Saturday, August 31, 2013

Weekend blogging -- sometimes combination is creation

I was putting together a weekend blogging post of catchy songs and I started to throw in my favorite mash-up...

but then I realized this video was better suited to another, earlier thread about being derivative in an original way:
You could argue that there are two distinctly British traditions of coming-of-age novels: the Arthurian (think the Sword in the Stone) and the school story. The best known example of the latter is Tom Brown's School Days; the best is Mike. Both genres are uniquely tied to British character and culture but, as far as I know, no one saw how fundamentally similar they were until Rowling came along.

You can see that underlying similarity of the two genres (and Rowling's skill at combining them) by imagining the Harry Potter and the Philosopher's Stone first with the fantasy elements removed, then with the public school elements removed. The results would be, respectively, a conventional school novel and a conventional juvenile fantasy novel, but they would both be basically the same story. Most of the characters and the majority of the plot work equally well in both genres.

To see connections between seemingly disparate elements and to find a way to bring them together in a coherent whole is pretty much the soul of originality, even those elements are old and familiar and worn smooth with use.

Friday, August 30, 2013

Joseph was overly and insufficiently harsh with Nicholas Carlson's Mayer profile

First off, when my co-blogger Joseph called this piece "a clever hatchet job," he was wrong. Having read the whole damned thing, I feel fairly confident saying that Carlson was not setting out to be unfairly or excessively critical of Marissa Mayer, though it's clear that some of his sources were. Instead he gave us something that is, to me at least, quite a bit worse.

For starters, the traditional hatchet job is not the worst of all genres, particularly if you can identify the author's position and, if needed, correct for it. Mark Twain's treatment of James Fenimore Cooper was unquestionably a hatchet job and it remains both a sharp piece of criticism and a damned funny piece of prose.

Carlson's profile falls into another genre, a type of novelistic business journalism heavily influenced by Michael Lewis, long (and I do mean long) form reporting built around a central narrative with lots of time spent on character sketches and atmosphere. When done well (and Lewis generally does it very well indeed), it can be both highly informative and wonderfully entertaining. Done badly (and badly seems to be the norm), it can be simplistic and misleading and as annoying as all hell.

Lewis has exceptional literary gifts, a sharp understanding of business and, perhaps most importantly, a satirist's eye. Carlson has, if anything, the opposite. Behaviors that would have Lewis looking for his best scalpel actually seem to inspire uncritical sympathy from Carlson. Consider the following:
One by one, they walked in and sat down at a table across from Mayer. Then, she launched into questions. She asked: “Where did you get your education?” “Where are you from?” “What do you do here?” And so on.

As Yahoo executives answered, Mayer took notes on their answers with pen on paper, hardly looking up.

“It kind of felt like you were summoned to the principal’s office,” says one executive who went through one of these introductory meetings with Mayer.

“You would have thought a fair portion of [that meeting] would have been about ‘so what are you going through? How are you feeling? Sorry about Ross. We love him. We’d like to keep him. Realistically, he won’t stay but that doesn’t have any impact on you.’

“There wasn’t any kind of commiseration or any kind of bear hug. There wasn’t even a question of ‘Are you in or are you out?’ It was: ‘I assume you’re in. Let me know otherwise.’

“There was no time for short conversation or human emotions. It was very boom, boom, boom.

“Most people walked away from that meeting saying, ‘Holy shit.’”

Keep in mind the situation here, this was a complete management shake up at company that was generally seen as headed for the rocks and we have a group of well-compensated executives (over compensated by many metrics) whining about the lack of bear hugs. Like so many places in Carlson's piece, his sources here seem to be asking for mockery but they are allowed to slide, partly because Carlson seems to lack all sense of the absurd and partly because he displays a troubling lack of detachment when it comes to his sources (particularly worrisome since many of them appear to have strong personal agendas).

The tendency to let sources frame reality for him, especially when that reality matches his narrative,  causes Carlson to miss the real significance of much of what he reports. Again and again he describes incidents, both at Google and Yahoo, that indicate dysfunctional cultures where effective decision-making and time management give way to wounded egos. Carlson is so caught up in the mindset of his sources that the message he takes away from these confrontations is that Mayer is too robotic (or as most of us would call it, professional) rather than asking what kind of organization puts hurt feelings and petty grudges ahead of sound decision making.

As for the non-people-person narrative. Trying to find some simple personality trait that explains a subject's behavior is usually a bad idea, but seldom as bad as it is here. Carlson's attempt to build a fairly normal level of shyness for a teenaged girl -- enough for her to describe herself as painfully shy, not enough to keep her from going to prom or becoming head cheerleader -- into the secret key that explains all of her career is unbelievably hokey. I'm amazed people still write this sort of thing.

I know most of you regular readers are probably sick of hearing this but having non-critical journalists shoehorning complex stories into overly simplistic narratives is a bad thing. Among other problems, it makes those journalists gullible as long as what they're being fed matches the narrative. To see just how gullible Carlson was, read David Auerbach's masterful take down  (which arguably is a hatchet job, though I don't mean that in a bad way).

Thursday, August 29, 2013

On the downside, when I make powerpoints they hardly ever have all that cute animation

Frances Woolley has a good post up on piracy in the textbook market but she lost me on this paragraph:
If students cannot be relied upon to cough up the cash, textbook publishers will start looking to raise more money from instructors and universities. Right now textbooks are paid for by students, but marketed to instructors, who choose the required text for their courses. Companies compete by providing instructors with complementary copies of textbooks, powerpoint slides, test banks, study guides, solution manuals, and so on. If the student market collapses, companies may decide to start charging for all of those beautifully prepared powerpoints.
It's been a while since my college teaching days but back in the day, I got a chance to view this issue both from textbook committees and as a producer of some of the supplements Woolley discusses.

I've always held the minority opinion that students can and should actually read math textbooks and that one of the impediments to getting them to read the books is the fact that most of them are virtually unreadable. I lobbied hard for better written texts but I don't believe I ever convinced any other committee members of my point. As far as I can remember, the rest only looked for two things, the homework problems in each section and what order the topics were presented in.  Obviously the committee had to make a decision and when most committees don't consider factors like clarity of explanation and price, that leaves lots of ties.

In this situation, assuming you do not allow kickbacks, very small factors often in up decisive. Case in point, video series as course supplements. Back when I was in the field, most books came with a video supplement, usually consisting of one of the authors working through a few examples for each section.

Back in the late 90s, I produced one of these for a college algebra textbook. I am not going to give you the name because it was one of the most God awful videos you'll ever seen, however since it did look more or less professionally produced and since it was long enough to cover most of the chapters and mainly since I got it in on time, everybody involved was reasonably happy and I got to pay off my car loan.

The sad truth was that most of these videos were pretty much useless. Most of the time they were put in tutoring centers where occasionally a student would try one or two and find they were not at all helpful. The problem was a combination of poor quality and the failure to think through exactly how video instruction should work ( insert MOOC comment here).

The reason these videos kept getting made was that they served as a check mark, a tie breaker. Committee members when faced with 10 or 15 books all of which seems more or less the same would look for some small but clear advantage that they could use to put some books at the top of the pile. These included videos that few students would watch, computer software that few would use and on the other side things like power points and lesson plans and test banks which the committee members probably wouldn't use but which they thought someone else might.

The thing about these tiebreakers is that they only have value when bundled with the product being sold and when the difference between the product and its competitors is very small. They serve much the same function as a $.10 toy in a three dollar box of cereal.

Historically the pay off for having a general ed textbook accepted by a major university has been huge. That was in large part because there was no practical option (legal or otherwise) for students who wanted to get a degree. If they couldn't find a used book, they simply had to pay what the publishers told them to.

There is no such monopoly on supplemental material, at least no effective monopoly. More importantly these supplementals are by nature non-essential. In fact many teachers, myself included, chose not to take advantage of them even when they were given to us for free. I preferred to make my own tests and presentations, and I know many teachers who feel the same way. That combination of monopoly, compelled-purchase, and principal agent problem which made the situation so dangerous with textbooks simply does not apply here.

We don't need to worry about text book publishers gouging instructors for free power points and test banks because these things are easy to do without.

Unfortunately, we still do need to worry about the rest of Wooley's concerns.

