Episode 82: Scale

Transcript

i've become fascinated in recent years around the idea of scale so there i'm not really talking
about scaling like scaling some technology service or some business or whatever i'm talking
about thinking about thing like zooming out of certain things and really thinking about them
from a you know how big does this go perspective i'm gonna go through like a couple examples
of kind of what i'm talking about and again this is just something that's like this has this this
sort of line of thinking has become more and more pervasive for me and and really interesting and
also helps explain certain things i think that maybe almost seem inscrutable the other thing i
find really interesting about this conversation around scale is that like it often it often
presents itself in in kind of count almost counterintuitive ways i'll see if i can kind of
explain what i mean by that too so where some of this starts for me is thinking about the manufacturing
of automobiles like you know cars trucks but you could probably apply this same thing to many things
because i bet at some point in your life you have said the following phrase or something like this
whether it's about a car or something else you know and it goes something like this you've bought
something in this case i'm talking about a car and you notice something cheap about it or something
inefficient about it or something that you think just isn't very good and you think to yourself
geez couldn't they have spent the extra dollar and just gotten a better part right so for example
you know you take like take a vehicle and you know it shows up and it's got like a crappy cup holder
and you think to yourself well the cup holder is already here couldn't they have spent the extra like
buck or two i mean come on it's it's a fifty thousand dollar car they couldn't have spent the extra
couple of dollars to put a better cup holder in here and you sort of think to yourself like
well geez again it's a fifty thousand dollar vehicle they make all you know so many of these
they're a huge company like couldn't they had done better until you think about scale right so if you
if you sort of think to yourself okay desire again we'll talk about a car if you if you consider
desired price point as a constraint in other words if you assume that the manufacturer is looking at
the car and saying you know this vehicle based on our market research must the base model must come in
under forty thousand it must be thirty nine nine or whatever and then you look at that cup holder
and you realize that they're not it's not that they didn't spend a dollar or two for you
it's that across their entire lineup of of of cars and and their entire invent you know not inventory
but their entire manufacturing process across all of their vehicles for that year you know what if
they're producing half a million cars then that one or two dollars it's not one or two dollars to
them if you if you zoom out it could be millions right um there's actually a funny video about this
i'll see if i can find a little little short video about uh uh sometime there was some airline i guess
at some point in history that you know saved themselves like forty thousand dollars a year by
removing one olive from their salads or something but anyway um separate kind of thing but at scale
and you got to realize too that yes i'm sure auto manufacturers have an idea of how much it costs
per car to you know create versus what they will bring in on that and there's a lot of factors there
right there's warranty pieces there's recalls like the total cost much like the total
cost of ownership to a consumer is not simply purchasing the car and making payments it's
also gas and repairs and this and that and everything for a manufacturer the total cost
of production is not just producing the car it's also dealing with warranty issues and you know if you
look across the entire line like if they make two hundred thousand cars of this type or whatever
then uh you know what percentage of those are going to have some sort of recall or warranty issue that
they're going to have to pay out of their pockets and that gets spread like butter across the entire
lineup right like even if you never have a problem with your vehicle you're paying for someone else to
have a problem with their vehicle somewhere in that economic you know pipeline
and the same goes for that dollar dollar that they didn't spend on a cup holder because across that
lineup it adds up at the at the not at the unit level but at the full company level where somebody
somewhere is looking at this and going well we could get another million in profits if we pick the
cheaper cup holder or another million in maybe not profits but in you know reduce a million in expenses
right and and those kind of numbers could be very real so yeah you get the crappy cup holder and you
would think to yourself well they're so big how could they not spring on the better cup holder
they're making so much money but that little choice at scale is huge in comparison to if you brought it
down to the individual level and i just find that so interesting and thinking about not that i'm trying
to empathize with giant companies that's not really my point here but when you when you when you look
at questioning well why xyz in many arenas in life it's worth asking yourself the question
is this a scale issue is this happening because of scale or is this an individual thing and and where
i think that this if you talk about home renovations i think there's an interesting piece here as well
which kind of dovetails with this contractors come into your house right and a lot of times you'll
have similar thoughts sometimes like you know contract comes in does some work you notice something
weird like they you know didn't sand something and they painted over it or whatever and yes it could
just be sloppy work or maybe they use crappy materials you know on some doorframe somewhere or whatever
and you ask yourself like why like they're contracted why don't they just use the better piece
or you know you know what that's probably a bad example let me back up and talk about time
because time is probably the better parallel here for contractors
for for people coming in and doing work on a house where they make their money is how quickly can
they get through your job to get to the next job because the more jobs they can do in a day
