Book Review: The Ascent Of Money (by Niall Ferguson)

June 14, 2010 2 comments

The epic clusterfuck of 2008 has since encouraged in me a desire to learn the arcana of the financial world. Collateralized debt obligations? I can tell you all about it. Chinese savings glut? Got you covered. Something to throw in the faces of relatives who still spout nonsense about “YOU SHOULD BUY PROPERTY IF YOU DON’T WANT TO DIE POOR”?¬†Oh yeah. Check.

But most of the news articles and books have focused on the here and now. If you want to cast a wider net, be sure to pick up Niall Ferguson’s “The Ascent Of Money: A Financial History”. While poorly named (especially since it was published in early 2008, a few months before Lehman), the book walks the reader through the earliest conceptualizations of money – whether on physical tablets or on silver and gold coinage. It covers European expeditions to South America such as Francisco Pizarro’s conquest of the Inca empire.

Ferguson then speedily moves on to medieval Europe, the birthplace of so many of the financial innovations we take for granted today. Which brings me to an interesting digression – in Silicon Valley, we’re so warped in our own sense of self that if it doesn’t involve something built with Twitter Annotations or geolocation data, it doesn’t “feel” like innovation. But its safe to say that the modern economy exists because financial innovations such as banking, joint stock companies, promissory notes and bonds/securities came into being.

But I digress. In the book, we visit early 13th century Europe – when Fibonacci (of the eponymous sequence fame to computer scientists) published his pathbreaking Liber Abaci which introduced Europe to Arab (Indian, really) numerals and did away with the disastrous Roman numeral system and reduced friction in trading and currency conversion. Yup, I thought it was fascinating too.

We then discuss the introduction of banking (derived from the Italian “banco” or bench where business was conducted) and the Medici banking dynasty of the Renaissance – yes, the rich hedge fund guys were arts patrons and douchebags hundreds of years ago too. Some things never change.

Bonds and public debt – also invented in Italy, much to my surprise – follow the discussion on banks. Did you know that bonds were first invented to finance wars? I especially loved the quote in the book: “War Is The Father Of All Things” even though its not quite accurate and a deliberate exaggeration. The chapter on bonds is hellish fun.

At a fast clip, we arrive at the origins of the stock market, first invented by the Dutch as they sought to pool together finances for The Dutch East India Company (you can thank us Indians for our important indirect contribution on this one at any point now) – conquest is risky business, after all, especially when you’re sailing thousands of miles and when there’s no call centers (get it?) to complain if shit goes wrong. It made sense to pool finances and buy “shares” of a company. It made further sense to create a secondary market to create liquidity since it took several years for the initial “shareholders” to recover their investments in the trading company.

We then take a more modern turn and cover the measurement of risk, and more specifically, insurance. Did you know that insurance policies as we know them today were invented by a pair of Scottish priests?! WTF?! And that the British (Ferguson is a Brit) take out more insurance than anyone else? This is a great fact-filled chapter.

Then, we cover real estate – that most misunderstood of asset classes – and the political invisible hand pushing Western consumers towards purchase of property with every imaginable bribe possible. Nothing gives me more joy than reading a lucid argument against property being a “sure thing”, especially since my relatives love nothing more than to lecture me about how “real estate is how you make money in America” with a condescending know-it-all look. An illiquid, one-way bet on a market is risky just like most other bets – as a lot of people found out to their detriment after signing ridiculous no-doc loans.

Finally, CHINA. I won’t say too much about this chapter except that its mostly covered in the press and that you won’t derive as much value from it as the previous chapters. But a fun gallop nonetheless.

All in all, this is a cool book for all business and history buffs. Read it!

Categories: life

On Amazon Prime

June 6, 2010 3 comments

Update: Looks like good ol’ Bezos has been reading BitBubble in his spare time (yes, I’m kidding. No, I’m not that delusional). Amazon Prime comes free for college students for a year! Way to hook ’em! http://www.amazon.com/b/?node=668781011

The day-to-day tech world tends to think of innovation primarily in terms of products and features – Foursquare’s “checkins” and game mechanics being an example of lauded innovation that’s being ripped off by others at an alarming pace.

On the flip side, we tend to simply ignore or discount great process innovations that produce fundamental behavior change. For me, this was the case with Amazon Prime. I always thought it didn’t make a lot of sense to pay 80 dollars for free 2 day shipping if you were an infrequent Amazon shopper. After all, you’d have to be already buying 2o or more items a year, roughly, for it to make economic sense.

