Wasted Talent

Facebook is one of the most celebrated websites on the internet.  I don’t think it’s worth near the hype it’s received.  I wonder how many people realize that Facebook has nothing to do with staying connected with friends and family.  The reason the company is now worth nearly $65 billion dollars is they are a corporate data mining operation with one goal in mind — sell as much targeted advertising as possible.   I just finished reading an interesting article in Business Week.

As a 23-year-old math genius one year out of Harvard, Jeff Hammerbacher arrived at Facebook when the company was still in its infancy. This was in April 2006, and Mark Zuckerberg gave Hammerbacher—one of Facebook’s first 100 employees—the lofty title of research scientist and put him to work analyzing how people used the social networking service. Specifically, he was given the assignment of uncovering why Facebook took off at some universities and flopped at others. The company also wanted to track differences in behavior between high-school-age kids and older, drunker college students. “I was there to answer these high-level questions, and they really didn’t have any tools to do that yet,” he says.

Over the next two years, Hammerbacher assembled a team to build a new class of analytical technology. His crew gathered huge volumes of data, pored over it, and learned much about people’s relationships, tendencies, and desires. Facebook has since turned these insights into precision advertising, the foundation of its business. It offers companies access to a captive pool of people who have effectively volunteered to have their actions monitored like so many lab rats. The hope—as signified by Facebook’s value, now at $65 billion according to research firm Nyppex—is that more data translate into better ads and higher sales.

After a couple years at Facebook, Hammerbacher grew restless. He figured that much of the groundbreaking computer science had been done. Something else gnawed at him. Hammerbacher looked around Silicon Valley at companies like his own, Google (GOOG), and Twitter, and saw his peers wasting their talents. “The best minds of my generation are thinking about how to make people click ads,” he says. “That sucks.”

Your friends and family aren’t the only people viewing what you do on Facebook.  There’s an army of analysts watching everything you do.  They want to know who you’re dating, how long you’ve been together, when you break up, where you’re working, your hobbies, your interests, what TV shows you enjoy, movies you’re watching, your education level, your thoughts on political positions, and the list goes on.  These analysts crunch away and sell off all of your information to corporations wanting to sell their products.

It’s sad to me that our most brilliant mathematicians are not working on inventions and technology which changes the world — instead they focus on helping Wall Street fat cats by devising trading algorithms, and work on complex software systems for targeted corporate advertising.

Hammerbacher grew up in Indiana and Michigan, the son of a General Motors (GM) assembly-line worker. As a teenager, he perfected his curve ball to the point that college scouts from the University of Michigan and Harvard fought for his services. “I was either going to be a baseball player, a poet, or a mathematician,” he says. Hammerbacher went with math and Harvard. Unlike one of his more prominent Harvard acquaintances—Facebook co-founder Mark Zuckerberg—Hammerbacher graduated. He took a job at Bear Stearns.

On Wall Street, the math geeks are known as quants. They’re the ones who create sophisticated trading algorithms that can ingest vast amounts of market data and then form buy and sell decisions in milliseconds. Hammerbacher was a quant. After about 10 months, he got back in touch with Zuckerberg, who offered him the Facebook job in California. That’s when Hammerbacher redirected his quant proclivities toward consumer technology. He became, as it were, a Want.

At social networking companies, Wants may sit among the computer scientists and engineers, but theirs is the central mission: to poke around in data, hunt for trends, and figure out formulas that will put the right ad in front of the right person. Wants gauge the personality types of customers, measure their desire for certain products, and discern what will motivate people to act on ads. “The most coveted employee in Silicon Valley today is not a software engineer. It is a mathematician,” says Kelman, the Redfin CEO. “The mathematicians are trying to tickle your fancy long enough to see one more ad.”

