Cliff Asness

Thursday, November 26th, 2015

Tyler Cowen interviews investment strategist Cliff Asness, who earns his geek cred in quant style:

Even the most insane billionaire cannot afford a hundredth of what frigging Tony Stark or Bruce Wayne have. It’s infuriating.

I’ve done well. I’m not the most insane out there. But if I wanted to go build a Batcave at my house, it would take approximately 600 times my wealth, and everyone would know about it.

I also enjoyed this light-hearted passage:

Cowen: Now, I think I’m interested in this issue, as I think you are. Extreme performances or performers, and it’s measured most readily in sports. So Gretzky is a kind of extreme outlier. In basketball, you could say Kareem Abdul?Jabbar who would be in the series as an outlier. Maybe Michael Jordan.

In sports or some other area of your choosing, which is the extreme outlier which strikes you as the most amazing? And you just say, “oh my God, I can’t believe there’s a Wayne Gretzky,” or a fill?in?the?blank-there for me, other than Gretzky.

Asness: I have no sense if this is actually accurate. But actually, no one could measure this. It can’t be accurate. You’re not going to believe what I’m going to say. Cirque du Soleil.

Cowen: Please explain.

Asness: When I sit there and watch Cirque du Soleil, which both my wife and I like, I literally walk out and go, “nobody can do this.” And I don’t think they are cheating.

Cowen: They’re not cheating, right?

Asness: But watch it again. It’s like a Looney Tunes show, where Daffy Duck dives from up there into a little thing of water down here, and he doesn’t die. I don’t know how they do it.

Everything else, the crash of ’87 was a 20 standard deviation event. Nothing. Wayne Gretzky, pretty good. The Cirque du Soleil people —

Cowen: Off the charts.

Asness: This story was from Vegas, and it’s not staying in Vegas. But, I was in Vegas, and I was exercising. I know you find that hard to believe, but I was.

The Cirque du Soleil people were in the gym, and you don’t want to ever do that. It is one of the most demeaning, humbling experiences.


Asness: They exercise exactly as?—?they did this thing where they just keep leaping over each other, and they go around in a circle, and they did it for like half an hour. And I’m sitting there on the StairMaster on a three.

ISIS Revenue

Sunday, November 22nd, 2015

According to U.S. Department of the Treasury officials, ISIS is taking in $500 million from oil a year — and that’s not their only source of revenue:

Yet even if the U.S. finally weakens the group’s oil income, Bahney and other analysts in the U.S., the Middle East, and Europe contend, Islamic State has resources beyond crude — from selling sex slaves to ransoming hostages to plundering stolen farmland — that can likely keep it fighting for years. In any case, $500 million buys a lot of $500 black-market AK-47s.

Islamic State got into the oil business long before it captured global attention through barbaric beheading videos in the summer of 2014. It seized Syrian border crossings to profit from oil smuggling. And it tapped a network that’s operated for decades, dating to at least the 1990s, when Saddam Hussein evaded sanctions by smuggling billions of dollars’ worth of oil out of Iraq under the United Nations’ Oil-for-Food program.

Most often refined in Syria, the group’s oil is trucked to cities such as Mosul to provide people living under its black banner with fuel for generators and other basic needs. It’s also used to power the war machine. “They have quite an organized supply chain running fuel into Iraq and [throughout] the ‘caliphate,’?” says Michael Knights, an Iraq expert at the Washington Institute for Near East Policy, using the militant group’s religiously loaded term for itself. Because the U.S. apparently believed the real money for Islamic State came primarily via selling refined oil, rather than crude, last year’s strikes heavily targeted refineries and storage depots, says Bahney. He and other experts say that strategy missed an important shift: Militants increasingly sell raw crude to truckers and middlemen, rather than refining it themselves. So while Islamic State probably maintains some refining capacity, the majority of the oil in IS territory is refined by locals who operate thousands of rudimentary, roadside furnaces that dot the Syrian desert.

Pentagon officials also acknowledge that for more than a year they avoided striking tanker trucks to limit civilian casualties. “None of these guys are ISIS. We don’t feel right vaporizing them, so we have been watching ISIS oil flowing around for a year,” says Knights. That changed on Nov. 16, when four U.S. attack planes and two gunships destroyed 116 oil trucks. A Pentagon spokesman says the U.S. first dropped leaflets warning drivers to scatter.

