

Timing: Why this crisis is our biggest break - tonystubblebine
http://www.lifeonashirt.com/2008/11/16/the-impact-of-timing-why-this-financial-crisis-is-our-biggest-break/

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timr
The point of Gladwell's book totally whooshed over the writer's head.

We know the robber-baron industrialists were born in a particular decade, but
is that the _cause_ of their success? Obviously not. Gladwell isn't making an
argument about the particular reasons that they were lucky -- just observing
that they were. They had good timing, and that translated into economic
success in their time. Everything else is speculation.

Nobody knows what's going to be "lucky" tomorrow. Maybe this time around,
_nobody_ will get rich. Maybe _this_ time, we're creating a new economic
paradigm where wealth will be more equitably distributed. Maybe this time,
30-somethings will get rich, because they've had a decade head-start on the
20-somethings to save cash. Maybe this time, _everyone_ will go bust. Maybe
this time, risk-takers will get squashed by the market, and savers will be
rewarded for their conservative moves. We don't know, and we can't know.

Trying to extrapolate useful information from Gladwell's observation is
antithetical to his thesis -- once you've controlled for practice and skill, a
lot of the "secret" of success boils down to dumb luck. You can't reproduce
luck. The best you can do is work hard, practice a lot, and hope that someday,
lightning will strike you too.

~~~
sharkfish
I dunno. I re-read the article after I read your comment, and I came to a
different conclusion: It is very possible we are in one of those gaps in time
where if you have put in your 10,000 hours, you can leverage them. You can be
one of those lucky ones.

His point is, then, how do you know you aren't coming of age during a lucky
time, when the old goes out the window? It is quite possible this is that
"garage electronics" time when nobody has any money and some of us figure out
unique ways to save and as a result, make millions.

You can bet, SOMEONE will. We are going to hear, in about 4-5 years, of
someone down and out who "did it" during 2009 after they got laid off and were
living in their parents' basement. Instead of shooting their employer, they
proved everyone wrong and succeeded.

I am one of the jaded and cynical, however. This is just a "glass is half
full" perspective.

~~~
vitaminj
I think timr's point is that you'll only know AFTER the fact that you're
lucky.

To try and extrapolate a single (and dubious) data point in history to the
present time, and then conclude that this is the right time for 20 year olds
to be lucky, is IMHO wildly misplaced optimism. You can't "time" luck... maybe
it'll be the elderly who come out of this lucky...

~~~
tonystubblebine
I found the article useful in two ways, neither of which rely on the accuracy
of the prediction.

One, if you've already made the decision to start a company, then it doesn't
matter whether this is a good time or not. However, it could be motivating to
think of this as a great time. When I think that way, that there are enormous
opportunities for me to solve, I behave more confidently and spend more time
doing rather than fretting. I think I'm not the only person who recognizes the
role that emotion plays in their own success.

Two, I thought it was an interesting thought experiment to think about whether
the rules have changed, what the changed rules are, what forces are driving
them, and what are some of the repercussions? She doesn't get into them, but
that doesn't mean we couldn't.

Off the top of my head:

1) Tighter credit. People who are bad situations will eventually work
themselves out, but we could be in a situation where people and companies keep
a more sustainable level of debt. What would the effect be?

2) Baby boomers get old. Supposedly they're going to retire, but their savings
just went kaput. Are they going to keep working? Are they going to make the
younger generation pay for their retirement and healthcare?

3) Energy covering climate and demand. Environmentalists are pushing for
conservation but Vinod Khosla thinks we're going to solve it in a way that
makes today's energy look expensive. What does a world of extremely expensive
energy look like? What does a world of extremely cheap energy look like?

4) Internet related, dropping costs. This isn't as big as the first three but
effects me personally. Where are the big plays? What about small plays that
add up (37signals)?

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mlLK
Here is a question that's been beating at my brain lately and this post help
catalyze my thoughts into text: how do we know what we're working on is worth
it? In other words, how do we measure what we're doing? This question begs
another set of questions, which is: What do you value? Do you value what you
do? More often than not, I find money as a poor system indicator for
determining the value of what people are _doing_.

