Posts Categorized: Longform

The Rise of the Attention Economy

I’ve been thinking recently about how time is being replaced with attention as the scarcest, and most important, economic resource. This trend is manifested in a few ways. For example, while twentieth century consumers bought time-saving products, twenty-first century consumers will buy attention-saving products. I’ll talk more about the implications of this below, but first, how did we get here?

(Note: this article by Venkatesh Rao provided a lot of inspiration for the following post. He’s more than a few levels above me in writing/thinking skills, so if you enjoy this post, I’d suggest checking out his).

The attention economy is a product of the information revolution. In their time, the industrial and agricultural revolutions also created new economic orders. There have been many revolutions, but these were the only three that changed the fundamental nature of wealth, scarcity, and growth. Between them, these three revolutions split economic history into four distinct phases.

Isaac Lewis
6th March 2012
Longform
10 comments

I read two interesting articles about learning recently, both from the same website. The first is based on this academic paper, and talks about how almost all skills follow the same power law curve. That is, you start off learning rapidly, but then you hit diminishing returns where you see less improvements for the same time spent practicing. There’s two suprising things here: one is that you do keep on improving, even when you’ve reached a high level. The improvement becomes very slow and hard to measure, but it is there. The second surprising thing is that every skill the researchers looked at followed this curve. They speculate that it’s either due to the way the human brain forms new connections, or it’s because most subjects are hierarchical – you start off by learning low-level, commonly-used actions, and slowly advance to learning higher-level patterns and strategies that provide less immediate value.

The second article was a review of the book Mastery, by George Leonard. The book draws on the author’s experiences with aikido to analyse what it takes to reach mastery with any skill — in particular, how hard it is.

In his book Zen Mind, Beginner’s Mind, Zen master Shunryu Suzuki approaches the question of fast and slow learners in terms of horses. “In our scriptures, it is said that there are four kinds of horses: excellent ones, good ones, poor ones, and bad ones. The best horse will run slow and fast, right and left, at the driver’s will, before it sees the shadow of the whip; the second will run as well as the first one, just before the whip reaches its skin; the third one will run when it feels pain on its body; the fourth will run after the pain penetrates to the marrow of its bones. You can imagine how difficult it is for the fourth one to learn to run.

When we hear this story, almost all of us want to be the best horse. If it is impossible to be the best one, we want to be the second best.” But this is a mistake, Master Suzuki says. When you learn too easily, you’re tempted not to work hard, not to penetrate to the marrow of a practice.

“If you study calligraphy, you will find that those who are not so clever usually become the best calligraphers. Those who are very clever with their hands often encounter great difficulty after they have reached a certain stage. This is also true in art, and in life.” The best horse, according to Suzuki, may be the worst horse. And the worst horse can be the best, for if it perseveres, it will have learned whatever it is practicing all the way to the marrow of its bones.

This chimes with my experience.

These articles made me think more about some skills I’ve learned in the last few years, and how I’ve hit the intermediate plateau with a few of them. The phrase “intermediate plateau” comes from language learning, but again, can be applied to any skill. I hit the plateau with Chinese a while back — in the first 6 months of learning, I went from being unable to speak to being able to hold a basic conversation. In the last 4 years, I’ve gone from being able to hold a basic conversation to being able to hold a slightly-less basic conversation. This happens to everyone, but it was still frustrating when it happened to me, and it was especially frustrating because my mental model was the following:

That is, I thought that if I kept practicing, or found the right study technique, I’d eventually leave the platau and start progressing as rapidly as I did as a beginner. When this didn’t happen, I got dispirited. However, according to the “power curve” theory, the learning curve should actually look like this:

(This graph is wider, that’s intentional).

That is, there’s no easy way off the intermediate plateau. In fact, there’s no way off at all. You just keep steadily improving for a long, long time, until eventually all those tiny gains add up and you realise you’re become really, really good at whatever you were trying to do. There’s no fanfare when you cross that line, because there is no clear line between “intemediate” and “advanced”.

Where does the “good horse, bad horse” distinction fit into this? Basically, the “bad horses” are used to the grind and the slog. They never enjoyed a rapid initial learning curve as beginners, so when they hit the intermediate plateau, they just keep hoofing along as they did before. The “good horses”, in contrast, learned very rapidly as beginners. Their natural aptitude, combined with an ability to quickly figure out the tricks of the trade, meant they left the beginner stage very quickly, and so hit the intermediate plateau both faster and harder. The easy rewards of rapid improvement are gone, and now only grinding will help them improve. A diagram will make this easier to explain:

A good horse in this situation has 3 options. They can give up, like the horse in the diagram. They can try and find more “tricks” that will help them advance as rapidly as they did as beginners, like I did when studying Chinese. Unless they recognise that such tricks are going to give diminishing returns, they’ll get dispirited and give up. The only real solution is to start grinding.

