In 2012, along with another researcher, I worked on a few projects in self-organizing, adaptive complex systems. Adaptive complex systems are where the whole system is more complicated and enigmatic than the properties of individual agents or components in the system combined. Emergent properties in such systems are sometimes so striking that it is hard to anticipate it before running simulations.
One of the projects was about studying the stock market behaviors in a widely cited model based on game theory (minority games to be specific). In this extremely simple model with 5 to 10 parameters, agents (e.g. traders) followed a few, simple and precise rules. We tweaked the model based on hundreds of hours of understanding and simulated time evolution of the system. Even in such a simple model, a small change in parameters would give rise to very different market dynamics and our intuition about the future would turn out to be wrong every time. After months of work, we decided to abandon the project.
Human society is also like a self-organizing complex system with millions of independent parameters. These parameters range from opinions of various politicians, weather in different regions to properties of the coronavirus. When a Black Swan like COVID-19 appears, it is exceptionally difficult to fathom what versions of the future have a higher probability of realization. To even complicate the problem, we get surrounded by misleading information. This is a time when technologists are writing articles about economic policies and politicians are guessing at treatments that will cure coronavirus (Dunning–Kruger effect).
We reached out to our advisors and mentors to get their advice on how to navigate this period. Their suggestions amounted to this:
- Secure a runway of a couple of quarters (raise money, cut costs if necessary)
- Consider a meaningful pivot with immediate impact. Evaluate if the crisis changes the underlying business case and value proposition of your product. If no pivot is required, continue on the current path with needed adjustments.
- Evaluate if the team’s expertise can be helpful in managing the crisis, e.g., building PPEs.
- Continue to talk to team, advisors, potential/existing customers, investors.
Once these things for a startup are gauged and taken care of, there is not much to do. When the uncertainty is huge, it is in fact less scary. The circumstances significantly reduce the responsibility of making innovative decisions. Most of the amazing stories, which will emerge in the future, about ingeniousness choices during the crisis are just examples of survivorship bias. Once the basics are covered for a startup, the best one can do is ignore the noise and just concentrate on the task at hand. Short term focus in an environment of uncertainty makes so much sense compared to a long term vision. Success and failure are less dependent on individual decision making but more on circumstances. It is best to accept it as it comes and move on.
While this is done, it better to be done without any apprehensions. Nobody at this point knows how a major crisis like the COVID-19 will eventually play out and what long-lasting impact it will have on human society. In spite of this, it is safe to trust the collective decision-making process by experts in different areas. Medical professionals, policymakers, political leaders, product manufacturers, etc. on the frontlines are digesting a lot of new information very quickly and acting upon it. Though post-crisis discussions will involve praises and criticism, it is hard to believe that beyond reliance on experts, the system can do any better. This allows a startup to contribute by focusing on the task at hand and advancing the area of its expertise. The defining feature of a Black Swan is that we will never know on which front it will show up next and which mundane technology may be critical in navigating through it. The beauty of our world is that we can count on human ingenuity to get us to the other side.
While all the bad ideas in this post are mine, good things are learned and influenced by Fairom’s team, which includes the core team, advisors, mentors and investors. Thanks to Jean Desgagne, Brian O’Donnell, Ahmad Sghaier, Jonathan Hackett, Taha Jaffer and Denis Bashkirov for suggestions and feedback on the post.