Beyond oil, the caliphate is believed by U.S. officials to have assets including $500 million to $1 billion that it seized from Iraqi bank branches last year, untold “hundreds of millions” of dollars that U.S. officials say are extorted and taxed out of populations under the group’s control, and tens of millions of dollars more earned from looted antiquities and ransoms paid to free kidnap victims.

The taxes bring in real money. One example: Islamic State allows policemen, soldiers, and teachers in its territory to atone for the “sin” of having worked under religiously inappropriate regimes—for a fee. Forgiveness comes in the form of a repentance ID card costing up to $2,500, which requires an additional $200 a year to renew, according to Aymenn Jawad al-Tami, a fellow at the Middle East Forum who closely follows the group.

Arguably the least appreciated resource for Islamic State is its fertile farms. Before even starting the engine of a single tractor, the group is believed to have grabbed as much as $200 million in wheat from Iraqi silos alone. Beyond harvested grains, the acreage now controlled by militants across the Tigris and Euphrates river valleys has historically produced half of Syria’s annual wheat crop, about one-third of Iraq’s, and almost 40 percent of Iraqi barley, according to UN agricultural officials and a Syrian economist. Its fields could yield $200 million per year if those crops are sold, even at the cut rates paid on black markets. And how do you conduct airstrikes on farm fields?

For his part, Bahney contends that the group’s real financial strength is its fanatical spending discipline. Rand estimates the biggest and most important drain on Islamic State’s budget is the salary line for up to 100,000 fighters.

Hire some people, fire some people, and make some strategies

Saturday, November 14th, 2015

Consultants Madsbjerg and Rasmussen describe the nihilism of professionalized management:

Not long ago, we met an executive from a global pharmaceutical company. He had been participating all day in a workshop on the future of health care and was standing outside the hotel, catching some fresh air. We talked about how the health-care business was changing and what challenges the company was facing with rising health-care costs, low R&D productivity, and a broken sales model. We asked him his thoughts on the challenges ahead.

He looked at us with somewhat tired eyes, squinted up in the sky, and said, “Well, first, I am going to have myself a big, fat sushi dinner, and then I suppose I will get back to the office tomorrow and do the usual stuff — you know: hire some people, fire some people, and make some strategies.”

He was not being ironic. He was being brutally honest about a feeling that many executives feel from time to time: What does it matter, anyway? Over time, as management has become increasingly professionalized, you can sense a kind of nihilism or loss of meaning in the executive layers. This sense of nihilism is strongest in large corporate cultures where management is seen as a profession in and of itself with no strong connection to what the company actually makes or does. What happens when satisfaction from work comes from managing — reorganizing, optimizing the operation, hiring new people, and making strategies — and not from producing something meaningful? How do you feel when it doesn’t really matter whether you make beauty products, soft drinks, fast food, or musical instruments?

(From The Moment of Clarity: Using the Human Sciences to Solve Your Toughest Business Problems.)


Thursday, November 12th, 2015

Roughly half the zippers produced in the world have YKK stamped on them:

So how did a small rural town in Japan, half a world away, come to dethrone this zippering behemoth? Through the single-minded visionary purpose of Tadao Yoshida, the founder of Yoshida Kogyo Kabushikigaisha (Yoshida Manufacturing Shareholding Company) from which YKK is necessarily abbreviated.

YKK Zippers

Yoshida had grown up in Kurobe the son of an itinerant bird collector. After a slew of business failures he moved to Tokyo and, seeing the growth of the zipper market, opened his own zipper firm in 1934. The success of Talon was known around the world and Yoshida shamelessly copied its products and machines, while adding some distinctive touches — like using aluminum instead of copper. When World War II began, he kept in business by supplying the Japanese Imperial Navy with zippers, and when his factory was burned to the ground during the firebombing of Tokyo in 1945 he relocated to his hometown of Kurobe and began all over again.

Yoshida’s remarkable stick-to-itiveness had been spurred on by reading Andrew Carnegie’s The Gospel of Wealth. Now, as if infused with the reciprocal force of the zipper, he too created a quasi-philosophy that he termed the Cycle of Goodness™. This stated that “no one prospers without rendering benefit to others.” It was a simple but enlightened creed that suggested that well-treated workers would create a better product, a better product would benefit customers, and satisfied customers would, in turn, benefit YKK. In short, Yoshida wanted to use his zippers to bind together not only clothes but also the very fabric of society.

