Digital control gone too far

So my wife and I drove down to Modesto for this weekend. I wanted to test out using my phone with my car’s Sync, because I noticed it had a USB connection. I tried to start playing Pandora and my car told me Sync was unable to play protected content through this device. Let’s think about how absurd this is. I have an auxilary input into my car, so I can easily use a headphone jack to play the exact same music through the car speakers. The only difference is that I lose the ability to use the on steering wheel music controls. Digital copyright maximalists have decided that to allow microsoft to use Sync they must limit the devices that can play protected content. How assinine. This means that it is now les safe for me to play music because I can’t use the dash screen to see what music is playing or other controls to keep my eyes on the road. I own both the car and the phone and I’m paying for Pandora through ads. There’s no logical reason that I shouldn’t be able to use these products in this way.

This is a bit of a first world problem sure, but the same idea that is limiting my ability to use products that I own how I want them is shaping the rest of the internet and controlling how media (digital or print in some cases) can be used and consumed the world over. One of the more famous cases of late is the story of a guy that bought a book from Thailand and sold it in the US. The got sued because apparently that’s might not have been legal (supreme court thankfully ruled in his favor) another one is the idea that any software is merely a license and not actually a product that you own. In this case Autodesk sued a guy that was selling an old copy of AutoCAD that he’d never opened, on the grounds that he bought a license and the terms of service (which they can change at any time without you knowing or re-agreeing to) said that he was unable to transfer this license. This wasn’t a digital download it was a physical disk with the content on it.

I believe that because the US market is becoming saturated in many regards for these types of technologies, these companies are looking to turn these aging platforms, technologies, and content into a continual revenue stream. Instead of risking money to innovate they are turning into monopolists that are exhibiting rent seeking behavior. They must do this to keep their stocks from falling. Even the fabled internet companies that are supposed to be different aren’t. Amazon has been accused of limiting access to drive book prices down from their suppliers. Amazon limiting access to books. Think about that. Can you think of anything more abhorent than limiting access to culture and/or knowledge to gain a greater profit margin?

Should companies make profits, by god yes. Should we enable companies that have innovative ideas to enter the market? Definitely, in fact it’s an imperative if we want to avoid rent seeking behavior. I’m not always a fan of Lyft, Uber, and AirBnB but they are making a serious effort to confront entrenched businesses, archaic laws, and meet an obvious market need. So, let’s work to enable market competition and limit monopolistic behavior. The former is good for everyone, while the latter only for those in power.

My thoughts so far on Piketty and corruption

There are a lot of people that are arguing over Thomas Piketty’s new book, Capital in the 21st Century. I’ve been reading it, i’m about a third of the way through the book. It’s pretty interesting in the way only dry economics can be. A lot of people are both tearing it apart and praising the content. He’s done something really novel and that’s to create an economic theory around the accumulation of wealth and the impact on the return on capital on growth and vice versa. This naturally is causing some concerns because the findings are disturbing people. Financial Times has found about a 12 errors that they feel invalidate the results, however, their graphs aren’t really all that different. I’m not convinced you’d reach different conclusions based on the data Piketty has accumulated.

I’m more interested in the results in relationship to behavior it drives in reinvestment in capital that can drive further growth. Based on what I’ve read so far, the fact that growth is less than the rate of return on capital means that capital will not invest in innovation, but rather in goods that they can easily receive rents from.

What does this mean? It means that those with capital will invest in lower risk or safer places for their money. This means that they will buy land and houses which acrrue value and provide a steady income of new capital to be reinvested elsewhere. If you’ve ever read the book Rich Dad, Poor Dad, that’s exactly what the author proposes doing. Once you have enough money to buy a house, you buy one pay enough down and improve it to get a profit, leverage favorable taxes so that you can sell it and upgrade to a duplex and have two familie paying rent. Repeats until you’re able to buy apartments and continually expanding the number of people paying you to have money.

This approach works, but doesn’t really do much of anything to actually help the economy grow, it helps increase wealth as it’s own goal. This is how Donald Trump got rich. It doesn’t help the economy grow because it doesn’t provide new jobs it relies on others to create new jobs. Furthermore, as the population naturally increases and the types of jobs change more people will move into the area and will continually to increase rents. Further increasing the wealth of a wealthy individual. Sure, the person might be a self made millionaire and possibly a business owner around their real estate empire, but that doesn’t truly mean that they are adding more value to the economy than they are extracting, which may prevent growth.