There’s two more tweaks I want to make to the above learning curve:

The first is adding a “noob” stage. This is the point before things “click” — you’re either unable to integrate what you learn into anything useful, or you’re not even trying to improve. You’re just doing it for fun, or you haven’t made a concious effort to get better. Some people leave the noob stage very quickly, others never do. You know you’ve left the noob stage when you start making rapid improvements. I would call this the “true beginner” stage.

The second change is making the intermediate plateau fractal — that is, it has the same structure as the overall learning curve, just at smaller scales. Mastering any skill involves mastering a bunch of subskills, each of which follows the same learning curve. That is, you might be intermediate at the language in general, but your pronunciation is still at the noob stage. So you dedicate some time to learning pronunciation, pass through the “rapid improvement” phase for that sub-skill, and become decent at it. Your overall language level will have increased slightly. There’s always under-optimised sub-skills for any skill, but as you approach mastery, learning any individual subskill has less and less impact on your overall abilities.

I’ll end with some examples from my own experience, to make all this clearer. I’ve already mentioned Chinese, so here’s two more:

Texas Holdem Poker

I’d played poker for years with high school friends. None of us were any good — there was one guy who’d read a few strategy articles, and that was it. Because poker is very random, it’s easier for beginners to think they’re better than they are — get lucky a few times, “omfg, I’m good at this!”. So I stayed at the noob stage for a long time.

Then at university I met a big group of people in first year halls who played regularly. A few were quite experienced, and I quickly realised just how bad I was. I’d make mistakes that would cause everyone to laugh. I tried learning from them, read a few basic strategy articles online, but somehow I wasn’t getting any better. Then I passed a turning point where I managed to get enough grasp of the fundamentals to start winning consistently. I kept reading articles and applying the lessons I learned, and kept progressing rapidly. A few months later the guy who was probably the best player in that group said he considered me the second best, and someone else remarked on “how fast I’d come up”.

I started playing online, and won a bit, but plateau’d hard soon after. After a point, poker takes a lot of time and patience to make any real progress. And of course, to play against higher-level people, you need to risk more money. Eventually I decided that learning programming would be a better investment of my time, and quit playing poker seriously.

Programming

I can pinpoint almost exactly when I passed out of the noob stage with programming. It was when I first started working on my own serious projects.

I’d done little bits of pieces of programming since the age of 8 — just little scripts that would do things like play tunes or crash Excel. (Quite a few people managed to teach themselves programming at that age or younger, so it’s not as impressive as it seems, just one of those things kids aren’t supposed to be able to do). Anyway, I think I stayed at the “noob” stage for about ten years, right through the first term of university. This time, it was because I didn’t practice much and had little guidance on how to get better. Even after starting a CS degree, I was learning lots about object orientation and other basics, but none of it was coming together into any kind of practical skill.

Then I decided to teach myself web programming, beginning with my own online multiplayer game. This started what hackers call the “larval stage”. In a few months I managed to teach myself HTML, CSS, PHP, MySQL, Lisp, Clojure, Ruby, Ruby on Rails, emacs, Javascript, AJAX, regular expressions, sysadmining Linux and the basics of software engineering. (If you’re not a techie, that means I’d gone from unable to make websites to quite good at making websites). I remember a lot of late nights spent coding, and the feeling that if I kept learning at the current rate, I’d reach Linus Torvalds/Peter Norvig levels within a few years.

Then, after learning Javascript, I plateau’d. I wasn’t aware of it at the time, but I’d learned all the fundamentals of web development. I still had a lot to learn — at the time, I think I dove into learning more about web servers — but the practical gains of each new piece of knowledge became less and less. The obessesion evaporated pretty quickly after that. For about a year from mid-2010 to mid-2011, I think I did almost no programming outside of university work. Looking back, I’ve learned quite a bit since then — HTML5, Android, machine learning — but nothing as revolutionary as those first few months.

Until recently, I’d been feeling a bit burned out with programming, which was one reason I was inspired to write this post. I think I need to mentally accept the fact that progress is going to be slow and difficult from now on, but that it is worthwhile. I have definitely been improving, albeit slowly, and I still know lots of people who are a few levels — or more — above me. Working hard at something is a lot easier when you’ve accepted the need to work hard.

What skills are you currently working on, and where on the learning curve do you see yourself?

Recently I’ve been running a small side project selling posters. The idea came from the University of Warwick Memes Facebook Group where me and a chap named Leigh Dawson both made images inspired by the popular “Keep Calm and Carry On” posters. A few people commented, saying they’d like the designs as a poster. Seeing an opportunity, I got in touch with Leigh and James Thake (a Warwick graduate who polished the designs), suggesting we work together to get the posters made and sold and split the proceeds.

