Category Archives: someone’s economy

pschidt others and occasionally me, think about the economy

Why Twitter Reminds me of the Coyote in the Roadrunner cartoon

First, resuming traditions established previously on this blog. The musical selection for this post is Beck’s Round The Bend

For some time now, the business model for Twitter has been falling short in providing a sustainable future for the company. Over the course of the last the last month or so, Twitter has found itself in the unenviable position of having to cut costs in the only way most companies know how to. The “axe”. Further evidence of Twitter’s new economy maturity can be seen in this comment from Dorsey during a conference call  “our board is committed to maximizing long-term shareholder value”. 

In the real world the laws of physics are a hard to violate, last I checked, you still can’t travel faster than the speed of light AND gravity still works. Similarly, in the business world, there are some fundamentals which cannot be ignored without consequence. The most fundamental is that a company HAS to produce revenue and profit.

I remember early on in the social media space how the most important objective was growth, not revenue growth, just growth. How to actually make money was always something to be determined afterwards. No one, myself included- a jaded HW -guy would dismiss the importance of cultivating market share. And yes, using the social media model of growth before revenue there have been some SIGNIFICANT successes. Unfortunately for the legions of entrepreneurs flooding our tech media and conscious those successes are relative far and few in between

What comes too mind for me in all of this are the Roadrunner cartoons I watched as a kid some 40 years ago. The coyote was always dreaming up all ploys intended to catch the roadrunner. Some were were marginally plausible, some were not. Always constant was the fact that the coyote NEVER caught the roadrunner. Usually, at the end of the show, there was one last grand attempt by the Coyote which as you might guess, also failed usually with much pain and some sort of long distance fall which ended up in a puff of dust at the base some canyon.

In unsuccessfully shopping itself around for a possible owner Twitter seems to have taken that final step and found it’s inner coyote. The question now is whether or not Twitter, like that coyote, will go over cliff and become that puff of dust.

 

A Grand Circle Jerk

I have neglected including a song at the beginning of each of my blog posts. For this post please consider this tune.

The rise and recent fall of the bio-tech firm Theranos is yet another example the challenges inherent in the valley’s startup business culture and the media echo chamber which supports it.

Theranos, founded in 2003 by Elizabeth Holmes while she was a student at Stanford became  a poster child for both disruption and all that that is insanely great about the valley. Theranos was going change the world. Hmmm where have we heard that before ?

Under Holmes’ leadership Theranos was developing a more efficient blood test. The test could reportedly provide the requisite chemical analysis in support of 30 or more  different blood tests using only a single drop of blood obtained through the pin prick of a finger. This test was supposed to enable blood testing services in just about any location. These efficiencies in turn were going to empower the average consumer with information which could ultimately lead to better health and wellness outcomes.

There were early signals that Theranos’ technology may not have been delivering the results originally claimed. The company, mid to late last year admitted to backing away from the technology upon which it’s original value proposition was predicated. For some reason these early signals did not result in any serious re-evaluation of the company.

Entrepreneurs by nature, are  optimistic and fiercely committed to their ideas. Holmes was no exception. Unfortunately she also believed her company could ignore common practices around peer reviewed work in the health and science fields. This thinking finally caught up with Theranos. Earlier this year, the FDA and The Center for Medicaid and Medicare Services (CMS), the organization which certifies providers for the Medicare and Medicaid determined the company’s claims and lab practices questionable. CMS has taken actions to de-certify the company. The FDA and CMS  have gone as far as to ban Ms. Holmes and others in the company from running any sort of lab for two years effectively removing Theranos from any sort of relevance in the near term.

Going forward it’s not clear what is to become of Theranos. Maybe lady luck will strike and Theranos will survive to prove the value and efficacy of its original technology. Maybe not. Ms. Holmes in all likelihood will lay low and find herself a gig as an  EIR at one of the VC firms here in the valley. Certainly this is not the last we will see of Ms. Holmes in the valley based on her ability to raise capital alone.

