Experimenting

Just because something doesn't do what you planned it to do doesn't mean it's useless.

Thomas A. Edison

If you are an experimental scientist, your days are likely to be either incredibly frustrating, or incredibly exhilarating. Actually for many of us this oscillation of emotions is the natural bipolar state of the work that we are driven to do. Everyone has a slightly unique process for experimentation. I tend to start with improvisation, while other, more organized scientists begin by systematic preparation. An improvisation is by its nature different than an experiment. It is more like psychoanalysis, with free association of ideas, without any conscious direction. I remember this being called brain storming in business and school meetings. For me an improvisation can clear my mind, so that I can see what is already in front of me, rather than be trapped by outside thoughts. As I said though, this is not really an experiment. An experiment requires more than improvisation, it requires an idea, or hypothesis, so that a proper test, and set of testing conditions can be designed. In cases like the Large Hadron Collider at the CERN labs in Switzerland, 15 years have been spent preparing for experiments. One of the key experiments at LHC has been sculpted by the world’s leading physicists over much of this time. The Hypothesis is that a unique particle, called the Higgs Boson, can be detected by colliding protons at high energies near the speed of light. Most physicists expect this particle, called by many the “god particle”, to be detected, confirming one of the 20th century’s most famous, yet improvable theories in particle physics. This is what is generally thought of as experimentation. At the 2009 Origins Conference in Arizona, two physicists Laurence Krauss and Brian Greene talked of an even more rewarding, or exciting possibility. Dr. Green said “what would be even better than finding the Higgs at the LHC, is not finding it. It would show all of us that there is something else to be discovered. Of course this wouldn’t be good for financing another large experiment like this.”

Greene was on to something that is generally misunderstood about scientists. Even when an experiment is well planned, and a hypothesis well formulated, we are even more enthralled by the possibility that the experiment leads us to entirely new places. The reason for this is that we trust that nature is inherently more interesting than we can first imagine.

Small technology companies are no less of an experiment than one run in a lab. Like the scientist in the lab, the entrepreneur is putting all of his mental capabilities into a hypothesis, believing that his idea is of value. The good entrepreneur, like the good scientist, is even more moved by the idea which he didn’t have. In other words when the experiment of trying an idea fails, he assumes that it must mean that there is an even better solution. This can make for difficult days, quarters and years, but ultimately the openness to reinterpret the experiment can lead to more beautiful places than the original design.

One area of the start-up which is often misrepresented, or at least not thought of in this light, is staffing. When I was a theatre director I was given a common piece of advice which is that “90% of the director’s job is casting.” This is true of course for directing and hiring engineers, but it is not as rigid as might be implied. When the director Mike Nichols hired Dustin Hoffman for “The Graduate” his choice was mocked throughout Hollywood. Hoffman was too old, to small and too Jewish. The role of Benjamin Bradick should have been given to Robert Redford, by all of the loose metrics of casting wisdom. Nichols was participating in an expensive Hollywood experiment, and one that ultimately paid off with one of the most successful films of its era. In hindsight Nichols is seen as a genius for this decision. When asked about it though, he doesn’t see it this way. He claims that the reason for choosing Hoffman was not based on an imagined box office success, but rather just because he thought Hoffman was good. He chose to experiment on Hoffman, not knowing for certain how he would fit in the role, but believing him to be a good enough actor that somehow he would.

“The Graduate” casting example is exactly what plays itself out when hiring the first few engineers in a company, and probably everyone after that. Sometimes it is not always best to hire the MIT Ph.D. with a specialty in your field. Sometimes that is like casting Robert Redford in “The Graduate”. It would work probably, but it might not be as inventive as you would like. There was also one other small advantage to the casting of Dustin Hoffman, which at first may seem like a compromise. Hoffman was an unknown, and was not as expensive as Redford. I don’t think this was Nichols reason for casting him, but in the end it didn’t hurt either. Because the production was under budget in casting, they were able to reallocate some of that money towards the scenery, which included the famous modern and post modern monochrome homes of the Bradicks and the Robinsons. It also didn’t hurt Hoffman, as he is now one of Hollywood’s top paid actors.

The early years of Tech Pro were much leaner than “The Graduate” pre-production days, but there were some similarities. My parents were looking at doing something that shouldn’t have been able to be done with a small amount of investment capital. They were trying to open a software, and hardware company to create completely new technologies, in order to compete with Monsanto, which was at the time a Fortune 50 company. Although it is obvious that this experiment was a risky one, and that there would be challenges, the challenge of hiring seemed easily approached by following common business wisdom: if a company has only a few dollars, at least those dollars should go to the obviously most qualified person. But, what if there aren’t even enough dollars to work with, or if it means changing your financing model in order to raise additional funds?

