Let the numbers do the "Talking"

Striving to be data-driven 🎛️

Jul 23, 2023

“There's always room for a story that can transport people to another place.” ― J.K. Rowling

I have a lot of memories from my childhood and some are good while some are bad. But I can look back fondly and revisit these moments like they happened yesterday. One of the dominant memories I have is of living in a 300 sq. feet house with my mom, dad, sister, and grandmother. It was a 1BHK, out of which, the bedroom was partially used as a commercial space for my mom’s or sister’s side hustles around fashion or personal grooming. We had guests, clients, and visitors in our house all the time.

That left only the hall for other stuff - dining, entertainment, reading, sleeping, calling, and praying (oh yes, there was a corner spot reserved for a mini-temple of sorts where many gods resided). So we were almost always holed up in this hall until the bedroom was available post-evening. This scarcity of space had one benefit - we all spent a lot of time together e.g. playing games with my grandmother, watching movies together, eating together. It was beautiful, barring some heated moments of course.

I grew up with a dream of owning a beautiful and spacious house one day for my family. It took hold of me in a very subconscious way. I didn’t know I was being driven towards that but when I evaluate in hindsight, I seemed to be in a hurry to get there. That was my (internal) story # 1.

Let’s move a decade and more down the line ⌛️

In 2007, we (a friend of mine & myself) started looking out for apartments in Dubai, and I remember the broker calling us to meet an investor at his residence for discussing the details of the house that he wanted to sell. The story we were told is that he wants a bigger house and hence seeks to sell this 2BHK, which was in an upcoming area in Dubai.

On the evening of this meeting, we got late at work and the traffic too was terrible, which lead to us reaching 15 mins late. We regretted being late but were hoping to meet the investor and then head out for dinner since we were hungry as hell. But we were in for a surprise. The investor refused to meet us, stating to the broker that “if people don’t respect his time, then he rather not deal with them.”

Wow. We had no option but to return to the traffic with our sorry faces, hunting for a quick meal before we call it a day. But in my mind, there was another story taking place “This investor seems to have a very high bar for integrity and professionalism. The guy must have done a decent job of due diligence on this property and maybe sitting on a real good deal.” That was my (internal) story # 2.

Unfortunately for us (when I think about it in hindsight) he decided to meet us again. And we were more than happy to meet, and that too with all documents ready including a down payment to book the apartment, and with the willingness to sign any documents needed. And we exactly did that. I still remember sitting in McDonald’s, in Karama (Dubai), and accepting all terms of the deal like a dog who has been handed over a juicy delicious bone.

Did I ever visit the site? Did I ever see the locality? Did I have an understanding of what I was getting into?

NO !!!

Why?

Because I had another story (internal story # 3) driving my purchase decision, and that was that Dubai is booming and I just couldn’t go wrong buying a property from a reputed builder who was launching a mega project which had attracted investments from many of my colleagues as well. ‘I wasn’t alone’ was sufficient enough to follow my friends (internal story # 4).

How did it pan out eventually?

It’s been a dud investment and is more than 60% down after 16 years of this investment. We have rents coming from it but they will not recover the principal for the next two decades at least, given that there are maintenance and mortgage payouts.

It upsets me when I think of this whole saga, and it makes me laugh too.

If you think of this whole episode, it was story after story being cooked in my head. The broker did a damn good job of convincing me about Dubai and the property developer. The seller was the Robert DeNiro of this saga by acting the part with grace and street smartness. 10/10 for him. My environment played its part by making us all believe that Dubai property prices will grow to the sky.

And at no point in time, did I stop myself to check on my assumptions. At no point in time, did I bother to do some scuttlebutt or cross-verification. And nor did I think about the prices being all-time high or the possibility of reversion to the mean. I had no sense of being data-driven or analytical in my decision-making.

It seems like I was a happy-go-lucky dude, moving along with a blind belief in the people around me and the universe having my back. This is the flip side of books like ‘Secret’ and ‘Think and Grow Rich’. They make you over-optimistic, steering you away (subtly) from being grounded in reality and evidence.

This whole episode was a like a wake-up alarm that still rings in my head. And I have a few more episodes like these, each leaving me with a scar, only because I was seduced into stories - my internal cooked-up ones like “the world is great and people are so nice” stories and the external ones by ace actors driven by incentives or self-interest alone.

As Francois de la Rochefoucauld once stated “Self-interest makes some people blind, and others sharp-sighted.”

And it’s these episodes and lessons learned from there that make me question anytime when I hear or read statements of certainty. It’s coming out of self-interest alone because the world is driven by self-interest and incentives. And the only way out is to become more data-driven, to question more, and to find evidence to reject the shared beliefs/opinions being dished out every day.

