Bouncing From One Bubble to Another

This post on Zero Hedge should serve as a reminder that people who use one “less bad” statistic to support the case for economic recovery are metaphorically bringing a knife to a gun fight. Economic performance, market performance, and fiscal and monetary policy are incredibly complex subjects that are both interconnected and operate on their own trajectories, but as is usually the case every snapshot in time usually reacts disproportionately to one of the above factors and right now what the Fed is doing certainly seems to be the critical set of actions.

And the scariest part of the chart is the tail end: even with the unleashed dam of liquidity, the market still has a massive retracement ahead of it before it can recover the adjusted losses it has suffered since the last credit bubble. Ironically a 50% run up in the S&P has not been enough to offset on an apples-to-apples basis the unprecedented liquidity efforts let lose by Chairman Ben.

The bottom line is that when viewed from the perspective of liquidity fueling the market, the S&P 500 has never been in a worse situation. And alas, as the Fed’s balance sheet climbs to $4 trillion +, absent a multi-year parabolic rise in stocks, liquidity will increasingly lose its power to sustain markets to historical overbloated levels. But Ben Bernanke will go down in flames, and take down America with him, trying to disprove this hypothesis.

[From Presenting The Liquidity Bubble | zero hedge]

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More on this topic (What's this?)
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About That QE4…
Read more on Complex, S&P 500 (SPX), Federal Reserve at Wikinvest

Columnar Data Storage

Hasso Plattner, SAP
Image by dfarber via Flickr

At the SAP academic research conference yesterday Hasso Plattner spent a lot of time talking about database design and why it’s still important. More significantly, he drilled into why re-architecting applications to take advantage of a fundamentally differently database than what we are used to with relational databases is critical if we are to simplify code bases and develop new generations of applications that take off where the current state of the art ends.

This area has a pretty steep learning curve so to get started here’s a good explanation of the distinction between columnar vs. row database architecture.

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The Nature of Anonymity and Who is Tyler Durden?

Several stories have popped up, thanks to @pkedrosky for the links, about the popular blog Zero Hedge and who exactly is behind Tyler Durden.

It is quite clear just from the variety of writing styles associated with the name “Tyler Durden” that more than one writer is associated with that name, It is also clear that the folks at Zero Hedge are unusually well plugged in, independent of their sources. The operation appears to have had a Bloomberg terminal from its early days (no minor expense), suggesting the writer(s) at a minimum co-located with a trading operation. I had though initially ZH might be a former hedgie who was trading for his own account and posting, but the volume of posts (and effort required to produce them) now suggests that some writer/researchers there are close to full time.

[From naked capitalism: Who is Tyler Durden?]

There are 3 reasons why people author under pseudonyms and why in two of those scenarios I don’t have a problem with it. However, let’s deal with the one case where anonymity is abused and has no place in the legitimate blogosphere, because you want to embarrass, harass, or slander. If what you are writing is not something you would say face to face or wish to have your name associated with, then don’t write it.

Anonymity has a long tradition on the internet and where it has been abused the result has been to devalue the internet as a whole and give ammunition to critics who have an agenda of command and control of information. I don’t have much patience for people who hide behind made up identities to say things as authors or commenters to other sites they are too cowardly to say mano e mano.

There is another very innocent reason why some people chose to blog anonymously… they are shy. I don’t have a problem with this and nobody else should either.  

Anonymity does have legitimacy as a tool for exposing information to the public that is for the public good. Quite often that comes with great risk, professional or even person safety, to the person exposing it and anonymity is exceptionally valuable to ensure the flow of information that would otherwise remain buried.

We could get dramatic and use examples like Deep Throat but it does not have to be dramatic, as is the case with many industry insiders who expose the inner workings of businesses, whatever their motivations. Zero Hedge is a great example, they consistently turn out some of the best reporting on the financial services industry from the perspective of someone who knows where to look for the dead bodies. it is not clear who is among the 40 people who contribute to the pseudonym Tyler Durden but they are becoming reviled on Wall St. for exposing the practices that make the insiders insiders while everyone else remains on the outside.

Who is Tyler Durden? I don’t know and I don’t care… if other media outlets delivered the in depth, highly informative coverage that the crew at Zero Hedge are doing, then maybe the public at large would not only be less dismissive of traditional media but also better informed. Naked Capitalism asks if this is a new kind of media platform… I think it is and hope we see more of them.

The PR Agency of Satan

UPDATE: I picked up the title for this post while looking at a Twitter search result, not realizing that it was the title of Jacob Morgan’s post on the same subject… so in the interest of credit where credit is due I point you to his post on this subject.

