What if Total Addressable Market can’t be estimated accurately? What then? What is Total Addressable Market (TAM)? Total Addressable Market, or TAM, is the number of buyers who are Willing To Pay (WTP) for a solution to a problem they have now, or are Willing To Pay (WTP) your firm instead of the firm they’re currently paying to solve a problem. Why is TAM important? TAM determines the life and death of a firm. The leading cause of startup failure, and perhaps all business failure in general, is the failure to penetrate and/or retain TAM (Including bureaucratic capture and rent-seeking). In this context, I’m concerned about the introduction of a new product into the market in an effort to generate both[…]

Bart Gajderowicz delivered a great talk at Machine Intelligence Toronto about how people go through stages in accomplishing a goal [1]. The talk was about homelessness and AI approaches to public policy. I instantly saw a connection to all sorts of tensions that people endure when they set out on a goal. To distill the concept, let’s start off with the idea that people have goals, people have emotions, and that time moves forward. As people make progress towards their goals, their emotions change over time. They start off in a good mood, in a state of uninformed optimism. Then, as negative information overwhelms their ignorance, they enter into a state of informed pessimism. So much negative information builds up[…]

“A study at Ball State University’s Center for Business and Economic Research last year found that trade accounted for just 13 percent of America’s lost factory jobs. The vast majority of the lost jobs — 88 percent — were taken by robots and other homegrown factors that reduce factories’ need for human labor.” – AP Canada’s labour force is around 19.6 million people, of which 18.2 million people are employed. Together, they worked something like 2.4 billion hours that month. In December 2016, something like 1.7 million Canadians worked about 240 million hours in manufacturing.  Roughly. Because of seasonal adjustments and different data at different times. And error. In terms of our working lives in Canada, collectively, manufacturing is about 10% of[…]

This WSJ piece “Has the world lost faith in Capitalism” had this infographic: And prompted Marc Andreessen @pmarca to remark on Twitter: “The inevitable result of 15 years of slow economic growth.” His tweet prompted me to think about the relationship between economic growth and the gini coefficient (a measure of income inequality). And there’s a lot to it. I don’t think it’s a straight line causal model between economic growth and inequality. (And I’m not suggesting that Marc thinks it is, it is, after all, Twitter). The core representation of a causal model is depicted below:     In very short terms, when we decided in 80’s that we were going to go for a service based economy, the linkage between wage growth and productivity[…]

Nash died this week, sadly, in a traffic collision. That’s isn’t how I’m going to remember him. My first introduction to Nash was from a book I found in a used book store titled “Game Theory and Canadian Politics”. There was a whole chapter on the Nash Equilibrium and the prisoner’s dilemma in there. This was the diving board for further exploration into game theory and, it was the gateway drug into the Garbage Can, Arrow, and the Genetic Algorithm. He offered up a thread of thought: this idea that collectively, as people, we are capable of creating such sub-optimal outcomes. I didn’t like that one bit. I spent time trying to disprove it. It was Arrow that would end[…]

One application of social technology to a transportation problem caught my eye today: social flights. There are two civilian air travel economies – the public and the private. Private air travel, on private jets from quasi-public air fields, is a completely different experience. For one, there is no invasive security. Delays are fewer. Service is better. The drawback is the cost. Very few people can afford a private flight. Enter the what if. What if the coordination problems among a large group of people could be reconciled? What then? Why, you’d be able to take a private jet with a number of like minded people, at a coordinated time, without delays and harassment – and probably do it for less[…]

In a game called “Power Grid Factory Manager”, two to five players are challenged with running a factory for five turns. The three sources of randomness (exogenous shocks) are the starting bid order, the increase in the price of energy, and the three starting factory  equipments available upon the very first turn. These three sources of randomness are enough to produce all the variety required. No dice here. No reliance on luck. Managers are given the same starting conditions, and have two resources – workers and money. Everybody is paid on the same schedule, where the input costs are subject to random fluctuations and capital must be balanced. There are very large degrees of freedom involved. The person with the[…]

There’s been a some talk about education bubbles as of late. Some of the evidence is compelling. A Frontline documentary on the quality and liability of for-profit post secondary education for instance. A general lamentation of the volume and cost of MBA’s being produced. And, many gripes about the affordability / accessibility of post secondary education in the US and Canada. When demand exceeds supply, the price for that supply rises. There’s a period of lag between demand shocks and supply responses. Frequently, suppliers either overestimate demand shocks, or, more likely, increases in supply follow a step function, which in turn eventually causes a price collapse. It’s this dance between supply and demand that generates the pseudo-random price of a[…]