Moontower #15


I think, at a child’s birth, if a mother could ask a fairy godmother to endow it with the most useful gift, that gift should be curiosity. – Anna Eleanor Roosevelt

A fitting quote for a person whose life was so full and exemplary she was bestowed with 35 honorary degrees. 4 more than FDR according to the internet. But slow down with the curiosity Elle, we also know that curiosity killed the cat.

Just talk shop with an ER nurse or doctor and you know curiosity is often the active ingredient in achieving Darwin Award infamy. And if curiosity spares its quixotic owner’s life, it usually leaves a shame implant as a future reprimand. Like in American Pie. The movie, not the song. Jason Biggs won’t be thinking outside of any more boxes when it comes to baked goods.

So there can be too much of a good thing. Inverting, there can be too little of a bad thing. Or more directly, a bad thing in a low dose can be good. Just as prescribed burns can lower the risk of catastrophic forest fires and lifting weights can make you stronger by initially catabolizing muscle, complex systems like forest habitats and human bodies benefit from measured doses of stress. This is known as hormesis and follows a J-curve.

Credit: Rogue
Get 15 minutes of sunshine, you’re in the pleasant hot tub part of the curve. Fall asleep naked near the equator, you’re shedding skin like a cobra. Examples abound. Vaccines and flu shots. Adventure playgrounds instead of the sterile tort-resistant kids’ parks we have culturally settled on (h/t Avi for this great example).

What doesn’t kill you makes you stronger. Big deal, you’ve heard that your whole life and giving it a fancy name doesn’t make it any more revelatory. The concept is most familiar when the cause and effect are visibly linked. Hard but manageable sets of curls and you got a beach-ready gun show. Too much crossfit and rhabdo pays you a visit.

This gets more interesting when a complex outcome which cannot be tied back to a single cause is a candidate for hormetic remedy. A common example — by allowing companies to go bankrupt the whole economy is healthier as resources are directed towards promising projects as opposed to sustaining outmoded sectors. The complex and desired outcome is a healthy economy. The hormetic stressor is Chapter 11. Too much bankruptcy and you have a systemic collapse, just enough and the economy is sipping mojitos in the hot tub.

Injecting Hormesis into Your Company Strategy

Why bother?

This 1996 article (and edited by Cormac McCarthy!) made the case that traditional Alfred Marshall economics were not applicable to certain industries such as high tech knowledge businesses which were enjoying increasing returns (network effects are drivers that have drawn study only more recently).

Desired Outcome: Profitably navigating a rapidly changing landscape governed by rules of a new game.

A game that is riskier and less straightforward than selling widgets, but whose rewards are larger markets and outsize margins. “The ability to profit under increasing returns is only as good as the ability to see what’s coming in the next cycle and to position oneself for it“,

Hormetic Prescription: The company must favor flatter hierarchies and “commando units in small teams that report directly to the CEO…[they] need free rein. The company’s future survival depends on them”

Shouldn’t we do this in every business?

Not quite.

In an optimized, competitive industry with low relative complexity, this script would be inefficient just as you cannot afford a single wrong move when you play tic-tac-toe. To be clear, it remains that flat, less specialized organizations are likely inefficient in the high tech paradigm as well. The difference is the inefficiency is intentional and serves a function that is more highly prized in the “move fast and break things” industries. That function is learning.

The commando units on the ground can improvise but cost a premium. The company backers acknowledge that these costs, which look redundant or wasteful to an outsider, are part of the special sauce. Nature did not screw up when it gave you the second kidney even though its maintenance is not free.

