Monday, September 27, 2010

/blink Moments in China; Did they really just do that?

5.  They have this sports tournament organized by the company's social club.  I don't know if this is a company thing or a China thing.  But I've never heard of a company-wide club in North America dedicated to organizing extra-curricular activities for the company's employees.  Like they have a volunteer executive committee, a corporate budget, and everything.  It's like being in a school club all over again.  So I joined up to compete in Men's Singles Tennis, Mixed Doubles Tennis, Men's Singles Table Tennis, Mixed Doubles Table Tennis, Volleyball, and something called Basketball Shooting.  Today, I got to play a bit with my doubles partner.  Wow, I overestimated her abilities... we have a lot of work ahead of us.  I thought she at least knew how service order works...  I hope she doesn't read this.  ;)  But seriously, a corporate-wide club dedicated to year-round extra-curricular activities?  Who does that in North America?  I do think it's awesome, but I wonder how much time it takes out of the executives who volunteer.  Back during my university days, club activities could sometimes be a lot of work and even outweighed studies sometimes.

4.  When we go to lunch at any restaurant, everyone pours tea into their cups.  But they don't drink the tea.  The tea is then used to sanitize every square millimetre of your plate, bowl, and utensils that will potentially touch food.  I really didn't think this was such a big issue, so I never followed suit.  I mean, yeah, I hear the stories, but my stomach's pretty good with this stuff.  It's just weird to see the waitress place a big bowl in the centre of the table for the sole purpose of collecting everyone's tea-dishwater.  Then I had dinner with this girl in HR.  She scolded me for not following local customs.  People in Shenzhen do this for good reason, and if I don't do it too, then I'm not respecting the local customs.  If she visited Canada, she would do what people do in Canada for whatever custom, eating or other, so I should likewise follow suit here.  Wow.  OK, I got it.  And another thing.  Never argue with a woman.  I now wash all my dishes and utensils with tea when I go to restaurants.

3.  After playing tennis today after work, I was walking to the bus stop to go home.  On the way, I saw a street BBQ stand.  Haven't had dinner, so why not?  Walk up, start picking things.  One of the guys says, "hey wait a second, let us get ready first."  They're still laying out veggies and stuff.  And then one of the guys starts passing the grill through the flame.  It's actually some kind of chicken wire mesh.  So I'm thinking, ah, he's sanitizing the grill.  That's cool.  Well, 30 minutes later (it was a long process, there was a lot of grill, and the guy obviously wanted to be thorough), the guy then puts the grill on the street.  And then he starts brushing it with a thick brush.  EXCUSE ME??  YOU JUST FINISHED SANITIZING THE DARN THING!!!  Then he turns the grill OVER and starts brushing the OTHER SIDE!  So both sides touched the street.  It dawns on me that he wasn't sanitizing the grill.  He was attacking the mesh's paint, chemical treatment, or whatever coating it had to make sure the chemicals didn't smoke into the meat.  After he finishes brushing the thing, he puts it on the grill and says, "OK, we're ready!"  I suppose a sane person would have run by this point.  Me, I was hungry, and I hadn't had proper street BBQ yet in China this time around.  So I grabbed three skewers, waited for them to cook, and then went happily on my way munching on beef, lamb, and chicken.  For my long wait, I negotiated the price down from 11rmb to 10rmb.  Wow.

2.  I am doomed  to suffer humidity and heat.  My electric bill for last month was 410rmb.  Friggin expensive.  I need to use my A/C less.  And that's with barely using my refrigerator at all.  The thought of less A/C makes me sad.  This is such a disaster that it is worthy of the #2 spot, despite not sounding like much.  Well, you guys aren't living in this heat.  Walk a mile in my shoes, then weep with me.

1.  So people have this week-long national holiday from Oct 1 to 7.  How cool is that?  Sadly, I'm allowed to be on vacation from Oct 1 to 5.  But... a week long NATIONAL holiday?  So the country just grinds to a halt or something?  Wow.  This will be interesting.  I'm sure retailers and such will still be open.  You can't expect everyone to just stay at home all day.  But many people are traveling back to their hometowns to visit families.  The airports and train stations will be packed.  For a while, every single day when we went to lunch, we'd see a long long lineup of people waiting to buy train tickets from this train ticket shop.

