At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, including investment analysis, psychology, science, technology, philosophy, etc. We have been sharing our favourite reads with clients under our weekly ‘Ten Interesting Things’ product. Some of the most interesting topics covered in this week’s iteration are related to ‘declining IPOs’, ‘dangers of YouTube for toddlers’ and ‘why CEOs devote time for hobbies’.
Here are the ten most interesting pieces that we read this week, ended October 12, 2018
1) Why do computers use so much energy? [Source: Scientific American ] Our computers use a lot of energy, and in order make it efficient, the author of this piece feels we need to better understand the thermodynamics of computing. Microsoft is conducting an experiment where it’s stuffing servers in a scouped-up shipping container and submerging it into an ocean. Many people are asking why Microsoft is doing this. The reason being, about 5% of all energy consumption in the USA goes just to running computers—a huge cost to the economy as whole. And this results in heating of the servers, thereby increasing the cost further for keeping the computers from melting.
Our brain and many cellular systems can also be viewed as biological computers. Our brain uses some 10–20% of all the calories that a human consumes. Our ancestors on the African savanna had to find 20% more food every single day, just to keep the brain working fine. That need for 20% more food is a massive penalty to the reproductive fitness of our ancestors. Nobody knows whether that’s the penalty why intelligence is so rare in the evolutionary record. Also, nobody has even had the mathematical tools to ask the question before.
So, are there tricks that human brains use to do their computations that we can exploit in our artificial computers? There have been breakthroughs which allow us to analyse all kinds of issues concerning how heat, energy, and information get transformed in non-equilibrium systems. However, computer science extends far, far beyond counting the number of bit erasures in a given computation. Thanks to the breakthroughs of non-equilibrium statistical physics, we can now also investigate the rest of computer science from a thermodynamic perspective. Clearly there is a huge amount to be done to develop this modern “thermodynamics of computation.” Soon we might have most of our servers deep under water!
2) A controversial virus study reveals a critical flaw in how Science is done [Source: The Atlantic ] Researchers led by David Evans from the University of Alberta had resurrected a virus that hasn’t been seen in nature for decades, horsepox. Evans’s team assembled it using genetic material they ordered from a company that synthesizes DNA. While horsepox is harmless to people, its close cousin, smallpox, killed hundreds of millions before being eradicated in 1980. Only two stocks of smallpox remain, one held by Russia and the other by the United States. But Evans’s critics argued that his work makes it easier for others to re-create smallpox themselves, and, whether through accident or malice, release it. The effect that this would have on humans is horrendous. What is more horrifying is that small groups of researchers and reviewers can make virtually unilateral decisions about experiments that have potentially global consequences, and that everyone else only learns about after the fact.
But Evans and his colleague, Ryan Noyce, argue that re-creating horsepox has two benefits. First, it can be used as the basis of a safer smallpox vaccine, should that extinct threat ever be resurrected. Second, the research could help scientists more efficiently repurpose poxviruses into vaccines against other diseases, or even weapons against cancer. But there are people who don’t buy this theory. Tom Inglesby, a health-security expert at the Johns Hopkins Bloomberg School of Public Health says, these purported benefits are hypothetical, and could be achieved in safer ways that don’t involve horsepox at all. Even if you want to use that particular virus, the Centers for Disease Control and Prevention has specimens in its freezers. But now anybody can make these as Evans’s paper spelled out several details of how to do so. It’s conceptually easier to weaponize because his paper explicitly connected the dots to smallpox.
One needs to debate how society decides what kinds of experiments should be done in the first place, let alone published. Few countries have clear procedures for reviewing research. The U.S. has perhaps the strongest policy, but it still has several loopholes. It only covers 15 big, bad pathogens, and horsepox, though related to one, isn’t one itself. It also only covers federally funded research, and Evans’s research was privately funded. He did his work in Canada, but he could just as easily have done so in the U.S. Kelly Hills, a bioethicist at Rogue Bioethics, feels that scientists need to be trained to think ethically and scientific enterprise needs better norms around potentially dangerous information. Also, scientists should be trained on these topics from the earliest stages of their career, adds Filippa Lentzos from King’s College London, who studies biological threats.
3) Why CEOs devote so much time to their hobbies [Source: HBR ] Does having a serious hobby make you a better leader? The few studies that have looked at the job performance of CEOs with strong hobbies show mixed results. For instance, CEOs who are also pilots lead more innovative companies, and CEOs who run marathons show better company performance — but excessive CEO golfing may actually harm shareholder value. The authors of this piece searched for public information on the hobbies of CEOs whose companies were in the S&P 500 index at the start of 2018. Their search yielded 56 CEOs who pursued a serious hobby. They also interviewed 17 CEOs of S&P 500, Fortune 500, and similarly sized US companies, asking about their hobbies and how it helps them and their ability to lead.
