Tag Archives: philosphy

The Only Good Idea Is A Bad Idea

I am a mediocre trader. I’m not rich. And yet I have come up with a few good ideas here and there over the years and they have something in common. I always arrived at them by trying to think of something stupid that wouldn’t work. They were all bad ideas that no one thought made any sense.

That is how it has to be. I trade in extremely competitive markets. Every intuitively good idea is done as efficiently as possible by people with tons of experience and resources. Finding ideas with little enough competition for small firms like mine to do profitably requires ideas that people have an aversion to, but which end up working.

I think this is probably true in many activities. In order to make money at a small scale or get attention or interest in your work you need to do something that seems wrong but works somehow. Because then you are competing with a lot fewer people.

But once you have scale or attention then it isn’t as hard to keep it. You just have to do the things that seem right, but require a lot of resources. So it seems like successful people just do things that make sense but it’s not how they got there. They had do something that flew against their instincts and everyone else’s.

What you see with a lot of successful people is that they have one big idea that they milk for all its worth. Nassim Taleb milks the idea of the “black swan” because that is what got him a ton of attention. If “Fooled By Randomness” hadn’t sold he probably would have moved on to something else.  Anyone else could try to expand on the same idea, but they almost certainly won’t be successful. Why would people want to get their black swans from just some random person when they can get them from the guy who invented them?

A lot of famous people don’t even need to milk their one idea anymore. They can just be ordinary and people will continue to like them due to familiarity and that one original thing they did once. Would anyone hire Bruce Willis or Robert Deniro to be in a movie if they were unknowns now? It doesn’t seem likely based on any performance they have given in the last 20 years or so.

There is a big downside for already successful people to come up with new bad but genius ideas. They are likely to fail, and a lot of people are watching. They might expose their earlier genius as just luck. So successful people who continue to take big chances are very rare. Consider Steve Jobs. He consistently took chances, and even though he’s been dead for 7 years, the only new thing that Apple has produced since then is the Apple Watch. What a hit! The only person like that today in the business world seems to be Elon Musk. In the celebrity world Donald Trump also seems to take big risks.

So, if you have few resources and can’t get anywhere by playing it safe, what do you do? There are clearly more bad ideas that are just bad than idea that seem bad but are actually good. How can you separate them? Its really hard. As far as I can tell there are 2 key factors that give an idea potential. One is that there has to be a lot of uncertainty about the outcome. Stubbing your toe is a bad idea, but you know how its going to turn out. There is no uncertainty, so there is no room for it end up working out. The other is that the worst case scenario can’t be that bad. Failure is the most likely outcome, so failure has to be survivable. Then, that’s it. You just have to try things. As long as you have massive uncertainty and limited downside and the feeling like your idea is stupid and doomed, then you are on the right track!

The Parable of the Altruist God

Once there was a minor god. She didn’t have all the powers of God but she had a few tricks up her sleeve and one day she was given a planet to look after. It was a beautiful little world teeming with life. Since she was but a young god she was given a planet of plants to start. From a distance the world was an Eden but as the god looked closer she was dismayed with what she found. When she looked close she did not see a paradise, she saw a war.  She saw tall trees fanning out large leaves to take all the sunlight while small bushes, ferns and grasses withered and suffered below trying to find small pockets of light for nourishment. Every day while some plants flourished and grew others were dying of starvation or thirst. The suffering of the young was greatest. The vast majority of baby plants died before they reached maturity.

Seeing all this suffering and inequality, the god knew she must act. She did not have the ability to make nutrients out of nothing, but she was able to reallocate. She said to herself, “Those that have much should give to those who have less. Surely that will be more just and would increase total utility.”  So the god put a spell on the planet such that every living thing that had an excess of nutrients would have some of them magically transferred to those that were the most in need. Then she sat back to watch her little planet thrive and flourish.

Immediately the young saplings that were dying in the shade started to perk up and grow. The great trees gathered the sunlight but it was now distributed to all. Without excess energy they could grow no further but that was just a wasteful competition. Now so many more plants could live.

All the plants continued to age and die as was their nature. The god could not prevent that and even if she could, it was important to make room for the new on her little world. Since no trees could gather enough excess energy to reach great heights the tall forests of the planet were gradually replaced by a vast grassland. This was good, the god thought, since millions of little blades of grass could live in the sun that was once hogged by one great tree.

As millennia passed and the plants lived their lives the blades of grass that dominated the world grew thinner and thinner. For each little blade the work of growing their one leaf to capture as much sunlight as possible did not make much sense. If they could not support themselves then other blades with wider leaves would support them. They could spend their energy making more seeds since their offspring would also be aided by whatever grass still generated more energy than it absolutely needed to survive. Finally, grasses started to evolve that produced no leaves at all. Relying on the now ancient spell to provide them with enough nutrients to survive they simply put all their energy into growing more seeds.

While the total number of lives on the planet continued to increase the total energy captured from the sun declined.

When the end came it was swift. Suddenly, there was simply not enough energy left to support the lives of most of the plants. The spell worked furiously to transfer what energy that was available to those who were closest to starvation but it was only able to extend their starvation by mere seconds. The few remaining plants that could feed from the sun had to starve to support the multitudes that could not. In one final gasp the planet died as the last calorie was consumed faster than the next could be produced.

The little demon looked at her dead planet and said “There, now all is just. All is equal” and moved on.