October 28, 2013

All Social News Websites

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This is a collection of all available social news websites. According to Wikipedia, social news can be defined as:
A website that features user-posted stories that are ranked based on popularity. Users can comment on these posts, and these comments may also be ranked. Since their emergence with the birth of web 2.0, these sites are used to link many types of information including news, humor, support, and discussion. Social news relies on crowd sourcing to shape focus in a bottom-up fashion, forming a type of collective intelligence. Social news sites facilitate democratic participation on the web.

General news:
Digg - Used to be the largest social news website, but has declined as described in The rise and fall of Digg, and what we can learn from it

Reddit - Is currently the largest social news website (and one of the world's largest websites). Has several subsections like corgi, TeslaMotors, etc

Specialized news:
GrowthHackers - Growth hacking only

Hacker News - Startups, programming, technology, etc

Inbound - Inbound marketing, such as SEO, social media, content marketing, conversion rate optimization, etc

Trejdify - Business news only, such as stocks, dividends, trading strategies, management strategies, etc

StreetEYE - Finds the most shared financial headlines from around the Internet in real-time, and brings them all together on one page

Financier News - News related to finance

Data Tau - Data Science only

If you miss a website, leave a comment or send an email!

October 27, 2013

What's the latest news about famous investors and traders?

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I thought it would be fun to find out what the famous investors and traders are up to these days. Some have retired a long time ago, and some are still working hard with making money from the financial markets.

David Einhorn. He's still trading as usual since he predicted the fall of Lehman Brothers. You can see the latest trades by his company and his view on the markets in this article: The latest trades from David Einhorn.

Ed Seykota. He was one of the pioneers of systems trading and is currently running The Trading Tribe, which is an association of people who commit to excellence, personal growth, and supporting and receiving support from each other. He's still performing "The Whipsaw Song" as seen in this clip from October 2013: Live Whipsaw song by The Ed Seykota. In 2012, Ed Seykota wrote the foreword to the book The inner voice of trading (click on the link to read the foreword). 

Update! There's a new (2014) interview with Ed Seykota available here: Ed Seykota Interview with Michael Covel on Trend Following Radio.

Julian Robertson. He has retired and invests his personal wealth in hedge funds controlled by former employees of Julian Robertson's old hedge fund. But he had also invested in Apple, but he decided to sell his Apple holdings after he read the Steve Jobs biography. The reason was that Julian Robertson thought Steve Jobs was a "really awful" person. "I came to the conclusion that it was unlikely that a man as really awful as I think that Steve Jobs was could possibly create a great company for the long term," Robertson said. "I just don't believe bad guys do well in the long run." (CNBC). 

Michael Steinhardt. In 2004, Michael Steinhardt came out of retirement to work for WisdomTree Investments, where he now is the chairman. The company is currently the industry's fifth largest ETF provider. In an 2009 interview by Bloomberg, it was revealed that he still owns his zoo and you can see a picture of a bird (unknown if it's the blue crane that used to follow him around his mansion). In another interview from 2013, it was revealed that he's not "very long," so he doesn't believe the market will continue to increase (Market folly).


Nassim Nicholas Taleb. He's currently tweeting, writing books, and is a "scientific adviser" at Universa Investments and the International Monetary Fund. In an interview from 2012, he argued that the reason to why banks today are having trouble is because they are too big. The big banks used to be smaller and their employees used to be more paranoid - they didn't want to use any complicated instruments such as derivatives. They hated everything they didn't understand and they hated everything with an equation in it - you need an equation to calculate the value of a most derivatives. The big banks are today more international, arrogant, and the probability they will blow up has increased - as we saw in 2008.

Paul Tudor Jones. He's still trading at Tudor Investment Corporation. In February 2013, Forbes Magazine revealed that he was one of the 40 highest-earning hedge fund managers. He's still fighting the battle against admires who post his documentary, Trader, on YouTube and other video sites. According to a rumor, Paul Tudor Jones hated the 1987 documentary so much that he bought up all the videotape copies in existence and asked the public network to stop airing it. According to Insider Monkey, his fund's holdings included (unknown if long or short) LyondellBasell, AIG, Baxter, Merck, and Wellpoint.

Peter Lynch. He's currently working with The Lynch Foundation. Established by Carolyn and Peter Lynch in 1988, it provides assistance to programs primarily in Massachusetts with an emphasis on education; culture and historic preservation; healthcare and medical research; and religion. You can see a recent interview with them here: Growing tax free. Peter Lynch used to control the Magellan fund, but the fund is now in decline. Between 2000 and 2012, the fund had net withdrawals of more than $63 billion, topping every other mutual fund (Wall Street Journal).

Richard Dennis. According to Wikipedia, he has been active in Democratic and Libertarian political causes, most notably in campaigns against drug prohibition. 

Salem Abraham. He's still trading from Canadian, Texas. The return are available on his company's website:
  • 2013: 1.91% (9 months)
  • 2012: -5.60%
  • 2011: -5.10%
  • 2010: 8.56%
  • 2009: -5.55%
  • 2008: 28.80%

Nick Lesson. He's the most famous rogue trader. Barings Bank collapsed thanks him when he had lost £827 million ($1.3 billion) from futures contracts. If you want to learn more about Nick Leeson, you can watch the movie Rouge Trader or read the book with the same name. Nick Leeson was released from prison in 1999 and is now a speaker about risk and corporate responsibility. You can visit his homepage here: NickLeeson.com

October 25, 2013

Thoughtful tweets by Nassim Nicholas Taleb

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A Black Swan. Source: Wikipedia

Nassim Nicholas Taleb is the author of books like Fooled by Randomness and The Black Swan. The latter book has nothing to do with the movie - it is a book about predictions. The basic idea is that it is impossible to predict the future since we can't predict Black Swan events. Once upon a time, everyone thought that if you looked at a swan, it had to be white. Then we discovered Australia and the black swans living there. There was no way someone could have predicted that swans also could be black by only looking at white swans in Europe.
"One single observation can invalidate a general statement derived from millennia of confirmatory sighting of millions of white swans. All you need is one single black bird."

