This is what charisma is like in action

Saturday, June 9th, 2018

Randall Collins explains the micro-sociology of charisma:

A charismatic leader pumps up followers with emotional energy; they admire their leader and follow willingly in his or her trajectory. Emotional dominance is a different mechanism because it operates by hogging the emotional energy. Charisma includes people rather than excludes them. Durkheim would say that the charismatic leader becomes the sacred object for the group; I would say he or she is the focus of attention that sets the trajectory of the group, filling them with enthusiasm that they will accomplish something great together.

A few brief examples. Joan of Arc led French troops to assault English fortresses, not because she was a great fighter but because she carried the banner at the front, and her followers would swarm up after her because they believed she could not fail. In quieter moments, she would display her humility as an agent of God and her personal saints, by weeping in church, so expressively that everyone else would be weeping along with her. It is no exaggeration to say that she led a procession across France of crowds weeping, and rushing behind her into battle. The shared emotion of weeping — a bodily process that sweeps one out of control — was the emotional mechanism that generated the sense of religious-plus-political trajectory.

Jesus, like most charismatic leaders, was a good observer of persons; he knew who could be moved to join him, and who had something else on their mind. Jesus always seized control of the interaction by the second conversational turn: instead of replying to what someone else said, he intuited what they meant and challenged them on it. He could turn the tables even on hostile enemies by controlling the rhythm and letting embarrassing silences work against them, then seizing the moment to make his point.

Jumping to a recent example of a dominant business entrepreneur, Steve Jobs: Jobs was not an engineer or a designer, but he had excellent judgment as to who were the most creative people to hire. He recruited them, in part, by touting the revolutionary things they would invent, and offering generous shares of the profits. Above all, he challenged them to do things that they thought were impossible; his emotional domination in arguing with his technical staff was so strong that they jokingly said Steve had a reality-distortion field.

The way it worked was by an extremely intense interaction ritual in the workplace. Steve would visit the most advanced work group, look at what they had done, and start criticizing it. His comments were crude, obscene and insulting. We might think his high-tech experts wouldn’t stand for this, that they would quit or rebel. But Jobs was not the kind of boss who walks in, shouts at his workers, threatens them if they don’t do better, then slams the door and leaves. Steve would insult them until they were really angry; then he would stay and argue with them. His persistence was incredible — he would argue with them for hours. He was famous for dropping in on people and staying up all night arguing and expounding his vision. Obviously Steve has a lot of emotional energy to be able to do this: he shows the familiar pattern of the charismatic leader who doesn’t need sleep, a single-minded workaholic who never takes a break. This high level of emotional energy is the result of constantly being in the center of successful interaction rituals. But the most energizing interaction rituals are not mere emotional dominance, where everyone else’s emotional energy is crushed. Jobs wants energized workers who share his vision, technical experts who push beyond the limits of what they had thought possible.

The crucial pattern is in the time-sequence. Steve enters, and forcefully seizes the emotional center of attention. He uses negative emotions to begin with; he gets everyone seething with the same emotion, even if it is anger at himself. He gets them into an intense argument about how the thing they are inventing can or cannot be changed in ways no one has thought of before. Let us say, roughly, twenty minutes of insulting, then hours of heated argument. Over those hours, the emotions settle down; they are no longer focused on Steve and his insults, but about a vision of the piece of computer equipment in front of them, and where they can go with it. Steve did not always win these arguments; if something turned out to be genuinely impossible, he would tacitly accept that, provided they had figured out a work-around that would get them into the territory they were aiming for.

One could say that Steve Jobs was extremely egotistical, but his ego was in his products; and these were very much the products of a team, as cutting-edge as he could assemble. His core team became so convinced that Steve could do anything that they stuck with him, even in the dark days when he was forced out of Apple by the marketing and financial managers he had brought in to handle the non-technical side. It would be superficial to say that Steve Jobs achieved success by abusing his employees. He used very confrontational tactics to stir up emotions, but his secret was that he never walked away from them: but always saw the argument through to a shared resolution.  He was an expert at provoking intense interaction rituals.

This is what charisma is like in action: it energizes a group, along a trajectory that they believe will be a glorious success.

Making movies for the audience Hollywood has ignored

Saturday, May 26th, 2018

Someone is finally pursuing the obvious strategy of making movies for the audience Hollywood has ignored:

Since fleeing Los Angeles in 2015 for Texas, where he grew up, Mr. Sonnier has cast himself as the producer willing to do features that others in Hollywood consider politically radioactive. In the past year, he has wrapped production on “Dragged Across Concrete,” starring Mel Gibson as a cop accused of beating a suspect, filmed a drama about militia members, and bought a script about a school shooting in which a female student wrests control of a gun and fights back.

