Saturday, July 12, 2008

Valedictorians, Class Clowns, and Bloggers

Jonathan Morrow at Copyblogger has an excellent post up exploring one of the great mysteries of blogging--why throwaway posts often draw a better response than carefully crafted essays.

He offers two key insights:
  • Class clowns get more attention than valedictorians
  • Most casual blog traffic is driven by the desire for diversion
All too true...I doubt that people are reading posts like "I Hate San Francisco" and "Geek Girls Are Easy" looking for in-depth philosophy.

Alas, I'm afraid I have too much of the valedictorian in me to change my style, so I'll have to content myself with being an acquired taste of the overly educated.

Here's the key passage from Morrow:

"People read blogs for lots of reasons. They might want to stay connected to a particular person, learn a valuable skill (like copywriting), or keep up with the news. But I’d argue there’s another reason that we as a community are hesitant to admit:

Blogs are a diversion.

Much like how we pay attention to the class clown to avoid boredom, blogs allow us to procrastinate, avoiding all of the other stuff we’re supposed to be doing. If you don’t believe me, look at the number of people who read blogs at work. Aren’t they supposed to be working?

But they’re not. They’re tired of working and feel like they deserve a break, even if it’s only for a few seconds while they catch up on a few blog posts. Besides, they might even learn something.

That still counts as being productive, doesn’t it?

Or so the thinking goes.
If you look at it carefully, it’s really not so different than school. People need a diversion, and we’re the ones that supply it to them."

Now if you'll excuse me, I have to get to work on my next post, "Make Love Like Batman: The 5 Steps To Guarantee Getting Laid Every Night".

Friday, July 11, 2008

The Real Reason Fannie Mae and Freddie Mac Are In Trouble

My old friend Bill Burnham has an outstanding post up explaining just how Fannie Mae and Freddie Mac ended up in their current pickle. I highly recommend checking it out.

"Fannie’s drive to lower underwriting standards had created a pool of mortgage debt with a much higher level of embedded moral hazard risk as well as good old fashioned credit risk. Fannie’s purchases of mortgage securities were so large that it was getting increasingly difficult to feed the golden goose enough food. On top of all that, with hundreds of billions of dollars of assets and liabilities to manage, Fannie's ALM strategies had become more and more complex and some of its bread and butter strategies started to become less profitable as the sheer weight of over half a trillion dollars of debt started to compress spreads (it would seem that even an implicit government guarantee has its limits).

It is no coincidence that the current mortgage crisis started in the so-called sub-prime market as that’s the mortgage market with the lowest credit quality and underwriting standards, however as the mortgage crisis has spread it has become increasingly clear that the traditional conventional, conforming mortgage market, long the domain of Fannie Mae and Freddie Mac, shares many more similarities with the sub-prime market than it would like to admit. While credit and underwriting standards are clearly much higher in the conforming market, they are also undoubtedly much lower than they were 10 or 20 years ago. What’s more the two biggest insurers against loss in that market now happen to also be the biggest owners in that market thanks to 20 years of purchasing mortgages to fund their government subsidized golden gooses. Guaranteeing oneself against risk is not insurance, its an exercise in futility."

The 60-second, 3-Step Guide To Ace Any Job Interview

1) Understand what the company is looking for.

2) Understand what the interviewer is looking for.

3) Focus obsessively on showing how hiring you solves their needs.

Everything else is window dressing.

(For a different perspective, and to read the post by my buddy Paul that inspired this, click here)

I Hate Blog Bling

If all the blog bling providers were eaten by hungry grizzlies, the world would be a better place.

I get incensed every time I try to load a page on TechCrunch--I'm trying to read a simple article...I don't want to have to wait for the page to render. It's almost as bad as Windows startup.

Just today, I tried to comment on Infectious Greed, and I had to switch to browsers to do so since Intense Debate was incompatible with my main browser.

A pox on all their houses!

Thursday, July 10, 2008

Wealth, Race, and Conspicuous Consumption

(image credit: darkmatter)

Being a cheap-ass bastard, I've never understood conspicuous consumption. But what would you expect from someone who graduated from HBS, then bought a Toyota Corolla Value Edition (no power windows, no power locks, no trunk light, no hubcaps)?

According to the latest research, however, conspicuous consumption is more common among the poor. And despite the common racial stereotype of bling-obsessed African-Americans, it's an affliction that affects all races.

"All else being equal (including one’s own income), an individual spent more of his income on visible goods as his racial group’s income went down. African Americans don’t necessarily have different tastes from whites. They’re just poorer, on average. In places where blacks in general have more money, individual black people feel less pressure to prove their wealth.

The same is true for whites. Controlling for differences in housing costs, an increase of $10,000 in the mean income for white households—about like going from South Carolina to California—leads to a 13 percent decrease in spending on visible goods. “Take a $100,000-a-year person in Alabama and a $100,000 person in Boston,” says Hurst. “The $100,000 person in Alabama does more visible consumption than the $100,000 person in Massachusetts.” That’s why a diamond-crusted Rolex screams “nouveau riche.” It signals that the owner came from a poor group and has something to prove.

So this research has implications beyond race. It ought to apply to any peer group perceived by strangers. It suggests why emerging economies like Russia and China, despite their low average incomes, are such hot luxury markets today—and why 20th-century Texas, a relatively poor state, provided so many eager customers for Neiman Marcus. Rich people in poor places want to show off their wealth. And their less affluent counterparts feel pressure to fake it, at least in public. Nobody wants the stigma of being thought poor."

