Tuesday, October 31, 2006

Designing For Behavior In Massive Multiplayer Games - Forbes.com

I guess between this and my earlier post today on Linden dollars, I'm seeing a lot of real-life MBA lessons are being found in the virtual world.

We've obviously discussed a lot about how to organize teams and how to keep teams motivated in real business, but it seem this is a similar problem being faced in the gaming community. How to keep people motivated (either on their own or part of a team) is a key way of keeping them engaged with your game.

Interesting parallel in real life. What is also interesting is that the more of a social community is created in a game, the less likely a player will leave for another offering. But as soon a players start leaving, that opens the floodgates and people begin to leave the game en masse.


Designing For Behavior In Massive Multiplayer Games - Forbes.com

Real exchange in the virtual world

So instead of working or doing school work, I’ve been looking at virtual exchange rates this morning. Yes…my time put to good use. Last class we had a look at exchange rates and I’ve been taking a quick look at Second Life “Linden Dollars” and seeing their rates of exchange for real USD on eBay.

What’s amazing is how consistent LDs go for in USD. The going rate seems to be about 223LD/USD with very little variation between LD lots of similar sizes—lots of thousands and tens-of-thousand LDs go for about the same price per LD. Where there does seem to be a price change is when you are looking at lots of 100 thousand LDs or higher. Here you see prices of LDs drop to about 238LD/USD to 243LD/USD.

This presents an arbitrage opportunity I think to buy up large lots, divide them up, and then sell them off.


eBay - linden dollars, Internet Games, Video Games items on eBay.com

Monday, October 30, 2006

The economic cost of doing nothing

More than anything we need to debunk the myth that doing positive from a social, environmental or ethical point-of-view is negative from an economic point-of-view. This is a false juxtaposition that serves only to act as a cheap excuse to do nothing.

What is really costly is to do nothing on the issues that challenge us today. Throughout capitalist history, the rewards have gone out to those who have sought to change things and drive innovation, the losers have been those who have favored the status quo.

Doing something about the environment (for example) is not a cost, it is an opportunity. The real cost comes from ignoring the problem.

Read on:
Climate change could tilt the world's economy into the worst global recession in recent history, a report will warn next week.

Friday, October 20, 2006

Capacity utilization...who cares?

I've been looking at some of the PPI numbers that came out today and for some reason, the one that really stuck in my mind is Capacity Utilization, which is at 82% and slightly worse than expected.

Two things came to mind when I looked at this number:

1) It has been argued that US trade deficits could be a good thing because deficits provide the US with capital. But if we're not using all the capital (although I'm sure it is impossible to get to 100% utilization), then aren't the deficits truly excessive and should be therefore reduced?

2) The other thought I had was that the US hit the 300M population mark this week. The US population is actually growing (compared to EU or Japan where it is stagnating or shrinking), so this means in the near future we will need more capital per effective worker in order to maintain our current level of growth. So perhaps then this underutilization is a good thing, as it gives us some room to easily add more workers?

Tension in interest rates

The Economist runs a story on the rise of the Asian consumer and points out that because of them, the world economy now has a back-up if the American consumer starts spending a little less. (hat-tip: Maurilio)

This all has me thinking about interest rates. Let's say the US economy slows down and even gets a little rocky, this would push interest rates down, right?

But I'm also looking at this new Asian consumer who, contrary to the traditional consumer from that part of the world, may actually have a lower savings rate. Asians saving less may push global interest rates up.

Now, like any good economic model, this would eventually reach equilibrium. The interesting question here is where would interest rates eventually come to rest, at the lower level as desired by the Americans, or at the higher levels as pushed up by shopping Asians?

Again, just throwing this out there to test my (weak) grasp of macroeconomic principles.

Thursday, October 19, 2006

Will work for peace

Whenever you talk about the Middle East, you are bound to inflame the passions of one side or another so I am going to attempt to tread lightly here...

As an everyday joe looking at news from that region it seems to me (without laying blame or praise on either side) that it is an impossible, no-win situation. A stable solution in the region seems impossible from where I sit right now (in my cube, looking out the window, it is a nice sunny day.)

Peace, unfortunately, has not seemed to work. War, as we've witnessed countless times, hasn't worked either.

So what is the alternative? Well, as ludicrous as it may seem on the surface, maybe business is the answer.

The argument goes that if you invest some money, put people to work, they'll be too busy to kill each other. That's so crazy it just might work! I know my day is so packed with work and school I scarcely have time to yell at my neighbor for playing music too loud... much less engage in mortal combat with him.

I mean, what do we have to lose? Things can scarcely get any worse over there. So let's have the soldiers and the diplomats and (above all) the ideologues step aside and let's have the business people come in with some money and a business plan and see if indeed corporations can be a force for peace in a part of the world where peace has seemed impossible.