Mr. Sonnier’s revenues from a film are a tiny fraction of those from a major studio release, but he is making money off his strategy by keeping production costs low and relying on word-of-mouth to turn his movies into sleeper hits. With a budget of $3.8 million, “Brawl” has turned a profit, says Mr. Sonnier. He says Cinestate did it by selling distribution rights to overseas markets on the strength of Mr. Vaughn’s “Wedding Crashers” fame, pocketing nearly $2 million for streaming rights from one online service and selling more than 40,000 DVDs in the first two weeks of release at big-box stores — a healthy performance in an age when few buy DVDs anymore.

Hollywood has occasionally targeted conservative moviegoers, releasing faith-based movies in specific neighborhoods or producing patriotic blockbusters such as “American Sniper.” The difference is that Mr. Sonnier is betting a whole company on a strategy of finding consumers he says are “outside the coasts,” marrying ideology with opportunism.

“The political climate brings a spotlight to these kinds of movies. We’re not shying away from that,” Mr. Sonnier says. “It’s funny that, in this moment in time, the movies we’re making are almost counterculture.”

Other studios don’t appear to be mimicking his approach, but some recent Hollywood moves seem to affirm Mr. Sonnier’s conviction that he’s tapping an underserved audience. The revival of the “Roseanne” TV series, starring the comedian Roseanne Barr as a Trump voter navigating various social issues, was part of a strategy at ABC discussed by executives at a meeting held the day after the election about how to entertain a broader swath of the nation.

The premiere episode’s top market was Tulsa, Okla., according to ABC, where it outperformed the national average by 60%.

[...]

“Sparrow Creek,” filmed in under three weeks for less than $1 million, Mr. Sonnier says, is part of a microbudget strategy he has used to profitable effect on previous movies “Brawl” and his 2015 Western, “Bone Tomahawk.”

When “Brawl” appeared on iTunes, the prison revenge movie shot to the top 10. The other titles in the iTunes top 10 at the time, “Spider Man: Homecoming” and “Wonder Woman” among them, had wide theatrical releases.

[...]

To pay the bills, he made direct-to-video shoot-’em-up films with Steve Austin, the wrestling champion.

One day, he dropped off Ms. Gerwig at an audition for Noah Baumbach’s art-house film “Greenberg,” he says, and met Mr. Austin for lunch on Sunset Boulevard. A fan approached the wrestler, had him autograph her arm and returned to show she’d had it tattooed. “Talk about walking in two universes,” he says.

The Austin features, with titles such as “Hunt to Kill,” taught Mr. Sonnier a simple formula: budgets under $1 million and foreign-rights deals that put the project in the black before cameras roll. He deployed what he calls a “Mad Libs” plot:

“A guy named Jim/John/Jack gets out of prison/wakes up from the dead/survives and comes back to his hometown/scene of the crime/where the bad guys are and kills everyone to save his family/save himself/save someone who can’t save themselves.”

He says: “As long as we stuck to the Mad Lib, the movie sold 300,000 to 500,000 units.”

Making everything else that was previously considered into obviously terrible ideas

Wednesday, May 16th, 2018

John Carmack shares some stories about Steve Jobs:

My wife once asked me “Why do you drop what you are doing when Steve Jobs asks you to do something? You don’t do that for anyone else.”

It is worth thinking about.

As a teenage Apple computer fan, Jobs and Wozniak were revered figures for me, and wanting an Apple 2 was a defining characteristic of several years of my childhood. Later on, seeing NeXT at a computer show just as I was selling my first commercial software felt like a vision into the future. (But $10k+, yikes!)

As Id Software grew successful through Commander Keen and Wolfenstein 3D, the first major personal purchase I made wasn’t a car, but rather a NeXT computer. It turned out to be genuinely valuable for our software development, and we moved the entire company onto NeXT hardware.

We loved our NeXTs, and we wanted to launch Doom with an explicit “Developed on NeXT computers” logo during the startup process, but when we asked, the request was denied.

Some time after launch, when Doom had begun to make its cultural mark, we heard that Steve had changed his mind and would be happy to have NeXT branding on it, but that ship had sailed. I did think it was cool to trade a few emails with Steve Jobs.

Several things over the years made me conclude that, at his core, Steve didn’t think very highly of games, and always wished they weren’t as important to his platforms as they turned out to be. I never took it personally.

When NeXT managed to sort of reverse-acquire Apple and Steve was back in charge, I was excited by the possibilities of a resurgent Apple with the virtues of NeXT in a mainstream platform.