Ironic, isn't it? The perversity of human nature leads those who can least afford it to waste the most money trying to conceal their true condition.

Wednesday, July 09, 2008

Triumph of Markets: Get Paid To Poop

I'm both disgusted and delighted by the fact that the town of Musiri is now giving its residents the opportunity to earn up to $0.14 per month for pooping into a special toilet.

The government wanted to reduce the common practice of defecating on the riverbanks (spreading disease), and the enterprising Marathi Subburaman came up with the idea of incentivizing the low-income residents who were the primary source of free-range feces.

I love the willingness to ignore conventional wisdom ("Let's pass a law against public defecation. Yeah, that will get people to stop!") and attack a problem head on with a monetary incentive.

Not to mention the fact that since about 150 residents are enrolled in the program, the total cost is only $21 per month!

If this works, will we see Sally Struthers on TV, imploring us to give just $0.66 per day to adopt the poop of far-off villages?

(Many thanks to Marginal Revolution for calling attention to the story)

Tuesday, July 08, 2008

Be Decisive, But Don't Rush In

John Wooden is famous for saying, "be quick, but don't hurry." Unfortunately, it's hard to act on this Yoda-like utterance. That's why I've rephrased it (glancing nervously at the sky, hoping to avoid a lightning bolt) in my own words:

Be decisive, but don't rush in.

Sports is one of the most popular metaphors for business, along with war. Famous players and coaches can make a mint off of books and speaking engagements. The same holds true for successful generals.

But here's the funny thing--a lot of ex-athletes and ex-coaches (as well as ex-soldiers) have failed in the business world. Not all of them--just lookat the success of guys like Roger Staubach and Magic Johnson, as well as military men like AG Lafley of Proctor & Gamble--but more than the general population of folks with similar advantages (rich, famous, well-connected).

It's not because athletes or soldiers are unintelligent; many are smart and capable. The problem is that their instincts are ill-suited to business success.

The business world operates on a different time scale than sports or combat. How often do we talk about how fractions of a second separate victory and defeat, or life and death? For athletes and soldiers, reflexes and instant aggressive reaction are the keys to winning.

I've been in the business world a long time, and even during the era of "Internet time" I cannot recall a single instance where a fraction of a second meant the difference between success or failure.

Be decisive, but don't rush in.

It's rare that time frames less than a day matter, and unheard of for time frames of less than an hour.

When something happens, take the time to make the right decision.

This is not an excuse for dithering...being decisive and aggressive is incredibly important to business success. But recognize that whether you respond to that proposal in 1 second or 1 hour generally doesn't impact your options, and that you can come up with a much better decision in an hour than you can in a second.

Rather than thinking of business as sport or war, think of it as chess. Every move must have its purpose. Make the right decision.

Whaddya Know--You *Can't* Buy Happiness

Sometimes I read an article, and I think to myself, "This is a blatant and cynical attempt to use our ugly fascination with wealth and celebrity as linkbait." But when the subject is as ripe as this one, I can't resist.

The New York Times, in its ongoing attempts to paint the past dozen years as a second Gilded Age, offers up today's story of $600/hour therapists that cater to the super-rich.

Apparently, yesterday's Masters of the Universe were made of sterner stuff than today's model. Rather than simply treating any misgivings by collecting expensive cars and plowing through supermodels like a six-pack of Hamms, as was good enough for their fathers, today's hedge fund managers have turned to psychotherapy.

Here's a sampling of problems for your delectation:

Janet L. Wolfe, a Park Avenue psychologist and the co-author of a paper about difficulties in counseling "women of the 'upper' classes," said she considered a rich person's unhappiness or emotional anguish no less serious than anybody else's, but acknowledged how trivial some of her patients' problems could sound.

"One of the things that drew a very wealthy woman to see me was that she was an inadequate tennis player," Dr. Wolfe recalled. "She was very serious about this. She felt that the other wealthy women she played with would think she was an inadequate person. It’s easier for rich patients to take problems like this seriously."

Yeah, I hate it when that happens.

“But this person knows more than you,” he told the elected official, a wealthy businessman who had turned to public service, yearning for a greater challenge, after quickly making a fortune in the private sector.

“But I’m his boss,” the patient insisted.

“The issue wasn’t foreign affairs; it was control,” Dr. Karasu recalled. “That was his attitude to me as well: ‘I know what is best because look at who I am.’ ”

I don't know about you, but that makes me feel pretty good about my government. Our politicians know that their ability to raise money and court special interests makes them better suited to make complex policy decisions than those fools who spent a lifetime studying the subject, and thus can't afford good suits.

"To generalize, it’s not the priority of people who are successful on Wall Street to be intimate,” Dr. Karasu said. “It is their priority to be aggressive. Many will not open themselves up to intimacy even in love affairs. They are slow to trust anyone — even the therapist."

I don't begrudge people money; as a capitalist, I think that people should be free to make as much money as they can (legally) haul in.

What I do object to is stupidity, and spending vast quantities of money in a futile attempt to compensate for a complete lack of self-awareness qualifies in my book. I think they'd be better off spending $20 on a positive psychology book.

At least that way, they'd know the book wasn't soaking them for more expensive therapy sessions. And the book would be backed with a hell of a lot more research!

Monday, July 07, 2008

Harmless Fun: Little Birthday Parties

I almost never post anything personal on this blog, so I thought I'd give y'all a taste of fatherhood. Here's what life is like at a 4-year-old girl's birthday party:

No, we never encouraged her to wear pink. She picked that up all on her own!

P.S. Don't forget to click on the pics for my captions!