When Nassim Nicholas Taleb is not writing books, he's using Twitter. If you don't follow him, you can find him under the Twitter-nickname @nntaleb. Compared with Warren Buffett (@WarrenBuffett), Nassim Nicholas Taleb is a more active user and has made more than 2,300 tweets. Warren Buffett has only made 4 tweets.

This is a collection of a few memorable tweets. Notice that I've taken the freedom to improve the readability of a few tweets. For example, in Twitter it's common to write "w" instead of "with" because the number of characters is limited to 140. In this collection I've changed all these to improve the readability for those who are not used to this "language."
People love variety with restaurants: they eat Chinese, Italian,…, but when it comes to religion they stick to one for worship and holidays.
Intellect without balls is like a racecar without tires. 
I want to write books that only those who read them claim they did. 
When I die, I want the highest number of firemen, risk takers, & other real people and the smallest number of academics to attend my funeral.
Looks like the only people who do not think that economists are bullshitters are economists.
Imbeciles summarize the black swan by "shit happens." Intelligent people say "Let us learn how not to be a Turkey."
Studying neurobiology to understand humans is like studying ink to understand literature.
Be polite, but ignore comments, praise, and criticism from people you woudn't hire.
Concern for financial panics in place of nonfragiltiy of system is like worrying about being caught rather than avoiding the action itself.
Discussing growth without concern for fragility: like studying construction without thinking of collapses. Think like engineer not economist.
To be genuine, if you dismiss criticism by the herd, you must also ignore its praise.
The problem with the idea of "learning from one's mistakes" is that most of what people call mistakes aren't mistakes.
The only people who think that real world experience doesn't matters are those who never had real world experience.
Those with brains and no balls become mathematicians, those with balls and no brains join the mafia, those with no balls and no brains become economists, and those with balls and brains become entrepreneurs and traders.
Hotel heuristic: In a new hotel, always reject the first room they give you.
In a conflict, people who claim they "don't have an opinion either way" tend to side against the injured or weaker side.
Attention authors: if a reviewer writes a unfair review of your work, contact me, I can be very unfair in reviewing his review.
Why is it that book reviewers get flustered when authors review *them* back, exposing nonsense/competence?
When hospitals go on strike and limit activities to vital treatments, area-life expectancy rises. Hopefully, same with government shutdown.
War make the most sense for arms dealers, markets make the most sense for stockbrokers, and schools make the most sense for administrators.
Many take refuge in software and mathematical objects because, unlike humans, you can trust that they won't betray you or stab you in the back.
Virtue is when the income you wish to show the tax agency exceeds what you wish to show your neighbor.
The absurdity of money is that it is only good for you if you don't spend it.
Finance professors have the highest salaries in academia, we overpay for them to stay on campus.
The way people reveal unconsciously that an action would be in their best interest is by telling you that it is "in *your* best interest".
Something despicable in finance people who, hearing about a massacre in Egypt, focus on its effects on the country's bond yields.
My rule: I never make a forecast or recommendation with risks unless I have something to lose if I am wrong. Never.
Business books on success makes readers both depressed and unsuccessful.
You can smell failure when someone only talks about his successes; success when he talk about his mistakes.
The danger of reading financial & other news: that things that don't make sense start making sense to you after progressive immersion.
As a child I wondered whether the difference between modern art and caricature was cultural construction for the rich. Still wondering.
Using "hunger" to justify GMO is like using economic hardship to justify Russian roulette.
Why are are all angrier with governments spying on us than with the more insidious, totally unchecked (and less fragile) Internet companies?
Unless you are a schoolteacher, you want to make the maximal number of costless mistakes. Life is not about right or wrong, but payoff.
The value of higher education is learning from academics to become what they are not, to use them as moral and practical inverse role models.
The greatest missed opportunity in history: the 2008 bankruptcy of Goldman Sachs. The world today would have recovered to be a better place.
The only valid political system is one that can handle an imbecile in power without suffering from it.
Time for the education system to realize that slow learners are deeper, more robust, & unlike nerds, make small, rather than large mistakes.
For bitcoin to make it it needs to be banned by a few governments and critiqued by policy makers. Otherwise it will fade.
Journalism is an honorable profession with dishonorable people; mafia/prostitution are dishonorable professions with honorable people.
If you find something "interesting" but save it to "read later", odds are that something in you isn't interested & you will not read it later.
Over-nutrition now killing far more people than hunger, and comfort is killing much more than violence.
Instead of journalism progressing into becoming more scientific, it is that science that is becoming more and more journalistic.

October 23, 2013

How Europe almost ran out of timber and how it relates to peak oil

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One of the best performing stocks this year is Tesla Motors - the stock has rushed from $35 to $164. The company was founded in 2003 and the main investor behind the company is Elon Musk, who is also the CEO. The main reason to why Elon Musk became interested in electric cars is because of the fact that the world is running out of oil. This is also known as peak oil. He argued how the problem that the world is running out of oil is one of the largest problems we as humans have to solve:
If we don't solve that in this century, we're in deep trouble. It's not like there's some infinite oil supply. We are going to run out of it [oil]. We will run out of even the fracking resources.  

Those who don't believe in peak oil are comparing oil with other commodities to prove that the world will never run of of oil. It is true that the Earth hasn't been depleted of any commodities. But the main difference between oil and other resources is that we can't grow oil in the same way as we can grow trees. Oil can't neither be recycled in the same way as we recycle metals, because we burn up the oil in our vehicles.

The Earth hasn't been depleted of any resources, but individual regions have been depleted of resources. You can also compare peak oil with the extinction of a number of animals, like the Dodo bird, which has been extinct since 1662. Despite the fact that the Dodo reproduced itself, the number of Dodos peaked, and then they disappeared forever.