This creates a serious risk to the people that use both the Wall Street Journal and Financial Times, because these book papers help support the wealthy get wealthier. They have a vested interest in seeing Piketty’s theories be disproven and discarded before policy makers have a chance to leverage them. I believe that this book along with the Origin of Wealth can point out ways to manage risks to our economy. Piketty’s theories are a purely macro economic construct, while the Origin of Wealth is a Micro theory that expands up through maro theory. I believe that Piketty’s theories help illustrate the impact of micro and behavior economic theories. We have inequality and it is unlikely to get better, unless we take action to change our policies and fight corruption.

I believe that the root cause of our problems relate back to a type of political corruption in nearly all our political bodies. Wealth is able to use their wealth to shape policies that create more wealth, while the poor are unable to do so. I think this is something that everyone can get behind regardless of your political beliefs. A true libertarian political body can’t exist with corruption any more than a complete comunist political body. Fighting corruption requires more than mouse clicks it requires people to act. People to force their leaders to be accountable for their actions. Inequality and power imbalances come through short terme thinking, political regimes, and historical choices. We can’t do much about the past, but we can drive change in our politics through voting, donating, action,  and through informing people.

Bastille’s Bad Blood and Friendship

I really enjoy the song Bad Blood by Bastille. It’s not the most amazing song out there but for some reason it really strikes a cord with me. I think it has to do with the course about how tightly things in our past bind us together. It reminds me of some of the stuff that ended up happening when I was younger. Things that when you have a meet up of those people that you end up talking about. One of them is a time when a friend and I were standing outside of Sheetz early in College. We were bullshitting with the woman working and she was really tired of working complaining about work. Well, my friend has a bit of an anarchist bent (or at least did) and said, yea we should just blow it the fuck up. He and she finished their cigarettes and we drove off thinking nothing more of it. A few days later I get a phone call asking about the terroristic threats. Which obviously didn’t happen.

Aside from events like that it also reminds me of all the people that I’ve lost through stupid things. One kid we wrote off after he didn’t show up for a bachelor party or the afterwedding party at the Cabin – he was the best man. We were pretty upset about it. However, some times you lose friends because of other friend’s disagreements. I’m thinking about two of the best buddies I knew in highschool and up through their argument. I’m not even sure of the details because it happened while I was in Europe and no one really talked to me about it other than saying not to talk to either of them about it.

This sucks. Our lives are both too short and too long to leave things things festering. We only have one life and we need to make the best of it. So in the case where a fight ruptures a friendship like that and impacts all relationships with each other, that’s something that needs to be dealt with. It’s one of those things that could very likely lead to a great deal of regret as we get older. When we’re in our 50s or 60s do we want some squabble to have ruined a great friendship? I don’t know.

Song just makes me really think about how our lives are bound together through collective stupidity in youth and how those are the strongest bonds you have. How, bad blood can poison a group of friends, and how some times we really do just need time to heal.

Comcast and regulation

I believe that the 300 GB data cap that Comcast is tossing around is tomorrow’s 640k predictions from Microsoft. In 5 years when they are claiming to plan to implement it, 300GB will be woefully small. As it stands many games are 50GB and likely will only grow. As will the size of our movies we stream and other services that will develop in the next five years.

Comcast’s arrogant attitude towards it’s customers can only be described economically in one way: market failure.  If we had a strong competitive telecom market, Comcast would not be able to dictate prices in this way. We know this is true because we can see prices AND speeds that are significantly better elsewhere in the world.

There are two other results of this market failure, pushing regulation that prevents competition and preventing regulation that would prevent a foreclosure of another market. I’ll start with the regulation preventing competition.

In my last blog I mentioned an idea call private public partnership. This is the concept of a municipality working with a private enterprise to spread the risk of implementing a local high speed network because one of the big players won’t. Comcast and other telecoms have pushed and been successful at making these partnerships illegal in a few states. This means a small rural community can’t develop their own fiber network if comcast doesn’t do it for them. It also means a big city like New York couldn’t either. This type of regulation only hurts competition and helps comcast control the market. In the US these partnerships have worked well. Provo Utah sold theirs to Google.

The other way that Comcast is using this market failure is to push the idea that net neutrality is regilation. It is a bit, because it prevents comcast from using a monopoly to foreclose another market. This is what Microsoft got in trouble for with Internet Explorer.  Leveraging the monopoly of Windows to push out other browsers. In the EU the ruling against MS really help other browsers immediately. Comcast will likely try a similar tactic with their Xfinity platform by never having it count against your data cap. Pushing people to their platform and squeezing out Netflix.

The play to get Netflix to pay them is a long term play, hurts Netflix now, but essentially will be funding further development of Xfinity.  Don’t forget, Xfinity will likely get Universal content earlier as they own that conent. This will give their platform a distinct advantage over Netflix. It’s pretty obvious to everyone that the future of in home entertainment is streaming content. Hence, Google looking to buy Twitch.