Monday, October 16, 2006

Outsourcing diplomacy to TV

This NYT story of US culture as a tool to improve America’s reputation in Europe reminds me of other recent revelations that Jackson Pollack exhibitions were used by the CIA to improve the US's image there during the height of the Cold War.

Economist talks convergence

Fixed-line phone calls are going the way of the dodo, the future is broadband and IPTV/digital video, and cable and telcos are butting heads as they continually try to steal each other's customers. We've been saying this for years, but if the Economist says it, it must finally be true.

Pretty solid "audio interview" (I guess they don't like the word "podcast") about the convergence of communication services on a single IP network.

German economic recovery continues apace

Germany ups GDP growth estimates to around 2%-2.5%. This helps it pull ahead of the euro zone in general (about 2%) but still lags the US (about 3.4% GDP growth).

I am the world's single worst investor but about a year ago I dropped a few pennies in a German-tracking ETF and it is up almost 25% so far. I hope this news could push it up further (I'm saving up for a newspaper and a pack of gum)

FT.com / World / Europe - German economic recovery continues apace

America's population | Now we are 300,000,000 | Economist.com

So what's the impact of a rising population?

Greater demand for capital overall to maintain a consistent amount of capital per effective worker (so America's hungry demand for foreign capital--and the resulting deficits-- make sense here).

Necessity for increased capital could also prove to be the mother of greater productivity invention.

Europe and Japan: consistent amount of capital per effective worker, but flat growth unless added productivity makes each worker... well... more productive.


America's population | Now we are 300,000,000 | Economist.com

Friday, October 13, 2006

Investing non-traditionally

Paul Grim talks about investing in non-traditional targets (airplanes) and I think he has cause a bit of a minor local stir. But it all makes sense to me.

Aviation is an entire industry that is dying because there hasn't been any real innovation, and from a VC point-of-view, where they see neglect in the past, they may see profits in the future. (And personally, when it comes to airplanes I'm happy to have someone innovate beyond, as Grim puts it "rubber mallets pounding ill-fitting parts into place.")

Look around now at all of the VC money going into alternative energies, that is really just funding innovation on top of 100+ year old combustible engine technology. Seems to me that this is the same thought process as Grim's avaiation adventures. Hopefully investments made today in energy will clean up our air in the future (and probably make a few people rich in the process).

So is energy, then, technology? Again, I would say yes. In the same way I would say that fire and the wheel were technology. (You may want to flip through "Guns, Germs and Steel" by Jared Diamond for a fantastic discussion on how technologies, shaped by local environments, have helped plot the development of humanity; starting with fire and the wheel, but even moving on to seed and animal breeding "technologies" and methods.)

My MySpace baby

OK, you can rightly think that I've gone out of my mind linking to some random MySpace page but here is my logic:

It is late, I can barely keep my eyes open, and I've got a ton of work to do. So what am I doing? Trying to look up random songs online that I used to listen to way back when going to school meant goofing off and not trying to improve my career.

Why am I linking to this page? Well, I loved "The Crow" when it came out and because of this page, I've come to the realization that
"Time Baby 2" is actually a better song than "Time Baby III"

Take on Tetlock: Everyone's a framer

In “Everyone’s an Expert”, Phil Tetlock (Berkeley-Columbia EMBA Organizational Behavior prof., Genius Grant recipient and a fellow Canadian!!) argues that pundits and experts generally cannot predict the future in areas they study any better than the rest of us. Often these “hedgehog” types of personalities who try to stress one big idea or concept upon the rest of use succeed in doing so more by their overconfidence rather than by their clarity of vision.

What I find most interesting about experts, particularly those who appear often in the media, is not whether they are right or wrong, but how they are able to successful frame the debate. The impact of their accuracy is second to their impact in making us see the world in their terms, and then either agree or disagree.

My favorite example of this is Thomas Friedman and his famous book “The World is Flat.” In his book he argues that technology-powered business is making the world “flat,” meaning that borders and time no longer confine global commerce. Anyone with an Internet-connection and an idea can now compete in the global economy, no matter where in the world he/she is located.

When I read his book I didn’t read anything that I myself have not experienced in my own professional life. Everyday I work with people from around the globe and sometimes I have more interaction with someone across the planet than I do with someone across the hall.
So is Friedman right? Are we in a new, unprecedented era of techno-globalism I don’t know… maybe. But just to debate the issue in his terms shows that he has succeed in his role of pundit.

What was genius about Friedman was not that he predicted some sort of new-world-order based on the Internet, but that he named and gave the concept a form. Now, simply saying “the world is flat” is a convenient shorthand for everything to do with globalization. I’m sure there are many people who have never read the book but go around talking about how flat their world is.

