Standardization Begets Innovation

Posted on by David Wright

This is starting to seem quite important to me.

For the weekend project, I’ve been delving deeper and deeper into Python and have come across a distinction between “1998 HTML” and “2003 to today HTML”.

In 1998 there was much less standardization for coding websites. The HTML was poorly written or written by programs that produced sloppy code. An interesting consequence of this is that many older websites are harder to analyze with scraping programs.

The code today is massively improved. Today’s websites benefit from standards that get updated with ‘best practices’, which can spur automation of all kinds of functions.

The upshot is that information is becoming much easier to find, analyze and publish. And no new technology, just old technology maturing.

And we’re just getting started. A lot of websites now have something called an “API“, which is just a web address you can point your computer to and fling requests for information at. The idea is that regular browser websites are great for people, but computers don’t need all that stupid formatting. They just want data.

Well, for some reason, lots of websites will have different content offered on their API from the website.

It’s bizarre, particularly because, with minimal-to-moderate effort, any industrious programmer can build a simple scraping routine and pull the data out of the ‘human’ interface. Why the hurdle? It’s just wasting time.

The hurdle’s there for cultural reasons having nothing to do with technology. These cultural blocks are preventing the sharing of information and so are preventing innovation.

And they’ll change, I think.

Much of my job is concerned with translating one system’s way of recording insurance information into another system’s ‘language’. There is no standardization for the way information is stored in insruance management systems. This makes for lots of people with jobs like mine, which are basically wasting time and money. My business isn’t about analyzing information, after all.

Standardizing data formatting is going to be the next dislocation in the economy. We already pity those poor suckers in the back office wrestling with legacy systems.

Eventually they will go the way of the typing pool.

Finance is High Status Welfare

Posted on by David Wright

At my alma matter, the students lived in a ‘ghetto’ of run down houses ripe for trashing right next to the University. This ghetto abutted an actual somewhat poor neighborhood.

I spent my first year off campus living in this actual poor neighborhood and have vivid memories of obese porch monkeys bitching into the phone about their petty social conflicts. Get a #$%$ job, I silently scoffed.

Little did I know…

-=- Continue reading Finance is High Status Welfare

Precocity

Posted on by David Wright

Here is Steve Blank touting a youngster’s project that impressed him:

Max and his partners interviewed and analyzed over 650 early-stage Internet startups. Today they released the first Startup Genome Report— a 67 page in-depth analysis on what makes early-stage Internet startups successful.

Interesting stuff. According to Steve, it sorta passes the Ariel Rubinstein test for interesting sociological research: it gives the answers you already knew but didn’t necessarily formulate so crisply in your own mind. Introspective validation is the gold standard here.

Anyway, moderately interesting research conclusions aren’t the story. The story is that Max is (was at the time?) 18. Steve’s reaction:

Holy sx!t [sic]… Max set the record for smarts divided by age… I can’t wait to see what [he] does by the time he’s 21.

Precocity. It’s a fascinating subject. I’m often very disparaging of my own abilities and achievements when I was much younger and when I evaluate younger people, I typically compare them to this view of myself.

I think this is a bit of a flawed approach for two reasons. First, people are terrible evaluators of themselves.  Two, linear extrapolation, implicit in the last quote from Steve up there, is nuts.

People tend to not have very many truly interesting achievements waiting for them in their futures. I don’t know why this is, but I can offer this alternative view of young Max’s achievement:

‘Wow, pity this kid blew his load so early on a moderately interesting project. Imagine what he’d have achieved if he waited a few years, met some more people and channeled all that experience into a truly extraordinary achievement.’

The one-and-done model makes precocity a tragic flameout rather than an awe-inspiring prophecy.

PS I tried to make this post sound less negative than it wound up. I don’t mean to say that Max is doomed to mediocrity, nor to I mean to advocate deliberate repression of the entrepreneurial instinct. For most people, a bias for inaction is what screws you over. I mean this as observation rather than advice.

Sales Kills?

Posted on by David Wright

Robin Hanson has been blogging Ken Lee’s PhD dissertation and saved the best for last: Jobs Kill.

The big result: death rates depend on job details more than on race, gender, marriage status, rural vs. urban, education, and income combined!

He presents this table:

Two comments on the chart. As I understand it, the higher the factor above the more a job characteristic contributes to death. So, “Overall:Physical Demands”, at 1.699, is a big killer. Also, more stars means a higher statistical significance.

Ok, so I want to talk about “Context: Socially Challenging”. Here’s Ken Lee (this link may some day break) describing this factor a bit:

Work Context: Socially Challenging… has such attributes [such] as as impact of decisions on others, frequency of conflict situations, stress tolerance, and dealing with physically aggressive or angry people.

One thing Robin has taught me (though this perhaps isn’t his insight) is that intelligence evolved to deal with the social complexity in our society. This means that jobs that are socially challenging are jobs that tax the human mind more than any other job in the world.

The most socially complex jobs, in my opinion, are sales jobs. Remember, the best salespeople are those that are best at two things: one-on-one persuasion and accepting rejection, two incredibly socially stressful activities.

If my take away here is that salespeople have high mortality, then I completely buy it. It’s brutal work.

It would be cool to correlate these ‘death factors’ to wage and employee turnover in the occupations. I bet wage is related to status and turnover will be highest in low-status, high-danger jobs.

For The Insurance Geeks In The Crowd

Posted on by David Wright

This is a deeply powerful point about the insurance business:

There are ten lines in that graph..

The straight blue line is the 1-1 line, which is the measurement of a year’s performance 1 year out. This is a pure fudge figure because the insurer doesn’t have enough information to measure the cost yet.

