Knowledge Proxies

The world continues to increase in complexity. On average, we’re poorly equipped to handle this.

Our iPhones and Google empower us to “fact check” and “research” on the fly. While non-stop streams of propaganda (oops – I mean social media) color our opinions.

I often wonder if our perception of knowledge deludes us to our ignorance.

For instance, I know that I’m still fascinated on a regular basis about how abysmally little I know about the world around me. Even the simple stuff. Including things I feel like I know a lot about.

It’s honestly incredible people don’t regularly break down from the sheer overload of complexity in our world.

But beyond my ability to ask other people and observe, I’m limited to my own experience. Maybe other people are much smarter than me. (If I was a dick, I’d add a line here, like “But I doubt it.”) Or maybe most people find bliss in ignorance.

Regardless of how other people experience the world, what chance does a guy like me (who wants to “win” at life) stand at maneuvering through all the complexity? Without wasting my best years sticking my nose inside every textbook within reach.

Facing Down Ignorance

One thing I’ve learned is that I don’t know much about much – even the stuff I think I know a lot about. Re-reading that sentence reminds me of the infamous Mark Twain quote:

“What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.”

Mark Twain

But nobody likes to be a know-nothing (especially not me). So we do our best when we face situations where we risk exposing our incompetence.

There’s the “fake-it ’til you make it” crowd. Which I now consider myself expatriated from. Basically you just feign competence. Some people do this for posture’s sake. They’re not bothered by the truth of their own ignorance. Others do it to survive – believing firmly in their own ability to hustle and learn so fast they overcome their ignorance before they’re found out (this was me).

Either way, you can only fake it so many times before you’re eventually found out. This isn’t a long-term winning strategy, even if offers temporary gains.

Of course, there are other options too.

The abhorrent “I don’t know” camp comes to mind. This camp accepts the truth of reality agnostically. Whenever you encounter something novel, you admit the truth. “I don’t know.” Of course, that “I don’t know” could mean blind acceptance of your ignorance. Or it could be the fuel to your fire to acquire new information (this is the part of the camp I prefer to inhabit).

But we just can’t learn about everything. There’s simply not enough time.

So, how do we cope with an ever-increasingly complex world, with our ever-finite base of knowledge?

Here’s one potential solution: I like to call it the “knowledge proxy.”

The Knowledge Proxy

I want to tell you a story first before I tell you about knowledge proxies.

For those who don’t already know, one of my guilty pleasures is wine. I love it. Every aspect. I love to drink it. Smell it. Read about it. Learn about it. The history surrounding it. The drama of it. The scandals. The culture. The traditions. The formality. And maybe most of all is that wine demands its own pound of flesh from you before you can truly appreciate all that it has to offer. It’s one of those rare few things left in life that has an extremely high barrier to entry that even money can’t overcome.

Anyway, when I first fell in love with wine I knew very little about the subject. Which can be daunting. And expensive. But when you don’t have much money and you want to learn about something relatively pricey, you’ve got to learn how to place your bets effectively.

Which is exactly what I did when I made an accidental discovery. I take pictures of every bottle I drink that I enjoy. I take notes (even if only mental). At some point I noticed that two bottles I drank both carried the same note on the back – “Imported by Kermit Lynch.” (Who is a famous wine merchant, though I didn’t know it at the time.)

This became a beacon for me. When I didn’t know about a bottle and there was nothing around to help, rather than relying on my own limited supply of knowledge, I looked to the label. If I saw “Imported by Kermit Lynch” I read it as an endorsement – almost like insurance against buying a bad bottle.

It was not a perfect solution. But it did act as a filter. When you’re facing thousands of possible choices, sometimes all you need is a good filter. Rather than picking from among thousands, I found myself picking among dozens.

That’s a knowledge proxy.

Using Proxies to Navigate the World

Proxies, by definition, are simply a substitute. They do not fully protect you against your own ignorance. But they certainly can offer a hedge.

We all use them all the time already. Anytime we take a recommendation from someone. Or even when we rely on our own biases – after all, that’s really what biases are, anyway. They’re just shortcuts. Proxies for actual knowledge.

