Tag Archives: futurism

Should the Best and Brightest Go Into Finance

http://priceonomics.com/should-the-best-and-brightest-go-into-finance/

Great question and interesting read. While there is a lot of data in this article, I can’t fathom exactly how they can pinpoint these metrics since GDP (and the per-worker statistic that is often referenced) is influenced by so many factors that it is difficult to extract the right information without lending any bias to data mining. Also keep in mind that I did not read the paper, only the article linked at the top.

Regardless, the analysis points out that a) finance can improve the GDP to a point where too much actually negatively affects it, and b) growth in finance competes with growth in other areas (labor competition).

“Their analysis of manufacturing industry data reveals that, as predicted by the model, sectors highly dependent on R&D do in fact suffer disproportionately during financial booms.”

That first aspect of the analysis interests me (but does not influence me) in that finance can improve the GDP, but only to a point, due to the risk adverse nature of finance itself. The article cites that the aspect of GDP of growth mostly influenced here is in physical capital, in this case the capital of buildings (manufacturing), computers, etc. As countries invest in this physical capital, they have more “opportunities” to grow because there is more availability of the required pieces of the business puzzle. Businesses rely on buildings to work in, computers to work on, and other physical things such as machines to work with (or create with). When there is too much physical capital, there is no demand or over supply, reducing prices.

For example, if there are 100 open offices and only 50 companies looking for office space, you’d expect the rent to go down, adversely affecting the amount of money the lessors will make, decreasing the amount of spending they will make, reducing GDP. The “finance” people help open offices, but they’ll never fill a building.

Taking that plus the second aspect of the analysis (intelligent workers not doing intelligent work such as R&D), there are less people doing the actual “creating”. Innovation is always the bottom line. The more a company or country can innovate, in the long run the stronger they will be. Innovative companies attract a stronger workforce, in a cyclical self-fulfilling prophecy sort of way. On the contrary, as we’ve seen numerous times (Yahoo), these companies can sometimes become the new “old guard” and drag themselves down in a heap of bureaucracy (aka Finance people), so it’s not easy to maintain the ideal balance between innovation and efficiency. When it does work though, it’s a legacy.

Venture Backed vs Community Capital – Reading Thoughts

http://www.nickgrossman.is/2015/05/22/venture-capital-vs-community-capital/

Venture Capital vs Community Capital by Nick Grossman

Great read! Interesting analysis of a presentation during the Paris OuiShareFest about the power of technology and dynamics. Specifically, it’s another interesting way to look at the platforms of technology in a way of (typically) venture/finance backed firms (such as Microsoft and Facebook) and community backed protocols/technology/firms (such as Bitcoin, the HTTP standard, and Android—though not exactly community backed it’s an open system vs iOS’ closed system which would be in this case “venture backed”).

It seems that in Grossman’s analysis of the community type ventures, their primary motive is to disrupt the incumbent industry. Using Microsoft as an example, he mentions that they’ve survived two waves of community disruption: the OS and Office productivity suite. Well known competition includes Open Office, which as the name implies is “open” software available to the community. The community version attempted to disrupt Microsoft’s stranglehold on the productivity suite via it’s open capabilities but in the end Microsoft overcame the obstacle. While I agree that community backed ventures are commonly disruptive, I believe they have great potential to create something bigger.

Thinking about how credit cards make the bulk of their profits, they charge fees (both monthly and per transaction) to businesses when their card is swiped. One of the reasons why American Express (Amex) is not available to use everywhere is because they charge a higher per transaction fee, which they counter by offering better customer service. There are now TONS of competitors trying to break into this space by eliminating credit card margins, charging smaller or even no transaction fees to the consumer or business (such as Square). I assume some are open standards, available to use anywhere by anyone, but in the end success in this area will come down to two factors relating to volume: number of users (consumers using the platform) and number of transactions made. Software is free, the ability for software firms to scale is virtually unlimited (mainly constrained by data servers), so I imagine there is still HUGE potential for open platforms to disrupt the way most businesses interact with their customers and business “partners” (such as credit card providers)

By offering the “open” platform, community backed ventures in the industry of credit cards can grow the number of transactions (since nobody likes paying fees) but are severely limited by the number of users. It makes me wonder, if the open platforms are free (or significantly cheaper) and only limited by marketing (getting people to actually use it), what value does the large corporation give? The answer, I’m guessing, is service.

