Not Everyone Wants to be an Entrepreneur

In a post titled “The End of Quiet Music,” Alina Simone discusses her dive into a solo venture to promote an album, failing, and learning what went wrong. Her story is interesting because she found a voice, later, through writing. She begins:

Not long before my first album was released in 2005, I spent a summer in Russia interviewing small business owners. An American microfinance organization had sent me there to gather rosy statistics and uplifting stories about how their loans had improved the lives of this new crop of entrepreneurs.

Instead, I would arrive in some city with a recently gutted economy, only to have men and women selling knockoff jeans or fruit from Uzbekistan tell me the same thing: they missed the factory. That is, their old jobs working at some inefficient Soviet enterprise. They didn’t like the financial uncertainty of their new jobs or the longer hours. They missed being able to check out at the end of the day. Many of them were less happy with the work itself. I heard the same thing again and again: Not everyone wants to be an entrepreneur.

At the time, I felt confused — what was so bad about being your own boss? Their words only resonated with me years later, when I abandoned my music career.

The realities of forced entrepreneurship in the music business hit me when, in 2010, the label that released my previous two albums went bankrupt. By the time its Web site vanished without warning one day, I was already done recording a record. Rather than cast about for another struggling indie label, I decided to go the route of so many other bands and put the album out myself. 

Alina mentions that she’s been friends with Amanda Palmer (who raised more than $1.2 million on Kickstarter) since middle school, but that even Amanda has

worried publicly about what the future will hold for the artists who refuse to roll up their sleeves and join the self-promotional melee — tweeting, fund-raising and “incentivizing fans” to run “jampaigns.” 

Her conclusion is a strong one:

We’ve placed the entire onus of changing-with-the-times on musicians, but why can’t the educational, cultural and governmental institutions that support the arts adapt as well, extending the same opportunities to those whose music provides the soundtrack to our lives? If they don’t, Darwinism will probably ensure that only the musical entrepreneurs survive. I can’t say if the world of music will be better or worse off if that happens, but it will certainly be a lot louder.

The Forever Stamps Arbitrage

The United States Postal Service wants to increase the price of the first-class stamp from 46 cents to 49 cents early next year. Most of the stamps I own are the so-called “Forever” stamps so the price increase won’t affect me. But I’ve always wondered whether there exists a market to purchase these “Forever” stamps in bulk and re-sell them at a tiny discount (of present first-class stamp price) to consumers. Allison Schrager and Ritchie King explore this potential arbitrage opportunity:

Our plan is to buy 10 million stamps at $0.46 each and sell them at $0.48. The margins, of course, are small. If we buy 10 million stamps, spending $4.6 million, we’ll earn $200,000—a 4.3% profit.

The good news is that you can buy up to 1 million stamps in a single order from the USPS, and pay a mere $1.75 in shipping (shipping is their business, after all).

But $4.6 million (or $4,600,017.50 with shipping) is a lot of money, especially for folks like us (an economist and a journalist) who’ve never raised money before and don’t have many assets. Ideally we’d borrow it all at once, but given our limited financial means, securing a $4.6 million loan would be tough, at least at an interest rate that would still leave room for us to make money.

We’d get better terms on the loan if we had some collateral. But all we can offer is the stamps we plan to buy. So the trick is to get our seed funding by selling equity (we’d like to start with $250,000) and then securing loans for the rest using the stamps as collateral. It may seem a little far-fetched, but it’s not all that different from the kind of leveraged trading that goes on in the financial world.

In the past, our journey would probably end here. There’s no way we could convince our friends and family or millionaires to invest a total of $100,000 in this hare-brained scheme. But thanks to the recent US JOBS Act, we don’t need them. We can crowd-fund all of our equity from the general public on sites such as Crowdfunder. This would be our offer: We’ll split the profits 50/50, with half going to our shareholders and the other half to us.

The Big If: ability to move all those stamps (either independently or via a distributor). I think it’s highly unlikely, and the interest on outlaying loans will exceed the income generated from selling the stamps at a tiny profit. Still, it’s a cool thought experiment!

The Man Who Buried his Treasure in a Poem

Forrest Fenn, an art dealer told he was dying of cancer, has decided to leave a unique legacy: a fortune in antiquities hidden in the Rockies, and a cryptic poem that may lead right to it. But will his treasure be found? Dozens of people have searched so far, all in vain. Some think the entire thing is a hoax. The Telegraph has a fascinating piece on the subject:

The title of Fenn’s book is significant. He insists that, for him, it isn’t really about finding the treasure at all. It’s about the “thrill of the chase” – encouraging families out of the house and into the mountains; getting children away from their computer games or television shows and experiencing the wilderness. “I have thousands of emails from people, most of them thanking me for getting their family out of the game room.”

