links of the day

Why Photography Matters: an Airbnb Case Study

readingbyeugene Leave a comment

This is a superb read on one of my favorite start-ups, Airbnb, and how the company was able to double its revenues after a critical decision was made: get professional-looking photos of the listings.

At the time, Airbnb was part of Y Combinator. One afternoon, the team was poring over their search results for New York City listings with Paul Graham, trying to figure out what wasn’t working, why they weren’t growing. After spending time on the site using the product, Gebbia had a realization. “We noticed a pattern. There’s some similarity between all these 40 listings. The similarity is that the photos sucked. The photos were not great photos. People were using their camera phones or using their images from classified sites.  It actually wasn’t a surprise that people weren’t booking rooms because you couldn’t even really see what it is that you were paying for.”

Graham tossed out a completely non-scalable and non-technical solution to the problem: travel to New York, rent a camera, spend some time with customers listing properties, and replace the amateur photography with beautiful high-resolution pictures. The three-man team grabbed the next flight to New York and upgraded all the amateur photos to beautiful images. There wasn’t any data to back this decision originally. They just went and did it. A week later, the results were in: improving the pictures doubled the weekly revenue to $400 per week. This was the first financial improvement that the company had seen in over eight months. They knew they were onto something.

This was the turning point for the company. Gebbia shared that the team initially believed that everything they did had to be ‘scalable.’ It was only when they gave themselves permission to experiment with non-scalable changes to the business that they climbed out of what they called the ‘trough of sorrow.’

Here’s the takeaway:

Gebbia’s experience with upgrading photographs proved that code alone can’t solve every problem that customers have. While computers are powerful, there’s only so much that software alone can achieve. Silicon Valley entrepreneurs tend to become comfortable in their roles as keyboard jockeys. However, going out to meet customers in the real world is almost always the best way to wrangle their problems and come up with clever solutions. 

Read the rest here.

 

IBM’s SyNAPSE Chip Moves Closer to Brain-Like Computing

readingbyeugene Leave a comment

This week, scientists at IBM research unveiled a brain-inspired computer and ecosystem. From their press release on the so-called SyNAPSE chip:

Scientists from IBM unveiled the first neurosynaptic computer chip to achieve an unprecedented scale of one million programmable neurons, 256 million programmable synapses and 46 billion synaptic operations per second per watt. At 5.4 billion transistors, this fully functional and production-scale chip is currently one of the largest CMOS chips ever built, yet, while running at biological real time, it consumes a minuscule 70mW—orders of magnitude less power than a modern microprocessor.

MIT Technology Review has a good summary as well:

IBM’s SyNapse chip processes information using a network of just over one million “neurons,” which communicate with one another using electrical spikes—as actual neurons do. The chip uses the same basic components as today’s commercial chips—silicon transistors. But its transistors are configured to mimic the behavior of both neurons and the connections—synapses—between them.

The SyNapse chip breaks with a design known as the Von Neuman architecture that has underpinned computer chips for decades. Although researchers have been experimenting with chips modeled on brains—known as neuromorphic chips—since the late 1980s, until now all have been many times less complex, and not powerful enough to be practical (see “Thinking in Silicon”). Details of the chip were published today in the journal Science.

The new chip is not yet a product, but it is powerful enough to work on real-world problems. In a demonstration at IBM’s Almaden research center, MIT Technology Review saw one recognize cars, people, and bicycles in video of a road intersection. A nearby laptop that had been programed to do the same task processed the footage 100 times slower than real time, and it consumed 100,000 times as much power as the IBM chip. IBM researchers are now experimenting with connecting multiple SyNapse chips together, and they hope to build a supercomputer using thousands.

I think this kind of experimentation is fascinating. You can read more at Science Magazine (subscription required to view full text).

 

What are B Corporations?

readingbyeugene Leave a comment

Something I learned today: so-called B corporations from this New Yorker piece by James Surowiecki.

B corporations are for-profit companies that pledge to achieve social goals as well as business ones. Their social and environmental performance must be regularly certified by a nonprofit called B Lab, much the way LEED buildings have to be certified by the U.S. Green Building Council. Many B corps are also committed to a specific social mission.

There are now more than a thousand B corps in the U.S., including Patagonia, Etsy, and Seventh Generation. And in the past four years twenty-seven states have passed laws allowing companies to incorporate themselves as “benefit corporations”—which are similar to B corps but not identical. The commitments that these companies are making aren’t just rhetorical. Whereas a regular business can abandon altruistic policies when times get tough, a benefit corporation can’t. Shareholders can sue its directors for not carrying out the company’s social mission, just as they can sue directors of traditional companies for violating their fiduciary duty.