Wednesday, August 28, 2013

More on rank (noun, verb and adjective)

Following up on Joseph's recent posts on corporate incentive plans that use rank to assign nice carrots and spiked sticks, here are a few disorganized thoughts.

1. The law of large numbers tells us that the distributions of random sample will converge on the distribution of the population as the size grows large. If you're assuming small, nonrandom samples will have nice distributions, this theorem is not applicable;

2. Most of these incentive schemes assume a linearity that neither experience or first principles support (I blame Heinlein). These relationships are not monotonic. A sufficiently strong penalty can, by prompting anger or panic or paralysis, produce the very behavior being penalized. A sufficiently large reward can and often does encourage people to game the system;

3. Complex systems can pretty much always be gamed. This is particularly true for systems where all parties are acting solely out of self interest with no emotional investment in the larger goals of the institution;

4. As incentives (positive and negative) increase, people will be more likely to come up with new behaviors that satisfy the letter of the conditions.

5. Even if we put aside the concerns in item 2, the potential for misalignment of incentives in peer interaction here is huge. When you interview potential co-workers, is it in your best interest to see the strongest candidate get the job? What about when a co-worker asks your advice on a modeling problem?;

6. From the management side this might even be worse. There are certain people managers are inclined to protect, either for personal reasons or because they full an immediate need in team. Sometimes a manager would rather hold onto an adequate SAS programmer even at the cost of losing a gifted financial analyst;

7. "Because that's how Jack Welch did it" has gotten to be a less and less convincing reason over the years.

Tuesday, August 27, 2013

Marissa Mayer: a continuing saga

The recent unauthorized biography of Marissa ayer was a very clever hatchet job thorough piece that quoted many critics of Ms. Mayer.  David Auerbach has done the hard work of asking tough questions: like why do the traits that people attribute as criticism to Ms. Mayer bear a remarkable resemblance to the strong points of CEO's like Steve Jobs?

The most devastating points of attack:

Mayer is an executive outsider not only as a woman but also as a techie. Her background is not in business or marketing, but in the actual guts of product development and management. This makes her far more of an outsider to business culture than women like Carly Fiorina and Meg Whitman. Creative, technically oriented outsiders are founders, not corporate ladder-climbers: David Packard, Walt Disney, Ted Turner, Jeff Bezos, Steve Jobs, and even Bill Gates. 
and, after discussing the brutal level of corporate politics the piece continues:

These aren’t incidental details. They speak exactly to the sort of people whom Mayer is deposing, and to why they certainly could never have saved Yahoo, just bled it dry while it withered. I suspect one of the final quotes in Carlson’s piece is dead-on: “If [Mayer] hadn’t come in, all the smart people would have left.” 
I don't want to say that Ms. Mayer will succeed in her venture or that she is without flaws (she has a few that would drive me nuts in a manager).  But this sort of radical approach at least holds the possibility of a successful turn around.  If she does this as a techie and not as an MBA then I cannot say that I would see this as a tragedy. 

EDIT: Nicholas Carlson has a different perspective on the Marissa Mayer piece than the one voiced in the first paragraph:
This is Nicholas Carlson.

I reject the idea that my story was a "hatchet job" of any sort.

Here is how it ends:

“If she hadn’t come in, all the smart people would have left.

“And that would have been the end of Yahoo.”

I am not sure that I completely agree, but on sober reflection a better description could likely have been chosen than "hatchet job". 

Stack Ranking Continued

More on the Microsoft ranking system:
This was my problem. I had three reports, A, B, and C, and they neatly fit into three categories: C was good, B was great, and A was fantastic. They were all nice and retiring sorts—they weren’t self-promoters, which put them at a disadvantage at Microsoft—and I did want to do well by them. Based on their position in the stack rank, I thought that this would have been a fair assessment of them relative to the company in general:

My Ideal Distribution

A: Above Average
B: Above Average
C: Average
Above Average would get A and B nice bonuses and raises, while C might get a small raise and a decent bonus with an Average. That didn’t happen. My manager told me baldly that this was how it would go:

The Actual Distribution

A: Above average
B: Average
C: Below average

My desired rankings were out of the question, since my manager would then have had to steal that extra Above Average from some other manager. I thought that B could live with Average (we were all well-compensated, after all), but rating C as Below Average hurt.

So I argued for C, and my manager said there was exactly one alternative:

The Alternative Distribution

A: Average
B: Average
C: Average

But A had been at the very top of the stack! How could A do worse than people we’d all agreed were weaker programmers? I gave up and let C take the Below Average. This is the zero-sum game at work.

I still feel bad about this.

This very much shows how the ranking ended up being all about politics and balance between different managers.  You can immediately see how taking a weak person could be a great idea to protect the rankings of the people actually doing the work.  And how good teams would be the absolute worst place to possibly join. 

I was mistaken about Mark P being a proponent of the system in a previous work situation (it is the only way to make IT workers productive was the gist but I don't recall the details and the other obvious person from that era has drifted out of touch).  But it keeps getting clearer and clearer that this kind of ranking system can lead to perverse incentives.  The actual example however shows something else -- the managers are imposing the distribution of ability on a three person team.  That the whole organization should have a wide distribution of talent is likely (the law of large numbers and all) but that any three person team will happen to follow an ordered distribution balanced around the grand mean of the company is a rather heroic statistical assumption

Now consider education reform and imagine what would happen if you tried the same thing with teachers.  All of a sudden there are new and interesting incentives to keep "poor teachers" because the distribution is fixed by design. 

Paul Krugman is not a marketer

A marketer would spend more time discussing the tremendous role that brand has played in Apple's success. Other than that Krugman's analysis is spot on.

From On The Symmetry Between Microsoft And Apple
The Microsoft story is familiar. Back in the 80s, Microsoft and Apple both had operating systems to sell; Apple’s was clearly better. But Apple misunderstood the nature of the market: it said, “We have a better system, so we’re going to make it available only on our own beautiful machines, and charge premium prices.” Meanwhile Microsoft licensed its system to lots of people making cheap machines — and established a commanding position through network externalities. People used Windows because other people used Windows — there was more software available, corporate tech departments were prepared to provide support, etc..
But Microsoft missed the boat on mobile devices, while Apple got temporarily ahead of the curve. I say “temporarily”, because as far as I can tell Apple products no longer have a dramatic quality edge. I’ve had an iPhone — which, sad to say, did not survive dunking in water — and now have a Samsung, and the differences don’t seem huge. I have an iPad 2, which I bought for the picture quality; but when I decided I also wanted a small tablet that I could carry around in my jacket pocket, it turned out that the iPad Mini wasn’t significantly better than several Android competitors, and in fact for my purposes worse in some ways.

Now, unlike Microsoft, Apple isn’t selling an inferior product. But it’s selling products that are little if any better than competitors, at premium prices. How can it do that? Again, network externalities: mainly a much deeper bench of apps, or so I’m told (I actually don’t use many).

[App selection is certainly a selling point for Apple, but I'd say that brand and marketing are currently much bigger factors.]

So how do the prospects for Apple’s reign look compared with those of Microsoft? Let’s not forget that Microsoft is actually an incredible success story — it maintained its PC lock for decades, and in fact still retains that lock today; it’s just that the market is changing. My casual impression is that Apple’s lock isn’t nearly as secure, in part because it’s relying on the loyalty of individual customers — in contrast to Microsoft, which was largely relying on the loyalty of corporate IT managers, who are inherently more conservative.

So, my problem with Apple. In general, the thing about Apple is that it reflects the spirit of Steve Jobs, who knew what was good for you — and left you no way to do things differently. And if you are an atypical user, you end up putting a lot of effort into fighting iOS in order to do simple things.

Case in point: as regular readers know, I really like watching live performances on YouTube; and I want the best of them available even when I don’t have access to broadband. So I download them onto my PC as MP4s — there are many add-ons that will do this.

But I actually want them on a tablet. To do this in iOS, you first have to import them into iTunes, then synch; not too big a pain, but still a couple of annoying extra steps. The big problem, however, comes when you want to organize your videos: how do I tell iTunes that, say, my 10 favorite Arcade Fire performances are a related set?

Well, the only way I’ve found is to convince iTunes that they are episodes of a nonexistent TV show. It’s doable, but stupid. Whereas on my Nexus 7 I just copy them into a folder named “Arcade Fire”, and there they are.
For more on the appeal of Apple's brand, check out this reflection by Rob Long on the company's near complete dominance of the entertainment industry.

