Ideas that might be good, but they are not fully baked.

Half-Baked Ideas

These are some ideas that I liked enough to think about... but not enough to actually implement. Sort of like "the project that would never die."

Hopefully, they will serve as inspiration for others. Or hopefully some day I'll have my laboratory, and I'll implement them myself.

Daylight Savings Time... Again?!?!

It's tough explaining why we have Daylight Savings Time... it's really tough explaining why we have it to a grumpy 4-month old who wants to keep napping... it's really, really tough explaining why we have it the same week it snows in Seattle fer crying out loud... Frankly, I think we should do away with it, and C. P. G. Grey agrees with me:

He's not alone... several academic studies have shown that daylight savings time wastes money and kills people. People use light bulbs less, but air conditioning more, so energy savings is non-existent. Also, there's a higher incident of car crashes, accidents, and heart attacks because everybody is sleepy and stressed out.

I'm for getting rid of it... how about you?

The Bucket List

Pie is feeling reflective... so he tagged a few of us with the question what do you want to do before you die?

I actually covered this back in 2007 in a post about The Buried Life. In case you don't know, The Buried Life is a show about 4 college guys who made a list of 100 "what to do before we die" tasks. Then, after making the list, they asked themselves what the heck are we waiting for?!?! So they rented a motor home, and toured Canada one summer doing as many things as they could. And every time they scratched something off their list, they tried to help a stranger fulfill their dreams as well.

I realized with some surprise that I had already done about a quarter of the things on their list... including:

  • skydiving,
  • hot air ballooning,
  • learning to play a musical instrument,
  • swimming with sharks,
  • catching something and eating it (not a shark), and
  • destroying a computer

That last one can be sooooooooooo fulfilling...

So, what's left? Pie wants us to pick one "bucket item" and explain it. I'm not sure if this means it has to be #1 on the list, or just the one you plan on doing next... In my case, I think they might be the same thing:

I want to invent some physical device that is both popular, and practical.

In my high school and college days I was a bit of a tinkerer... more with electronics than anything. However, my job these days is writing software, which is a tad less fulfilling than inventing a device with actual physical dimensions... I have a few ideas for devices that could save fuel, save money, and even save lives, but I haven't set aside the time to properly implement them. Michelle and I are planning on buying a house soon, and one of my requirements is to have a shed where I could experiment. I'm also going to try to dedicate 10% of my work week to tinkering. Hopefully, its only a matter of time before I invent something useful, or I blow up my shed. One or the other...

I had several others that didn't make the #1 spot:

  • Get a degree in economics: since clearly nobody else in the world seems to be using theirs...
  • Write a book NOT about computers: I have many other book ideas that I think are great, and I've even started outlining them... but Michelle only wants me to write one book every three years. Apparently, deadlines make me grumpy.
  • Build a school: in some poor part of the country, or the world. I think it should be based on the KIPP methodology with a strong emphasis on Non-Violent Communication as well. That's a big project I probably can't get around to it for a few years... but I really want to do it some day.
  • Travel lots and lots and lots: my list includes Greece and Turkey because I'm a history nut... Australia because the people there are just plain cool... Galapagos and Antarctica because I'm a science nerd... and Japan because they make 80% of the world's weirdest stuff. I don't know if I can do it all, but I'll certainly try.

I don't feel like tagging anybody else with this meme... These kinds of reflections can be a bit of a bummer for some folks, so I won't subject them to it. However, if you're inspired to write your own "bucket list" because of this post, leave a link in the comments, and I'll retro-tag you ;-)

The Semantic Web Versus The Fallacies Of Distributed Computing

Back in the early days of the web, Peter Deutsch from Sun penned a classic list: The Fallacies of Distributed Computing. Peter took a long, hard look at dozens of networked systems that failed, and realized that almost every failure made one or more catastrophic assumptions:

  1. The network is reliable.
  2. Latency is zero.
  3. Bandwidth is infinite.
  4. The network is secure.
  5. Topology doesn't change.
  6. There is one administrator.
  7. Transport cost is zero.
  8. The network is homogeneous.

Any time you make an assumption along the lines of the fallacies above, your project will almost certainly fail. These fallacies are best explained in an article by Arnon Rotem-Gal-Oz, but today I will focus on fallacy #5: Topology doesn't change, and how the semantic web will fail partially because its creators made this fatal assumption.

As I mentioned before, proponents of the "Semantic Web" are trying to dial down their more grandiose claims, and focus on items with more concrete value. The term that Tim Berners-Lee is using these days is Linked Data. The core idea is to encourage people to put highly structured data on the web, and not just unstructured HTML documents, so the data is easier for machines to read and understand.

ummmmm.... ok...

Funny thing, people have been doing this for decades. Tons of folks make structured data available as "scrapable" HTML tables, as formatted XML files, or even as plain ol' Comma Seperated Value (CSV) files that you can open in Excel. Not to mention the dozens of open web services and APIs... allowing you to do anything from check stock quotes, to doing a Google Maps mashup. There really is nothing groundbreaking here... and I find it painfully disingenuous for somebody to claim that such an obvious step was "their magic idea."

Well, not so fast... in an attempt to breath relevance back into the "Semantic Web," Tim claims that "Real Linked Data" needs to follow three basic rules:

  1. URLs should not just go to documents, but structured data describing what the document is about: people, places, products, events, etc.
  2. The data should be important and meaningful, and should be in some kind of standard format.
  3. The returned structured data has relationships to other kinds of structured data. If a person was born in Germany, the data about that user should contain a link to the data about Germany.

OK... so your data has to not only be in a standard format... but it needs links to other data objects in standard formats. And this is exactly where they fail to heed the warnings about the fallacies of distributed computing! Your topology will always change... not only physical topology, but also the logical topology.

Or, more succinctly, what the heck is the URL to Germany?!?!?

Look... links break all the time. People move servers. People shut down servers. People go out of business. People start charging for access to their data. People upgrade their architecture, and choose a different logical hierarchy for their data. Companies get acquired, or go out of business. Countries merge, or get conquered. Embarrassing content is removed from the web. Therefore, if you use links for identifiers, don't expect your identifiers to work for very long. You will need to spend a lot of time and energy maintaining broken links, when quite frankly you could do quite fine without them in the first place.

An identifier says what something is. A link says where you can find it. These concepts should be kept absolutely separated. Its a bad bad bad bad bad idea to blend the "where" with the "what" into one single identifier... even the much touted Dereferenceable URIs won't cut it, especially from a long-term data maintenance perspective... because the data they deference to might no longer be there!

