Assistant Village Idiot shares his new coping strategy for work, which “has taken on a surreal quality of inefficiency lately”:
I’ve decided I’m in a sitcom or a reality show. This is all being taped, and they’re going to be broadcasting my reactions nationwide. So I don’t want to be an ass. I want to appear witty, efficient, good-hearted, wise.
A recent survey by ChangeWave Research found that 9% of holiday shoppers plan to buy an iPad in the next 90 days.
Apparently Steve Jobs joked that the iPod Nano is small enough to make a good watch, and designer Scott Wilson decided to run with the idea and to fund it via Kickstarter — $25 to pre-order the lower-end TikTok watch-band, $50 to pre-order the higher-end LunaTik kit, hot-stamped and CNC’d out of aluminum.
Netflix considers itself a streaming company, which also offers DVD-by-mail:
The dilemma for Hollywood was neatly spelled out in a Netflix announcement Monday of a new subscription service: $7.99 a month for unlimited downloads of movies and television shows, compared with $19.99 a month for a plan that allows the subscriber to have three discs out at a time, sent through the mail, plus unlimited downloads. For studios that only a few years ago were selling new DVDs for $30, that represents a huge drop in profits.
[...]
For the first time, the company will spend more over the holidays to stream movies than to ship DVDs in its familiar red envelopes (although it is still spending more than half a billion dollars on postage this year). And that shift coincides with an ominous development for cable companies, which long controlled home entertainment: for the first time in their history, cable television subscriptions fell in the United States in the last two quarters — a trend some attribute to the rise of Netflix, which allows consumers to bypass their cable box to stream movies and shows.Netflix now has the frothy stock price to show for its success. The stock has enjoyed a Google-like rise, nearly quadrupling from its 52-week low in January, and with a market value of nearly $10 billion, Netflix is now worth more than some of the Hollywood studios that license movies to it.
In some ways, the closest parallel as a one-stop digital marketplace is iTunes, the Apple service that has put itself at the center of the digital world and has used that power to demand concessions from its suppliers.
Netflix offers a new source of revenue for the studios — but it also presents a threat to their current revenue streams:
“As the home entertainment industry comes under pressure, they are the only guy standing there in a red shirt writing checks,” said Rich Greenfield, an analyst at BTIG Research. “That makes Netflix really unique right now.”
The biggest check came a few months ago, when the company spent nearly $1 billion to stream movies from three Hollywood studios — Paramount, MGM and Lionsgate.
Steve Swasey, the company’s vice president for communications, said, “As we move from paying U.S. postage to acquiring movies and television episodes from the studios and networks, Netflix can become one of their top customers.”
But digital economics can be much less lucrative to content companies. For example, under the terms of Netflix’s deal with Starz, the pay-TV channel, which allows Netflix to stream movies from Sony and Disney, Netflix pays about 15 cents a month for each subscriber, much less than the $4 to $5 a month that cable and satellite owners pay for access to Starz, according to research by Mr. Greenfield.
For that reason, Netflix is increasingly viewed as a threat by cable companies and movie studios, who are considering a variety of ways to put the brakes on the company’s growth.
The story of China’s productivity revolution starts with the improbable tale of Gavriel Salvendy, a Hungarian-Israeli-American high-school drop-out:
Growing up in a Jewish family during the Nazi occupation, Mr. Salvendy hid in haystacks to escape deportation. Later, after his family abandoned Europe, he became the Israeli weight-lifting champion. Now 72, at well over 6 feet tall and 265 pounds, he still has the presence of a strongman.
For the past nine years, Mr. Salvendy has run the department of industrial engineering at Tsinghua University in Beijing, China’s equivalent of MIT. He is an incongruous presence there — a booming maverick in a hierarchical and generally conformist culture — but he and his team of professors have helped to boost productivity at some Chinese factories by as much as 20% a year.
Mr. Salvendy’s road from weight-lifting to academia involved a series of strange twists. In his youth, he took a job in a factory in London and discovered a natural flair for reorganizing manufacturing systems. A British engineering professor heard of this untutored genius and, despite his lack of formal schooling, recruited him into his graduate program at the University of Birmingham. There Mr. Salvendy earned a master’s degree and a doctorate. Then in 1968 he landed an academic appointment in the U.S.
By 2001, Mr. Salvendy was a grandee of industrial engineering, known for more than 200 publications in journals, and, among friends, for his eccentricities, including an inability to remember the alphabet and a habit of losing his way on short walks. Already past his 60th birthday at that point, his big head framed by a comb-over of orangey brown hair, the professor seemed comfortably established. But then an offer came from Tsinghua, and Mr. Salvendy could not resist.