The Case for Going to School Yesterday and the Case for Not Going to School Today (Not!)

Seeing that Mark Zuckerberg is the latest billionaire darling of the tech world who dropped out of school (who the heck has multiple books AND a movie made about them while they're still in their mid-20s?), you have more and more people saying that kids should not go to university; Bill Gates attained riches and glory without finishing school, so can you!  Now it's Mark Zuckerberg.  College dropout failure to worldwide fame!  So goes the kool aid, ad nauseum.

Let's put this into context, OK?

1.  School:
The school that Gates and Zuckerberg quit wasn't your average Joe Schmoe community college.  It was Harvard.  It's hard to get into Harvard.  You have to be in the 99th percentile of something, or 95th percentile of everything, to be able to get in.  Gates and Zuckerberg were that smart, maybe more.  If you're that smart, you might still make it if you drop out.  Most people are sadly not that smart.  People like Gates and Zuckerberg are 1 in a hundred million.

2.  Field of Expertise:
Bill Gates and Mark Zuckerberg were programmers.  But they were hardcore programmers.  According to Outliers, written by Malcolm Gladwell, Gates was able to start learning how to program a computer when he was a teenager, due to special resources in his private school.  He had access to a computer at a time in the 60s when most people didn't even know what a computer was.  And he showed that he was good at it at a time when it was still a nascent field.  As I read on one really interesting blog post some time ago, Gates didn't drop out of Harvard because he couldn't keep up with Harvard.  Gates dropped out of Harvard because Harvard couldn't keep up with him.  He went on to found a company that forever changed the face of computing and make those machines into truly general purpose business and consumer devices: Microsoft.  As for Zuckerberg?  According to The Facebook Effect, he took masters level computer science courses when he was a teenager.  Just because he was so good at it.  He created a program in high school called Synapse that essentially was an early stage of Pandora.  Microsoft offered to buy it for $1 million.  But he turned them down.  I mean... come on.  How many of us were able to do anything like that when we were teenagers?  I'm talking about the masters level computer science courses.  And all the other crazy stuff he programmed while in high school.  For both Gates and Zuckerberg, the equivalent would be something like Joe Schmoe's teenage kid practicing with real NHL players to become a professional hockey player.  Except the NHL players also say the kid has the most natural talent they've ever seen.  And then they all decide to work full-time to help the kid develop the talent into something solid.

3.  Background:
These were privileged kids.  Gates' dad was a lawyer.  Zuckerberg's dad was a dentist.  They went to private schools.  They got opportunity to develop and learn special things that normal kids don't.  Again, Gates got access to a computer when nobody else even had one.  These guys weren't your average Joe Schmoe kids complaining about homework, trying to get girls, and wasting their lives away.  If you read about their lives, you see that they were driven, even as teenagers.  They had a type of discipline that the average kid (and average adult) does not have.  Heck, Zuckerberg didn't sell Synapse to Microsoft for $1 million because he cared about what he created.  He didn't sell Facebook for $15 billion to Microsoft when he had the chance for the same reason.  These guys were about creating, innovating, and changing the world; they refused to let their visions be compromised.  Anybody else would care more about making the quick buck.  And changing the world they are because they had the guts to stick to their guns in the face of adversity, the intelligence to architect true innovation and disruption, the drive to pull their audacious visions off, and the creativity to actually see those visions in the first place.  These people who are telling kids to drop out of university often have no idea which of those kids will have these attributes; fact is, most kids will not.  Again, these guys are 1 in a hundred million.  Maybe 1 in a billion.  And if you don't have the discipline to even aspire to get that, you have to really wonder if you're a contender or a pretender.  Because pretenders won't make even 1 dollar, let alone billions.