A few findings that stood out according to the authors were: 1. It provides detachment like nothing else can – Many CEOs can never stop thinking about work, even in their free time! Being able to switch off revitalizes them for the task at hand. 2. It means constantly striving for your “best self” – having a true passion besides work allow you to reach new levels of mastery. 3. It can provide a welcome humility lesson – Evidence shows that humility at the top can translate into greater engagement all the way to the bottom of the organization and into improved overall performance. 4. It offers a “full control” experience – Leaders are meant to stay in control. Having a passionate hobby like competitive cycling can enable you to stay in control.
5. It creates different, deeper connections with your followers – Most CEOs who have a serious leisure interest have found a way to connect it to their followers. 6. It strengthens your authentic leadership – Authentic leaders develop and consolidate their leadership identity through constructing their life story. 7. It may simply make you a better leader – PayPal’s Dan Schulman has credited practicing martial arts with a host of leadership lessons, from “never standing still” to keeping one’s calm in a crisis to avoiding unnecessary fights with competitors. One of the CEOs said that a passionate non-work interest forces you to find time for it.
4) The real reasons why mentors change your life [Source: Financial Times ] What happens when one procrastinates writing a report? Maybe a likely reason for his procrastination is lack of knowledge: he simply does not have the information or skills to write a report: gathering facts, turning notes into prose and so on. The least-sensible move, surely, would be to ask him to be a mentor to a junior. A few behavioural scientists at the University of Chicago Booth School of Business found out that the act of mentoring may in some circumstances be the secret to cracking procrastination. But, there’s also a study that suggests mentoring can be a hindrance rather than a help to staff progression. It all depends on the circumstances.
According to the Chicago Booth study, one needs to understand what a co-worker needs. Is it the confidence or motivation that they lack? Those who lack motivation may need to give advice rather than receive it. Professor Ayelet Fishbach, co-author of the research says that one needs to ask why the person is not doing something. “Is it because she doesn’t know how? Sometimes, but often there is another explanation: the task is too overwhelming and they have lost confidence.” Asking the person to give advice to a junior boosts his confidence or gives confidence that was missing is first place.
Mentoring can be life-changing if done well. But Kathy Kram, professor of management at Boston University Questrom School of Business and a leading authority on mentoring, feels that managers should plan carefully because dispensing advice is not always a good idea. She also feels that while giving advice is a good solution, sometimes it would be more helpful if you ask thought-provoking questions to the mentee. This will help him think deeply and maybe find solution on his own!
5) Reddit: The rancorous rise of a social-media phenomenon [Source: nature.com ] In this book review of We Are the Nerds by Christine Lagorio-Chafkin, the author talks about the Reddit story and how it’s become one of the wide-used social websites globally. The top ten websites getting most traffic from the US, according to Alexa.com, an internet-analysis company, Google, YouTube, Facebook and Amazon, besides Twitter and Wikipedia. But one website that beats them all, on the basis of time spent by each user, is Reddit (at number 5). From its emergence to its evolution, We Are the Nerds is the story of co-founders Steve Huffman (the technical brains) and Alexis Ohanian (the showman). But it is really three tales in one.
1. A scrappy start-up destined for web domination: Reddit’s story is similar to that of Apple founder, Steve Jobs. After selling Reddit to Condé Nast in 2006, Huffman and Ohanian lost heart. They left by 2010 only to return in 2015 to revive it after the crises, which included staff rebellions to a spate of revenge porn between users.
2. Early-twenty-first-century technology industry: Reddit is a node in a network of technologists, entrepreneurs and iconoclasts seeking to reshape the world. Hired at the start of Reddit’s journey, programmer Aaron Swartz quickly became more taken with campaigning than coding. Incensed by publishers’ paywalls, he covertly downloaded millions of academic articles, and was caught. The ensuing legal battle ended in 2013, when this principled, sensitive young man killed himself, aged 26.
3. The rise of social media: Reddit was built to foster discussion. In August 2012, it all seemed positively wholesome. At the University of Virginia in Charlottesville (where Huffman and Ohanian met), then-US president Barack Obama took part in an Ask Me Anything or AMA, a Reddit staple in which anyone from A-listers to the terminally obscure (I’ve done two) answers questions. Reddit, as We Are the Nerds shows, was always a venue for the edgy and degenerate, fostered in part by its anonymity.
While Huffman today is the boss of a major website valued at well over US$1 billion, Ohanian, Reddit’s first promoter and now its executive chair, is a celebrity.
