Saturday, September 27, 2008

Let Palin be Palin

John McCain's campaign is in disarray. The economic crisis is turning the election into a referendum on the economy...which is McCain's greatest weakness. The disastrous Couric interview looks to have transformed the Sarah Palin VP pick from a blessing to a curse. And he failed to win a much-needed victory in last night's debate. So what can the original maverick do to turn this around?

I'm not going to lie and say that this is easy...hell, I've already called the election for his opponent. But there is one card left that he can play that might give him a long shot at victory, and ironically enough, this advice comes from ultra-liberal scribe Aaron Sorkin:

Let Palin be Palin.

Ever since the Palin pick, McCain's campaign team have Governor Palin sequestered somewhere, and are trying to cram her full of foreign policy knowledge so that she appears "ready" to be president. This is a losing strategy.

First, it's hard to develop a firm handle on foreign policy in a matter of weeks, no matter how intelligent and talented the student. If years of preparation have failed to make a dent in McCain's ignorance of basic economic principles, why does his campaign expect a few weeks to take Palin from novice to master in foreign policy?

Second, by sequestering Palin from the national media, the McCain campaign turned a natural ally into an enemy. Yes, the MSM is largely liberal, but they care more about ratings than ideology. Their natural instinct is to swoon over a telegenic, charismatic candidate with a storybook biography. By hiding Palin, McCain's campaign transformed what should have been a strength into an Achilles heel.

Fortunately, this is America, where decades of Hollywood blockbusters have conditioned us to accept secret twists and improbable reversals. What McCain's campaign has to do now is to pursue the opposite strategy--let Palin be herself, and rush her on to every imaginable media outlet.

Once upon a time, America decided that it liked Sarah Palin...and I can do so again. Her focus should not be on the minor details of foreign policy. Guess what, Americans don't give a damn about foreign policy when they're worried about losing their jobs. She should relentlessly focus on her understanding of the fears and needs of average working Americans. If interviewers try to get her to opine on foreign policy, she should admit her relative inexperience, but emphasize that such issues are of secondary importance to managing the economic crisis.

As I wrote in my last round of advice for the McCain campaign, a perfect answer would be:

"Like most Americans, I haven't had time to memorize the names of the world's leaders. In between governing my state and raising my family, I haven't had the opportunities to travel the world in private jets and have my picture taken on five continents. But I do understand the concerns of hard-working Americans who want to make sure they can keep their jobs and afford their homes."

Of course, based on what I've seen of Steve Schmidt's campaign management to date, I have little confidence that the McCain team will make any of these much-needed adjustments. No wonder Karl Rove keeps insisting that he's not Schmidt's mentor--I'd hate to have my good name dragged down by such an inept protege.

In this campaign at least, it looks like "The Ax" is going to beat "The Bullet."

Friday, September 26, 2008

Line of the Night: McCain, Obama, and the Bailout

"Neither candidate, it seems, has given thought to the fiscal implications of the bailout. Perhaps this is a good thing. If either were to do that, they might wonder if they really want to win."

Ouch. It hurts, because it's true.

I also thought that Crook, an Obama backer, made what is probably the best argument for Obama as president:

"McCain goes by instinct and (yes) experience, Obama more by intellect and calculation. Ideally, one would have all of the above. Forced to choose, I prefer the latter, but can see there are pros and cons on both sides."

Read the whole post here.

US Presidential Debate: A Strategic Victory for Obama

John McCain turned in a relatively strong showing to stem the bleeding after an absolutely disastrous week (The bailout! The Katie Couric/Sarah Palin interview! The debate cancellation fiasco!).

But Barack Obama also performed well, landing the sharpest blows of the night with his series of statements about the Iraq war ("You were wrong").

I'm inclined to call it a narrow win for Obama, though one could also argue for a tie or a narrow McCain victory.

The problem is that McCain couldn't afford a narrow, tactical victory. He needed a clear, strategic victory that changed the current arc of the election, which, thanks to the bailout and an increasingly negative view of Sarah Palin*, is trending very badly for McCain.

Obama is ahead, and can simply run out the clock. Like a football team with a 4th quarter lead, all he has to do is keep grinding out first downs and killing the clock. He doesn't need to score any touchdowns.

