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Intermediaries

Friday, April 1, 2005

I’m just love examples of the power of middlemen to enable things. The best are the ones where a event would be impossible without the intermediary. Like the way that real estate agents close deals that an owner could not close himself. So here’s one I noticed today.

This grows out of one of the advertising mysteries. I.e. why is that if I shop for tires at one point during the day I don’t see tire ads at other sites latter in the day.

The social engineering problem is part of the reason that doesn’t happen. If I visit great-barge-in-tires.com and then pop over to the weather site, my favorite blog, and then the news paper it would totally spook me out to be followed around by tire ads.

That social barrier creates discounts the value of assembling a model me.

But, if I arrive later in the day at a car chat site and ads appear for tires it wouldn’t spook me out. It would seem perfectly natural that ads for tires appear on a car chat site.

The distinction there is that the car site’s has a natural audience. The persona of the imaginary member of that audience includes the possibility of an interest in tire purchases. My visiting the site creates a makes me a member of their audience and so it becomes reasonably to target a tire add in my direction.

The middleman here is the car site, which labors to create a particular audience demographic. My visiting the site acts, to a degree, as a kind of permission based marketing. In a sense I’m giving them permission to stereotype me as a car fan by virtue of my visit.

The notable thing is that in the context of the car site the knowledge of my morning tire buying can be leveraged without spooking me into thinking - “Man there something inapproprate going on here.”

That suggests that there maybe more dynamic add placement than I’m aware of, that the folks who run places like Double Click have just managed to sell the model they collect about me to sites where it will be more valuable and less likely to back fire.

The middleman, the car site, provides a way to solve the social engineering problem. Of course this leads to the exaggerated humorous insight that creating an audience is a form of identity theft.

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Fear of the New

Friday, April 1, 2005

This is a list of various ways that folks frame up their fear of the new (the innovative?).

  • These new things, they are just trifles.
  • They are a threat to the established order.
  • Typical Nuevo Riche behavior!
  • Their novelty is transient.
  • Go ahead sink you money into that. But beware, it’s not going to come to anything.
  • Stuff like this, well, it always suffers from exaggerated claims.
  • This is just disruptive.
  • Oh, this could be very destablizing.
  • Don’t be impulsive!
  • This is going to lead to disaster!
  • It’s Eve’s apple all over again! Run away.
  • This will lay waste to our entire ecology.
  • Snort. People into that stuff? They are just status seeking.
  • Conspicuous consumption, that’s what’s going on here.
  • They just think they’re happy.

The list is descended from one in Albert Hershman’s book Shifting Involvements, all his stuff is a hoot.

If your against something, say SOAP, Rest, Axis, cell phones, … you name it … then you can just pluck one of these off the list and write up another blog posting.

I laughed out loud when I read that one about “status seeking” since that’s the default diagnosis of what’s going on in open source by the fearful outsiders.

This list is analogous to the list Michael Porter pulled together back in the 1970s that enumerates the risks faced by new or emerging businesses. Porter’s list is more useful if your inside the new thing and struggling to make it survive or think thru what the nature of your customer’s objections are.

  • Erratic Quality
  • Customer Confusion
  • Raw Material Risks
  • Perceptions of Obsolescence
  • Regulatory Climate
  • Image & Crediblity with Funders
  • Absense of Standards
  • High Costs
  • Immature Infrastructure
  • Mobility Barriers
  • Subsidy of traditional solution
  • Short Time Horizon
  • First-Time Buyers
  • Spin Offs
  • Strategic Uncertainty
  • Technology Uncertainty

I seem to have lost source of this last one. This list’s audience are people who are trying to pull a new initiative out of the skunk works phase and start to actually change the organization around them. It enumerates five fundamental wells of resistance that you encounter at that step.

  • Existing assumptions about what’s key.
  • The current strategy.
  • The consensus about what the future goals are.
  • The background of the current management.
  • The social network of managerial relationships.

Those remind me of this marvalous quote: “It’s not ignorance does so much damage; it’s knowin’ so derned much that ain’t so.” — Josh Billings

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Labor

Friday, April 1, 2005

I bet the story of how their PR people will manage this story would make a great article for the New Yorker!

Forced-labor charges for Saudi prince’s wife

By Stephanie Ebbert and Scott Goldstein, Globe Staff and Globe Correspondent  |  March 31, 2005

WINCHESTER — The wife of a Saudi prince was arrested yesterday for allegedly forcing two Indonesian housekeepers to work for her family at homes in Arlington and Winchester for meager wages over nearly two years.

