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The Brode Report  |  February 2014

David Brode profile

 

Hi everyone,

I’ve connected with many of you in 2014, and appreciate the great energy out there in new ventures. It sure is great to be way past the depths of 2009!

Besides the projects I’ve been working on (mostly software startups to start the year), I’m excited about some product development I did recently. Since the issue with spreadsheets is often the thinking and source data behind them, I created a new documentation system for complex spreadsheets (combining Excel’s hyperlink capabilities with hosted wikis) and can’t wait to try it out on the next telecom analysis.

Let’s stay in touch! If it’s been too long, give me a call at (303) 444-3300 so we can catch up.

Best regards,

David

 

 


I love working through complex corporate finance analyses; I'd be happy to leverage the
style of analysis that I applied here to your problem or project then

Call me at (303) 444-3300 or connect with me on
LinkedIn.

 


http://www.brodegroup.com/newsletter/Feb14/sochilogo.pngSochi Winter Olympics Analysis

Two years ago I looked at the Beijing Summer Olympics and crunched the numbers on the results. (See Who Won The Olympics?) In 2012 there was a high correlation between GDP and performance: the R-squared was 0.60, meaning that 60% of a country’s performance could be tied to GDP. My hypothesis was two-fold: (1) having more people helps because standout athletes are rare, and (2) greater wealth allows for more investment in training. Conveniently, population x per capita income = GDP, and it was gratifying to see that explain so much of the results. As the Sochi Winter Olympics finished up last Sunday, I was eager to see how the theory held up.

The answer: not so well. The R-squared dropped to 0.11. Why? I have some thoughts.

1.

Some countries specialize.
http://www.brodegroup.com/newsletter/Feb14/sochimedal.pngWhile every country can find athletes for the 100 meter dash because every country has track and field competitions, that isn’t true for the events in the winter games. I couldn’t find a consistent data source to track average temperature or latitude with results, but the results are solidly Eurocentric, and Northern Europe at that. Consider Norway, where Wikipedia reports that while “football” (sorry, we’re not talking NFL so I’m pulling out the quotation marks) is the most popular sport in terms of active membership, the most popular televised sports are biathlon, cross-country skiing, and then football. Is it any surprise that a small group of countries dominates these events when they are the only ones to focus on them? This is different from Jamaicans outperforming in sprinting or Kenyans outperforming in the marathon because not everyone has the right facilities, and GDP doesn’t necessarily get you those items. There are only 17 bobsled tracks in 11 countries in the world. All nine medals were won by those countries. Latvia—who does have a track and won a silver—would outperform all but five countries on a GDP basis with that medal alone. India’s Shiva Keshevan trained on a Himalayan highway. He came in 37th.

 

 

2.

http://www.brodegroup.com/newsletter/Feb14/flags.jpgTight competition favors small countries. Imagine a situation where every competitor is equally talented, and there are 30 competitors representing ten countries. Someone will pull off a monster day and win the gold. So will that person be from a big country or a small one? Consider that China and India have over 1/3 of the world’s population, but they can send the same number of competitors as Latvia. Normally we expect that the Chinese competitors will be better since they were the best three out of 1.3 billion people. But in highly competitive events, maybe having more entrants increases your chances of winning more than having an athlete who has finished the course 0.06 seconds faster on her best day.


Still, you have to be impressed with Norway. And some things remain mysteries.
http://www.brodegroup.com/newsletter/Feb14/flag-sweden-norway.pngFor example, why did Norway (pop. 5M) have twice as many medals as Sweden (pop. 10M)? I’ll keep my eye turned on this and see if future games bring more insight.

The data:

http://www.brodegroup.com/newsletter/Feb14/sochimedals.png


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The Brode Group

Strategic Financial Consulting - Real-World Results

(303) 444-3300