McCain, in contrast, needs to gamble on going long to have any chance at victory. And he didn't manage to connect downfield against Obama's prevent defense.

I called the election earlier today, and I've seen nothing that makes me less confident about the eventual accuracy of my prediction.

* I can't bring myself to watch the Couric interview, but the universal judgment seems to be that it was a fiasco. It is a shame to see a promising political career get submarined like this. I tend to agree with one piece I read recently which speculated that Palin, who was previously a strong media performer, is suffering a crisis of confidence from being overcoached. Perhaps they should just let Palin be Palin...it would certainly be better than having her recite talking points.

It's Over: Obama Will Win The Presidency

In the words of the immortal Chick Hearn, this election is in the refrigerator.

The lights are out, the eggs are cooling, and the butter is getting hard.

The Jell-O is jiggling.



Thanks for playing, John McCain, you can now take your place with Dole (no good reason to run), Gore (inexplicably, ran as a populist), and Kerry (Dukakis-esque ineptitude) in the campaign mismanagement Hall of Fame.

Congratulations, President Obama.

InTrade may say that Obama is still at just a 57% chance of victory, but I didn't get my reputation by making the safe calls.

Thursday, September 25, 2008

Startup2Startup: 7 Rules for Open Source Businesses

After bailing a couple of times in the past, I finally made it to one of Dave McClure's Startup2Startup dinners. Very interesting format--what makes it work is the fact that Dave imposes a high quality filter on attendees, and that the usual talk is supplemented by a table discussion.

Tonight's guests were Matt and Toni from Automattic (disclosure: Various of my companies have worked with Automattic before, and I'm a big user of their products...just not for this blog). Here are my quick notes:

Matt's Presentation: 7 rules for Open Source Businesses

1) Lead by example
Code talks, everything else walks. If you want other people to work on an open source project, they'd better see you working even harder.

2) Get off the computer
Relationships matter. Since people are working for free, you have a carrot and no stick. You've got to make it fun, or people won't work.

3) Transparency
Overcommunicate. (Note that Matt admitted that he no longer does this, with his rate of blog posting falling to "once every couple of months")

4) Build consensus (even when you're right)
Matt backed down on his tagging implementation because the community thought another approach was better.

5) You're not right
The crowd is wiser than the individual. Matt realized he was wrong about the tagging issue. Today, neither he nor any Automattic employees gets any more of a vote than the general WordPress community.

6) Centralize the community
WordPress themes didn't spread as fast as plug-ins because artists didn't understand Subversion like coders did. Themes only took off once they allowed themes to be uploaded as zip files.

7) Open source has little to do with the license
Simply saying you're open source doesn't do you much good if the community doesn't want to contribute. When Matt formed Automattic, he put all of the WordPress IP in the open source realm; technically Automattic doesn't have any IP, and anyone in the world can set up shop to compete with them. If Matt acts like a jerk, the community can fork off a new branch. For example, there's one company in Australia that hosts a customized version of WordPress for teachers and students.

Toni's Presentation

Toni's presentation talked about the business side of open source. That is, how do you apply open source principles to running a business? It turns out that Automattic doesn't look like your typical company.

It's virtual.
It has 30 employees, some in the Bay Area, others scattered around the world. They have no physical office, even in the Bay Area, though they meet up in person twice a year. 90% of their communication occurs over IRC.

This has some interesting effects; for example, some developers moved to places they wanted to live, but couldn't do so before because there weren't tech jobs.

Entry into the market is organic.
As Toni put it, he never goes on sales calls. He just asks people who are using WordPress if the company can help them. One day, they simply noticed that the Wall Street Journal had started using WordPress for all their blogs.

It's successful.
  • The WordPress software is downloaded 20,000 times per day
  • There are 5.5 million active installs of WordPress (that Automattic is aware of)
  • There are 4 million blogs hosted on WordPress.com
  • 235 million unique visitors visit a WordPress.com blog each month
  • WordPress.com has about "98%" of its code in common with standard WordPress, and Automattic releases the additional scalability modules, such as HyperDB, as open source software as well
  • Automattic has 800 servers, and one sysadmin, who spends much of his time talking with customers who want to learn how to improve their hosting environments
  • The community has built over 3,000 WordPress plugins
  • Automattic uses Google AdSense on WordPress.com, but in a very targeted way; since Firefox users don't click on ads, they don't bother showing them. Since regular visitors to the blog aren't likely to click, they focus on RSS visitors. Their approach is designed to optimize for the highest possible revenues with the lowest annoyance to users.