Maybe the best resource comparable to oil is timber. One of many good examples of peak timber is what happened on the Easter Island in the South Pacific. As shown in the drawing below, the island was covered in dense forests.

Easter Island before peak timber. Source: Science

And this is an image of the island today:

Easter Island after peak timber. Source: Wikipedia

Around 1400, the Easter Island palm became extinct due to deforestation by the island's growing population. The inhabitants could no longer build canoes to find food outside of the island, so they began to consume land birds, migratory birds, and mollusks. They could do this until peak bird happened. As the forests lost their animal pollinators and seed dispersers, the number of trees decreased even more.

Peak timber did not only happen on the Easter Island, it also happened in Europe and in the Middle East. Thousands of years ago, the mountain slopes in the Middle East were covered with massive cedar forests. These forests disappeared about two thousand years ago as the timber was needed for the construction of ships and buildings.

The Europeans used trees as fuel and as building material. It was also common to cut down trees to have somewhere to grow food. The Vikings deforested Iceland, and the Romans deforested Sicily and other parts of their empire. When the forests were depleted in already occupied regions of the Roman Empire, they ordered the military to occupy areas with a plentiful supply of timber.

Maybe the main reason to why the Europeans in the western part of Europe became the great explorers was because of the availability of timber. Without its forests, Europe would never have been able to undertake the exploration of the world. The countries in the Middle East and the southern parts of Europe didn't have the same possibilities because of peak timber. Venice used to be a country of great explorers until they ran out of timber. Spain took over as a country of great explorers until they also ran out of timber. This allowed England, France, and Holland to build large fleets of ships so they could take over Spain as the masters of the sea.

But neither the forests in western Europe were endless. The first signs of peak timber in England were noticed during the wars against France in the 1620's. But the shortage was saved by imports of timber from the Baltic region, Scandinavia, and the colonies in North America. As the industrial revolution increased the demand for timber, England couldn't import enough timber, so in the middle of the 18th century, the deforestation of Europe led to an energy crisis.

To replace timber, the Europeans began to use coal. But neither coal was an endless resource. In the middle of the 19th century, England began to run out of coal, and the English coal production peaked in 1913. To replace coal, England began to use oil. As both timber and coal peaked, so will oil, and the question is when it will happen? Elon Musk expects that peak oil will happen around year 2020 and the world will finally run out of oil in 2050. The current amount of oil available was estimated to 1 258 billion barrels. As the world consumed 87 million barrels per day in 2010, the remaining oil will last for about 40 years.

Source: Consequences of Deforestation on Easter Island, Deforestation by regionDeforestation during the Roman periodThe Role of Wood in World History, The Engineer, Peak coal

On the importance of recognizing the 80-20 rule of thumb

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Also known as the Pareto principle, the law of the vital few, or the principle of factor sparsity - the 80-20 rule originates from the beginning of the 20th century. The Italian economist Vilfredo Pareto observed how 80 percent of the land in Italy was owned by 20 percent of the population. He could also observe how 20 percent of the pea pods in his garden contained 80 percent of the peas. The 80-20 rule may first seem like a joke, but it's actually a very important rule to remember as a rule of thumb. It has been shown that:
  • 80 percent of your profits come from 20 percent of your customers
  • 80 percent of the complaints come from 20 percent of the customers
  • 80 percent of a company's sales come from 20 percent of the products
  • 80 percent of a company's sales are made by 20 percent of its sales staff
  • 80 percent of your profits will come from 20 percent of your trades
  • 80 percent of your blog's views will come from 20 percent of your articles

If we apply the rule to Apple's iTunes store, we can see that the rule is not 100 percent accurate. We can argue that 80 percent of the apps have never been downloaded once, and of the downloaded apps, 80 percent are free apps. In an earlier article, Lessons learned from two of iTunes's most successful games, it was saw that 60 percent of the apps in iTunes have never been downloaded once, and 90 percent of the downloaded apps are free apps.

The rule is closely connected to the fact that it's often impossible to achieve a 100 percent perfect solution to a problem you want to solve. Peter Norvig, who work as a Director of Research at Google, recalled the German saying about the perfect being the enemy of good.
We [Google] are out here to provide the solution that makes the most sense and if there's a perfect solution out there, probably we can't afford to do it. We're just going to do what's the most important now. You have to think how much is it going to benefit the customer if I go from 95 percent to 100 percent on this feature vs working on these ten other features that are at 0 percent. At Google, I think it's easy because we have this "launch early and often" philosophy. Look at all the software bugs on your computer. There are millions of them. But most of the time it doesn't crash. The bug-free software for the space shuttle costs $1500 a line.

Source: Wikipedia, Coders at Work

October 22, 2013

How to add stock charts to your website or blog

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This is a tutorial on how you can add stock charts to your blog.

Method 1.
Visit Google Finance or Yahoo Finance, navigate to your favorite stock, press the print screen button, paste it in your preferred image editor, edit the image, and upload the image to your website. The main drawback with this method is that if you want an updated chart, you have to make another print screen and redo the entire process.

Method 2.
Embed a chart from Google Finance by using this code snippet:

<img src="https://www.google.com/finance/getchart?q=AMZN&p=20Y&i=86400" />

Where:
  • AMZN is the ticker symbol. Amazon in this case
  • 20Y is the time - as in 20 years. If the stock hasn't existed for 20 years, the chart will automatically begin on the first day of trading. You can change this to 20d for 20 days, and 20M for 20 months
  • i is currently unknown and I will update as soon as I find out

This is the result:


Method 3.
Visit wikinvest and use their Embed Stock Chart service. This is the result:


The drawback with this method is that you have to use flash, so the chart will not be shown on your iPad.

Method 4.
Embed a chart from YCharts. This is the result:

AMZN Chart
AMZN data by YCharts

This last method seems to be the best alternative. The chart will be displayed on your iPad and you can modify the chart in multiple ways when you create it.