So, where does that leave us? Exactly where we are. There are plenty of ways to create a system of globally unique IDs, whether you are a major standards body, or a small company with your own product numbers. But we shouldn't use brittle links... we should use scoped identifiers instead. We need a simple, terse way to describe what something is, that in no way, shape, or form looks like a URL. The identifier is the "what." We need a secondary web service -- like Google -- to tell us the most likely "where." At most, data pages should contain a link to a "suggested web service" to translate the "what" into the "where." Of course... that web service might not exist in 5 years, so proceed with caution.

For example, we could use something similar to Java package names to make sure anybody with a DNS name can create their own identifier... For example, there's a perfectly good ISO standard for country names. So you tell me, which is a better identifier for Germany?


I don't know... and DBPedia might not be around in 3 years, and data is supposed to be permanent. Wikipedia will probably be around for a while, but should it go to the English page or the German page? The ISO 3166 identifier may not be clickable, but at least it works for both German and English speakers! Also, if you remove the dots and Google it, the first hit gives you exactly the info you need. Plus, these ISO codes will exist forever, even if the ISO itself gets overrun by self-aware semantic web agents.

I just can't shake the feeling that using links for identifiers leads to a false sense of reliability. Your identifiers are some of the most important parts of your data: they should be something globally unique and permanent... and the web is anything but permanent.

Lets' accept the fact that the topology will change, create a system of globally unique identifiers that are independent of topology, and go from there.

Popularity of the Web Considered Harmful

In a recent TED Talk, Tim Berners Lee laid out his next vision for the world wide web... something he likes to call "Linked Data." Instead of putting fairly unstructured documents on the web, we should also put highly structured raw data on the web. This data would have relationships with other pieces of data on the web, and these relationships would be described by having data files "link" to each other with URLs.

This sounds similar to his previous vision, which he called the "semantic web," but the "linked data" web sounds a bit more practical. This change of focus is good, because as I covered before, a "true" semantic web is at best impractical, and at worst impossible. However, just as before, I really don't think he's thought this one through...

The talk is up on the on the TED conference page if you'd like to see it. As is typical of all his speeches, the first 5 minutes is him tooting his own horn...

  • Ever heard of the web? Yeah, I did that.
  • I I I.
  • Me me me.
  • The grass roots movement helped, but let's keep talking about me.
  • I also invented shoes.

I'll address his idea of Linked Data next week -- preview: I don't think it will work. -- but I first need to get this off my chest. No one single person toiled in obscurity and "invented the web." I really wish he would stop making this claim, and stop fostering this "web worship" about how the entire internet should be the web... because its actually hurting innovation.

Let's be clear: Tim took one guy's invention (hypertext) and combined it with another guy's invention (file sharing) by extending another guy's invention (network protocols). Most of the cool ideas in hypertext -- two-way links, and managing broken links -- were too hard to do over a network, so he just punted and said 404! In addition, the entire system would have languished in obscurity without yet another guy's invention (the web browser). There are many people more important than Tim who laid the groundwork for what we now call "the web," and he just makes himself look foolish and petty for not giving them credit. Tim's HTTP protocol was just an natural extension of other people's inventions that were truly innovative.

Now, Tim did invent the URL -- which is cool, but again, hardly innovative. Anybody who has seen an email address would be familiar with the utility of a "uniform resource identifier." And as I noted before, URLs are kind of backwards, so its not like he totally nailed the problem.

As Ken says... anybody who claims to have "invented the web" is delusional. Its would be exactly like if a guy 2000 years ago asked: "wouldn't it be great if we could get lots of water from the lake, to the center of the town?" And then claimed to have invented the aqueduct.

As Alec says... the early 90s was an amazing time for software. There was so much computing power in the hands of so many people, all of whom understood the importance of making data transfer easier for the average person... Every data transfer protocol was slightly better than the last, and more kept coming every day. It was only a matter of time until some minor improvement on existing protocols was simple enough to create a critical mass of adoption. The web was one such system... along with email and instant messaging.

Case in point: any geek graduate of the University of Minnesota would know that the Gopher hyperlinking protocol pre-dated HTTP by several years. It was based on FTP, and the Gopher client had easily clickable links to other Gopher documents. It failed to gain popularity because it imposed a rigid file format and folder structure... plus Minnesota shot themselves in the foot by demanding royalty fees from other Universities just when HTTP became available. So HTTP exploded in popularity, while Gopher stagnated and never improved.

But, the popularity of the web is a double-edge sword. Sure, it helps people collaborate and communicate, enabling faster innovation in business. But ironically, the popularity of the web is hurting new innovation on the internet itself. Too much attention is paid to it, and better protocols get little attention... and the process for modifying HTTP is so damn political, good luck making it better.

For example... most companies love to firewall everything they can, so people can't run interesting file sharing applications. It wasn't always like this... because data transfer was less common, network guys used to run all kinds of things that synced data and transferred files. But, as the web because much more popular, threats became more common, and network security was overwhelmed. They started blocking applications with firewalls, and emails with ZIP attachments just to lessen their workload... But they couldn't possibly block the web! So they left it open.

This is a false sense of security, because people will figure ways around it. Its standard hacker handbook stuff: just channel all your data through port 80, and limp along with the limitations. These are the folks who can tunnel NFS through DNS... they'll find their way through the web to get at your data.

What else could possibly explain the existence of WebDAV, CalDAV, RSS, SOAP, and REST? They sure as hell aren't the best way for two machines to communicate... not by a long shot. And they certainly open up new attack vectors... but people use them because port 80 is never blocked by the firewall, and they are making the best of the situation. As Bruce Schneier said, "SOAP is designed as a firewall friendly protocol, which is like a skull friendly bullet." If it weren't for the popularity of the web, maybe people would think harder about solving the secure server-to-server communication problem... but now we're stuck.

All this "web worship" is nothing more than the fallacy of assuming something is good just because it's popular. Yes, the web is good... but not because of the technology; it's good because of how people use it to share information... and frankly, if Tim never invented the web, no big loss; we'd probably be using something much better instead... but now we're stuck. We can call it Web 2.0 to make you feel better, but it's nowhere near the overhaul of web protocols that are so badly needed... Its a bundle of work-arounds that Microsoft and Netscape and open source developers bolted on to Web 1.0 to make it suck less... and now it too is reaching a critical mass. Lucky us: we'll be stuck with that as well.

What would this "better protocol" be like? Well... it would probably be able to transfer large files reliably. Imagine that! It would also be able to transfer lots and lots of little files without round-trip latency issues. It would also support streaming media. It would have built-in distributed identity management. It would also support some kind of messaging, so instead of "pulling" a site's RSS feed a million times per day, you'd get "pushed" an alert when something changes. Maybe it would have some "quality of service" options. Most importantly, it would allow bandwidth sharing for small sites with popular content, to improve the reach of large niche data.