YKK was unusual in that it produced everything used to make its zippers in house. Brass, aluminum, polyester, yarn, were smelted and woven in Kurobe. Workers lived in dormitories opposite the factory and a leadership cult quickly grew up around Yoshida and his Cycle of Goodness™. Gripped by zippering inspiration, YKK’s designers began churning thousands of different types of zippers aimed at specific industries and individual customers. It made the world’s smallest zipper, the concealed zipper, the first nylon and polyester zippers and the world’s thinnest zipper. A pantheon of patented fastenings rolled off the factory line — Beulon! Eflon! Zaglan! Ziplon! Minifa! Kensin! Natulon! Excella! — each one seeking to create a more perfect union. Soon YKK was opening factories across the world the better to offer their services to local manufacturers and by 1974, YKK was making one quarter of the world’s zippers, enough in one year to stretch from the earth to the moon and back again.
By contrast Talon, which in the late 1960s was producing 70 percent of the United States’ zippers, was now barely producing half that. Its decline was rapid. By 1993 Meadville no longer had any zipper factories within its town limits at all.

Inside Amazon’s First Physical Bookstore

Saturday, November 7th, 2015

Amazon’s first brick-and-mortar bookstore has opened for business:

The store, which is situated in an outdoor mall across the street from the University of Washington campus, is unlike the grandiose retail book palaces that Barnes and Noble and Borders built in the late 1990s and with 5,000 to 6,000 titles on hand, Amazon Books stocks far fewer titles than today’s bigger bookstores. Small and scaled back, Amazon Books is cleanly designed and easy-to-navigate.

Amazon Books Exterior

The inventory is mostly books, with some magazines and a central aisle of electronics featuring the company’s Kindle, Kindle Fire and FireTV devices. Book selection is deepest in bookstore strongholds: children’s, young adult, bestsellers and genre fiction. The store also features a respectable graphic novel selection, and a shelf of work by local authors.

Amazon Books Interior

Despite the initial look and feel of a 20th century bookstore, a closer look at Amazon Books reveals that it’s very much a 21st century endeavor.

Every book is tagged with a custom label featuring its aggregate rating on, along with a review from the website. There are no prices. To get a book’s price, you must use the Amazon app on your smartphone to scan the barcode. This act will provide you with the product listing, all the title’s reviews on, and the price. If you don’t have a smartphone or the app handy, associates are on hand to assist.

An associate at the store also confirmed what many news reports about Amazon Books have stated, that the store only stocks books with ratings of four stars and above. The associate also confirmed that prices for books in the store are identical to those of the books sold online. And, since book prices on can fluctuate regularly, so can prices in the store. The associate said one thing they are vigilant about in the store is ensuring customers don’t get confused by receiving different price quotes at different times.

The store, which aims to seamlessly transition the online shopping experience to a real world scenario, allows you to use credits associated with your account at the register. However, you cannot order merchandise online and have it delivered to the store.

10,000 Hours with Reid Hoffman

Tuesday, November 3rd, 2015

Ben Casnocha’s description of Reid Hoffman makes him sound like the Superman-analog of Kurt Busiek’s Astro City, the Samaritan, who laments that he has no time to enjoy life, because there’s always some good he could be doing:

Every decision has tradeoffs: when you choose to do one thing it means you choose not do some other thing. When you choose to optimize a choice on one factor, it means necessarily suboptimizing on another factors. Reid faced tradeoffs in his life that were heavier than the ones you or I face. Imagine you could meet anyone, from the President of the United States on down. Do almost anything you can think of — from saving the local opera company from bankruptcy to traveling to the farthest outposts on earth in total luxury. A small number of humans have virtually no constraints on their decision-making, and Reid is one of them. When Reid chose to fly to Las Vegas and speak at this event, the list of things he chose not to do with that time was very, very long.

Astro City Life in the Big City

Often, Reid wrestled with these tradeoffs. Author E.B. White once captured the essence of why. “I wake up in the morning unsure of whether I want to savor the world or save the world,” White said, “This makes it hard to plan the day.”

For some, savor is the easy answer to the task of planning a life. For those with no constraints, the plan is often straightforward: they put their name on a few buildings of their alma matter, buy a pro sports franchise, and call it a day. For the 99% of people with resource constraints, they might bag a 9–5 job, accumulate vacation days as diligently as possible, retire early, and maybe donate to their friend’s Walk Against Cancer. Reid likes to savor, albeit not hedonistically. Savor for him means arriving at intellectual epiphanies; it means spending time with friends.