I can’t stand quants.  I think they’re worthless human beings.  The idea of investment is providing capital to entrepreneurs who will bring new products and services to the world, making the world a better place.  In effect, these money masters are in charge of our society’s resources,  controlling which technology gets created.  They hold humanity’s destiny in the palm of their hands.  And what do they do with this power?  They create a casino where everyone tries to outwit one another by devising clever mathematical algorithms to make systematic trades.  They create the mortgage security market and then bet on who will and will not default on their mortgages.  They inflate a bubble, make huge profits on the upswing, then cash in on the downswing in the derivatives market.   It’s so absurd that I want to scream.

Call me old fashioned and conservative, but I believe banking and finance should be a boring job, because it is.  We don’t need financial cowboys gambling away our hard earned savings and retirements.  In order for markets to function properly, profits and rewards must be based on whether or not a person is adding value to and improving others lives.  When people can earn money without doing this, things fall apart.   This seems like a good place to quote Hayek.

“It is that any workable individualist order must be so framed not only that the relative remunerations the individual can expect from the different uses of his abilities and resources correspond to the relative utility of the result of his efforts to others but also that these remunerations correspond to the objective results of his efforts rather than to their subjective merits. An effectively competitive market satisfies both these conditions.”

– Friedrich Hayek – Individualism And Economic Order

Working at Facebook selling advertising is infinitely better than being a “quant”, but that’s not saying much.  There is some merit to effectively making people aware of products that are available, and helping a person find a good deal.  All in all though, it’s sad to see our brightest minds waste their lives and their talent.  Jeff, don’t waste your life working for Facebook.  Go out there and contribute to real technology that truly improves the human condition.  We already have enough junk in our homes.

3 thoughts on “Wasted Talent”

  1. Excellent post, as always, Jason. However, I think that Facebook is about BOTH people “staying connected with friends and family” AND “a corporate data mining operation with one goal in mind — sell as much targeted advertising as possible.” That is, people like myself happily use Facebook for the former and the people at Facebook use it for the latter. Well, actually, I suppose many of them use it for the former as well as for the latter.

    But two questions arise: (1) Even though people like us use Facebook for good purposes, do the ends justify the means, and, relatedly, (2) Should we be encouraging our brightest minds to become social media “quants” instead of great scientists, teachers, and other truly productive members of society?

    And, actually, there’s a third question: Are too many of us wasting enough time on Facebook to prevent us from being the truly productive members of society that we might otherwise be? 😉

    One concluding comment. I frequently post links to your blogposts on my Facebook page. 😉

    1. Steve, though I would agree Facebook is making money because they connect friends and family together, I don’t think Mark Zuckerberg cares whether or not he’s bringing us together or not. From interviews and articles I read about the man, he comes off to me as an ambitious opportunist and isn’t someone I’d trust with intimate details about my life. He definitely doesn’t respect our privacy. But his intentions aside, I worry that our modern society has forgotten how important privacy is. Corporations are gathering so many details about our lives from a wide array of sources, and we have no way of knowing what other people know about us at any given time. I feel it’s very important that other people know very little about us until we reveal it to them.

      Take when you’re applying for a job. I worry that information services are going to data mine sites like Facebook, and employers will be able to get a full breakdown of a person’s life, in vivid detail. People who have had a rough start in life will find it more difficult to get back on their feet because their past will haunt them for the rest of their lives. Whether it’s drug problems, alcoholism, divorces, depression, past crimes, and so on, these data companies will have records listing it all. Employers may well get access to your past Facebook posts, and then read your homophobic rant from your teenage years, or your posts on how greedy corporations are exploiting their workers. I don’t like people having access to our political views, our religious beliefs, or anything of that nature.