What is certain is the more Silicon Valley (and the industry friendly press which writes about it) claims to be the purveyor of only the best,  ideas, best in breed  “power of the market and merit” community, and ethically evolved in contrast to the rest of the U.S.  business sector the less it seems to ring true.

 

A Simple Yes Would Do

It is unfortunate that this past May Facebook felt compelled to invite members from conservative media leadership to join a discussion  of  bias against conservative content. Zuckerberg and Sandberg are a demonstrably impressive duo when it comes to leading technology driven companies. In this space however, I believe both Zuck and Ms. Sandberg are operating outside of their wheelhouse. It’s not their fault.  Silicon Valley has a history of accomplished folk leaving the relatively safe and focused confines of the tech sector to insert themselves into others.

Those of us in the peanut gallery see that more often than not these folks by way of their resources have significant voices and/or roles in areas including education and feminism. It is not always the case that they should have these voices.

Silicon Valley is a community chocked full of the smartest – a universal definition of smart would be helpful here – people in the room.  At least that is what we are repeatedly told. Furthermore, they are so smart it only makes sense to for them to branch out into other areas, to bring their smarts to bear on those areas and resolve issues within them, e.g. to change the world.

It is true that in certain areas of ability there are incredibly smart people at work here in the valley. The challenge for these folks however, is to recognize where mastery of subject matter in a space is a pre-requisite to actually solving problems – there are those spaces where there is no problem as we think of them, they are what they are – in those spaces.  Many times immersing one’s self in a space for a brief but intense period is not enough. In some cases, considerable time observing over the course of years, and deliberation should occur before jumping into the fray.

In 2010 Mark Zuckerberg, armed with money and good intentions  donated 100 million dollars to the Newark, New Jersey school district in the hopes of improving schools there. The outcomes after this announcement are well documented  (Russakoff). Similarly,  Sandberg with her 2013 book Lean In, and subsequent organization of the same name found herself in the center of a dialogue around feminism as it was relevant both in and out of the workplace. Some from the academy weighed in with their critiques (Hooks) and (Rottenberg).

I mention these examples because education reform and feminism are social issues obvious in their need for improvement; they are also incredibly complex once you look behind their respective curtains. They need more than good intentions, interest in the space, and financial resources. Actual experience, and ability in large system transformation is required.

Then there is the political media space kerfuffle Facebook found itself involved in. In political media there are no simple immutable issues around which to rally. Everything is highly subjective and in the end, it is a space where there is no pleasing anyone.

After his meeting with the conservatives Zuckerberg indicated there would be an investigation. What the hell for ? In that moment, the right had already won or at least already scored before Zuckerberg and Sandberg had even suited up.  I have to assume that for an instant the Facebook folks forgot to recognize the fact that their company is a publicly traded one.Surely, the market would reflect its desires for Facebook to become more friendly to the right by way of the stock price no ? Maybe this was a loss of what Hemingway called “grace under pressure”.

To no one’s surprise the investigation that Zuck said would go forward came back and declared there was no bias. Again, Facebook missed the point of this exercise.  All the right wanted with this shot across the bow was to draw some attention to their complaint. The conservative right of the last 3o years or so has become quite adept at playing the long game when it comes to media (Lakoff). Furthermore there has been and will always be bias in media. We need to get past thinking all media HAS to be ideologically neutral. In Europe, the Far East,  Latin America, Africa and other parts of the world the media and news don’t hide the fact that they have biases. It is the responsibility of the consuming public to account for these  biases . Goodness, Zuck has heard of Fox News hasn’t he ?

Just for fun let’s imagine for a moment  that we were in the room during the meeting. Zuckerberg and Sandberg are asked directly if there is any bias in how they curate content. Instead of setting the expectation they would twist themselves into knots determining  whether there was any, and, to prove a true understanding of  real-world media. Both should have visualized Occam’s Razor in their mind’s eye and simply answered yes.

Works Cited

Russakoff, DaleThe Prize: Who’s in Charge of America’s Schools? N.p.: n.p., n.d. Print.
Hooks, Bell. “Dig Deep: Beyond Lean In.” The Feminist Wire. N.p., 28 Oct. 2013. Web. 26 June 2016.
Rottenberg, Catherine. “The Rise of Neoliberal Feminism.” Cultural Studies 28.3 (2013): 418-37. Print.