But what he really wants to do is save. He wants to use his talent and network and money to change the world for the better and solve some of humanity’s biggest problems. He is among the most selfless and externally-generous people I’ve met in my life.

The Plucky Young Entrepreneurial Elon Musk

Monday, November 2nd, 2015

Here’s another story of the plucky young entrepreneurial Elon Musk — and his brother and cousins:

Here’s an idea that one of five young South African cousins threw out sometime in the 1980s: What if they could arbitrage the cost of chocolate in an Easter egg? Plain old chocolate at the time cost virtually nothing, but a nicely packaged chocolate Easter egg cost about one rand. So the young cousins melted regular chocolate, molded it into egg shapes, wrapped the chocolate eggs in foil, and went around the poshest parts of their Pretoria neighborhood. And instead of selling these chocolate eggs for the going rate, they cranked up the price to 10 rand.

When neighbors balked at the price, the boys responded as they’d rehearsed. Purchasing from them, they said, would mean the buyer was supporting young capitalists. It worked.

This is not the kind of scheme most 14- or 15-year-old relatives dream up, but these were not most 14- or 15-year-olds. This is a piece of lore essential to understanding what may be the 21st century’s First Family of entrepreneurship, a family of happy capitalists intent on cracking today’s toughest problems by building businesses. Those budding teen tycoons included two sets of brothers: Elon Musk, whom you’ve likely heard of, and his brother, Kimbal, a fellow entrepreneur focused on trying to change America’s food culture; and Lyndon and Peter Rive, the founders of SolarCity. (Their brother Russ now runs the art, technology, and design company SuperUber, in Brazil.) Each family also has a sister: Tosca Musk, a filmmaker, and Almeda Rive, a competitive dirt-bike rider.

Elon may be the most famous of the clan, thanks to his mad-scientist ways and the Beatles-esque buzz surrounding the companies he’s dreamed up—from PayPal to electric carmaker Tesla Motors to aerospace manufacturer SpaceX to what remains—for now—the mere concept of the high-speed Hyperloop. But each of the Musk-Rive cousins has achieved notable levels of success. Kimbal Musk co-founded The Kitchen, a group of eight restaurants that source directly from local farmers, and The Kitchen Community, a nonprofit that’s opened more than 250 school and community gardens that impact 140,000 kids each day. Lyndon and Peter Rive founded SolarCity, the energy-service company that has a market cap of about $4 billion, after Lyndon, Peter, and Russ sold their company, Everdream, to Dell in 2007.

Vivos Indiana Underground Survival Shelter

Wednesday, October 28th, 2015

The Vivos Indiana underground survival shelter is a nuclear-hardened, luxury shelter — conveniently “located within a one-day drive from anywhere in the Midwest and the Eastern seaboard of America”:

Built during the Cold War to withstand a 20 megaton blast, within just a few miles, this impervious underground complex accommodates up to 80 people, for a minimum of one year of fully autonomous survival, without needing to return to the surface.

Like a very comfortable 4-Star hotel, this massive shelter is tastefully and comfortably furnished and decorated, completely outfitted, fully stocked with food, toiletries, linens, medical supplies, a one year supply of fuel, a deep water well, NBC filtration systems, geothermal heating and cooling, bedroom suites, full size showers and bathrooms, a theater area, dining area, lounge area, exercise equipment, kennels, a garden area for fresh vegetables, laundry area, abundant storage areas, ATV’s, bicycles, tools, a workshop, security devices; and, just about everything else that may be needed to ride out virtually any catastrophic event. You only need to bring your personal clothing and medications. We’ve thought of everything else!

Far from any known nuclear targets, this shelter is also strategically located a safe distance away from the New Madrid fault line, the Mississippi River, and all oceans that might cause submersion as a result of a tsunami-type event. The site is also surrounded by excellent farming, fishing, hunting and water resources.

Vice magazine takes a look and, naturally, hates what it sees:

In the 90s, [Robert Vicino] took up selling shares in villas in swanky spots like Aspen and the South of France. It was the idea of fractional ownership that got him thinking about a long-coveted dream of his to build survival bunkers where people of means could escape Armageddon in comfort. In 2007, just before the financial crash, he decided to give it a go.