It turns out that I got the whole thing exactly backwards – Prime *turns* infrequent shoppers into rabidly frequent shoppers. Amazon Prime isn’t – or at least shouldn’t be – aimed at the people who were already heavy shoppers. It should be aimed at people like myself. You see, last year a friend got me on his friends/family Amazon Prime account (20 dollars instead of 80 since we pooled) and I then realized how powerful/addictive Prime can be. I’ve since quadrupled my annual spending on Amazon and actively try to not walk into brick-and-mortar stores. Point, click, ship-to-office, done.

So what Prime has done, instead, is produce serious behavioral change by reducing online buying friction. I know I won’t pay for shipping anymore, so I don’t have to worry about nebulous S&H pricing. I don’t have to try to package my purchases together to get over the 25 dollar limit – packaging frequently delays transaction consummation and i end up driving to Target. I now buy early and often and with disorganized impunity. The end result: I have the honor of paying Amazon 20 dollars a year so I can buy four times as much stuff as I did 2 years ago. Who’s the smart one in this equation?

The final question, then, is: Why doesn’t Amazon push Prime more aggressively? Why is the entry point to Prime 80 dollars? Why can’t there be Amazon Subprime (okay, bad name choice) that does free 3 day shipping for a lower price point? I’m sure Amazon could extend this to the logical conclusion by looking at the spike in yearly purchase volume after a user acquires a Prime subscription. Is it foolish to imagine a world where 80% of all Amazon customers are all on Prime and buying more and more with free shipping? And why haven’t other general retailers like Walmart.com (with the exception of Overstock) adopted this innovation en masse?

Categories: life

A Few Thoughts on Tynt and Daring Fireball’s Takedown

May 30, 2010 5 comments

I spend my waking hours thinking about online content publishers (both print leapsters as well as pure plays that started out as a blog in Mom’s Basement), monetization of content and how monetization interacts with users. I therefore watched with fascination as John Gruber published an angry memo against Tynt, a company that helps publishers track copy/paste and appends deep links back to publisher content when content is shared.

With my obvious monetization bias declared, I’ll make my rebuttal short and to the point:

  1. There is absolutely nothing wrong with publishers deciding to “break” copy/paste if you grab content from their site. On the scale of intrusion of advertising, this one is one step worse than the right rail Google ads (gold standard for great experience coupled with greater monetization). Most in-text advertising is FAR worse, and don’t even get me started on the quality and efficacy of display advertising. I actually *like* advertising and most display ads make me want to gouge my eyes out.
  2. Tynt’s opt-out process will likely have to be made easier/better/more-discoverable sooner than they anticipated, but hey, that’s life.
  3. Content publishers aren’t in the content business. They’re in the audience business – a fundamental flaw with all advertising-based businesses that manifests itself with in-game advertising, product placements and every other way an audience is going to be “forced” to see an ad no matter how good DVRs or AdBlock Plus gets. Tynt is simply free advertising for the content author when the content is sent around over the Interweb wires. So why so much anger over it? Most advertising (except for search ads and Super Bowl ads) is a necessary evil anyways.
  4. Blaming the issue on dead tree publishers who “don’t get it” is a cop-out. Tynt does billions of pageviews a month, so clearly they’ve identified a widespread *publisher* need that goes beyond the weird New York types who think editorial still matters (okay, I kid, I know it does). Let’s find other ways to heap scorn on print dinosaurs, really, its like shooting fish in a barrel.

Am I missing something here? I’m all for working folks up into a lather over Punch The Monkey banner ads but getting ticked over copy/paste? Really?

[ And let me state the obvious disclosure again; this post has no affiliation with my employer Kosmix or my work with them. If anyone’s crazy enough to think they’d pay me for my opinions, call me. Have I got a scheme to lighten your wallet for you! ]

Categories: life

Apple and Microsoft

From the Everyone’s-covered-it-but-I’m-still-going-to-talk-about-it department: Apple passing Microsoft in market cap is just an outstanding achievement that leaves one stunned.

As a technophile, its simply impossible to not be awed at this singularly amazing story of second chances, redemption and the power of second chances. I only wish I’d bought more stock when I had the chance, in October 2008 or May 2009!