Wednesday, October 11, 2006

Applying Finance smarts to GooTube

We've been talking about different sorts of financing in my Financing class (good place to discuss these issues, I suppose) so here is some of my new-found knowledge in action:

Google buys YouTube for $1.6B.

Since rumors surfaced last week that Google/YouTube were in talks, Google's stock shot up about $10. Given that they have about 215M shares outstanding that means Google gained about $2.15B on the news alone. Which means that not only is the deal for free, they had actually at one moment profited about $500M from the deal (in addition to getting YouTube.)

I'd love to say this was all my thinking, but I stole it practically word for word from here

This all makes sense after the fact, of course; the GooTubers couldn't have known before the deal that the stock was going to bolt the way it did (although, they may have suspected!)

A wise classmate of mine reminds me that it is always a good idea to analyze your ex-ante (before the fact) reasons for doing an investment once the investment is completed. He goes on to say that even if the investment works out in the end (ex-post), it is rarely for the same reasons you had initially considered.

Group think and chaos

MIT has proposed a new project to make "group-think" a positive endeavor. They are getting a bunch of people, connected Wiki-style, to collaborate and essentially jointly write a business book on (what else?) collaboration.

One thought that immediately jumps out at me. What if we got everyone in the world to collaborate on a single project, similar to what MIT is doing. Imagine drawing on the skills and insights of everyone on Earth, and focusing that brainpower on a single project or a single piece of writing.

And how depressing would it be if the end-result sucked?

What would it say about the human condition?

I guess this goes to the heart of the question of where do really great ideas come from? A group or an individual? A wise person once told me that never in the history of the universe has a good idea been thought up by committee. But MIT's project here isn't about ordinary committees (or indeed, some sort of super-committee).

In Chaos, a single random event can launch of a series of other events culminating in a completely unpredicted result.

Is it therefore possible to use technology to take the chaotic inputs from many individuals and assemble them so that the end result is greater than the sum of the most valuable inputs from each individual?

I don't know the answer, but I think it is a great question and I look forward to seeing what MIT comes up with.

Monday, October 09, 2006

The War Against Studying Economics

So this Krugman article on WalMart its "war against wages" has been circulating among classmates of mine.

I'm a Krugman fan although I haven't really kept up with him recently because I'm too cheap to pay for "Times Select" (which was a really dumb idea IMHO) and too lazy to constantly troll the internet for re-postings.

If you know anything about Krugman and anything about WalMart, you won't really have to read his article. It is as you would expect... WalMart sucks and is making money by paying people a pittance. There, I saved you a few minutes of basking in Krugman's glory (again, I'm only being hard on his because I love him.)

Anyway, in this case a re-posting was handed to me on a silver platter, so I hereby post it here.

And in the spirit of studying for my upcoming economics mid-term, here is an attempt at what might be a rebuttal from an economist with an opposing point-of-view.

*ahem*

Without the wage rigidity of unions and (to a lesser extent) of a dominant minimum wage the market can reach an equilibrium where the demand by WalMart for cheap labor is met by a supply of people willing to work at those wages. If this market-clearing equilibrium is not reached, than WalMart would hire fewer people. So the question then become what would you rather, more people hired at some sort of "artificially" increased wage, or some sort of full employment at the market-clearing, but lower, wage.

So waddia, think? Full marks?

Saturday, October 07, 2006

YouTube!

(sorry, I thought putting YouTube in the header again would be a good way to boost my traffic)

Google reportedly in talks get its pants sued off

There must be dozens of studios, labels and other copyright owners just begging for Google to buy YouTube.

Finally, someone with really deep pockets to sue!!!

Friday, October 06, 2006

Thursday, October 05, 2006

Video projects to talk about other then YouTube

Not a big fan of the current broadcast model/DVR model. I like shows when I want them without fiddling through commercials (don’t mind if the commercials book-end the show). At the moment I'm relying heavily on Netflix and stuff on YouTube for my TV fixes, as I’ve discussed elsewhere.

With that in mind I read with great interest Om’s GigaOM »interview with Janus Friis, of Kazaa, Skype and now the mysterious Venice Project fame. P2P TV… sounds a little like YouTube without all the huge bandwidth issues we always hear they have.

Also, this project is trying to go legit so hopefully there will not be another endless series of repetitive articles wondering aloud over and over again how on Earth will YouTube ever make money, who is going to buy it, for how much, and will the studios pull a Napster on them.

In case you’re about to read one such article I’ll save you the trouble… no one has a clue what is the answer to any of these issues.