The story of Jeff

The summer of 1985 was a period of transition for Tech Pro. The company itself was experimenting through improvisation and hypothesis, starting as a garage refurbishing shop. That is really all it was. My Father had worked in Akron, the rubber capital of the world (at least then), in many areas of the industry, from manufacturing rubber, to working in a testing lab, to working for Monsanto, who made testing instrumentation. During this time period Monsanto had a near monopoly on a type of instrumentation called rheometers, which were the only practical way of evaluating vulcanization of rubber. In the mid 1980’s there was a transformation in the industry occurring. The large tire companies were being acquired by foreign firms, and local factories were being closed. At the same time smaller US companies were filling some of the gap left by the departure of the major players. These smaller companies couldn’t afford the rheometers that were by natural supply and demand standards expensive from Monsanto. My parents made a logical bridge between the factory closures, and the need for low cost instrumentation. They purchased used instruments from shuttered plants at auctions, and rebuilt them to resell to the new companies needing cheaper instruments. This was, not surprisingly, welcome news to the industry. It was also a lot of work. Tech Pro hired first a night maintenance man from Kmart to help with the rebuilding. Joe Bulman was a superb tinkerer, and even though hired mainly as a technician, showed creative interests, and abilities. So, he became a design partner, and was the first person to design, along with my father, an original rheometer, not just a refurbished old one. Actually, I will digress for a moment on this story, as it is a perfect example of an experiment that needed adjusting.

In 1985 Tech Pro was actually happy, and even profitable in its business of refurbishing and reselling rheometers. With Joe building, my mother doing the administration, and my father doing sales and installations, it was a nice, very small business. The way the process worked was that Tech Pro would find the old, usually not functional instruments, at an abandoned factory and cheaply acquire them. They would then strip the instruments to only there bare physical structure. They would buy all new parts, from Monsanto, rebuild the instruments, paint them, test them and resell them. This was the entire business at the time. Then a shock that could have stopped Tech Pro at this stage happened. Monsanto refused to sell Tech Pro any more parts. Since Monsanto was the only supplier, there were no other choices. That is except the one that now seems obvious. Tech Pro started to make its own instruments. At this point my father moved from being a salesman, and installation man, to a designer, and Joe became an engineer.

Once Tech Pro had an equivalent, but less expensive instrument to Monsanto, the idea of being just a second supplier lost its excitement. My father was an experimenter at heart, and wanted to experiment with the most exciting technology of the day, the personal computer. Personal computers in 1985 had started to find their way into corporations in many ways. The large main frames of the past were no longer necessary for many applications. Spreadsheets and word processing were being used by nearly everyone. Accounting departments and human resources were starting to use personal computers. In the rubber laboratory, however, analogue devices, called recorders, were the only way to acquire information from rheometers. Personal computers seemed like a perfect fit. A computer would be able to acquire data from the instrument, and store the information. It should also be able to do mathematical calculations to help with the interpretation of that data. The problems in pursuing this line of experimentation were: 1). Joe, my mother and my father had never programmed before, and 2). Computer scientists were scarce and expensive.

Though Joe was the only engineer at Tech Pro in 1985, the work load for building and rebuilding instruments had increased to the point where some hourly employees were necessary to help with the manual labor involved. When a company is as small as Tech Pro, every hire is important, and risky, no matter how unskilled, or low paid the job appears to be. My parents even had a test, which was not so much based on knowledge but instead based on problem solving and creative manipulation. An example from this was putting together a pizza box quickly. Another involved an aspect of design. The only knowledge based questions were ones of electronics. It was important that every early Tech Pro employee know some basics, as everyone needed to multitask. There was also a search for a computer geek. For people who spent time building their own computers, and coding video games. Tech Pro was looking for people who had fun with computers and electronics, not people who were educated in them.

One of these early shop hands was Jeff Archer. Jeff was in his early twenties, high school educated, and clumsy with tools. In such a small firm, where the ability to use a broom, and a drill were more important than your ability to do differential equations, this could have been a problem. Instead months went by with Jeff working hard, but not extremely effectively as an assistant of sorts to Joe. Jeff’s potential during this time was growing, as he was indeed leaving work to build his own computers, and doing programming. When my father decided that he wanted to create the first PC applications for rheometers, he did not search for capital, and computer scientists, he instead looked for the geek with the broom. Jeff, and my father worked together to make the first ever PC driven rheometer system. Jeff was not just good technically, he was creative, and smart, and understood, like my father did, the psychology of the user. Together they created a system which was such a smooth transition from analogue to digital, that within 5 years the entire industry had embraced it.