I was originally going to post on this subject when I first saw that Washington Post article, but unfortunately lacked time.  Well, it's come on my radar again due to this post.  And ironically enough, one point in the Washington Post makes me very worried that there is a certain rationality to quitting school (or not even entering in the first place).  This comment from the Techcrunch post is the seed:

Most of the people responding are as much in denial as those kids who think they can all be Michael Jordan. Sure, if you are a clueless idiot who has a good idea, and the social skills to get other people to give you money and build it, you can still succeed, it worked for George W Bush. 

But you know, sometimes, we as a society need *REAL INNOVATION*, not the 20th dweeb putting up a hacked up PHP website and blowing through investor money like no tomorrow. We need people doing real research, real engineering, producing things which actually make a difference in the world.

The TechCrunch readership is full of wannabees who of course, don't care about an education, because their idea of entrepreneurship is a half-ass idea, $15k of capital, and 3 months hacking up a prototype. Are you inventing new battery technology? You think you're going to do that without formal training in Chemistry? Are you devising a new cancer drug? Think you're going to do that without an education in molecular biology? Was Craig Venter a guy who didn't attend college? How about a new class of power efficient 3D rendering, or a new power efficient, high yielding WEBM hardware codec for mobile? How many of you are going to build THAT business?

This reminds me of all the people who say they never use algebra. The purpose of teaching you algebra and calculus is to teach you critical thinking, problem solving, and abstraction, not create a new Fields Medal winner. College does not exist to teach you a trade skill, that's what vocational skills are for, it's to expose you to a wide array of knowledge, and teach you learning and thinking skills that will help you in every endeavor. 

What's happening here, is smug self-importance of people who fancy themselves entrepreneurs, who create trivial and mundane products, blowing investor money, and most of whom fail, blowing their level of success out of proportion.

With the exception of some lucky few, and some outright thieves and bandits like Marc Pincus, real success and real innovation come from hard work. We need people to go to school to invent the next great product, and not the next great web 2.0 junk site.

Here's my worry.  The cost of post-secondary education is rising, giving rise to the question whether ROI for post-secondary education is worth the cost.  Normally, I'd say yes.  But I am increasingly worried that society is more and more short-sighted about what education is and what a job is.  And as is normal for free markets, where there is demand, there will eventually be supply.  I worry that society no longer cares for giving its children knowledge and the ability to think; rather, they only demand the ability to earn money quickly.  I believe that can have severe unintended consequences as the demand for shallow-earning-potential-first education gets fulfilled.  I wrote those posts in 2004 and 2005.  My perception of education is even worse now than it was back then.  Even university may not be able to provide that amazing foundation in chemistry required to develop a new battery anymore, if things keep declining.

Yes, university is supposed to be about learning how to think, not about getting job skills.  Heck, after developing my career some odd number of years, I can see how this is even more true.  I see even people with MBAs fail at work because they don't know the first thing about real work, about getting stuff done, about adding value that matters.  It's the attitude, not the pedigree, that's the most important, especially if the pedigree is garbage.  And unfortunately, education may actually be more akin to garbage now than not these days.  If you're going to learn nothing, then why go?  My own experience at university gave me a total of five courses that made me feel like I developed:

PHIL 001 - taught me the basics of logic and reasoning
BUS 437 - taught me about complex decision making
POL 241 - gave me a framework for understanding world events
BUS 468 - ignited my interest in information asymmetry (an unintended consequent, as this was an IT case study course)
BUEC 495 - taught me about transaction costs and the Coase Theorem

The value I saw in my university degree can be summed up right there in 5 courses.  Now of course there were calculus, statistics, economics, discrete mathematics, computer science, and other classes that were also valuable.  But these five were the cream of the crop.  The vast majority of them?  Well, the experience is epitomized by two courses:

BUS 207 - applied calculus for business economics.  Everyone was saying, "OH MAN, THIS COURSE IS SO HARD, THERE'S SO MUCH CALCULUS IN IT!!!"  That's cool, I rock at calculus, course should be a piece of cake.  I go into the course.  Guess what, we didn't do a SINGLE derivative or integral the ENTIRE semester!  Which part of this was supposed to be calculus??  Heck, what part of this was supposed to be worth LEARNING??