Let’s look at some (external) stories that have been gaining traction in recent years and may have even occupied your mind space in some shape or form #

The inequality between the haves and have-nots is the worst it has ever been
Social Media influencer makes more money than most professionals globally
Wind Energy will replace the need for Oil & Gas industry
There are more depressed people today than ever before
We lose more people to suicide than anything else
You cannot lose money on government bonds
Stock Markets always go up in the long term
Our ancestors had a better life than us

Is it even true?

Let’s look at some of these through the lens of being ‘data-driven’ -

Wind Energy #

Excerpt from Vaclav Slim’s book ‘Numbers don’t Lie’ -

For a 5 megawatt watt turbine, the steel alone averages 150 tons for the reinforced concrete foundations, 250 tons for the rotor hubs and nacelles (which house the gearbox and generator), and 500 tons for the tower. If wind-generated electricity were to supply 25% of global demand by 2030, that alone would require roughly 450 million tons of steel. To make that amount of steel, you’d need fossil fuels equivalent to more than 600 million tons of coal.
The foam cores and outer laminations of the 60-meter-long airfoils are made mostly by polyester resins, which is made in furnaces fired by natural gas. The resins itself begin with ethylene derived from light hydrocarbons - most commonly the products of naphtha cracking, liquefied petroleum gas, or the ethan in natural gas. And this is equivalent to 90 million tons of crude oil to support the wind-generated electricity needed in the future.
Though wind energy will generate enough power, but its production, installation, and maintenance remain critically dependent on fossil fuels. Cement, steel, plastic, fibreglass, lamination, iron-ore smelters, ships, trucks, construction machinery, lubricants - we have no non-fossil fuel substitutes for these on the large scale needed for these green projects.

And it’s this data that makes me question journalists/media/CEOs/politicians when they are speaking out loud on every platform possible about the virtues of going green. I look at anti-oil protesters gluing themselves to the street with disdain since they don’t even realize the very glue they used required fossil fuels as ingredients.

They have been brainwashed by troll farms or their favorite leaders who have used their oratory skills to their optimal effect by enrolling their followers to be willing to go to the grave for their espoused ideology.

Green Energy is indeed needed but it isn’t a panacea for all of our civilization’s pursuit of growth and prosperity for two centuries post-industrialization.

Social Media #

Let’s explore a few statistics that may have excited you to pursue a career in the passion economy a.k.a. Creator economy -

The creator economy is worth USD 250 billion in 2023 and is expected to nearly double in market size by 2027 - Goldman Sachs
The top 10 highest earning authors on Substack collectively make USD 20 million per year - Backlinko
Non-stop attention-grabbing tweets like 👇

Wow, wouldn’t it be incredible to be a “one many army” and build a lifestyle that allows you complete freedom and autonomy? No one to report to, no waking up early, no traffic jams, no late nights at work. You get to choose the country you work from, the times you work, and the people you work with.

That will be a dream come true indeed. But let’s hit pause and review a few statistics on the ground (source - Linktree’s 2022 Creator Report) -

67% of creators have an audience of less than 10,000 followers. Only 21% of creators have an audience between 10,000 to 100,000 followers, and only 2% have more than 100K followers.
More than 59% of beginner creators haven’t made more than USD 100 in a year, and more than a third don’t make more than USD 1000.
Stats for full-time vs part-time creators 👇

Let’s dig into youtube statistics alone -

1,000,000 subscribers have life pretty easy and there are now approximately 25,000 to 30,000 channels in the 1,000,000 + club. - source

Obviously, it is important for a channel to keep coming up with new videos, at least one to two videos per week. If a channel were able to get its entire fanbase of 1,000,000 to watch two new videos per week it would receive each week: $18 x 1,000 x 2 = $36,000 per week from AdSense alone i.e. USD 1.8 mio +

I know that you already are thinking about your current profession as pointless and your current income as lame.

But. A big BUT !!!

Out of the 100 million+ youtube channels, only 0.026% of these have crossed the 1,000,000+ subscriber base. That’s the success ratio to become a massive social media star. So the odds of making this happen are similar to you becoming a cricketer in a cricket-crazy nation of India or the winner of American Idol.

The stories or reels of people on Instagram or tweets from online creators may give you an impression that the world on the other side is a bed of roses. But it’s not. The statistics on the ground speak about a whole different reality. So be careful before you get sucked into a narrative that makes you question the path you are on.

“Some of these things are true and some of them lies. But they are all good stories.” ― Hilary Mantel, Wolf Hall

We are human beings after all and we will fall for stories. Bad ones will move us, and good ones will inspire us. Either way, they will make us act. And act we must. So why not get better at differentiating stories backed by data instead of stories backed by false promises, delusions, or emotions alone?

Think about it !!!

I watched Oppenheimer this morning and I must admit that it was one of the best movies I have ever seen. The direction, the background score, the acting, and the drama - it’s an edge-of-your-seat experience and I would invite you all to give it a watch, and solely in IMAX. It’s worth the cost !!!

Wishing you all a fantastic weekend.

Sending you loads of love and luck 🧿

Manish

Drops of Wisdom

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