All these technologies already exist in popular protocols... but they are not in "the web." All of these technologies are likewise critical for anything like Tim's "Linked Data" vision to be even remotely practical. All things being equal, the web is almost certainly the WORST way to achieve a giant system of linked data. Just because you can do it over the web, that doesn't mean you should. But again... we're stuck with the web... so we'll probably have to limp along, as always. Developers are accustomed to legacy systems... we'll make it work somehow.

Now that I've gotten that out of my system, I'll be able to do a more objective analysis of "Linked Data" next week.

Does Twitter Mean The End Of

Face it, folks... the 140 character limit that Twitter imposes really starts to hurt when you try to pass around URLs. Previously, most folks used to make their URLs short and sweet... but lately, some Twits have determined that even tiny URLs waste precious character space, and have been demanding even tinier URLs. I mean, look at this link to my site:

Twenty five characters. What a bit pig... although I love the hidden message bonk w4... especially now that it's tax season.

As a result, many Twits have decided to go for a system that makes even shorter URLs. Here are a few URL shortening sites I've found laying about:

  • Using this, the link to my home page is now compressed to: Wow! That's saving six whole letters! Just enough to throw in one last ROTFL into your tweet...
  • not to be outdone... 'Is Good' shaves off eight whole characters, making it
  • UNGODLY short URLs! Check out http://➡.ws/웕. This makes links twelve characters shorter than, making it easily the tiniest URL I've ever seen! Hot damn! Its using some nifty tricks with UTF8 encoded URLs, the arrow symbol, and what I believe to be the Chinese symbol for "awesome." Its all technically valid in a URL, but it won't work on all screens, all web pages, nor all programs.

There are many more URL shorteners available... if you really insist on being original. Personally, I think will probably muscle out, at least amongst the Twitter crowd... and might cause more than a few folks to argue about the practical limitations of encoded URLs, especially where security and phishing are concerns...

There is another possibility... sites may begin making their own tiny urls. Imagine if CNN they did their own tiny urls, so you only had to send something like Just ignore the http:// prefix, since many apps these days know if a string something has .com and a few slashes, its probably a link... so they just slap on the implied http:// prefix automatically.

So what do you think? Will Twitter kill Will web sites start offering pre-made tiny URLs? Which URL shortener do you use?

Half-Baked Idea: Bribe People To Stay Healthy

People have a tendency to behave differently when they have insurance... they are a tad more careless than they should be, because its suddenly "somebody else's responsibility" to pay when things go wrong.

Auto insurance? If somebody scratches your car the insurance company has to pay for the paint job... even if you yourself scratched your paint job a dozen times prior to that. Theft insurance? Maybe you care less if somebody steals your 3-year-old computer, because then you get a new one. Health insurance? Well, then you might demand a CAT scan for every headache, an MRI for a sprained ankle, and expensive drugs instead of just taking a walk once in a while...

If "somebody else" is paying the repair costs, people tend to stop taking care of their stuff... This is what economists call adverse selection, and its a common reason why insurance is more expensive than it should be...

As we move towards health care reform in this country, a lot of people are concerned about this kind of behavior becoming more widespread. We need some kind of system that prods people into being more responsible with their health, but it cannot be coercion, nor can it be preachy nagging. This is the paradox about us: Americans love telling people what to do, but we hate being told what to do.

My solution? Bribe people to stay healthy. It sounds silly, but similar projects have shown promise for different kinds of insurance...

Take a classic case of unemployment insurance. In general -- and barring a widespread economic downturn like today -- most unemployed people find work within the first 2 months of being unemployed... even though they are receiving unemployment benefits. After this, there really aren't many people who get jobs in the 3rd, 4th, or 5th month of unemployment. That's because unemployment insurance lasts 6 months. At the last moment -- right about when the free money dries up -- there's another huge surge of people getting jobs.

In the 1990s, there was something called the Illinois Reemployment Bonus Experiment, where unemployed people got a bonus for getting a job within 60 days. Instead of waiting around for 6 months, most people worked hard to get jobs in 60 days, just to get that bonus. About half of them applied for different jobs with their previous employer. Overall, this decreased the costs of insurance, because they didn't have to pay the extra benefits for the other months. Critics say it could use some more fine-tuning -- many people quit the new jobs right after they held it enough to qualify for the bonus. Nonetheless, they proved their point, and saved a lot of money, despite the cheaters.

Why not try similar experiments with health care? How about instead of wasting money on preachy public service announcements that never work, you give $500 to anybody who quits smoking? How about a $1000 bonus for marathon runners? How about if your health care costs are significantly below average, and yet you still qualify as "healthy" in an annual physical, you get a little bling? How about on your income tax return, you can get a deduction of 300 minus your blood cholesterol?

Naturally, I'm not a doctor, nor an insurance guru, nor a biostatistician... and my friends who are experts seem divided on whether this will work. There are problems with setting the right "bribe," caching cheaters, general fairness, and a feeling that genuinely sick people shouldn't be doubly punished. All valid points, but I'm not talking about individuals; I'm talking about the aggregate.

All I know, is that if we have universal health care -- in ANY form -- there will be no direct economic incentive to stay healthy. Given how generally unhealthy Americans are already, and how we like to overspend on doctors, that's a recipe for big financial problems. I know people "should" just stay healthy because its the "right thing to do," but we also all "should" eat 5 servings of veggies per day. We don't, because the payoff is too vague.

But what if your health insurance provider gave you $500, if you could prove you ate broccoli every day?

I would bet anything that a lot more people would suddenly become more interested in their health...

Enterprise 2.0 Tip: Data Mine Email Archives to Generate A Social Map

One of the biggest challenges in social networks is keeping them updated. When you first log in, its a blank slate, and you have to find all your friends and make connections to them. This is a bit of a pain, so sites like Facebook and LinkedIn allow you to to import your email address book. They then data-mine the address book to see who you know that might already be in the network, which helps you make lots of connections quickly.

Ignoring the obvious security and privacy concerns, there are still two big problems with this:

  1. These systems find connections, but they ignore the strength and quality of those connections.
  2. You have to constantly import your address book if you keep making new friends.

In my latest book, I give some practical advice about how Content Management fits in with social software and Enterprise 2.0 initiatives... One of the ideas that I liked to drive home is that not all connections are equal, and it takes a lot of effort to keep quality information in your social software systems. Who is connected to whom? Which connections are genuine? And who is just a "link mooch" who is spamming people with "friend" requests just to ratchet up his ranking?