ENGL 105 - course where we read books.  I complained to an older friend (an English major) that my English course was basically just a book club, we read the books and discussed them.  My friend thinks I'm crazy, "Isn't that perfect though??"  Chee.  I experienced more insightful analysis and discussion during my high school English AP class, thanks.  If I wanted to join a simple book club, I should go join a book club.  I paid like friggin $300 for this course, and that was back when tuition was cheap.

Now tuition is expensive.  Really expensive.  If the quality of education declines because of the great demand for cheap framed pieces of paper that can say someone can earn money, quality be damned, then why should one go to school?  It used to be that degrees meant something special.  But there is an increasingly inflated value placed on a degree.  The higher demand has caused an increase in supply, but because the demand is after the piece of paper, not the thirst for knowledge, the increase in supply is actually quite low quality.  Volume is the game and pumping more students through the system means more revenue for the system.  Quality be damned.

If we don't try to demand high quality, we will lose out in the end, because we'll get what we demand; it will be a race to the bottom.  And for that reason, perhaps it doesn't make sense anymore for kids to go to university.  BUT if one chooses to make that decision, the important question is then: how the heck are they going to get the quality knowledge and critical thinking ability necessary to become successful?  I'm not talking Bill Gates successful.  I'm talking Joe Schmoe successful.  Because if they aren't able to get that, the next stop is the trailer park, or worse, the street.  Fortunately, humanity is resourceful when the chips are down.  Hopefully, we can figure something out.  People are already trying to fix things and they're starting from the foundation.  There goes Gates and Zuckerberg again....  Dang, I'm interested in seeing that other movie.  :)

For now?  Probably a good idea to stay in school.  While the value of a university degree is more and more in doubt, I think it's still worth it.  For now.  The experience of being in college and growing up with friends you'll have for life is worth it.  And those 5 courses that I cherished were more than worth all the money I spent for getting my degree.  Sometimes, something is just so valuable that it's invaluable, and it makes sense to pay for it and spend time getting it.  Especially when you're not Bill Gates.

Saturday, September 25, 2010

My hockey team

So here's my hockey team for the annual TheRushIsBack pool.  :)

C:  Anze Kopitar  (LA Kings)
C:  Brad Richards  (Dallas Stars)
LW:  Daniel Sedin  (Vancouver Canucks)
LW:  Alex Tanguay  (Calgary Flames)
RW:  Patrick Kane  (Chicago Blackhawks)
RW:  Johan Franzen  (Detroit Red Wings)
D:  Shea Weber  (Nashville Predators)
D:  Tobias Enstrom  (Atlanta Thrashers)
D:  Keith Yandle  (Phoenix Coyotes)
D:  Niklas Kronwall  (Detroit Red Wings)
G:  Michael Leighton  (Philadelphia Flyers)
G:  Jonas Gustavsson  (Toronto Maple Leafs)

C:  Mike Ribeiro  (Dallas Stars)
LW:  Ryan Clowe  (San Jose Sharks)
RW:  Rene Bourque  (Calgary Flames)
D:  Brent Burns  (Minnesota Wild)

I got Tanguay in the 15th round!  I can't believe he was still available.  He's looking pretty sweet playing with Iginla again.  :)  Really hoping Franzen can stay healthy this year, the guy can score some monster goal numbers when he's healthy.

My defense doens't have any truly top tier guys, but they're satisfactory.  I'm obviously not happy with my goaltending, should have picked a goalie higher up in the draft.  Well, we'll see what happens.

Tuesday, September 21, 2010

Weird sights and experiences in China

5.  If a typhoon hits, the rain cascades like a waterfall.  And the lightning may never stop until the last song is done.
4.  You don't want to sit down in a bus when it's pouring and the windows are leaky.  Whatever is mixed in with that water, it sure doesn't look like it's simply dirt.
3.  If someone has heavy interaction with another non-English-speaking ethnicity, that person will adopt that ethnicity's accent when speaking English.  For example, I met a woman married to an Italian man.  She has a heavy Italian accent when speaking English.  One of my co-workers studied for a year in Japan.  She has a heavy Japanese accent when speaking English.
2.  The night security detail at my workplace has a crew manager who acts like a drill seargent, and the security guards all wear black t-shirts like they're in boot camp.  At late nights, I see them lined up with hands clasped behind their backs, standing at attention.  I think that's before they start the night shift.  I believe they wear proper uniforms while working.
1.  There's something strange about an army of guys lined up in a hair shop after closing hours, practicing their vocation on mannequin heads.  Like an army of guys.