The fact that this line is at 1.00 is important. 1.00 means that the insurer expects to pay out 100% of its premium in claims. Nominal Revenue = Nominal Cost. 10 years of interest makes this possible.

As you look back at the year over time (1-2, 1-3, etc), the amplitude of the ‘wave’ increases. This happens because, over time, insurers gain information about how well that year is going and absorb the volatility in the relationship between revenue and costs.

Workers’ Compensation business is the most ‘long tail’ of insurance businesses. This means that the claims cost of comp policies take the longest to resolve.

In fact, insurers have very little idea for the ultimate cost when they write a comp policy. Workers’ comp is notorious for this and many, many insurance companies avoid it entirely because of this uncertainty.

The cycle is present in all insurance businesses, though. Once people figure out they’re losing money, they pull capacity and rates go up. The difference with comp is that there is more risk of finding out too late.

Think of that realization like a tsunami. When they’re out to sea, small waves look like big waves because very few have enough power to displace the entire vertical distance of water from the ocean floor all the way to the surface. Good years and bad years and company-killing years look pretty similar.

But once the sea floor shortens up and you hit the shore, you find out how much energy was in the sucker.

And with comp, those suckers can be big.

Sticks and Stones Can Break My Bones But Names Break the Bank

Posted on by David Wright

From the dept of the absurd:

a judge granted a privacy injunction, meaning that English newspapers could not legally publish the name of a professional soccer player who allegedly had an affair, despite thousands of people who have reported the name on the social-networking site.

The reason here is, of course, because of legal liability. The UK has one of the most spectacularly aggressive libel laws in the world.

The intended consequence is, presumably, that people play together more nicely, but the unintended consequences are more interesting. Libel Tourism, for one.

Another is that, because libel is by definition printed, and most print is online, the Internet is making for some interesting legal theatre, as in the case above.

Score another massive point for Web 2.0. Because big firms are a big fat target, people sue them.

But that cost isn’t borne by the firms. Oh, no. It’s paid by the insurance companies who, in turn, raise rates for the entire media industry.

I was working on an account today and noticed that liability insurance for UK Media Firms is about 6x more expensive than the equivalent for Australia and Canada (no data for the US in my little trove).

Twitterers don’t pay liability insurance for libel cover because they can’t realistically be sued for libel.

This is obviously a margin at which power is being transferred away from Big Media and whatever coalition is blocking libel reform in the UK.

Yay for liberty.

What Makes a Golden Age

Posted on by David Wright

In the mid-late 1990s, there was a golden age. Not in stocks, not in tech, not in film or art or scientific discovery.

It was the golden age of professional wrestling.

If you were born between 1975 and 1990,  you’re probably right on board, here. To me, the thing that drove the all-time peak for this sport was competition (and a healthy dose of demographics):

What would be dubbed the “Monday Night Wars” began… and slowly but steadily, the popularity of the wrestling business in general began to grow during this period, driven largely by the direct competition between the two wrestling shows.

Want a better product? Take a lesson from wrestling:

raise the stakes and credibly threaten incumbents.

Nothing less than the promise economic annihilation can produce genuine effort.

And Pigs Fly

Posted on by David Wright

The NYT reports that Conde Nast is the anchor tenant for WTC1:

“We built a new reality at the World Trade Center, and this transaction will be the exclamation point on that turnaround,” said Christopher O. Ward, executive director of the Port Authority.

Felix comments:

It looks as though Condé is getting the bottom 22 floors of the building; one assumes that the 1.6 million square feet of office space in the 48 floors above Condé will go for even more [than the $80 / sq ft Conde is paying].

I scream “BS”. From the rooftops.

My boss and I both immigrated to the US long after 9/11 and he flirts with the idea of possibly moving to WTC1 when it opens (we’re already downtown). I don’t know, I suppose I’m mildly opposed.

The guys that were here during 9/11? Opposed.  Violently opposed. Like, each guy was at his 99th percentile freaking out opposed.

Conde is going to have a pile of furious employees on their hands.

There’s no way Conde takes on that morale burden without some sweetheart deal.

And imagine how this sentiment changes as you go UP. Nobody is going to forget what happened to the last set of tenants UP THERE.  And the next tenant isn’t even going to get as sweet a deal as Conde.

And now think of the other side: public servants are desperate to pretend like they’re running a profitable business.

The incentives here point to a deal that makes the WTC LOOK like it’s break-even but, deep in the shadows of the fine print, be all but guaranteed to annihilate vast stores of public wealth.

Today’s politicians can bathe in the happy-feeling and tomorrow’s politicians can unearth the dark secret and righteously point their fingers.

Shmacroeconomics

Posted on by David Wright

A powerful economic idea is that government spending is good during times of recession (‘slack’).

The only argument for it that I think I understand is that stimulus holds back the tide of atrophy in human capital. A common corollary focuses on the greatest economic calamity of the 20th century and its supposed ‘cure‘. Wars as stimulus. Ok, got it.

Well, in response, I’d say that I find this unsurprising.

Nearly 30 percent of young veterans end up unemployed for some length of time after returning home. Critics say it’s a combination of poor transitional training by the Pentagon and ignorance in the private sector about the soldiers’ skills.

As an employer, my healthy respect for veterans is tempered by the fact that they’re learning skills I don’t find useful and that wars are extremely destructive to human capital. So the answer is government jobs? Is that stimulus, too?

Another thing that I find irritating is that I can’t get it out of my head that people confuse rates and levels on this. If you destroy humans and things, can you really deem the scurrying around to rebuild a boom?