Category Archives: Science & Technology

Part 4: How it will shake out and conclusion

Economics, Science & Technology, , ,

This is part one of a four part series:

  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).

There are other ideas floating around, that might be of interest to private individuals, too. Wind turbines floating on neodymium magnets resulting in ultra-low coefficients of friction that generate electricity spring to mind. Even the smallest gust of wind could offset electricity costs for your home. Applied on a larger scale, these turbines could be installed next to stretches of highway where the wind created by vehicles speeding by generates power for the grid. The ideas get progressively more sci-fi and less based in reality, but all have research and/or working prototypes to support them.

Ultimately, I expect a handful of green power generation strategies to become prominent, based largely on a region’s geographical needs. A landlocked country has little use for generators that harness tidal forces, and a country without large amounts of sunlight will have little use for a solar grid and might be better off with a network of small, personal, near-frictionless turbines to produce a great deal of power. This will have the secondary effect of changing power companies’ dynamics. Private individuals and businesses may end up selling a significant fraction of the electricity that they generate back to the power company, as already happens on a tiny scale.

Rather than being a sunk, overhead cost, electricity could provide a smaller, secondary source of income in some cases. This is good for the overall health and robustness of the power grid itself. Rather than a centralized source vulnerable to operator error, equipment failure, or even an unlikely terrorist attack providing us with all of our power, a grid of consumers becomes a grid of hybrid supplier-producers. This has an effect on the dynamic of the producer-consumer relationship, too. The consumer has more power because they’re doing more than just consuming. They become more of a partner in the relationship.

So while no single master stroke of technology is going to save the world from global climate change, or rescue our economy from its dependence on foreign oil, there are a number of initiatives that, in aggregate, are having a real, profound effect on our economy. That effect will only become more pronounced as time goes on, and these technologies that are mostly in the lab make their way slowly into the real world. It’s important to note that while being green is trendy and gets a lot of press and has considerable mindshare, particularly among the youth, it’s not this trendiness or mindshare that’s going to create lasting change. It has certainly sparked social change, which is good, but as always, it is the bottom line that will be the driver for bigger and better things. It will be economic forces that determine whether we continue our destructive tendencies or move towards a more renewable future. My money is on green, because that’s the direction the invisible hand is pushing us in. Green is, quite simply, how we do more with less, and create new markets while we make our way in that direction.

Part 3: Petroleum, plastic and data centers

Economics, Science & Technology, , ,

This is part one of a four part series:

  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).

Plastic, another petroleum product, is a problem in the making as well both in terms of making more and recycling what we’ve already used. Recently, a 16 year old Canadian high school student conducted a series of experiments designed to isolate organisms that might degrade plastic bags. After collecting soil samples at a local landfill, he spent 3 months culturing them solely on a diet of polyethylene film strips. He narrowed it down to four types of bacteria, and grew each on agar plates, and discovered a new species of bacteria that eats plastic bags more ravenously than Pseudomonas, the only known plastic eater to that point. Burd found that only 0.01% of the microbes’ body mass was released as carbon dioxide, allaying fears that his technique, if implemented on a wide scale could increase the amount of greenhouse gases released during recycling. It’s estimated that these plastic bags will take between 50 and 1,000 years to break down on their own in a landfill. And microbes have been shown to do the opposite as well: taking toxic styrene and turning it into a biodegradable plastic called PHA. Both processes have economic implications, and each seems to be another tiny nail in Malthus’ coffin.

There are other initiatives being worked on, primarily in academia, that will have huge implications for our business and environmental future. Generators that sit in the ocean or river and harness the power of tidal forces. There are some problems associated with this method of electrical production, such as how to store this energy meaningfully, but these problems have analogs with other types of green energy production, like wind power. With enough interest, investment, and work, they’ll be solved.

Other ideas surrounding the harnessing of the oceans include thermal energy converters. It’s thought that the amount of solar energy captured by the ocean is equivalent to 250 billion barrels of oil per day. That means that each day, the world’s oceans capture the energy equivalent of 33 years worth of the US’s total oil consumption. Obviously capturing the entirety of that energy is impossible and undesirable, but any company that comes up with a way of efficiently harnessing just a tiny fraction of it stands to make billions. Quite likely they will find themselves in an oligopolistic or even monopolistic position, too, as the barriers to entry will be huge, and the absolutely large minimum efficient scale of production will prevent new firms from entering.

“Green” thinking is also driving microscale R&D. Electronics companies are looking at solid state storage as a means of cutting down on power consumption in the datacenter. As more and more of our computing and storage moves to the “cloud”, more datacenters are required. Datacenters are expensive to cool, and it’s quite difficult to achieve an inexpensive, efficient, useful power density as well. That means that a large scale reduction in the amount of electricity consumed by individual server components will mean that useful power densities can be lower, or more servers can be crammed into a smaller space.