Proxies by themselves do not perfectly describe or define the world around us. But they can be useful in reducing the complexity enough that our simple ape brains can more effectively manage it.

But, just like anything else, proxies can be prone to error – especially if you’re using some other person’s opinion as a proxy for your own decision-making.

So tread with caution. Though here’s one tip, if I may.

Avoid Single Points of Failure

Having insufficient knowledge of a subject does not get you off the hook for making decisions. But it sure does increase the danger to you.

This is how people get taken advantage of. And if you’re a stupid person, I pity you. Unless of course, you’re stupid by choice. In which case, half of me envies you. And the other half wonders how you’ve survived this long.

Anyway, back to the point here.

Whenever you have insufficient knowledge, relying on a single proxy increases the risk of a bad decision. Because you’ve created a single point of failure.

I’ll repurpose the wine scenario to illustrate what I mean by this.

Let’s suppose for a moment that the “imported by” feature had been a bad proxy for selecting wine. Maybe I’d gotten lucky the first few times. What if I’d been wrong though, and more often than not it represented low-quality wines? That sure would’ve been sour grapes, huh?

While I my knowledge was limited, it sufficed. But as I learned more, I began to add additional layers of proxies.

Rather than rely solely on the “Imported by” proxy, I also began to catalogue the particular regions, grape varietals, and producers I enjoyed.

So I could confidently navigate a wine shop or wine menu by looking for multiple data points – multiple proxies.

If a bottle boasted, “Imported by” + “Desirable grape varietal” + “Region I’ve enjoyed”, then I could be reasonably confident about my selection – and thereby increase the bet I was willing to take (i.e. My willingness to spend more money on a particular bottle increases as my confidence in the selection does.)

The same thing is true in our day to day lives. This is the power of second opinions at work.

Proxies, by themselves, do not excuse us from responsibility for making decisions. They simply help us catalog the world around us when we don’t have all the information.

The more proxies you have, the more boldly you can navigate into uncharted territory. Of course, you can always supplement proxies with your own learnings, too.

But learning how to use proxies – and then layer multiple levels – that can be a true super power in an increasingly complex world.

Let’s Shake On It

I grew up in a place where handshakes mattered. Where a man’s word was his bond.

Call me old fashioned but the same principle still governs my worldview.

Doing business shouldn’t require contracts.

Except today, you’re probably making a stupid decision if you’re not getting something in writing.

Sure, contracts make things easier in some ways. Contracts define the scope of expectations for both parties. They provide a means for recourse if terms aren’t met. These legal instruments hedge against untrustworthy behaviors.

But contracts also create business friction. They introduce a third-party (lawyers) into a situation that could otherwise be settled between two competent, consenting parties. Contracts extend the sales cycle. They create a barrier to satisfying two party’s unmet needs.

Incentives matter.

People respond to incentives. Where there’s a big enough incentive, there’s also a temptation to violate an agreement. Sure, contracts provide an avenue for reconciliation in these cases – but at what cost? (Read: more lawyers).

Skin in the Game

As Robert Frost said, “Good fences make good neighbors.” In some sense, contracts are one way for a person to up the ante on someone else’s behavior. They add a little skin in the game for both parties.

Absent a contract, what’s the worst that could happen? Maybe it’s a line of thinking that ruining your reputation isn’t that high a cost. That with the right amount of money you can buy a new reputation – or better yet, buy the victim’s silence.

Kinda shady, right?

The Future

Blockchain holds a lot of cool possibilities for getting us closer to “handshake” agreements again. Not in the sense that everybody suddenly begins acting out of good faith. Rather, it takes everyone as they are. Hey, let’s just pretend everyone’s a shady motherfucker. Instead, imagine a world where people don’t have to trust one another to do business.

That’s not to say that blockchain will eliminate the need for trust. But what if it could minimize the need for trust? What if two parties could engage in transactions that didn’t require egregious legal fees, lengthy due-diligence, and an arthritic-inflicting pile of paperwork?