They were favourable to the idea, and we got our first batch of posters sold earlier this week. So far we’ve made a (small) profit. Along the way, I learned a lot about the ground-level, tactical details of running a business that weren’t apparent before. I’ve spent a lot of time reading about business, both in books and online, but you know what? You can get a basic grasp of the high-level strategy that way, but you really have no idea until you actually go out and do it.

It’s like the sports fans that know exactly how the team’s manager should be doing their job. From an outsider’s perspective it all seems so easy. Why doesn’t Costa copy Starbucks and have staff write down customer’s orders? Why doesn’t Transport for London copy Hong Kong’s MTR and clean their tube stations? (And maybe make their service actually affordable and reliable while they’re at it)? But viewed from the inside, there’s a million more pressing details, any one of which could kill the whole enterprise if it went wrong.

Selling posters was a tiny venture, but it brought up a whole bunch of business issues. And this was for a project that involved a handful of people, about two weeks time and a few hundred pounds in revenue; I can’t imagine the pressures of running a billion-dollar corporation with tens of thousands of employees. Here’s a summary of what I learned.

Lesson 1: The Lean Startup Approach

I wasn’t sure where to begin at first. Was it worth paying to get posters printed without knowing if people would pay for them when they arrived? And how much could I charge? I needed to ascertain if there really was a demand.

Then I remembered the “Lean Startup” approach, which suggests making a minimum viable product to gauge demand. The MVP might be a working demo or prototype, but it can be more minimal then that. I decided to make a pre-order form for the posters, with a range of prices on offer. Although the form wouldn’t take payments, it would be a pretty strong signal of intent to purchase (or lack of it). It would also gauge how much people would be willing to pay.

It worked. I got my first pre-order about 5 minutes after setting up the form. The orders came so rapidly after that, watching them come in was addictive. The idea was validated.

Lesson 2: Manufacturing

The next step was getting the posters printed. There were lots of little issues here — tweaking the designs, getting the files in the right format — but they were mostly straightforward.

The hard problems were deciding which posters to print, how many, and from whom. The printing industry has massive economies of scale, and it works out a lot cheaper per item if you get a larger print run. That is, I would be better off getting many copies of one or two designs. On the other hand, we had five designs offered on the pre-order form, in four different sizes (big mistake there, eh?), and people had ordered a whole range of them. If I didn’t satisfy these people, would I be leaving money on the table? And some people had said they’d pay extra to get their posters early. Would it be worth using two printers, one fast and expensive, one slow and cheap?

These problems seem a lot simpler when it’s not your money at stake. In the end, we decided to order two designs in two different sizes, and use a slow-and-cheap printer. Right choice? No idea.

Lesson 3: Pricing

Students are pretty cheap, and keeping the price low would increase demand. But some pre-orders had been willing to pay £18 for their posters, and if you undercharge people who would willingly pay more, you’re leaving money on the table. It’s the classic price-demand curve. Again, it’s a much harder problem when you’re faced with the prospect of people calling YOU a rip-off and a terrible person if your prices are too high (which happened), and losing money if your prices are too low (which also happened).

What you really want is for everyone to pay what they’re willing to pay. Except that’s not feasible. Another way is to have a tiered pricing structure, like Starbucks has with their coffee. Small black coffee? £2. Want more coffee, fancier coffee, flavour shots? Price goes up. Remember how I made the big mistake of offering too many options? It’s not a mistake from this perspective. People could order an A3 poster for £5, or an A1 poster with fast delivery for £18 (people did, too), or somewhere in the middle. In the end we ended up one print run of A3 and A2 posters, so people who might have paid £18 ended up paying a maximum of £10. Mistake? Hard to say.

Another issue was whether to lower the prices from the pre-order form. After printing in bulk, the price per item turned out to be quite low, and it would have been possible to lower the prices a fair bit and still make a per-item profit. But people had been willing to pay the existing prices. It seemed people who wanted the posters felt the prices were fine, and so lowering the prices wouldn’t have attracted more customers, only left money on the table. And like most retail businesses, despite a high per-item profit margin, our overall margins were low, mostly due to unsold stock. In the end, we kept the prices the same.

(Why did I order so much stock? Because of the economies of scale, it worked out a lot better to order too many than too few posters. Again, one of those things that’s easier to appreciate when it’s you running the numbers and your money at stake.)

Lesson 4: Marketing

Marketing, I think, was the biggest weak point of the venture. Most of our traffic came from the Facebook group, but people were posting constantly to the group, meaning our advert would disappear quickly. We posted a few times but didn’t want to spam people.

