Bloomberg does AB testing

Fascinating AB testing observed on the entire world’s population by major news networks. 

Barely 72 hours after the announcement of phase 1 trade deal, its accompanying mass euphoria and surge in world markets, the almost same exact photo with some slight changes in copyrighting and background color is released into production. 

It will be fascinating to observe the world’s reaction to this new AB year variant that just got released and the corresponding market price levels. 

Key insights from mooncake festival at house of Jerry and Liza

Technology trends

  • Companies are increasing shifting their service from one-off on premise licensing deployment monetization to cloud based SaaS recurring subscription models
    • revenue hit in the short run
    • increased customer LTV in the long run
    • affected publicly traded companies will experience short term discounts to their shares
  • Artificial intelligence versus Augmented intelligence
    • companies are increasingly shifting away from automatic insight generation to systems that help decision makers simulate and model potential outcomes when specific policies are executed
    • demand is shifting from insight generation to data cleaning services
  • Corporate adoption of artificial intelligence
    • CEOs are increasingly considering how to leverage AI as a tool for their trade
    • primary use case is figuring out how to increase their sales volume
    • experiencing challenge on how to apply AI on in-house data to achieve monetization goals
  • Rise of deep vertical data networks
    • EverString – provides sales lead refresh for all client companies ends up becoming a large database for decision-making executives information, approximately 6 million records
    • StreetSine.sg – cleans up real estate data to help agents better price houses for sale by utilizing in-house agency ends up becoming a large database of high quality real estate data
  • Crypto-currency
    • Bit coin is still the main poster child
    • general population still skeptical about libra
    • main argument is still to remove central bank controls
    • main adoption hurdles
      • writing throughput volume
      • a stable store of wealth
      • starting to be using as a means to facilitate transaction in China
      • Inability to increase or decrease currency supply in times of need is going to be hard as a means to provide much needed stimulation during economic recessions and inflations

US/China trade war

  • sources of conflict
    • technology theft
    • forced technology transfer
    • unfair trade practices like subsidized state owned Chinese companies operating in the export markets
  •  economy
    • China is experiencing inflationary deleveraging
      • local farmers are not growing critical food sources
      • critical food supplies are imported
      • price of imported goods are denominated in US reserve currency
      • shifting of supply chain out of China to
        • Vietnam
        • India
        • Taiwan
      • capital flight
        • Li Ka Shing moved funds out from Hong Kong in 2013 to Europe
        • raising funds for US Venture capital from China was easy prior to Chinese and US government shut down
    • US is experiencing deflationary deleveraging
      • businesses are concerned about macro environment and are reducing fixed investments
      • manufacturing is slowing due to decreased demand both locally and overseas
      • consumer spending and confidence is still strong
  • Chinese domestic concerns
    • Potential US meddling in Chinese domestic affairs – Hong Kong’s demonstration and demands
      • Revoking of National Education
      • Revoking of extradition bill
      • Resignations of HK Chief executive
      • universal suffrage: freedom to elect their own leaders
    • destabilized situation presents a challenge for Xi JinPing’s party to retain control of power over former Jian Zemin’s faction
  • value system
    • US is a highly rule based system
    • China’s system of control is highly subjective to the individual in power.  Direct government intervention in the distribution of wealth is a major source of concern

US/Mexico and world issues

  • NAFTA agreement was too one side and failed to take into account large  imbalance between the two economies
  • US’s arrangement of allowing Mexican tax payers the right to claim dependents ultimately resulted into tax claims and refunds for entire extended families in Mexico. This has the effect of subsidizing Mexican’s at the expense of Americans living along the rust belts
  • Its observed income inequality is becoming prevalent across the entire world not just within US and China.