Monday, August 26, 2013

Health Care and Complexity

Aaron Carroll:
That said, if you want to have a discussion on the merits of making the American Health Care system look like Singapore’s, I’m on board. Let’s do it. But what I’ll fight against – and call out – are the people who do that with lots of “buts”. You want Singapore, but you don’t want the mandated savings accounts. You want Singapore, but you don’t like government involved in purchasing decisions. You want Singapore, but you oppose centralized budgets. You want Singapore, but you oppose government subsidies.
This was partially in response to Tyler Cowen:
Now enter Aaron Carroll, who tries to argue Singapore is moving in an ACA-like direction.  His post has been cited numerous times, but it is not insightful nor does it show much curiosity about the new changes in Singapore.  It is mostly a polemic against Republicans.  In any case the new Singaporean emphasis on taking care of the elderly isn’t well understood by a comparison with ACA.
 In some ways I think they are both making very good points, albeit very different ones.  In Cowen's defense, health care has become so tightly bound to partisan politics in the United States that a strong pro-ACA line is going to look like an attack on Republicans, even if it is modeled on a Republican plan.  That's rather unfortunate but true. 

On the other hand, one of the ways to argue for a system is to find historical (or, even better, contemporary) examples of a particular approach working.  Innovation is likely to be tried by smaller groups first.  So Democracy works out so-so in Athens and people begin to tweak it.  Eventually you get the UK model and the US model of democracy, neither of which look like the original.

The problem with this approach is that it requires one to be extremely clear about what the effects of these tweaks will be.  The United States appears to be in an equilibrium where, at a population level, it costs a lot and delivers middle of the road outcomes.  Moving further into that space (and away from programs that are cheaper and deliver better results) requires a very clear argument for why we think there is a local (or perhaps even the global) maxima out there. 

So the problem with Singapore is that there seems to be real disagreement over whether specific pieces are essential or not.  You also have a very different economy -- only 5 million people with an unemployment rate running in the 2-3% range.  While they have no minimum wage, the government tends to be the largest shareholder in Singapore companies and thus excessive wage inequality can be handled at the ballot box.  These design features can make a mandated savings program work really well.  But we also have what looks a lot like a command economy (just one that is small enough and distributes decision-making enough that they are not overwhelmed by complexity).  In any case, much of the US problems would be well handled by a 2% unemployment rate where people would be able to reliably save against disaster and have a decent chance to get a new job (and notice that Singapore is a single city, so there are no relocation frictions if you lose your job in a part of it with few opportunities -- you just commute longer as a result). 

So the problem is trying to reduce the number of moving parts.  I suspect that, despite its huge flaws, this is why the Canadian system keeps coming up.  It is based in a nearby country with a similar type of economy, lots of immigrants, lots of regionalism, and delivers equivalent outcomes (overall) for less overall cost.  It also encourages economic risk taking by making the risk of being uninsured negligible which can also be a benefit. 

But trying to import external health care systems is tough -- they are complex and have lots of points where it is unclear if the piece is essential or merely nice to have. 

Revisiting the growth fetish (kind of a relief to be agreeing with Felix Salmon again)

Salmon has an excellent post, based in part on an equally good John Kay post, about the trouble people have with the idea of healthy contraction in business.

Here's Salmon:
I can understand where Mims is coming from. HP is a technology company, and under the unspoken rules of the US stock market, all public companies, and especially all technology companies, should constantly be growing as fast as possible. It’s the inexorable mathematics of discounting: if a company can deliver consistent growth which is faster than the prevailing discount rate used to calculate net present value, then its stock price should, by rights, be infinite. Consequently, given that infinite upside, it’s worth risking quite a lot to achieve growth.

But the facts are pretty plain: (a) HP is very good at producing excellent products in the shrinking markets which make up most of its business right now; (b) HP has in recent years shown no particular ability to produce excellent products in other markets; (c) Meg Whitman is not by nature a visionary innovator. Given those facts, it makes perfect sense for HP to run its existing businesses as efficiently and as profitably as it can, and to extract as much value out of them as possible, in the knowledge that all companies are mortal. In fact, it makes more sense to do that than it does to follow the Tim Armstrong playbook, where AOL’s CEO decided to take his enviable dial-up revenue stream and invest it in doomed content plays like Patch.

Here's Kay providing some historical context:
The marketing guru Theodore Levitt elaborated this theme in an article half a century ago. Levitt denounced marketing myopia. There was always, he suggested, a future for a company; the key was to look for a creative answer to the question: “What business are we in?” Manufacturers of buggy whips might still be around as carmakers if they had only understood that they were not simply encouraging faster horses; they were transport companies.

Much of Levitt’s analysis was devoted to urging oil companies to recognise that they were really in the energy business. Some of these companies found his arguments persuasive.

Yet 50 years later, few of their diversifications into other forms of power have worked out – their flirtation with coal in the 1970s and 1980s was particularly unsuccessful – and the traditional oil majors still make most of their money out of oil.

Levitt did not recognise that competitive advantage, rather than a fertile imagination, is the key to success. The whip manufacturers had neither production capabilities nor marketing channels relevant to the automobile industry. The skillset needed to manage coal mines is very different from that required to run an integrated oil company.

Recent history has provided a textbook illustration of the limitations of the Levitt hypothesis – the disastrous remodelling of JC Penney’s dowdy stores by Ron Johnson, brilliant designer of Apple’s retail chain. The outlets of both JC Penney and Apple are shops but the age group and disposable incomes of their customers – and their reasons for visiting the stores – were entirely different: JC Penney and Apple were not really in the same business.
Along with ddulites, the growth fetish has been a hobbyhorse here at West Coast Stat Views since before we were West Coast Stat Views.
Think of it this way, if we ignore all those questions about stakeholders and the larger impact of a company, you can boil the value of a business down to a single scalar: just take the profits over the lifetime of a company and apply an appropriate discount function (not trivial but certainly doable). The goal of a company's management is to maximize this number and the goal of the market is to assign a price to the company that accurately reflects that number.

The first part of the hypothesis is that there are different possible growth curves associated with a business and, ignoring the unlikely possibility of a tie, there is a particular curve that optimizes profits for a particular business. In other words, some companies are better off growing rapidly; some are better off with slow or deferred growth; some are better off simply staying at the same level; and some are better off being allowed to slowly contract.
We also managed to tie a similar take on JCP to another favorite hobbyhorse, fitness landscapes.

Friday, August 23, 2013

Employee ranking

I have actually worked under this system of employee review.  It is really as bad as it sounds as it forces political decisions about who will be on the bottom of the ranking system.  The focus on the short term is nasty as is the generalized fear that you could be let go despite good performance if you came out on the wrong side of a struggle.  So the explicit link between job security and office politics (because no matter how objective people try to be, there will always be a political element to a rank ordering process) really does a lot to refocus people on politics.  In the long run I worry that is a corrosive approach because the only time it works out well is when there is enough growth that the risk of a bad ranking is balanced by generous rewards with good rankings.  But in a stagnant period, the benefit of a small bonus is not equal and opposite to the risk of being let loose into a weak job market. 

If I recall correctly, Mark P had a more positive attitude about the process although I don't think he was a fan, either.

The Great Non-Blackout of 2013

From Variety:
The current CBS blackout on Time Warner Cable systems in New York, L.A. and Dallas, now in its 21st day, is only the latest and highest-profile spat that illustrates a chronic problem with the current retransmission-consent system, American Cable Assn. prexy Matt Polka wrote in a letter Thursday to the Federal Communications Commission. 
“Without action by policymakers to change the laws governing these negotiations there will undoubtedly be many more blackouts,” Polka said in the letter to FCC interim chairman Mignon Clyburn. 
As a remedy, the ACA proposed that the FCC adopt a rule mandating that broadcasters and pay TV operators continue to offer a broadcast station’s signal to consumers after an existing retrans-consent agreement expires, while the terms of a new agreement are worked out. A cable or satellite operator would pay rates under the previous contract, with a retroactive “true-up” once a new deal is signed.
I don't know about New York and Dallas, but pretty much everybody in L.A. can still get CBS for free just like they always could. Channel 2 is one of the region's strongest signals. I know this from personal experience (with my TV and my laptop) and from visiting family and acquaintances who have switched to OTA. From Whittier to Santa Monica, from North Hollywood to Watts and Torrance and points in between, it's one of the easiest channels to pick up. Pretty much everybody in L.A. can not only get CBS, often using plain forty-year-old non-amplified rabbit ears; they can get a better picture than the one they're paying Time Warner for.