This morning I opened up my email and there was a message to a list called “DigitalBrand” from a PR agency pitching a book. It was bulk email to a list of people, I have no idea how many but as the events unfolded in the morning I recognized many of the people on the list, mostly journalists, authors, public speakers, and other influential bloggers (note that I am in none of the above categories… so I was kind of honored to be included!). The list name was in the CC, meaning anyone who replied to the email ended up respamming the entire list, by the end of the day over 50 messages were traded, not a lot considering but I think that by late morning they had shut down the list server to control the traffic.

Lesson #1: Don’t use lists but if you must then think ahead and put the list in the bcc field. PR pitches should be personal in this day and age, spamming a list isn’t going to make you any friends.

Throughout the morning people, also on the list, were replying back questioning how they got on the list, demanding to be taken off, and sundry other harshly worded messages. I have no idea how I ended up on this mailing list, but a quick search revealed I had nothing from them previously (I only delete outright spam from my inbox, which explains why I have 50k messages in my gmail account.

Lesson #2: Don’t pitch or promote a service or product to an email list consisting of people who didn’t ask to be on the list. Pissing off the people you are trying to court is not smart.

Despite many pleas from people to take them off the list, demanding to know why they were on it, and expressing dismay that it was happening in the first place, no one from the offending agency stepped in to offer an explanation of what happened, why, and what they were doing to fix it. Later came torrent of emails from the list server with unsubscribe help ticket confirmations, it felt a virtual black hole sucking in everyone on the original list.

Lesson #3: Being engaged may seem so 2008 but it still matters. If you are pitching something about social media, make a blatant mistake, and then don’t step up to explain yourself, you have not only pissed off a lot of people but you throw away any sympathy and “don’t worry about it” sentiment that certainly exists. We have all made mistakes with email, and will certainly make mistakes in the future…

The final observation is that because their is no latency in communication today, individual acts like sending an mail to a list and setting off a cascading series of unfortunate events, can happen with blinding speed and far greater amplitude than anyone expects. By the afternoon the twitterverse was picking up on this incident and blog posts were appearing, none of it complimentary and certainly not beneficial to this firm’s clients.

People who communicate for a living and to groups not connected to their firm need to be very careful about these small acts that can quickly spiral out of control. I deliberately didn’t include the name of the firm, although no doubt you will quickly figure it out if you follow the links, because I don’t think they deserve to be burned in effigy… it was a mistake and I’m sure more than a few people had a very bad day today. Having said that, I can’t help but notice that this event underscores the idea that people who are used to being pitched for a living don’t want to be pitched like they used to. In this unfortunate incident are some real lessons to be learned about how PR firms deal with the people they want to court support from.

The Just Say No Movement

Environmental groups long ago lost legitimacy with mainstream Californians for simply being the Party of No, as in no development of any kind, anywhere, under any circumstances. There’s only so many times that you can raise the same objections and not turn into the proverbial boy who cried wolf. The latest example of this is a proposed water desalination plant in Marin County, ground zero for liberal progressive environmental agendas, and by extension the 20 currently planned desalination projects in planning stages in California.

According to Helliker, the plant itself – planned to occupy a 7-acre swath near the Home Depot in San Rafael – will cost $3 million to $4 million each year to operate. Desalination eats up a lot of energy due to the high pressure needed to push seawater through extremely fine membranes that extract the salt.

[From Key Marin County hearing on desalination]

First a little background, desalination works by pumping large amounts of sea water through a series of membranes, a process called reverse osmosis, with the resulting product being high quality drinking water and a sea salt sludge that is simply pumped back out to where salt is already abundant, the ocean. The process is, by any standard, old technology that has been adopted in places where naturally occurring water is not in abundance, like the Middle East, and the increased cost, roughly 4-5x the cost of acquiring drinking water from a watershed or a groundwater system, is a necessary tradeoff. Tampa Bay, Florida has successfully operated a large scale desalination plant for years now.

In California these same environmental groups have waged a war against the citizenry by attacking water diverted for the agribusiness, California’s largest economic sector and significant supplier of food to the country as a whole and for export internationally, and for population centers, a war that has been joined by the Federal government in what amounts to a massive violation of states rights as bureaucrats in Washington are determining how the State of California uses California water resources.

Beyond simply a matter of building new dams, the state finds itself in a position of defending existing dams that environmental groups would prefer to see razed, which means no new supply is being added the state water system while the population continues to expand. Conservation alone simply cannot make up the difference, that old song has been pushed on Californians for 3 decades and the underlying water supply situation has not changed. Conservation is good, we practice it here at our house, but it’s not enough… it’s like suggesting that if everyone simply drove 55 mph we would not have an energy crisis.

