Wednesday, July 20, 2011

Nassim Nicholas Taleb Interview with Jaffer Ali
By: Jaffer Ali

[What follows is a FICTIONAL interview with Nicholas Taleb. Whenever possible, exact quotes from the books; Fooled By Randomness, The Black Swan, and The Bed Of Procrustes were used. To my knowledge, Taleb never addressed the online media ecosystem directly, but I believe what follows faithfully represents what he would say about the ridiculous online media and advertising industry most of us participate in.]

JA: Mr. Taleb, may I call you Nassim?

NT: Please. I don't go for this alpha male ritual. The only definition of an alpha male is if you try to be an alpha male, you will never be one.

JA: OK Nassim, I guess if we both don't try, then the matter is resolved. You have made an impact on many disciplines from finance to econometrics. Do you think your way of thinking and critique can be applied to the online media ecosystem?

NT: Without a doubt. The general theme of my work is the limitations of human knowledge, and the charming and less charming errors and biases when working with matters that lie outside the field of observation; what lies on the other side of the veil of opacity. Simply put, online marketing and specifically behavioral targeting is not capable of dealing effectively with nonlinear and complex matters.

Complex matters like human behavior are fraught with interdependence and in spite of data mining and predictive modeling's hyped up successes in physics and engineering, that prestige has endangered us when it comes to much of our media and financial models.

JA: Nassim, many of the quantitative analysts that worked on Wall Street have migrated over to Madison Ave. Do you think these "quants" will be any more successful in the advertising industry than they have been in finance?

NT: To bankrupt a fool, give him information. Counter to the common discourse, more information means more delusions; our detection of false patterns is growing faster and faster as a side effect of modernity and the information age. Thanks to our detections of false patterns, along with real ones, what is random will appear less random and more certain- our overactive brains are more likely to impose the wrong, simplistic narrative than no narrative at all.

JA: As I have grown older, I have become more aware of my ignorance. I wrote an article called Embracing Uncertainty which discussed my personal journey from demanding certainty. What are your views on this?

NT: You find peace by coming to terms with what you don't know. Knowledge is subtractive, not additive- what we subtract is reduction by what does not work, what not to do...not what we add.

JA: Nassim, if I can be frank, you seem to be a Luddite who has a bone to pick with technological solutions to economics, finance, and marketing. Is this a fair criticism?

NT: Many reduce my ideas to opposition to technology when in fact, I am opposing the naive blindness to its side effects-the fragility criterion. I'd rather be unconditional about ethics and conditional about technology than the reverse. I rarely worry about what others think of me or my work. They will envy you for your success, for your wealth, for your intelligence, for your looks, for your status- but rarely for your wisdom.

JA: Online marketing folks have spent a great deal of money and energy on predictive modeling. Former Google CEO, Eric Schmidt said in a magazine article, "...we will be able to predict what someone will search for before they search for it."

NT: I have spoken about the "scandal of prediction" when it comes to Wall Street, but this pales next to the arrogance of prediction of behavioral targeting models, Google and Mr. Schmidt's bravado. Anyone voicing a forecast or expressing an opinion without something at risk has some element of phoniness. Unless he risks going down with the ship, this would be like watching an adventure movie.

The ancients knew very well that the only way to understand events was to cause them. They would take forecasting very seriously if it were pointed out to them that in Semitic languages, the words for "forecast" and "prophesy" are the same.

One of the great shams of online marketing is that the validity of its predictive models is never tested "out of sample." In other words, you can construct a model that produces a seemingly accurate conclusion from an existing set of data. But test it on a different set of data and the predictive ability of the most elaborate constructed models simply evaporates.

JA: Don't you think that collecting all this data in one place, like what Google is doing, creates a tremendous opportunity to succeed where others have failed?

NT: Centralization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. The media ecosystem is swelling into gigantic, incestuous, bureaucratic repositories of shared data â?? when one fails, they all fall.

JA: Is there anything thought with which you would like to leave our readers?

NT: With modern technology, we created youth without heroism, age without wisdom, and life without grandeur. END

The above is a brief extrapolation of Nassim Taleb's ideas and applying them in a cursory manner to the online marketing industry. While I believe the ideas represented are faithful to his general precepts, any mistakes are mine and not his. JA

Jaffer Ali is the CEO of Vidsense and PulseTV.com. He can be reached at 708-478-4500 or email him directly at j.ali (at) Vidsense (dotcom)

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Original Article: Nassim Nicholas Taleb Interview with Jaffer Ali

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