Innovative business models

Mark Evanier has an interesting observation about an extended warranty for an external hard disk he bought at Amazon.

A 2-Year Data Recovery Plan for $9.95. This proposition gives me more information. It says, "If your drive stops working, the Rescue data recovery plan will recover the data from the failed drive and return it to you on a new piece of external storage." That sounds interesting until you get to this line: "If your data isn't recovered, you get your money back."
...

Okay, so follow me on this. Let's imagine that I have no technical capability to recover data from a damaged drive. None whatsoever.

I offer this deal. When you buy a new hard disk, you send me ten bucks. If the drive never fails you, I keep the ten bucks.

If the drive does fail, you send it to me and I send it back to you with your ten bucks and say, "Sorry, I couldn't recover your data." I don't even have to send you that new piece of external storage I send you if I do recover your data, which I don't even try to do.

What is my potential loss here? Well, I haven't investigated far enough to know but I suspect when you send me your drive for possible data rescue, you have to pay a postage and handling fee for its return. If you do, I'm out nothing. I might even make a few more bucks off that postage and handling fee. If you don't, then I'm out the cost of sending you your refund and returning your drive.

Charles Pierce shows how journalists should acknowledge a mistake

No excuses. No "if anyone was offended." Just take responsibility and apologize to everybody.










Then compare yourself to a character in a Monty Python sketch.

Push, push, push...

BP: great company or the greatest company?

A example of corporate push polling for your files.

Happy New Year's -- Little Nemo grows up

Season's greetings from Windsor McCay.

For best results, open in another tab and expand.

Some things to keep in mind if you see Annie on New Year's Day

There's a lot of history here.

Most of the regulars probably know, I've got a great fondness for comics and their history, whether we're talking panel, strip, book or animated. The adventure strips of the Thirties are are particular favorites. In an age when graphic novels win Pulitzers and superhero movies break a billion at the box office, it can be difficult to remember that in the Golden Age, newspapers were where the action was. With the qualified exception of Will Eisner (whose groundbreaking title the Spirit was a newspaper supplement), the comic book artists of the late Thirties and Forties were mainly imitating people like Alex Raymond, Roy Crane and Milton Caniff.

At their best, these men created bodies of work that stand up remarkably well to this day both in terms of art and narrative. I have no trouble killing lots of hours with Terry and thePirates or captain easy. Little orphan Annie is more problematic. Annie was a beautifully drawn and inventively written strip, butit is difficult to read more than a few strips without being reminded that politically Gray was a Proto-Randian and personally was something of a creep.

Here's an example from Brian Cronin.

[Harold] Gray felt that this travel was integral to the strip (in fact, speaking of the first legend, years after the fact, Gray tried to give his own origin of how he came up with Little Orphan Annie, and it involved him talking to a young orphan girl – it is a dubious story at best [Cronin pointed out earlier that the original title was little Orphan Otto and that the gender change was suggested by his publisher -- MP]). Well, during World War II, gas was rationed. Gray was already no fan of the federal government (as he viewed Franklin Delano Roosevelt as the enemy to basically all of his ideals of self-reliance for the American people), but when he requested and was denied extra gas ration coupons to effect his travel, he was furious. It was an Office of Price Administration clerk named Flack who turned Gray down, determining that Gray’s cartoons were not vital to the war effort.

Gray, a great supporter of the war (Annie formed a group called the Junior Commandos to help the rationing effort in the United States and it soon grew from the strip into a reality) and he was outraged that what he felt were his great patriotic efforts were being unrecognized. Gray asked for a hearing and he received one, but Flack’s decision stood.

Gray then took to his strip by starting a series of strips where he would berate a “fictional” character named “Fred Flask.”

Editorials piled in denouncing Gray and a couple of papers even dropped the strip. Flack threatened to sue over libel. Gray never apologized, but he did drop the series of strips.

Just to put things in context, unnecessary travel was considered a big deal at the time.

But the Flask strips are far from being Annie's low point.

In a series of strips in 1944, upon Roosevelt receiving the nomination for his historic FOURTH term as President, Gray began a series of strips where Warbucks was slowly dying of a mysterious disease. The disease, clearly, was that of the country itself. The current generation was killing the hero of capitalism, Warbucks…

Gray dragged the death out for some time, with many strips similar to the above.

However, as you all know, Roosevelt died early in 1945. Well, what do you know, Warbucks turned out to have faked his death!!

And then, Gray went even further by explaining how happy Warbucks was about a certain change in the “climate.”

I first came across these strips when I picked up a large collection of Annie strips at a library sale. I knew Gray was conservative (start with the lovable war profiteer...), but I had no idea how intense the feelings were or how open he was about them. I remember reading these and thinking "he didn't just say that, did he?"