A federal grand jury indicted Hana F. Al Jader on 10 counts of forced labor, domestic servitude, and other immigration offenses, alleging that she hid her servants’ passports and work visas and threatened they would be harmed if they failed to perform the work.

Jader, a 39-year-old Saudi national married to Prince Mohamed Bin Turki Alsaud, …

It’s got it all! Problem, the media, and a hero, the PR team, and I assume there will be movement; except I notice the story New York Times doesn’t appear to have called up this story from it’s farm team paper, the Boston Globe, … yet.

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Dirty Money

Thursday, March 31, 2005

I recall my father’s bemused comment on dirty money: “We can clean it!”

I have a friend who won’t use a very useful piece of open source software because he feels it’s author is a pompous jerk with a short fuse.  You can clean money, it is much harder to clean your reputation.  Relationships relationships, complex transactions, can not be reduced to simple market commerce.

Today’s debacle around WordPress (they were running a link farm on the reputation credit created by all the Wordpress blogs “thank you links”), bleck. I use WordPress here and in a few other venues. I’ve made some very minor contributions. So yea!  I’m in that core of the community, if you define that as the top 5 thousand people in the community :-).  Today’s mess ripples thru the entire complex relationship network that holds a community like this together, and it is more likely to shake off people at the periphery than those closer to the core.

For example one of the things that the WordPress community does is Pingomatic.com. One of the hubs in the ping market. Trust?

Ugo does a good job of covering many of the bases of my opinion about this. He ends with this…

Since Matt is almost exactly half my age, I don’t want to be too harsh. Who’s not done something terribly stupid in his youth? I’m sure he’ll regret this and reform his ways. Unfortunately for him, the web, and Google in particular, have very good memory, so this episode won’t be forgotten so easily.

Open source projects are very long games with many many rounds and very ambiguous end states. If a player doesn’t play nice it taints his reputation for a long time. In the end sooner or later every participant in these games makes a fool of him self. In all robust collaborative games forgiveness is an extremely necessary and critical move.

 

 

 

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>   <li><a rel="nofollow" href="http://wordpress.org/" title="Thanks! WordPress">WordPress</a>,

 

 

 

 

 

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Where the eye falls

Wednesday, March 30, 2005

Via Gideon Rosenblatt a cool visual of where user’s eyes fall over google search results. This also answers a question I had. On a pull down menu the sweet spot is the second, not the first, item on the list. I’d wondered if that might be the case on a google search listing. This suggests not; though eye and click aren’t necessarily the same.

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Intergenerational Income Patterns

Wednesday, March 30, 2005

One of the ways to get a El Curve is to take a population and iteratively reward the winners slightly in each round. This appears to be the model that gives rise to power law distributions in things like oil reserves. So I’m always interested in research that looks at the details of the iterative process in the vicinity of a system that exhibits an El Curve. Income for example.

From Brad DeLong

Very nicely done: very much worth reading:

Sam Bowles and Herb Gintis (2002), “The Inheritance of Inequality,” Journal of Economic Perspectives.

That really is a marvelous paper beautifully and carefully written. Fascinating.

I did not know that back in the 1960s there was a consensus that the data showed America to be the land of opportunity, i.e. that your parents’ caste did not tend to dictate your own. I gather from this paper that this was wrong due to an assortment of errors in the design of the studies.

Today we know that if you’re born poor your chance of rising is small; the poverty trap. if you’re born rich your chance of dying poor is small. The authors think it’s unlikely that this second syndrome will come to be called the affluence trap.

Under some definitions of fair the maximally fair society would give each child an equal chance at various levels of income. In American society if your parents had high incomes chances are your income will be high. A child born of parents in the top 10% has a 40% chance of ending up in the top 20%. If your parents were dirt poor then it’s very unlikely you will have a high income. Children born into the bottom tenth have a 3.7% chance of getting into the top 20%.

The paper includes this great peice of eye candy. This shows the chance a child will fall into a given 10% of the income range given his parents’ position in that range. The two peaks are the poverty/affluence traps.

The fun thing about the paper is the very careful attempt they make to tease out of the data some information about the causality of the intergenerational income status trap. The extent of the trap is really amazing. If you average income over 15 years then the correlation is .65. That means there is a 65% chance that the next generation’s income will be within 1 standard deviation of the previous ones.

Of course what one wants to know is what’s the causal chain from one generation to another. For example maybe the key driver of wealth is a sense of humor (though i doubt it) and parents tend to pass that on to their children a bit by nature and a bit by nurture. The nice thing about the paper is that they make a really substantial effort to draw out of the data as much causality as possible. This is almost impossible since there are plenty of causal chains for which the data is very very thin.

