Optimizing for Humans

Working in Vegas is full of contradictions. Of course we’re a city built around entertainment, amusement, and fun. People come back to Vegas because they create emotional connections to the city – whether it be the neon lights, the glitzy showgirls, or the action on the casino floor.

Behind the scenes, countless hours are spent trying to analyze nearly anything we can get our hands on. But creating a narrative that makes sense through analysis and data sometimes omits a truth of Las Vegas that gets forgotten: People are participating in an irrational activity. A typical Vegas vacationer therefore is already behaving completely outside the realm of “normal” econometric thinking.

Consider the ”normal” econ described in nearly any economics textbook. You’ll see someone who would abhor gambling and various other vices of a party-fueled city. It wouldn’t make sense, and so therefore it would be thrown by the wayside. This isn’t like a CPG product manager trying to figure out how to sell more dish soap by creating a fusion of brand awareness and loyalty combined with product features that fill a market niche. It’s not even a pseudo-rational activity like buying the extra upgrade on the car you were already going to buy – so why not upgrade the rims and the entertainment package while you’re at it? Oftentimes consumer-focused sales and marketing makes a plea for both emotional and logical decision-making.

But in Vegas, we have to optimize against an irrational behavior.

How might your business also be in the irrational behavior business? I think any travel & hospitality company really has to imagine itself in the irrational behavior industry. Sure, lots of travel is done for purely utilitarian purposes, but even there, people become irrational almost immediately upon leaving their home’s front door. Ever watched a group of perfectly normal-looking people absolutely lose their minds when told an airplane flight is excessively delayed, or even cancelled? Poof – there goes your utility-optimizing “Econ” and enter your irrational human.

Optimizing for humans requires spending a little extra time within your analytical model trying to unwrap the boundaries of their irrationalities. Again – Vegas is a great place to watch people because you see so many different kinds of unexpected behaviors. People smoke more. They drink more. They gamble. They stay up late. They spend too much time in the sun. They are drawn to blaring music and ridiculous architecture and scenery. So when trying to create an optimal path, the straight line may not be the ideal solution.

Take a line, for instance. I absolutely hate lines. I want nothing to do with lines while I’m on vacation. I imagine most people don’t either. But something interesting happens in Las Vegas when lines form — people are drawn to the queue. So yes, the people standing in line are suffering the obnoxiousness of standing there; but they can also serve a powerful social signal to other people wandering by that something interesting is going on. If whatever is at the end of this line isn’t interesting, people wouldn’t be standing in this line – so I better stand in this line so I catch whatever it is! Sure – you can make the case that this is utility maximization, but really it’s just humans being humans. The things that sound silly in a business meeting may turn out to be just fine in the real world.

Optimize for humans and don’t be surprised when their irrational behavior turns out to be the most powerful part of your marketing plan.


By the way I strongly believe this is part of what makes the crypto universe so hard to dismantle at this point. I’ve heard it dozens of times even from people I truly admire (like Kara Swisher and Scott Galloway on Pivot podcast, for instance) – pronouncing ”there are too many smart people working on this, there must be something there.” That’s just like people in Vegas walking past a hot table and imagining that the gamblers on that one have figured it out. Their dice are working extra well today, so today’s the day we all get our money!

There’s simply the possibility there isn’t something there. Just irrational humans behaving predictably irrationally.

Foundations for Internal Innovation

Over the past five years I’ve been in a role that includes the word ”Innovation” in its title. This is one of the handier buzzwords in a title, because nobody has any idea what it actually means. Am I planning on innovating something right there on the spot? Can regular routine work be done by an ”innovator?” Is there some sort of list of activities that must be followed in order to innovate within a big (regulated, and often slow-moving) organization?

Clearly innovation isn’t some sort of line-level activity like most of the other activities within a resort — front desk agents, table dealers, financial accounting are pretty clearly titles that mean their function. But how does an ”innovator” innovate, within a large company?

I think innovation works best when the boundaries are tighter rather than boundless. Constraints breed creativity and context. If someone claims to be a generic innovator you often end up with a swiss army knife approach to everything. A bunch of gizmos but hardly the best tool for any job. Sometimes that’s actually desirable! A mix of mediocre or adequate improvements or radical step-changes in an approach work better when they’re done with imprecision than when they’re done with power drills and band saws.

My role has been contextualized by being part of the casino division, and specifically within the relationship marketing department. That provides a set of instructive constraints that I can scaffold new ideas against. It requires sufficient breadth & depth, but not so much that I am spending most of my time learning new business challenges rather than riffing on solutions to known challenges within the domain. Loyalty & relationship marketing (CRM and customer data being a key part of that space) are easily defined and there’s lots of material to learn about, but it also has a finite limit.

So in building an innovation role, boundaries are valuable. Creating goals – both qualitative and quantitative can be important as well.

Qualitative goals can be solved through innovation oftentimes where there’s a human component that needs to be investigated and researched. A process that is cumbersome, or a department that cannot figure out how to retain team members are great environments for a deep qualitative evaluation. What’s enjoyable? What’s miserable? ”We’ve always done it that way,” is a common refrain to know that qualitative steps may be valuable in deciphering the business processes that are failing (or coming up with less than spectacular reviews).