6) The lie generator: Inside the black mirror world of polygraph job screenings [Source: Wired.com ] Can you ever imagine that failing a polygraph test (lie detection) can cost you a jobs? Yes, in the USA, if you apply to become a police officer, trooper, firefighter, or paramedic today, there is a good chance you will find yourself connected to a machine little changed since the 1950s, subject to the judgment of an examiner with just a few weeks’ pseudoscientific training. American psychologist and proto-feminist, William Marston, after noticing his wife’s blood pressure shooting up when she god mad or excited, thought of making a device that could measure blood pressure while asking questions, which would then reveal deception by pinpointing the answers that caused a spike. Various studies and research have found that this outdated system is inconsistent.
One use of lie detection test was seen recently when Christine Blasey Ford, the woman who accused Supreme Court nominee Brett Kavanaugh of sexually assaulting her as a teenager, said that she had taken a privately administered polygraph test to help bolster her account of the incident. “While not admissible in court, they’re used by various governmental agencies and many people believe in their abilities,” Douglas Wigdor, a former prosecutor who now represents victims in sexual harassment and sexual assault cases against high-profile men said. When Marston had developed the device, few psychologists had said that the physiological responses the polygraph recorded could be caused by a host of things other than deception – fear, anxiety, nervousness and arousal.
While today’s technology has been touching new heights, solely depending on it like a lie-detector test can throw deceiving results. Dozens of equal opportunity complaints have been made against the FBI’s polygraph screening unit, accusing examiners of racial and other biases. Also, according to the best available science, polygraph tests are no more reliable at extracting the truth than Wonder Woman’s magic lasso.
7) Elon Musk's radical financial ideas are being realised in London [Source: Quartz ] Before Tesla and SpaceX, Elon Musk had an idea for finance in 1995. He wanted to build a 21st century financial service called X.com, an internet bank. Musk’s vision has been taken up by extraordinarily ambitious start-ups in Europe. Many of them, including Curve, Monzo, Revolut, and Starling, are based in London, seen as the fintech capital of the world. Valentin Stalf, the CEO of N26, says the company’s goal is to have 100 million or more customers within five to 10 years (it has 1.5 million today). He acknowledges that the company — backed by Valar Ventures, a fund run by PayPal co-founder Peter Thiel — has a vision similar Musk’s ambition for X.com. ”The time is right for a global financial brand,” he said.
For most of these companies the goal is to create a one-stop shop for financial advice and products. The younger generation needs everything on the go. Be it money transfer or getting foreign exchange, they want it quick. And in order to get ahead of the race, some of these companies are taking shortcuts, like bypassing compliance, which is a big no for any type of finance firm. The question that arises is, will the online banks succeed and take down traditional banking system? The time will only tell. But Europe is ahead of all and has internet success stories like Spotify, Skype, and a host of start-ups. The neo-bank fintechs are geared to burn cash and grow quickly: N26 has raised more than $215 million from the likes of Tencent, the Chinese tech giant, while Monzo has Silicon Valley venture funding.
US companies have similar ideas. Square’s CFO recently said people should expect the payment company to become more like a bank. Goldman Sachs has waded into online consumer finance, and JPMorgan has its own mobile bank called Finn. PayPal, meanwhile, has the top-ranked finance app in the UK, according to Apptopia. Curve’s CEO, Shachar Bialick, thinks that the competition will be decided in the next 5 years. Also, in order to stay competitive and expand, companies will need massive funds.
8) The dangers of YouTube for young children [Source: The Atlantic ] ChuChu TV, a YouTube channel, named after the daughter of its CEO, Vinoth Chandar, is well-known amongst young parents. If the baby is crying, show a ChuChu video and the baby will soon be giggling. After posting just two videos, ChuChu TV had 5,000 subscribers. Five years on, ChuChu TV is a fast-growing threat to traditional competitors, from Sesame Street to Disney to Nickelodeon. With all its decades of episodes, well-known characters, and worldwide brand recognition, Sesame Street has more than 5 billion views on YouTube. That’s impressive, but ChuChu has more than 19 billion. Sesame Street’s main feed has 4 million subscribers; the original ChuChu TV channel has 19 million—placing it among the top 25 most watched YouTube channels in the world, according to the social-media-tracking site Social Blade — and its subsidiary channels (primarily ChuChu TV Surprise Eggs Toys and ChuChu TV Español) have another 10 million.