I was brought in to talk about the needs of games in general, but I made it my mission to get Apple to adopt OpenGL as their 3D graphics API. I had a lot of arguments with Steve.

Part of his method, at least with me, was to deride contemporary options and dare me to tell him differently. They might be pragmatic, but couldn’t actually be good. “I have Pixar. We will make something [an API] that is actually good.”

It was often frustrating, because he could talk, with complete confidence, about things he was just plain wrong about, like the price of memory for video cards and the amount of system bandwidth exploitable by the AltiVec extensions.

But when I knew what I was talking about, I would stand my ground against anyone.

When Steve did make up his mind, he was decisive about it. Dictates were made, companies were acquired, keynotes were scheduled, and the reality distortion field kicked in, making everything else that was previously considered into obviously terrible ideas.

I consider this one of the biggest indirect impacts on the industry that I have had. OpenGL never seriously threatened D3D on PC, but it was critical at Apple, and that meant that it remained enough of a going concern to be the clear choice when mobile devices started getting GPUs. While long in the tooth now, it was so much better than what we would have gotten if half a dozen SoC vendors rolled their own API back at the dawn of the mobile age.

Trader Joe’s eschews the long tail

Monday, April 23rd, 2018

What Megan McArdle and her neighbors love about Trader Joe’s is not a particular product, or even the store’s subtle hippie aesthetic, but its business model:

That business model can be summed up in two things: “private label” and “low SKUs.” Private label is self-explanatory; Trader Joe’s house-brands most of its products, which means they’re cheaper (no need to pay for all those national advertising campaigns).

But maybe you already realized that. It’s the low SKUs that really offer a hidden benefit to millions of unwary shoppers. SKU is an industry acronym for a “stock-keeping unit,” a.k.a. “one product.” The average grocer carries nearly 50,000 SKUs. Trader Joe’s, by contrast, carries only about 4,000. That’s an immense difference — though you’ll only realize how immense when you think through the implications.

Real estate, for instance. The new Trader Joe’s near my house is, by the standards of a Trader Joe’s, quite roomy, with wide aisles and lovely high ceilings. But compared to the local grocery stores, it’s still compact. In a dense, urban area like Washington, that’s a big savings on rent — which can be passed on to you in lower prices.

The advantages hardly stop there. When you only have a few SKUs, all of which have to earn their place on the shelf by selling briskly, you end up with less spoilage than a normal grocery store. Given the razor-thin margins typical of the industry, spoilage can be the difference between turning a profit and running into the red. Minimizing your SKUs gives you even more room to cut the prices on the products you do sell.

[...]

The thing about having 50,000 SKUs (or 100,000, as is typical of a Walmart) is that no employee can be familiar with more than a small fraction of them. It is not possible, in such a place, to deliver the kind of service that Trader Joe’s does. For example, the new outlet’s store captain, Rebekah Eagle, told me that the store regularly holds employee tastings to familiarize the staff with what they’re selling. A great idea, with a limited stock selection; not feasible in a conventional grocery. And since it is actually impossible for front-line workers at conventional stores to deliver Trader Joe’s-level service, it doesn’t necessarily make business sense to invest in the kind of training and retention policies that Trader Joe’s does.

The private-label branding allows Trader Joe’s to attract loyal customers with cheap prices. And the low number of SKUs allows it to generate extremely high revenue per square foot, enabling it to pay the rents even in expensively dense urban areas and to lower prices even further. It’s a pretty neat trick, if you can manage it.

Many firms don’t know their numbers

Saturday, April 7th, 2018

Alex Tabarrok has learned a lot about industrial organization by watching The Profit, a reality-TV show on CNBC featuring businessman Marcus Lemonis:

In each episode Lemonis buys into a failing small-to-medium-sized business and works to turn it around. Lemonis doesn’t invest in a random sample of businesses nor even in a random sample of failing businesses. Nevertheless, the lessons that The Profit teaches are consistent with the new literature on management which has increased my confidence both in the show and the literature.

In the perfectly competitive model, price is equal to average cost and firms operate efficiently at minimum cost. Yet, Syverson finds that in the typical US industry a firm at the 90th percentile of the productivity distribution makes almost twice as much output with the same inputs as a firm at the 10th percentile. It’s not easy to measure inputs or outputs, of course, but even firms producing very uniform products show big productivity differences.

How can firms that use inputs so inefficiently survive? In part, competition is imperfect which gives inefficient firms a cushion because they can charge a price higher than cost even as costs are higher than necessary. Another reason is that small firms eat their costs.