Which leads me to my final point: When community backed ventures can be an essentially free, more disruptive, version of an existing product, companies can profit by offering services. The United States is a service based economy, and the cycle between actual product (community backed) vs service (venture backed) can be a clearly paved path to mutual success.

Future Needs

The future has many needs. Resources are a top priority: water, food, habitable land, and housing are the main ones. Environmental needs are strongly linked with that: we are pulling out WAY too much ground water and will see more sinkholes than ever before, deeper problems related to a drought, and too much pollution sinking in to what little remains of our earth’s top layer. Food (obviously related to water) is a major concern especially with GMO seeds destroying our farmland and destroying not only our lives (namely increased cancers) by the lives of our insect life (bees!), fauna, etc.

The key culprit is obvious, but rarely discussed: our earth is over populated.

1) Why is it rarely discussed? I’m not sure, to be honest. I think there are a lot of hands trying to keep ‘mum’ on the issue (read: corporations and politics). It’s obvious that for large corporations, the larger the market (the more people there are) the more profits can be made. In the long run, a rising population means more opportunities to sell and make profit. For countries, population size can also be a competitive metric. The larger the population, the higher potential GDP, larger the size of a standing army, the more competitive the country can be. Politically, it makes sense for the US to avoid discussing it since power, in the long run, would shift from a medium sized country to a large sized country like China, India, or Russia. It’s a bad reason, and is probably not the reason it’s not discussed in US politics. It’s probably just not a topic anyone wants to debate over. You’ll have neo-cons and liberals both saying that the government is putting limitations on our freedoms and also bring up Japan’s declining population as an example.

But, like many difficult decisions, it’s the hard choice that is the best one. If we look at the demographics of our population, I’d wager on average it’s the lower and middle classes that have more children than the upper class. Not always true (Mitt Romney), but that’s what an average is for. I don’t believe or agree with a class system, and I hate to use it, but it’s a demographic that is very real and present.  Just like there is a demographic for gender, with some people not fitting into either. We can use these demographics as one way to check that any policy is made to be fair to all. It’s unfair that the rich should be able to pay to have extra babies (see China). It’s unfair that we would limit the number of babies the lower classes can have, and unfair that we would impose restrictions or give incentives to the lower or middle class (see our current welfare system incentivizing large families).

My first step would be to allow a maximum of two children per couple. This is population maintenance, not reduction. There would have to be some kind of policy in place for new couples, couples that separate and form new couples (e.g. divorce and then remarry), the death of a child or children, birth of twins or more, and single or separated parents. For example, a couple has their second child: congratulations and here is your required (free and reversible) vasectomy. For those receiving welfare, the added benefits for more than two children are stopped (if you have new children starting “now”) and replaced with subsidized birth control methods. Vasectomies would be free, as would birth control pills, and abortions would be subsidized (with limits, you can’t and shouldn’t do multiple abortions in a year just because you don’t like condoms).

The biggest problem: these mandates need to be made world-wide. As we’re seeing with climate change, it’s great that some countries are tackling their pollution well, but China and India really seem to make up for that. Let’s work together to stop this problem before the problem stops us.

Elon Musk – SpaceX

http://www.bloomberg.com/graphics/2015-elon-musk-spacex/

Elon Musk’s Space Dream Almost Killed Tesla from Bloomberg Business

 

Elon Musk, our real life ‘Tony Stark’ (Iron Man) and one of my personal inspirations. I’m continually reminded by how little I’ve achieved and reminded of how much more potential I have to offer if only I can reach deeper into my own gut (in cockney: “Nut Up”) every time I read more about the man.

