Five years ago at the blog -- When you're always a skeptic. there's always a risk that something you mock will live up to the hype. (Hasn't happen to us personally, but you hear about cases.)

This isn't to say that every business or innovation we've criticized have crashed and burned. Netflix is nowhere near the profitability bulls were promising, but it does make money and it's still the number one streamer unless you let Disney count all the subscribers from Disney+, Hulu, and ESPN, and I 'm sure there are other examples, but when it comes to ideas that we called out as stupid and completely unworkable -- hyperloops, Quibi, "Netflix but for Legos," and countless others -- all attracted millions and in some cases billions in funding only to crash and burn. 

Elon Musk's proposal for a high-speed train to travel a route of just over three and a half miles never even got to the funding stage. It has been replaced by a controversial, but less silly plan for a gondola to carry people to the stadium. More on that later. 

 

 

 

Wednesday, October 3, 2018

Fixed costs, marginal costs, and the Zeno project management rule of thumb.

Having spent a long time now chronicling bad journalism, one of the conclusions that keeps coming up again and again is that 21st-century journalists have a serious problem dealing with the obvious, particularly when it goes against the story being told by the subject of a piece. This inability to address these naked emperor situations shows up in every area of news coverage – – political examples alone would fill volumes – – but let's focus on one egregious example, high-speed intra-city rail, best illustrated by a recent proposal from, to no one's great surprise, Elon Musk.

There's a very good rule of thumb when you're trying to devise complex solutions to get you as close as possible to some upper bound: if you think of your progress in terms of a succession of steps that take you halfway from where you are to where you want to be, you should assume that each step will cost more than the previous step. In other words, getting halfway to your goal will be cheaper than going from half to one fourth and going from half to one fourth will be cheaper than going from 1/4 to 1/8, and so on. (I'd probably start using the word "asymptote" here if this were the kind of post where I was going to use words like "asymptote.")

Clearly, this is closely related to the concept of diminishing returns and it immediately suggests that plans which promise complete solutions to thorny problems should be viewed with great skepticism. Recent case in point, the vague pitch for a vague proposal for a vague plan for getting pedestrian deaths in Los Angeles down to zero. With a well-functioning press corps, offers of perfection should be a hard sell.

Unfortunately, this takes us into the bullshit territory of aspirational language and various other magical heuristics. The willingness to commit to the impossible has increasingly come to be seen as a sign of seriousness and visionary thinking. Playing by these rules, the very fact that a claim is unbelievable actually makes it more credible.

While it is possible to come up with exceptions to the Zeno rule, it holds for an exceptionally large number of cases, particularly when you take into account fixed and marginal costs. Let's get back to the subject of transportation.

Consider two flights, one from Los Angeles to San Francisco, the other to some city east of the Mississippi. LA has a fair number of major airports, but they all tend to be understandably on the outskirts so that, if you are starting from a fairly central location, it is easy to find yourself a considerable distance away from the closest option. Between driving, parking, and getting through security, let's call it two hours from stepping out your front door to stepping on the plane (to simplify things, we'll treat the other airport as your final destination).

We'll round up the flying time from Los Angeles to San Francisco to an hour and call the flying time to our unnamed East Coast city eight hours, giving us a total of three hours and ten hours respectively. In terms of travel time and airspeed, those two hours are fixed cost while the rest are marginal. Increasing airspeed would decrease the second but leave the first unchanged, thus paying extra for a much faster airplane would make a great deal of sense for the long flight but almost none for the short one.

Once again, apologies for spending this much time making obvious points, but it's good to have these things in mind when we consider the following:

Elon Musk's company proposes 3.6-mile tunnel to Dodger Stadium
Billionaire entrepreneur Elon Musk’s tunneling company on Wednesday announced a proposal to build another tunnel in Los Angeles, a 3.6-mile underground route that would carry fans between Dodger Stadium and a nearby Metro subway station.

The Boring Co. said the Dugout Loop would be a “zero-emissions, high-speed” transportation system that could carry fans in about four minutes between Elysian Park and a Metro station along Vermont Avenue, at Beverly Boulevard, Santa Monica Boulevard or Sunset Boulevard.

Pods carrying passengers would whiz through the tunnel at speeds of up to 150 mph, resting on self-driving platforms called “skates,” the Boring Co. said. The trip would cost about $1, and riders would purchase tickets in advance through a mobile app.