All posts by Rian

An economic case for being “green”

Economics, Science & Technology, , ,

If I were a venture capitalist today, I wouldn’t be looking at Internet startups. While the Internet is a sexy market and commands a lot of mindshare, I don’t think that it’s the future. We’re coming to the end of the Information Age. No, the problems uncovered by the Information Age aren’t solved. Search isn’t solved. Scientific computing as a whole is still quite nascent.

But we are gradually working our way out of this Age and into the next: the Renewables Age. Just like we’re still using what was developed during the Industrial Revolution, so too will we continue to use and develop the goods and services developed during this Information Age. So while computing and information management isn’t going anywhere, it will be superseded by bigger economic concerns. Namely, renewable energy.

I firmly believe that a few well-placed, relatively modest investments today can very probably yield absurd returns on investment sometime down the road. It would, however, be a very long-run type of play, and many VCs aren’t prepared to make an investment that won’t pay off within ten years.

With that in mind, I wrote the following as part of a larger essay for an economic history class about a week ago. What is interesting is that when I started the paper, I had no idea where I would end up. Like most Americans, I hadn’t thought about the “greening” of the economy at all. I didn’t have a conclusion in mind when I began. The final result was this, and I think I make a pretty good case for renewables and investment therein. At the very least, I have convinced myself, and I don’t really know how you can argue against it unless you’re talking timespans of less than ten years.

I’ve broken it up into a couple of shorter pieces because it’s simply too long to post as-is. No one would read it. Because it’s unedited, the beginning of each piece might feel a little jarring beginning on day 2.

  1. Part 1: The Little Things
  2. Part 2: Wind and waste heat
  3. Part 3: Petroleum, plastic, and data centers
  4. Part 4: How it will shake out and conclusion

PDF of the whole thing (2,158 words).

Let me know what you think…

On fear, entrepreneurship, and wealth: Felix Dennis

Business, , ,

Felix Dennis who comes from humble beginnings:

An art college drop out, Dennis left home before his sixteenth birthday, and lived in a number of bedsits. Dennis started his career in publishing with Oz magazine, the Sixties counterculture magazine, initially as a successful seller, through which editor Richard Neville realized Dennis’ potential business acumen. Dennis had earlier contributed to a television discussion on the counterculture, which Oz reprinted; the first magazines Dennis sold had been Neville’s only available means of compensating him for using this material.

Oz was prosecuted for obscenity in 1971. All three editors were found guilty of corrupting children, and given jail terms with hard labour, although Dennis himself was given a shorter sentence because the judge, Justice Michael Argyle, considered Dennis “very much less intelligent” — and therefore less responsible — than his co-accused. It was such a cutting remark that it allegedly drove Dennis to create a business empire to prove the judge wrong.

Revenge empire? Interesting, if true.

Some quotes from this article, which somehow manages to be simultaneously annoying, enlightening, and heartening. Probably quite a bit like Dennis himself, if his writing is a window into who he is as a person.

The key, I think, is confidence. Confidence and an unshakeable belief it can be done and that you are the one to do it.

Tunnel vision helps. Being a bit of a shit helps. A thick skin helps. Stamina is crucial, as is a capacity to work so hard that your best friends mock you, your lovers despair and the rest of your acquaintances watch furtively from the sidelines, half in awe and half in contempt.

[…]

If you wish to be rich, however, you must grow a carapace. A mental armour. Not so thick as to blind you to well-constructed criticism and advice, especially from those you trust. Nor so thick as to cut you off from friends and family. But thick enough to shrug off the inevitable sniggering and malicious mockery that will follow your inevitable failures. Not to mention the poorly hidden envy that will accompany your eventual success.

Consider carefully this shortlist:

  • If you are unwilling to fail, sometimes publicly, and even catastrophically, you stand little chance of ever getting rich.
  • If you care what the neighbours think, you will never get rich.
  • If you cannot bear the thought of causing worry to your family, spouse or lover while you plough a lonely, dangerous road rather than taking the safe option of a regular job, you will never get rich.
  • If you have artistic inclinations and fear that the search for wealth will coarsen such talents, you will never get rich. (Because your fear, in this instance, is well justified.)
  • If you are not prepared to work longer hours than almost anyone you know, despite the jibes of colleagues and friends, you are unlikely to get rich.
  • If you cannot convince yourself that you are “good enough” to be rich, you will never get rich.
  • If you cannot treat your quest to get rich as a game, you will never be rich.
  • If you cannot face up to your fear of failure, you will never be rich.

On risk: Ann Winblad

Business,

Ann is the co-founder of Hummer Winblad Venture Partners which opened its doors in 1989. It was the first VC firm to focus exclusively on software. Since that time, 45 of its portfolio companies have been acquired or gone public. She began her career as a systems programmer at the Federal Reserve Bank. In 1976 Ann co-founded Open Systems, Inc., a top selling accounting software company, with a $500 investment. She operated Open Systems profitably for six years and then sold it for over $15 million.

