The neuroscience of a “gut feeling”

George Soros famously felt back pain when he knew something was wrong with his portfolio. This is what Daniel Goleman, the psychologist and author of Emotional Intelligence, would call a somatic marker—a physiological signal that guides decision-making. This subject—and much more—was covered this week in a fun conversation with author William Green. Among several subjects, the two explore how investors can manage emotions more effectively, “so they can think more rationally, reduce stress, increase their focus, and strengthen their resilience.”

“First of all, the brain is designed to register more strongly negativity than positivity because that helps us to survive. You want to remember the thing that’s dangerous. You want to remember the thing that’s a threat. You want to remember the thing you should never do again. And so, the brain is designed to imprint that memory more strongly than the pleasant things that happen. So that’s why all people, not just investors, overreact to bad news. That’s why newspapers are full of bad news because it’s captivating. It’s what we want to read about. It’s what the brain wants to know because it wants to learn the lesson.”

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How an unpopular 18th century French gunsmith helped usher in the modern factory 

My friend Michael Olenick wrote a great piece this week about the little-known Honoré Blanc, a.k.a. Le Blanc, a French inventor whose work on muskets helped drive innovation during the industrial revolution. “His invention — the industrialization of standardized parts — literally fits the world together,” Michael writes. “It’s the reason that whatever device you’re reading this one is able to display the information the same way.” It’s a great story about the unlikely roots of invention—and the hallmarks of product innovation that continue to be relevant for businesses today. Michael continues:

“Le Blanc was a gunsmith with the French army and realized the method could be miniaturized for muskets. Muskets were vastly smaller than cannons and bullets require vastly tighter tolerances. Creating a standardized musket, where each part could be interchanged, was significantly more difficult than creating a standardized cannon…. The benefits of an interchangeable musket in war were obvious: not only could bullets be created the same size, much like cannonballs, but soldiers could also be taught to assemble a rifle and, if their rifle broke, could use parts from a different one. Standardized parts were lower cost and higher value: the marker of a blue ocean invention.”

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The new business model of social media

Michael Mignano, a co-founder of Anchor and a former Spotify executive, wrote a compelling essay this week about the (potential) future of the Internet. His basic thesis is that the erstwhile era of social media is dead, or at least dying, and that we’re now pivoting into a decade of machine-learning-based “recommendation media” where algorithms take priority over the social graph and engagement.

In my view, this is an essential point and something anyone invested in the space should consider. That is: In the 2020s, platforms that can keep users engaged via AI-curated media and have significant global scale (i.e. Spotify, YouTube, etc.) could have enormous sustaining advantages over platforms that choose to prioritize social engagement (i.e. Snapchat, Instagram, etc.). 

“But in recommendation media, the algorithms that power distribution reign supreme. These algorithms, which are powered by machine learning, are unique, valuable, and grow in power and accuracy as a platform scales. Therefore, only the biggest and most powerful platforms can afford investments in the best machine learning algorithms because they are such expensive and resource intensive assets. In recommendation media, the platform with the best machine learning wins.”

A few more links I enjoyed: 

The Space Space: Part 3 “Anomalous Phenomena” – via Pippa Malmgren (H/T Andy Parker)
“It is strange to stand on the precipice of history and see the possibility that the discovery of anomalous phenomena may dwarf the discovery that the earth revolves around the sun, that humans evolve, that physics is Quantum and that time is an illusion. Like a big black hole in space, the words ‘We are not alone’ or ‘time is not a constant’ (see Scientific American July 26th) or ‘reality is about frequency’ all seem so simple and yet so dense with weight that we cannot imagine which human belief systems and institutions could collapse under the true meaning. The leadership challenge is almost unimaginable. First – how to explain the lie? Second – how to explain the truth? Third – how to help humanity successfully navigate in a world that might be nothing like what we thought it was.”

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