Related readings

Insights from evening with Wine and Jam session with Adriene and Dennis, Birthday party with Konstantine

From Tommaso on Machine Learning – Economics

  • Study was done on Italy
  • Voting patterns can be leading indicators for credit spread
  • When a political party is stable, Eigen distance between votes of party members will cluster together, even for bills that are not critical for parties
  • When a political party becomes unstable, the Eigen distance between vote on non-critical bills by party members will increase
  • Alignment will increase before a wild swing to misalignment
    • periods of high alignment leads to very tight credit spread
    • tight credit spread indicates a very high price for bond
  • Misalignment will decrease before consolidation towards alignment
    • periods of low alignment leads to very wide credit spread
    • wide credit spread indicates a very low price for bond
  • proposed strategy:
    • when alignments increase, short bonds in anticipation for forthcoming misalignment
    • when misalignments increase, long bonds in anticipation for forthcoming alignment

From Tommaso on Machine Learning – Micro-biology

  • Started studying how presence specific bacteria affects health at an aggregate level
  • Studying ancestral tree of bacterias help estimate the distribution of bacteria in the gut of different individuals

On sales

  • Mormons are one of the best sales people due to their coming to age ritual.
  • They typically will get rejected many many times during their passing through rite

On human cyborgs

  • Neil Harbisson is an artist who is color blind, he implanted a device into his brain which allows him to see colors

On hardware and biotech with Andrew

  • To design printed circuit board install IDE which allows easy assembly, simulation and coding – DesignSpark
  • Firmware for micro-processors are written in C. Firmware controls where signals are past to when incoming signals are received
  • Micro-processors are installed on circuit board
  • Can be printed in China and shipped over in 5 days – PCBWay
  • BioCurious and another biotech hacker space up in Berkeley have managed to train yeast to product cocaine and THC

Related readings

The case for hastening the replacement of workers with AI

If the issue of aging population is an inevitable affliction of all industrialized countries and majority of countries will become industrialized within the next 30 years, then we should be expecting our population to collapse by 2050. Based on this premise rather than being worried that majority of workers will get replaced by Robots and made irrelevant, we should instead be worried that robots are not replacing tasks handled by forthcoming retirees fast enough,

Related References

https://www.bloomberg.com/amp/news/articles/2019-07-24/u-s-truck-driver-shortage-is-on-course-to-double-in-a-decade

https://amp.businessinsider.com/elon-musk-reiterates-global-population-is-headed-for-collapse-2019-6

 

Summary of readings and conversations for the week

Trends observed

  • Worsening income inequality
    • driven by increased globalization and automation with failure in re-education as the primary cause
    • Continued low worldwide interest rates as central banks the world over struggles to prop up inflation rate at 2%
  • Rise in protectionism around the world in response to income inequality
    • Slowing trade volumes around the world
  • Demand saturation at the upper income segments
    • Slowing demand for housing in South Bay
    • Too much money chasing after too little deals

Related sources

Book summary AI super-powers, China, silicon valley and the new world order by Kai Fu Lee

The difference waves of AI

  • Internet AI – Facebook, Netflix, Google search
  • Business AI – Palantir
  • Perception AI – Tesla cars
  • Autonomous AI – Tesla self driving, Google self driving

Key locations

  • Silicon Valley
  • Zhong Guan Cun – Beijing

State of the Union

  • We are in the stage of implementation/application as opposed to RnD
    • having access to more data is more important than have expertise to do more RnD
    • having solid AI engineers is more important than AI researchers
  • We are still far from general AI
  • Key ingredients
    • data
    • computing
    • maybe work of strong AI algorithms engineers

Key differences between eco-systems

  • Silicon Valley businesses are mission and core values driven while Chinese businesses are pragmatically focused on profitability.
  • Silicon Valley businesses stay in bits and binaries offloading the brick and mortar to external vendors vendors while Chinese businesses extend their business model into the brick and mortar (online to offline)
  • Silicon valley prefers one size fit all strategy, Chinese businesses utilized localized solutions often investing/acquiring in local startups
  • Americans treat search engines like Yellow Pages (come and leave fast) while Chinese treat search engines like shopping mall (come to linger around long)
  • Silicon Valley is adversed to copying preferring to be unique Chinese business copy the heck out of each other