Mr. Salvendy accepted the offer — at 20 times the standard pay package for a Chinese professor — and the revolution began:
Chinese professors were accustomed to hierarchy; Mr. Salvendy insisted on open-collared informality. He wanted professors to publish in the top peer-reviewed American journals, so they started to write and teach in English. Dividing his time between Beijing and Purdue University in Indiana, Mr. Salvendy quickly built up a department of some 25 professors, most of whom had Ph.D.s from the U.S.
Salvendy’s team from Tsinghua found plenty of low-hanging fruit at the Hua Jian shoe factory:
The factory kept months’ worth of raw materials in its warehouse, wastefully tying up capital. Its tools were designed with obvious inefficiencies.
Within a few months, the Tsinghua delegation boosted Hua Jian’s productivity by 20%. In the West, gains on this scale are almost unthinkable. Productivity in a fast-improving U.S. factory might rise by 5% a year. And as they returned repeatedly to Hua Jian, the engineers conceived a new ambition: to rethink the standard ideas about production-line balancing that were hatched in U.S. factories in the 1950s and 1960s.
At Hua Jian, most workers arrived fresh from the countryside and then quit after a year or so; the level of training was both low and uneven. Because skills were minimal, the tasks had to be split up more, so that each worker was required to master a single simple function. But because skills were uneven, workers at some stations might complete their task in 30 seconds while others took a full minute. The least productive workers would determine the speed of the conveyor belt, while the most productive ones would spend half the shift idle.
This past summer, the Tsinghua team devised a way to balance out the tasks on the production lines to minimize wastage. Hua Jian’s productivity registered a further 20% gain.
Traditionally, economists have fingered poor infrastructure, low levels of education and excessive regulation as the chief impediments to continued growth in productivity. But the technical literature on the subject increasingly points to poor management as a serious obstacle.
Mr. Salvendy’s achievements at Tsinghua suggest that China will increasingly realize its productivity potential. His department has cycled more than 1,500 Chinese managers through its executive training programs, and thousands more are being minted by the 200 industrial engineering programs that have sprung up around China in imitation of Tsinghua. Every year, more of Mr. Salvendy’s disciples fan out across the country, spreading the lessons of lean manufacturing, quality circles and supply-chain management — techniques that have powered industrial success since the time of Henry Ford.
(Hat tip to David Foster.)
One-third of the top-grossing iPhone apps are free — and make their money via in-app purchases:
The ten top-grossing iPhone apps include Restaurant Story (#3), Tap Zoo (#4), NBA Game Time 2010-2011 (#7), Haypi Kingdom (#9) and Kingdoms at War (#8). Restaurant Story, Tap Zoo and Empire Story all launched within the last couple of months, but older games, such as Haypi Kingdom (Jan. 2010) and Kingdoms at War (Sept. 2009), also continue to rake in significant revenue. The free titles are edging out established moneymakers like Plants vs. Zombies, Madden NFL and Doodle Jump.
But it’s not just gaming apps. The New York Road Runners Marathon App, which allowed real-time tracking of the marathon, went for $3.99, and shot to No. 1 Sunday during the race. The NBA Game Time app also hit No. 1 on Nov. 1, with its ability to receive videos, highlights, radio feeds advertising free. Distimo said the largest portion of in-app purchases are in games (3.8 percent) and social networking apps (4.3 percent).
Meanwhile, the iPad, with its generally higher price points for paid apps, isn’t as lucrative for freemium apps compared to paid apps. None of the top 100 apps on the top-grossing list are free though there are free iPad apps with in-app purchases.
The growth of the freemium model on the iPhone shouldn’t be a surprise. Freemium has been popular in Asia for years with pioneers like Nexon leading the way, and has also been the model of choice for Facebook games, helping Zynga achieve a $5.5 billion valuation. IPhone games publisher Ngmoco switched early to a freemium model and hit No. 1 on the top-grossing chart with Eliminate Pro, a shooter game. Now success is becoming much more common for app developers as the pace of freemium app adoption picks up.
Forbes recently mentioned R, the open-source data analysis software, as a name you need to know in 2011, and this prompted a non-IT employee — with a comp-sci background — working in the insurance sector to share his story about managing R adoption for a group of about 30 business analysts with minimal programming background:
Programming in the business world is screwed up beyond all imagination. The more money a given application is responsible for, the more likely it is that it’s a house-of-cards (pun intended for MVS nerds). They’re always mishmashes of COBOL, SAS, DFSORT, and random proprietary languages that have never been the subject of a third-party book, and were sold to a company that was sold to a company that was sold to CA Technologies back in the 1970s. Whatever these languages can’t do is implemented through Escher-painting constructions of Excel references and VBA macros.
So, when people say that R has some issues, I say, “boo f—ing hoo”.
Most businesses suffer from an unnatural separation between IT and the business end. If business people want something programmed, they call IT. They don’t learn Python and do it themselves, because Python is a “programming language”. R is the first real language that business people are being encouraged to learn, because it’s an “analysis environment”. You have no idea how often I have to edit the word “programming” out of my presentations for this reason.