His timing was impeccable. Since 2013, the country has minted 1.6 million new millionaires , and there are an estimated 3 million-plus preppers in the US. It stands to reason those groups overlap, especially since in these divided political times, many of the rich are concerned with their money’s security: what threatens it, how to hang on to it, and above all, what happens when the have-nots get tired of not having it. (Witness the infamous 2014 Wall Street Journal letter to the editor that compared America to Nazi Germany and the wealthy to the Jews.) Vicino warns that the rich need to be ready for a scenario that will “turn Suzy Homemaker into a gun-wielding predator.” As he asked me, without any apparent irony, “Do you really want to fight off all the zombies, the predators, the gangs, the militias, whatever else is roaming the streets to get what you got?”

It’s a good time to be in a fear-based industry. Public comments from some of the planet’s richest people reveal a strain of paranoia about insurrection. At the last annual meeting of the World Economic Forum in Davos, Switzerland, observers noticed elites growing more alarmed about the possibility of social unrest. Last year, entrepreneur and venture capitalist Nick Hanauer published an open letter to his “Fellow Zillionaires” in Politico Magazine that summed up the growing worry among the wealthy: “What do I see in our future now? I see pitchforks.”

This matches what Vicino hears. “They’re going to Patagonia, they’re going to remote locations of the world,” he says. “Their reasoning is more to be insulated from a revolution, rebellion, anarchy, or whatever, following an economic collapse.”

The affluent have always spent money on things that they feel will help them hold onto what they have. But the rise of businesses like Vicino’s points to a convergence of social and political trends that has become a toxic brew of inequality, paranoia, and extreme individualism.

This raises the question of what you should do to prepare for the worst, since I doubt a luxury timeshare in Indiana is the answer for most of us.

Unspoken Hierarchy

Sunday, October 25th, 2015

One of the things that made working at Chris Savage’s startup so exciting and fun was its flat organizational structure:

I felt proud showing off our team dynamic to new employees, because I knew that we approached work in an egalitarian way — there were huge opportunities for individuals to jump in and make a real difference.

Flat was startup-y and awesome. Structure was BigCorp-y and boring.

As our company grew from 2 to 30 people, I was surprised to see how the strengths of a flat organization turned into our team’s biggest weaknesses.

Letting go of our “flat” management style was one of the toughest adjustments that we had to make as we scaled the business. We ended up doing something that I never planned to do — create an organizational chart. And it turned out to be one of the best decisions we made.


As your company gets bigger, responsibilities get chopped up into smaller pieces. The relationships between areas of ownership become exceedingly complex, which clouds the decision-making process. For us, it became hard to take risks — no one was clear on who was responsible for what. We moved more slowly, and it felt harder to learn and be creative.

While people on the team made smaller decisions about their parts of the business, I ultimately acted as a bottleneck for major decisions.

We began to realize that by building a company with a flat org structure, we had done the exact opposite of what we had intended. We had centralized all the decision-making, and we were relying on a secret implicit structure to make progress.

Every company has a structure. If you don’t explicitly define your structure, then you are left with an implicit one, and that can stifle productivity. We had hoped that being flat would let us move faster and be more creative, but as we grew, we ended up with an unspoken hierarchy that actually slowed down our ability to execute.

The Value of Being Cavalier

Friday, October 9th, 2015

Harold sees the value of being cavalier after realizing that all of the smartest and most dedicated people he knew from college were on incredibly conventional, though prestigious, career tracks:

You could almost draw a 2 x 2 matrix with the axes labeled “Courage” and “Capability” and see a vast yawning void where the right upper quadrant ought to be. I scratched my head about this puzzle for a long time, but no explanation was forthcoming.

So let’s tackle a different question: why is Donald Trump so interesting? I don’t mean his politics per se, but rather his personality. In a time when lots of politicians try to brand themselves an outsider to politics, he actually acts like one, for better or worse. He exudes an attitude of “I’ve already made it, I’m gonna do my thing, and maybe people will like it or not.”

And sure, he’s a billionaire, so it’s easy for him to do that sort of thing. But it’s notable that there are 536 billionaires in the US — just two short of the number of Congressmen and Senators — and almost all of them are fairly boring in their interests and activities. Trump, Soros, Musk, and Thiel are the ones that jump out as exhibiting, in very different ways, the sort of agency you’d expect from someone who’s already made it. Sure, most of us have day jobs and families to feed, so you’d expect us to veer closer to convention. But if anyone could be brashly unconventional, it would be billionaires. And yet that’s not what we observe.