What if a handshake created an actual binding, digital contract? Instead of needing to “insult someone’s honor” or demand a contract – imagine if contracts generated spontaneously.

Pretty wild to think about, right? Maybe not.

Nice guys finish last.

Sadly, I don’t think honoring handshake deals is back on the rise. But the cost of transacting business AND providing means for enforcement is getting a lot easier.

I like to imagine a world where, instead of looking over your shoulder or worrying who’s going to screw you, you can confidently go about your business in good faith.

Maybe there’s still hope for the nice guys out there after all. But for everybody else, get it in writing.

 

 

 

 

 

 

 

 

Fix It Before It Breaks.

Innovation examines the whole world as a puzzle waiting to be solved rather than as a problem or nuisance of fate. Under this microscope possibilities to create and build a better one become endless.

I  bought into fear of innovation and change until I found a loophole. It’s a whole hell of a lot easier to embrace with the right mentality. Just focus on the reason innovation matters. It’s something we all know. Every improvement makes our lives better.

“Don’t fix what isn’t broken,” they say. How broken does something need to be before we replace it with something better?

Take the iPhone for example. I’ve heard sentiment expressed about the rapid release of newer technology.  Just ask around some afternoon. Before long, you’ll meet someone who expresses contempt that a newer version comes out every year. This frustration illuminates a common misconception about innovation.

Profit-motive might drive the innovation or it might not. The innovator might or might not have sinister intentions. It doesn’t matter. The product matters. So does the improvement the product yields for everyone who uses it. Every advancement, big or small, raises standards of living. Every advancement moves the world forward from where it was.

Innovation finds no satisfaction with the status quo. Intrigue prevails over frustration during gaps in performance or errors. Innovation figures out why these occur rather than damns them.

Innovation examines the whole world as a puzzle waiting to be solved rather than as a problem or nuisance of fate. Under this microscope possibilities to create and build a better one become endless.

Innovation and its entrepreneurial counterpart are at their core anarchistic. No set structure or central plan governs the moves. They testify of benefits from the chaos prevalent the absence a system.  In such chaos, harmony and spontaneous problem-solving arise.

Don’t believe me? Look around at any group. Be it work force, team, or committee, etc. In absence of guidelines for solving problems people spontaneously generate solutions. People naturally solve problems according to the information they have. I guess you could say there’s an innovator within us all.

That innovator needs to be unleashed. It needs to be given the proper fuel to enact change.  And it needs something to practice on. Lo and behold the world is full of problems waiting to be solved. The innovator needs to be given the driver’s seat.

Innovation doesn’t glimpse out into the world and witness problems. It looks at challenges as opportunities to create valuable solutions. It knows pessimism doesn’t solve problems. It arraigns criticism through speech as a hollow approach. Innovation attacks failing systems of thought by providing alternatives.

Innovation debates through the products of its ideas. It begins with a resolve to create. Innovation has little time for thought experiments. Innovation runs field experiments, instead.

Innovation and entrepreneurship witness harmony where once before only chaos existed. They see potential in everything rather than conflict or destruction. They trade in a doomsdayer perspective for hope and belief in ingenuity’s ability to solve problems.

Innovation recognizes alternatives as possible even if they don’t exist yet. That’s the essence of entrepreneurship and I believe it’s the foundation toward achieving a freer, more prosperous society.

Reputation Markets Change Everything.

Take-Home Message: The rules of the game are rigged against you. Do not be dismayed. Entrepreneurs to the rescue.

Before long, we’ll all be flustered, rushing to the accountant’s office with a stack of papers and a shoebox of receipts, begging them to perform a miracle. Meanwhile, we’re hoping not to get pulled over on the way to the office for speeding, or a seatbelt ticket, or for running a red light. Then, once we finally find a parking spot, we all hope that it doesn’t take more than 45 minutes, or we’ll earn a parking ticket.

