The Kid and the Beast

At Reykjavik Chess Tournament of 2004, a “kid vs beast” match took place. A 13-year-old player faced Garry Kasparov, the greatest chess player in the history of the game. At move #30, Kasparov had to defend himself with serious risk of loosing the match. He was lucky to escape with a draw. Full report here.

Eight years later, “the kid” became “the beast”. Magnus Carlsen is now the #1 chess player in the world, with the second highest ranking in history (after Kasparov).

Yesterday the “new beast” played an interesting game with a “new kid”. Carlsen played ten simultaneous games with randomly selected players from the Marshall Chess Club. To everyone’s surprise, after easily defeating nine of them, the only player still fighting was an 8-year-old named Daniel Levkov.

He (Carlsen) checkmated his first opponent in around 15 moves, with a surprising move that left the man dumbfounded. Some players kept playing when they had no chance of winning. But not Levkov, who stayed near equal in piece count until the end game. (Source: Business Insider)

With his full concentration on the board, the best player in the world crushed the 8-year-old in the endgame:

I love when little kids show extraordinary talent and achieve little miracles like this one. If some day I read in the papers that Daniel Levkov became the next #1, I’d smile and remember this episode. And if he decides to quit chess and become a musician, I’d also enjoy the idea of him telling his friends: “My dad taught me to play chess. When I was a kid, I forced the best chess player in the world to try his best to beat me”.

Daniel Rabinovich

Fun vs Passion

You might not have heard of AbInBev, but surely you’ve heard of Budweiser, Stella Artois, Corona, Beck’s, Brahma and Quilmes (if you are from Argentina). AbInBev is the largest brewer in the world, enjoying 25% of global market share. It’s CEO is Carlos Brito, a sharp brazilian who was included last year in Barron’s 30 Best CEOs list.

Last week, Carlos Brito gave us a talk at Stanford Business School, on his “Dream, People, Culture” framework (here’s a video of a similar talk). While discussing how to generate the right context for a meritocratic culture, he remarked:

“We don’t want a fun environment. We want people to be passionate. Look at the olympic athletes: they are not having a great time, they are training like hell, they want to win, to perform, to be a part of a great team”

I loved the way he expressed it. Fun is extremely important to relax between sprints, to celebrate wins and to recharge batteries after a defeat. Nevertheless, we want to make sure that fun plays exactly this role and doesn’t outweigh passion as the main aspect of our culture. We want people to be motivated by desire to achieve, to win, to do something worthwhile, to get peer’s recognition. An entertainment room will reinforce it, but the right motivation must be preexistent.

A neurological approach

In an amazing course on Brain Based Insights, Baba Shiv helped us structuring the relationship between chemicals, states and risk aversion types. Challenging situations produce high levels of Dopamine, whereas relaxed situations (low adrenaline) produce high levels of Serotonin.

  • Passion will trigger excitement, desire for achieving, fear of missing opportunities.
  • Fun will trigger contentment, comfort with the status quo, fear of making mistakes.

Passion will cause tears, fun will cause laughs. Passion vs fun, Dopamine vs Serotonin. The “Lövheim cube of emotion” describes some of these relationships:

Is there a way to “manage” passion?

The type of passion we’re interested in is generated by challenges. Sometimes managers have to “translate” company’s objectives into challenging goals for people in their teams.

Brito continued:

“The most important aspect of a leader is to inject the right pressure on the system. Not too much, not too little.”

In order to create effective accountability, we need to create “challenging but attainable” goals. Useful challenges are a function of a person’s skills. As skills evolve, challenges must evolve too. Maybe a good framework to visualize this can be found in the videogame world. Videogame designers deal with engagement, without which a game is worthless. Here’s “The Flow Zone” explained in Gabe Zimmerman’s book:

The key to engagement is to keep players in the “Flow Zone”, moving them to the upper-right corner as their skills improve. If the challenge is too hard, players experiment stress and shut the game off. If the challenge is too simple, boredom arises and engagement is broken.

I’ve seen many companies focusing too much in the “fun” part and not in the “passion” side. Even my own company focused on fun at some point. In hindsight, it was a mistake. Environment should be fun as a consequence of great people united by a strong culture. Managers must ensure that the driving emotion is passion. They also must ensure to apply the right pressure to keep talented people in the “Flow Zone”. Hopefully, as time goes by, with an upper-right trend.