But the question that arises is, are these channels and videos good for toddlers? The kind of growth that these channels are witnessing suggests that something unpredictable and wild is happening: America’s grip on children’s entertainment is coming to an end. The new children’s media look nothing like what we adults would have expected. They are exuberant, cheap, weird, and multicultural. Colleen Russo Johnson, a co-director of UCLA’s Center for Scholars & Storytellers, believes that for kids to have the best chance of learning from a video, it must unfold slowly, the way a book does when it is read to a child. “Calmer, slower-paced videos with less distracting features are more effective for younger children,” she said. “This also allows the video to focus attention on the relevant visuals for the song, thus aiding in comprehension.”
But even in relatively limited doses, these videos can affect young toddlers’ development. If kids watch a lot of fast-paced videos, they come to expect that that is how videos should work, which could make other educational videos less compelling and effective. “If kids get used to all the crazy, distracting, superfluous visual movement, then they may start requiring that to hold their attention,” Johnson says. ChuChu has changed over time — it has slowed the pacing of its videos, focused on the key elements of scenes, and made more explicitly educational videos. But in the wilds of YouTube, the videos with the most views, not the most educational value, are the ones that rise to the top. ChuChu’s newer videos, which have more of the features Johnson looks for, have not had the time to hoover up as much attention, so the old ones keep appearing in YouTube searches and suggestions.
9) Digital insurgency - Conspiracy theorists could topple a few towers [Source: Wired.com ] Social media is playing a vital role in everyday life. It’s easy to incite hate on social media. Last month, the attorney of Christine Blasey Ford, the California professor who has accused Supreme Court nominee Brett Kavanaugh of sexual assault at a long-ago high school party, revealed that Blasey Ford and her family were in hiding and had hired private security after Blasey Ford received death threats over email and social media. In 2014, the term Gamergate (stemmed from a harassment campaign) came to limelight which is believed to have helped Donald Trump in his presidency election. Also, information terrorists (as they are termed) like Roger Stone, Mike Cernovich, Jack Posobiec, Cassandra Fairbanks, Alex Jones and Chuck Johnson are helping to transform the way Americans consume news in the age of Trump.
These information terrorists control hundreds of thousands of followers and devotees on Twitter, Instagram, Gab, and other social media, many of whom will post and amplify their views even after the personalities themselves are kicked off the platforms for threats and rules violations. The network also takes advantage of affiliations with increasingly mainstream partisan media outlets that will subscribe to any argument that suits their current agenda. The followers are then cultivated and activated to threaten or harass the enemy. Collectively, the group mentioned above dominated the media surrounding the GOP (Grand Old Party) convention with their outrageous statements and intimidation tactics.
The cadre and their followers knew exactly what to do when the allegations made against Kavanaugh by Christine Blasey Ford became public. Rapid efforts by far-right blogs and personalities to dox and troll Blasey Ford resulted in the targeting of the wrong Christine Blasey Ford; Posobiec was one of those reportedly amping this misguided doxxing.
10) The Death of the IPO [Source: The Atlantic ] Initial public offering (IPO) is one of the best ways to own a share of business that has potential to grow. Historically, private investors have been willing to risk only relatively small amounts with any one company, and they have tended to exit any investment within a few years. But, recently on Nasdaq while 5 stocks entered through IPO, 16 stocks were delisted due to various reasons, including failing to file financial reports. A two-decade chart, since 1997, showing the number of public companies looks like a slide at a children’s playground, slowly but surely going down.
An IPO is still the best means for many companies to obtain liquidity; selling shares on a public exchange remains easier and cheaper than in the private markets. But staying private has, for a variety of reasons, become more alluring than it used to be. Going public is expensive. Investment bankers, lawyers, and auditors collectively charge millions of dollars to prepare the lengthy registration statement that must be filed with the SEC before shares can be sold. And that’s not all. It costs millions more to comply with ongoing-disclosure requirements. Public companies also incur the harder-to-quantify costs of opening their books to the scrutiny of securities analysts, activist investors, the media, and short sellers. Equitable Financial, a Nebraska bank operator that delisted from Nasdaq this summer, said it was doing so in order “to eliminate the administrative and annual fees associated with being listed on Nasdaq.”
Also, big companies like Coca-Cola or Alphabet, nowadays make for safe bets as these in turn own many smaller companies. Besides, before 1990s, many of these acquired companies like Android, Waze, YouTube, would have gone public on their own rather than accepting an offer from an industry giant. But, today almost 90% of venture-capital-backed firms seek to be acquired. In this sense, publicly traded companies aren’t really disappearing, they are consolidating. Also, IPOs are not always a good investment option. Many IPOs fall after they debut the market. One reason why we see fewer IPOs today is that many investors were burned by dot-com companies that promised riches and then collapsed.