Lakoff, George. Don’t Think of an Elephant!: Know Your Values and Frame the Debate. Carlton North, Vic.: Scribe, 2005. Print.

Post Script:

Zuckerberg and Sandberg have, to their credit, continued their evolution. Zuckerberg and his wife have started a school in Menlo Park working with educators, we’ll see. Sandberg, after the sudden loss of her husband last year, has begun seeing feminism through the lens of be being a single mother.

Wither the MVP, rejoice in the old fashion art of product development

Music: Why must I chase the cat

Read this article  by Bill Aulet which was posted in Venture Beat. While phrases like “Minimum Viable Product” and “Lean Startup” are in vogue these days. Aulet takes us back to yesteryear. Back to a time where a product was a combination of assessing the market, querying potential customers, and most importantly, having some significant vision.It seems that lately, the “product” cycle is more about rapid iteration. I won’t deny that this approach facilitates some forward progress. However I need to also comment that it does tend to drive things in the direction of micro-iteration, which then consumes development resources in ways which generate lots of lines of activity in support of “features” while  at the same time taking resources away from deliberations and thinking which might foster the development of a truly innovative product and/or additions to them.

I liken it to the hardware world when the first PALS (Give me a 22V10 or give me death) and FPGA’s (Field Programmable Gate Array’s) came on the scene. Both of these were a type of hardware device which could be programmed to function in whatever way the designer desired. If, after programming, you didn’t like what it had, you could “erase” it and try again. This was a boon for hardware developers. Gone were the multi-month waits after taping our chip to get an actual piece of physical hardware back.You could literally try two or three implementations of a design out each day.You could fix bugs rapidly. You could add a “feature” in as fast as you could think it up. Oh my, “Slap me, I must be dreaming”, or so we thought.

That’s where the problems began. It was precisely because you could iterate rapidly (in hardware development terms) that features were added which maybe weren’t necessary even thought they added to the overall feature count of the product. Worse still, there was a marked drop in quality as the game became about spinning and getting something into the lab quickly to “show”. What is now called an MVP I supposed

In Mr Aulet’s piece, he points out how  becoming enamored with getting something built, coded etc.., can get in the way of the real work of true product development.To wit, you become a slave to the release cadence.

It’s great to see the software side of the business get some exposure and lead the charge forward. I hope part of the charge forward includes reflecting on lessons learned from others. One can only hope…

Sound Familiar ? Long time for the echo no ?

This taken from a 2011 paper written by Robert Sidelsky about Keynes:

“In 1929, with British unemployment standing at 10% of the insured workforce, Keynes and Hubert Henderson wrote a pamphlet entitled Can Lloyd George Do It? (Keynes, 1981). In this they proposed a big programme of public works, to be financed by loan, the idea being to induce a ‘cumulative wave of prosperity’. The British Treasury attempted to refute the proposal using an argument developed by its only economist Ralph Hawtrey. Hawtrey had claimed that, with a fixed money supply, any loan raised by the government for public works would ‘crowd out’ an equivalent amount of private spending. Employment could be increased only by credit expansion—or what was then called inflation. The prime minister, Stanley Baldwin, was fed the lies ‘we must either take existing money or create new money’.

Keynes riposted: ‘Mr. Baldwin has invented the formidable argument that you must not do anything because it means you will not be able to do anything else’. Yet the Treasury argument of 1929 was restated in 2009, in almost identical terms, by Professor John Cochrane of Chicago University: if money is not going to be printed, it has to come from somewhere. If the government borrows a dollar from you, that is a dollar that you do not spend, or that you do not lend to a company to spend on new investment. Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs from the decline of private spending. We can build roads instead of factories, but fiscal stimulus can’t help us to build more of both. (Cochrane, 2009)”

 

Who knew ? It’s almost like the right and some members of the left just copied from this original material. As my mom used to say: I swanee