$15 million in 1982 dollars is worth approximately $50 million today using GPD per capita measure, which is the appropriate metric for this kind of thing.

From page 299 of Founders at Work: Stories of Startups’ Early Days:

When I went there, it was the first real business experience I had — although I had had part time jobs. I’d never been in a corporation, and it felt so glamorous to have a cubicle. Minneapolis is a bright city. There’s the Nicollet Mall and you were right downtown in the city. It’s like getting a job in San Francisco.

But it just wasn’t inspiring. No one was chomping at the bit. I actually can’t remember — I knew I was going to quit, but I can’t remember the moment where I thought, “I’ll quit and start a company.” I still felt very empowered, like, “This isn’t this hard a job. This is a big job and I’ve already gotten promoted once in the first 3 months and I know I can earn money. I can always come back to this, so why don’t I break out?” So the three guys from the Federal Reserve that started the company with me — one guy did quit his job and the other two took a year sabbatical, just in case this didn’t work. They held on to the safety ring.

There were not a bunch of people saying, “Start a company, start a company. Let’s do this. Let’s build something from scratch.” It’s so long ago now that I just remember the general feeling that there was very little to risk. I was somehow already fully trained for anything that might confront me. Of course, all that is false; there’s a lot of risk and you are never fully equipped to… you just have to be very adaptable. It turned out that I was adaptable. I didn’t know that until I did that, but it was just a feeling of fearlessness. “What’s the risk? What will I have to lose? I’m sure I can do this.” It was not cockiness, just that moment you feel in your youthfulness that you are sort of empowered to achieve.

I think what does separate some entrepreneurs from other entrepreneurs is we’re not handwringers. We don’t worry about the unknown. We don’t really worry about the risk points ahead. As you get older and you get more experience, you train yourself to think ahead about the risk points versus just to take the next hill. But non-risk-takers and non-entrepreneurs would have really big headaches about this. They would need some level of comfort and safety.

That’s something that we look for in entrepreneurs — that they have the courage to do the job. That they’ll have the ability to judge the business situation. They’ll have the ability to lead people. They’ll have the ability to interact with the marketplace and to really build confidence into strategy.

On risk: Paul Graham

Business,

I’ve been doing a lot of reading lately, and today I was reading “Hiring is obsolete” by Paul Graham. I loved it, and the section on risk really stood out to me, and I’d like to highlight some specific bits.

So what you should invest in depends on how soon you need the money. If you’re young, you should take the riskiest investments you can find.

All this talk about investing may seem very theoretical. Most undergrads probably have more debts than assets. They may feel they have nothing to invest. But that’s not true: they have their time to invest, and the same rule about risk applies there. Your early twenties are exactly the time to take insane career risks.

The reason risk is always proportionate to reward is that market forces make it so. People will pay extra for stability. So if you choose stability– by buying bonds, or by going to work for a big company– it’s going to cost you.

Riskier career moves pay better on average, because there is less demand for them. Extreme choices like starting a startup are so frightening that most people won’t even try. So you don’t end up having as much competition as you might expect, considering the prizes at stake.

…

But it’s not necessarily a mistake to try something that has a 90% chance of failing, if you can afford the risk. Failing at 40, when you have a family to support, could be serious. But if you fail at 22, so what? If you try to start a startup right out of college and it tanks, you’ll end up at 23 broke and a lot smarter. Which, if you think about it, is roughly what you hope to get from a graduate program.

Even if your startup does tank, you won’t harm your prospects with employers. To make sure I asked some friends who work for big companies. I asked managers at Yahoo, Google, Amazon, Cisco and Microsoft how they’d feel about two candidates, both 24, with equal ability, one who’d tried to start a startup that tanked, and another who’d spent the two years since college working as a developer at a big company. Every one responded that they’d prefer the guy who’d tried to start his own company. Zod Nazem, who’s in charge of engineering at Yahoo, said:

I actually put more value on the guy with the failed startup. And you can quote me!

So there you have it. Want to get hired by Yahoo? Start your own company.

The entire essay is absolutely worth reading for anyone interested in starting their own business.

Benjamin Franklin on vaccination

Culture, Science & Technology, , , ,

Ben Franklin is one of my all-time favorite historical figures; there are few people who have been universally successful in all they’ve done: business, politics, science, and humanitarianism. Franklin was one of these, and he’s left a guidebook for those who wish to follow in his footsteps. (And really, how can you beat $2.50 for a brand-new book?)

I’ve been reading through it lately, and while it’s easy reading, it’s so chock-full of wisdom that I find it slow going. Lunchtimes and evenings find me with pencil in hand, underlining and annotating the bits that especially speak to me, and there are many.