Show me the onramp to agility

This is what Venkat Rao refers to as “fat thinking” and stands in direct contrast to top-down Six Sigma optimization principles. Fat thinking is a stew of hormesis, anti-fragility, redundancy, adaptability, and optionality. In this outstanding essay, you’ll learn:

  • Why leak-before-failure design is “intentionally and selectively underengineered to promote learning. The learning doesn’t show up in a spreadsheet though so the lack of optimization looks wasteful.”
  • Why it is positive-sum at a macro level and possibly suboptimal at the micro level depending on competitive dynamics.
    • Why a company needs to grow fast and wide to reap the value of this design
    • Why the “value of bolted on attempts don’t accrue to the owner”

Climb Higher

I’ve mentioned it before, but we are the only species confused about what to eat. If there’s another, please let me know. Chris uses this Q&A as a one-stop reference for nutrition. Its guiding principles, distilled from volumes of research, are revealed in this exchange:

Q: What happens when new information comes out, like, tomorrow? How can I stay up to date? It seems like the conventional wisdom on healthy diets changes all the time.

A:  It doesn’t, and the definition of a healthy diet has been clear for some time. In fact, the basic theme of optimal eating — a diet made up mostly of whole, wholesome plant foods — has been clear to nutrition experts for generations. What does change all the time is the fads, fashions, marketing gimmicks, and hucksterism. How do you avoid the pitfalls of all that? Focus on foods, not nutrients. A diet may be higher or lower in total fat, or total carbohydrate, or total protein, and still be optimal. But a diet cannot be optimal if it is not made up mostly of some balanced combination of vegetables, fruits, whole grains, beans, legumes, nuts, seeds, and water. If you get the foods right, the nutrients sort themselves out.

The plant-based meat market is the latest high profile food innovation. The health, environmental, and investment effects are heavily debated as expected. I had an Impossible Burger twice. Quick take:

  • I did not think they are as tasty as a medium quality burger like In N’ Out (If you think In N’ Out is “amazing” you are just a California homer. There, I said it.). Impossible burgers are adequate if you are in a place like Disneyland where I actually did have one.
  • I like that they exist if they will displace any of our demand for mass animal slaughter.
  • Are they healthy? Doubtful. They are loaded with ingredients but the relevant benchmark for judging their merit on a societal level is if they are healthier than what the consumer would have eaten instead. Your personal measuring stick will vary.

While we don’t eat too much red meat at home, summer grilling most definitely boosts the seasonal average. This is not without its risks. This article weighs the literature. It takes an even-handed approach on the risks of eating meat, but on the subject of grilling or preparing meat with high heat, it is flashing red warning signs.

I still plan on at least one batch of my smoked ribs this pool season.

Last Call

Please stay in the game. This story stands alone. A fund manager who I regularly follow put a very personal and important story out there. It should be a screenplay. Ending twist and all. It was viral on Twitter but Brenda sent it to me as well (she is one step removed from the author it turns out)

Some fun links:

  • “Gender reveals in Florida are getting out of hand.” Look here.
  • Marijuana Pepsi is smart and refreshing
  • Sometimes I wonder if I’m the asshole
  • Pink Floyd’s legendary guitarist David Gilmour auctioned over 120 guitars and amps. Proceeds are pledged to a climate change charity
    • “The Black Strat” is a special guitar. Gilmour used it to record some of Pink Floyd’s greatest music. He played it on “The Dark Side of the Moon,” “Wish You Were Here,” “Animals,” and “The Wall.”  The Stratocaster fetched a record $3.975m. Indianapolis Colt’s owner Jim Irsay was the buyer.

From my actual life 

We used our pool for the first time this weekend after finally fixing a few issues. Our pool solar lost a few panels during a storm this winter and we needed a new pump. Pool service is a “low professionalism” industry. Vendors don’t call you back and they are flaky. While the service that cleans the pool weekly is reasonable and actual pool repair makes Comcast customer service look like The Four Seasons. A pool tech in the east bay costs a minimum of $170 per hour. I suspect the peninsula and Marin techs charge even more. I’ve heard the reason is the regulation and cost of doing business is very high. Feel free to google “regulatory capture”. The entrenched pool companies likely welcome the regulations once they realize it’s a significant barrier to entry. Regulatory capture is insidious and you probably notice it everywhere. Anyway, having a personal ditch for your aquatic leisure is a First World problem so I’ll just end the rant there.

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