Sunday Reads #110: Probabilities, Vaccines, and Failed Fat Startup Experiments
|Nov 15, 2020|
Hope you and yours are keeping safe (and sane).
Sorry for the radio silence. I had a particularly busy month at work, and with that and the doomscrolling, I couldn't get much reading done.
But I also did a little soul-searching, to define what it is I write about in this newsletter.
I could write about "whatever catches my fancy", but that wouldn't work. For one, it would be quite random and unpredictable for you. And two, it would make me less accountable - the goalposts would keep shifting, as my interests vary.
Instead, let me draw a line in the sand. Here's what this newsletter is about.
The aim of Sunday Reads is to build our cognitive toolkits for business. So that you and I don't have to learn by doing.
Every week, we'll look at a topic (or more) in business, strategy, or society, and apply a few mental models to them, to understand them better. For example:
Applying the concept of positional scarcity to predict the demise of a well-funded streaming video service (Update: I was right. More on that below).
Using game theory to predict the outcome of a legal tussle between two tech behemoths.
Applying economic models to understand why the stock market was hitting all-time highs, right in the middle of the pandemic.
Learning a key management principle from Nigerian scamsters.
I usually find mental models too abstract. I find frameworks too theoretical, and I struggle to apply them in practice.
By looking at real life problems through the lens of these models, I hope they escape the abstract realm. I hope they help us become sharper thinkers when we encounter problems of our own. So that we can make the right decisions, and make them faster.
With that, let's get to this week's newsletter.
[PS. If you like what you see, do forward to your friends. They can sign up with the button below.]
1. Would you take a COVID-19 vaccine right when it comes out?
Last week, there was early positive news about the efficacy of a new COVID-19 vaccine from Pfizer.
The stock markets celebrated. But on social media, a lot of people said they wouldn't take it immediately.
I saw comments like, "I'll take it after the first 50 million people take it". Or, "I don't want to be the experimental monkey" (this was on a very popular podcast).
To be fair, I understand what they're saying. Yes, the race to develop the vaccine has been very politicized. Yes, it's coming out in record time.
I understand all this.
But still, I disagree. I'll take the vaccine as soon as I have the chance to.
The search for the vaccine is politicized, yes. That's a good thing - we are in a health emergency!
Governments are facing a sort of Sophie's Choice: lock down and cripple people's livelihoods; or don't lock down, and cripple the healthcare system.
So yes, they have a lot riding on a vaccine coming through quickly.
But guess what, so do the rest of us. The WORLD needs the vaccine out soon. That's why there's so much investment. That's why there are so many vaccines in trial (a dozen in phase 3 trials, and 150 more in earlier phases).
So that we get a vaccine that works, and we get it quickly.
On the one hand, we believe that investment can accelerate vaccine development. Yet, on the other, why are we surprised when vaccine development is actually accelerated by our efforts?
This is an "isolated demand for rigor".
Why are we setting such a high bar of efficacy? "I'll only take it after the first 50 million do"?
It's not like we are this rigorous in other areas of our lives.
We hire people with three interviews. We decide that a politician is a modern day prophet (or that the same one is a manifestation of pure evil) based on some news articles.
Now you'll say, sure, but this is my health we're talking about here.
Well, guess what, we do the same when it comes to our health.
We decided to take fats out of our diets in the 90s, without any scientific evidence that it's bad for us.
Intermittent fasting is all the rage these days. Despite there being very limited studies on it. (And the few that there are, show limited benefit - more on this next week).
But here's the clincher: we've never had such a high bar for vaccines either!
Here's an infographic I had shared in Sunday Reads #101:
How large do you think the randomized controlled trials were, in 1963, 1955, and (gasp!) 1796?
And lest you worry about contamination as the vaccines are hastily distributed to the world, here's how the smallpox vaccine was distributed.
On 14 June, 1802, Anna Dusthall became the first person in India to be successfully vaccinated against smallpox.
