Showing posts with label mean reversion. Show all posts
Showing posts with label mean reversion. Show all posts

Monday, July 18, 2016

irreducible experiences

Ah> we are back from Bangalore, Jispa’s first nationals. The nationals have a heats format wherein the heats are in the morning and the finals are in the evening. You have to make it to the top eight to participate in the evening. Jispa’s heats were in the morning and Jispa with Jasmine had reached a few days before. Acclimatizing to the pool, water and the whole experience is also important. Jispa was telling me that every swimming pool is different. According to her, each pool has its peculiarity as regards the water. Some water is heavy and some is light to push. The feel of the pool, the starting blocks and everything is different. So a few days in advance make a big difference.
Jispa is now at an interesting age. I bought her two swim books that are supposed to help you swim and get your technique right. This is obviously meant for competitive swimmers and iron out some flaws while explain the technique with some science backing it. She read them both, surprising me. And then we had a chat about it as well. She was explaining to me how the book helped her understand stuff as well as help her put words to what she instinctively knew. One interesting thing was, as she told me, she searches for still water to push. While your hand flows through the water, it pushes in an S shape flow, as hand goes through the water. This is essentially searching for still water to push through. Next she explained that the book helped her change the technique a little bit as she now modified her arm to have a higher arm action as she pushes through with larger force. She feels it has improved her stroke.
Wow. It felt nice to have such conversations with her. I have been learning from everyone and everything, it was about time that my daughter taught me stuff.
So, off to Bangalore she went for her first Nationals. I was to reach the place on the morning itself, hopefully in time for the heats. I take an early morning flight to reach Bangalore by around 7:40 am. The plan was to take an Uber and get to the city. Uber and Ola have really made travelling much easier across India and I am sure, across the world.  Cabs, have always been a pain in most cities, with unreliable service, hard to get cabs, bad drivers and shitty vehicles. These guys have solved these problems with having a service that is cheap and reliable. In most of the Indian towns it removed the scourge of the rickshaw which would be notorious for charging whatever they want and being militant about it. The rickshaw fares would invariably be 4 to 5 times the normal fare and he wouldn’t even bother to respond to you if you were going in the wrong direction of his choosing.
Bangalore, Delhi or any city, you had to land at the airport and take a pre paid taxi, which was the only safe way to get anywhere without being fleeced. Even that was an issue with these jokers finding different ways to catch you and extort money from you. The simple non a/c cabs would have their meters doctored and I remember not even bothering to look at the meter every time I had to take a cab to home from Mumbai Airport. I would step out and just place a 100 buck note in his hand. I knew that was the real fare and I would walk out fast, while he screamed abuses at me. All this has been solved with the arrival of the cab aggregators.
Good service, no fleecing, nice cars and reliable bills.
But hell, this is India. For every good thing we have a lot of people, ready at the wings waiting o get in. When you have enough people and lot of them, what you have is a really large sample. When you have a large sample, you have enough to get a mean. And you will have what we know as mean reversion.
Let’s see the math definition:
“Reversion to the mean, also called regression to the mean, is the statistical phenomenon stating that the greater the deviation of a random variate from its mean, the greater the probability that the next measured variate will deviate less far. In other words, an extreme event is likely to be followed by a less extreme event.
Although this phenomenon appears to violate the definition of independent events, it simply reflects the fact that the probability density function (x) of any random variable http://mathworld.wolfram.com/images/equations/ReversiontotheMean/Inline2.gif, by definition, is nonnegative over every interval and integrates to one over the interval -infty,infty). Thus, as you move away from the mean, the proportion of the distribution that lies closer to the mean than you do increases continuously.”

Or in simpler English:
“The mean reversion is the theory suggesting that prices and returns eventually move back towards the mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry.”

Or as I can explain – given enough instances – everything will become average. This is the truth of life. So while I was getting amazing experiences with Uber and yes the app experience is amazing – at some point mean reversion is going to happen and it happened (is happening as we speak).

I got out of Bangalore airport to get an Uber. The guy did not know the Uber designated pickup point, did not know the location, in fact he did not even know anything about the city. His car was not so much in a good shape and then he wanted me to pay for toll (always paid for in bill), and the worst – he wanted to fill diesel on my time.

I was running late and wanted to catch Jispa’s swim but this guy ready to make me reach late. In the end – I had to shot at him, that you are not filling fuel on my time. You will take me to the place I have marked off, NOW. This was the limit, it wasn’t going to work.

Jispa sees this streak in me. Suddenly I will lose it at some random guy for some random reason and take his case. Jispa and I have been talking about this. I try and explain to her that this is not a random fight. This is a very genuine reason to get angry. Don’t do silly things and piss me off and give some bull reason. You have to use anger for a reason and at the time you must use it to get something done.

On the way back to the airport – we were getting late and we got the driver to wait while we get the bags from the hotel. When we got the bags down the guy had disappeared. He had locked the car and gone somewhere. It was really really painful and I was really angry. I explained to Jispa that ‘at the time I was really angry but did I raise my voice of show anger?” “NO”. because it was not beneficial. I had no choice, the deed was done, my anger would have helped me reach nowhere. I would only get more late and the driver would just simply not be affected. It does not help. So anger is a weapon that must be used properly and against the right guy.

So getting back to mean reversion. That is the truth of life. You are going to be controlled by the averages. Your performance is going to be controlled by average people around you. You are destined to be average unless you are really really aggressive in pushing the boundaries in terms of actively removing below average people you interact with. When you remove people who drag the average down you automatically get a higher average because you have only the higher ones left. Now your average is better than what it was, but there is a caveat to this… SCALE! If you want scale you cant just start removing all that is below the average.
Most ideas work when the proposition is small to start with. When you have a limited audience and you want to maximize the experience for that. When you think its successful and then you want to take that and spread it around, that’s when the average starts to kick in. the pressure of growth is so large that it becomes near impossible to grow at the speed of the opportunity in front of you, and not be ruined by the law of averages. You have to keep a constant eye on the average and weed out the ones that drag down the mean.
This also comes with a high human cost. No – I am not suggesting that high averages are desirable or the right thing to do. It’s a choice you have to make. Everything comes at a cost. Especially scale. The question you have to ask is what do you want to achieve in life and what is the cost of achieving that. There is human costs on both sides, yours and on the others who happen to be below average. It easy when it comes to the outliers, the complete losers who kill you but as the bell curve property shows, maximum concentration happens around the mean. So these are difficult calls to take.
A higher mean is good for your sanity and you tend to then focus on smarter people who surround you, but then you can’t have scale then. If you want to have scale then you have to have a mechanism that attracts and retains only the top of the totem pole. This would mean a higher concentration of real top average people. When that happens, you will have too many awesome minds trying to fight amongst themselves and you will have your own set of problems with that. Problems of higher politics and higher ambition and everything else.
Nature is a balance… I am reminded of a book written on managing software projects called The Mythical Man Month. One of the points that the author makes is about complex systems have a certain amount of irreducible errors:

The tendency towards irreducible number of errors

The author makes the observation that in a suitably complex system there is a certain irreducible number of errors. Any attempt to fix observed errors tends to result in the introduction of other errors.


I think something similar is - an irreducible number of awesome experiences. Its going to catch up with you. Just wait!