Examples of B corps in America include Patagonia, Etsy, Seventh Generation, and Warby Parker.

A very nice conclusion to the piece:

The rise of B corps is a reminder that the idea that corporations should be only lean, mean, profit-maximizing machines isn’t dictated by the inherent nature of capitalism, let alone by human nature. As individuals, we try to make our work not just profitable but also meaningful. It may be time for more companies to do the same.

On Happiness and its Opposite

readingbyeugene Leave a comment

This is a fascinating, must-read piece in The New York Times in which the author, Arthur C. Brooks, posits that the opposite of happiness is not unhappiness, and the things we can do to elevate our levels of happiness:

So when people say, “I am an unhappy person,” they are really doing sums, whether they realize it or not. They are saying, “My unhappiness is x, my happiness is y, and x > y.” The real questions are why, and what you can do to make y > x.

If you ask an unhappy person why he is unhappy, he’ll almost always blame circumstance. In many cases, of course, this is justified. Some people are oppressed or poor or have physical ailments that make life a chore. Research unsurprisingly suggests that racism causes unhappiness in children, and many academic studies trace a clear link between unhappiness and poverty. Another common source of unhappiness is loneliness, from which about 20 percent of Americans suffer enough to make it a major source of unhappiness in their lives.

The tangible advice comes near the end:

More philosophically, the problem stems from dissatisfaction — the sense that nothing has full flavor, and we want more. We can’t quite pin down what it is that we seek. Without a great deal of reflection and spiritual hard work, the likely candidates seem to be material things, physical pleasures or favor among friends and strangers.

We look for these things to fill an inner emptiness. They may bring a brief satisfaction, but it never lasts, and it is never enough. And so we crave more. This paradox has a word in Sanskrit: upadana, which refers to the cycle of craving and grasping. As the Dhammapada (the Buddha’s path of wisdom) puts it: “The craving of one given to heedless living grows like a creeper. Like the monkey seeking fruits in the forest, he leaps from life to life… Whoever is overcome by this wretched and sticky craving, his sorrows grow like grass after the rains.”

This search for fame, the lust for material things and the objectification of others — that is, the cycle of grasping and craving — follows a formula that is elegant, simple and deadly:

Love things, use people.

This was Abd al-Rahman’s formula as he sleepwalked through life. It is the worldly snake oil peddled by the culture makers from Hollywood to Madison Avenue. But you know in your heart that it is morally disordered and a likely road to misery. You want to be free of the sticky cravings of unhappiness and find a formula for happiness instead. How? Simply invert the deadly formula and render it virtuous:

Love people, use things.

On France and Independent Bookstores

readingbyeugene Leave a comment

Pamela Druckerman, who lives in Paris, provides some insight on how the French people still value books and independent bookstore in France. The secret? Fixed prices on books across the entire country.

France, meanwhile, has just unanimously passed a so-called anti-Amazon law, which says online sellers can’t offer free shipping on discounted books. (“It will be either cheese or dessert, not both at once,” a French commentator explained.) The new measure is part of France’s effort to promote “biblio-diversity” and help independent bookstores compete. Here, there’s no big bookseller with the power to suddenly turn off the spigot. People in the industry estimate that Amazon has a 10 or 12 percent share of new book sales in France. Amazon reportedly handles 70 percent of the country’s online book sales, but just 18 percent of books are sold online.

The French secret is deeply un-American: fixed book prices. Its 1981 “Lang law,” named after former Culture Minister Jack Lang, says that no seller can offer more than 5 percent off the cover price of new books. That means a book costs more or less the same wherever you buy it in France, even online. The Lang law was designed to make sure France continues to have lots of different books, publishers and booksellers.

And this point, beyond the economics of book pricing, is very important:

What underlies France’s book laws isn’t just an economic position — it’s also a worldview. Quite simply, the French treat books as special. Some 70 percent of French people said they read at least one book last year; the average among French readers was 15 books. Readers say they trust books far more than any other medium, including newspapers and TV. The French government classifies books as an “essential good,” along with electricity, bread and water. (A French friend of mine runs a charity, Libraries Without Borders, which brings books to survivors of natural disasters.) “We don’t force French people to go to bookstores,” explains Vincent Montagne, head of the French Publishers Association. “They go to bookstores because they read.”