Wednesday, August 21, 2013

Details Matter

I'm fascinated by business but between buzz words and reporters who are willing to publish press releases almost verbatim, I'm definitely out of sync with most business journalism. I like to think about how to solve the problems (or at least what the problems are) and about the strategies and sometimes I just like to go picking through the details and see if they tell a story.

With some companies, the story is the percentage. For a company like Weigel Broadcasting, it's about getting all the details right. For NBC's COZI it's about getting almost everything wrong. Most of the time though, it's about what the company gets right and what it gets wrong.

Netflix is, on the whole, a reasonably competent company, but, as I've mentioned before, they don't really seem to be that interested in movies and TV. This might not have been that much of a problem when they were primarily in the DVD market and they could just keep every major title in stock, but once they got into streaming and commissioning shows (both of which require being selective), indications that they didn't understand their viewers' taste became more troubling.

Here's the sort of thing I'm talking about. (after a quick and nerdy digression)

Back in 1980, Donald Bellisario (NCIS) hit on his highly successful formula for action-adventure shows: quirk-heavy characters; military culture; and an established thespian with a knack for chewing scenery. One of the earliest examples of the formula was Airwolf which featured a Stradivarius-playing fighter pilot named Stringfellow supported by a cheerfully overacting Ernest Borgnine. Though never a hit, it had a respectable three season run on CBS followed by a considerably less respectable run on cable.

These days, basic cable produces some of the best shows on television and USA is one of the industry leaders but back in the Eighties only a handful of invariably low-budget shows were being produced for cable by anyone other than HBO (unlike first run syndication which had something of a renaissance in the late Eighties). Given all this, the following wasn't surprising:
The USA Network funded a new fourth season in 1987, to be produced in Canada ... This was intended to increase the number of episodes to make the show eligible for broadcast syndication. The original cast was written out of the fourth season: Jan-Michael Vincent appears in a first transitional episode; a body double for Ernest Borgnine seen only from the back represented Santini, who was killed off in an explosion; Archangel was said to have suddenly been assigned overseas...  Production moved to Vancouver, British Columbia, Canada, with a reduced budget, less than one-third of the original CBS budget. The production crew no longer had access to the original Airwolf helicopter, and all in-flight shots were recycled from earlier seasons; the original full-size studio mockup was re-dressed and used for all interior shots
While you can still find people with fond memories of the CBS run of Airwolf, you'd be hard-pressed to do the same with the USA run, which is why (and I apologize for taking so long to get to this point) this suggests that Netflix didn't understand the fan base for this show.

In case you're wondering, that's the cast of the fourth season.

It is, of course, a small point, but it's something that will tend to confuse or annoy fans (many if not most of the comments say something brutal about season four) and, more importantly, it's the kind of sloppiness that shouldn't happen given the extremely small selection Netflix offers for streaming.

Using the cast of the final season seems to be a standard practice with the company even though most people will start watching an unfamiliar show from the first season and, more importantly, early seasons are often preferred by fans.

For example, if you ask fans what their favorite Mission Impossible cast was, I bet you'd get Peter Graves, Martin Landau, etc. first, then either Steven Hill, Landau... or Graves, Leonard Nimoy second and the final cast last.

Martin Landau and Leonard Nimoy are both still well-remembered, as was the original M:I even before the Tom Cruise franchise came out. At the risk of belaboring the obvious, effective marketing highlights features that appeal to customers.

What worries me about all this (beyond the fact that I want to see Netflix do well) is that the question how well a business is run doesn't seem to worry anyone else. If Netflix fixed these problems I doubt Forbes or BusinessWeek would notice, but if Reed Hastings makes some big, questionable move like possibly overpaying for a show or talking about  going into a field the company's infrastructure can't handle, he gets called bold and visionary, his face is on the cover and Motley Fool starts pumping his stock. This is not how we like the incentives to line up.

Tuesday, August 20, 2013

More Motley Foolishness

Just to pound the stake in a bit deeper, here's another reminder that, if you're getting you stock-picking advice from Motley Fool, you really need to stick with index funds. MF specializes in overexcited, often under-informed posts usually focusing on hot topics that have strong emotional associations of success or (more rarely) failure. All of which is designed to get readers anxious and eager enough to shell out $199 a piece for various newsletters.

Recent case in point, comic book movies are big now as is AMC and the TV show (and comic book adaptation)  the Walking Dead. Both very much have that  strong emotional association of success so it's not surprising that MF would do a story on comic book publisher Image:
Just as AMC Networks (NASDAQ: AMCX  ) profited when Matthew Weiner and Vince Gilligan brought the network Mad Men and Breaking Bad, Image today has several of the comics industry's big names making strong books such as The Walking Dead, Saga, and Thief of Thieves, among others, many of which have cross-media potential.

Should Disney or Warner make a bid for Image? Would you? Or, alternatively, would you invest in Image were it a public company? Leave a comment to let us know what you think of the indie comics opportunity and what, if any, indie series you're reading right now.
You'll notice I keep talking about "associations of success." Mad Men is a perfect example. As mentioned before, Mad Men appears to have lost AMC a significant amount of money, enough to force them to make risky budget cuts to their hit, Walking Dead. You could argue that when PR and reputational capital are figured in, the Mad Men deal was worth it, but from an objective standpoint it's difficult to argue that it was much more that a break even deal for AMC. From an emotional standpoint, however, Mad Men certainly has the association of success, what Colbert might call 'successiness.' It's the coolest of TV's cool kids, by some standards the most lauded basic cable show ever.

While the first paragraph drives home the role these emotional associations play in MF posts, the second illustrates just how uninformed these posts can be. Normally, when a big player buys a publisher, the primary asset being acquired is the catalog. In this case, it's not entirely clear what Disney or Warner would be buying:
Image's organizing charter had two key provisions:
Image would not own any creator's work; the creator would.
No Image partner would interfere – creatively or financially – with any other partner's work. Image itself would own no intellectual property except the company trademarks: its name and its logo, which was designed by writer Hank Kanalz.
I've been reading quite a few MF posts recently and I see red flags frequently, indications that the writers are leaving out important details either because those details undercut the narrative or because the writers don't know what they're talking about. Either way, given the difficultly and risks of playing the market, is this a source of advice you'd want to bet the farm on (perhaps literally)?

Monday, August 19, 2013

Paging Mark P

I remain deeply unsure of why people see Federal taxes as somehow being worse than other forms of tax:
The position of the libertarian Republican [inaudible] Right, coming from a principle of non-violence, which is the libertarian American position, that produces interesting results . . . Non-violence: don’t extort taxes from people to the federal government with the policemen.
I mean I get that people don't like to pay taxes.  But let me assure you, there is no state or local tax that I am aware of where you can fail to pay and not become familiar with the legal system.   Why is it violent for the federal government to collect taxes but not for the state government? 

I am paging my local expert on US culture to solve this quandary for us  . . . 

The Pleygo Proposal

One of my jobs back when I worked in the financial services industry was to give analytic support to teams that came up with new products. I always enjoyed those meetings. It was fun listening to smart people dig their teeth into an interesting problem.

The recent gush of PR for Pleygo, the well-connected, well-funded company that claims to be able to extend the Netflix DVD-by-mail model to Legos got me thinking about those conversations. More than a dozen blogs and news sites, including heavy hitters like Time and Businessweek, ran what appeared to be lightly paraphrased versions of the same press release. They were depressingly similar both in what they said and in what they left out. What you didn't see were the kind of questions you would normally associate with product development brainstorming meetings and we're talking some fairly obvious questions.

Though this isn't my field and I don't bring any special expertise beyond a few years in marketing, here are some of the topics I'd expect to hear raised when people first heard about this model.

The Way Kids Play

One of the many great features of Lego is the way the interchangeability of the pieces allows children to recombine them in new and imaginative ways. Give kids a little time and pieces from that rented X-Wing will be thoroughly mixed with the permanent collection. The guns will be protecting the medieval castle, the radar dish will be helping Batman track the Joker and the engines will be making the train set look really cool.