I came across this paragraph, and I was astonished. With the anti-vaccination crazies gaining influence and mindshare, this earthy bit of common sense was a breath of fresh air, written in the 1700s by someone who knew a world without vaccines, and saw the devastation caused by these diseases — smallpox, polio, and many others — first-hand.

In 1736, I lost one of my sons, a fine boy of four years old, by smallpox, taken in the common way. I long regretted him bitterly and still regret that I had not given it to him by inoculation. This I mention for the sake of parents who omit that operation on the supposition that they should never forgive themselves if a child died under it, my example showing that the regret may be the same either way, and therefore that the safer should be chosen.

Simple and profound. Alas, I don’t think the anti-vaccination types will take his advice to heart, and we are all the poorer for it.

Custom Word medical spell check dictionary updated

Pharmacy, , ,

I have updated MeDic with a new version. 0.0.2 brings the dictionary from 41,009 words up to 66,239.

I have erred always on the side of accuracy, opting to omit a word when I couldn’t be sure that it was correct. Users have submitted their own additions, and I have folded them in, after verifying their accuracy to the best of my ability. Many of the words are quite obscure, as most of you can imagine.

Most recently, someone from Australia has created an Australian localization for the work, and I have added that to the page as well.

I think this is a better option for students and anyone else that wants a pretty comprehensive spell check word list, and doesn’t want to pay Stedman’s $100 to get one. This is also much more comprehensive than those $15 shareware dictionaries that you see floating around — many of which have spelling errors. (I know, I’ve looked at most of them.)

MeDic is, of course, freeware. And always will be. It’s also available for OpenOffice.org, for those of you who don’t use Word.

If you think it’s useful to you or someone you know, please bookmark it, Stumble it, or even throw me a link to the MeDic main page:

A history of debt in America

Culture, Economics,

While going through my RSS reader this morning, I came across one of JD’s daily links posts, and one of them was to A History of Debt in America. It’s quite a long article, but well worth reading. Unfortunately for people like me, reading large quantities of text on a screen gets to be painful after a few minutes.

I whipped up a quick PDF of all of the pages, and Tom, the author of the article, has graciously allowed me to post it here.

It’s 21 pages long, and will take you a little while to read it, but it’s worth the time.

PDF link.

If you enjoyed this, you may enjoy my post on how paying off debt is like folding laundry — a behavioral, as opposed to mathematical approach to paying off debt.

A unanimous triumph of common sense

Pharmacy, ,

Two posts ago:

Arthur Firstenberg says he is highly sensitive to certain types of electric fields, including wireless Internet and cell phones.

“I get chest pain and it doesn’t go away right away,” he said.

Firstenberg and dozens of other electro-sensitive people in Santa Fe claim that putting up Wi-Fi in public places is a violation of the Americans with Disabilities Act.

Result:

The City Council has unanimously approved a plan to provide wireless Internet service in libraries and other city buildings, over the objections of those who say they are electrically sensitive.

That doesn’t mean the legal wrangling is over, however.

Julie Tambourine, an advocate for the disabled and homeless, said after Wednesday’s meeting that the legal analysis was flawed, because it didn’t take into account those with diabetes, seizure disorders, respiratory ailments and other conditions that can be adversely affected by microwave radiation.

These idiots need to read up on the electromagnetic spectrum. Unless they’re going to sit in a lead box all day long with no visible light on a carefully controlled diet, they’re going to be exposed to all kinds of EM radiation, including gamma rays throughout their lifetimes. And even inside that theoretical lead box, there’s no guarantee of being radiation-free.

For further comic value, these people’s minds would explode if they had any idea of how many radio waves pass through their bodies each second. Theoretically, for physiologic purposes, 802.11b+g wi-fi signals (0.124-0.121m wavelength depending on channel) are no different than FM radio signals (~3m wavelength). Common sense would tell you that that’s pretty insignificant.

But since common sense is often wrong, we look to the actual evidence. And the evidence in favor of wifi radiation sensitivity just isn’t there.

Hillary’s superficial plan to “fix” gas prices

Economics, Politics, , , , , ,

It seems that Hillary Clinton wants to tax big oil, but only on their record profits. She would do this to make up the revenue lost while putting the federal gas tax on hold for a while. While I’m sure this is more of a ploy to pander to voters due to her faltering campaign, the whole thing is incredibly superficial for a couple of reasons.

The first is that taxing big oil is only going to shift the cost to consumers. While you might see a temporary drop in prices at the pump, businesses typically shift such burdens on to the consumers. Doing this only makes sense for their bottom line. Beyond this, it will cause an increase in demand, causing prices to rise naturally. But then, Hillary apparently doesn’t care what economists think.

