Charlie Munger on CNBC (Full Interview)

Best Ideas 2013 Conference

I'll be participating at the Best Ideas 2013 Conference.

Please visit: Best Ideas 2013 Conference

Instructor page: Dah Hui Lau

Greg McKeown: The Unimportance of Practically Everything

A friend of mine is the Executive Director for an organization with global reach. He is intelligent and driven, but constantly distracted. At any given time he will have Twitter, Gmail, Facebook and multiple IM conversations going. The majority of them are useful in some way. Yet, in the back of his mind, he knows there are more important deliverables to get to. But the days slip by and he finds himself working all weekend to catch up. Staying up Sunday night until the early hours of Monday morning has become his modus operandi. He told me, while checking his Blackberry again, that it results in having no social life. It's so bad that he tried having his Executive Assistant pull all of the internet cables on his computer. But there were still too many ways to get online. When he was struggling to complete a particularly big project, his brother took away his Blackberry and left him at a motel with no internet access. Yet, even there, he still found a workaround within 10 minutes using his ancient Nokia phone to check his email. Eventually, after eight weeks of almost solitary confinement, he was able to get the project done.

Why do otherwise intelligent people find it so easy to be distracted from what really matters?

Social media did not create the problem of distraction, but it is clearly an amplifier. Indeed, a study [PDF] by Clifford Nass et al. at Stanford showed that heavy media multitaskers are more susceptible to interference from irrelevant environmental stimuli than light media multitaskers. Heavy multitasking may encourage even heavier multitasking because it leads to a "reduced ability to filter out interference." Could the part of our brain that is processing deeper cogitative thought actually be atrophying in the process?

None of this would matter if activity and reward were linearly related. But we live in a world where almost everything is worthless and a very few things are exceptionally valuable. This is a counterintuitive idea. After all, the idea that 50% of results come from 50% effort is appealing. It seems fair. Yet, research across many fields paints a very different picture.

As far back as the 1790s, Vilfredo Pareto observed this nonlinear pattern in Italy, where he found that 80% of the land was owned by 20% of the people. Much later, Joseph Moses Juran, one of the fathers of the quality movement, called the insight the "Pareto Principle" and applied it beyond economics. In The Quality Control Handbook, Juran called it "The Law of the Vital Few." His observation was that you could massively improve the quality of a product by resolving a tiny fraction of the problems. He found a willing audience in Japan, where the country had been producing low-cost, low-quality goods. By adopting the quality processes, the phrase "Made in Japan" gained a totally new meaning. And gradually, the quality revolution led to Japan's rise as a global economic power.

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Derek Thompson: The 11 Ways That Consumers Are Hopeless at Math

You walk into a Starbucks and see two deals for a cup of coffee. The first deal offers 33% extra coffee. The second takes 33% off the regular price. What's the better deal?

"They're about equal!" you'd say, if you're like the students who participated in a new study published in the Journal of Marketing. And you'd be wrong. The deals appear to be equivalent, but in fact, a 33% discount is the same as a 50 percent increase in quantity. Math time: Let's say the standard coffee is $1 for 3 quarts ($0.33 per quart). The first deal gets you 4 quarts for $1 ($0.25 per quart) and the second gets you 3 quarts for 66 cents ($.22 per quart).

The upshot: Getting something extra "for free" feels better than getting the same for less. The applications of this simple fact are huge. Selling cereal? Don't talk up the discount. Talk how much bigger the box is! Selling a car? Skip the MPG conversion. Talk about all the extra miles.

There are two broad reasons why these kind of tricks work. First: Consumers don't know what the heck anything should cost, so we rely on parts of our brains that aren't strictly quantitative. Second: Although humans spend in numbered dollars, we make decisions based on clues and half-thinking that amount to innumeracy. 

Here are 10 more ways consumers are bad at math, with an assist from historian and author William Poundstone.

(2) We're heavily influenced by the first number. You walk into a high-end store, let's say it's Hermès, and you see a $7,000 bag. "Haha, that's so stupid!" you tell your friend. "Seven grand for a bag!" Then you spot an awesome watch for $367. Compared to a Timex, that's wildly over-expensive. But compared to the $7,000 price tag you just put to memory, it's a steal. In this way, stores can massage or "anchor" your expectations for spending.

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Princeton Baccalaureate 2012: Michael Lewis

Dr. Michael J. Burry at UCLA Economics Commencement 2012

Dr. Atul Gawande: Failure and Rescue

Researchers at the University of Michigan discovered the answer recently, and it has a twist I didn’t expect. I thought that the best places simply did a better job at controlling and minimizing risks—that they did a better job of preventing things from going wrong. But, to my surprise, they didn’t. Their complication rates after surgery were almost the same as others. Instead, what they proved to be really great at was rescuing people when they had a complication, preventing failures from becoming a catastrophe.

Scientists have given a new name to the deaths that occur in surgery after something goes wrong—whether it is an infection or some bizarre twist of the stomach. They call them a “failure to rescue.” More than anything, this is what distinguished the great from the mediocre. They didn’t fail less. They rescued more.

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Coca Cola: There are reasons to believe in a better world

What Jeremy Lin Teaches Us About Talent

Linsanity! For those who don’t follow the NBA, or read the NY Post, or check Twitter during Knicks games, Jeremy Lin is a new point guard who has been churning out a series of incredible performances. Last week, he torched the Lakers for 38 points; last night, he hit a three pointer at the buzzer to beat the Raptors. What makes Lin’s story even more remarkable is that he has been repeatedly spurned by basketball professionals. Although Lin dreamt of attending UCLA or Stanford, neither college offered him a scholarship. He ended up at Harvard.

Although Lin excelled in the Ivy League and broke numerous basketball records, he wasn’t selected in the 2010 NBA draft.

Eight teams had invited Lin to predraft workouts. Diepenbrock said that NBA tryouts do not play five on five. Lin acknowledged that the workouts were “one on one or two on two or three on three, and that’s not where I excel. I’ve never played basketball like that.”

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Richard Feynman: No Ordinary Genius