Imagine trying to separate out the X-Wing pieces from all those other sets, keeping in mind that many of the components that look similar (say the windshield from the fighter and the windshield from the Batmobile) may be different enough not to be interchangeable. Now imagine going through this process every time you want to return a set to Pleygo.

Of course, even if users can keep the rented sets segregated, the model still run into a still bigger challenge, what you might call the duration of play problem. It generally takes about two to four hours to watch a DVD (possibly spread over two or three days). After viewing, the value of that DVD to the renter drops sharply; there no incentive to keep it around. This is one of the reasons why the rental model has worked so well for home video.  With toys, some are played with once while others are played with almost daily for months. If you're paying $25 dollars a month and your child keeps a $40 set for six weeks, you're not coming out ahead. (Actually, some kind of rent-to-own model might work better.)

A Niche of a Niche

So who's the target market here? With Netflix, it was pretty much everyone with a DVD player. With Pleygo, it's certainly much smaller. For the reasons mentioned above, it's probably not children who play with Legos in the conventional sense (play is problematic for this model). Instead I think we're mainly looking at the subset of non-collecting model builders. These people are certainly out there but are there enough of them to justify millions in start-up costs?

Dozens of Choices

Another factor to consider when thinking about the viability of a mail-order business, either rental or retail, is catalog depth. Going all of the way back to Montgomery Ward and the Sears Wish Book, one of the historic advantages of mail order is the ability to offer huge selections. No video store could ever offer the choices that Netflix could (By mail. Streaming is another story). This isn't the case with Pleygo which offers a selection not much better than Target and probably no better than the Lego store at the mall. (The Lego store also has bins of different sized bricks so you can mix and match exactly what you need -- a huge plus for Lego enthusiasts).

A Logistical Nightmare

One of the great insights of the original Netflix model was that shipping DVDs was surprisingly cheap, fast and convenient. Shipping packages is none of those things. Remember, the value for renters here comes from getting access to many more sets than you could get on a monthly budget of $15, $25 or $39 (the last making sense only if you're regularly ordering sets with more than 500 pieces). Even if we assume that most of the sets mailed to the $15 and $25 members fit in the smaller boxes, it's still difficult to see how Pleygo plans to break even on shipping costs if these customers if they order three or more sets a month.

And then there's handling. Once again, the Netflix comparison is instructive. To process an incoming DVD, you make sure the bar code matches the title then feed it into a machine that checks to see if it's still playable. With a box of Lego pieces, the process would entail sorting and checking hundreds of components, making sure that nothing was broken, that pieces from other sets hadn't been mixed in, and that moving parts (motors, gearboxes, switches) still worked. And this process would have to be flexible enough to work with dozens of different sets.

"Wait! There's More!"

There is a partial exception to the claim I made about these points not being raised in other coverage about Pleygo, but it's a depressing example because in this BusinessWeek article by Susan Berfield, the questions feel more like the patter of an infomercial than any kind of actual journalistic inquiry.
That’s great, but most customers have a more mundane concern: How does Pleygo keep track of all those pieces? [founder Elina] Furman says that actually hasn’t been much of a problem, though each set does arrive with a bag of spare parts. The bigger issue has been figuring out how to offer free and fast shipping. For now, the company uses priority shipping from the U.S. Postal Service. Pleygo needed its version of the red Netflix envelope, too. That turned out to be a custom-designed cardboard box that comes in two sizes: small and large.

Throughout the BW piece, I got the feeling that the writer was being fed the questions with the (implicit?) understanding that there would be no follow-ups. Furman has a huge incentive to keep the good news flowing until the IPO and this piece gave her the chance to issue a reassuring if not credible "we're on top of it" about logistic concerns without having to lay out specifics or release supporting data.

Saturday, August 17, 2013

Weekend Kael Blogging

If I blogged this before, I apologize, but given the recent careers of Brian McGreevy and "Pittacus Lore," I thought this passage was worth revisiting.

Part of what has deranged American life in this past decade is the change in book publishing and in magazines and newspapers and in the movies as they have passed out of the control of those whose lives were bound up in them and into the control of conglomerates, financiers, and managers who treat them as ordinary commodities. This isn’t a reversible process; even if there were Supreme Court rulings that split some of these holdings from the conglomerates, the traditions that developed inside many of those businesses have been ruptured. And the continuity is gone. In earlier eras, when a writer made a book agreement with a publisher, he expected to be working with the people he signed up with; now those people may be replaced the next day, or the whole firm may be bought up and turned into a subdivision of a textbook-publishing house or a leisure-activities company. The new people in the job aren’t going to worry about guiding a writer slowly; they’re not going to think about the book after this one. They want best-sellers. Their job is to find them or manufacture them. And just as the studios have been hiring writers to work on novels, which the publishers, with the help of studio money, will then attempt to promote to best-sellerdom at the same time that they are being made into movies. The writer Avery Corman has suggested “the horrifying prospect of a novelist being fired from his own book.” It won’t horrify the people who are commissioning these new books—pre-novelizations.
"Why Are Movies So Bad? Or, The Numbers"
Pauline Kael  1980

New site

Notstatschat, added because of this contribution.  I should do the equivalent for Epidemiology conferences some day . . .

Friday, August 16, 2013

The ongoing airplane debate

It has been a long time since we have had a blog discussion and I have to admit that I am enjoying this one a lot.  So, where Mark P and I agree is that cars are clearly the lowest hanging fruit and the clarification in the last round makes it clear we are in fundamental agreement on this point.

Where we may disagree is that I think some small policy changes in air travel could yield important reductions.  The lack of alternatives may make this less likely than one would think (and TSA is quite good at ensuring air travel doesn't become too convenient) but I think there are two telling examples.

The first was the sequester and the special treatment air traffic controllers got relative to other public services.  After all, we had no trouble cutting assistance to Americans with inadequate food, rationing access to cancer care for Medicare patients, or to biomedical research.  Was this really the impact of the sequester (increased cost of air travel) that was the most pressing relative to the other items on this list?  The one area of true bipartisan agreement>

The second was blocking the merger of two airlines, one of which was bankrupt and the other was not far behind.  This could have led to higher prices, true, but in an industry where profits have been eaten to nearly zero was this really the biggest disaster possible?  That airlines might have enough money to not have to make brutal pension cuts due to financial distress (see this for the pension woes of American, one of the two airlines involved in the blocked merger)? 

So I guess my issue is not that we should focus on airlines as the lowest hanging fruit but rather that we should stop actively intervening to increase airplane consumption.  Now I live 4,000 miles from family and plane trips are already costly.  I definitely remember childhood trips to visits the grand-parents being 3 long days in the car.  I am not eager to replicate those days.  But I am also worried about carbon emissions.

Maybe if planes were properly priced we could get the political will to adopt 1980's era train technology as an option for shorter trips?  At 186 mph, no TSA, and fast boarding, there is no reason that you could make the trip between San Francisco and Los Angeles way more carbon friendly. 

Just take the old logging trail to Safeway...

Perhaps I'd better better add some nuance to the to the comments alluded to here.

For starters, I meant not to defend SUV use in LA but to argue that SUVs are as or more defensible here than they are in the vast majority of urban areas that don't have mountains running through them. Even here, most SUVs and big pick-ups are embarrassing reminders of market inefficiency and conspicuous consumption.

I grew up in a pick-up culture and spent a large part of my youth loading firewood and shoveling manure into the beds of various trucks. I still have great affection and respect for vehicles that can work like hell six days a week then get you out of trouble on a Saturday night. I don't, however, have any use for people who buy these fine machines not to haul loads or cross washed-out stretches of dirt roads, but to drive up and down the 405 during rush hour.

The point I was going for was that Megan McArdle's attempt to undercut the moral authority of environmentalists was muddled and more than a little dishonest. This was probably preordained the moment that McArdle, perhaps the ultimate product off the the NYC/DC bubble, decided to frame her argument as taking the side the ordinary folks in the rest of the country.