Wednesday, September 24, 2008

Shocker: New Study Shows Smug "Environmentalists" Can Be Hypocritical Douchebags

I'm not an anti-environmentalist. Pollution is an economic externality, and we have to make sure that our policies account for it (preferably with a pollution tax or cap and trade, rather than with regulation). But I do find the smug moral superiority of environmentalists like Al "Manbearpig" Gore rather offputting.

Which is why I can't resist passing along this research from Britain's Exeter University:

The research team questioned 200 people on their environmental attitudes and split them into three groups, based on a commitment to green living.

They found the longest and the most frequent flights were taken by those who were most aware of environmental issues, including the threat posed by climate change.

Questioned on their heavy use of flying, one respondent said: "I recycle 100% of what I can, there's not one piece of paper goes in my bin, so that makes me feel less guilty about flying as much as I do."

Barr said "green" lifestyles at home and frequent flying were linked to income, with wealthier people more likely to be engaged in both activities.

He said: "The findings indicate that even those people who appear to be very committed to environmental action find it difficult to transfer these behaviours into more problematic contexts."

In other words, I'm happy to be green as long as it doesn't interfere with my ski trips to St. Moritz. Nice work, a--hole.

Conservation is a wonderful thing, but you gotta walk the walk if you're going to talk the talk.

Success just means you have higher-grade problems.

Success doesn't mean you can take it easy...success just means you have higher-grade problems.

I attended a board meeting today for a startup. The team had made impressive progress in nearly every area. We rightly celebrated their achievement. And then we told them that we wanted them to step up their game. "Hey," was the reasoning, "Now that you've made it this far, let's really work on some stretch goals."

I recently lost 30 pounds as part of a weight loss competition (Ed: Which unbelievably, I did not win). That just meant that I decided I needed to lose another 15 pounds to get down to my college weight.

Ask Warren Buffett if his incredible success makes his life problem free--of course, being called upon to save the financial system is a high-grade problem to have.

And while I'm very much against the hedonic treadmill, I'm glad that success doesn't decrease motivation.

Why Smart People (Generally) Have Less Sex

Absolutely fascinating piece on sex and intelligence on Gene Expression. Bottom line: The very intelligent are more likely to be virgins, and to have less sex when they are married. The cause may be testosterone, which appears to suppress intelligence and increase sex drive.

I guess my raw intelligence must be enough to overcome my overwhelming sex drive. Either that, or castration would make me much smarter. Not that I'm going to try out that theory.

Here are some of the key tidbits:
  • "Depending on the specific age and gender, an adolescent with an IQ of 100 was 1.5 to 5 times more likely to have had intercourse than a teen with a score of 120 or 130. Each additional point of IQ increased the odds of virginity by 2.7% for males and 1.7% for females."

  • "By the age of 19, 80% of US males and 75% of women have lost their virginity, and 87% of college students have had sex. But this number appears to be much lower at elite (i.e. more intelligent) colleges. According to the article, only 56% of Princeton undergraduates have had intercourse. At Harvard 59% of the undergraduates are non-virgins, and at MIT, only a slight majority, 51%, have had intercourse. Further, only 65% of MIT graduate students have had sex."

  • The author even cites the famous Wellesley study, and notes, "This paper provides me with GRE scores by academic discipline, and, in fact, the correlation between the percentage of virgins in each Wellesley major and the average 'Analytical' GRE score associated with the discipline is 0.60."

  • "Not only do intelligent people have a delayed onset of sexual behavior, Half Sigma found that they also have a lower number of premarital sex partners throughout adulthood (18-39). While this is consistent with the above theory that high IQ people are more religious and conservative, this is, of course, not true. Religiousness correlates with lower IQ, and as HS shows in the same post, intelligent people were also more likely to say that premarital sex was not immoral. (Leaving those who did think it was immoral to participate in the bulk of it!)"