Jeff was an experiment that paid off for him, for Tech Pro, and for the rubber industry in ways that were never hypothesized when he was hired. Still the flexibility and insight to see in him as a potential partner made something unique possible. Only in a small company where the owner knows the worker can this discovery be made.

Risk

For a dying man it is not a difficult decision [to agree to become the world's first heart transplant] ... because he knows he is at the end. If a lion chases you to the bank of a river filled with crocodiles, you will leap into the water convinced you have a chance to swim to the other side. But you would not accept such odds if there were no lion.



— Christiaan Barnard



Scientists suffer from an unfair reputation in America. They are considered to lack instinctual savvy. For this reason, nearly every physicist I know is deeply offended by the stereotypical characters in the CBS sitcom “The Big Bang Theory.” They are socially awkward and tend to quantify even the most banal details of life. What my colleagues miss about “The Big Bang Theory” though, is that hidden underneath all of the silliness these characters possess something that is unique, and apparently rather attractive about scientists. After all, even the Asbergian self-centered Sheldon is likeable , I actually think that there is something about the geekiness of “The Big Bang Theory” that is every bit as attractive as the coolness of the “Sex in The City” ladies. Though this is certainly a project for sociologists and not me, I have a hypothesis regarding television likeability and culture. I think that somehow we know that the common perception of cool is not really all that important, or even interesting. This is a significant, even if unconscious, realization for modern television viewers, because common wisdom takes a long time to become common. It is also interesting because it gives a defense for seeing the Universe and ourselves differently. In essence we think that everything Sheldon does is not intuitive. He is a classic clown in this way. He humiliates himself by creating friendship surveys so that he can create a mathematical model to see who would best qualify as a friend. Our instincts are the opposite of this. We become friends with people because they are attractive in some, sometimes superficial, way. They make us laugh, or they are handsome, or they are somehow dynamic in a way that we wish we were. For anyone who has had friends they ended up hating, or has been married and divorced, human instincts are exceptionally bad.

This is one area where a geeky physicist may have some insight on business that is different than everyone else. Physicists are used to the facts being different than the way they feel. The Copernican revolution is one of the first examples of this: it doesn’t feel right that the earth rotates around the sun. This is even truer of 20th century physics. Our instincts are absolutely insufficient to understand Einstein. General Relativity, with warped space-time, just isn’t in our normal arsenal of instinctual survival skills. Quantum mechanics is even less intuitive, so much so that one of its discoverers, the Danish Nobel Laureate Neils Bohr famously said, “If quantum mechanics hasn't profoundly shocked you, you haven't understood it yet.” So to be a good physicist or scientist in general, it is important to be at least a little “Sheldonesque.” We must not trust our instincts, but instead investigate the truth. In facts and friendships we need to consider quantitative data, not just attraction.

A field of science which is relatively new is called “evolutionary biology”. You would think that this would have started just after Darwin’s “Origin of the Species” was published in 1859, but it wasn’t. That revolutionary book was so well written, that it debunked all of recorded history’s various religious interpretations of biology without being all that difficult to understand. In fact, when you read “Origin of Species” the first thing that comes to mind is “why did it take so long to realize this?” Darwin just observed and recorded nature for many years, and made a leap which was incredibly obvious in retrospect; that there is a relation between species and that certain traits and species survive because of natural selection. This was, of course, controversial for all of the obvious reasons as well. Religion is both very personal and very political. Even though what Darwin was doing was science, it did step on some sacred beliefs. Still, to most people who read the book it made sense. Theodore Roosevelt read it when he was 14 years old and for the rest of his life claimed it was the most important book ever written. It is easy to see that Roosevelt’s love of nature shaped his decisions as president, and much of that can be traced back to his admiration for Darwin. So because of its apparently intuitive qualities, Natural Selection could be taught in biology classes, without there being a separate branch of the discipline devoted to it.

The surprising thing is that as much as Natural Selection made sense, it really wasn’t as intuitive as expected. What made most sense to humans about evolution was not the centuries it takes for species to transform themselves. This is hard to visualize. Instead it was an idea that humans could only prosper through a conscious survival of the fittest. The term Social Darwinism was coined in 1944 by the historian Richard Hofstedter to reference some rather disturbing contemporary human behavior that was carried out with the excuse of Darwinian naturalism. The most obvious during Hofsteder’s time was the eugenics programs of the Nazis. The concept of superior races, and linking human survival to the elimination of the unfit seemed like an extension of Darwin’s work. In fact, Darwin’s own cousin, Francis Galton, was the founder of Eugenics at the end of the 19th Century.