In retrospect, it shouldn't have been that surprising. Gray hated a lot of people, particularly those he considered "do-gooders" and that hatred was never far from the surface of the strip. Given the changes the films made to his creation (included an appearance by FDR in the 1982 version, I'm pretty sure that Gray would have added the people behind those movies to his enemies list.

I'll explain why later...

but in the meantime, go download the Wake Up Now segment from This American Life. At least a half dozen threads converge on this one.

Robots, Railguns and Rube Goldberg

I'm starting a weekly video feature over at the teaching blog (part of a bigger educational media project, but more on that later). For now I'm collecting fun little STEM videos that teachers can start off the week with or use as filler or as writing prompts.

The purpose is generally more inspirational than instructional. Unless it fits in with the day's lesson plan, it is difficult to get across a complex scientific concept in a five minute YouTube clip. You can, however, get across quite a bit of cool, particularly with a young audience.

I'm looking for short videos with big visual impact (visual enough that most can be played with or without sound). They should appeal to a broad age range (ideally K through 12) though probably for different reasons -- we'd like a high school physics student to watch at the first video and think about majoring in engineering; we'd like first graders to watch at the video and think "wow, a robot cheetah!" (because the second reaction has a way of leading to the first).

Right now, the candidates are mostly from engineering but I'd like to broaden that later. I've been mainly looking at MIT and IEEE. There is also a TED, which somewhat violates my principles but when you see it, you'll understand. I'm also looking for off-beat Rube Goldberg devices and pre-industrial tech. I'm not crazy about the two historic examples here. I love the tech but the videos leave something to be desired.

Does anyone have any suggestions for filling out this list?





Robotic Cheetah








Magnetic Hair












Squishy Robots








Three Strokes of Upward Lightning







Small cubes that self-assemble




Soft autonomous earthworm robot at MIT







A Swarm of One Thousand Robots





Atlas Human-Powered Helicopter - AHS Sikorsky Prize Flight






Levitating Superconductor on a Möbius strip





















Soft Robot Uses Explosions to Jump







1,000,000,000,000 Frames/Second Photography - Ramesh Raskar







OK GO








Hero's steam engine






World record trebuchet at Warwick Castle

The perils of bell curving

This is Joseph.

As people probably know, I tend to be a bit of a Marissa Mayer fan.  However, this one item from a recent piece is definitely something that I would prefer not to see in a company that I worked for:

Mayer also favored a system of quarterly performance reviews, or Q.P.R.s, that required every Yahoo employee, on every team, be ranked from 1 to 5. The system was meant to encourage hard work and weed out underperformers, but it soon produced the exact opposite. Because only so many 4s and 5s could be allotted, talented people no longer wanted to work together; strategic goals were sacrificed, as employees did not want to change projects and leave themselves open to a lower score.

The problem with this sort of approach is twofold.  One, it makes people reluctant to join elite teams and groups (where they get to be rated as sub-average) instead of letting these teams mentor and nurture up and coming talent.   Two, since any ranking is partially a political process (only so much of the data can be objective, especially since the manager presents the evidence), it encourages political infighting among the managers of closely related teams.

Neither process is ideal.  Furthermore, you have to pay extra to compensate for the fear and uncertainty around a low ranking (base salary gets more important when bonuses can be variable). 

Now I am not saying that this process cannot work effectively under some circumstances, but it has notable downsides that need to be thought carefully about. 

Modern War

This is Joseph.

Paul Krugman:

Angell’s case was simple: Plunder isn’t what it used to be. You can’t treat a modern society the way ancient Rome treated a conquered province without destroying the very wealth you’re trying to seize. And meanwhile, war or the threat of war, by disrupting trade and financial connections, inflicts large costs over and above the direct expense of maintaining and deploying armies. War makes you poorer and weaker, even if you win.

I think that this insight is something we should think about a lot more.  In the modern and interconnected economy, even the peaceful absorption of a state (think East and West Germany) can be fraught with difficulty.

Once imperialism looks cost ineffective, it really does change the best ways to deal with opponents.  It's no longer the case that Alsace-Lorraine is really what we want to be fighting for -- instead it is the human capital where a lot of the value lies and it is hard to loot that.  This is not to say that resources are not a good thing (the resource curse can be over-rated) but that they are no longer the sole thing that drives a states economic power. 

This is likely to be a good development, in the long run. 