Chinese Advantage

  • Abundant data – quality and quantity aided by their online to offline initiatives
  • hungry entrepreneurs
  • AI scientist
  • AI friendly policy environment – strong emphasis by Chinese government
  • Hardware manufacturing know how – Shen Zhen
    • unparalleled supply chain flexibility – XiaoMi

Silicon Valley Advantage

  • Microchip manufacturing know-how

Trends within the Chinese eco-system

  • Darwinian eco-system has lead to extreme levels of competition
  • Chinese companies have already moved past the stage of clone Silicon Valley business models
  • Businesses innovate to build a defensive moat around themselves. Local businesses have advantage, with no timezone differences to deal with, decision making is relatively faster.
  • Online to offline
    • an essential ingredient to building strategic moats
    • caused the decline of cash use
  • Chinese government information systems will be able to leap frog US government information systems

Policy approaches

  • Google – impeccable safety
  • Tesla / China – trial by fire
  • key to winning the Autonomous AI race
    • is the bottleneck technology (Silicon Valley) or policy (China)?

Key concerns

  • having cheap labor is no longer going to be a source of advantage in a world heavily powered by automaton.  Developing countries hoping to employ this well tested strategy to progress will not be able to do so anymore
  • Estimated 60% potential job loss worldwide barring policy interventions
  • Job loss probability assessment
    • physical labor
      • environment – unstructured versus structure
      • tasks nature – level of dexterity versus high dexterity
    • cognitive labor
      • social – high versus low
      • cognitive – optimization based versus creativity/strategy based
  • AI replacement approach
    • single tasks approach
    • ground up rethink re-imagination
  • A population of irrelevant (no longer employable) as opposed to unemployed

Tackling Key concerns

  • Silicon valley – reduce, retrain and redistribute
  • Kai Fu Lee – stipends for care, service, education

New promise

  • Humans freed up from repetitive tasks can now focus on becoming more human oriented

Related readings

  • Disruptor, Zhou
  • www.Arvix.org – an online repository of scientific papers
  • Folding Beijing – Hao JingFang

Trends associated with GetData.IO

Alternative Data

Robotic Process Automation

Book summary – The Signal and the noise

Risk versus uncertainty

  • Risk can be mathematically modeled to yield a probability
  • uncertainty cannot be mathematically modeled

Conditions for quality data

Why google’s Search data is better than Facebook profile data

  • subject feels she has privacy privacy
  • subject feels she is not judged
  • subject sees tangible benefit from being honest

The hedgehog versus the fox

  • The hedgehog approaches reality through a narrative/ideology while the fox thinks in terms of probabilities
  • The hedgehog goes very deep in an area while the fox employs multiple different models
  • The fox is a better forecaster than the hedgehog
  • The fox is more tolerant of uncertainty

Big data

  • More data does not yield better results and predictions
  • Deciding the right kind of data from the abundance available
  • To do prediction it is important to start from intuition and to keep model simple
  • qualitative data should be weighted and considered
  • Be self aware of your own biases

Prediction

  • Similarity scores – clustering in Netflix and baseball
  • Be wary of confirmation biases
  • Be wary of overfitting using small sample size – Tokyo earthquakes and global warming
  • Correlation does not equal causation
  • short hand heuristics to reduce the computational space – for example chess

Related references

  • Irrational exuberance, Robert Shiller
  • Expert political judgement, Philip E. Tetlock
  • Future shock, Alvin and Heidi Toffler
  • Principles of forecasting, J Scott Armstrong
  • Predicting the unpredictable, Hough

Insights from dinner with Josh

Grepsr is increasingly being used in the work place by Quid.

Business people that don’t know how to code use Grepsr to pull data.

There is increasing demand for DIFFs to identify thematic trends. Themes are extracted from articles through the use of NLTK.

The proliferation of machine learning libraries and the maturing of the semantic web is democratizing the access to insights.

The legalization of online sports betting has open a fertile ground for this trend towards democratization.

NBA basketball predictive modeling should be done at the players level instead of the team level as the data becomes too lossy.

The odds of sports books at the opening lines is to encourage even bets on both side. The odds of the closing lines is a weighted average of bets (signals) from the crowd.