A typical firm on The Profit, for example, has decent revenues, sometimes millions of dollars of revenues, but it has costs that are as high or higher. What happened? Often the firm began with a competitive advantage — a product that took off unexpectedly and so for a time the firm was rolling in profits without having to pay much attention to costs. As competition slowly took hold, however, margins started to decline and the firm found itself bailing. But instead, of going out of business, the firm covers its losses with entrepreneurs and family members who work without pay, with loans which grow ever larger, and by an occasional demand shock which generates enough surplus revenue to just keep going.

The correct metaphor for competition isn’t a boxing match that knocks out the inefficient firm. The correct metaphor is a slow tide. Inefficient firms must scramble for a bit of high ground but as the tide ebbs and flows they can occasionally catch a breath when their head bobs above the profit line. An inefficient firm can survive for years before it inevitably sinks.

The second lesson from The Profit is that management matters and it matters in systematic and fairly easy to replicate ways. If mis-measurement explained productivity differences, Lemonis would not be able to successfully turn firms around. But he can and does. How?

One of the first things Lemonis does in almost every episode is get the numbers right so he can calculate which products are selling and which have the highest price-to-cost margin. Concentrate production on high-margin, big sellers. Drop the rest. Simple; but many firms don’t know their numbers.

Second, in episode after episode, Lemonis cleans up shop. Literally. He cleans the shop floor and gets rid of inventory that isn’t selling. He then arranges the floor to improve process flow (made easier by concentrating production on fewer products). He then creates an inventory system, tracks orders and the inputs needed to create those orders, and takes advantage of costs savings through economies of scale in input purchases.

Can it be so simple? To be sure, Lemonis is a smart guy but very little of what he does takes genius. We know this because we now have robust evidence from India and Mexico that better management increases profits and productivity and that such increases can be sustained over the long run. In the studies from India and Mexico, randomly selected firms were given access to a “management intervention” and their productivity and profits improved and stayed higher for years after the intervention ended.

Moreover, what were these management interventions? Did some bright Harvard grad recommend a complicated swap-options deal? A new chemical process? A new management form? No. By and large, the interventions were simple. Just like the Lemonis interventions.

Communist-style incentives at work

Friday, February 9th, 2018

While we were recently discussing flawed incentive systems, David Foster brought up some Communist examples:

There’s an old story about a Soviet-era factory that made bathtubs. Plant management was measured on the total tonnage of output produced–and valves & faucets don’t add much to the weight, certainly not compared with the difficulty of manufacturing them. So the factory simply made and shipped thousands of bathtubs, without valves or faucets.

He notes that the above story may be apocryphal. The version I heard involved cars and people stealing each other’s windshield wipers.

He continues with a more spectacular example from Viktor Suvorov, who was working on a communal farm in Russia, when the General Secretary of the Party announced that they needed to increase their output, and the fertilizer plant resolved to do its part:

A vast meeting, thousands strong, complete with brass bands, speeches, placards, and banners, was urgently called at the local Chemical Combine. To a man, they shouted slogans, applauded, chanted patriotic songs. After that meeting, a competitive economy drive was launched at the Chemical Combine to harvest raw materials and energy resources.

The heroic efforts of the factory workers filled the plant’s storage tanks to capacity, and the local communes had 24 hours to take possession of their liquid fertilizer:

There was a long queue of trucks of different makes, dimensions, and colours standing outside the Chemical Combine. But the queue was moving fast. I soon discovered that lorries, which had only a moment before been loaded, were already returning and taking up new places in the queue. Every one of these lorries ostensibly needed many hours to deliver its valuable load to its destination and then to return. But they rejoined the queue in a matter of minutes. Then came my turn. My tanks were rapidly filled with the foul-smelling liquid, and the man in charge marked down on his list that my native kolkhoz had just received the first one and a half tons of fertilizer. I drove my lorry out through the Combine’s gates and followed the group of lorries which had loaded up before mine. All of them, as if at a word of command, turned off the road and descended a steep slope toward the river Dneiper. I did the same. In no time at all, they had emptied their tanks. I did the same. Over the smooth surface of the great river, the cradle of Russian civilization, slowly spread a huge poisonous, yellow, stinking stain.

Foster warns us not to get too smug though. If you read the whole thing, he has an example of capitalist stupidity, too.

Three negative archetypes

Thursday, February 8th, 2018

Will Felps, who studies organizational behavior at the University of South Wales in Australia, secretly brought grad student Nick into his experiment, where groups were asked to construct a marketing plan for a start-up, and had him portray three negative archetypes — the Jerk (an aggressive, defiant deviant), the Slacker (a withholder of effort), and the Downer (a depressive Eeyore type):

In almost every group, his behavior reduces the quality of the group’s performance by 30 to 40 percent. The drop-off is consistent whether he plays the Jerk, the Slacker, or the Downer.