Today's Principal Agent Problem

This is Joseph

From Mark Miller:

The fix moving through Congress would revised the Employee Retirement Income Security Act (ERISA) to grant plan trustees broad powers to cut retired workers' benefits if they can show that would prolong the life of the plan. That would mark a major change from current law, which calls for retirees to be paid full benefits unless plan assets are exhausted; then, the PBGC steps in to pay benefits, albeit at a much lower level. The bill also would increase PBGC premiums paid by sponsors, from $13 to $26 per year.

and

The big problem here is that the plan fails to put retirees at the head of the line for protection. When changes of this type must be made, they should be phased in over a long period of time, giving workers time to adjust their plans before retirement. For example, the Social Security benefit cuts enacted in 1983 were phased in over 20 years and didn't start kicking in until 1990.

My problem with this approach is that it does not appear to give the people who manage the plans (i.e. the corporate entities) any incentives to manage the plans successfully.  The focus on short term performance and the linkage of these metrics to managerial compensation, creates a severe principal agent problem -- the group responsible for managing the plan doesn't bear any of the cost if the plas end up dramatically underfunded.


It is often the case that such schemes do not end well, as it can be very easy to boost profits by underfunding the pension scheme.  Under these rules, the potential long term cost to the business is quite mitigated.  Do we really want incentives aligned like this? 

Movies in the modern age

This is Joseph, trying something new.

I was very interested to read this piece on the focus on sequels:

I believe that what studios see when they look at the bumper-to-bumper barricade of a 2015–20 lineup they’ve built is a sense of security — a feeling that they have gotten their ducks in a row. But these lists, with their tremulous certainty that there is safety in numbers, especially when numbers come at the end of a title, represent something else as well: rigidity and fear. If you asked a bunch of executives without a creative bone in their bodies to craft a movie lineup for which the primary goal is to prevent failure, this is exactly what the defensive result would look like. It’s a bulwark that has been constructed using only those tools with which they feel comfortable — spreadsheets, P&L statements, demographic studies, risk-avoidance principles, and a calendar. There is no evident love of movies in this lineup, or even just joy in creative risk. Only a dread of losing.

I must admit that is interesting that the Lord of the Rings and the Hobbit became a six movie extravaganza and that the Marvel/DC comic book movie line-up is . . . daunting.  Sure, some of these movies are surprisingly good (see the latest X-men movie).  But the focus on doing more of the same is exactly what led to a long period where TV was pretty much a dead art form.  Now roles are reversed, and it might well be that movies have a long slump before something new and daring pops up.

Happy Holidays

Since 2009, Mark and I have used this as a forum for a lot of different topics.  From a blog that started about Epidemiology and a little bit of Dungeons and Dragons, we've become instead an eclectic opinion blog, talking about a wide range of fun topics.  Education reform was probably the first deviation, but since then we've seen media criticism, financial advice, and a general willingness to be skeptical about strong claims.

It's been a great ride and we look forward to continuing it in 2015. 

Incentives and proper incentive alignment: a never-ending series

This is Joseph.

Mark has promised a post on this topic, so I thought that I'd start the show by revisiting the issue with Amazon and warehouse workers.  From Megan McArdle:

Should you get paid for standing in line? Workers at an Amazon warehouse thought they should. I kind of agreed. But the Supreme Court disagreed, holding 9-0 that the Amazon contractors could be forced to stand in line to clear security at the end of their workday but did not have to be paid for their time.

The issue here is that the wait could be lengthy.  That added unpredictability to the end of the shift and, if time in line was unpaid, the employer has no incentive to improve matters.  Screening costs and the more efficient it is then the more costly it would be.  Increasing waits to exit protected Amazon profits by reducing shrinkage (which is good) but cost workers (standing in line).

It is legal outcomes like this that check my libertarian streak,  If the law isn't constructed to handle these sorts of external costs on workers (and everyone else) then it makes the preconditions for basing the social contract on contract law to be questionable -- even if this ruling should happen to be correct on the merits.

Sony's hypercube -- they keep finding new sides to cave in on

First they caved in when Rogen and Franco came in with a bad idea for a movie that was certain to be more trouble than it was worth.

Then they caved in due to threats and cyber-attacks from North Korea.

And finally(?) today they caved in to criticism and bad PR and announced a small and largely symbolic theatrical release.

Is this really the end? I can't think of anyone else to whom they could cave, but we do have about thirty-six hours till the theaters open on Christmas Day, I have faith in Sony executives' ability to surprise me.

The Hobbit: The Battle of the Five Armies

This is an off-topic post by Joseph

I just wanted to point out this review.  I think Howard Taylor hits most of my high points and he is quite astute about the book versus movie piece.  The movie is better if you just pretend it isn't adapting a book and take it on its own merits.