On How the Wealthy Hide Money in New York City Real Estate

readingbyeugene Leave a comment

An excellent piece in New York Magazine on the booming real estate market with ultra high net worth individuals. Buildings such as 432 Park Avenue and 111 W. 57th are not yet completed but are selling out quickly.

The piece does a great job explaining how difficult it is to police the flow of money into real estate

The first rule of selling property to the ultrarich is that you can’t try to sell them property—you offer them status, or a lifestyle, or a unique place in the sky. A marketing video for 432 Park Avenue, scored to “Dream a Little Dream,” features a private jet, Modigliani statuary, and Harry Macklowe himself costumed as King Kong. One recent morning, at the development’s sales office in the GM Building, Wallgren led me down a hallway lined with vintage New York photographs, through a ten-by-ten-foot frame meant to illustrate the building’s enormous window size, to a scale model of Manhattan.

…

Extreme wealth demands extremely elaborate wealth management, and anyone who has a few million in spare cash will probably already have an entrée to the cloistered world of private banking. An anonymous high-net-worth client of Credit Suisse, who spoke to U.S. Senate investigators after taking advantage of an amnesty for tax cheats, described the process by which he would manage his funds when visiting Zurich. A remote-controlled elevator would take him to a bare meeting room where he and his private banker would discuss his money; all printed account statements would be destroyed after the visit.

The ways these ultra-rich go to to conceal their holdings is extreme:

Behind a New York City deed, there may be a Delaware LLC, which may be managed by a shell company in the British Virgin Islands, which may be owned by a trust in the Isle of Man, which may have a bank account in Liechtenstein managed by the private banker in Geneva. The true owner behind the structure might be known only to the banker. “It will be in some file, but not necessarily a computer file,” says Markus Meinzer, a senior analyst at the nonprofit Tax Justice Network. “It could be a black book.” If an investor wants to sell the property, he doesn’t have to transfer the deed—an act that would create a public paper trail. He can just shift ownership of the holding company.

The theatrical secrecy is designed to build personal trust between such bankers and their clients, which is especially vital when the goal of the transactions is to conceal assets from the prying eyes of rivals, vengeful spouses, or tax collectors. Moving the money itself is a relatively simple matter: A wire or a suitcase can convey cash from China to Singapore, or from Russia to an EU member state like Latvia, and once the funds have made it to a “white list” country, they can usually move onward without triggering alarms. Concealing the true ownership of a property or a bank account is trickier. That’s where the private bankers, wealth advisers, and lawyers earn their exorbitant fees.

Worth the read.

###

Bonus: see this Vanity Fair piece from May 2014 which highlights the major high rise condos being built in New York City.

The Stanford Commencement Address by Bill and Melinda Gates

readingbyeugene Leave a comment

Bill and Melinda Gates jointly gave a commencement address at Stanford University earlier this month on June 15, 2014. The full transcript is here, but I wanted to highlight a few notable passages:

Melinda and I have described some devastating scenes. But we want to make the strongest case we can for the power of optimism. Even in dire situations, optimism can fuel innovation and lead to new tools to eliminate suffering. But if you never really see the people who are suffering, your optimism can’t help them. You will never change their world.

And that brings me to what I see as a paradox.

The world of science and technology is driving phenomenal innovations – and Stanford stands at the center of that, creating new companies, prize-winning professors, ingenious software, miracle drugs, and amazing graduates. We’re on the verge of mind-blowing breakthroughs in what human beings can do for each other. And people here are really excited about the future.

At the same time, if you ask people across the United States, “Is the future going to be better than the past?” most people will say: “No. My kids will be worse off than I am.” They think innovation won’t make the world better for them or for their children.

So who’s right?

The people who say innovation will create new possibilities and make the world better?

…or…

The people who see a trend toward inequality and a decline in opportunity and don’t think innovation will change that?

The pessimists are wrong in my view, but they’re not crazy. If technology is purely market-driven and we don’t focus innovation on the big inequities, then we could have amazing inventions that leave the world even more divided.

The key driver to make notable change is building empathy:

If our optimism doesn’t address the problems that affect so many of our fellow human beings, then our optimism needs more empathy. If empathy channeled our optimism, we would see the poverty and the disease and the poor schools, we would answer with our innovations, and we would surprise the pessimists.

The question is: how do we build and develop empathy in others?