Comcast is using the anti – regulation faction to fight net neutrality while leveraging that same group’s anti- government sentiment to prevent novel forms of competition to exploit customers and move into new markets. This is a dangerous problem because they will keep doing this to push out other competitors.

Customers, Companies, and Power – imbalances drive inequities

I’ve been in the process of buying a house for the past month. It’s been a rocky process. Some of it has been on us, but a lot of it has been on the side of the lender. The first problem came when they basically started the process they day we were supposed to sign. This precipitated a series of events that as lead to the fact that it’s unlikely for us to actually fund the house on the last day we possibly could. Furthermore, they have been rather cavalier about the fact that we can just move closing dates without a problem. Essentially their poor processes have required us on multiple occassions to modify a private contract. We’ve been punished again and again because of their inability to meet their obligations. This strikes me as a serious inequity, especially since it’s not a big deal for them that we essentially lost out on a full month’s of rent from the seller. We have minimal to no recourse to address this loss.  On top of this, they still get paid. In my mind they’ve provided little to no value in this process and have in fact simply added a great deal of waste. They should no be paid and in fact should pay us the loss in rent we should have received from their inability to meet deadlines.

This sort of behavior is rampant in industries and companies that are essentially monopolies. Either their customers are fully locked in to a specific company because it is expensive or difficult to extract personal data or some other technical issue or the customers have no other option. In either case the company is able to act with a great deal of disregard for their customers. The goal of the business then becomes to extract maximum rents from their customers not to provide maximum value to the customer. This can create existential issues for a company that undergoes this transition, because many of the people that made that company great are pressured and have the quality of their employment decline without understanding why. Essentially these folks still try to do the right things and in many cases don’t agree with their corporate leadership. In many cases, such as with a Telecom, it’s likely they are exempt from the full rent seeking behavior of the company.

Thinking about these things have made me really frustrated the past few weeks. My job is to help my company deliver more value to the customer so seeing these actions is increasingly frustrating and counter productive to Lean principles. If companies aren’t adopting principles that improve value for end customers, then what can we do? Well, I think that in each of these cases the root cause comes from two totally different policy actions. First many of the issues we’re having are designed to protect customers so we enacted policies to that end. While the other problem, rent seeking behavior comes from the lack of policies to protect customers.

In each of these cases different government actions have lead to different actions for end customers. In actually these painful delays for our loan may for many other people, truly protect them. However, in our case, they aren’t. In the case of push deregulation on telecom the result has been monopolies and behavior designed to continually take more money from their customers. In each cases, these derive from two different philosophies around the value of government regulation. I think these situations highlight the nuances in this area.

In the end it’s important that we have real conversations about the underly reasons for different policy decisions. We need to understand that there are imbalances of power between customers and companies. In many cases those companies will exploit them to their best advantage. Unfortunately, these imbalances extend to the realms of politics as well. This of course is another area where we have issues and will continue to have issues. It is unclear how to address these imbalances, i’m not confident that we’re going to be able to do this in the next few years. If we cannot address these issues I believe they will continue to get worse as the economy remains flat in it’s growth.

Starting from the Bottom, building an app

So, aside from blogging, watching (and playing some) video games, and obviously reading what else am I working on? Well, I’ve got a few things cooking. A friend and I are working on an app for smart phones as well as the web application version.

Who isn’t working on an app these days? Well that’s a seriously good question, it’s pretty easy to get started. I found that the idea was one of the easier things to come up with. Especially since the starting point wasn’t mine, it was Jesus‘s, a really good friend of mine from the Netherlands. The basic premise started with wanting to build a social networks to help kids find other kids to play with.

However, we’ve since evolved the concept into something that parents would want to use for their kids. We’re envisioning an app that will help kids deal with being diagnosed with Diabetes. Managing diabetes through an app isn’t a novel concept, the American Diabetes Association has one already as well as a support group with forums online. Hell they even have dietitians and RNs to help support the forums. We’d have none of that at launch.

Our goal is to enter a slightly different space, helping the adults learn how to teach their kids how to manage the disease. So this puts us in a different space. Furthermore, we don’t think that apps alone will help manage the disease as we believe that there needs to be something to continually engage the kid or parent to continue using the application.

To this end we plan to eventually extend to games and other things that would tie into our application. Those are still in the works and I think our key idea, an avatar, will help when we launch.