“When Nick is the Downer, everybody comes into the meeting really energized. He acts quiet and tired and at some point puts his head down on his desk,” Felps says. “And then as the time goes by, they all start to behave that way, tired and quiet and low energy. By the end, there are three others with their heads down on their desks like him, all with their arms folded.”

When Nick plays the Slacker, a similar pattern occurs. “The group quickly picks up on his vibe,” Felps says. “They get done with the project very quickly, and they do a half-assed job. What’s interesting, though, is that when you ask them about it afterward, they’re very positive on the surface. They say, ‘We did a good job, we enjoyed it.’ But it isn’t true. They’d picked up on the attitude that this project really didn’t matter, that it wasn’t worth their time or energy. I’d gone in expecting that someone in the group would get upset with the Slacker or the Downer. But nobody did. They were like, ‘Okay, if that’s how it is, then we’ll be Slackers and Downers too.’”

Trying a bunch of stuff together

Tuesday, February 6th, 2018

Peter Skillman’s design contest challenged each group to build the tallest possible structure using uncooked spaghetti, tape, string, and one marshmallow — to go on top:

The fascinating part of the experiment, however, had less to do with the task than with the participants. Some of the teams consisted of business school students. The others consisted of kindergartners.

The business students got right to work. They began talking and thinking strategically. They examined the materials. They tossed ideas back and forth and asked thoughtful, savvy questions. They generated several options, then honed the most promising ideas. It was professional, rational, and intelligent. The process resulted in a decision to pursue one particular strategy. Then they divided up the tasks and started building.

The kindergartners took a different approach. They did not strategize. They did not analyze or share experiences. They did not ask questions, propose options, or hone ideas. In fact, they barely talked at all. They stood very close to one another. Their interactions were not smooth or organized. They abruptly grabbed materials from one another and started building, following no plan or strategy. When they spoke, they spoke in short bursts: “Here! No, here!” Their entire technique might be described as trying a bunch of stuff together.

If you had to bet which of the teams would win, it would not be a difficult choice. You would bet on the business school students, because they possess the intelligence, skills, and experience to do a superior job. This is the way we normally think about group performance. We presume skilled individuals will combine to produce skilled performance in the same way we presume two plus two will combine to produce four. Your bet would be wrong. In dozens of trials, kindergartners built structures that averaged twenty-six inches tall, while business school students built structures that averaged less than ten inches.

The result is hard to absorb because it feels like an illusion. We see smart, experienced business school students, and we find it difficult to imagine that they would combine to produce a poor performance. We see unsophisticated, inexperienced kindergartners, and we find it difficult to imagine that they would combine to produce a successful performance. But this illusion, like every illusion, happens because our instincts have led us to focus on the wrong details. We focus on what we can see — individual skills. But individual skills are not what matters. What matters is the interaction.

The business school students appear to be collaborating, but in fact they are engaged in a process psychologists call status management. They are figuring out where they fit into the larger picture: Who is in charge? Is it okay to criticize someone’s idea? What are the rules here? Their interactions appear smooth, but their underlying behavior is riddled with inefficiency, hesitation, and subtle competition. Instead of focusing on the task, they are navigating their uncertainty about one another. They spend so much time managing status that they fail to grasp the essence of the problem (the marshmallow is relatively heavy, and the spaghetti is hard to secure). As a result, their first efforts often collapse, and they run out of time.

The actions of the kindergartners appear disorganized on the surface. But when you view them as a single entity, their behavior is efficient and effective. They are not competing for status. They stand shoulder to shoulder and work energetically together. They move quickly, spotting problems and offering help. They experiment, take risks, and notice outcomes, which guides them toward effective solutions.

Most people aren’t shoplifters

Sunday, January 28th, 2018

TechCrunch looks inside Amazon’s surveillance-powered no-checkout convenience store, which should work just fine as long as all the customers are Amazon employees:

In addition to the cameras, there are weight sensors in the shelves, and the system is aware of every item’s exact weight — so no trying to grab two yogurts at once and palm the second, as I considered trying. You might be able to do it Indiana Jones style, with a suitable amount of sand in a sack, but that’s more effort than most shoplifters are willing to put out.

And, as Kumar noted to me, most people aren’t shoplifters, and the system is designed around most people. Building a system that assumes ill intent rather than merely detecting discrepancies is not always a good design choice.