or a week or a month or year it doesn't pay for them to travel back and forth to your house all day
long it's better to go and start like to get through yours to move to the next one so you ask yourself
like oh why couldn't they just let the first coat of paint dry longer before getting to the next one
and the answer is because at scale at their version of scale where it's not just about your house it's
about your neighbor's house and the one down the street and the one across the you know way and
whatever and their week month year kind of thing that really adds up overall but i think that the home
renovation thing is also interesting because i think it opens doors to have a conversation with them
because for you as the homeowner you're not operating at scale you're operating at the individual level
and i think what this enables you to do is to have the conversation with that contractor that walked
into your house and say look i know you're probably going to want you know you're probably going to
suggest let's say they're coming in to do like a water heater right and they're like oh you only need
like a 50 gallon water heater and you can say no look because from their point of view when they think
about it across the whole it makes more sense that most people need a 50 gallon not a 75 or 100 gallon
but you could go to them and say hey just up it like i know it's going to be an extra 500 that's okay
i'll pay it now i'm not saying you have to just ignore your budget but in a lot of cases
the contractor level item they suggest because they're used to operating at a different scale
than you're thinking about from a homeowner's point of view it's it's almost oh it's a case of like
scale mismatch right where it's very useful to them to be thinking about this across the large
scale when for you you couldn't think about it just in terms of your house
and generally speaking they'll do that because to them it doesn't really matter if they bring in
the slightly bigger part as long as you'll pay the bill to do it and i think that as a homeowner
it almost always pays to go one step up because at your scale you know you're going to do so many
damn projects in your house something's always going to break something's always going to need
replacing get the better thing spend the extra two three hundred bucks you're probably going to
spend it on something else anyway but at that time just spend for the extra thing and generally
speaking they're going to be fine with that because it doesn't actually impact their scale
they're just making recommendations based on what would be best at scale closing out here there's
another thing that i heard this week that finally gave me a concrete example because intuitively i
have felt this way or thought this way about sort of this ai llm revolution that we've all been going
through the last couple of years so intuitively i just felt that this was true but i didn't have
like a concrete example and i'll link to the video it's a hank green video that talks about this or
at least i'll try i gotta dig it up i think there is a certain degree at which you know there's this
idea that llms are just gonna increase productivity almost infinitely it's worth keeping in mind that they
are also costing us productivity and here's a concrete example of that applying for jobs think about
this for a second so most people now when they are applying for jobs first of all they're applying
for way more jobs than they used to right when i was first looking for my first job i think i applied
to like three or four companies very precisely i got like two or three interviews and i took one of them
and then like two offers and i took one of them right it was the scale the total scale was like four
you know now geez with linkedin and everything else people apply to a few dozen in a day easily
and probably more and how are they doing that a lot of these places ask for cover letters
cover letters are time consuming if you actually write them you know what makes them less time
consuming writing them with ai and that goes for your resume too you know an ai is probably going to
be better at putting together a resume more quickly so you as an individual you are shoving
your data through an llm so that it can spit out cover letters and resumes efficiently then you submit
those then on the other end of that companies have put ai and llm systems in place to read your cover
letter and resume and summarize the whole thing so they don't have to read the whole piece of you know
the full submission basically so what's happening we're using llms to put things into a format so that on
the other end another llm can read it and take it out of that format and break it down into something
simpler that flow when you think about it even at the individual level seems insane but here's where
it ties in right think about that at scale think about how many millions of people are applying for
jobs every day using this exact flow and how many companies are taking those resumes and cover letters
and pulling them apart and summarizing them so that they don't have to read the very thing that the
other llm put together and think about how many tokens and dollars and heat and water and gpus and server
farms and all the rest of it are supporting that at scale at true scale like really try to zoom out and
think about what that looks like it is a massive waste of productivity and and many other things
probably it's a financial burden to everybody and that's just one process think about other things
that you use llms for to churn things out and then ask yourself what the likelihood is that whatever
you're doing with that on the other side is then taking another llm to pull it apart and like
summarize it outline it whatever so that someone else somewhere else doesn't need to actually read it
and then just zoom out and i find this just mind-boggling like i haven't done the math on this
but it's got to be crazy right really zoom out and think about what the true repercussions are
environmentally uh in terms of electric in terms of like just so many things wasted time it it's it's
this idea of scale when you start thinking about it all of a sudden you start seeing it all around you
it's one of those things and it really i think helps to decipher some of the crazy that we encounter
every day in this world