 7’s (in England this is the 7th year of compulsory education).  At the end of the year we make them all sit an exam.  If they get above a certain percentage then they pass the year and get to progress up to Year 8.  Those that fail have to remain in the Year 7 class along with the people who passed their Year 6 end of year exam.

All sounds very good so far!  And in fact this is how things are ran in countries such as Bangladesh.

However if we let the system described above run for several years what will happen?  It’s likely you’ll end up with a Year 7 class full of people who can’t pass the end of year exam.  You will basically get a build up of people who have reached their educational limit.

This would have a very negative impact on the rest of the class.  The less smart pupils would negatively affect the bright students and you’ll end up with even more people failing.  The natural solution would be to reduce the pass mark and make the exam easier so that you don’t get a build up of incompetents in one class.

This seems to be what has happened in the education system in England.  And over the last few decades things have been continually dumbed down all the way up to the University level.  At the same time there was a push by the government to get more people into University.  This concoction of ensuring everyone passes all the time and getting everyone to go the whole way with education has resulted in worthless degrees and with degrees which necessitate supplantation with a PhD to mean anything.

The fact is that “unpaid internships” result in real world experience and skill sets.  For many this is the one that is needed.

So far we have established that people are allowed to progress even if they should not.  We have established that this doesn’t magically result in valuable skill sets being acquired or the wealth to be generated.

But what happens if we allow people to progress up until they reach their potential?  This is the system that is prevalent in most organisations and companies.

Say for example we take an administrative employee from a large organisation.  She works hard, she up-skills and gets valuable experience in the real world.  Over the years she moves up the ranks of the organisation.  She used to be very organised, she used to be able to deal with her tasks above and beyond that was required.  However, now that she has reached this high position she is finding it increasingly difficult to keep up with the work.  Her new job also requires that she gives speeches and talk to different clients.  The person in question has never been the extroverted type.  As a result she keeps making mistakes, she is late to meet her deadlines, a lot of clients don’t get on with her.  The person in this example has reached her “level of incompetence”.

This is what usually happens in all large organisations.  People keep getting promoted when they are doing well, but they stop being promoted when they are struggling in their current position.  What happens when you get an organisation full of people who have reached their level of incompetence?  Well you get scenarios like the following:

Me: “Hello, I would like to order a tuna pizza.”

Restaurant person: “I’m sorry, that only comes to £8.00.  We only deliver on orders over £10.00.”

Me: “Oh, that’s alright.  I really won’t be able to eat anything more, so I’ll pay £10.00 for the pizza.”

Restaurant person: “Oh…….Hmmmm….We can’t do that…”

Me: “What do you mean?  You’re still getting the required amount which I’m happy to pay”.

Restaurant person: “I don’t think we can do this.  Are you sure you don’t want something else?”

Me: “No thank you.  I don’t see why this isn’t possible….Do you think you can speak to your manager about this?”

Wait for three minutes

Manager: “I’m sorry we’ve kept you waiting.  This is absolutely fine.  We’ll get this delivered right away.”

Now in this example it may be that the first person on the phone that I spoke with was just new and learning on the job.  However, more often than not, these occurrences happen due to the person in question having reached their level of incompetence.

Clearly then the solution to a lot of societies problems is to not dumb things down and to stop people progressing before they have reached their level of incompetence.  I don’t see many people agreeing with this essay however, so I suppose we will continue to live in a society which gets dumber and retain its dysfunction.