  • "Perhaps more revealing, HS, also showed that intelligence correlates with less sex within marriage for the same age range. While still consistent with pregnancy fears and competing interests, lower sex drive seems like a better fit. In fact another revealing finding from the Counterpoint survey was that while 95% of US men and 70% of women masturbate, this number is only 68% of men and 20% of women at MIT!" (Editor's Note: I know people from MIT, and I don't believe this stat for a second.)

  • "Also the idea that more intelligent people are too busy for the opposite sex not just in 7th grade to college, but throughout adulthood and for their own spouse, seems unrealistic. In fact the GSS also shows (PDF) that smarter people spend more time socializing with their friends, indicating their hours aren't spent as uniquely isolated and narrowly channeled as the theory would require."

  • "Half Sigma also showed that the smartest men in the GSS (approx. IQ >120) were also more likely to visit a prostitute. (Hardly indicative of cautiousness) This may suggest intelligent men are less able to find willing sex partners. Are smart men less attractive to women? Perhaps in some ways. For instance HS found that smart men were less likely to be athletic, and this paper shows, unathletic men and women have fewer sex partners. Athletic men, with more willing sexual partners are also less likely to visit a prostitute. Athletic activity gives men more masculine bodies, which are more attractive to women. A more masculine physique correlates with (PDF) an increased number of sex partners."

  • "One team found that salivary testosterone levels were lower for preadolescent boys with IQs above 130 and below 70. (the same two groups most likely to be virgins in adolescence). Another paper suggests that a gene responsible for androgen sensitivity and higher sperm counts may also create a tradeoff for intelligence."

Tuesday, September 23, 2008

BRK + GS: You heard it here first

As I predicted last week, Goldman Sachs turned to Warren Buffett for additional liquidity.

While it's not an outright purchase, Buffett did agree to invest $5 billion in cash...considering Goldman has a market cap of around $50 billion, that's a pretty significant stake.

And Warren got a sweet deal too...perpetual preferred shares that pay a 10% dividend, callable at a 10% premium, plus a 5-year warrant to purchase $5 billion of common at $115/share (Goldman closed at $125, and was up to $138 in after-hours trading).

Of course, as my wife pointed out as I was crowing over my powers of prognostication, "So did you buy any Goldman? Did we make money?"

Damn. Would have been nice to pick up some Goldman calls when it was at $90/share!

Notes from TechStars, Part 2

Brightkite: Location-based social network. Each location has a "placestream" that records all the activity that ever occurred in that location. I like the real-time view of one's friends.

Artist Exploder
: For musicians, turns Facebook into MySpace. Artists can build a FB app in 5 minutes. I get the need for musicians to be able to get on Facebook. I worry about whether the business is sustainable. Sounds like they're off to a good start though.

Occipital: Sci-fi artificial intelligence for photostreams. This is some very cool technology. 1) They use the GPS tags and timestamps on your photos to locate them and group them. 2) They scan your photos and compare them against a landmark database to figure out what's in your photos. 3) They can automatically detect common objects within your photostream. 4) They can even generate 3D walkthroughs based on geometric analysis of your photos.

I have no idea what this technology will be used for, but it is way cool, and the founders are technical rockstars.

App-X: SFDC for private equity and VC. App-X is an SFDC application for fundraising, dealmaking, and portfolio management, including iPhone support. Totally makes sense. Don't understand why they're raising money--I'd bootstrap it. I think they're here to pitch for customers!

Interesting fact: SFDC seats are free for non-profits.

EventVue: Conference-based social network. Attendees tag themselves, say what they're looking for, add in things like blog/LinkedIn/Twitter, and can message each other. The value to conference organizers is simple: When people know who's coming, they'll be more likely to register. You can see which of your LinkedIn contacts are attending, for example. EventVue focuses on conferences, not trade shows--high attendee cost and quality. Wendy Lea, Eric Norlin, and Dave McClure are all on board (nice company!).

I like it, and I can see why conference organizers would adopt the product.

Breaking news from TechStars...Automattic acquires Intense Debate

Just announced at TechStars presentation.

