June 25, 2008


Silent Evidence

Were you amused to see a bell, the kind which you see in Hindu temples, in Pizza hut when you saw it for the first time? I was. The idea is if you are happy with the food and service, you ring the bell (dong! dong!) and the entire staff shouts back the gratitude in unison - "Thank You!" During the 40-60 minute dinner you might hear the bell a dozen-odd times. It almost acts as a reminder that the food you are eating is delicious and waiters are extremely courteous and prompt.

But, what about all those people who did NOT ring the bell because they were less than satisfied with the food or service? Well, the system is designed such that you don't notice those responses. They don't have an electric bell which creates cacophony and staff will apologetically shout "Sorry." This is what is called silent evidence. The evidence which disproves a theory or conjecture simply doesn't show up. You need to ask for it.

On one of the stock investing groups some folks gloat about their acumen of stock picking by showing multi-baggers (the stocks which returned say 10x of investment) from their recommendations. What they don't talk about is the recommendations which have sunk to 20% of their recommended buy price. Or the history of all of their recos and cumulative returns. Those data points will give me a whole lot confidence. These multibagger recos will be classified as outliers till there is evidence to suggest otherwise.

Whenever you are given a theory with some data supporting it, ask if there is data which shreds this theory to dust.

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Hi Shashikant, we met during the Pune Open Coffee Club meet. My name is Abhay and I am the founder of a startup called "42". Hey, I wanted to discuss some stuff with you. I do not have your email-id. Can you please mail me at abhay DOT shete AT gmail ? I will revert back...
well the existing system can be used. for example - just keep ringing the bell so many times that every looks at you. and when you have everyone's attention - say you hated the food or the service sucked.

i never ring bells, not because i am not satisfied, but becoz i feel embarassed abt this ppl shouting thank you.

but that wasn't the point you were trying to make anyway :)
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