So where are we now? At the very beginning. My development skills are way out of date and not so relevant for this project, so I’m learning how to develop in Ruby on Rails right now. I’m using the book Agile Web Development with Rails 4 to do so. I’m  a big fan of this book. By the time I finish walking through the book I’ll have developed a Store Application (to sell the book no less).

Even beyond that though, I’ll learn how to manage a full application in Ruby along with all the database structures that go with it. It’s pretty much ideal for developing the back end as we determine how we want the front end to work. Furthermore, Ruby plays really nicely with JavaScript, CSS, and a few other languages. So, we’ll be able to continually evolve our front end well beyond the initial Rails application.

This will allow us, as developers, to build a fairly consistent application feeling across platforms. I’m not building this alone, as I mentioned Jesus is helping me and he’s doing more of the administration of our server, DB, and has started on a UI for the app version.

We have a long way ahead of us, but we’re using an application called Trello to manage our agile Kanban work items. This allows us to pull the amount of work we believe we can do in a week. Have a conversation about the work we’re planning on doing, and then demo the work that we’ve done so far (see image below).

Kanban Board

 

These tools have allows us to move forward at a modest but consistent pace. Jesus is currently pursuing both a PhD and an ice cream business, while I’m working, buying a house, writing blog posts, and kind of working on a fantasy novel. So we’re both busy guys but we’re making head way. It will take time, but I think no matter what happens, it’s going to be worth the effort invested into this project.

By the way, the app’s name is going to be Monster’s Versus Diabetes. I think it’s a pretty sweet name. I’ll post updates as we go through the process. Feel free to shoot me any questions about agile, kanban, or managing a project like this.

Video Games, not just for Kids

So, today was one of those days where I had a few different topics that I wanted to write about. I had a request to write about video games. I’ve written one or two blogs about video games in the past. However, I think that there’s always more to be said about them.

I think it’s fair to say that video games are a bit of the red headed step child in the entertainment industry. They aren’t taken as seriously as movies and it’s not as culturally acceptable to geek out over video games as it is to geek out over movies (some movies) or television shows. However, I think that this is going to change and it’s not because of the video game designers and publishers.

I think that Twitch is going to drive to make video games more acceptable and shift video games location in culture. Through events like Intel’s championship series or DreamHack which is a collection of tournaments for games like DOTA 2, League of Legends, Star Craft, and many more, I believe that there is an opportunity for video games to reach an acceptance level akin to golf. For the most part these games are multiplayer and very team based. There are leagues, trading of players and everything else you would expect in a major league “sport.”

It’s not just these events, it’s the personalities that drive watching live streaming. As I’ve mentioned in the past I have a few friends that stream and there is a community that has sprung up around watching these guys play. It’s pretty awesome.

Through these streamers, I’ve been able to experience many more interesting games than I can actually play or even afford to play. This allows me to keep abreast of the video game landscape without having to really play (I play Civ V, Binding of Isaac, Super Meat Boy mostly). In the case where the streamers are playing single player games it’s similar to watching a movie with someone guiding the movie. It’s a lot of fun, especially since you’re able to have a conversation with the star and his fans all at the same time.

Furthermore, I think that video games have not been given enough credit for pushing the boundaries of technology. Game designers and players for PC together drive companies like Intel, AMD, and Nvidia to keep designing newer and more powerful products. Intel is able to make a massive profit on their platforms designed for gaming – they know it, they’ve changed their strategy a few times in regard to selling stand alone chips because of gamer’s demands. We should be praising the hardcore gamer because they are helping us continue to advance in one of the few bright spots in our economy.

Each video game community has it’s own quirks and idiosyncrasies, which can be seen in how new games are developed as well as in business practices for the developer. For example, Valve has several economists studying the naturally occurring economy around trading in games like TF2, I believe that through controlled economic settings like TF2 where there is no central control (Blizzard I’m looking at you!) unique economic conditions can emerge that will shape how the designers develop future releases in the game. This has been clearly shown in how Valve continually releases new hats (yes, hats).

Compared to Eve (a massive multiplayer online role playing space video game) TF2’s economic system is rudementary. In Eve you can buy, build, trade and develop true economic systems. Furthermore, it’s possible to see the effect of war and diplomatic missteps on the economy. Recently nearly $200k worth of money was wiped out because someone missed a monthly payment. It’s possible to see how various factions have recovered after a serious economic, material, and military shock hit the entire game.

Games are vital to our culture. We’ve always had both physical (sports) and mental (chess) games. I believe that video games are simply a new extension to both of those. Many games require you to think quickly and have quick moving fingers (Star Craft) while others are almost as passive as watching TV. Understanding the value of video games and the culture about them is important to understand how our culture can grow and develop in new ways.