My sense is that aristocrats were way more interesting, and this is not unrelated to their remarkable intellectual productivity. Darwin noodled around with naturalism after abandoning a career in medicine. Edward Gibbon wrote his famous Decline and Fall only after several equally ambitious failures, such as a panoramic history of Switzerland and a survey of contemporary English literature. These were not the equivalents of a grad student carefully publishing some cautious extensions of his PI’s work to get some guaranteed publications, they were bold, imaginative, and ambitious.

In a world where more people than ever could live materially quite comfortably, it seems notable that so few of our elites are demonstrating that level of ambition. It’s as though we had all the tools necessary to support enormous levels of human agency, and decided to just sit on them.

There are probably lots of causes for this shift, from changes in culture to differences in education. But one striking difference is that for past generations of elites, it was common to take a position as a military officer while growing up — whereas today, outside maybe Israel and a few other countries, it’s unheard of. Being a lieutenant in a cavalry regiment was as common then is going to grad school is today.

Part of this, sure, was carrying on the tradition of the nobility as being responsible for physical security. But part of it, too, is the sense that command over men in situations that matter fundamentally changes the way you see the world. As a leader, you have to be responsible both for planning and for execution. You have to closely monitor how the men under your command are behaving. And it forces you into a frame of mind where taking initiative and making decisions are the default, rather than the exception.

We don’t really have analogues of this anymore. Pretty much every prestigious career track involves not personal command but prolonged institutional subordination.

It’s not your fault

Monday, October 5th, 2015

People don’t simply want you to solve their problem:

A friend of mine who is a landscaper once told me that when he first meets potential clients they are often embarrassed by the condition of their property. When he senses this, he immediately points out how many of the problems with their property are due to such things as drought conditions, bad soil conditions and the like. In other words, the condition of their property doesn’t say anything negative about the potential client. It isn’t their fault! How important is this subtle change in strategy? He told me that the number of people he secured as clients increased significantly once he realized that people often not only want their property to look nicer, but don’t want to accept responsibility for it looking poor in the first place.

Scott Adams’ Hypnosis Reading List

Monday, September 28th, 2015

Scott Adams came to the art of persuasion by way of hypnotism, which he finds a more powerful term:

When I talk about hypnosis I am speaking broadly and conflating all forms of influence in daily life. The only thing I am EXCLUDING is the trance phenomenon and the things that stage hypnotists do. Those things have no use to you.

He presents a reading list, divided up into “chapters”:

Chapter 1 – Things You Can Stop Believing

The first chapter is designed to make you skeptical about your ability to comprehend reality. If you are already a hardcore skeptic, you can skip this chapter.

Chapter 2 – Stretching your Imagination

These books are selected to open your mind for what follows. If you have experience with LSD or mushrooms, you might not need this chapter. (Yes, I am serious.)

Chapter 3 – The Moist Robot Hypothesis

The Moist Robot Hypothesis first appears in my book that is listed below. The idea is that humans are biological machines, subject to cause and effect. According to this view, free will is an illusion and humans can be programmed once you understand our user interface.

With this chapter I ease you into the notion that humans are mindless robots by showing you how we are influenced by design, habit, emotion, food, and words. Until you accept the Moist Robot view of the world it will be hard to use your tools of persuasion effectively because you will doubt your own effectiveness and people will detect your doubt. Confidence is an important part of the process of influence.

Chapter 4 – Active Persuasion

This chapter gets into the details of how to influence people. My opinion is that you will be less effective with these tools if you do not have a full understanding of our moist robot nature introduced above. The only book on this list that I have read is the Gerry Spence book. And I have taken the Dale Carnegie course in person. But based on reviews, the other books on this list will give you some useful tips on persuasion that I have acquired from a variety of other sources over my life.

Confessions of an Anonymous Free-to-Play Producer

Thursday, September 24th, 2015

We own you, an anonymous free-to-play game producer explains:

One of our engineers came up with a rather simple solution that today would seem like a joke. We could have a JSON file online that contained all the level information. Then we could update the file to make a level easier (or harder). This way we could watch user reactions (mostly app store reviews, Twitter was still pretty basic at this time). This worked great, we were able to balance the game in the wild.