R will win in business because it’s decent, and it’s been around long enough to not be scary to managers. I’d be cautious about drawing comparisons to other languages that have undergone big design changes, because, as far as I can tell, the existence of a decent language in the business world is entirely without precedent.
Real-estate developer Greg O’Connell plans on resurrecting Mount Morris, New York by buying up Main Street:
His intentions became clear in the last year as he took control of more than a third of downtown and began chipping away at the building facades, renovating apartments and signing up tenants. Mr. O’Connell, 68, a big, shambling retired New York City detective, wants nothing less than to bring Mount Morris back from the dead and make it a western New York version of Red Hook, Brooklyn, where he made his name and millions.
He has snatched up 19 buildings, some at tax lien sales for $2,000, and has restored the historic look of a half-dozen storefronts, dusting off the tin ceilings and renovating the apartments on the second floor, where he has installed new bathrooms and oak floors. New businesses — an Italian restaurant, a barber shop, an antiques store and a gourmet food shop — are opening in long-vacant spaces, with leases from Mr. O’Connell that require the businesses to leave their lights on at night, stay open at least one evening a week and change their window displays at least four times a year.
[...]
Mr. O’Connell, who reckons he has spent $1 million on the 19 properties and plans to spend another $1 million on renovations, says he has had a soft spot for the area ever since he attended SUNY Geneseo. He moved to New York City after graduation to join the Police Department, and did not turn his attention to Red Hook until long after he retired, in 1981.He bought waterfront land cheaply from the city and the Port Authority of New York and New Jersey, and set about renovating dormant Civil War-era stone warehouses on the piers, where wild dogs and drug dealers roamed.
Today, his buildings house more than 150 small businesses and Fairway, the high-end grocery that has attracted patrons from all over Brooklyn.
[...]
Rents for Mr. O’Connell’s stores run about $5 a square foot, a paltry sum by New York City standards. Carol Huffman, who rents a store for her antiques and used-furniture business, Treasure Island, said she was also paying $300 a month for the cozy, exposed-brick apartment she rented upstairs from her store.
Tim Cavanaugh interviews Peter Thiel on Facebook, technology, and the higher-education bubble:
Professors Ithai Stern and James Westphal identified seven effective forms of ingratiation most likely to help executives win board seats:
First is to frame flattery as advice seeking — such as “How were you able to close that deal so successfully?”
Second, argue before accepting a manager’s opinion; do not agree immediately.
The researchers also recommend complimenting the manager to friends in his or her social network.
Fourth, frame flattery as likely to make the manager uncomfortable (e.g. “I don’t want to embarrass you but your presentation was really top-notch. Better than most I’ve seen.”).
Next, agree with the manager’s values before agreeing with his or her opinions.
Expressing agreement with those values to people in the manager’s social network is another effective form of ingratiation.
Finally, bring up potentially common affiliations with the manager, such as a religious organization or political party.
Derek Lowe looks at a new Nature Reviews Drug Discovery paper that explains where drugs come from:
First, the raw numbers. In the 1997-2005 period, the 252 drugs break down as follows. Note that some drugs have been split up, with partial credit being assigned to more than one category. Overall, we have:
58% from pharmaceutical companies.
18% from biotech companies..
16% from universities, transferred to biotech.
8% from universities, transferred to pharma.First, the raw numbers. In the 1997-2005 period, the 252 drugs break down as follows. Note that some drugs have been split up, with partial credit being assigned to more than one category.
46% from pharmaceutical companies.
30% from biotech companies.
23% from universities (transferred to either biotech or pharma).And now to innovation — 118 of the drugs during this period were considered to have scientific novelty (46%), and of those:
44% were from pharmaceutical companies.
25% were from biotech companies, and
31% were from universities (transferred to either biotech or pharma).
So why does this happen?
This paper doesn’t put it one word, but I will: money. It turns out that the novel therapies are disproportionately orphan drugs (which makes sense), and although there are a few orphan-drug blockbusters, most of them have lower sales. And indeed, the university-to-pharma drugs tend to have much higher sales than the university-to-biotech ones.
The bigger drug companies are (as you’d expect) evaluating compounds on the basis of their commercial potential, which means what they can add to their existing portfolio. On the other hand, if you have no portfolio (or have only a small one) than any commercial prospect is worth a look. One hundred million dollars a year in revenue would be welcome news for a small company’s first drug to market, whereas Pfizer wouldn’t even notice it.
In Asia and Africa, guerrillas rely on the Toyota Hilux, known to Americans as the Tacoma, to get around. In Mexico, the drug cartels rely on the Ford Lobo, known to Americans as the F-150. Now Mexican sales of the Ford Lobo have dipped — because it’s so popular with the cartels:
Mexican sales of Ford’s Lobo pick-up, popular with drug cartel hitmen, are falling along with those of similar vehicles because motorists fear being mistaken for gangsters by soldiers and police, the head of the U.S. automaker’s local subsidiary said on Thursday.