The following week, five other children in Bombay were vaccinated with pus from Dusthall’s arm. From there, the vaccine travelled, most often arm-to-arm, across India to various British bases – Hyderabad, Cochin, Tellicherry, Chingleput, Madras and eventually, to the royal court of Mysore.
No, what ultimately matters is this:
Is the vaccine positive expected value or negative expected value?
As I wrote in Sunday Reads #105: How to Think like an Epidemiologist, it's important to think probabilistically.
“As we learn more, our beliefs should change,” Dr. Lipsitch said in an interview. “One extreme is to decide what you think and be impervious to new information. Another extreme is to over-privilege the last thing you learned. [You need to] integrate what you previously thought with what you have learned and come to a conclusion that incorporates them both, giving them appropriate weights.”
So, what do you think will yield a better outcome?
Not taking the vaccine right away. Not risking any side effects from the vaccine. But risking the disease itself, for you and your community.
Taking the vaccine right away. With comfort that it has come out on top in a race among 160+ vaccines. With the knowledge that it hasn't shown any serious side effects with 10K+ other people, and will deliver at least a modicum of protection to you and your family.
The choice is clear.
Citing Alex Tabarrok, as I did in Sunday Reads #109: How to Gain Super Powers:
Imagine that you were offered the superpower of being immune to bullets. Bullets just bounce off you like Luke Cage. That’d be pretty cool, right? Even partial immunity to bullets would be a great superpower! I’d be willing to pay a lot for that superpower, even undertake say some mildly perilous journey.
So I am puzzled that some people say they don’t want a COVID vaccine. What??? That’s like rejecting a super-power, the power of immunity! Indeed, COVID has killed far more people this year than bullets, so virus immunity is a much better superpower than bullet immunity. Sign me up!
2. Build it and they will come. Except when they won't.
Back in April, when Quibi launched, I predicted that it would fail. Given the economics of the streaming video industry, it would be near-impossible for Quibi to succeed.
Well, the denouement came sooner than I expected. In An open letter from Quibi, the founders announced that it was shutting down.
There were an immediate flurry of hot-takes on it, from good old schadenfreude to "startups are hard; why is everyone celebrating a fail?".
The most intelligent new take I found was Learning From Quibi:
Business ventures are rarely pure leaps of faith. Instead, they are acts of creation that are based on signals from the past. These signals provide an imperfect map to what the future could look like. It is up to a founder to see them, to interpret them, and to take the next step to build a new reality.
What signals did Quibi hear?
Quibi’s management says they looked at a common signal: “broad and increasing consumption of mobile video”, and applied their own filter to what they saw as “good”.
Katzenberg looked at one measure of quality: his own intuitive sense of what he liked. His “gut.” And he actively and vocally dismissed the more expansive signals from consumers, as defined by the billions of views that they paid to creators in places like Youtube, Instagram and Snapchat.
More damning is the fact that in public comments, Katzenberg and cofounder, Meg Whitman eventually came to define “good” as merely “expensive,” using budget, not taste, as the key difference between what Quibi offered and what was already available.
[Ultimately] it was yet another old media executive who could not bear to accept the idea that a zero-budget YouTube creator had the same inherent value as an Oscar-winning actor. Or that the “anointment” from Hollywood was the essence of commercial success.
Well, that being said, there was always only one way the Quibi would crumble (sorry!), and the tweet below sums it up.
Emily Grace Buck @emilybuckshotCan you imagine how many new shows & films could’ve been funded with this https://t.co/p4TiBRXiPC
What was Quibi’s Seinfeld? (this is a rhetorical question, Quibi didn’t have a Seinfeld).
More in my article, The Fat Startup Experiment.
3. To end on a lighter note...
The world's first nuclear energy influencer.
She starts talking about her diet and exercise routine, and then suddenly... well, why don't you just watch the video?
PS: Here's an article about her: This radiant model wants you to stop worrying and love nuclear energy.
And I absolutely love this headline.
That's it for this week! Hope you liked the articles. Drop me a line (just hit reply or leave a comment through the button below) and let me know what you think.
See you next week!