Connect The Dots 08/11/2020

The two ideas of today’s connect the dots are:
Randomness: Though the human brain has trouble comprehending it, much of the world is composed of random, non-sequential, non-ordered events. We are “fooled” by random effects when we attribute causality to things that are actually outside of our control. If we don’t course-correct for this fooled-by-randomness effect – our faulty sense of pattern-seeking – we will tend to see things as being more predictable than they are and act accordingly.
Trademarks, Patents, and Copyrights: These three concepts, along with other related ones, protect the creative work produced by enterprising individuals, thus creating additional incentives for creativity and promoting the creative-destruction model of capitalism. Without these protections, information and creative workers have no defense against their work being freely distributed.

The randomness of the success of an idea makes big hits challenging to predict. As described in The black swan, randomness can be seen in historical events like wars, bestsellers, and the economic crisis. However, you can easily extend the thinking to any idea generation venture. VCs invest in many companies because they don’t know which one will be successful; it’s tough to predict because no one knows which data is relevant.
The creative-destruction of capitalism is represented accurately in both positive and negative black swans, and as Nassim Nicholas Taleb mentions in his book, a way to protect against black swans is to acknowledge they exist and prepare for them. You can transform them into grey swans by obtaining more information or having extremely low risk in most of your investments, what he calls the barbell principle.
Protection of ideas, using patents, would be a way to protect against black swans because if your idea is successful, you have a way to benefit from it. As you don’t know which idea will yield benefits, a potential strategy would be to patent as many diverse ideas as possible, to ensure maximum exposure to positive black swans.

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