Proxy

This is a preview of a concept contained in The Personal MBA by Josh Kaufman, a book that will help you master the fundamentals of business, hone your business instincts, and save a fortune in tuition. The Personal MBA distills the most powerful principles of business and delivers them quickly and concisely. Order your copy now…

What is a “Proxy”?

“How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg.” — Abraham Lincoln

Key Points:

• A Proxy measures one quantity by measuring something else. Think of votes: they measure the “will of the people”, although measuring it with 100% accuracy is impossible.
• The closer the Proxy to the related subject, the more accurate.
• Proxies can help measure the immeasurable, but you have to make sure that the Proxy is highly Correlated with the subject of interest.

Questions for Consideration:

• If you’re having trouble measuring something, could you measure something else that’s related to it?
• What proxies could you potentially use to triangulate into a better understanding of your subject?

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