Of course all this stuff is very tangled. Wealthy parents tend to buy more schooling, for example. The trick is to condition the results so you’re getting a reasonably pure contribution from each stage. I.e. so if you doubled the schooling without changing the parent’s wealth your model would predict accurately what the change in outcome would be. That’s really hard. For example it’s common to use data about twins or brothers to try and tease out the differences between nature and nurture. But even that’s very subtle. For example we know the height is very tightly tied to genetics but we also know it varies tremendously depending on how well people are eating. We know that brothers tend to have very similar incomes, unless you partition the data by race at which point you discover that black brothers are extremely highly correlated and non-blacks much less so. They do a beautiful job of stepping thru this mine field.

Here are the numbers they manage to pull out of the data:

  • 4% IQ
  • 7% Schooling
  • 12% Wealth
  • 2% Personality
  • 7% Race

The key result of the paper is that 32% of the trap remains unexplained. It’s something else. Humor say.

I still have an affection for my five ways to get rich model (pick the rich parents, spouse, pocket, card, or trade).

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Wealth in the long tail!

Wednesday, March 30, 2005

Gold occurs in sea water at 0.1 to 2 mg/1000 kg (0.1 - 2 ppb) depending on sample location.

Go get it!

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Friction and the new dark ages

Wednesday, March 30, 2005

This article from the WSJ is interesting, it’s about using systems like pubsub to create persistent search as part of trying to get as far in front of the rumor mill around your investments as possible.

“It’s like a giant electronic driftnet,” …
Such technology may have been at work recently, when the results of a government study of a cancer drug developed by Genentech was mistakenly posted on the Web site of the National Institutes of Health. An hour after the results went live, the stock had soared nearly 20%. David Miller, president of Biotech Stock Research, based in Seattle, said a few investors using the new technology may have seen the change on the NIH site, which put the release on its RSS feed about five minutes after it appeared on its news page — and acted on it.

I really like that driftnet metaphor. Very synergistic with my talent scrapping metaphor; or that some business models are like whales.

Fun to puzzle how about how friction is always part of the market/business design. As King Content continues to be dethroned by the distribution channels the net present value of content falls. Like money in a depression it’s interest rate is going negative. When the interest rate goes negative the incentives get pretty strong to pull the money out from under the mattress and convert it into some other capital good. Presumably that’s what’s happening to content.

So maybe I’m wrong.

I’ve been assuming that open content and owned content are in a death match. That open content will win. That the displaced culture around owned content will go dark. I call this the new dark ages - that all the content copyrighted during the 20th century will just go dark. Locked up in the vaults of the mega-content owners.

But, just maybe, like those who horde capital in a recession the content owners can be convinced to pull it out of the vault. No wonder these guys are doing everything they can to increase the friction in the information distribution networks!

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El Curve

Tuesday, March 29, 2005

I’m thinking that it might be more useful to use the term El Curve rather than Long Tail when we talk about the things with a power-law like distribution. Long tail is a useful term when our focus is reaching out into the long tail; but it frames the discussion in a manner that ignores the role of the vertical portion of the distribution in the architecture of the systems we build.

I’m reading the cheerful provocative book “The Fortune at the Bottom of the Pyramid,” which is about this very question. How can we architect business models that span from the vertical edge down into the horizontal edge to create economic growth thru-out. The book is targeted at the leaders of multi-national corporations. It wants to sell them on the idea that selling into the long tail of the world’s poor is a great business.

Without question the most politically charged power-law curves are the distributions income/wealth curves. The data is sobering. If I pluck the data out of the book’s pyramid drawing and split the world population into two camps about .1 Billion (1.7%) make more that $50 dollars a day and 5.5 Billion make less. It’s easy to become hysterical.

This book declines to partake of that temptation; his audience doesn’t respond well to that. Instead it’s a set of case studies in classic B school style along with the grand rules of thumb required of such books.

The business models all involve elements all along the power-law curve. A distribution channel if you like, though he calls it a process design. Value generating activities along the curve are orchestrated by the firm that designs, builds, and owns a economic network implicit in the business models. This is analagous to the way a fanchise resturant chain architects a value chain that reachs from the individual store up and into centralized production and marketing facilities. Like all economically stable systems some customer problem is resolved and value is captured in exchange for solving the problem. The captured value is spread along the various stages along the power-law curve.

This book is facinating if your interested in business models that reach into the long tail. In spite of it’s overwrot enthusiastic MBA tone, I’m enjoying it.

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Whisky Bar

Monday, March 28, 2005

Man! Whisky Bar’s star is burning bright over on there on the left side of the blogging sky!

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