You may have taken the highway to the accountants office, so, there may have been a toll. Of course, you’re already in your car, with your state-issued driver’s license, your mandatory insurance, tag, license plate, title and registration. Not to mention the money you put into the tank, or the oil, or the filter, or having the tire rotated recently. Those maintenance charges were all yours, though.

At every turn, there is a barrier. At every stop, there’s a new fine, tax, expense, surcharge, fee, or request for “charitable contribution.” On top of that, there are things to think about like putting food on the table, keeping the lights and water on, putting back for some future child’s college (or paying tuition already), regularly maintenance the vehicles, mow the yard, feed the dogs, clean the house, and on and on and on…

We stretch every dollar, nickel, and cent as thin as it will go. We stretch every hour and minute to cross of item after item of perpetually multiplying checklists. And for what? Is there a light at the end of the tunnel? Is there a way for our burden to be lifted?

How do we manage to juggle all of the impositions, restrictions, regulations, licensure requirements, fees, taxes, and (I’ll call it for what it is) bullshit that piles up commensurate our own lives’ duties?

One of the ideas I’ve been recently examining focuses on the role of entrepreneurship and innovation as means to combat these impositions in our lives and to free back up our money and time so we can spend both of them where we would rather prefer. So we can spend OUR money and time on OUR lives.

It’s basically the tangible application of public choice theory into the marketplace. , It’s ideas like Facebook, Twitter, Uber, Yelp!, Lyft, TaskRabbit, Tinder (Regardless of how you feel about it, Tinder achieves this), dating websites, AirBnb, HomeAway, and an exponentially growing number of other brilliant ideas from entrepreneurial minds.

It’s this concept of what I’ll refer to as reputation markets. Each of these takes the wants, needs,  and preferences of consumers, just like me and you, into account, and transforms not only the way we find businesses and people, but the way we perform transactions. And they’re drastically reducing prices for these things we want.

Not only do these lower transaction costs, though. These applications also provide a means of feedback. They put accountability back into the hands of consumers and service providers alike. It removes the need for “regulations that keep us safe.” It eliminates the middle man. It puts people with people. It’s the Peer-2-Peer revolution, and it’s dramatically transforming every facet of our lives–if we’ll only embrace it.

So, what does this revolution mean for us? It means that with every new advancement, we achieve a new means for finding whatever it is for which we are searching.

It means when I’m landing in an unfamiliar city, I don’t have to jump in a car with a cabbie about whom I know nothing. With the press of a button, I can signal my desire for a ride, while simultaneously checking out the reputation of the driver. And then I can punch another button and find a cool place to eat I’ve never been, and the driver can drop me off. And hell, if I have one too many drinks (and would prefer not to risk a DUI), I can just hit the same button again  to make it home safely.

It means when I’m doing an artistic portrait photoshoot and I need to find a lens that I don’t own, with the touch of a button and a quick charge to my VISA, I can summon this lens from outer space via the magic of entrepreneurial innovation and the stork will drop it off on my front porch the next day.

It means when I’m taking a vacation with my family but don’t want to stay at some cookie-cutter hotel or resort, I can search for someone’s vacation home and rent it directly from them for the amount of time I’d like to stay.

It means if I need something done around my house that I don’t know how to do or simply don’t have the time to do, at the click of a button, someone other people have trusted into their homes before me will show up and trade me money to accomplish the task at hand.

It means you can find someone with similar interests and connect.

It means you can find something to buy or rent. It means, too, that you can sell your stuff for cash. Instantaneously.

It means that we don’t need someone standing between us at every transaction. It means we don’t need anyone to keep us safe. We’ve got 2 billion friends out there watching our back, using their experiences to rate services at every turn–and this number is growing each day as entrepreneurs find creative ways to provide affordable internet worldwide.

It means you can have your life back and your money back. And it’s all right down the pipeline. So, pull out your Smart phone, visit the app store, and see what brilliant ideas entrepreneurs are cooking up to give you back your lives and hard-earned cash.

P.S.– As I spend more time in-depth researching these ideas, I will provide more data and scholarly resources to assess the way these innovations change human interactions in a positive way. (At least, that’s what I hope to prove).