Method 5.
If you need a chart that display the price of a commodity, such as sugar, you should embed a chart from Index Mundi.

Sugar - Monthly Price - Commodity Prices - Price Charts, Data, and News - IndexMundi
Method 6.
Embed a chart from Quandl, which is a site that have collected data from across the globe.

Graph of ICE Sugar No. 11 Futures, Continuous Contract #1 (SB1) (Front Month)

October 21, 2013

Book review: The Everything Store

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One of today's really powerful entrepreneurs is the founder of Amazon: Jeff Bezos (pronounced bay-zose). He might not be as famous as Steve Jobs, but he has built a company as powerful as Apple. But Amazon (not Amazon.com since March of 2012) is not Jeff Bezos's only company. While Steve Jobs reinvented movies with Pixar, Jeff Bezos plans to reinvent rockets with his rocket company Blue Origin. Other projects he has include the 10,000 Year Clock:
We are building a 10,000 Year Clock. It's a special Clock, designed to be a symbol, an icon for long-term thinking. It's of monumental scale inside a mountain in West Texas. ...a Clock that ticks once a year, where the century hand advances once every 100 years, and the cuckoo comes out on the millennium.
I'm Swedish and Amazon is not big in Sweden, there's no Amazon.se, so Amazon to me was an online store where you could buy books, movies, etc. But a while ago, I found an article called "Who's afraid of Jeff Bezos." The short article listed everything Amazon really is, including book publisher, developer of e-book readers, owner of several large websites like IMDB, a provider of computer infrastructure, and much more. Jeff Bezos's large vision behind Amazon has begun to be reflected in stock price ($AMZN):
  

To learn more about Jeff Bezos, his companies, and his projects, I decided to read the newly released book
The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone. I had earlier studied one of his companies called Blue Origin when I wrote a biography on the entrepreneur Elon Musk, and I had also studied Amazon in a few books were the company was briefly mentioned, and in articles. 

Jeff Bezos early life can be compared with other well-known entrepreneurs. He grew up in a so called dysfunctional family - his mother met a new husband who adopted Jeff Bezos as his own son. His real father had problems and saw Jeff Bezos for the last time when the soon-to-be billionaire was three years old. The Stanford professor, Steve Blank, argued that a disproportionate number of entrepreneurs grew up in similar dysfunctional families. Steve Jobs was adopted, and the parents of Elon Musk (founder of Tesla Motors, SpaceX, PayPal, SolarCity) divorced when he was nine years old. Starting a company is a chaotic process and growing up in a dysfunctional families prepares you for these endeavors - or as Elon Musk often says: 
Starting a company is like eating glass and staring into the abyss of death. 
"Staring into the abyss of death" means that the entrepreneur is constantly facing the extermination of the company because 90 percent of all new companies fail. "Eating glass" means that the entrepreneur has to work with the problems benefiting the company most – not the most fun problems. The Everything Store reveals how Jeff Bezos ate glass and stared into the abyss of death when he founded Amazon. It revealed how the analysts argued how Amazon would die after the crash of the dot.com bubble, how Amazon had to kill the bad ides they had spent millions on, how to deal with top employees who began working for Google, and the logistical nightmare behind how to deliver everything to anywhere.

Jeff Bezos is smart and has a high working morale. He forced his employees to work as hard as he did. If they failed, he had the same temperament as Steve Jobs. Those who failed could hear something like; "I'm sorry, did I take my stupid pills today?" or "Are you lazy or just incompetent?" The employees were encouraged to use cars to get to work - not travelling by bus - because Jeff Bezos thought they would work late in the evenings if they didn't need to schedule their travel home. Some employees couldn't handle it, but those who could were rewarded by a career and wealth from the increase of the stock price.

If you were as uninformed as I was about Jeff Bezos and his companies, you will learn everything you need by reading The Everything Store. Because Jeff Bezos didn't participated in the book himself - he thought it would be difficult to tell the true story of Amazon because history in hindsight is often different from what really happened. So the book might not be as detailed as the book on Steve Jobs regarding facts about Jeff Bezos himself - and it might be as exciting. The problem with the story of Jeff Bezos is the lack of really dramatic events. The story of Steve Jobs included when he was fired from Apple, how he saved Apple from death, and when he got cancer. The story of Elon Musk included exploding rockets and how he almost died from malaria. The life story of Jeff Bezos is less dramatic, so the book may sometimes be a little dull. But it was worth the read and is as well-written as the book on Steve Jobs.

(Adlibris, Adlibris, Adlibris, Bokus, Bokus)

October 18, 2013

Why relentless.com redirects to Amazon

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Every journey has a beginning. As so many other journeys of newly founded companies, Amazon's journey began in a garage in 1994. The founder of the company, Jeff Bezos, and his small team had severe problems with coming up with a name for the company. Amazon was originally called Cadabra because it had a magical feeling to it (as in Abracadabra) - but they realized people confused the name with cadaver (a corpse). Other ideas they registered were Awake.com, Browse.com, Bookmall.com, and Aard.com. Yet another name they thought of was Relentless.com, which both Jeff Bezos and his wife really liked, and they liked it so much that they still keep it. So if you type in Relentless.com, you will be redirected to Amazon.com.

But how did they come up with Amazon? Jeff Bezos searched through a dictionary and found the Amazon river, which is the world's largest river. "This is not only the largest river in the world, it's many times larger than the next biggest river. It blows all other rivers away," Jeff Bezos told his team. The name was a perfect fit for the company because, already at these early times in 1994, he wanted to build the world's largest bookstore. In the screenshot below, you can see how the Amazon river snakes through an A in Amazon's first logotype.