California is for the most part arid. We don’t get any significant rain for almost half of the year, we cannot escape drought cycles, and water that is collected is under assault from a hot and dry climate that results in massive evaporation. We have plenty of water, it’s just in the snowpack and rivers which is the heart of environmental objections. They would prefer to see rivers flow to the ocean instead of providing water to the citizenry. It’s one of those let them eat cake moments in public policy…

Further complicating matters is that California’s population centers depend on water collected far way and delivered by pipeline. This water infrastructure has been neglected for decades as Sacramento politicians neglected their responsibility for good long term stewardship of public infrastructure in the name of short term measures more geared to satisfying powerful allies than serving the public good. As a result we have a water system that is greatly as risk of natural disaster which could result in outright cutoff of water service to major cities. You want to see a civil war then cutoff a water supply… there is nothing as basic as clean water for a household in this state or anywhere else.

So we have environmental groups that have restricted the development of water supply and have in their sights a reduction in current capacity now objecting to development of a new water resource on the grounds that it is expensive, uses too much electricity, and has alleged but unproven risk for returning the salt sludge to the ocean. Basically it’s “no, no, no, and hell no” and while we are on the subject, I am not hearing the “too much electricity” argument being applied to the fleets of plug in electric vehicles being imagined by environmental groups…

I say build massive desalination plants, supply them with abundant nuclear power, and refine the sea sludge into food grade “fine grey sea salt” that can be sold in Whole Foods. Win win.

UPDATE: After writing this I recalled reading about molten salt technology. Basically the way it works is that a salt sludge mixture is used as a thermal energy store and then used to power electricity generators. The salt sludge flows through solar panels which heat the mixture to approximately 1k degree (F), the heat can be stored for up to a week is used to power steam generators which produce electricity. This is a great example of how a waste byproduct can be used productively and why projects like desalination deserve to move forward.

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The Lack of Diversity in the Technology Industry

Every once in a while this issue flares up, usually in relation to conferences not having anything other than a bunch of white guys on the speaker agenda, but I think we should stop fooling ourselves about the technology industry valuing diversity and on there being a system of meritocracy for achieving it.

Women, Hispanics, blacks, and people with disabilities are all conspicuously absent at events and on company payrolls. We have deluded ourselves into a false sense of security about the fact that because tech centers like Silicon Valley, Boulder, and Boston are themselves centers for cultural diversity, that our industry is diversified as a result. Not true.

Why does this matter, especially coming from someone like me who has a gag reflex about the words “affirmative action” and repulsion at the idea that we, as a society, condone hiring or admittance, and promotion based on anything other than merit? It matters because we are not an economy that searches out natural resources like iron ore, timber, coal or natural ports and waterways to determine where we expand; we are an economy that depends upon businesses identifying clusters of talented human resources to solve problems that have economic value. If our solution is that a bunch of white men, young and middle aged predominately, are going to solve the bulk of problems from here on out, then we will neither be very good at it on a global scale nor efficient as a society in lifting earning power and real economic growth across the board.

Before reflexively commenting that every company has Indian and/or Asian engineers, as your proxy for diversity, just think about this for a moment. When was the last time you saw someone in a wheelchair or with a vision disability working in your office, or someone who is black or the last time you met someone at your company event who was there with their gay partner? Can you name more than 10 female executives at big tech companies or the last time you met someone who is older than 55 at a conference?

I’ve been in this business for a long time and can say without fear of hyperbole or generalization that the above are not common experiences, which makes me believe that for all of our enlightenment, those companies that we look down on, like Walmart, are actually much better at courting and sustaining a diversified workforce than the majority of tech companies, large and small.

Why (Current) Web Statistics Don’t Mean Shit

I would sum up this puff piece on the so-called new AOL as “we’re big, we’re bad, we’re AOL”.

But AOL, often derided as the original gated community, is now manufacturing a broad array of digital media that is free for the grabbing. There are 300 working content producers in its New York headquarters, backed by hundreds of other freelancers and programmers in Bangalore, Dublin and Dulles, cranking out copy and editing photos for more than 80 Web sites. Ten are ranked in Technorati’s top 100. Politics Daily, which began in April, already has 3.6 million unique users a month, while Politico, a much more established name, has 1.1 million. In the aggregate, the media properties at AOL have about 76 million unique visitors.

[From The Media Equation - AOL Builds Content as Mainstream Media Falters - NYTimes.com]

Here’s the problem for AOL, which the NYTimes apparently doesn’t see because they themselves have the same issue: it’s not how many people are hitting your URL, it’s what they do with you once they get there that matters. While community may be the most abused and mis-used word in media at the moment, engagement matters more than ever and the best brands in media know it. AOL is, for the most part, fighting the last war by focusing on unique users and pageviews. If either of those stats actually mattered anymore, well the newspaper business would be a growth industry right now.