The entire piece is pretty much a train wreck (if you'll pardon the expression). First off, its anti-air travel premise has to coexist somehow with her previous position that seemed to call for more airports. Then we get this textbook example of using relative measures when you need absolute.
Those trips are simultaneously less necessary and more carbon intensive; almost eight times as many passenger miles are traveled by car as by plane, but passenger car travel only accounts for 3 to 4 times as much greenhouse gas emission.
If I want to reduce spending by, say, fifty percent and I have two costs, one of which is three to four times as much as the other, guess which one I'll focus on? There is, of course, a partial  exception when the lower cost is associated with an extraordinarily low-hanging piece of low-hanging fruit, but in this case, the low-hanging fruit is actually associated with cars, not airplanes.

I'm not happy about it, but for time-constrained long-distance transportation there is simply no currently available substitute for airplanes in this country. If we fixed the externalities (which we should), people would travel less, but when people travel in excess of five hundred miles, they will still opt to fly until we see major improvements in high-speed rail.

With autos, however, we have lots of low-hanging fruit from zoning changes to improved public transportation to upping fuel efficiency. It's this last one that leads to one of the clumsiest attempts of slight-of-hand I've seen in a long time, McArdle's odd conflation of not having a car and of not having an SUV.

And while most of those car trips are the business of everyday life -- getting to work, procuring food, etc. -- most of those flights are either vacations, or elite workers flitting to conferences and business meetings.
Giving up air travel and overnight delivery is much more personally costly for the public intellectuals who write about this stuff than giving up a big SUV. If you live in one of the five or six major cities that contain virtually everyone who writes about climate change, having a small car (or no car), is a pretty easy adjustment to imagine. 
This is simply amateurish. In the penultimate paragraph, McArdle goes from the necessity of having a car to the necessity of having an SUV, having laid no groundwork despite the fact that if easy improvements in automobile  fuel efficiency are possible, her whole argument falls apart.

Thursday, August 15, 2013


Mark P and I have been having a conversation about climate change and car use in the comments of this post.  Somehow I seen to have gotten him to defend SUV use in Los Angeles.  Not that this is irrational -- to be fair I was telling him on the phone yesterday how I have actually considered purchasing an SUV for my next vehicle (would it help to note I am looking at how much to save up to make it a hybrid?). 

But the real context was that I quoted Megan McArdle.  Ms. McArdle has a fairly poor reputation among the progressive movement due to her defense of Libertarian ideals using some pretty sneaky arguments.  Add in some tendencies for her writing to be lively but a bit sloppy and people can be very skeptical of McArdle quotes.  In particular, I suspect that progressives are annoyed at her firing at a key piece of the lifestyle of some of their core groups (we build a global community via travel) as part of putting us on the defensive. 

On the other hand, I do think that it would be useful to admit that fighting climate change is going to involve sacrifices.  Cheap energy is a positive good.  I love cars, electricity, and a wide variety of food even out of season.  But I think the real trick will be to focus on pricing in the externalities that massive burning of carbon entails.  Does that main people should not have SUVs or air travel?  No, but it does mean it might be worthwhile to make sure that the costs of these items is properly priced into the market. 

So I think it is worth thinking about these arguments, even when we are suspicious of the source.  After all, I would be even more surprised if progressives disagreed with her post on brokers and why it is a bad thing if the only way they can manage small accounts is by fleecing their owners.  On the other hand, I get deeply suspicious of arguments as to why companies shouldn't necessarily be held liable if their products prove harmful.  

Let me guess, it's like Netflix but with Legos

This is what a few million in start-up capital and  a good PR firm can get you, people all over the internet slightly paraphrasing then posting your press releases for you (or in the case of Businessweek, going the above and beyond and writing an unadulterated puff piece in exchange for a couple of exclusive quotes).

Pleygo’s Near-Perfect Pitch: It’s Like Netflix for Lego (Businessweek)

Pleygo Is Basically Netflix for Legos (Time)

Pleygo is to Lego what Netflix is to movies (Gizmag)

Pleygo: Netflix for LEGO (Tehnabob)

Pleygo, A Netflix-Style Rental Service For LEGO Sets (Geekologie)

What none of these articles mention is that, other than both products being relatively durable -- almost none of the reasons why DVDs-by-mail was a good idea apply to Legos-by-mail, but that's a post for another time.

The topic for the moment is the way products and businesses generate buzz. Right now journalists mainly seem to rely on the circular "We talk about it because it's important"/"It's important because everybody's talking about it." One of the many problems with that line of reasoning is that it's really easy for people with money and influence to get that cycle going by appealing to journalists' laziness, greed, vanity and herd instinct.

Much of the effectiveness of PR comes from the fact that, compared with traditional advertising, it hits us with our defenses down, We tend to assume that the writer has uncovered something interesting and dug up the relevant details. That was never entirely true, but these days, with a flack-to-hack ratio approaching 9:1, you should generally assume the opposite.

Wednesday, August 14, 2013

Social epidemiology of who does not get vaccinated

This post on who is actually refusing vaccination for their children is interesting indeed.  Consider:
 As Seitz-Wald explains, the unvaccinated kids are clustered in some of the wealthiest schools and neighborhoods, particularly in California, where some extremely expensive private schools have vaccination compliance rates as low as 20 percent. Anti-vaccination sentiment has been stereotyped as a mindless lefty cause, but in reality, Republicans are slightly more likely to oppose vaccination than Democrats. The real correlation is between having a lot of money and class privilege and opposing vaccination.
 This puts the whole issue of selfish behavior in a completely different context.  Especially as failing to vaccinate an older child can result in the infection of younger children.  So people with the most resources are deliberating deciding not to support the social good of reducing the burden of infectious disease among children? 

The speculation about reasons is unclear, but the most grisly possibility is that it is a status symbol showing that a special class of people should not have to follow the rules.  There is very little public health justification for exempting people because they want to feel special and like the rules do not apply to them.  We did not create special person exemptions with the prohibition of dumping raw sewage on the streets or dropping your garbage into city parks, we should not do it here. 

Climate change and air travel

I have heard this argument from Megan McArdle before:
The question answers itself, doesn’t it? Giving up air travel and overnight delivery is much more personally costly for the public intellectuals who write about this stuff than giving up a big SUV. If you live in one of the five or six major cities that contain virtually everyone who writes about climate change, having a small car (or no car), is a pretty easy adjustment to imagine. On the other hand, try to imagine giving up far-flung vacations, conferences, etc. -- especially since travel to interesting locales is one of the hidden perks of not-very-well remunerated positions at universities, public policy groups, nongovernmental organizations, and yes, news organizations.
But I tend to credit it as having at least a little bit of truth.  It would personally cause me a great deal of grief if it were to become a social norm, given how far away from my family that I live.  But it is true that air travel is a very tough source of carbon emissions to remove, given the need for high energy density fuel.

But I think that this fits in well with how nice it would be to improve train travel, which is a very carbon-friendly mode of transportation.

Tuesday, August 13, 2013

Government secrecy

It is fashionable right now to see people who leak government secrets as being some sort of hero.  It is true that secrecy in government action can be subject to significant abuse.  But Eric Posner points out that transparency is not all good in a democracy:

Thus, the debate is not “democracy vs. security,” as the press has invariably framed it. It is, paradoxically, “democracy vs. democracy.” The secret ballot is the most famous illustration of the essential role that secrecy plays in a democracy. The secrecy of the ballot protects people from intimidation so they can vote sincerely, but it also enables a dishonest government to manipulate elections since people’s votes are not publicly verifiable.

Commentators always emphasize the importance of openness to democracy, forgetting that secrecy is just as essential. Often they treat secrecy as a disagreeable golem that lurks unwanted in our democracy, whose claims must be entertained but should be treated with the utmost skepticism. The New Yorker’s John Cassidy, for example, celebrates Snowden (and Manning) for generating huge gains in public accountability, while discounting the government’s claims that he caused serious harms to national security by revealing methods to enemies who can henceforth evade our spies.
I think that the secret ballot is a very good example of a case where transparency could actually prove counter-productive.  The potential for intimidation in revealing the specific voting decisions of people who need to work with the next government (think of government bureaucrats or people who contract with the government) is actually pretty huge.  I also wonder if the focus on victimless crimes doesn't lead to more problems than it is worth, leading to a huge need for secrecy about matters that are usually adult decisions.

I am not sure I completely agree with the decision to go with lower levels of government transparency there is clearly a trade off here.  But I have to agree that Posner brings up a good point that there is a point where openness could actually create more problems than benefits. 