Meanwhile, of course quantitative improvements are desirable. Everyone wants to grow productivity or units shipped or revenue per available room (RevPAR), etc. Understanding how to read the data, quantify the opportunity for improvement, and then apply “Innovation” to the problem is going to make most leaders & managers happy (well, until the bill comes or the transformation actually starts).

Setting a foundation of:

  • Meaningful constraints
  • Sufficiently broad market opportunity, but with deep enough wells of interesting problems
  • Qualitative pressures and pain-points
  • Quantitative values that are quickly evaluated for efficacy

… All of these things can start down the path of building an internal innovation role within your organization. More to come!

Four Thoughts on Next

Predicting the future of what comes next is always a foolish endeavor, but it’s a fun one. The beauty of laying out a thesis for the possible is that the future really is just that – possible. Being in Vegas has certainly honed my mindset around probabilities and thinking in bets – but when it comes to understanding the future it’s all the things that aren’t in the game that can come into play.

With that all in mind though, let’s play the game anyways!

Thought Number One: The World Needs Safer & Reliable Food. I’ve been an investor for a little while in a company called App Harvest and in general I love the thesis of indoor agriculture. The pro’s seem obvious in a climate-change impacted planet. You can grow large volumes of food in large-scale facilities with a higher degree of predictability and with less water, far less pesticides, and with specific conditions tailored to whatever food you want to grow.

As we’ve seen in the first half of 2022, inflation of food can be shocking to everyone involved, and there aren’t easy ways to fix the problem. If more food could be grown closer to where it’s consumed you’d have the benefit of reducing transportation costs, increasing local preference and variety, and even possibly building new community food sources that could be sustainable for all price levels. I think safer & more reliable food is a good thing and I think companies working on Ag-tech especially indoor farming and the related technology and infrastructure to support it will do well.

Thought Number Two: People Feel the Need to Slow Down. It feels like we’re reaching a bit of a peak in terms of instant gratification and dopamine hits through technology. Again – the hypocrisy is real here given that I work in a very successful casino – but the point being that I watch more and more people start to really reconsider and turn off various kinds of social media. I am the step-dad to two young adults and the dad to a seven year old, and I am often in awe of how many signals and messages try to permeate into their vision at any given moment. Fortunately, I think there’s a good chance that people are responding to their mental health needs and starting to unplug from many of these social networks – even for short bursts. It’s healthy, and I think the next wave of computing (not Web 3 — that’s a discussion for a different day) should think about how to create lasting and meaningful relationships through computing without requiring constant hits of attention spans. I’ve been impressed with the integration between the Apple Watch and Fitness+ and the various messages that come through those systems. It’s very flexible to adapt to a user’s bandwidth and though provoking, doesn’t seem to be overwhelming with feelings of FOMO.

Thought Number Three: The Workplace of the Future is a Place. I know there’s lots of effort to create hybrid work models at various companies, and I think for certain kinds of work, remote can be a good addition. But as the working world evolves I think there’s still an obvious need to craft working spaces that allow for meaningful work at any level – whether it be collaboration with others or independent personal work with little interactivity. Those work spaces however may be some kind of blended office space, meaning there’s probably a market or opportunity for building customizable work environments that allow workers to acclimate to a space quicker than the typical weeks, months, or years it takes to fill an office or a cubicle with stuff. I haven’t really seen any companies building solutions for being able to choose a desk and make it feel welcoming like a personal space. I think that’s also part of the reason car-sharing struggles to take off too – people like having their stuff in their vehicle where they know it is. I’d look for something like “We” to do well (now that they’re coming off the totally crazy nonsense) but I think there’s also perhaps room for hybrid 3rd spaces to evolve we haven’t seen yet. Gyms, cafes, bookstores, etc. merging into some sort of new coworking environment (possibly with passes / subscriptions) and the ability to ”bring yourself” to the space quickly so you feel comfortable to start doing your best work.

Thought Number Four: The Metaverse won’t be VR. The latest Facebook VR headset was described – in a positive upbeat way – as a laptop for your face. There’s a hundred million things I’d rather experience than a laptop for my face.

However, I’m starting to see bits and pieces how a metaverse-view of the world can start to materialize, but we’ve got a long way to go. I think the real challenge is to rethink the protocols of these technologies. Right now, I’m writing on an open source piece of software (WordPress) sitting on a ton of HTTP and various other web-based open source protocols that all make “The Internet” work. I don’t think this approach to Metaverse will work when it’s just virtual lands vying for entry into their walled gardens. Somewhere along the way I think there’s going to need to be a breakthrough in the way MySpace was a breakthrough for social networking – bridging the gap and the experience between the glorious mess that was Geocities to something that anyone could use quickly and easily. Once those virtual spaces can be transported and stitch together a variety of different media – I think we’ll start to see a true ”next generation“ Internet constructed. But it’s not going to be a face-laptop – it seems much more likely to be an augmented experience that allows users to interact with all sorts of different devices and mediums. We’ll see.

There’s a long way to go to get to the future, so these are just some of my thoughts on a Thursday evening. Looking forward to be proven wrong on them, if only to make room for a few more ideas of how the world might look down the road. Let’s go build what’s next.