He’s a great business leader: ambitious, smart, and proactive. His current mission: Space. I’ve had many chats about what my interests are and Space is always one of the consistent passions of mine. It’s certainly a concept that my ideological brain knows will be the future of humankind, but it is such a complex and complicated concept that it’s intimidating. I’m one of those people who struggle to answer the question: “What are you passionate about?” My answers are usually not in the right place at the right time. I’m passionate about bringing humanity to its next level of evolution. I’m passionate about making the world a better place. I’m passionate about making enough money to do what I want without having to be concerned about worldly (material) desires like a speedboat or something. But that’s not a good answer, I think, because if you ask my “Why?” or if you ask me “What do you think you could do about it?” my answer is not one many people would agree with. Or, more often, the answer goes completely against the cookie-cutter answer the interviewer is looking for.

Example: Interviewing with a company: “What are you passionate about?” “Space” “Then why do you want to work here?” Umm… I guess because in the end I only really want to get more experience (and a paycheck). I have immediate needs that conflict with my goals. I do get interviews with some companies I want to work for, but I’m swimming with some real sharks for one spot.

Elon Musk’s ambitions are fantastic, seemingly un-selfish (for the good of all), and he makes it clear that anyone can do it. His stepping stones worked out, probably a testament to how intelligent he is and his network. I’m sure there are lots of intelligent people whose stepping stones did not work out, but it’s inspiring to know that it can work out. He steps outside of the status quo, marching over mediocrity by example, and is rewarded for it. He’s also got a sizable wallet which surely helps. If that’s the formula to success, I’m interested in knowing how large the wallet has to be for a similar system of success. If it’s replicable without a wallet (which I doubt it is), when and where is the next opportunity? I want to think rare-material suppliers are in pole position for that.

Commodities (like workforce/worker-bees) are dimes in a bank. If you’re a commodity, how can you break out? Another reason why working for someone else rarely gets you where you want to go. Elon Musk proves that theory, his skills are great to have but it’s really his ambition that makes him who he is. That’s something you can’t put on a resume.

Technology: Open, Free-For-All Monopolizer

Technology is a funny thing, specifically the internet. I remember being young during the early days of the internet boom, using it as a kid and being the only one in my family that understood how it worked. I grew frustrated trying (and failing, consistently) to teach my parents, brother, and sister how to use computers and do basic tasks on the internet. I tried to teach them how to do research, set-up and check email accounts, how to install programs, and how to play games on it.

The internet was, and still is, purported to be the door to infinite possibility. We can connect to people anywhere in the world, learn from them and teach them anything we want. The internet was supposed to bring about a new era of freedom and choice. Yet, more and more each day, I see it as a tool for consolidation, under the moniker of collaboration.

The big corporations that run this country can continue to get bigger, stronger, and hold more reach than ever before. Sure, there are more “start-ups” and small businesses leveraging the internet to make money, and there are several successful businesses built upon the idea of the internet. Google is the primary example of how a company can leverage the world wide web to endless possibilities. But I believe that more often than not (at a 98% ratio of more:not), these small businesses and start-ups are great R&D tools for the large corporations.

Consolidation and acquisitions are great ways for businesses to grow. Not only can they acquire large numbers of existing customers without putting in the work to do so, they can gain valuable technologies and grow an idea once it’s been proven. The product/market fit is a struggle for start-ups and leads many to fail. They can’t get the product (or idea) to sell in the market and eventually run out of funding. This is a great opportunity for a large company (like Microsoft) to buy a product that works in the market, has a recognizable name, large customer base, and cash on hand (like salesforce).

The irony here is that the technologies that were purported to be the next wave of freedom and marketing opening, have become the greatest tools for consolidation and risk tolerance. During times of booms (like our current moment), consolidations are likely to come in hard and fast. During times of busts (like our coming wave), consolidations are likely to come in hard and fast—and more importantly: cheap.