During a meeting about the game, the guy who ran our website brought up some interesting information. He started watching the web logs and seeing all the connections to the JSON file. Unbeknownst to him (or our team) he was getting us a DAU. For the engineering and production teams, this was just a neat thing to know, a feel good “look how many people love our game” statistic. The CEO saw something else. Pretty quickly we started getting more requests for what our users were doing. Upper management was disappointed by our lack of answers. I found a new service online called Pinch Media, they were an analytics tracker. I got the team to integrate Pinch into a few products and finally I had answers. Of course then more answers were asked. Around this time, free to play started happening. Suddenly, Marketing and our bosses demanded to know more than ever. In response to the pressure to explain our user base, I ended up building an event matrix. I had no schooling in this, so I was just making it up as I went along. My first matrix was awesome for a game developer. It was full of all those cool stats like “How far has the player run” or “How many bullets has he shot”. But this did not impress my bosses. They wanted to know how we could get the player to buy more stuff, tell his friends to play the game (and thus I learned about cohorts, all I wanted to do was make games).

Time passed, Free to Play became a thing. I went from company to company. Each time, every new project became less and less about how we can do cool things, and more about how we can track and target users to get the most whales possible, boost chart position and retain users to shove as many ads on them as possible.

All of this already seems bad. But along the way, a major thing happened. Facebook. I forget when I did my first Facebook required app, but it was a game changer. Facebook has changed how it has worked over the years. Today you can’t quite get as much information (easily) as you could with the first API, but you still get a lot. We collect as much information about a player as possible, thanks to Facebook we have a ton. Even users who don’t really use Facebook or fill it with “fake” data actually tell us a lot. You might not use Facebook, but your connections give you away. If you play with friends, or you have a significant other who plays, we can see the same IP address, and learn who you are playing with. When we don’t know information, we try to gather it in a game. Have you played a game with different country flags? We use those to not only appeal to your nationalistic pride, but to figure out where you are (or where you identify). Your IP address says you are in America, but you buy virtual items featuring the flag of another country, we can start to figure out if you are on vacation, or immigrated. Perhaps English is not your first language. We use all of this to send you personalized Push Notifications, and show you store specials and items we think you will want.

And if you are a whale, we take Facebook stalking to a whole new level. You spend enough money, we will friend you. Not officially, but with a fake account. Maybe it’s a hot girl who shows too much cleavage? That’s us. We learned as much before friending you, but once you let us in, we have the keys to the kingdom. We will use everything to figure out how to sell to you. I remember we had a whale in one game that loved American Football despite living in Saudi Arabia. We built several custom virtual items in both his favorite team colors and their opponents, just to sell to this one guy. You better believe he bought them. And these are just vanity items. We will flat out adjust a game to make it behave just like it did last time the person bought IAP. Was a level too hard? Well now they are all that same difficulty.

Walt Disney on American Experience

Saturday, September 19th, 2015

Walt Disney is a fascinating character, and the latest episode of PBS’s American Experience takes a long look:


Tuesday, August 25th, 2015

Pete Hottelet’s Omni Consumer Products — named after the mega-corporation in Robocopdefictionalizes products from movies and TV into real products.

He started with Brawndo, the “thirst mutilator” from Idiocracy, and moved on to Sex Panther cologne and Fight Club bar soap.

His biggest hit was True Blood, which he licensed before the show premiered:

It would have been easy and cost-efficient to consider the tie-in a novelty and use plastic bottles. Instead, Hottelet used heavy-duty glass to match what viewers see on-screen. Each pack weighed eight pounds, adding to shipping costs. But Hottelet figured consumers didn’t want a tacky approximation. “The value,” he says, “is in a perfect 1:1 replica bottle.”

True Blood wound up being a hit for HBO, lasting seven seasons—which amounted to 80 hour-long commercials for Hottelet’s bottles. Priced at $4 each, the four-packs sold in the hundreds of thousands and became the biggest hit of his six-product inventory. Though Hottelet usually targets online venues, the cultural impact of the series allowed him to jump the beverage queue at major retailers, including 7-11. “The big drink companies basically own shelf space,” he says. “Creating a brand from scratch, the chances of getting into stores were almost nothing. It took Red Bull years to do it.”

His bet on Stay-Puft marshmallows has not paid off though, as the Ghostbusters sequel been delayed a few years.