Amazon in 1995. Source: Kokogiak

When the above site appeared on the Internet, no-one could have guessed that Amazon would grow into:

Source: The Everything Store, Sam Gerstenzang

Anecdotes from The Engineer

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I've already given away some information from the book by answering questions at Quora:

I've also written a few articles related to Elon Musk:

In the future, I might tell you why Elon Musk named one of his dogs Hamlet (and it wasn't because Hamlet had a foot fetish) or how Elon Musk was two days away from dying of Malaria. If you can't wait, you should skip a few beers to afford the book (or combine both) and read about it in the book.

How to build online communities

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The Truly Monumental Guide to Building Online Communities is a free book (pdf with 147 pages), you can pick it up online here: Mack Web Solutions. It promises to help companies who want to build an engaged audience around their brand. If you have no audience at all, it will help you to build a community of lifelong customers, but the book is also for companies who would like to improve their existing communities. These communities consists of your current and potential customers, your peers, the leaders/innovators in your industry, and the visionaries from any field that inspire you. The book targets mostly Internet-based companies, but I'm sure someone who hasn't an Internet-based company can find some valuable insights from it.

To build an online community, you have to identify, reach out to, and enter into relationship with the online community of the diverse pieces that compose the sphere of your business. This relationship can't, like any healthy relationship, be bought. To form this relation ship, you have to:
  • Listen and respond to your community
  • Understand your community
  • Provide valuable advice or insight to your community. This is the most important advice - you can't build a sustainable online community without a great product with valuable content. For example, this book review will hopefully be valuable content to my community.   

Here are some key-points from the book:
  • You don't have to be on every social media platform known to man. And never automate social media. You need to be aware of what's happening and engage as a human with humans. Or as the book concluded, "The absolute best way to build community is to remember that you are a person among people." This is similar as the thoughts by Gary Vaynerchuk and his book "The thank you economy." He built a wine store by interacting with people on Twitter for seven hours a day.  
  • Building a community is not a process with an end - no matter how large it becomes. It's rather common that large companies tend to forget about their respective community as they grow.     

October 14, 2013

Lessons learned from Paul Willard's talk on Growth Hacking

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A few weeks ago, the free book, The Definitive Guide to Growth Hacking, traveled around Internet like a scalded troll (Swedish expression for viral). At the end of the book, the author of the book, Neil Patel, argued that the company Atlassian is a role model on how to grow a company. The book said:
Atlassian is one of the fastest growing software companies in the world and they also have one of the most sophisticated growth hacking teams that I've ever seen. They approach their experiments with the rigor of a scientist, and they use machine learning models to refine their process over time. They have one group focused specifically on new customer acquisitions, and another group focused exclusively on the funnel once they are inside the product. It's a well oiled machine. 
But here's the rub; they are an enterprise B2B software company, selling products that the general public has never heard of. They have boring products that enable communication and collaboration within software environments. They are not spreading because they are sexy. They're growth hacking their way to the top. If you ignore Atlassian, and the companies that are following their lead, then good luck competing in the future.
So I thought it was a wise idea to research exactly what Atlassian are doing to be such a role model. It turned out that the Chief Marketing Officer at Atlassian is Paul Willard (Twitter, LinkedIn, Blog) and he has given a lecture on the subject.



Lessons learned
  • He learned the basics of growth hacking from NextCard in the late 1990's
  • He holds an M.Sc in Manufacturing Systems Engineering from Stanford, where he learned Japanese manufacturing concepts (Lean), and he can use those concepts when growth hacking
  • The saying "If you build the best product, you will win" is not true - the product will not travel around the Internet like a scalded troll. You also have to learn how to fail fast (2 month per A/B test is too slow)
  • Temporarily change what you want to test front-end since it's easier. If it's working, you can change the back-end code
  • For each person in the group working with growth, try 2 new ways each week to bring in new customers, while at the same time you continue with the old ways of bringing in new customers
  • A couple of tests each week per person is enough
  • Business changes, so what didn't work a year ago might work today
  • Read everything on behavioral design by Robert Cialdini, Dan Ariely, and Nir Eyal (Blog)
  • Speed of the website, call to action buttons, and grouping/contrast of the website are important
  • Don't A/B test your core repeat usage product (the customer will become annoyed) - it's better to use beta in that case. Only A/B test newsletters, tutorials, first-time user signup, etc
  • Keep things simple
  • An A/B test can also teach you about your market/segment

Book review: Predictably Irrational by Dan Ariely

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Written by Dan Ariely, the book Predictably Irrational is a bestseller that promises to answer questions like, "Why do our headaches persist after we take a one-cent aspirin but disappear when we take a fifty-cent aspirin?" and "Why do we splurge on a lavish meal but cut coupons to save twenty-five cents on a can of soup?" It will also explain why the salaries of the top CEOs have increased so much, you can find the answer here. You can say that the basic idea is thus to tell the reader why we humans are not making rational decisions. This knowledge can be very useful. We can "trick" our neighbors, co-workers, and customers - but above all, we avoid getting tricked ourselves.

In economics, rationality provides the foundation for economic theories, predictions, and recommendations. The rational economic model says that we are capable of making the right decisions for ourselves. But humans are not rational - we are irrational - and we are not only irrational, we are predictably irrational. Our irrationality happens the same way over and over again.

There are several books within the same area - another well-known is Influence by Robert Cialdini. Before I began reading Predictably Irrational, I had already studied Influence, so I thought they would be similar to each other. It turned out that some of the conclusions from both books are similar to each other, but they are explained in different ways. So to get most out of the field, and if you have a time to spare, you should read both books. The main difference between the books is that Predictably Irrational talks more about the financial markets, so if you are interested in the financial markets and have only time to read one of the books, you should read Predictably Irrational. The book begins with a common conversation from the financial markets:
- When there's a lot of money on the table, people think especially hard about their options and do their best to maximize their returns. One person makes a random mistake in this direction, another makes a mistake in the other direction, and, collectively, all these mistakes cancel each other out.
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Doing their best is not the same as being able to make optimal decisions. What about Enron? What about the incentives of money managers, who make big bucks when their clients do, but don't lose anything when the opposite happens? In such environments, where misaligned incentives and conflicts of interest are endemic, people would most likely make the same mistakes over and over, and these mistakes would not cancel each other out.