Secondly, there’s the temporary nature of the repeal. Reinstating the tax after it’s been rolled back for a while will be unpopular on an epic scale, but I suppose Hillary is mostly going for a short-term boost to get her through to the November elections. Naturally, I’ve heard nothing about rolling back the tax on big oil’s profits once the federal gas tax would go back into effect. That means that the consumer is going to be doubly hurt in the end anyway.

This leaves big oil’s profits right where they’re at now. Taxing big oil’s profits isn’t the answer — and neither is breaking up the oil monopolies. (Though the latter might not be a bad first step.)

The real problem is that demand has exceeded supply. This is a result of the American way of life. We depend on oil for literally everything: we are a spread out nation of roads where a child’s first thought of freedom = getting their drivers’ license, and whose development has, for generations, been driven by cheap oil. Every aspect of our lives is controlled by the road: everything from our food to our consumer goods arrives via truck. Auto companies have been complicit as well, and in some cases actively undermined attempts to create efficient mass transit systems that were a direct threat to their business model.

This isn’t a problem that can be fixed overnight, nor is it a problem that will be cheap or easy to fix. Comparisons to European nations and Japan with their comprehensive mass transit systems are inherently flawed because of the US’s relatively low population density and sheer size of our country. While effective, efficient mass transit is certainly the answer in urban and larger suburban areas, those systems do not scale well in more rural areas.

In that respect, we will always be a nation of cars — or other personal transport devices[1]. The mantra that we need freedom from foreign oil is trite, and it misses part of the point: we need freedom from petroleum in general, inasmuch as that is economically and techonologically possible. We will always be somewhat dependent on combustible fuels so long as the internal combustion engine is our primary mode of getting from Point A to Point B. (And really, aside from bicycles and our feet, there’s nothing out there that’s as efficient from top to bottom as a modern internal combustion engine.)

So in that respect, even if Hillary’s plan had a prayer of a chance of long-term success, and if she had any ability to get it passed — which she doesn’t because it’s an idea for this summer, not after January — it would be like prescribing a pain med instead of removing the thorn from one’s foot.

The proposal is just astonishingly dumb on every conceivable level.

I do have some related thoughts about the next ten years…

1) We’ll see a small resurgence of the railroad industry. Rail travel is more efficient than air travel, and solves some of the mass transport problems presented by our spread-out nation. This will resemble the current hub-and-spoke airline system in the short term. Business travelers won’t mind taking the train as much due to the ubiquity of wireless internet access and the fact that you can use cellphones while on a train. Trains don’t have to be slow, either. So while you won’t be taking the train from NYC to LA for a one-day affair, you might well take it from Boston to Washington DC for the same.

2) More effective car-pooling systems. Thanks to the Internet, it’s easier to more effectively carpool with folks headed in your direction. This could be supplemented by mass transit systems — buses in the beginning, and trains later on — where people gather at smaller, de-centralized staging areas for a trip into the city. Many suburban areas already have these systems, but there are many, many larger cities that don’t.

3) More and better research into biofuels as a replacement for traditional petroleum. This goes beyond corn-based ethanol which was a failure of epic proportions, as it resulted in increased food prices and is energy-intensive to produce. The graphic below (click for larger) demonstrates some of the more promising alternatives, particularly algae and switch grass.

biofuels comparison chart
(Preserved against link-rot from this article.)

I think America is getting to the point where they’re ready to think about letting go of their precious four-wheeled transportation. Drive by a used car dealership, and you’re likely to see quite a few gas guzzlers sitting on the lot. This alone is anecdotal evidence that the PED of gasoline isn’t zero. A more formal study finds that when the price of fuel goes up and stays up by 10%, the process of adjustment is dynamic and far reaching:

  • The volume of traffic will go down by roundly 1% within about a year, building up to a reduction of about 3% in the longer run (about five years or so).
  • The volume of fuel consumed will go down by about 2.5% within a year, building up to a reduction of over 6% in the longer run.

The reason why fuel consumed goes down by more than the volume of traffic, is probably because price increases trigger more efficient use of fuel (by a combination of technical improvements to vehicles, more fuel conserving driving styles, and driving in easier traffic conditions). So further consequences of the same price increase are:

  • Efficiency of use of fuel goes up by about 1.5% within a year, and around 4% in the longer run.
  • The total number of vehicles owned goes down by less than 1% in the short run, and 2.5% in the longer run.

Prices have certainly gone up by more than 10% in the last 12 months, and the snowballing effect of this phenomenon is that many people of my generation have gotten rid of their cars where and whenever possible, and instead opt for healthier, less expensive modes of transportation: walking or biking. When they need to travel a longer distance, they rent a Zipcar.

I certainly would if it were realistic.

[1] I could see motorbikes becoming more popular, as they are in the UK, as gasoline prices continue to rise. For Americans who have not been to the UK, it is not uncommon to see motorcycles and scooters out and about, even in the rain.