Fanta was created for Nazi Germany

Thursday, January 25th, 2018

In April 1955, Coca-Cola reintroduced Fanta with a new, orange-flavored recipe. The original version was rather different — and developed in Nazi Germany:

The drink was technically fruit-flavored, but limited wartime resources made that descriptor not wholly accurate. Its ingredients were less than appetizing: leftover apple fibers, mash from cider presses, and whey, a cheese by-product. “[Fanta] was made from the leftovers of the leftovers,” says Mark Pendergrast, who, as the author of For God, Country, and Coca-Cola, revealed this hidden past. “I don’t imagine it tasted very good.”

[...]

In 1895, Coca-Cola’s CEO boasted of its presence in every American state and territory. In 1920, the company’s first European bottling plant opened in France, and by 1929, Coca-Cola was being bottled and drunk in Germany.

In 1933, right when Hitler and the Nazi Party were assuming power, German-born Max Keith (pronounced “Kite”) took over the company’s German subsidiary, Coca-Cola GmbH. Keith was an imposing figure: tall, intimidating, possessing a “little whisk-broom mustache” (not unlike Hitler’s), charming but quick-tempered, and utterly devoted to Coca-Cola. “[Keith] valued his allegiance to the drink and to the company more than his allegiance to his own country,” says Pendergrast. For that reason, he saw no quarrel with boosting sales by tying Coca-Cola to every aspect of German life and, increasingly, Nazi rule.

[...]

The U.S.’s entrance into World War II meant that American companies had to immediately stop all business activities with the enemy. In addition, the German government was threatening to seize “enemy-owned” businesses. General Motors pulled out of Germany (though, Opal, a fully owned subsidiary of GM, still operated there). IBM’s operations were seized by the Third Reich, though controversy exists on how much they contributed to the German war effort. Coca-Cola HQ in Atlanta also cut off communications with Keith in Germany and halted the export of Coca-Cola’s 7X flavoring (the long-mythicized, top secret formula for Coca-Cola syrup).

[...]

Working with his chemists, Keith patched together a recipe within the limitations imposed by wartime rationing. It was basically made from the leftovers of other food industries: fruit shavings, apple fibers and pulp, beet sugar, and whey, the liquid remaining after milk has been curdled and strained during cheese production. To name this concoction, Keith told his team to use their imagination. Joe Knipp, a salesman, pitched “Fanta,” shorthand for the German word for “fantasy.” It stuck.

Fanta saved Coca-Cola GmbH. Sales rose gradually during the war, particularly as other choices became harder and harder to find. It wasn’t simply drunk either. Fanta was popular as a sweetener for soups due to severe sugar rationing, since the drink’s renown earned it an exemption from the rationing after 1941 (though Keith had to use beet sugar). It was likely used for a variety of other cooking and baking needs as well.

“It was Fanta or nothing,” says Tristan Donovan, author of the book Fizz: How Soda Shook Up the World. “It had pretty much market dominance during war time.” By 1943, sales had reached nearly three million cases.

Damore vs Google Class Action Lawsuit

Wednesday, January 24th, 2018

If you haven’t read the Damore vs Google Class Action Lawsuit, you really should. It’s pretty disturbing — yet perfectly believable.

You are quite likely to grind up the humans in the process

Wednesday, January 24th, 2018

Megan McArdle shares some stories of metrics and their unintended consequences:

In December, doctors at a VA hospital in Oregon decided to admit an 81-year-old patient. He was dehydrated, malnourished, plagued by skin ulcers and broken ribs — in the medical professionals’ opinion, he was unable to care for himself at home. Administrators, however, overruled them.

Was there no bed for this poor man? No, the facility had plenty of beds; in fact, on an average day, more than half of the beds are empty, awaiting patients. Was there no money or medicine to care for him? No, and no. Reporting by the New York Times suggests that Walter Savage was, perversely, turned away because he was too sick. Very sick patients tend to worsen the performance measures by which VA hospitals are judged.

If this had happened in isolation, we could simply gape at the monstrosity that bureaucracies are occasionally capable of.

But such examples abound in health care. For example, in the 1990s, New York and Pennsylvania started publishing mortality data on hospitals and surgeons who did coronary bypasses. The idea was that more informed consumers would steer themselves toward the teams with the better statistics — theoretically good for patients, bad for slacking providers. The reality was less ideal: In those states, surgeons seem to have started doing more operations on healthier patients, while turning away the sickest ones who might otherwise have benefited.

From this we can take a few lessons. The first is one that has been well-known to other sorts of businesses: What you measure is what you get, not necessarily what you want. In fact, if your measurement is badly designed, you may get a great deal of something you don’t want.