Here’s an article you must read if you haven’t already: http://www.nytimes.com/2010/05/27/technology/27apple.html?ref=technology

Categories: life

Tag Filtering At Hulu FAIL

Yah. That’s smart.

Categories: life

Bo Peabody of Tripod fame is wrong about Facebook and Twitter

February 3, 2010 2 comments

This post: http://www.businessinsider.com/facebook-and-twitter-will-always-be-crappy-businesses-2010-2 made the obligatory electronic rounds at Kosmix today. The high-level gist of the post is that Facebook and Twitter are uncontrolled Wild West environments that scare the bejesus out of ivory tower brand managers and – gasp! – even worse, ad agencies.

The post is also peppered with some cool history from Tripod.com, which Bo founded (Respect!) and ran in the 90s and how difficult it was to sell advertising on Tripod because of the fact that it was all user content without brand controls. This was all likely true back then, and community sites of all stripes certainly have challenges selling advertising.

But the overall argument is flaky at best and intellectually lazy at worst.

First of all, this ain’t the 90s. While brand managers and agency types continue to be “scared”, they’ve been brought to the Internet kicking and screaming. Hell, some of Facebook’s biggest advertisers are the same folks who run the biggest brands in the world (Procter and Gamble being the poster child here). Yes, FB’s *largest* advertiser might well be Zynga, which in turn derives its dollars from DR advertising types or other questionable marketers. But the larger point remains; brands and agencies are slowly getting more comfortable with social media, and the overall trend is undeniable in this direction. Brands and agencies recognize that they MUST engage with social media users; this is the whole point of Federated Media’s strategy.

Oh, and what to speak of Facebook’s rumored 700 million dollar plus topline number? You think Bo’s EverydayHealth makes 700 million topline? FAR FROM IT. Ask anyone in the industry in the know.

Secondly, yes, within certain verticals social media has an intractable problem. Word on the street is that DailyStrength, a Web 2.0 health darling, had to sell itself for a song because big pharma would never advertise on a UGC site (btw: I was formerly Product Manager for the second largest health site on the web so I’m not talking out of my a** here). An informational site like ours, or EverydayHealth in the case of Bo’s current venture, has an easier time making a brand sale.

But turning a data point like this into a blanket indictment of social media is simply naive. Social media sites have lower content production costs, more pageviews, lower CPMs but (potentially) higher total revenues.

Lastly, Bo tries to tie together – unsuccessfully – the connection between search and social media and how VCs have been fooled by the success of the first into investing heavily in the second. Again, this is irrelevant. Search and social media are simply different. Yes, social media will never sell at the CPMs as the kinds we command (at RightHealth and Kosmix, to speak nothing of what Google and Bing and are seeing) but THEY DONT NEED TO. They need to make thin margins against *their* cost of doing business at the volume of billions of impressions. A great business and one that I’d get behind any day.

The reality here is that the sites that are truly screwed are the small/medium social media sites – like DailyStrength – that can’t make the brand sale (yet) and lack the size and heft of Facebook and Twitter or even Ning. But Bo fails to make that point explicit and goes after, specifically, Facebook and Twitter.

Which, to me, makes no sense at all.

Categories: tech Tags: ,

“Send To Youtube” changed my life

January 24, 2010 Leave a comment

Still reading? Yeah, headlines are supposed to be more dramatic than the actual content. Of *course* “send to youtube” didn’t really change my life. But the point remains.

I bought a 3GS a few months ago and loved its video capabilities. However, I always hesitated with the vids because I – in my non-Apple way – thought I’d have to go through the painful process of iPhone –> Mac, via USB –> compression software –> Youtube upload.

Then I discovered Apple’s intuitive and amazing “Send To Youtube” button. And I haven’t looked back since. Six video uploads in a few short weeks and more than a few drunk friends caught on video saying the stupidest things in the world. Simply priceless for post mortem jokes.

What still stinks, however, is YouTube’s mobile interface. They make me write dumb descriptions on my phone before they agree to upload my video. I don’t have time to type on my phone! They fail to offer important privacy options off the phone. This means I have to set my vids to private online; after all, I don’t want the world to see my friends’ antics. I just want to send that stuff around to a few friends.

I wish the iPhone came with a native app to better handle the Youtube end of things. But apart from that, I’m finally taking video and loving it. Tangential note: Flip Video, you’re screwed. Good thing you were able to get Cisco to pony up.

Categories: life