“It’s a vehicle that is in high demand for committing crimes,” said Gabriel Lopez, the new president of Ford in Mexico. “There’s plenty of space in the pick-up’s cabin for more weapons.”
A slump in sales of the Lobo, part of the F-Series pick-ups made by Ford Motor Co, has helped pushed the company’s total market share in Mexico down to 10.7 percent from 16 percent a few years ago, Lopez told a news conference.
Heavily armed members of drug cartels are known to steal pick-up trucks when they launch attacks on rivals or security forces as part of Mexico’s increasingly bloody war on drugs.
The OkTrends data-miners, who usually analyze free-dating-site OkCupid’s own data, make the admittedly self-serving argument that you should never pay for online dating, based on the for-pay sites’ own data:
- We’ll start with their yearly revenue: $250M in 2009 as reported by the industry analysts at Piper Jaffray and CNBC2.
- Since eHarmony charges users by the month, we’ll divide that big number by 12 and, rounding up, get $21M.
- Now all we need to know is how much the average user pays per month. If we divide that into the $21M they make, we know how many subscribers they have. Their rates run this gamut:
$19.95 per month, for a 12-month subscription
$29.95 per month, for a 6-month subscription
$59.95 per month, for 1 month at a timeFrom those numbers, we can see that they have somewhere between about 350,000 and 1,050,000 subscribers (the lower number supposes everyone is month-to-month, the higher supposes everyone is yearly).
- What’s the exact number? Well, I found this helpful nugget in eHarmony’s advertising materials3: On average, eHarmony obtains 12-15k new users every day and sees full audience turnover every 6.5 months.
- The most charitable way to interpret this last sentence is to assume their average account life is 6.5 months.
- We’re almost there. To get eHarmony’s total subscribers, we divide their $21 million in revenue by the average subscription price. Therefore maximizing total subscribers is just a question of minimizing the average monthly fee. First off, let’s do them the favor of assuming no one pays month-to-month.
- Our remaining dilemma can be expressed mathematically like this: We want to minimize monthly revenue (29.95x + 19.95y) while making sure the average account life works out to 6.5 (6.5x + 12y = 6.5) where x is the [share] of users on the 12-month plan, and y is the [share] of users on the 6-month plan.
- After some dickery with a legal pad we discover, in the best case for eHarmony, 1/13 of their users are on the yearly plan, and the rest subscribe 6 months at a time. Thus the minimum average monthly fee is $29.18. They have at most 719,652 subscribers.
- For the sake of argument, let’s round that up to an even 750,000.
So, having given eHarmony the benefit of the doubt at every turn, let’s look at where that leaves their site: 750,000 subscribers / 20,000,000 profiles ? 96.25% of profiles are dead.
Yes, only 1/30th of the “20 million users” they advertise is someone you can actually talk to. That’s the paradox: the more they pump up their membership totals to convince you to sign up, the worse they look.
Ideas must be judged by how well they fit reality, Ilkka notes. This is xkcd‘s economic argument:
Ilkka continues:
This is, of course, also the very reason why science and engineering graduates earn so much more than humanities graduates. Speaking of the wage gap, the argument in the strip also disproves the claim that women get paid 30% less than men for the same work, for some varying value of 30. If a wage gap this huge really existed, any corporation (who were supposed to be greedy and sociopathic and care only about their profits, remember?) could instantly massively cut their payroll costs by hiring only women. Then again, the real wage gap is nowhere near 30%, especially if we look at the median wage (not as easily swayed by a handful of billionaires), and more importantly, define “equal work” as truly equal work instead of the Marxist sense of “labor theory of value” where a social worker and a systems engineer do “equal” work simply because they both work the same number of hours each day and spent the same number of years in college.
Edward Jay Epstein (The Hollywood Economist) explains why TV is replacing movies as elite entertainment:
Once upon a time, over a generation ago, The television set was commonly called the “boob tube” and looked down on by elites as a purveyors of mind-numbing entertainment. Movie theaters, on the other hand, were con sidered a venue for, if not art, more sophisticated dramas and comedies. Not any more. The multiplexes are now primarily a venue for comic-book inspired action and fantasy movies, whereas television, especially the pay and cable channels, is increasingly becoming a venue for character-driven adult programs, such as The Wire, Mad Men, and Boardwalk Empire.
(That reminds me, should I be watching Boardwalk Empire?)
Alex Tabarrok adds that you can understand what has happened with some microeconomics:
Advertising-supported television wants to maximize the number of eyeballs, but that often means appealing to the lowest common denominator. (This is especially true when there are just three television stations.) The programming that maximizes eyeballs does not necessarily maximize consumer surplus.