5th March, 2023

😰Anticipate, 🔀 Align, 🦾 Automate

The view out from the Lava Caves on Rangitoto Island.

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😰Anticipate

Have you noticed:

Everybody is exhausted all the time.

Many of us are completely over the weather, and the constant disruption caused by the weather - even those of us who haven’t been directly impacted (yet).

Living near Nelson, it feels like the storm and floods we had here last year were a beta test for what’s happened in the North Island this year.

There is an awful definition of global warming that goes something like this: climate change is just a series of shaky videos of disasters, shared on social media, that get slowly closer and closer to home until you are the one holding the camera.

This is just a version of the fable of the boiling frog (apparently debunked).

It’s possibly the only thing that conservative politicians and climate scientists agree on: the 1960s were much better.

Sometimes challenges emerge so quickly we don’t have time to adjust. That’s painful when it happens, as we all learned in the last few years. But, other times they emerge so slowly we fall into the ultimately much more dangerous trap of deferring hard decisions.

Right now it feels like we’re at the intersection of both of those phenomena. And maybe that explains everything?

A colleague remarked this week they didn’t feel ready for Autumn. Tell me about it, I thought to myself, I just turned 47. PBs are increasingly a fading memory.

At the same time, many parents are wondering about the meaning of a “new year”. The experience of having kids at school (or more accurately not at school) at the moment has a strong this-year-same-as-the-last vibe.

We got an email from our son’s school this week to say that any students who left school to attend the climate strike would be given an “unjustified absence”. And also that the teachers will be striking for better pay in a couple of weeks time, so there will be no school again that day. We all look forward to spending some more time together “learning” from home.

Meanwhile those who live alone are apparently feeling more lonely than ever.

This feels like an arbitrage opportunity!

On top of this, we’re depressed about the cost of living or about house prices. Or both.

Business confidence is nearly as low as it has ever been, with data going all the way back to the 1990s. That seems remarkable.

There is (correctly, I think) a feeling that “business is being run for the few”. That too many people are focused on the value they capture for themselves, rather than the value that they create.

And yet, we’ve probably never been more reliant on business to improve our circumstances - by generating the incomes we need to pay salaries, pay taxes and invest in the future.

I don’t know how to reconcile those two facts.

We always seem to take the wrong lessons from history.

The Think Big policy in the 1970s taught everybody who was alive at the time (and every politician who has been in power since then) that borrowing money to invest in infrastructure is a bad idea. The lesson should have been to demand better government, not smaller government.

The ‘87 Stock Market Crash taught my parents’ generation that investing in companies was a bad idea and it’s much better to buy as much real estate as possible (or at least as much as bank financing tolerates). Rather than being invested, growing incomes have been used to bid up the prices of existing houses.

I wonder what lessons from the COVID-19 years (both the initial shock and the on-going long tail) might look equally as silly with the benefit of hindsight. There do seem to be a lot of people who think they are so special that they should be unaffected by a pandemic.

We’re all annoyed at everyone else for not having the answers, when we also have none.

This pervading pessimism makes me think of Brian Eno’s response the the question: “what would change everything”, which I’ve written about a few times over the years:

[It] is not even a thought. It’s more of a feeling.

Human development thus far has been fuelled and guided by the feeling that things could be, and are probably going to be, better.

…

What if this feeling changes? What if it comes to feel like there isn’t a long term—or not one to look forward to? What if, instead of feeling that we are standing at the edge of a wild new continent full of promise and hazard, we start to feel that we’re on an overcrowded lifeboat in hostile waters, fighting to stay on board, prepared to kill for the last scraps of food and water?

…

What happens then?

The following: Humans fragment into tighter, more selfish bands. Big institutions, because they operate on longer time-scales and require structures of social trust, don’t cohere. There isn’t time for them. Long term projects are abandoned—their payoffs are too remote. Global projects are abandoned—not enough trust to make them work. Resources that are already scarce will be rapidly exhausted as everybody tries to grab the last precious bits. Any kind of social or global mobility is seen as a threat and harshly resisted. Freeloaders and brigands and pirates and cheats will take control. Survivalism rules. Might will be right.