Daniel Rabinovich

Speaking at Etsy

Last May, I had the honor to welcome Dave McClure and the Geeks on a Plane group at MercadoLibre offices in Buenos Aires. I gave a short talk and answered questions on  technology, e-commerce and Latin America. One of the geeks on that plane was Kellan Eliott-McCrea (CTO at Etsy), who kindly invited me to give an open talk in context of the Code as Craft Technology Talks series. It wasn’t until last monday when we found the opportunity to make this happen.

The talk
I’ve always hated the “success story” format, where somebody explains how well he figured out everything from the very beginning. In this talk I intended to share concrete examples of some mistakes we made, and what we learned from them.


Just in case you have an hour, here’s the video.

Etsy offices – A lesson on “design culture”

Etsy offices are located in Brooklyn, in a neighborhood called DUMBO, an acronym for Down Under the Manhattan Bridge Overpass. As soon as you step a foot in that office, the “design spirit” takes over your senses. It’s one of the coolest, quirkiest place I’ve ever been to. Everything looks hand made. Every desk is different, crafted by a different Etsy seller. Every “normal” object was an excuse to craft something beautiful. Here’re some pics:

If you work there it’s clear that you are expected to carefully “design” everything you do, no matter if you’re a designer or an engineer. No surprise Etsy is arguably the most “beautiful” marketplace out there. This experience triggered something in my head: we need more than a good design playbook to reach the next level. Now I have a challenging (and pleasant) homework to do.

Daniel Rabinovich.

Guinea pigs and cognitive biases

Some time ago, a friend asked for my help with a puzzle:

There are 1,000 buckets, one of them contains poison, the rest of them are filled with water. They all look the same. If a pig drinks that poison, it will die within 30 minutes. What is the minimum number of pigs do you need to figure out which bucket contains the poison within one hour?

Since I was familiar with similar problems, I quickly replied: the answer you’re looking for is 32 (the rounded square root of 1000). The procedure looks like this: the first half hour, split all 1000 buckets in 32 groups of 32 buckets. Have the first pig drink a drop from every bucket from group #1, and so on. Half an our later one pig will die, so we’re left with 32 candidate buckets (and 31 pigs) for the second half hour. Then, have all pigs drink from one bucket. This should find the poison (if none of them perish, the poison is in bucket #32). Proud at my problem solving skills, quickly rested my case and focused my attention in something else.

A few weeks later, I realized that I was wrong. 1000 buckets can be binary encoded with 10 bits (log 2, 1000) = 9,96 -> 10 pigs will suffice. The procedure is explained below for 8 buckets and 3 pigs (10 pigs solve 1024 buckets).

          Pig1   Pig 2   Pig 3
Bucket 1:  0       0      0
Bucket 2:  1       0      0
Bucket 3:  0       1      0
Bucket 4:  1       1      0
Bucket 5:  0       0      1
Bucket 6:  1       0      1
Bucket 7:  0       1      1
Bucket 8:  1       1      1 

There was a disturbing fact though: the procedure solves the problem in half an hour, and we have an entire hour to use. However, after finding a a solution to a similar problem in the comments section of the original post, I ignored this annoying fact and quickly jumped into the conclusion that the solution was actually 10.

Long story short, I was wrong, again. There are 2 better solutions:

Solution with 9 pigs: binary encoding, but in two “rounds” of 512 buckets.

Solution with 7 pigs: use ternary encoding instead of binary. The “trits” (as opposed to bits) represent 3 states: “dead in the first half hour”, “dead in the second half hour” and “survivor”. Using this technique, 7 pigs can solve up to 2187 buckets (3^7).

A dangerous cognitive bias

This sequence of failures have a common denominator: I tried to match the problem with the most similar pattern I knew, and quickly jumped into conclusions. As Daniel Kahneman says in his marvelous book Thinking Fast and Slow:

“A failure to check is remarkable because the cost of checking is so low”

In my case, I only had to check the comments section of the page! I almost answered by intuition. Since everything “looked right” the lazy left side of the brain failed to ring the alarm… 4 times.

To illustrate this point, Kahneman gives the following example. Don’t try to solve it but listen to your intuition:

A bat and ball cost $1.10
The bat costs one dollar more than the ball
How much does the ball cost?

They tested this simple puzzle on thousands of university students. More than 50% of students at Harvard, MIT and Princeton gave the intuitive -incorrect- answer: 10¢. The right answer is $1.05 and 5¢.

“A few seconds of mental work, with slightly tensed muscles and dilated pupils, could avoid an embarrassing mistake.”

This cognitive bias “force a situation into a known pattern and quickly jump into conclusions” is quite dangerous in a Technology team. Often the size of the inefficiency of a suboptimal solution is in the range of “32 vs 7 pigs”. In a large system, this cost could be huge, both financial and in terms of User Experience.