That latter one is particularly problematic on LinkedIn... Its littered with sub-par recruiters who send friend request spam so they can get something from you... but they never care to do anything for you.

Luckily, in the enterprise these problems can be solved relatively easily: data mine your email archives for who is connected to whom! By monitoring a host of statistics on who emails whom, about what, and when, you have a tremendously powerful tool for building social maps. You can determine who is connected to whom, who is an expert on which subject, and where the structural holes are in your enterprise. And you never need to maintain your connections! Any time you send a message to a friend, your social map is automatically rebuilt for you!

In order to do so, you'll need to run some data mining tools to find answers to the following questions:

  • Who do you send emails to? These are the people you claim to be connected to.
  • Does this person reply to your emails? If so, the connection is mutual.
  • How often do you email? A one-time email is probably not a connection, but a weekly email might be a strong connection.
  • How long does it take them to reply to you? A faster reply usually means your communications get priority to them, and they feel a stronger connection to you.
  • How long do you take to reply to them? Again, a faster reply from you means that their communications get priority from you, meaning you feel a strong connection as well.
  • Do you answer emails about a topic, or just forward them along? Just because you are the "point man" for Java questions, that doesn't mean you "know" Java... but it probably means you "know who knows" Java, which is sometimes even better.
  • Does one person usually do all of the initiation of new emails? If so, then this might be a lopsided friendship, or it might just mean that one person has more free time.
  • What are the topics of conversation? In reality, the more often you discuss work, the weaker the connection! If you also discuss gossip, news, current events, sports, movies, family, or trivia, then you probably have a stronger connection. The more topics you discuss, the more likely you are to be close friends.
  • What is the flow of email from one department to another? If its peer-to-peer, then these departments are comfortable sharing information. If it always goes through the chain of command, then these departments are socially isolated, and probably unlikely to trust each other.
  • Who do you email outside the company? If an employee in the marketing department emailed a friend who works at the company Ravenna, and your sales person is trying to connect with somebody at Ravenna, then these two employees might want to connect.

Unfortunately, many employers have a policy against using company email for personal communications. Ironically, this policy could hurt the employer in the long run, because analyzing the violations of that policy are frequently the best way to determine who is well connected in your company! So, before you deploy any social software in the enterprise, encourage your employees to goof off via email (within reason), and set up some technology to data-mine your email archives (like Oracle Universal Online Archive, or something similar). Then keep tuning your map based on the email messages people send.

That will help you hit the ground running with enterprise social software...

Is The Roth IRA a Total Con?

I've been reading a lot about economics and finance lately... Retirement planning gets a lot more complex when you run your own business! In any event, I've learned several things that made me highly skeptical about commonly held advice about retirement savings plans. In particular, I now believe that nobody should ever invest in a Roth IRA. This probably goes against what a lot of financial planners say, but I have my reasons.

Why? First, lets go over the differences:

  • Traditional IRA: This is a pretty good deal... these let you purchase mutual funds of stocks and bonds, and take a tax deduction when doing so. Your money grows tax-free while its in the fund. At age 59.5, you can take money out of the fund without penalty, and you pay federal taxes on it as income.
  • Roth IRA: This is a relatively new idea... identical to the Traditional IRA, except for two things. First, you cannot take a tax deduction when you put money into it. However, since you paid taxes up-front, you can take money out of the fund, and not pay taxes on it! Wow, sounds pretty good, huh?

For example... let's assume some dude named Bob Lemonjello is 30 years old, and puts in $5,000 per year into a IRA. This is the current maximum Bob can put into his account. We could assume a reasonable 8% growth over the next 30 years, yielding a total of about $610,000 by retirement. If Bob did this as a traditional IRA, that $5000 would be tax-deductible every year... saving him about $50,000 in taxes before he retires. Not bad... but when Bob takes out money from your IRA, it will be taxed... so the government will probably get $150,000 of his nest egg.

If Bob instead did this as a Roth, he wouldn't get a tax deduction, so he'd wind up paying approximately an extra $50,000 in taxes during his working years... but then he has $610,000 of tax-free cash! Woo hoo! The government can't touch a dime of that! Even better, he could have a traditional IRA, then do a rollover immediately before retirement. Sure, he'll have to pay $50,000 in back taxes when doing the roll-over, but for that $50,000 investment, he gets to avoid paying any taxes on his $610,000 nest egg!

Bwa ha ha ha ha!!! Bob is free... FREEEEEEEEEE!!!

I have one question: does anybody actually believe that the future US government would let Bob keep his Roth money, and not make him pay any taxes on it? Does anybody actually believe that the US government will never change the tax laws, and that they will sit idly, and not demand a piece of that easy money?

Reality time: Roth IRAs and Roth 401Ks are amazing tax-free investments, which have become wildly popular amongst people in every tax bracket... which is exactly why future governments will not keep their promises.

Let me remind you... until 1983, Social Security benefits were considered tax-free income... then Ronald Regan signed a law which made half the recipients pay taxes on their benefits! Bill Clinton later boosted it, so that 85% of Social Security recipients pay some kind of income tax. Face facts... When a government wants money, it will find clever ways to tax you. They will be called "Roth Withdrawal Fees," or "Conditional Rollover Fees," or just plain "We got all the guns! Gimme Gimme Gimme!"

The entire benefit of the Roth IRA rests on the belief that the government won't change the tax laws. I for one have zero faith that the government will keep their promises about the Roth. If you want the sure thing, go for a Traditional IRA. This has an immediate tax deduction at exactly the moment when you are in a high tax bracket, along with tax deferred growth. You'll pay taxes when you take money out, but in retirement you'll almost certainly be in a lower tax bracket.

So what do you think? Will the US Government keep it promises? If the tax laws change, will a Roth IRA be worse than a Traditional IRA?

Half Baked Idea: The Goldilocks 400 Index Fund

Author and entrepreneur Tim Ferris has been contemplating how to invest his millions... he put together a pretty nice post on rethinking "common sense" investment rules. He even quoted some advice I gave him a while back... Happy to be useful, Tim ;-)

Since he's looking for still more input from the lunatic fringe on the 'net, and he's a bit risk-averse, I thought I'd share the most important piece of advice to new investors: THE STOCK MARKET IS COMPLETELY RIGGED.

This is basic human nature. Any time there is a financial incentive to cheat, people will cheat... and insiders know both how to cheat, and how to stay out of jail. I've read a fair share of books about how hedge-fund managers make their millions... It goes something like this: barely legal bribes for barely legal insider information. Most of our current financial woes are because of Wall Street cons that outlived their usefulness, or went too far.