Live Notes from TechStars, Part 1

I'm here on the Microsoft campus in Mountain View, watching the company presentations at TechStars. TechStars is YCombinator for Colorado, with Brad Feld substituting for Paul Graham as the godfather. Here's what I thought of what I saw.

Ignighter
: Social network for group dating. Looks interesting, but since I've been married since 1998, I don't have a lot of expertise to judge.

Devver: Developer tools in the cloud (Ruby testing). Instead of running tests locally, you run them in the cloud instead. Great presentation--they use a side-by-side comparison to show the improved test speed, and keep hammering home the key point: Devver reduces the amount of time your developers wait around for test results by 75%. $100/developer/month. I also like the fact that the founders have known each other since the 6th grade. Looks like a winner to me.

Foodzie: Etsy for food. Founder worked at Fresh Market running their e-commerce program; realized that small artisan producers needed a better place to reach their customers. Foodzie provides a custom-branded store, does the payment processing, and provides the shipping label for the producer to ship the product. $0.60 per transaction, plus 20% commission (very eBay). This disintermediates the traditional retail channel, which takes 60% of the retail price.

Great idea, but what is the differentiator? I know that they are different from Amazon, etc. (no warehouse, let producers share their story, community for foodies) but what about copycats? It helps that the team has experience and relationships already. Met as frosh at Virginia Tech.

Travelfli: Mint for frequent flyer programs. Aggregates information from all your frequent flyer programs, notifies you when awards become available, makes it easy to book.

Focused on elite frequent flyers (17 million; 9 trips/year; responsible for 58% of all flights taken--$298 billion/year). This would be a huge benefit for management consultants...maybe promote with McKinsey, HBS, et al?

The team dressed up as airline pilots. Cute, but didn't add much. They have an experienced team, and has an airline exec on board, which is critical. Is there any threat from airline sites trying to block their screen scrapers? I think it's a great product for niche audience.

Gyminee: Google Analytics + Weight Watchers. Track your fitness, use social networking to keep yourself motivated. App is available online and on the iPhone. User-created workouts with video. Interesting, but it seems like a lot of work for people who aren't motivated to get fit. They are getting good traction; 50,000 users, 800 paying users, 1.3 million PV/month. No advertising to date. Focused on the male market, vs. most such services which are targeted at women.

Intense Debate: Blog comments 2.0. Correctly focus on the publisher benefit: "Measurably increases subscriber engagement and repeat visitors." Toni Schneider just announced the acquisition of Intense Debate. Now if only Matt can make the application run faster....

Line of the Day: "They let a white lady kill a moose...."

The honors go to Chris Rock for this line on Letterman:

"Michael Vick's like, why am I in jail? They let a white lady kill a moose, black man wants to kill a dog, that's a crime..."

Do Sexists Earn More Money?

That's what a recent study purports to show, at least according to attention-grabbing headlines in the mainstream media.

Judge and UF colleague Beth Livingston analyzed information from interviews of nearly 8,000 individuals, ages 14 to 22, at the study's start in 1979. Interviews also took place in 1982, 1987 and 2004. The participants were part of the National Longitudinal Survey of Youth carried out by the U.S. Bureau of Labor Statistics.

To reveal their gender role views, participants indicated how strongly they agreed or disagreed with statements such as: a woman's place is in the home; employment of wives leads to more juvenile delinquency; a man should be the achiever outside the home; and women are much happier if they stay home and take care of children.

Results showed that men who reported having more traditional gender role attitudes made an average of about $8,500 more annually than those who had less traditional attitudes.

Women who held more traditional views about gender roles made an average of $1,500 less annually than the women with more egalitarian views.

So if a married couple holds traditional gender role attitudes, the husband's earning advantage is predicted to be eight times greater than a married couple where the husband and wife have more egalitarian attitudes, the researchers noted.

I'm not buying, at least not fully.

I do think that having traditional gender role attitudes (read: the man makes the money and the woman keeps the house and raises the kids) can help men earn more money. It's a lot easier to get ahead at work if you can work longer hours and never have to expend any of your executive function at home.