This is a dark thought, but one to keep an eye on. Feelings are more dangerous than ideas, because they aren’t susceptible to rational evaluation. They grow quietly, spreading underground, and erupt suddenly, all over the place. They can take hold quickly and run out of control (‘FIRE!’) and by their nature tend to be self-fueling. If our world becomes gripped by this particular feeling, everything it presupposes could soon become true.

(Source: Edge.org via Wayback Machine)

I first referenced that piece in 2009, around the time that Barak Obama was inaugurated. As I said then, it was a bit of a “counterbalance to the general feeling of hope and optimism”.

Now it seems the exact opposite is required.

So the questions I have for you are:

What are you personally optimistic about?

What are you looking forward to? (“Getting back to normal” isn’t an accepted answer: back != forward).

What do you believe is going to be better in the future than it is right now?

What are you doing to contribute to that?

And, if you can’t think of anything significant, then what are the consequences of that?

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🔀 Align

Speaking of the fine line between optimism and pessimism…

The intro to the recently released 2022 State of Australian Startup Funding Report (PDF)¹ manages to hold both of those thoughts in single paragraphs:

Funding to Australian startups dropped from its 2021 peak, a tumble driven by a substantial fall-off in the mega deals the market became accustomed to in 2021. However early-stage funding was never stronger, with more early-stage startups getting funded than in any [previous] year.

And:

We remain optimistic about the future of the Australian startup ecosystem. In a year of turbulence, more newly launched Australian startups were funded by local investors than ever.

Great companies still get started, even when everything is terrible. Perhaps especially when everything is terrible - because there are fewer distractions and it’s easier to hire the people needed to actually build a great company.

Trade Me was started in the wake of the original Dot Com Bubble in 2000. The Xero IPO was just prior to the Global Financial Crisis in 2007.

But, for me, this was the most fascinating chart in the report:

Check out the inconsistency between what funders and founders think is most important in that relationship.

Investors think that their brand and reputation is the thing founders rate them on, but only 5% of founders say that’s a key consideration when picking investors. Meanwhile founders think being aligned on vision and purpose is important, but those supplying the money put that well down the list of priorities.

For many years I’ve said that “the best founders choose their investors carefully, not only for how much cash they can invest but also for how much they can help the venture get to the next milestone”, and that the easiest way to predict how an investor will behave when things get difficult is to look at their track record. Despite that, I continue to see otherwise smart founders take as much money as they can get from those investors who have already demonstrated that they don’t help as much as they claim.

So this is probably yet another thing I need to add to the list of things I’ve been wrong about. Reputation doesn’t seem to help or hurt as much as I think it should.

There is at least one thing in this survey that investors and founders agree on - diversity of the investment team is at the bottom of both lists. I think this is the incumbents all agreeing that a rowing squad goes faster when everybody looks the same. If that’s correct it would suggest there is an opportunity for others who take the opposite view to optimise for diversity and prove that the results are better. But that doesn’t seem to be happening yet.

Related Essays:

• Show Me The Money - When trying to decide how to fund a startup, it’s important that we ask the right questions.

• Monochrome - What rugby teams and rowing squads can teach us about building and managing diverse boards and executive teams.

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🦾 Automate

One of the best time-saving investments we’ve made at home in the last few years is a robot lawn mower. He’s called Jemaine.

We have him set to run a few hours nearly every day. He starts himself, (mostly) quietly goes to work, then parks himself back in his little house whenever he needs charging. He’s even smart enough to stay parked when it rains, and to adjust the time he spends mowing based on the season and how fast the grass is growing.

But, this is the really interesting thing…

Nearly every visitor who sees him quietly buzzing around in a seemingly random pattern, often doubling back on himself, or going around in circles, or mowing one section and then heading off in the complete opposite direction without “finishing” that area, says the same things:

Look at this stupid thing!

And

Why doesn’t it go in straight lines?