Does that mean its hopeless? Nope... you just need to know how to make money on a rigged game. This means you need to take a hard look at anything that is currently making money (even index funds), figure out how somebody could rig them, then invest in such a way to minimize the rigging. Don't expect a money manager to give you this advice: that would force him to admit that he's involved in a totally crooked industry.

For example... take Warren Buffet's standard advice to people who want to invest, but don't have the time to monitor individual investments: "buy an index fund, and get back to work!"

Not a bad idea... index funds make a lot of money, especially if you have the cash to invest right now. But first think how could an index fund be rigged? This is simple. Consider the most common index, the Standard & Poor's 500. Next, imagine you're a big company, but the S&P committee judges that you lie just outside the top 500 companies. If only you could do a tiny bit better, you'd be in the index. Why should you care? Well, because if your company makes it to number 500, then suddenly a bazillion computerized 'buy' orders will go through, because your stock is now on the S&P 500 index!

Therefore... the leaders of this company have a strong incentive to engage in sketchy -- if not downright ILLEGAL -- accounting practices to make that happen. This doesn't meant that they would, but there is a strong incentive to do so... if the CFO indeed cooks the books, then the company appears on paper to be healthier than it really is, which pollutes the value of the index... Likewise, company #499 has even MORE reason to cheat... if they had a bad quarter, they fall off the index, a bunch of computerized managers sell the stock, and the stock plummets further. Those who have been on the index for a long time have an even larger incentive to lie, cheat, and steal to stay on that index!

Instead, be like Goldilocks! Have a nice blend of the 400 (or so) companies that have been there for long enough that you know they're OK, but not so long that they have to worry about dropping off. Others have run the numbers, and its true that an index like the Goldilocks 400 makes significantly more than the S&P 500, and could be managed with a very small shell script. Naturally, this advice only works if not many people follow it... luckily nobody reads this blog.

Investors, please line up to the right ;-)

The Origin of "Bex"

A lot of people ask me, "where did you get the nickname 'BEX'?" Well, it all started about three million years in the future.

Let me explain...

I always was a big fan of British comedy... about fifteen years ago I came across an odd sci-fi British comedy called Red Dwarf that I particularly enjoyed. It mostly took place in the distant future, and it has quite the cult following, even today. In one episode, the main character Dave Lister mentioned that his sports hero was a chap named Jim Bexley Speed. He liked him so much he named one of his sons "Jim," and the other "Bexley."

I thought... Bexley, that's a pretty interesting name...

So, I started using it as a pseudonym. I shortened it to "Bex" and started using it as one of my internet nicknames... along with more unusual ones like Grin, Slosh, and Thudwallow. Naturally, back then nobody called me Mr. Bex any more than they called me Mr. Thudwallow...

Anyway, one year I was in college, there were too many Brians in my dorm. There were like 5 in a group of about 50. My dormmates decided I needed a nickname. One of the geekier ones asked me for my IRC handle, and I said "Bex." They liked it, so it stuck. It didn't hurt that my favorite beer at the time was Beck's Dark, although it did lead to some debate over the proper spelling of my new nickname...

After I left the dorm the following year, nobody called me "Bex." Apparently outside of my dorm, the ratio of Brians to non-Brians was at an acceptable level.

A few years later, I started working at Stellent... this was about 8 years before it was acquired by Oracle. Once again, there were too many Brians. I believe there were 4 in the company of about 100... include two in my 6-person dev team! Just like before, they asked for my handle... and I replied "Bex."

They liked it... so it stuck. I eventually used it as my email address (, I put it on my name plate for my cube, even on my business cards.

It probably would have remained a Stellent-only nickname, however I spent so much time building the Stellent community -- including moderating user groups, writing 2 books, and numerous conference presentations -- that the name recognition started to grow. More people knew me as "Bex" than knew me as "Brian."

So... now I use it or a variation whenever I can:

And now I never have to concern myself with the ratio of Brians to non-Brians ever again...

XML End Tags Are Stupid...

Building on my observation that URLs are Backwards, I've decided that XML end-tags are stupid. For example, why do I have to write XML like this:


Instead of just like this:


Or even this:


Huh? Crazy, I say... crazy! Coders have been dealing with generic end parenthesis, and generic end braces for decades... why complicate matters in XML? As Alec always says:

Your data format ain't better just because it has angle brackets in it...

Seriously, what semantic advantage is there? If you are creating XML of only minor complexity, its just a bunch of extra typing that don't add any value... if you are using complex XML then I might see the advantage... but in those cases you would probably use an XML editor which does all kinds of fancy code highlighting to make sure you can see everything... and the words in the end tag are superfluous anyway.

Besides... XML end tags are especially useless for HTML. Seriously... everything is DIV tags anyway. If your HTML is invalid, it usually doesn't help to know that you need to end an open DIV tag... the question is which one? Your only hope is an advanced editor, or decent HTML comment blocks.

Having the name of the tag in the end tag just makes the data format more bloated, and no more useful. I prefer JSON anyway:

{ "head": { "title": "foo" } }


Enterprise 2.0: What It Is, and How You'll Fail

A few days ago Justin asked me if I would like to give a presentation at Oracle's Enterprise 2.0 Bootcamp on July 28th... I said sure, but only if I get to be controversial.

Hopefully this topic will be controversial enough!

UPDATE: the presentation went over quite well... and I've posted it online if you want to take a peek.

I've heard a lot of buzz about Enterprise 2.0 lately... and lots of Enterprise Content Management folks (including Newton, Pie, and Billy) still seem to be frustrated by the general lack of a coherent definition of what exactly is Enterprise 2.0? Frankly, I think the very act of defining Enterprise 2.0 defeats the whole purpose, but I appreciate that some people need guidance...

The world is filled with "thought leaders" trying to railroad people into a narrow definition that is properly aligned with their own technology and ego... Some say E 2.0 is just Web 2.0 for the enterprise. Some say its emerging enterprise architectures (SOA, ESB, CEP, IdM) that make services easier to govern and re-use. Others -- like the lame-os at Wikipedia -- say its nothing more than enterprise social software. Others say its just the Knowledge Management Beast rearing its ugly head yet again...

triple ish on that last one...

In my upcoming book, I spend a chapter on how Enterprise Content Management fits in with Enterprise 2.0... and after swimming in blogs for the past year I think I have synthesized an approximate definition that might make everybody happy:

Enterprise 2.0 is an emerging social and technical movement towards helping your business practices evolve. At its heart, its goals are to empower the right kind of change by connecting decision makers to information, to services and to people.

Swish! Leave a comment and tell me what you think... Hot or not?

Its vital to understand that E 2.0 is still a moving target... we know that the enterprise is changing radically, but we don't have enough hard data to say what its changing into. However, I feel its just the latest leap in the neverending goal to make information and services more re-usable.