But I question the relevance of comparing men who were 14-22 in 1979 to men today. Back in 1979, only filthy hippies, pantywaists, and kept men held today's more enlightened views. Small wonder that such a motley crew would trail the mainstream in earnings.

Today, a belief in equality is mainstream, and the sexists are dinosaurs whose attitudes are likely to hold them back from advancement (though those that don't have any responsibilities at home will still have an advantage over those who do).

Monday, September 22, 2008

Is it okay to lie to get elected?

If, in the words of my buddy TK, "the masses are asses," is it okay to lie to get elected?

If you are the best candidate for the presidency, does the good of the country justify immoral electoral tactics?

Can you really destroy a village to save it?

Discuss.

Extra Credit: Interpret the above as a slam against your preferred candidate; write comment justifying your candidate's recent turn towards negative campaigning and pandering.

My Solution To The Credit Crunch

Alex asks (via comment)

So, what solution would you favor? Admittedly I haven't searched much, but it seems like I've yet to find a well thought out, pragmatic solution.

So far I've seen "It sucks, but may be the only option" and "no bailouts for billionaires".

An excellent question. In my opinion, the best solution is one that is clear about its objectives, and achieves them with the least possible amount of intervention.

If I were asked to structure a bailout deal, here's what I'd do:

1) The bailout would be voluntary; no companies would be forced to participate.

2) The bailout would consist of the ability to sell assets to the government as a buyer of last resort.

3) Each firm could only take advantage of the bailout once--that is, get all the bad stuff out of the way in one fell swoop, rather than dying from a thousand cuts.

4) The government would appoint a bipartisan committee that would include representatives of Wall Street as well as "ordinary citizens" to decide what to bid for each company's package of assets, but no bid could ever exceed 50% of book value.

The effect of this system would be to provide a miserly safety net for Wall Street. It would head off catastrophe, but strongly incent people to avoid availing themselves of government benefits.

As for the calls I hear for a bailout for homeowners, forget it. Those who bought houses beyond their means should not be rewarded for it. Foreclosures are unlikely to crater the financial system in the same way that the failure of leading financial institutions would. Unfair, perhaps, but true. My goal is simple utilitarianism--the greatest good for the greatest number.

The best simple, plain-English explanation of the credit crunch

I've been fielding questions from various friends and relatives about the credit crunch. I guess they see me as some kind of business expert! At any rate, I've been casting about for a good plain-English explanation of the current crisis. Well, I've found it:

Here’s the problem with having lots and lots of debt and no savings, whether in the form of passbook savings or equity in your house: Sooner or later Tuesday comes around when you happen to have had a bad week, and the guy who sold you your hamburger wants his money, but you don’t have it. Once home prices began to decline (or for the most over-leveraged homeowners, simply stopped rising fast enough), therefore, it was a big problem when Tuesday started to come around and lenders and vendors started to ask to get paid for the hamburgers.

Normally this would have been bad for both the homeowner and the guy who wanted to get paid for his hamburger, which might very well be the mortgage lender, but not really a big deal for you or me. (If enough of this occurred, of course, it could lead to a general slowdown and hurt pretty much everybody.) But this impact was magnified by the fact that most of the mortgage lenders sold the right to the payments under the mortgage to third parties. These third parties broke up the rights to the payments from the mortgages into lots of little pieces, combined these pieces with the rights to payments for little pieces of lots of other mortgages, repacked these in “creative” ways, and re-sold them to fourth, fifth and sixth parties. Four, five and six then used these promises as their own equity in order to raise further debt of their own. This would be like you using an IOU from your neighbor as your down payment for a mortgage. So when lots of these over-leveraged homeowners started to miss mortgage payments, parties four, five and six had less money than they expected, and they had problems making their own debt payments if they themselves had taken out enough debt. Oh yeah, many of these debt contracts are in fact between parties four, five and six.

Unfortunately for you and me, parties five and six are the financial institutions where we have our life savings deposited.

That's what many bloggers seem to miss when they complain about bailouts for billionaires...if the financial system goes down, all of us go with it.

Sunday, September 21, 2008

Quote of the Day: "What a wonderful life I've had!"

"What a wonderful life I’ve had! I only wish I’d realized it sooner."

--Colette

Thanks to Gretchen Rubin for the pointer.