The bulk of Fenn’s wealth will be passed down to his daughters and grandchildren. But what really was the purpose of giving away part of his fortune? In his book, Fenn ponders the nature of death. He describes experiences of his tour in Vietnam, stumbling upon the unmarked graves of French soldiers. “What about those whose bones are rotting under the headstones of a thousand wars?” he writes. “Is it fair that no one recalls where those brave French soldiers fell?”

On paper at least, Fenn seems concerned about the fact that most of us will be “nothing but the leftovers of history or an asterisk in a book that was never written”. And so I ask whether this is the real reason for the memoir and the hidden treasure: that as he approaches his 84th year, he wants to ensure his legacy – make certain that history will remember him.

Dated to about AD 1150, the chest is said to contain in the region of $3 million worth of treasure: gold coins, pre-Columbian gold animal figures, Chinese jade carvings, a 17th-century Spanish ring with an inset emerald, rubies, sapphires, and diamonds.

I, for one, believe Fenn is for real. I endorse his motivation for hiding the treasure:

What Fenn wants is for people to experience history, not just read about it in dusty books. When he was an art dealer he used to raise eyebrows by letting schoolchildren touch the canvases of 200-year-old paintings. One of those was of George Washington, produced when the first President of the United States was sitting just a few feet away from the artist. By letting those schoolchildren touch the actual paint, they could, Fenn says, connect with what this really was and what it meant. “You can become part of that episode,” he says. “And that’s exciting to me.” When somebody finds his treasure and reads his memoir (a tiny copy of it, together with a magnifying glass, is included in the treasure chest), he says “they’ll be amazed at what things were like back then.”

Interesting in its entirety.

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(via @longreads)

On Criticism and The Uncanny Valley of Earnestness

Leah Reich’s post “The Uncanny Valley of Earnestness” summarizes the 2013 XOXO festival,recently held in Portland. The whole post is worth reading, but these paragraphs on the value of criticism were particularly good:

Then one day, someone came in and told me my photo wasn’t very good. They weren’t particularly nice about it, and it stung. I let the comment sit there, and someone else – friends with the first person – said something similar, but in a more specific way. Then a third person, someone I admired so deeply it still makes my guts ache, told me what I was doing was okay but that it was about time I pushed myself. And I realized something crucial:

They knew I could be better. They believed in me. They wanted to see me get there.

That ache in my gut is going to be familiar to all of you. It’s not the ache that’s desperate for likes or hearts or little stars. It’s the ache that wants someone to help you and to approve of what you’ve done because their work and their approval mean something to you. Because a “yeah, that’s it, that’s pretty good, that’s the right direction” or even a “this is getting there, but think about why your composition isn’t working over here” feels like it’s been earned.

So as it turns out, The Uncanny Valley of Earnestness is where people can be excited about stuff. And here’s a secret: Sometimes being excited about something means not always being positive.

This is a smart take:

Criticism is not negativity. Criticism is not saying you’re bad. Criticism is – it should be – a way of saying: I think you’re good. I know you can do better. I think you can figure out a way how.

Recommended.

The Counterintuitive Science of Traffic Jams

Tom Vanderbilt, author of Traffic, gave a 23-minute talk on the counterintuitive science of congestion at the Boing Boing: Ingenuity conference in San Francisco last month. Turns out a lot of the problems we ascribe to poor roads or other drivers are really our own fault. You can watch the video below:

 

Brad Plumer, at Washington Post, summarizes the talk:

— Self-driving cars steered by robots could do a lot to reduce traffic jams.That’s because the human inability to maintain a steady, constant speed on the road is responsible for a lot of congestion. Japanese physicists discovered this when they had people try to drive around in steady speeds on a circular road. Jams materialized out of nowhere. People braked erratically and started responding uncertainly to people ahead of them.

— Cars tend to drive closer to bicyclists who are wearing helmets. That comes from Ian Walker, who set up a bicycle with sensors and drove around the city. Vehicles tend to crowd closer to him when he was wearing a helmet than when he wasn’t. That’s not necessarily surprising, but it’s a reminder of all the weird unconscious tics we adopt while driving and making on-the-fly assumptions.

— There are all sorts of fun patterns in who honks their car horns. In what sounds like a exciting job, researchers sat at intersections and refused to move when the light turned green to see who honked at them. Men honk more quickly than women. People with expensive cars also honk more rapidly — although people in convertibles are less likely to honk.

— There are also fun patterns on driver courtesy. Older drivers are more likely to stop for others. Drivers are more likely to be courteous when the other car has extra passengers inside. People also are more likely to violate traffic rules the closer they are to home — a “familiarity effect.”

—  There are all sorts of optical illusions that can trick human drivers. Fog makes objects seem like they’re moving slower than they really are. And experiments show that humans are really bad at judging the speed of an oncoming train at a crossing until it’s nearly arrived. Another point in favor of self-driving cars, perhaps.