As an added twist, E 2.0 also has at its core the goal of connecting people with each other in order to discover the tremendous value that exists outside "the process." If the purpose of process is efficiency, then why do so many people in enterprises complain that their process is horribly inefficient? It might be because your process just plain sucks, or it might be because the process is keeping you from changing something that has drastic side-effects outside your view of the company. The point is not to mock or destroy "the process," but to help processes evolve at the optimal rate. This is not possible unless all decision makers can see first-hand how their changes negatively affect other departments. This cannot be done with metrics alone: you need friendly hallway conversations between people who normally would hate each other.

Unfortunately, after coming up with that definition I was staring point blank at something a little unsettling... If people focus on the wrong things, Enterprise 2.0 will FAIL HORRIBLY the same way Knowledge Management FAILED HORRIBLY! For those who forget, Knowledge Management was some snake oil sold 20 years ago saying that access to information was the #1 problem... its not. The problem is access to the right information at the right time in the right format. My industry -- Enterprise Content Management -- emerged from the ashes of Knowledge Management, trying to implement the few good ideas that it offered.

So... how did Knowledge Management fail? What implications does this have for the failure of Enterprise 2.0? I'm no psychic, but I anticipate that people might make similar mistakes... it all boils down to one problem: you're probably focussing on the wrong thing! How could you fail? Here's five ways:

Software Design is Gene Splicing!

I came across a new article by ACM about Web Science, a new interdisciplinary approach to looking at how the web works. Its a great article about how we in software design have been thinking about the web all wrong, and need a more broad approach to solving its problems. Master Mark makes the comment that terms like "engineering" and "architecture" are completely misused when it comes to software. I never liked the terms myself... Mark suggests that instead we use the analogy of gene splicing.

That's the best idea I've heard in a long time... Maybe I should change my title to Chief Software Splicer? Maybe Chief Software Hybridizer? Chief Software Incubator? I'll noodle on it for a bit...

I have seen far too many projects go astray because people thought there was a "right" way to do software... probably because they bought into the concept of it being similar to designing a building, or slapping gears together. No No No! Software design is vastly different... we're more like mad scientists. Good software designers understand the potential for chaos, and use techniques to control it.

What we do has the vague appearance of science: we use algorithms and patterns that have worked in the past, we get to know limitations to physical hardware, we analyze common security and performance blunders, etc. However, every time we create new software, we are building a new Frankenstein's monster! It could be utterly mundane, or terrifying and ferocious. Likewise, integrating two existing systems isn't as simple as clicking together some Legos... its merging two completely different species into one single unholy unit. In other words, its creating a hybrid chimera like a eagle with a lion's head, or a fire-breathing manatee.

In short, its difficult to predict the end result of software unless you've done exactly the same thing in the past... but in practice, this almost never is the case. People rarely pay developers to do the ordinary... which is also part of the problem.

Sure, we can make reasonable guesses of what this new beast will be like... based on previous combinations, patterns that work, initial tests, and similar software development best practices. However, its still difficult to determine how it will behave in the wild until you unleash it. Perhaps software developers should take a page from the mad scientist handbook, and hone the following skills:

  • Keep close tabs on your new creations.
  • Observe closely how they interact with humans.
  • If they cause humans pain, then you must act swiftly:
    • either destroy your beautiful creation and start over, or
    • teach it to behave better.

Either way, new software will behave in erratic ways, and you always need a plan for what to do when it begins to behave badly... And many times you never know how it will behave until you unleash it upon the keep the tranquilizer darts handy.

URLs are Backwards...

Is it just me, or are URLs totally backwards? For example, take this email address:

Nothing too odd... the email is is going to bob, who works in finance at the company. Not many folks do email addresses like this, they might instead do, but I did it that way to compare it against a typical URL:

Nothing too odd there, eh? You are going to the blog for the company, the article named my-hands-are-bananas, published in June, 2008.

What always bugged me is how they mixed up the order. A URL is supposed to be directions to find information... and directions always start off general (head east on I-94) and end up very specific (turn off the paved road and stop at the fifth pink trailer home).

But URLs totally mix up the order:


Putting directions in that order makes about as much sense as these directions: turn left at reception, go to this company, go to France, then make a right.

A properly consistent URL should actually be structured like so:

Adding to the oddness... things like .com and .org are called top-level domains. Yeah... it really makes sense to call something "top" when actually its on the "bottom."

Louis in the comments suggested that maybe this would be even better:


That would would sure make type-ahead URL matching a hell of a lot easier...

Attention internet: please change.

Possible Twitter Business Model: Charge Leets, Not Tweets!

All right... the Twitterverse is all up in arms about how crashy it is, and the lack of a business model... well, at least Jake and Radar are... so I figured I'd throw in my 2 cents, and solve both problems at the same time:

How to make Twitter crash less:

  1. Ditch Rails.
  2. Ditch Ruby.
  3. Rewrite it for Python / Django.
  4. Use Google App Engine for hosting.

Done and done. Pownce has proven that it way easy to redo everything Twitter did (but better) using Django... and in a remarkable short amount of time. Plus, if you use Django, you can port your entire system to Google App Engine, and get insane scalability and uptime for cheap. Google might even be a willing partner for such a high-profile client with such widely known scalability problems...

I always thought Rails was the wrong tool for Twitter... I'm sure the pragmatic programmers would be all up in arms if Twitter ditched their favorite tool... but who cares? Using the same tool for every job is woefully unpragmatic. "But Rails can do it! Rails can do it!" Ugh... At times like this I let Chris Rock do the talking:

Sure, you can do it, but that doesn't mean it should be done! You can drive your car with your feet if you want to, that doesn't make it a good idea!

Now, regarding the business model, there are these options:

  1. Charge $10 per year for people who tweet more than 5 times per day.
  2. Engage businesses, sell them "Twitter Appliances," and train them how presence can boost communication and productivity.

Seems pretty damn straightforward to me... at least, that's what I'd do if I had a brand like Twitter. Move into more of an evangelist model, teach people to collaborate with presence, and get into the enterprise before somebody else beats you to the punch. Heck, they could even sell enterprisey books, and be the first "sexy" enterprise app. I'm baffled why they haven't already done so.

In the meantime, I've moved on. Check me out on Friend Feed.

UPDATE: Garrick posted on another twitter business model... The scalability problem is not due to the number of tweets per day, but in the number of followers you have. Some people have thousands of followers, so one tweet per day from a popular person consumes more resources than a friendless one tweeting every hour. Therefore, perhaps you should charge people to be followers? I'm not 100% sold, because that would discourage popularity. Its also vulnerable to Twitter syndicators like FriendFeed... Why should everybody pay $10 to follow Scoble on Twitter? Just follow his FrendFeed instead.

