Posts

How Much Should You Be Willing to Spend to Get a New Customer?

Image
How Much Should You Be Willing to Spend to Get a New Customer? The maximum rational customer acquisition cost depends on more than what a customer will generate over their lifetime. A business also has to consider gross margin, retention, payback time, available cash, and the cost of acquiring the next customer rather than relying only on historical averages. Customer acquisition is one of the central economic problems in a growing business. A company can have a product customers like, healthy revenue growth, and attractive lifetime customer economics while still damaging itself by paying too much or waiting too long to recover acquisition spending. The useful question is therefore not simply how much it costs to acquire customers. It is how much a particular customer relationship can economically support. Start With Customer Acquisition Cost Customer acquisition cost, usually shortened to CAC, estimates how much a business spends to acquire each new paying customer. The basic formula ...
Post a Comment
Read more

What Makes Intelligent People Believe Things That Aren’t True?

Image
What Makes Intelligent People Believe Things That Aren’t True? Intelligent people can believe false things because analytical ability is only one part of belief formation. Motivation, repetition, trust, social influence, and prior commitment all affect what evidence people examine and how willing they are to revise a conclusion. Intelligence usually provides an advantage. People who reason carefully are often better at distinguishing strong evidence from weak evidence and true information from false information. The mistake is assuming that reasoning ability automatically guarantees good judgment. The same mind that can dismantle a weak argument can also construct a sophisticated defense of a preferred conclusion. Intelligence is a tool, and the result depends partly on what the tool is being used to accomplish. Theranos and the Evidence Around the Claim Elizabeth Holmes built Theranos around an extraordinary promise. The company claimed that extensive blood testing could be performed ...
Post a Comment
Read more

What Happens When Intelligence Changes Faster Than Our Ability to Understand Ourselves?

Image
What Happens When Intelligence Changes Faster Than Our Ability to Understand Ourselves? Artificial intelligence can improve the quality and speed of human work without necessarily producing an equivalent improvement in the knowledge, judgment, or independent capability of the person using it. As AI becomes more capable, distinguishing assisted performance from human understanding becomes increasingly important. The benefits of generative AI are easy to observe. Work can be completed faster, drafts can improve quickly, difficult calculations can be automated, and people can produce results that previously demanded much more time or expertise. The less visible question concerns what happens to the human capability behind those results. Improved output does not automatically tell us whether the person gained understanding, developed skill, or would recognize when the system produced a convincing error. AI Can Improve Professional Performance Research has already documented meaningful prod...
Post a Comment
Read more

Will AI Eliminate Uncertainty?

Image
Will AI Eliminate Uncertainty? Artificial intelligence can reduce many forms of uncertainty by improving measurement, identifying patterns, and producing better forecasts. It cannot automatically eliminate uncertainty because the future is constrained by incomplete information, chaotic systems, probabilistic processes, computation, and the behavior of people who respond to predictions. The distinction matters because discussions about AI forecasting often treat uncertainty as though it were simply a technical problem. If today's models cannot predict something accurately enough, the assumption is that a more capable model eventually will. Some forecasting problems do work like this. Better information and more capable models can produce enormous gains. Other forms of uncertainty cannot be reduced in exactly the same way. Understanding the difference helps clarify what better AI prediction can realistically provide. Some Uncertainty Comes From Missing Information Suppose you want to...
Post a Comment
Read more

What Makes Intelligent People Believe Things That Aren’t True?

Image
What Makes Intelligent People Believe Things That Aren’t True? Intelligent people can believe false things because analytical ability is only one part of belief formation. Motivation, repetition, trust, social influence, and prior commitment all affect what evidence people examine and how willing they are to revise a conclusion. Intelligence usually provides an advantage. People who reason carefully are often better at distinguishing strong evidence from weak evidence and true information from false information. The mistake is assuming that reasoning ability automatically guarantees good judgment. The same mind that can dismantle a weak argument can also construct a sophisticated defense of a preferred conclusion. Intelligence is a tool, and the result depends partly on what the tool is being used to accomplish. Theranos and the Evidence Around the Claim Elizabeth Holmes built Theranos around an extraordinary promise. The company claimed that extensive blood testing could be performed ...
Post a Comment
Read more

Are Arguments Decided by Facts or Emotions?

Image
Are Arguments Decided by Facts or Emotions? Arguments are influenced by both facts and emotions, but the two play different roles. Evidence helps determine what is true, while emotions and values influence which consequences matter, how people interpret evidence, and whether they are willing to reconsider a position. Arguments become confusing when these roles are mixed together. Two people may appear to disagree over evidence when they actually agree on the facts and disagree about priorities. Alternatively, they may share the same values while making different predictions about what a particular policy or decision will produce. Understanding which type of disagreement is taking place can be more useful than immediately searching for another fact. Facts Can Establish What Happened Suppose two employees disagree about whether their company should continue allowing remote work. One produces data indicating that individual productivity increased when employees worked from home, while the...
Post a Comment
Read more