And

How will it possibly mow the whole lawn that way?

And yet, they ignore the evidence right in front of their eyes - a well mown lawn, that has never been as healthy as it is now, and much better than it ever was when I was responsible for mowing it.²

There are two related mistakes here, if we’re paying attention:

1. They judge the process rather than the results; and

2. They assume that a machine will approach the job in the same way they would as a human

The nature of computing is changing, and with it our expectations. In the past computers were primarily used to automate things we already know how to do. This meant that the “code” we wrote was often just a more machine-friendly version of the instructions we already understood.

(Shout out here to all of the first-year Computer Science students starting the academic year at the moment who are about to have their brains melted by different sorting algorithms, and in the process discover that something they may have previously assumed was completely objective is actually quite subjective, because of the trade-offs involved)

However, with the rise of machine learning and artificial intelligence, this is no longer the case. We’re now asking more complex questions that require a different approach. For example, if we ask a computer to draw a picture of “a man wearing a blue hat, in the style of Picasso," we are in a totally different universe from asking it to "calculate the average of this long list of numbers".

These complex questions require different techniques to assess the results. For mathematical problems, we can prove that the output is correct or incorrect. However, when it comes to style or subjective questions, it's much more challenging to say whether a given result is right or wrong or to determine if one answer is better than another.

Over the last decade, we've learned to ask Google questions in the most efficient way and to scan the results to find the best link. However, in the next decade, we may need to start again with chatbot prompts and the results we get from them. It will require a different skill set. The people who have been good at the former may not be good at the latter.

How does as robot prove that they are not human?

I was doing some coding this week - something I don’t get the opportunity to do enough anymore, but always enjoy whenever I can.

I asked a (human) expert to look over the output before I deployed it, and mentioned that I’d used ChatGPT to help with some of it. That caused them to wonder aloud about which bits were mine and which bits were automated. They guessed wrong.

I’d used it to help write a simple query that I knew was possible but didn’t know the syntax for, and in the process saved myself a lot of time trawling through documentation. The thing I hadn’t appreciated about this workflow until I tried it was how you can have a conversation, where each answer builds on the previous responses. It very quickly gave me the pattern I needed to solve the problem I had.

The idea that this sort of seemingly intelligent response can be generated by a tool that is, in simple terms, just analysing the next best word to display, based on the previous set of words, is mind boggling.

But, just like my lawn, the results should speak for themselves.

Curiously, the line of code the actual human person doing the review guessed was generated was an elegant query elsewhere in the code I’d actually written myself without assistance.

I wasn’t sure if I should be proud or offended!

Don’t get me wrong, I think everything about this is incredible and should also probably be burned down now while we still have the opportunity.

Our technology is increasingly going to feel like magic. We will need to start assessing it based on the results, not by observing or even understanding the process. And the things that work best are likely to surprise us, and be non-intuitive.

I’m not sure we’re ready.

Disclaimer: I used ChatGPT to rewrite and improve several paragraphs in this section of the newsletter. I’ll leave it to you to assess the results and decide if that bothers you or not.

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PS…

I laughed at this photo. I counted ten pillows, including one with the words:

Less is More

Also, can anybody help me track down the original source of this quote that I tweeted back in 2014:

Rowan Simpson @rowansimpson

Eyes like a well used ink well, recessing further and further into his skull.

Google isn’t helping and even ChatGPT was initially confused - although as confident as ever despite being completely wrong!

1. This report is compiled by Folklore Ventures and Cut Through Ventures, seemingly with input from nearly every significant venture fund or venture-fund-adjacent organisation in the Australian ecosystem.

2. This difference is mostly explained by clippings (or so I’m told).

The push mower I used previously has giant cutting blades that produce a lot of clippings which need to be removed - especially when you mow infrequently like I did.

But the robot has tiny cutting blades - not much bigger than the ones I use when shaving - and mows every day, so the clippings are tiny. Rather than collecting these and taking them away they recycle back into the soil, which is much better for the health of the lawn.