The largest consumers of electricity in the server are the pieces that move, specifically the hard drive. This movement has the secondary effect of creating waste heat which must be compensated for with adequate cooling lest the entire datacenter overheat. So even a small decrease in power consumption in that one tiny segment of that one specialized market will have domino effect across many secondary industries. It’s similar in scale to the standby power dilemma mentioned above. And when you see companies like Microsoft, Amazon, and Google moving close to hydroelectric dams to build their datacenters, or moving to Siberia to save on cooling costs, you know these concerns aren’t pie in the sky. There are real economic forces at work that are more powerful than the constraining forces associated with having to build fiber infrastructure out to these remote areas.

Part 2: Wind and waste heat

Economics, Science & Technology, , ,

This is part two of a four part series:

  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).

Being green makes good business sense, much of the time. While you obviously wouldn’t want a hospital run directly on solar power, it does make sense to build solar arrays in the right places, and wind farms in perpetually windy areas, and then hook these up to the existing power grid. In that context, running the hospital on solar power doesn’t seem like such a bad idea anymore. In medicine, we manage chronic pain by coupling a long-acting opioid with a short-acting, rapid-onset opioid. The long-acting agent is used to control baseline pain, and you never use short-acting opioids to manage baseline pain because of the greater duel risks of overdose and dependence. These agents are used to breakthrough needs only. In power generation, the metaphor is analogous: renewable resources provide your baseline power, and your coal- and oil-based electricity kicks in only when necessary. Thankfully, exothermic reactions lend themselves to relatively rapid cycling and are therefore suited to “as-needed” use.

Texas billionaire oilman T. Boone Pickens is seeing why it’s valuable to invest in renewable sources of energy. Not only is it good for national security, but it makes good business sense to invest in renewables. With any non-infinite resource, the market is subject to the forces of supply and demand. When supply drops, the price goes up. If demand increases because India and China need their share of the world’s petroleum supplies, prices for the US consumer go up, as well as the ancillary costs associated with anything that needs to be transported. As the amount of available petroleum decreases — as it’s steadily and inevitably doing — these forces increasingly affect the way you operate your business. For a company like National Grid, eliminating the twin problems of scarcity and competitive bidding are good for the bottom line.

Civil and structural engineers and architects are hopping on the green bandwagon as well. The first of them jumped on because it was hip and different, and enabled them to leverage a different kind of brand image to achieve financial success. Lately, though, buildings that are built to be more energy efficient make economic sense. In Sweden, Jernhusen AB is harnessing the body heat of thousands of commuters that pass through Stockholm’s main railway station. The firm believes that the system being designed can provide about 15% of the energy needed to heat the 13-story building being built next to Central Station. This system isn’t even particularly radical. It’s going to cost about $47,000, and will only require a few pumps and some pipes, since the ventilation system is already in place. I think it’s a safe bet that a 15% annual energy savings for a 13-story building will more than cover even the short-term costs associated with it, particularly in a city only ~1,000 miles from the Arctic Circle like Stockholm.

Since every mechanical system wastes energy in the form of heat, recycling waste heat is also becoming more popular. Estimates of the amount of energy lost in the form of heat — expressed in terms of electricity — from smokestacks in the US alone is at 50,000 megawatts, more than half of what this country generates from its aging nuclear fleet. Initiatives to turn this waste heat directly into electricity are already underway, and can be built on small scales that make it worthwhile for these industrial companies to invest in.

Part 1: The Little Things

Economics, Science & Technology,

This is part one of a four part series:

  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).

Being “green” is a badge worn with honor by companies and individuals alike. Just like consuming organic foods, it’s as much a yuppie status symbol as it is a lifestyle choice. At least it used to be. Venture capitalists are on the lookout for interesting green companies these days because there’s lots of money to be made by reducing energy consumption, cutting back greenhouse gas emissions, and generally doing more with less. From a very high, forward-thinking level, it seems bizarre that we haven’t been doing this right along: if economics is the study of human behavior in a world where there are limited resources but infinite demand, it makes sense that we would want to do more with less.

If it requires 50% less electricity to run an efficient datacenter, and 50% less gasoline to get from point A to point B, then that means we can house twice as many servers and end up with the same electric bill, and travel twice as far without burning any more gasoline. So every halving of the resources required to do something results in a net doubling of whatever you can do with that resource, all things being equal.

This model is easily applied to things like fuel efficiency and other commodity consumables, where small increases in efficiency result in immediate, apparent cost savings to an otherwise ignorant consumer. However there are other, less intuitive places to look where small savings aggregated across millions of people results in real macroeconomic benefit.