~~~
puzzle-out
There is a pressing need for entrepreneurial thinking into social and
environmental problems - social entrepreneurs like Tim Smit of the Eden
Project think the financial crisis could be a huge opportunity for social
enterprise. In terms of measuring impact, I think we need a new form of
accountancy, which rates social and environmental impact as importantly as
financial impact.

~~~
anamax
> In terms of measuring impact, I think we need a new form of accountancy,
> which rates social and environmental impact as importantly as financial
> impact.

That assumes that the "social and environmental impact" are going to be
measured honestly and not just used as an excuse for control.

For example, even if you believe all of the AGW stuff, the "account for
environmental costs" tax is around $2/ton of carbon.
[http://www.sciencedirect.com/science?_ob=ArticleURL&_udi...](http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V2W-4CJCVJ8-2&_user=3061873&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_version=1&_urlVersion=0&_userid=3061873&md5=67fe725c4c081d254e0b4dd265316562)

That's a large pile of money, but it isn't going to have the "side effects"
that the AGW people want. Those will require much higher taxes on "bad"
things. So they'll have to either give up on the rant against said bad things
or go with "sin carbon" taxes, which pretty much proves that they're not
interested in carbon but sin.

------
fbbwsa
Sort of a terrible example by the author (Gladwell, I guess), I think with
regards to the wealth creation window being limited to those born between 1831
to 1840.

don’t see why its surprising at all that 14/75 of the richest people in the
country came from a given 9 year time period.

Since we don’t know what the distribution looks like, lets grind through this.

If we had no a priori reason to suspect that that particular 9 year period is
different from any other, we might think that 75/14*9 ~48 years encompasses
all 75 of the richest people 75 people in the country. If we expected that 9
year birth period to show more wealth creation then we should see MORE than
19% representation.

In a time where most people didn’t accumulate their wealth quite as early,
lets imagine that people could even imagine to START getting rich at 25
(remember this is a time where instant wealth creation via the internet didn’t
exist). Add 48 years to that, and we’re at an age of 73.

Current life expectancy is 78 in the United States and it was lower back then.

So… the claim that 14/75 of the richest people were born within a 9 year
period is not inconsistent with the null hypothesis that being born in that 9
year time bracket shows absolutely no proclivity towards wealth creation than
any other equivalent 9 year time period.

~~~
jeggers
Two issues with your calculation: (1) You are considering contiguous 9-year
periods across which the 14-person sets can be applied with the 48 years + 25.
Because the span of time is recorded history, and with a brief look at the
Forbes list, at least 1000 years are covered... or 966 sets of 9-year periods
(1000-9-25), rather than 5.

(2) Life expectancy globally across this period of time gives a much wider
range.

Overall, your calcs are too narrow to disprove Gladwell's assertion. We'd have
to dig more deep into the actual numbers to get the real stats to show how
likely/unlikely this is.

~~~
fbbwsa
you are correct, I skimmed/misread the post. I thought it 75 richest LIVING
people (and could not for the life of me figure out why they were using such
an old Forbes list...), not in history.

Thats why I was assuming we could assume dead people and those under 25
wouldn't be as relevant and fit all potential candidates to a 50-ish year
birth-year block.

Taking any arbitrary 9 year period in a 50 year period and finding that it
captured ~20% didn't seem odd to me, which is why I screwed up with my bad
argument.

Good catch.

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mitko
Well, the examples of Rockfeller, JP Morgan etc. only show the "tip of the
iceberg". What, in my opinion, is underlying is a probability distribution of
people wealth.

In times of big changes there is more uncertainty, which increases the
variance of the distribution. It is true that these times bring out people
that make enormous wealth, but also many people remained poor.

And those who orient better in the situation(or get lucky) end up being better
off at the end.

------
crabapple
well all of the so-called robber-barons came out of an old economy (to them),
but offered something NEW. if you think you are going to bust out of this
recession with the startlingly novel idea of starting a website, you're
actually trying to apply the rules of the old (as in ten years ago) economy to
the new. the web is past the innovation stage and is moving into the
economies-of-scale stage. if you don't think so, compare google's earnings to
yours.

in any case its too early. lots of the carnage has yet to be unleashed...the
reductions in consumer spending will likely only become obvious in the
shopping season for _2009_ as the job cuts of 2008 accelerate and are felt.

the blogger's thinking isn't new....the 30s was littered with traders who
tried to play contrarian too early and got gutted. let it play out kids, this
will take time. preserve capital.