Monday, August 12, 2013

Infrastructure that requires no new tech

Matthew Yglesias on low tech solutions:

It's no hyperloop, but here's one way we could make the trip from New York to Washington, DC much faster. It's called a "passenger train" and all you need to do is instead of relying on existing tracks build whole new tracks that go more or less straight. And instead of slowing the train down by stopping in Baltimore and Wilmington and Trenton and such you'll just traverse a bunch of jurisdictions without actually providing them any service.

What is ironic is that these jurisdictions that are bypassed may still be better off.  All you need to do is have small express trains to either Washington, DC or New York (whichever is closer).  Two fast trains may well be better than one slow train that is always stopping.  It even fits the Mark P principle that it can be done now with currently available technology.  No need to hope that technological break-throughs will continue at a historical pace to allow the technology to become viable one day . . .

Film history for fools -- box office disasters

Consider this a footnote to the previous Motley Fool rant.

There's an old and very common saying in Hollywood that the biggest money-losing film ever was the Sound of Music. The joke here is that though the film did rather well...
Upon its initial release, The Sound of Music briefly displaced Gone with the Wind as the highest-grossing film of all-time; taking re-releases into account, it ultimately grossed $286 million internationally. Adjusted to contemporary prices it is the third highest-grossing film of all-time at the North American box office and the fifth highest-grossing film worldwide.
... The films it inspired lost a lot of money. That's a bit of an oversimplification. Music was just the last of a string of hit musicals in the early Sixties ( West Side Story, The Music Man, My Fair Lady, Mary Poppins) but it was the biggest and it suggested an upward trend and, to the extent that it was responsible for what followed, it might well justify that money-losing title. 
The commercially and/or critically unsuccessful films included Camelot, Finian's Rainbow, Hello Dolly!, Sweet Charity, Doctor Dolittle, Star!, Darling Lili, Paint Your Wagon, Song of Norway, On a Clear Day You Can See Forever, Man of La Mancha, Lost Horizon and Mame. Collectively and individually these failures crippled several of the major studios.
I don't want to push the analogy with comic-book movies but there are similarities, particularly regarding the budgets and the stories executives told themselves to justify them. 

And I'm pretty sure if Motley Fool had been around in, say, 1967, these upcoming movies would have generated lots of optimistic exclamation points.

Because that's the way it is with hot trends, they just keep getting bigger and bigger forever!

And don't forget to invest! Super-powered movies have been some of the highest-grossing films of all time, and as these franchises continue to grow, the numbers are only going to get more impressive. The Motley Fool's new free report "Your Ticket to Cash In on the Superhero Battle of the Century" details what you need to know to profit from your favorite superheroes. Click here to read the full report!
DC Comics Turns to an Anti-Hero in Its Time of Need

As part of researching a couple of ongoing threads, I've been reading more Motley Fool than is good for me lately and it's brought home just how much of a scam MF and most of its ilk is. They've mastered a reassuring, knowing tone despite displaying only the most superficial knowledge of the industries they're discussing.

What's worse, each tired piece of under-researched conventional wisdom is presented as a reason to call your broker. Netflix is going places since it grabbed House of Cards (never mind that they probably overpaid, particularly since they didn't even get syndication rights); Hold it, Netflix might be in trouble because their new kids' show is a spin-off of the flop Turbo (never mind that the Turbo show was part of a much larger Dreamworks deal that involves hits like Kung Fu Panda and How to Train Your Dragon or that historically spin-offs of hit kid's movies like Disney's HerculesLilo and Stitch and even the Lion King haven't been notable hits on their own so it's not clear how much difference a good opening for Turbo would have made).

The truth of the matter is that very few of us should try to pick stocks and if you find yourself frequently saying "I didn't know that" when reading Motley Fool posts you are definitely not one of those few.

Saturday, August 10, 2013

Weekend blogging -- Anthromorphic Theater

This cartoon from the aftermath of the meltdown had been lying forgotten in a corner somewhere since it first came out. It's less topical now but it's a nice snapshot of a part of the crisis some people mey have forgotten.

Friday, August 9, 2013

Owning a business in Russia can be tricky, it seems

This story cited by Tyler Cowen really shows the problem of private or corruptible police:

Most of the imprisoned are not there for any political reason. Their incarceration has to do with the nature of Russian corruption, said Elena Panfilova, the director of the Russian branch of Transparency International, a nonprofit group that studies corruption around the globe. Run-of-the-mill bribery schemes, practiced from China to Mexico, usually involve the police, fire inspectors or other regulators asking for payments on the side to allow a business to operate. In these instances, the interests of the business owners and corrupt officials are aligned — both ultimately want the enterprise to succeed.

But in Russia, the police benefit from arrests. They profit by soliciting a bribe from a rival to remove competition, by taking money from the family for release, or by selling seized goods. Promotion depends on an informal quota of arrests. Police officers who seize businesses became common enough to have earned the nickname “werewolves in epaulets.”
This type of problem really points out why you need a state that is strong and well functioning.  Because there is a bad equilibrium for a police force to shift into (see above), it is critical that there be an external check on the shift into these equilibrium.  It also tells us just how valuable a tradition of "good government" is and how deeply we should prize it. 

The word 'metacognitive' is usually a bad sign

Lucy Calkins of the Reading and Writing Project at Teachers College has an article on something I should probably be paying more attention to.
In April, hundreds of thousands of children in grades 3-8 in New York State took Pearson’s version of the totally new Common Core aligned literacy exams. The students’ scores on those tests have yet to come out, but the New York State Department and Pearson’s scores have been accumulating as well, and accounts of how well they’ve done on this test are not good. Each week, another journalist produces a blog or a column that begins, “I recently obtained a bootlegged copy of the New York State English Language Arts (ELA) exam…” and then the article proceeds to critique the exam. One recent journalist, for example, wrote, “I received full copies of each of the sixth, seventh and eighth grade tests…” before going on to ponder the implications of this iteration of the test ( More than a month ago. The Post distributed copies and quoted excerpts of the 5th grade exam.

Ironically, it feels as if the only people who are studying the test and writing their responses to it are teachers and principals. Because this is a closed test, educators risk losing their jobs if they obtain and speak out about boot-legged copy of standardized tests. Still, it is possible for the world to hear the observations and concerns that educators have about the test. The day after the ELA, the organization I lead – the Teachers College Reading and Writing Project – opened a site ( on which educators could post observations made during the test, and thoughts and concerns about the test. More than a thousand responses have been entered onto that site, and altogether, the responses show that teachers, principals and superintendents from both high achieving and high need schools have deep concerns about New York State’s test. gives a window into what educators are concerned about in regard to these tests. Now the question is – is anyone listening?


It is entirely likely that this test will be influential (even controlling) in decisions about how reading and writing are taught. It is especially likely that the exams will become curriculum in any state or city in which standardized tests have become deciding factors in whether teachers are hired or fired. In NYC, the scores that students receive on Pearson’s tests determine whether students have access to selective middle schools and secondary schools, allowing the tests to take on inordinate importance. On top of that, in NYC, teachers are ranked by name in newspapers based upon the scores their students receive, and this, again, means that the tests become an all-important measuring stick.

In the online posts at, you’ll find a few issues that are raised again and again. One of these addresses the interpretation Pearson makes of close reading of nonfiction. For most teachers, the goal of teaching kids to read nonfiction successfully is to teach in such a way that students can learn from the nonfiction they read. That is, if they read an article on the Pony Express, the goal is that they learn quite a bit about that topic. If you look at the Common Core standards themselves, this reading work would encompass standards 1-3, which asks students to determine central ideas and supporting details, and analyze their development in the text, as well as standards 7-9, which asks students to synthesize and integrate, compare and contrast, and weigh and evaluate, ideas suggested by texts on the same subject.