To illustrate that, look at Wells Fargo, which recently paid a whopping fine because a badly designed compensation system encouraged low-level employees to muck around with customer bank accounts. These machinations generated effectively no revenue for the bank, and annoyed customers, but they did generate income for the employees — and eventually, a stinging, expensive rebuke from the Consumer Financial Protection Bureau.

[...]

I could reel off examples endlessly: purchasing managers who have cozy arrangements to buy a certain amount of product from their vendors in December, and ship it back in January, in order to help some sales director make quarterly targets … universities that compete to turn away as many students as possible, because doing so makes them rise in the U.S. News rankings … law schools that hired their own graduates for temporary make-work jobs in order to boost the schools’ employment statistics. All metrics will be gamed, and the games always have costs. And when the metrics involve our health, those costs can be very high indeed.

Health care and education are particularly ill-suited to management-by-measurement:

Most companies are dealing with reasonably standardized inputs, which can be turned into measurable outputs. But the less you deal with things, and the more you deal with human beings, the less useful productivity metrics are. Human bodies and human minds are both highly variable and immensely complicated. When you are working on them, it is hard to know how much of the final result is a result of your labor, and how much can be credited to the qualities of your initial starting material.

So when we measure outputs, we are getting at best a very distorted picture of the value of the services provided. Modern industrial management is simply not designed for this sort of situation. If you feed human inputs into a machine system, you are quite likely to grind up the humans in the process.

Space is open for business

Sunday, January 21st, 2018

Space is open for business. Rocket Lab has announced, with its successful Electron rocket launch, from its own private launch pad in New Zealand, which reached orbit and successfully deployed multiple small satellites that will map the earth’s surface and track weather systems and shipping.

The Electron rocket is disposable:

It is made of lightweight carbon composite material and has 3D-printed engines to reduce costs and assembly times. It is 17m long, roughly a quarter of the size of rivals such as SpaceX’s Falcon 9 rocket, which can carry satellites the size of a van into orbit. Each Rocket Lab launch costs about $5m, compared to $62m for SpaceX, the company founded by billionaire Elon Musk.

Sunday’s launch was the second test flight by the Electron rocket following an earlier flight in May. On that occasion the rocket entered space but was unable to reach lower earth orbit due to a technical fault. It is planning a third test flight later this year.

Some satellite providers are willing to risk their products on test rockets due the lengthy backlog in launches that has built up as the industry expands. Rocket Lab deployed the three small satellites on behalf of Planet and Spire Global, US-based satellite providers that are deploying constellations of nanosatellites at a low earth orbit of about 500km.

Rocket Lab says its private launch pad on the picturesque Mahia peninsula on New Zealand’s North Island gives it a commercial advantage to many competitors, who use government-run facilities such as Cape Canaveral in the US. The company is licensed to conduct a launch every 72 hours from the remote location, which benefits from the lack of air and shipping travel in the vicinity.

I first heard about Rocket Lab just last year.

The birth of the digital camera

Monday, January 8th, 2018

Former Kodak employee Steve Sasson tells the story of the birth of the digital camera:

I worked for Eastman Kodak Company for over 35 years. I began in July of 1973. I was a junior engineer. My supervisor said, ‘We’ve got a filler job for you. There’s a new type of imaging device called a charged couple device imager; we want someone look at one of these and see if we could do anything useful with it.’

Our conversation probably lasted about 30 seconds, it was nothing.

Most of the parts I used to build it, I stole from around the factory. Digital volt meters and chips, digital tape cassette, prototype box, it looks like an erector set with a blue box on top with a lens stuck on top. And I would output to a television set. We took our first full images in December of 1975.

I folded the camera up, and I walked down a hallway, and there was a young lab technician, her name was Joy. I asked her, ‘Could I take a snapshot of you?’ She said, ‘sure, whatever.’ The tape started to move, that’s how I know I made a picture. I popped it out of the tape player, put it into the playback system. It was quite a moment, because this crazy thing actually worked. Up popped the image. We could see her black hair and a white background, but her face was complete static, completely unrecognizable. Jim and I were overjoyed at what we saw, because we knew so many reasons why we wouldn’t see anything at all.

Joy had followed us in, she looked at the picture and she said, ‘Needs work.’

We filed for a patent, and the first patent for a digital camera was granted in 1978. U.S. Patent 5016107. We started to show it to people at Kodak. Then, it became more interesting.

I thought they’d spend all their time asking me how did I get this to work. They didn’t ask me any of the hows, they asked me, ‘Why? Why would anyone want to do this?’