Auto Companies Should Finance Solar Panel Installations

Here's a half-baked idea inspired by a Freakonimics commenter: failing industries should help homeowners finance renewable energy.

The logic goes like this:

  1. Ford's business of selling cars has not be profitable for some time...
  2. Ford Credit -- which helps people finance the purchase of For cars -- has been incredibly profitable, so much so that it keeps the rest of the company in business... therefore
  3. Ford is actually in the banking industry. They help ordinary people purchase expensive manufactured equipment, which in turn help benefit the lives of ordinary people. Now,
  4. Alternative energy, such as Solar Panels, home-grow biodiesel, and cogeneration, also benefit lives by reducing the expense of energy for ordinary citizens.
  5. Alternative energy systems require expensive manufactured equipment, which many people cannot afford.
  6. Alternative energy creates a return-on-investment -- less monthly costs on electricity and gasoline -- which offsets the costs of making monthly payments. Therefore,
  7. If Ford got into the business of financing the sale and installation of solar panels, it really wouldn't be much of a shift in how they do business, but could be insanely profitable.

Ford, GM, and Chrysler are all touting how they plan on using alternative energies in the next generation of products... I say, why stop there? Don't integrate solar panels into cars... purchase a solar panel manufacturer, and finance solar panel installations in people's homes! Set up some local biodeisel co-ops... and make your money the way you always did: financing the sale of manufactured equipment. Use your leverage in Washington to get tax credits for people to install solar panels, and make it even cheaper for your customer base.

This initial step will also help the auto manufacturers get to understand the nature of alternative energy... before completely shifting your manufacturing process to create biodiesel cars, make sure there's a market for it. Use your financial influence to create the initial market, profit from it, and finance the rest of the endeavor. Purchase the best companies, learn from them, and make your cars more efficient as well.

To me, that strategy seems much more doable, and much more profitable...

Banks like Ford are the future, not the past... modern banks that focus on hedge funds, derivatives, and sub-prime mortgage financial vehicles are ignoring the sacred purpose of the financial industry: to spur the growth of industry that improves the well-being of the public. If you are a bank that is also into manufacturing (cars and solar panels), services (repair and installation), and perhaps agriculture (for biofuels), you have an edge that few could match. That won't happen overnight, but financing solar panels would be a good start.

Anybody know the CEO of Ford?

Half-Baked Idea: "Tweet" your Pain!

If you have chronic pain, or any kind of intermittent health problem, then you should join Twitter.

Why? Well, in case your last trip to the hospital wasn't a clear enough sign, the communication breakdown between doctors and patients is costing us dearly. Too little treatment, too much treatment, improper treatment, it all boils down to the fact that your doctor doesn't know enough about you to make some of these calls.

What were you doing when the pain struck? Getting out of the car? Well, what did you do before that? An hour before? Four hours before? Last week? Did you move furniture? Sit at your desk all day? Or did you go for a run? If you used Twitter, all this information would be available for your friends, family, and even doctors.

Naturally, this does open up the problem of information overload... and in fact studies have shown that doctors can sometimes give better treatment by asking fewer questions. The most famous example is probably the chest pains decision tree described in the book Blink: by asking three questions and no more, doctors have a better chance of catching heart attacks. Of course, that's just for determining whether your chest pain is serious enough to warrant hospitalization, or whether you should take a Tylenol and go home. After a patient is in the hospital, the more information your doctor has, the better your treatment will be.

By constantly recording what you are doing with twitter messages (aka "tweets"), you give your doctor a wealth of information about your habits. If you moved furniture three days before you felt pain, you might not remember... but its in your Twitter feed, so your doctor will know.

Why Twitter and not a diary or blog? Simple... the easier it is to do, the more likely you are to do it. Diaries and blogs are for long-winded thoughts, rants, and essays. Twitter is simply what you are doing right now, and nothing else. Its clean and simple, and you can even "tweet" via cell phone text messaging. Nobody expects you to be pithy, funny, or even interesting... just approximately accurate.

In short, if you want good medical treatment, you should tweet your pain.

Half Baked Idea: Wiki Markup For Text Messages

I saw the beta of Fanchatter at the latest MinneDemo un-conference... it looked good, it was a nice way to fuse text messages, micro-blogging, and sports fans. Kind of like Twitter, but sports-focussed, plus several extra bells and whistles.

While watching it, I had a bit of an idea: why does nobody use Wiki markup for text messages?

This wouldn't be needed for IM-ing your buddies on a phone... but as more and more people use text messages to communicate with web sites, the need for quick-and-easy markup becomes more important. I'd sure like to be able to convert that pure text into pretty HTLM, not to mention have quick links between my Twitter feed and a wiki somewhere...

Of course, you can't use traditional wiki markup on your phone... square brackets and underscores are a pain... How many times do you have to click the to get a [ symbol? Do all phones even have square brackets? No... it would be better to use numbers:

  • Bold: 0foobar0 or *foobar*
  • Italics: 1foobar1
  • Underline: 2foobar2
  • Hyperlinks: or #https
  • Hyperlinks with custom title: Bex Huff#
  • Wiki links: camel-caps (ie, FooBar), or double pound sign (ie, ##foobar##)
  • Unordered lists: begin each line with a star (ie, *foobar)
  • Ordered lists: begin each line with a pound (ie, #foobar)

That's probably all most people would need... you can optionally use 3, 4, and 5 for blockquotes, code, or citations. The wiki links would go to either a global wiki page on Twitter, or a "tribal" wiki page for your chosen tribe. You can even allow micro-blogging turbo users to 2-digit numbers for custom markup... like 10foobar10 for a float:right text block.

If micro blogging ever hits it big, people will love this crap. Feel free to steal my idea, I'll never implement it... in part because I frigging hate cell phones.

Google Owes Me A Pony

I was always fascinated by economics... but every time I tried to study it I was put off by the sheer idiocy of it all. Pretty much every founding principle of economic theory is complete and utter crap, and it infuriated me that educated people bought into it. Economists totally tarnish the nobility of the Nobel Prize...

That was before I picked up the amazing book The Origin of Wealth, which is about a new field called complexity economic theory. Complexity theory states pretty clearly that "traditional" economic theory is crap... and replaces it with a vastly more enlightened model. The economy cannot be modeled with automatons with perfect knowledge buying widgets; its based on the principles of complex, dynamic, evolutionary systems... and has many emergent properties that are impossible to predict, although clearly not random. Its pretty academic, but if you have a basic understanding of physics, computer modeling, and evolutionary biology, its a must read.