For example, there is a push right now to get rid of or improve “standby” modes for most electronic devices. This is what is widely considered the “off” position for most things, but in reality is actually the low-power mode wherein a device is not performing its primary function. The clock on the VCR and the microwave. The “breathing” the LED in your Macintosh computer does while it’s asleep. Your laser printer while it’s on standby waiting for a print job. Same for your fax machine.

A single device can suck up as much as 30W of electricity every 24 hours. Multiplied across all of the consumer electronics in your home, multiplied by the number of households in the United States, and you quickly realize that this is a boatload of wasted electricity. In fact, in the lifetime of a single electronic device, this savings is estimated to be $10. This is one of the reasons that President GW Bush directed the entire federal government to buy low-standby-power devices back in July of 2001 (PDF). Uncle Sam buys a lot of electronics. That means tens and possibly hundreds of millions of taxpayer dollars saved by one superficially insignificant initiative.

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…

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.

Quietly influential

Business, Science & Technology, , ,

I chuckle every now and again when I see the MSM reporting on blogs. The usual suspects almost always turn up: TechCrunch, the HuffPo, GigaOM, BuzzMachine — as well as a smattering of the hot blogs du jour. This time it was Steve Rubel’s MicroPersuasion and Passive Aggressive Notes.

I must confess some incredulity, because I have never seen Ars Technica mentioned in a story that focuses specifically on blogs. This despite being relegated to merely a “blog” (albeit acknowledged as an influential one) most of the time by the mainstream media when they reference a story that Ars breaks.

Now, the HuffPo is a huge website. Probably a little bigger than Ars with 5.7M unique readers per month. TechCrunch is markedly smaller, and GigaOM is smaller still (1.37M pageviews/month or so).

It makes me wonder why these particular blogs are chosen. Is it because the stories about blogs are by their nature more noise than substance? Indeed these stories are often widely hyped when they hit and will make their way around the ‘sphere several times before disappearing like yesterday’s newspaper. (The blogosphere echochamber at its finest.) Ars seems to be anti-hype most of the time. It’s been known to take a somewhat dim and sometimes even contrarian view to what’s hot in the blogosphere this week — “The Cloud!“, death by blogging! — if indeed what the blogosphere is focusing on this week is even worth talking about at all. (Usually it’s not.)

So here are some sites that Business Week may want to think about including, because these sites are the real movers and shakers in the Internet publishing world. This list is by no means comprehensive, and I make no comments about their content or quality of the sites, only their size. This list isn’t sorted in any meaningful way:

For comparison, TechCrunch sits at ~7.5M pageviews per month, and Ars Technica sits at ~30M.

On the Condé Nast Ars Technica acquisition

Business, Science & Technology, , ,

So the hot news in the blogosphere this week has been the acquisition of Ars Technica by Condé Nast. TechCrunch broke the story on Friday, but there was no official word from Ars until yesterday due to an embargo. Anyway, in that time, there has been quite a lot of discussion on the valuation of “blogs” — or the overvaluation thereof, as the thinking in the blogosphere seems to be.

Silicon Valley Insider:

Ars’ 8-person news operation will be folded into Wired Digital, which is run by CondéNet.

This is almost, but not quite, correct. Ars will remain its own brand, and will retain its own staffing. Ars will not be “folded” into Wired, though they will continue to exist under the Wired Digital umbrella (which is turn is owned by CN). In a very real sense, they will be friendly competitors. This is not unlike two newspapers owned by a larger parent company competing with one another in overlapping geographic territories. (A common practice in traditional print media.)

I guess I’m a little bit stuck on calling Ars a “blog”, however. Ars is a news site with real, investigative reporting and thoughtful analysis, longer, multi-page in-depth investigative and explanatory pieces and guides, and has been around since before people had even heard the word “blog”. If anything Ars is a news site and a focused blog network all rolled into a single brand. (As opposed to the old Weblogs, Inc. model where each blog was separate and had its own flavor.) The journals section of the site combines six different journals under one umbrella — each of which has a large enough audience on their own to be considered very successful. Particularly Infinite Loop and Opposable Thumbs.

On the $25 million

There was a collective gasp in the blogosphere over the price commanded by Ars. Frankly, I’m not really sure why. When I first heard the number, I thought it was low, given the amount of traffic that Ars gets, which is different than the traffic that sources that measure such things think.

The usual suspects like Comscore and Alexa are referenced as though they’re absolutes. The truth is that Alexa is horribly inaccurate, as anyone who runs a website with a tech-savvy audience will tell you. (Who do you know that uses the Alexa toolbar?) Nonetheless, these same sites will turn around and quote the stats as though they’re somehow magically more meaningful for another web property. It doesn’t really make a lot of sense if you stop and think about it.

Maroon Ventures:

Some key stats:

  • Purchase Price $25,000,000
  • Monthly Unique Visitors: 1,500,000
  • Monthly Pageviews: 4,000,000

Okay, let’s have some fun. Let’s assume that this acquisition helps set the market price for the internet blog pure play. What it this acquisition telling us?