I like how Melinda closes the address, saying that young graduates shouldn’t be in a rush to change the world:

You don’t have to rush. You have careers to launch, debts to pay, spouses to meet and marry. That’s enough for now.

But in the course of your lives, without any plan on your part, you’ll come to see suffering that will break your heart.

When it happens, and it will, don’t turn away from it; turn toward it.

That is the moment when change is born.

Student Debt and The Boomerang Kids

readingbyeugene Leave a comment

The New York Times paints a bleak image on the student debt crisis in the United States of America in this magazine piece:

One in five people in their 20s and early 30s is currently living with his or her parents. And 60 percent of all young adults receive financial support from them. That’s a significant increase from a generation ago, when only one in 10 young adults moved back home and few received financial support. The common explanation for the shift is that people born in the late 1980s and early 1990s came of age amid several unfortunate and overlapping economic trends. Those who graduated college as the housing market and financial system were imploding faced the highest debt burden of any graduating class in history. Nearly 45 percent of 25-year-olds, for instance, have outstanding loans, with an average debt above $20,000. (Kasinecz still has about $60,000 to go.) And more than half of recent college graduates are unemployed or underemployed, meaning they make substandard wages in jobs that don’t require a college degree. According to Lisa B. Kahn, an economist at Yale University, the negative impact of graduating into a recession never fully disappears. Even 20 years later, the people who graduated into the recession of the early ’80s were making substantially less money than people lucky enough to have graduated a few years afterward, when the economy was booming.

Worth the click for the slide show alone.

The Pivot, or the Luck Factor in Silicon Valley

readingbyeugene Leave a comment

A thoughtful take on the concept of the “pivot” in Silicon Valley, from Scott Adams (the creator of the Dilbert comic):

Smart observers in the valley look for the “tell” that an early stage start-up will be a winner, but none can be found. Oh, sure, the team needs to be smart, talented, and willing to work long hours. But nearly every start-up has that going for it. Most have great ideas as well. None of it predicts success. 

So imagine if you will, some of the smartest, most rational humans the world has ever created, wallowing around in the absurdity of Silicon Valley, where success is mostly based on luck. How does one feel good about that? And what is the solution?

Answer: You institutionalize the pivot.

I’ve been watching the TV show Silicon Valley, and the episode where Pied Piper tried to pivot comes to mind.

Adams argues that the pivot is basically a way to optimize one’s luck:

Here’s the system:

1.      Form a team
2.      Slap together an idea and put it on the Internet.
3.      Collect data on user behavior.
4.      Adjust, pivot, and try again.

Thanks to Google Analytics, Optimizely, Bitly, and other tools for measuring customer behavior in real time, a smart team can try different approaches and different products until something works out. A start-up in 2014 is a guess- testing machine.

Read the rest here.

Richard Lewis Explains How Cultures Interpret Time

readingbyeugene Leave a comment

In this fascinating post, Richard Lewis (author of When Cultures Collide) explains how various cultures consider/view/understand time. Most of us in the West are used to “Linear Time” (i.e., event A happens, followed by event B, and so on) whereas people in southern Europe interpret time as being “multi-active”:

Southern Europeans are multi-active, rather than linear-active [read Lewis’s analysis of cultures as multi-active, linear-active, and reactive]. The more things they can do at the same time, the happier and the more fulfilled they feel. They organize their time (and lives) in an entirely different way from Americans, Germans and the Swiss. Multi-active peoples are not very interested in schedules or punctuality. They pretend to observe them, especially if a linear-active partner or colleague insists on it, but they consider the present reality to be more important than appointments. In their ordering of things, priority is given to the relative thrill or significance of each meeting.

In countries inhabited by linear-active people, time is clock- and calendar- related, segmented in an abstract manner for our convenience, measurement, and disposal. In multi-active cultures like the Arab and Latin spheres, time is event- or personality-related, a subjective commodity which can be manipulated, molded, stretched, or dispensed with, irrespective of what the clock says.

“I have to rush,” says the American, “my time is up.” The Spaniard or Arab, scornful of this submissive attitude to schedules, would only use this expression if death were imminent.

There are also other great bits from the piece. This part about Japanese culture I had never known before:

Another example is the start and finish of all types of classes in Japan, where the lesson cannot begin without being preceded by a formal request on the part of the students for the teacher to start. Similarly, they must offer a ritualistic expression of appreciation at the end of the class.

Read the rest here.