It is only when you let go of this instinctual idea of survival of the fittest that you can really see the true scope of Evolutionary Biology. Genetic mutations are slow to occur, and happen because of natural means, but humans have removed themselves from the natural process. Technology, as wonderful as it is, is only 10,000 years old. Until that time there was not agriculture or architecture. There were no cities or writings. We call everything before this “prehistory,” because until that point history was not created by deliberate societal choices. Darwinism has been in progress since the beginning of life on earth, but social Darwinism exists only during those times we call “history”. Therefore most scientists feel that we as humans are effecting nature, while behaving as if they were outside of the natural process. This is not instinctual, and is not as easy as “Origin of The Species” initially seemed to be.

Social Darwinism is also evident when evaluating risk. The 2008 credit crisis and banking collapse can be seen in this light. The majority of the crisis was caused by misunderstanding risk. Was it riskier to give certain loans or not? Was it riskier to make certain credit swaps or not? There are two prevalent points of view about why this happened, and in such dramatic and drastic ways. Most people not working in finance see it as a case of greed. This viewpoint is an unconscious blaming of social Darwinism. It holds that the wealthy Wall Street Bankers wanted to be the strongest, therefore richest, so they pushed for larger profits at the expense of the weaker greater population. On the other hand, the banking industry blames poor financial modeling for the collapse. The claim has been that the models did not appropriately explain the risks associated with these transactions. Even the most famous economist and Federal Reserve chief of all time, Allen Greenspan, used this explanation saying “the models of finance that I have followed were not accurate in predicting this crisis”. When we look at these two explanations we see a huge contrast, while both ignore something that is probably more accurate. It was neither greed nor modeling alone that caused this. It was merely a deficiency in our ability to instinctually comprehend risk. The numbers were too big, our vision of history too limited, and our confidence too great. It seems that we were not as smart as we thought. Growth seemed inevitable. We thought that credit and finance in general were part of the evolutionary process, but in fact they were removed from it. Derivatives and credit default swaps just happened too fast for Natural Selection to catch up with them.

This applies also to the personal and professional risks associated with starting a technology company. The common wisdom on the risks of entrepreneurship are strangely opposed to the way we approach risk in our daily lives. Most people change their risk threshold based on how much money they have. When we have very little money we tend to risk all we have, because we feel there is not much to lose. This is why lottery lines are longest in poor neighborhoods, and why casinos are filled with people who can’t really afford to lose the money that they are gambling with. These people feel that the upside is much larger than the downside. It just feels right, but is completely wrong. The odds of a poor person winning the lottery are just as bad as the odds of a rich person winning the lottery, but the risks associated with the poor person playing are so much worse. This wrong instinct extends through the middle classes and even to the wealthy, not for lottery tickets but for ideas and the money it takes to pursue them. Someone who is worth 2 Billion Dollars is less likely to risk 1 Billion dollars on a single venture or idea, than someone worth $ 200,000 is to risk $100,000 Even though the billionaire may lose much more money he certainly is in better shape financially than the person who loses half of his $200,000 investment. Our instincts are just that bad.

Instinctively entrepreneurs often work by the motto “never spend your own money”. I have been told this many times, by everyone from the founder of Cirque Du Soleil, to the investor of the leveraged buyout concept in the 1980’s. These people have been undoubtedly following their instincts, and those instincts have made them a lot of money. The question I need to ask myself  is whether that would make me a lot of money too, and more importantly whether that would be the best thing for my company and the happiness. We have tended to answer no to that question. Seeking other people’s money presents a bigger risk for me than risking my own for reasons that seem completely unreasonable.

The main reason why technical entrepreneurs, like me and my family, may want to take relatively large risks compared to the Billionaire, but relatively small risks compared to the lottery addict is because it is a scale that we can relate to. There is an assumption that the risk taken is never so great that it will land us and our children on the street corner, but is none the less a risk that could alter our lifestyle. This is something a scientist can understand. A scientist knows he cannot appreciate in an instinctual way, those things which he cannot feel, and that further comprehension only comes through a deep knowledge of a subject. For a scientist starting a small company it isn’t always the most interesting use of his time to fully understand business, so he shouldn’t have to do it. The risk and reward factors change when this is considered. It becomes more risky to raise large sums of money because large sums of money may be out of the scientist/entrepreneur’s expertise. In order to gain that expertise he would have to sacrifice his true interests, which may very well be the riskiest choice of all.