  • Value of the Monthly Unique User: $16.65/unique
  • Value of the Monthly Pageview: $6.25/pageview

Unfortunately, these numbers aren’t correct, no matter what TechCrunch would have you believe, but to be fair to Chris, Ken hadn’t posted the official word until yesterday. As far as TechCrunch is concerned, more diligent reporting would have led to Federated Media’s information page on Ars for potential advertisers — so they should know better.

Here’s the official word on the acquisition, straight from the horse’s mouth:

We have an amazing community, both in terms of its size (5+ million readers, as tracked privately by Quantcast) and in terms of its contributions (12 million posts, thousands upon thousands of news tips, recommendations, and corrections). Our community is unparalleled, in my not so humble opinion, and it’s a big reason why this year we’re serving more than 30 million page views each month. (I’ve seen lots of folks citing Comscore numbers… they’re horribly, horribly wrong).

Now you might think that the $25 million isn’t so unreasonable. Taking a look at the old Federated Media advertising numbers[1], you can see that Ars commands about $38 per thousand pageviews.

30,000,000 / 1,000 * $38 * 3 ads on each page = $3,420,000

That’s $3.42M per month in advertising revenue that Ars is generating. Yes, FM takes a cut of that, but Ars has other, smaller revenue sources, such as affiliate referal dollars and Ars-branded merchandise for sale, so we’ll call the difference a wash.

Now that’s revenue, not profit. There’re 8 full-time employees, as well as webhosting for the main site, the cost of the CDN (they’ve been using CacheFly to serve all static content), the cost of the discussion forums (currently a hosted solution: groupee’s eve product) as well as several ICs that do web development, CMS development and other technical work for them.

A typical business acquisition is 3-5x annual profit[2], so that means the four main founders (Ken, Jon, Ben Rota, and Panders) were taking in an annual profit of ~$6.25M per year split however they were splitting it.

Final thoughts

I often wonder why such blatantly incorrect numbers are often bandied about when the truth is usually freely available if you look for it. It’s no secret just how many pageviews Ars has been doing: they’re posted on Federated Media’s website for anyone who wants to advertise there. And you can bet your shiny metal ass that they’re accurate — and more likely (*gasp*) conservative. When millions of dollars are changing hands on a monthly basis, there are very accurate accounting measures going to be built in so buyers can have faith that they’re getting what they pay for.

And for those wondering whether Ars is or is not going to jump the shark, I have two thoughts for you:

First, this isn’t the first time Ars Technica has been part of an online network. Early readers of Ars may recall that Ars was once part of the now-defunct Maximum PC network. Then, as now, the larger and more focused you are, the more you command in CPM rates.

Second, having known Jon and Ken since 2000, I can say with a great deal of personal conviction that Ars isn’t going anywhere, and that thing most certainly will change, but they will change because that’s what the guys steering the ship (Ken, Jon, and possibly Eric) want — not because it’s what Condé Nast wants. So if you see something change in the future, you can feel free to continue pointing the finger at the founders, not at Condé Nast. ;)

Footnotes:
[1]I’ve linked to a screenshot because the original FM link will inevitably disappear in the near future as Ars Technica will no longer be outsourcing their advertising to Federated Media.

[2]This will obviously change depending on your industry.

Vanity license plate density

Science & Technology, , ,

I spend most of my time in northern Massachusetts and Southern New Hampshire. There are an inordinate number of vanity plates around here, particularly from the State of NH. I have one, actually. They’re cheap, and they’re easy to get. (You can order them online.) I’ve heard some people — particularly people from other regions of the country — make fun of people with vanity plates in NH. They’ve never seen so many in one place.

There’s a reason for that. New Hampshire has a relatively small population compared to Massachusetts and New York — 1.24 million, putting it at 41st in the Union — and where do most of these people live?*

In Southern New Hampshire. The northern regions are relatively unpopulated.

The Oxford English Dictionary places the number of words in the English language at ~500,000. Some of these are longer than 7 letters, but they can be abbreviated or shortened. Words can also be spelled by substituting numbers for letters as well. (l33t-speak) Zeroes cannot be used because they can be confused with the letter O.

So for simplicity’s sake, we’ll say there are 500,000 desirable letter-number combinations. (There are actually closer to 6.1 billion — 25^7 — but only a tiny fraction are desirable.) Figure that the 80% of the population is concentrated in the southernmost 50 miles of the state, and it’s easy to see why you see so many vanity plates in southern New Hampshire. It’s not that the absolute number of plates is higher than, say, New York, it’s just that they’re all in one place.

*For reference, Essex and Suffolk county (Boston and Metro North) have a combined population of ~1.3 million people.