The problem with the financial markets is that it's almost impossible to determine who's right. To determine that, we would have to make several experiments, but we can't run one version of the stock market multiple times. We can save historical data and try to draw conclusions from the data, but the financial markets consist of more parameters that's impossible to simulate because humans engage in actions and make decisions that are often divorced from rationality, and sometimes very far from ideal.

After the financial crisis of 2008, the former chairman of the Federal Reserve, Alan Greenspan, explained how shocked he had been when he realized the financial markets didn't work as he had anticipated. The markets should have automatically self-correct as described by theory - but they didn't. He said he made a mistake in assuming that the self-interest of organizations, specifically banks, was such that they were capable of protecting their own shareholders. What we've learned is that we can't rely on standard economic theory alone as a guiding principle for building markets and institutions. It has become clear that the mistakes are not random, but part of the human condition, or:

"In theory, there's no difference between theory and practice, but in practice there's a great deal of difference."


To explain why we are so predictably irrational, the book consists of thirteen chapters. In the latest version of the book, you can also find a chapter where Dan Ariely discusses why the 2008 financial crisis happened and its consequences and what he believes should be done to avoid a similar situation. Each chapter covers one topic and the proof consists of experiments made by the author and his co-workers. The test-subjects in each experiments are generally college students.

Each chapter in the book includes several examples from the non-academic world. One interesting example described why humans are fooled by the word "free." The online store Amazon wanted to sell more books and promised their customers that if they ordered books for more than $30, the shipping of the books would be free. As you might suspect, the amount of books ordered from Amazon increased everywhere around the world - everywhere except in France. What the French division of Amazon had decided to do was to not offer the "free" shipping, but "almost free" shipping. The French customers had to pay $0.01 for shipping if they ordered books for a sum above $30 - and that $0.01 had made a big difference on the number of books the French customers purchased. When the French began to offer free shipping, the number of books ordered from France increased.

So if you haven't read Predictably Irrational, you should read it. Alternatively, you can read Influence since both books are quite similar to each other. No matter which of the books you read, I promise you will learn something useful and hopefully make fewer psychologically mistakes in your future life. 

October 9, 2013

Chef Marcus Samuelsson interviewed by Google

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Google has two underrated YouTube Channels. The first one is Google Tech Talks where you can watch recorded lectures from Google that are dealing with technical subjects. The second channel is At Google Talks which is similar to the first channel but the lectures are less technical. Among other occupations, you can see interviews with politicians, authors, and chefs. One of the chefs interviewed is Marcus Samuelsson.


Marcus Samuelsson was born in Ethiopia. When his mother died from an illness, and his father didn't know the siblings had survived the same illness because he was in another village, everyone thought Marcus Samuelsson and his sister were orphans, so they were adopted by Swedish parents. When he grew up in Sweden, Marcus Samuelsson wanted to become a soccer player, but his coach thought he was too weak compared with the rest of the team, so the team kicked him out. The interesting part here is the then unknown fact that Marcus Samuelsson was one year younger compared with his team. No-one knew how old he was when he was adopted, so the immigration department had to guess. This might have been the reason to why he was not as athletic as the rest of the team.

Soccer was Marcus Samuelsson's life, and when he was forced to leave his beloved soccer team, he was really angry, but calmed down and decided to become the best chef in the world. To become the best, he realized he had to practice with the best. The best chefs didn't live in Sweden, so Marcus Samuelsson traveled around the world to work at the best restaurants. Before he settled in New York, he worked in Austria, Switzerland, France, and on a cruise ship.

In his biography, Yes, Chef, he explained how he had to give up everything to be able to become the best. He didn't have time to meet his then girlfriend and daughter, and because he was so exhausted from the pressure to perform, he had to learn how to sneak away from the kitchen unnoticed so he could throw up in the bathroom. But the long hours gave a result and he became a chef at the restaurant Aquavit (the name originates from a Scandinavian liquor) in New York. To find new dishes to serve, he traveled around New York on roller skates. He tested everything he could find, and to afford the most expensive dishes, he had to eat the dishes without any wine.

At the end of the book, he talked about how he had been responsible for the first state dinner of the Barack Obama presidency. After the dinner, the President visited the kitchen. One team was so exhausted that he said "Yes, Chef" when the President had asked him a question. When Marcus Samuelsson came back to New York, he served the same food as he had served the President to the neighboring kids. He though they might become as inspired as Marcus Samuelsson had when he worked in the kitchen with his grandmother.

October 6, 2013

How the Mighty Fall applied on BlackBerry

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Jim Collins has written several books on the subject of company sustainability and growth. The books follow companies from the birth to the bitter end:
  • Good to Great - Will explain how to transform a good company into a great company.
  • Built to Last - When your company is great, this book will explain how to keep the company great.
  • Great by Choice - Why some companies survive a state of chaos - such as the credit crunch of 2008, and spikes in the price of oil - while other companies perish under the same conditions.
  • How the Mighty Fall - Investigates how and why a once great company begins to decline and how to reverse the decline

This article will explain how the model from the book How the Mighty Fall can be applied to the once great Canadian company BlackBerry. Released in 1999, the first BlackBerry device was an email pager, and the company would become one of the great developers of mobile phones. The stock market reflected their greatness:

The BlackBerry stock. Source: Yahoo

From the stock chart it's easy to see that something happened in 2008/2009, and that something was first Apple's iPhone and then Google's Android. Due to the competition, the number of US BlackBerry users peaked at 21 million users in the fall of 2010. The question is why the decline continued and if the decline can be reversed? According to the book How the Mighty Fall, the decline of a company can be described by five stages. It's possible for a company in decline to skip one of the stages, but most companies in decline follow this model:

The five stages of a company in decline. Source: How the Mighty Fall

  1. Hubris born of success. The company becomes arrogant and loses sight of the true underlying factors that created success in the first place.
    • BlackBerry argued how keyboard-equipped phones had always done well with corporate customers and how it would be a mistake to follow Apple and Samsung who sold touchscreen phones.
    • The executives argued how they had time to reinvent the company because they had managed to do so in the past.
  2. Undisciplined pursuit of more. The company makes undisciplined leaps into areas where it cannot be great or the company tries to grow faster than it can hire great people. When an organization grows beyond its ability to fill its key seats with the right people, it has set itself up for a fall.
    • BlackBerry expanded fast across the world. In 2009, Fortune said that BlackBerry was the world's fastest-growing company. But the large company became a slow company, thus they were always late to launch new products.
  3. Denial of risk and peril. Managers in the company begin to ignore negative data, and focus only on the positive data. They blame external factors for setbacks, rather than accept responsibility.
    • The market for keyboard-equipped mobile phones was dead, but you could still hear BlackBerry executives saying "I don't get this" when they saw a touchscreen phone. They thought customers bought the BlackBerry because of the keyboard. One the other hand, other executives said "If that thing [the iPhone] catches on, we're competing with a Mac, not a Nokia." But concerned executives were dismissed as non-team players.  
    • An executive argued how the launch of a new phone was "an overwhelming success" when the sales lagged behind the iPhone and customer returns were high.
    • Feedback from customers never reached the co-CEOs (BlackBerry had two CEOs) because top executives didn't want to.  
  4. Grasping for salvation. The company tends to hire a charismatic leader or outside savior that's supposed to save it, it tries different bold strategies, creates products or acquires companies that doesn't fit within the Hedgehog concept.
    • BlackBerry had a plan to convince wireless carriers to replace SMS with SMS 2.0 called BBM (BlackBerry Messenger). It became the company's top strategic priority, but was killed in 2013.  
    • BlackBerry's "iPhone killer," the Storm, was cobbled together quickly and wasn't ready for the market. The customers hated it.
    • BlackBerry acquired Torch Mobile that had created a mobile Internet browsers, but it was complex and time-consuming to re-fit this browser for the BlackBerry phones.
    • To satisfy both consumers and corporate users, the BlackBerry phones were equipped with camera, games, and music applications. But the large corporate customers didn't want personal applications on corporate phones. Neither consumers were satisfied, they wanted apps but it was difficult to develop apps for BlackBerry's system.
    • Delayed with six months, the PlayBook (BlackBerry's "iPad killer") lacked third party e-mail and apps.
    • BlackBerry recruited an "outside savior" -  the artist Alicia Keys as a Global Creative Director.
  5. Capitulation to irrelevance or death. The setbacks starts to erode the financial strength of the company, and key persons abandons the company.
    • In Q2 2013, the company reported a USD 965 million loss, primarily due to unsold phones. The company cut 4500 jobs - or 40 percent of the workforce. 

In September 2013, BlackBerry signed a letter of intent to be acquired for $4.7 billion by a consortium led by Fairfax Financial with the intentions to take the company private. But can BlackBerry be saved? According to How the Mighty Fall, it can, and the book includes several examples of companies that were in decline before they recovered. These companies include the steel producer Nucor and retailer Nordstrom

October 4, 2013

Lessons learned from two of iTunes's most successful games

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It's not easy to make money from an app. According to Forbes, the average life-time revenue of an app in iTunes is $4000. While the same number for Google's app store is $1125, the same number for Microsoft's app store is only $625. But don't expect to make $4000 by developing an app. According to research by Adeven, 60 percent of the apps in iTunes have never been downloaded even once. To make it even worse, research by Gartner revealed how 90 percent of the downloaded apps are free apps. On the other hand, the developer of the free app may make money from it by having a so called F2P (Free 2 Play) monetization. For example, the popular game Candy Crush Saga is a F2P/freemium app where the customer is given the option to pay for certain parts of the game. Another popular game in iTunes is Angry Birds - which is not a free game so you have to pay for it if you want to download it.

Games like Candy Crush Saga and Angry Birds are not difficult games to make from a programming point of view, but there are some tricks the developers of the games have used to increase the probability of success. The basic mechanics behind a game like Angry Birds is not new, a similar game called Gorillas arrived in 1991. As in Angry Birds, the player in Gorilla chooses and angle and a force - the only major difference between the games is that the player fling bananas at the other player (it's a two player game). In Angry Birds, the player fling birds against pigs.

Gorillas. Source: Wikipedia

The questions is why Angry Birds players are spending a total of 1.2 billion hours in the game? According to an article by MauroNewMedia, there are are number of reasons to why Angry Birds became a success. One of the reasons include the game's interaction model which is easy to learn because it allows the user to quickly develop a mental model of the game's interaction methodology, core strategy and scoring processes. Another reason is the fact that the game is not realistically fast. If you had launched a bird in real-time, the bird would have traveled faster, but in Angry Birds you can see how the bird travels towards the target in a way to help the player become better. This is a bit related to trading software:
"This problem is a vast and complex issue for screen-based trading systems where error correction is not only essential, but also career threatening."
Other points include the use of short-term memory management, the added mystery to the game, and the sound. The audio in Angry Birds was developed to enhance the player's experience by mapping tightly to the player's simple mental model of the game's main conflict between the birds and the pigs. A voice in Candy Crush Saga had a French accent, but the developers had to change it because the players didn't like it.

The colorful puzzle game Candy Crush Saga is played by 45 million people each month and generates $633 000 each day despite the fact that you can download it for free. A game like Candy Crush Saga is not hard to develop - there's no complicated three-dimensional graphics - the basic idea behind the game is to drag candy across the screen. If at least three of the same types of candy is on the same row/column, the candy disappears and the player is rewarded with points. The number of levels is almost unlimited since they are added continuously by the developer.