—  Congestion often looks tantalizingly easy to clear up — in theory. One study that tracked drivers in Boston during rush hour found that if you could remove just 1 percent of people on the road (say, to mass transit), you could achieve a whopping 18 percent improvement in traffic flow. But  for whatever reason, cities haven’t figured out how to do that just yet.

I can’t wait for self-driving cars.

Modeling 3,000 Years of Human History

It’s rare to find an interesting paper on history in the Proceedings of the National Academy of Sciences, so it was interesting to stumble upon Peter Turchin et al.’s “War, Space, and the Evolution of Old World Complex Societies” who developed a model that uses cultural evolution mechanisms to predict where and when the largest-scale complex societies should have arisen in human history.

From their abstract:

How did human societies evolve from small groups, integrated by face-to-face cooperation, to huge anonymous societies of today, typically organized as states? Why is there so much variation in the ability of different human populations to construct viable states? Existing theories are usually formulated as verbal models and, as a result, do not yield sharply defined, quantitative predictions that could be unambiguously tested with data. Here we develop a cultural evolutionary model that predicts where and when the largest-scale complex societies arose in human history. The central premise of the model, which we test, is that costly institutions that enabled large human groups to function without splitting up evolved as a result of intense competition between societies—primarily warfare. Warfare intensity, in turn, depended on the spread of historically attested military technologies (e.g., chariots and cavalry) and on geographic factors (e.g., rugged landscape). The model was simulated within a realistic landscape of the Afroeurasian landmass and its predictions were tested against a large dataset documenting the spatiotemporal distribution of historical large-scale societies in Afroeurasia between 1,500 BCE and 1,500 CE. The model-predicted pattern of spread of large-scale societies was very similar to the observed one. Overall, the model explained 65% of variance in the data. An alternative model, omitting the effect of diffusing military technologies, explained only 16% of variance. Our results support theories that emphasize the role of institutions in state-building and suggest a possible explanation why a long history of statehood is positively correlated with political stability, institutional quality, and income per capita.

The model simulation runs from 1500 B.C.E. to 1500 C.E.—so it encompasses the growth of societies like Mesopotamia, ancient Egypt and the like—and replicates historical trends with 65 percent accuracy.

Smithsonian Magazine summarizes:

Turchin began thinking about applying math to history in general about 15 years ago. “I always enjoyed history, but I realized then that it was the last major discipline which was not mathematized,” he explains. “But mathematical approaches—modeling, statistics, etc.—are an inherent part of any real science.”

In bringing these sorts of tools into the arena of world history and developing a mathematical model, his team was inspired by a theory called cultural multilevel selection, which predicts that competition between different groups is the main driver of the evolution of large-scale, complex societies. To build that into the model, they divided all of Africa and Eurasia into gridded squares which were each categorized by a few environmental variables (the type of habitat, elevation, and whether it had agriculture in 1500 B.C.E.). They then “seeded” military technology in squares adjacent to the grasslands of central Asia, because the domestication of horses—the dominant military technology of the age—likely arose there initially.

Over time, the model allowed for domesticated horses to spread between adjacent squares. It also simulated conflict between various entities, allowing squares to take over nearby squares, determining victory based on the area each entity controlled, and thus growing the sizes of empires. After plugging in these variables, they let the model simulate 3,000 years of human history, then compared its results to actual data, gleaned from a variety of historical atlases.

Click here to see a movie of the model in action.

Of particular interest to me was the discussion of the limitations of the model (100-year sampling and exclusion of city-states of Greece):

Due to the nature of the question addressed in our study, there are inevitably several sources of error in historical and geographical data we have used. Our decision to collect historical data only at 100-year time-slices means that the model ‘misses’ peaks of some substantial polities such as the Empire of Alexander the Great, or Attila’s Hunnic Empire. This could be seen as a limitation for traditional historical analyses because we have not included a few polities known to be historically influential. However, for the purposes of our analyses this is actually strength. Using a regular sampling strategy allows us to collect data in a systematic way independent of the hypothesis being tested rather than cherry-picking examples that support our ideas.

We have also only focused on the largest polities, i.e those that were approximately greater than 100,000 km2. This means that some complex societies, such as the Ancient Greek city states, are not included in our database. The focus on territorial extent is also a result of our attempt to be systematic and minimize bias, and this large threshold was chosen for practical considerations. Historical information about the world varies partly in the degree to which modern societies can invest in uncovering it. Our information about the history of western civilization, thus, is disproportionately good compared to some other parts of the world. Employing a relatively large cut-off minimizes the risk of “missing” polities with large  populations in less well-documented regions and time-frames, because the larger the polity the more likely it is to have left some trace in the historical record. At a smaller threshold there are simply too many polities about which we have very little information, including their territories, and the effects of a bias in our access to the historical record is increased.

Overall, I think the supporting information for the model is actually a lot more interesting read than the paper itself.