Smaller start-ups, smaller funds

The Sleuth has a great video interview with Neil Sequiera with General Catalyst Partners talking about how GYM (another goofy IT acronym… this one means “Google”, “Yahoo” and “Microsoft” but for some reason I find this acronym amusing) are aggressively buying small technology-play companies. He goes on to state that GYM would rather buy small companies and just focus on the technology purchase. If the start-up gets too large, then GYM figure it is cheaper to just build the technology themselves.

This is probably true for some of these more consumer-facing “Web 2.0” applications but I doubt it holds true for deeper, more complex technologies. There you probably want a slightly more mature company with some market traction. This way the acquiring company can pick up a technology that has already been market-tested, and they can pick up a few more customers in the process. But I don’t think this is the level that Sequiera is talking about.

A lot of what he is saying was also recently said by PayPal co-founder Max Levchin said at a talk I recently attended at B-school. If Sequiera is saying it, and Levchin is saying it… so it must be true

Sequiera also goes on to say that VCs are really only interested in bigger deals, because smaller ones aren’t worth their while. With that in mind, I was interested to read about microfunds. These are smaller funds some VCs are putting together to go specifically to go after the $10m-$15m deals.

Makes sense… if companies now require less capital to start-up, VCs should probably evolve to address and invest in those smaller firms.

Tuesday, October 03, 2006

Armstrong 'got Moon quote right'--GoldWave PR

I gotta admit... the whole "small step for man" think did confuse the heck out of me for a while. Glad to hear that GoldWave cleared things up and got some super amazing PR for themselves in the process.

Did they clean up the Armstrong audio themselves as a PR stunt or where they just used as part of some other effort.

Monday, October 02, 2006

No fix for Netflix.

Wisdom of the crowds or is Netflix out of good ideas? I dunno... this sounds a little flakey to me.

I mean asking the public to come up with a new tag-line or sneaker logo is one thing, but I imagine it is hard to come up with a new algorithm off the top of your head (but what do I know about such things... I'm in PR).

Hey, if someone out there can write me a new algorithm or computer-program thingy that increases my income by 100% (or more), I'll shoot you a few dollars also.



TechEffect: Netflix looks to the public for help

Two reads on Yahoo: BusinessWeek and Economist

As the eldest among my siblings, I used to get caught in-between my parents when they used to argue. I come from pretty hysterical, melodramatic Mediterranean stock, so you tell me how comfortable that position used to be.

I just got that feeling all over as I read about Yahoo’s acquisition strategy. Yahoo is too bureaucratic says the Economist, but BusinessWeek says that Yahoo’s acquisition strategy is the path to growth paved with gold.

Waahaaaa….. Mom and Dad… can’t you just agree???? Bwahhhhh!!!!!

So what am I to make of this? This disagreement by the two critical and highly analytical publications of BusinessWeek and the Economist.

Maybe one of these stories were filed in a parallel universe where Yahoo is really a great acquirer of companies…or a crummy one depending on which universe you happen to be as you read this.

Or even better, maybe this proves that there really is no such thing as pack journalism and that reporters are careful, thoughtful people who diligently research stories and in doing so may actually come to different, but well argued positions.

Um… yeah… I’m going with the parallel realities explanation too.

Content aggregation is the new black

Content aggregation… that’s been what’s on my mind as of late (well, what’s been on my mind that I feel like posting on this blog in any event.)

So lots of people what to make content, right? Everyone’s a critic, a pundit, a poet, an intellectual, a comedian….whatev, whatev.

And hey, that’s great. All sorts of people turning out all sorts of content and for the most part, the content is really only of value to the content-producer’s mother. But somewhere, somehow amongst all that mediocre stuff must be some good stuff, or at least some stuff you can convince someone to pay for or otherwise sponsor. This isn’t Chris Anderson “Long Tail” stuff… that’s not what I’m referring to. Well, OK, maybe I am a little but long tail stuff really isn’t of interest to me at the moment.

What is of interest to aggregating all sorts of content until the aggregated whole is greater than the sum of its disaggregated parts.

I was blown away by the deal SeekingAlpha cut with YahooFinance! I mean, that was awesome.

What is interesting about this deal is that SeekingAlpha is a blog that aggregates financial and stock information from many different individual contributors. Some are in the finance business already; some are private, individual investors; some are independent bloggers; and there is even a PR person who contributes regularly.

Once comments are on the SeekingAlpha blog, they will now be linked to a company's page on YahooFinance, right next to articles by mainstream business publications and even the company’s own press releases.

SeekingAlpha does’t write-up diddly-squat, they just rely on their contributors who post their thoughts for… get this… FREE. SeekAlpha gets tons of content that they pass along to Yahoo and they pay jack to the content providers. Now there is a business model if I ever heard one. True, they do apparently pay some human editors to go through the stuff so the content doesn’t read as free as is costs.

Anyway, I still think it is pretty cool.