One of the key points to why Candy Crush Saga became so successful can be described by the partial reinforcement effect. The game is random so you never know if there's an reward arriving soon so people keep playing. To motivate people to play even more, you can compare your score with your friends. With a gameplay based on pattern recognition, Candy Crush Saga taps into our brain since humans are trained to search for patterns. If we find a pattern, we do not only get happy about it, the game will also give us a reward.

While you have to pay to download the full version of Angry Birds, Candy Crush Saga is free and the developers hope that you will pay money in the game. I'm not saying that Candy Crush Saga uses all techniques - it's impossible to find out - but there are several ways to convince players to purchase items in a free game:
  • You can use an in-game currency in a way so the players don't think of it as real money. These games often use another exchange rate - 1 USD should not be the same as 1 game-currency-dollar. Also make sure the player doesn't have to leave the game when buying this new currency
  • The player can skip a level or get help on a level when the player really need it and think it's a good idea to pay for it. In Candy Crush Saga, the player has the option to buy an extra life for real money or wait 30 minutes to get a new life for free
  • You can design the game where the first part of the game is based on the player's skills, but then it becomes harder and harder so the player is almost forced to pay money for help so the player can continue until the end - if there's an end?
  • The overall skills of the paying player can improve compared with the non-paying player - like in an aircraft where you may pay a little more to get a better seat
  • When the game notices that you are willing to pay money to get an advantage, the game can become more difficult so you have to pay even more money
  • You can add "useful" hints that tricks the unaware player to believe these are really helping the player to become better - but they are helping the player to screw up so the player is forced to pay more money 
  • Give the player a free reward after an achievement - then threaten to take the reward away if the player doesn't pay for it. The player is now more motivated to pay money to keep the reward compared with if the player had not been given the reward for free

Source: Forbes, phone Arena, Helsingborgs Dagblad, MauroNewMedia, Yahoo Finance, Financial Post, Valleywag, Gamasutra

October 3, 2013

The number of failures before success

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This will become the complete list on how many times an individual or a company failed at a task before they became successful. If you want to add a person or a company to the list, please leave a comment.
  • SpaceX's first rocket, Falcon 1, failed three times before it became successful
  • The book The 4-Hour Workweek by Tim Ferriss was rejected by 25 publishers
  • Richard Branson founded 400 companies before he found a successful idea
  • Colonel Sanders, founder of Kentucky Fried Chicken, was turned down 1009 times when he tried to sell his now successful fried chicken recipe
  • Sylvester Stallone was rejected 1500 times when he tried to sell in the movie Rocky
  • James Dyson manufactured 5126 prototypes of a vacuum cleaner before he found a good design
  • PayPal changed business idea 5 times before they found the idea behind the company we know today

October 2, 2013

Tim Ferriss On How To Growth Hack A Book

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Tim Ferriss. Source: Forbes

Tim Ferriss became famous (and wealthy) after publishing the book The 4-Hour Workweek. The book became a bestseller despite the fact that over 25 publishers had rejected it. He has since then published two more books with the same theme: The 4-Hour Body and The 4-Hour Chef. These later books were as successful as The 4-Hour Workweek, so I thought it was a good idea to investigate what Tim Ferris marketing tactics were. While the typical US nonfiction book sells fewer than 250 copies per year, and under 3000 copies in its lifetime, Tim Ferris sells a considerable amount of more copies. I've published my own book called The Engineer which is a biography on the entrepreneur Elon Musk, so I can hopefully use some of the same marketing hacks.

When Tim Ferriss wanted to publish The 4-Hour Chef, he realized that 700 bookstore boycotted his book because he published it through Amazon. This was not a good start. So what he did was to begin marketing the book as an online startup. Most other authors spend two year of their lives writing a book and then they release it and sell their 250 copies of it each year - and that wasn't good enough to Tim Ferriss.

  • To help him, he contacted Ryan Holiday who is considered to be a marketing wizard  
  • The 4-Hour Chef consisted of several different topics so he could market each topic to a specific audience interested in that specific topic. You can see the insane long list here: (The 4-Hour Chef Launch - Marketing/PR Summary of Week One)
  • He released the first chapter of the book together with (at least) 680 mb of behind-the-scenes content on the torrent site BitTorrent. The same torrent network is famous for helping people downloading (pirating) illegal copies of books
  • He created a series of campaigns: Booksellers got the opportunity to travel with him. Fans who created their own trailers for the book got the chance to win a $2500 reward and a hour long conversation with Tim Ferriss himself. Those who bought his two earlier books got the opportunity to get the new book for free
  • When he released his first book, and to find out which title/cover to use, he printed different covers and attached them to books by other authors. He then traveled to airports where he put a fake book on a table, and from distance he could now see people's reactions when they picked up the book. He could now find the most popular title and cover
  • He conducted as many fast low-cost experiments as he could, and then he tried to scale the successful experiments. An eight second book trailer was one of the successful experiments
  • When he began to write the book, he asked his blog readers what they thought the weaknesses were of the current books with similar topics. He argued how he got more information from his blog readers than what he gave them with his three books
  • If you have 1000 hard-core fans, you will never have a marketing problem. Don't ask yourself "How do I sell as many copies of the book as possible" - ask yourself "How can I create content that appeal these 1000 fans." This is the article he got this idea from: 1000 True Fans
  • Your book should fit into a new category that doesn't exist. For example, the 4-Hour Chef is a cookbook for people who are not reading cookbooks, and that category didn't exist before
  • If you want to become a better marketer, you should read: Benjamin Franklin by Walter Isaacson who also wrote the Steve Jobs biography
  • Hire a good editor
  • He gave away 1000 copies of a book before the release to friends, companies, contributors
  • Carpet-bomb the Internet with information of the book for a short time - don't bomb the Internet for seven months


More articles in the same series: Best technical and creative writing resources