Would you pay $70,000 for a lunar vacation?

Wednesday, January 3rd, 2018

Would you pay $70,000 for a lunar vacation? That’s what Andy Weir estimates it’ll cost — eventually, in the 2080s, when Artemis takes place. Here are his key points, edited down:

The cheapest way to get mass to LEO (at the time of this writing) is with a SpaceX Falcon 9 booster. They charge $61.2 million for the launch, and it can put 13,150kg of mass into LEO. So right now, that means it costs $4,653 per kilogram.

The commercial space industry, through competition and engineering advances, will settle down to the same fuel-to-overhead ratio as the modern airline industry.

For each flight, I noted the price of each class of ticket, then worked out the take — the total amount of money the airline gets if every seat on the plane is sold at its listed cost. The fuel consumed is based on the flight duration and the fuel consumption rate of the aircraft. The cost of that fuel is based on the market price of jet fuel on the day I looked up those tickets, which was $0.475/kg. (Actually, the price was 38 cents per liter, but I wanted price per kg and jet fuel has a density of 0.8kg/L). [...] So for the rest of this paper I’ll assume a commercial airline spends 16.5% of its take on fuel.

A passenger spacecraft would weigh the same as a passenger aircraft capable of carrying the same number of people.

The commercial space industry will use hydrogen-oxygen fuel.

The thing that matters most about rocket fuel is a property called “specific impulse.” I don’t want to bore you with physics (I’m here to bore you with economics) so I’ll just say this: specific impulse is a measure of how efficient a rocket fuel is. The higher a fuel’s specific impulse, the less of it you need to get a ship moving a given velocity. And hydrogen-oxygen fuel has the best specific impulse known. Also, it creates water as its exhaust, so there are no pollutants. And finally, it’s cheap to produce.

Right now, there are engineering limitations to using hydrogen-oxygen fuel. The main one being that it burns very hot — hotter than any engine can handle. But again, I’m assuming all these challenges get researched and solved by a profit-hungry industry.

The final piece of the puzzle is the cost of hydrogen and oxygen. This was a little harder to find. I was able to find reliable data on the 2002 price of bulk hydrogen, so I adjusted the 2002 dollars into 2015 dollars and got $0.93/kg. As for oxygen, I used the publicly available data on what NASA pays for it — $0.16/kg in 2015 dollars. The reaction requires one part hydrogen and eight parts oxygen (by mass), so the total fuel cost is $0.245/kg.

Okay, we have a ship that weighs 165,500kg and we’re going to put 550 passengers on it. We’ll give them 100kg each for their bodies and luggage. That’s a total mass of 215,500kg.

The specific impulse of hydrogen-oxygen fuel is 389s (yes, the unit for measuring specific impulse is “seconds”. It makes no intuitive sense, just roll with it). To get to LEO you need to accelerate by 9,800m/s. LEO actually only requires 7,800m/s, but you lose around 2,000m/s during the ascent to air resistance and other inefficiencies.

Again, I’m skipping over the physics (Tsiolkovsky’s Rocket Equation, if you’re curious) but those numbers mean we’ll need 12.04kg of fuel for every 1kg we want to put into LEO. We want to put 215,000kg into LEO, so we need 2,594,620kg of fuel.

At our calculated fuel cost ($0.245/kg) that means the total fuel cost for the launch is $637,200.

Now I get to use my airline fuel overhead figure. Airlines have 16.5% fuel overhead ratio and we’re going to assume the space industry will as well. So $637,109 is 16.5% of our total ticket take. And that means our total take is $3,861,266.

Our ship carries 550 passengers, meaning each passenger will have to pay $7,020.48.

According to my research, it takes a total of 5,930m/s of delta-v to get from LEO to the surface of the Moon. More physics and math happens here, but it means that for every kilogram of cargo you want to put on the lunar surface, you have to put 4.73kg of mass into LEO. 1kg of actual cargo, and 3.73kg of fuel to get that cargo to the Moon.

So what’s it cost to put freight on the Moon? Well, it would cost 4.73 times what it would cost to put the cargo in LEO. So, while it costs $35.10 to put a kilogram into LEO, it would cost $166.02 to put it on the surface of the Moon.

You have to get your body to LEO ($7020), and then soft-landed on the moon. So you end up needing the same overhead – 4.73 times the LEO cost. $33,206.87.

So let’s say you want a two-week stay. That’s a total of 28 days of expenses at $800, so $22,400. Round that up to $25,000 because vacations always cost more than you expect. That plus the $45,000 travel costs totals $70,000.

So I ask again: Would you pay $70,000 for a lunar vacation?