We also did some offline marketing, by sticking flyers up around campus. Considering the business, getting hold of flyers wasn’t hard (we just used some of our excess posters), but sticking them up took a long time. Flyering is an effective way to get the attention of university students, but you have to be ubiquitous (we weren’t). We flyered some of the “designated flyering points” on campus, but not everyone walks past those. If you flyer other places, they might get taken down quickly, wasting your time.

There’s a few guys who occasionally hold a proper poster stall at Warwick, and they stick up proper signs all around campus, along with a notice saying the signs will be removed at the end of the day (so campus security doesn’t remove them first). Both more effective and efficient than our approach. I’m definitly going to try and market our next stall more seriously.

Lesson 5: Sales

Actually selling the posters was the biggest “grind”, though also the most rewarding part. The few hours I spent at the stall by myself, not making sales, were really tough. I just felt incredibly stupid accosting people and trying to get them buy silly posters. And the buzz when people actually turned up and began forking over their hard-earned was amazing. I also realised the benefit of having good salespeople — it’s not something that comes naturally to me, but I was doing an OK job. Then my friend Teenie showed up (she owed me a favour for helping her set up her blog) and immediately began hustling to get people to come over and buy. Impressive to watch.

I can also see why business programmes like The Apprentice make such a big deal out of selling. As well as being the business function that directly brings in cash, it’s also the best way to get a ground-level, detailed view of your market. You’re on the frontlines, seeing directly who is buying, who isn’t, and what it takes to get them to open their wallets.

Lesson 6: Legal

We didn’t break any laws selling the posters, but we did, er, stretch a few campus regulations. Warwick in general does not look too kindly on students selling things on campus, especially if it takes away profits from Warwick Retail or the Student’s Union (“UK’s most entrepreurial university”, yeah right). Aside from that, we also needed a space to set up the stall. It’s fairly cheap to rent space inside the SU, but foot traffic there is not that high. We had a hard time getting hold of clear information about where else we could sell on campus.

In the end, we took an “easier to ask forgiveness than permission” approach and used the library. I didn’t know if this was permitted or not — I found out after setting up the stall that it wasn’t — but no-one from the library said anything during the 8 hours we were there.

Lesson 7: Public Relations

People in general have funny opinions about making money. I know I used to. So I was pretty apprehensive that I’d get shit from people once I actually started making sales.

In the end, most people were supportive and approving of what we were doing. Some people said they thought it was really cool (what can I say, some Warwick students are really fond of the Koan). There were a few people who declined to purchase once they found out it wasn’t for charity — fair enough, their money. There was only one guy who gave me serious shit about it, and posted on the Facebook group that we were fraudsters, mercenaries, etc.

It was pretty hard to not react emotionally to that, though I managed not to (imo). Most people were on our side so not much damage control was required. Still, the whole thing occupied my mind for way too long.

(I calmed down when I figured out what the guy was actually complaining about. It wasn’t that we’d stolen the designs (we hadn’t), it was the fact that the original “koan” meme wasn’t our idea. Which is a pretty flimsy criticism, and I realised the guy was mostly just trolling for the hell of it.)

Lesson 8. Making money is easy

Wealth isn’t money. Wealth is matter that’s in a form favourable to humans. So if you rearrange matter into such a form, you create wealth. Sounds easy? It is, really. There’s so many opportunities to make the world slightly better or more convenient for people, and you just need to find and exploit one.

Despite the complexity detailed above, all we really had to do was make some designs, get posters printed, and sell them to people.

Lesson 9. Making money is hard

We made a few hundred pounds selling posters. It also cost a few hundred pounds to get them printed, so we were only just breaking even. That’s not factoring in our time. We have a lot of stock left over and I think we can hold another stall and get more sales, but still, we’re unlikely to make a fortune. I’d be happy if we ended up making minimum wage for the time we put in. There’s almost no chance of making what I’d earn as a professional web developer.

So although there’s a lot of opportunities out there, big opportunities, and especially big, scalable, opportunities, are scarce. That’s one reason why a lot of these same university businesses crop up year after year. Every year, students begin reselling textbooks, running events, or printing t-shirts. If they’re lucky, they make a few hundred or even a few thousand pounds, but then find out they can get way more in a graduate job. So they quit, until someone else comes along and spots the same opportunity, and the cycle repeats.

The upside of this is that there’s always small opportunities out there. You could probably quantify the expected value of unexploited opportunities with a variation of the efficient market hypothesis. Obvious opportunities over a certain size will already have been gobbled up, but the small ones might still be worthwhile (And of course, there are plenty of big, but non-obvious opportunities).

Was it worth it? Yes. Although the financial rewards were miniscule, actually getting out there and hustling has taught me an incredible amount.