Anyway, In the book the author tries to answer the only economic question worth asking:

  • How is wealth created?

Traditional economic theory states that by specializing in a trade -- or a product -- you can create wealth... I make axes, you make clay pots, we trade, and wealth is created... but why? What is this thing we call "wealth," and how exactly does trading and commerce create it?

We should emphasize here that the economy is not a zero-sum game... Many used to believe that there is a fixed amount of wealth in a country, determined by the natural resources a country has, its labor, and its ability to turn the two into wealth through technology. Nope. The economy is not a big pile of gold. People shouldn't have to lie, cheat, or steal to get their share... That philosophy is called mercantilism (thanks solistics), and is rejected even by traditional economists... although tradition economists could never get the math to work out to explain how wealth was actually created...

To illustrate further... On occasion, a king, a country, or an organization stops innovating, and simply coasts on the capital from previous glories. At this point, the local economy does resemble a zero-sum game, and no economic progress is possible. In fact, if the competition (ie, other countries) continues to innovate, the organization will get poorer. Throughout history, closed societies (North Korea, Fundamentalist Muslim nations, Ancient Sparta) failed economically, whereas their "open" counterparts (South Korea, Dubai, Ancient Athens) became economic powerhouses.

Throughout history, zero-sum thinking has caused wealth to stagnate... whereas sharing, cooperation, and innovation always generated new wealth. By following win-win situations, new wealth can be created almost by definition... But how on earth does it work? What could explain it all?

Wealth Is "Fit Order"

The author put forward a pretty cool theory: wealth is fit order. By this, he means that wealth has little to do with natural resources, capital, or labor... its not even so much about technology. Instead, wealth and knowledge are fundamentally the same thing!

Note: raw data is insufficient to create wealth... This difference is partially semantic, but it's important. Knowledge needs to be transferable and useful to others. Thus your religious faith and supernatural beliefs have personal value to you, but no economic value... In fact, they can have serious negative value if you listen to shady preachers or TV psychics...

True wealth only occurs when a piece of physical technology and a piece of social technology mix into a "business plan." In addition, implementing the plan needs to create higher levels of order from available raw materials... pedantically speaking, a plan must be thermodynamically irreversible, decrease local amounts of entropy, and thus consume lots of energy. I have my doubts if this is a requirement -- deleting embarrassing emails and demolishing buildings can alone increase wealth -- but for now I'll agree.

In the next step, the information -- or "order" -- is tested out in the "economy" to see if it is "fit". Beinhocker provided a wealth (har!) of data demonstrating that the economy is an evolutionary system, which means it adheres to a basic evolutionary algorithm:

10 differentiate()
20 replicate()
30 selectForFitness()
40 GOTO 10

This is survival of the fittest. Most ideas are slight variations on existing ones, and on occasion you see radical new ones. The radical ideas are more likely to fail, but every once in a while they completely change the economic landscape.

If the business plan is copied by others, it replicates. Now, sometimes the business world is trendy, and people copy ideas for no good reason... but if the idea lasts over a few years, it can be considered fit. Fitness, naturally, is dependent on your environment: a polar bear is a rock star on the ice, but wouldn't survive long in the Sahara...

Fit order creates wealth.

Skeptical? Consider this: did the invention of marketing create wealth? How about public relations? What about customer service, or human resource departments? Do any of these things produce physical objects of material value? NO! But do they produce wealth? YES!

How do we know? Well, corporations that adopted good practices in these "service" areas outperformed their competitors. They got better employees, better customers, better products, and better market capitalization. In the dog-eat-dog world of capital markets, companies with these services attracted and generated more capital. If additional wealth wasn't generated by these activities, no corporation would implement them for long.

Clearly, service industries generate wealth just as agriculture and manufacturing. Simple as that!

All of these are examples of fit order. Marketing is a good way to make a bad piece of technology sell better, or to help inform people about good technology. Public relations keep you out of trouble when the news is bad, and helps you toot your horn when the news is good. Customer service ensures your customers are happy, and willing to pay a premium for your product. Finally, good human resources ensure you locate and retain the best employees.

The job of a computer geek is even more abstract... we string together ones and zeros into applications that make our customers feel stupid, then we mock them. By some bizarre chain of events, the economy appears to prize this career over the creation of food... Similarly, school teachers are vital for our next generation, but they don't make nearly as much money as sports stars... Adam Smith called this the diamond/water paradox: water is essential to human life but is nearly free, whereas diamonds have little to no value and yet cost a lot... Price is all about supply and demand, and has little to no bearing on the actual value of something.

Ummmmm... So Why Does Google Owe You Anything?

If Beinhocker is correct, and there's a direct correlation between wealth and knowledge, then public data stores like Google are modern wealth-creation engines... This idea in general was covered by The Economist and Jimmy Guterman at O'Reilly recently, but I don't think either understood the full implications...

When the modern banking industry began, very few people saw it as the wealth-creation mechanism that it was. Many saw it as a wealth protection and re-distribution system. Investors saw them as a "safe" place to put their money. Bank managers understood profit, loss, and risk... which meant charging the right interest in order to make a profit for the bank and its investors... however, many still regarded the economy as a zero-sum game.

Since Google stores so much information, they can mine it to find new kinds of ideas, new concepts, and create new knowledge. Thus, they can sift through the cruft and chaos on the web to find the order. Since Google tracks everything, they can watch trends, and monitor the popularity of certain ideas. Thus, they have their fingers directly on the pulse of what kind of order is fit.

If wealth is actually "fit order," then giving information to Google is like putting money in a bank, but not getting interest! That's why Google owes me money... or at the very least they owe me a few good ideas. However, I already have more ideas than I need, so I'll settle for a pony.

The Economist compared Google to some of the original banking families... not because they do the same things, but because they both wield tremendous power. Well, Google indeed holds the same power... not by coincidence, but because Google is creating wealth in the same way the Rothschilds and the Warburgs did. It by no means a coincidence that they wield the same power: if Google was not instrumental in the creation of wealth, they would be on the ash-heap of history by now.

An older article in The Economist asks how a company like Google can be so big, and yet claim to not be motivated by money. I believe the answer is simple: Google isn't motivated by cash; Google is motivated by wealth. Cash is only one mundane variation of wealth, which becomes less and less useful every year. What use is your gold in a world with Star-Trek replicators? It isn't worth nearly as much as your ideas are... and desktop replicators are closer to reality than you may know...

As such, Google might just understand things about the new economy that others fail to grasp... or perhaps they just stumbled ass-backwards into one of the greatest wealth generation systems since J.P Morgan.

Either way, good for them.

And gimme my pony.

Recent comments