My first hand encounter with this dangerous bias made me tweak the “left side alarms” and strive to minimize the negative effects. After a while, it’s paying off. Hope you find it useful too.

Daniel Rabinovich

Uncommon sense for the Thoughtful Investor

Last October in San Francisco, I gave a presentation to 60 analysts in the context of MercadoLibre’s investor day. In the Q&A section, I casually mentioned to one of them that I’d love to see the world the way investors see it. A few weeks later, back in Buenos Aires, I received a package with a handwritten note:

“Daniel, I remember you saying that you were curious about how investors think.
I’d argue the best think like Howard Marks.
Attached is his new book which I think is an efficient read”

Inside, there was a copy of “The Most Important Thing – Uncommon sense for the Thoughtful Investor“, by Howard Marks. I enjoyed every page of the book. In addition to a sneak peek into the mind of a real expert, I found that many concepts were applicable to my work in Technology and Product.

Here are some interesting quotes:

“Being too far ahead of the curve is indistinguishable from being wrong” (H. Marks)

“The market can remain irrational longer than you can remain solvent” (J.M. Keynes)

“Is only when the tide goes out that you find who’s been swimming naked” (W. Buffet)

“There is little that’s as dangerous for investor health as insistence on extrapolating today’s events into the future” (H. Marks)

“Nobody goes to that restaurant anymore: is too crowded.” (Y. Berra)

“Is our job as contrarians to catch falling knives, hopefully with care and skill” (H. Marks)

“In every Poker game there is a fish. If you’ve played for 45 minutes and haven’t figured out who the fish is, then it’s you” (Old Poker Quote)

Daniel Rabinovich

MercadoLibre’s approach to Mobile

We’re living in one of those moments in Tech History when everyone agrees on the upcoming standard but, at the same time, disagrees on how to handle the present.

The first MercadoLibre’s mobile app was launched last October. As explained in the Investor Day, it took us a long time to build a common layer of APIs, serving the desktop web, mobile apps, 3rd party apps, etc. The bright side of being late is that (if you’re still alive) you can leapfrog. We’re delighted by the fact we’ve reached 2,5MM downloads in just five months.

The app is 100% native, available for iOS, Android, Blackberry and Symbian. Although we’re enjoying the benefits of the native-apps world (better with slower data connections, great UI), we’re paying the price for it (lower deployment frequency, writing the same thing 4 times).

Why don’t we turn our apps into “native shells” for HTML5 applications? Last year Facebook did just that and they’re arguably the largest mobile app in the world. One simple answer: Native User Experience is still superior. I strongly emphasize “speed” as an integral part of the User Experience. At least in LatAm, where data connections are slower, this is a major issue. The second factor is that HTML5 doesn’t work that well on older mobile browsers, and we have a large installed base of those in LatAm.

Wouldn’t have been easier to just copy Facebook’s approach? IMHO, despite Facebook took the right long term approach, they may have made the move a bit too soon, at least in Latin America. Delivering a suboptimal User Experience is very cost-effective but it makes room for “beautiful” apps to emerge. The growth of Path might be a consequence of this. Ok, maybe uploading users’ address books without premission helped as well, but that’s a different story.

What about the mobile web? Mobile is not just about apps. The mobile web is also growing, and is quite relevant for e-commerce. We’re currently working on a web version of MELI, using the Progressive Enhancement approach. As soon as we achieve a good enough UX, we’ll start embedding the web into the native app. Here are a few screenshots of the Work-In-Progress MercadoLibre web version:

Daniel Rabinovich

Relative color

I’m amazed at how many people think that colors are absolute, meaning the same RGB value will be perceived as the same color in every condition. It’s definitely not like that. Lighting conditions and the proximity of other colors and shapes greatly affect our perception, and our brain performs an enormous amount of corrections.

Consider this optical illusion:

Despite squares A and B are the exact same color, they are perceived as black or white in the proximity of other colors. In Color Theory, this is called “color context”.

Lighting conditions are another source of relativity. When using our eyes, our brain learned what lighting conditions we’re on and automatically adjust perceived colors. Digital Cameras have a tough time understanding what our brain is automatically correcting. That’s why we’re asked to adjust white balance when taking pictures. The following pictures show the same object in the assumption of three different lighting conditions (tungsten, fluorescent, and sun):

Why is this relevant to an e-commerce company like MercadoLibre? Because we need to extract product colors from user-uploaded pictures with unknown lighting conditions and therefore, unknown colors. This is a non-deterministic, complex, and beautiful problem to deal with. We’ll keep you posted.

Daniel Rabinovich