      Facebook is really just the tip of the iceberg though. Have you heard about the iPhone and how it tracks everything you’re doing, storing all the information on a hidden file on its hard-drive? Now what’s THAT all about? Call me paranoid, but I worry humanity may well be diving straight into a police state of unimaginable terror. Google is storing everything we search for and linking it to our IPs. Every other day I’m hearing about Congress attempting to pass legislation requiring identification to surf the web, linking everything we do to our account. There’s a lot of things I’ve searched for online that I wouldn’t want others knowing about, and I definitely don’t want the government to know what I’m doing online. Even things you’d NEVER expect are spying on us. Take Microsoft’s Kinect. I read in, I think it was PC World, that those things have been programmed to scan the gender and location of everyone watching the television. This is going to integrate in with future televisions so ads specific to you will be displayed during commercial breaks. It’s unbelievable. Though it’s not here yet, if this technology is used in the wrong way, welcome to Orwell’s 1984! I worry about the day when this quotation from 1984 becomes a reality,

      “It was terribly dangerous to let your thoughts wander when you were in any public place or within range of a telescreen. The smallest thing could give you away. A nervous tic, an unconscious look of anxiety, a habit of muttering to yourself–anything that carried with it the suggestion of abnormality, of having something to hide. In any case, to wear an improper expression on your face…; was itself a punishable offense. There was even a word for it in Newspeak: facecrime…”

      I also think kids today are the ones we need to worry about most. They’ve grown up in a culture where they feel they have to share anything and everything about themselves. Whether it’s in their blogs, facebook pages, or online picture galleries, they want every detail of their life posted. They’ll regret it later. The other day I was with my mother, and she started talking to me about how worried she was about other people’s children. “So and so’s daughter, ohhhh, I can’t believe she’s fallen prey to the wild college life. She’s drinking, and partying, and I’m so worried about her.” I sat back thinking, “This is EXACTLY why people shouldn’t be posting every single detail of their lives on Facebook.” To a young mind, they’re probably thinking, “I’ll post all of this on my Facebook page so people will thing my life is exciting and fun.” Later in life they’ll probably realize the truth in Bertrand Russell’s quote, “Drunkenness is temporary suicide: the happiness that it brings is merely negative, a momentary cessation of unhappiness”, and then feel ashamed of all they did. My mom is harmless, but future employers, future relationships, and so on… that’s where I worry.

      As for quants, saying they’re worthless is harsh in tone, but I really do hate what they do. A great deal of it is incredibly evil. They are one the saboteurs of peace and security in our day and age. All of these financial oligarchs and speculators who make billions of dollars yet don’t actually create anything for the economy are parasitic leeches. I recently watched Nial Ferguson’s series The Ascent Of Money. There was a scene with Ken Griffin, an unbelievably hedge fund manager, who earned billions of dollars in 2009 (not his company, he HIMSELF earned over a billion dollars), by betting on complex financial instruments with other people’s money. He’s the very type of person who created the housing bubble, and lobbied Congress to remove the Glass-Steagall act. How many people has he bankrupted? How many people are now in panic as their homes are plummeting in value? And I watch that low-life waltz off with billions of dollars, wasting it on expensive paintings and statues. Maybe it helps his conscience a little when he gives a little of it back to charity, but what he does is evil. Young families go to buy their first home, are offered loan agreements with complex terms and variable rates which they don’t understand, and as economic conditions change, their interest rate rises and their payments shoot through the roof, eventually ending in defaults. While all of this is happening, that Wall Street “investor” has previously placed a high dollar derivative gamble on a massive bundle of such mortgages, and makes a fortune as it implodes. Math whizzes tell them, “Place your high dollar bets here. This is where you’ll earn the most money.” Jump to 3:03:00 in this youtube version of Ascent of money, and watch that segment for yourself.


      Bankrupting others in complex schemes is no way to earn a living.

  2. Hi Jason,
    I enjoyed reading your post and have some comments about it. I agree with you that it’s a shame some of our brightest minds are working on things with questionable worth. However, it’s a bit harsh to say quants are worthless human beings. Some mathies are working as quants because they need to pay their bills, not because they love their jobs. I know at least one who hates their job in marketing or finance but they do it because they have bills to pay and they want to save for their future.

    The other thing is that I almost never click on the ads on FB. If you asked me what ads I’ve seen, I can’t even remember! Are these ads even effective? Most people are too busy looking at their friend’s updates and photos, or posting updates to be clicking on ads, I think. But it does seem shady how it all works.

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