Yet the Pearson exam seems to have asked few or no questions that addressed standards 7-9, as they chose to present students only with isolated texts rather than text sets, and many questions on standards 4-6, that ask students to analyze the craft and structure of texts. “Which term best describes the structure used in paragraphs 4-6?” “Why did the author include the image of….in line 12 of paragraph 5?” This sort of highly metacognitive, analytical reading-writing connection work is not usually the primary reading lens of nonfiction readers. Teachers are getting the message that their instruction should no longer channel students to read lots of nonfiction in order to expand their knowledge and grow ideas about a topic. Teachers are gathering that what counts to Pearson and New York State is that even children as young as nine year olds read nonfiction texts in order to analyze the author’s craft. This work has been propagated through the Publishers Criterion, a document offered by two authors of the Common Core, after the CCSS was ratified. As one poster, Sandra Wilde wrote, “ the items are constructed in a very narrow way, not from the standards themselves but from a narrow set of ideas - based on the Publisher's Guidelines”
I wish I had time to spend on this issue. It's too complex to discuss without doing your homework (which I haven't done), but I do have a few brief observations:

1. The reform movement has always been based on an odd alliance of that saw a chance to advance their generally well intended but otherwise disparate goals. One of these groups is theorists who wanted to try different pedagogical approaches and were running into resistance from the teaching establishment.

2. Though reform is often presented as a return to common sense basics, some of these pedagogical approaches, particularly those involving reading and writing, seem quite arcane. From first and second grade, a great deal of time is spent on fairly obscure concepts like the distinction between perspective and point of view.

3. If the tests we use to evaluate students, schools and teachers incorporate these ideas, then these approaches will become the standard.


4. While I don't want to dismissive of these approaches, I have a very different view. Kids are amazingly intelligent and inquisitive. If you give them the ability to read with little effort and good comprehension and you get them to read widely and deeply and to write clearly and thoughtfully, they will teach themselves better than you ever could.

Tech companies may lie to you but we never do

Item number 5 from The Worst Lies Tech Companies Tell You:
Cord cutters, pay attention: There is no such thing as an HDTV antenna. Or to put it another way, any TV antenna you've ever used, ever, is an HDTV antenna. Yes, all of them.
Check out the update on this post from 2010 or this post from 2011. (I've actually grown more suspicious of  some other aspects of that 2011 story, partly because the account conflicts with some things I've observed and partly because the New York Times has a record of serial inaccuracy on the OTA story.)

Thursday, August 8, 2013

Jon Chait has to be pranking us?

I say this because of this review he posts of a book that seems deeply ahistorical:

The new right-wing book of the moment is American Betrayal, by Diana West, which offers the thesis that American foreign policy under presidents Roosevelt, Truman, and Eisenhower was secretly controlled by the Soviet Union. If this sounds like the sort of tract that would be written by somebody who thinks Joe McCarthy was absolutely right about everything, well, that’s exactly what Diana West does believe. She’s also quite the birther.

West argues not just that there were communist spies in the government or that American foreign policy failed to take a strong enough line, but that the Soviets controlled the American government in the way they controlled, say, East Germany. For instance, West argues that America provoked Japan into attacking Pearl Harbor — an American working for the Soviets “subverted relations between the US and Japan by inserting ‘ultimatum’ language into the cable flow that actually spurred the Japanese attack.”

So the downfall of the communist US government was due to John F Kennedy, lion of the right wing?  Who managed to squeak out a victory over Soviet pawn Rich Nixon (Eisenhower's Vice President, after all)?  Making JFK and Lyndon Johnson leading the only actual American led government in this 40 year period of subjugation?  Making the Great Society what a non-communist government would introduce in opposition to the communism of Richard Nixon? 

I am not saying that these things aren't possible in the sense of "logically possible".  But the Korean war and the Berlin blockage seem like odd policy decisions if the United States was a soviet satellite in the sense of East Germany.  Look what happened to Hungary in 1956 when it decided to buck Soviet control!  Now, this is completely separate from a claim that these presidents were rabid socialists or a competing strain of communist (kind of like China was).  It is the direct control from Moscow that seems to beg for a very high level of evidence.

So I guess I prefer to believe that Jon Chait got his facts wrong rather than actually imagining anybody would posit this theory of US history. 

The Epidemiology of Laughter

No, really. This post by famed sitcom writer/producer/director Ken Levine illustrate how infectious laughter follows some of the same rules as other infectious phenomena.

Comedy plays better in confined spaces. Laughs are louder when they don’t drift away.

Now you may say this is a superstition and I just want to be near that massage parlor, but (1) they don’t give group on’s, and (2) being in close quarters amplifies the laughter and laughter is infectious.

Whenever a sitcom episode goes into production the first order of business is a table reading. Several large tables are set up, the actors sit across from each other and read the script aloud as the writers and executives sit around them. Many shows I’ve worked on just hold their table readings right on their cavernous sound stages. On shows I’ve produced I insist we hold the table readings in conference rooms. Yes, it’s a little cramped, and chairs are pushed up against walls, but the difference in the reaction is startling. Laughs are so much bigger when you’re not at the bottom of the Grand Canyon.  Jokes are so much funnier when they don't echo.

Lest you think it’s just me, the table readings for CHEERS, FRASIER, WINGS, THE SIMPSONS, and BECKER were all held in conference rooms.
Levine also addresses the question of whether you should initially test a concept under overly friendly or overly hostile conditions.
Do we get an unfair reading as a result? Do the scripts appear funnier than they really are? Sometimes. There are producers who won’t change jokes later if it worked at the table reading. I’m not one of them. If a joke doesn’t work when it’s on its feet I cut it.  Table readings can always be deceiving.

But way more often, I’ve seen bad table readings done on the stage then gone back to the room and changed the shit out of the script. Later that day we'd have a runthrough of the original table draft and 70% of the stuff we planned to cut suddenly worked.

I’d rather err on the side of the table reading going well. Especially since you have the network and studio there as well. The less nervous they all are about the script, the better it is for all concerned.

Wednesday, August 7, 2013

The Totem Pole

Via Andrew Gelman, Gary Rubinstein has a very good post on what he observed while visiting a KIPP school in NYC (part of a larger series). I'll be getting back to the big issues Rubinstein raises soon, but first I wanted to take a moment on this side issue.
One thing that I see in schools a lot is the most experienced teachers getting to teach the high level class while the newbies have to teach the ninth grade remedial classes.  I suppose that this is some kind of reward for longevity, but it really is unfair.  If it really is about ‘the kids’ the new teachers should teach some of those easier classes.  I’m sorry to report that at KIPP they seemed to have the same sort of totem pole going on.  In the ninth grade wing is where I saw the most first year TFAers.
We hear a lot of complaints about how soft things supposedly are for long-time teachers, but the one place I've actually seen extensive evidence of this is an area that almost no one mentions (except, of course, for Rubinstein).

As a rule, first year teachers are best suited for advanced classes both in terms of strengths and weaknesses. New teachers tend to take a while to stop thinking in college terms. They are generally weak in classroom management and in those special communication skills needed for to handle lower level classes. Talking about concepts with peers and professors is very different from discussing those same concepts with bored ninth graders running behind grade level.

On the plus side, those concepts are fresher for just-out-of-college teachers and they inspire more passion. New teachers generally have more energy and are better able to keep up with classes of academically advanced kids. On top of that, college bound students often respond better to teachers they see as part of the college experience..

There is, as always, a context of bigger issues here, but for now, if you're looking for a reform to get behind, you could do worse than  tearing down that totem pole.

Tuesday, August 6, 2013

At this point, seeing even inaccurate coverage of OTA television seems like a triumph

This Marketplace story does leave a bit to be desired in terms of accuracy and completeness. In the audio version, the reporter, Sally Herships, like almost everyone covering this story, seems confused by digital versus amplified antennas and TV antennas versus satellite leading her to greatly overstate the price range of the equipment -- think under $10 if you don't need amplification (if not cheaper) -- and she failed to mention that the picture quality is actually better for free TV or that, in the region being discussed, you can get close to one hundred channels over the air or that with an adapter you can watch and digitally record those channels on you laptop.

All of that aside, this is still a story about doing without cable (or at least certain channels on cable), airing on one of the biggest and most respected financial news programs and it lists rabbit ears as the first option. I've been following this story closely for years now and I honestly can't recall this happening before. There have been a few voices in the wilderness on the subject -- Rajiv Sethi being perhaps the first and most notable -- but that was the blogosphere. A story like this in mainstream media is a very promising development, particularly given that the last time I heard the topic broached on Marketplace it was immediately dismissed by their guest expert (from the NYT, of course) who claimed that you can only get "a handful of channels" with an antenna in LA.

The story digital broadcasting has always come down to the question of whether the superior technology could establish a foothold before regulatory capture and the huge imbalance of hype drove it out of business. In that context, this is a good day for the medium.