Drake’s Equation

Frank Drake searched for intelligent life in the Milky Way using radio telescopes.

I want to tell you about Frank Drake, radio astronomer. In 1961, Frank invited some of his colleagues to a weekend getaway to talk about aliens. They did this at the National Radio Observatory in Green Bank, West Virginia.

Among the group of 10 scientists who attended this getaway were Carl Sagan — you probably already know who he is — and John C. Lilly, a neuroscientist famous for his work on dolphin intelligence (and LSD). Drake and his colleagues founded the modern search for extra-terrestrial intelligence (SETI).

To put some structure on their discussion, Drake proposed an outline of the problem. It was an equation to describe the number of detectable intelligent civilizations in the Milky Way. Each term was expressed as an independent variable and when you chained those variables together you would get an answer to their big question: How many intelligent civilizations exist in our galaxy?

Drake’s Equation took a complex question and broke it down into more manageable component parts. This let anyone understand the various aspects of the search for extraterrestrial intelligence.

Drake took a big, messy, and super-interesting question and he decomposed it into manageable chunks. He looked at the rate of star formation (R*), the fraction of stars that form planets (fp), the number of planets that form per star (ne), the fraction of those planets that can support life (fl), the fraction of life supporting planets that evolve intelligent life (fi), the fraction of those that develop radio communication ability (fc), and finally the length of time an intelligent radio signal emitting civilization would last (L).

What the heck does this have to do with business? Drake’s equation was an unintended gift to general managers. If you need to make a complex or very large system knowable to your team, Drake’s equation is a godsend.

When I joined eBay I was mystified by all the variables at work in the marketplace, but a colleague of mine taught me to make a simple equation out of all those variables exactly like Drake did. Things started to make much more sense. I could analyze the business easier, my team and I could organize our work around those variables, and best of all we had a standard way of describing our business.

The thinking behind Drake’s Equation gave me and my fellow general managers at eBay a common way to describe our revenue. eBay revenue = gross merchandise sales x our take rate. Gross merchandise sales was just the number of listings x the fraction that were successful x the average selling price (ASP) of the items. You could refactor the equation to look at active buyers, active sellers, or a combination. The point is that all of us — whether in engineering, marketing, trust and safety — could understand the variables that drove business results.

Drake’s thinking can simplify any big picture output by breaking it down into component parts. Decomposing something complicated and multi-dimensional makes it actionable from a general management point of view.

Drake’s equation made his conference memorable and relatable for the chemist, the biologist, the neuroscientist, the entrepreneur, and the astronomer. It opened up the SETI movement to a much wider audience of academics and civilians. Heck, his equation is still used today to give people the sense of the SETI problem quickly and easily. You could do the same thing for your team with a few minutes of Drake thinking and some basic math. Try it.

If you want to read more about Drake’s equation you can visit seti.org/drakeequation.