Suggesting that your place on the Technorati Top 100 is a proof point for your success is pretty lame, just as much so as reciting your traffic stats. How about some new stats that measure how viral your content is, as in propensity to be shared directly by visitors or on other topically related sites, and depth of engagement that measures, beyond time spent, what site visitors are doing when they get there, like commenting, clicking on sponsor links, etc.?

So while AOL is trying to be Huffington Post, by bringing individual authors and brand names under one masthead, Huffington Post itself is going to personalized news in a big way with their Facebook Connect initiative. Poor AOL, always a day late and a dollar short…

Obstacles to Greatness

Last week I watched a really interesting documentary called Moon Machines about the development of the machines that took us to the moon in the 1960s and 70s. What was really remarkable about that program was the absurd amount of new engineering that had to occur in order to achieve the man on the moon goal set by President Kennedy nearly a decade earlier.

The engineers clearly had a grasp on the physics challenges, which presented the most significant challenge in the form of mass and energy required to get to the moon and back, but keep in mind that by 1963 the U.S. space program consisted of humans strapped onto intercontinental ballistic missiles where the nuclear warhead would normally sit and a grand total of around 2 hours and 45 minutes of suborbital flight.

Through watching the Moon Machines series I gained a fascinating perspective from the engineers themselves (no interviews with astronauts or the other pseudo celebs usually associated with the 1960s space program). What was as remarkable about the achievements aside from the engineering was the age of the people who did it… the program manager for the Saturn rocket first stage engines was 28 years old when tapped to lead that project.

On the engineering front the challenges were not only daunting but also with life and death consequences. Time and again the engineers spoke about the unknowns they faced and broad assumptions they had to make about conditions they would expect. We often here stories about the abstracts of this endeavor, like the limited compute power they had at their disposal, but other state of the art technology presented its own challenges.

The lunar module featured two engines, one that would power the descent and a second stage that would separate from the base of the machine to power the ascent which would return the astronauts to the command service module. The engine on the ascent stage relied on a fuel that was so corrosive that it had to be rebuilt after each use, meaning that when the astronauts were on the surface of the moon they were relying on an engine which had not been tested prior to flight. One could only imagine the thoughts that went through the engineers and the astronauts minds while waiting to press that ignite switch to free them from the Moon’s surface.

There were failures and disasters that resulted in the loss of life before that goal was accomplished but that doesn’t diminish from the success of the program, which accomplished a series of engineering accomplishments with few equals in the annals of mankind. Watching this made me question whether we are capable today of equally ambitious achievements or if we, as a society, are incapable of taking on endeavors with the risk of failure so pronounced. What would OSHA say?

While this question kept bouncing around in my head I happened to watch a History Channel program on the building of Hoover Dam, an engineering achievement of another flavor but with it’s own impressiveness when the stats are all lined up. Perhaps the most remarkable statistic is that Hoover Dam was completed ahead of schedule and under budget… could such an accomplishment happen today? I don’t think so.

If Hoover Dam was undertaken today it no doubt would drag on for decades under environmental reviews, lawsuits, and political machinations before a shovel ever hit dirt, and then it would be an endless stream of procurement scandals, faulty welds, union work rules, budget overruns and schedules misses. Think Boston’s Big Dig…

Don’t get me wrong, I would never suggest we are not capable of great things but I do question whether we have allowed ‘death by a thousand cuts’ to impair our ability to do great things.

Email Marketing Primed For Massive Disruption

I just had a great conversation with a friend that covered, among many things, email marketing and how broken it really is. Then I come home and open up my email, finding this.

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Email marketing is so fundamentally broken that it defies the imagination. Single digit response rates are considered a great success and not pissing off your market is a good day. Companies in all market segments turn to email marketing knowing full well it is not an optimal solution, meanwhile email service providers and software companies actively develop solutions that defeat email marketing. Users have been conditioned to avoid “unsubscribe” links because they serve primarily to validate email addresses purchased from lists, while legitimate unsubscribe links often do not work or take up to 30 days to remove you from a list that took a nanosecond to add you to.

Obviously the biggest problem with email marketing is the lack of effective targeting technology. Current generation solutions use blunt force instruments for targeting and the result is that prospects are rarely matched with information and offers that appeal to them. This also explains why the takeup rate is so low.

There simply has to be a better way to do this, whether it be tapping into activity streams and feeds, affiliate arrangements, or location based services. Something… anything has to be better than what we have today.