The Facebook Book Reviews

Seeing how that weird movie about a website is coming out, I went and bought some books a little while ago.  Now that I've read both books, it seems ironic that I probably won't be able to see the movie (at least, not on the big screen).  After all, if China blocks Facebook, why would they want to allow people to see a movie about it, right?

Reading the two books was interesting, but they're of course very different from each other.  Ironically, the differences aren't so much in the versions of truth.  There are some incidental differences in what is presented as historical fact, but nothing that one could consider significant contradictions (eg. who attended a specific dinner at a restaurant, who had to appear before the academic board, who pitched Wirehog to Sequoia, etc).  It doesn't help that Mezrich, the author of The Accidental Billionaires, states that he deliberately recreated scenes and dialogue as he saw fit to tell the story better; you're not sure what to believe, but it's spicier reading, which is why it's now a movie.

The big differences between the two books are really in timeline and conflict.  The Accidental Billionaires focuses on the story before Facebook started generating major revenues, and The Facebook Effect focuses on the transition into a major revenue generating and game-changing company.  So there's a slight overlap in time, but really, the latter really could just pass as a less exciting and more academic sequel for the former.  The second big difference, conflict, is something that The Accidental Billionaires really embraces and explores, while The Facebook Effect really shies away from it and does a lot to ensure Zuckerberg, his cohorts, and Facebook don't fall in a bad light.  Sometimes, it tries too hard, vaunting Facebook's lack of tolerance for hate speech, but conveniently forgetting Facebook's tolerance for antisemitism.  This is probably to be expected, given that Mezrich was declined interviews with Zuckerberg multiple times, while Kirkpatrick wrote his book with the full blessing of the Zuckerberg empire.  However, that does nothing to help us to discern what the truth of all the Zuckerberg-Saverin conflict was (Eduardo Saverin was the co-founder who fell out of favour and ended up engaging in legal action).  You can't get both sides of the story because The Facebook Effect doesn't even bother writing about a side, save a few token words to acknowledge that something happened.

We'll probably never know the full truth of the matter, as it's often difficult to discern what's truth and what's not in any he-said she-said argument.  But the fact is, there was a lawsuit and statements were made.  Those things don't happen for no reason.  My take on the whole matter of Zuckerberg vs. Saverin?  Given it's lack of content on the matter, The Facebook Effect does nothing to help me draw any conclusions.  So given that The Accidental Billionaires was written with a lot of input from Eduardo Saverin, you'd think I'd come out with a good opinion on Saverin, right?  Man, so wrong.  Reading The Accidental Billionaires has only reminded me that if you want to be part of something, you need to bring value to the table.  Saverin provided the original funding for the company and tried to drum up ad sales, but he did nothing to develop the product or enable Facebook to become the revolutionary product it has; he couldn't see it being anything more than a website that showed banner ads for revenue.  He overrated the value he brought to the company.  Full stop.  That value disappeared as soon as Peter Thiel was brought on board.  Heck, it probably disappeared when Sean Parker was brought on board.  He should be happy to sit on his laurels with the equity he still has and enjoy the money when the company experiences its IPO.  According to The Facebook Effect, Saverin had 5% of the company's stock at the time of the book's publishing.  Let's say that dilutes all the way down to 1% due to stock options granted to new employees, etc.  1% seems a bit extreme, but hey, possible.  If the company really is going to hit $2 billion in revenue this year, a conservative 10x multiple would give it a $20 billion valuation.  1% of that is $200 million.  Dude, not bad for originally investing 5 figures.  Heck, it could be even better.  Most of us can only dream of being backstabbed that badly.

OK, this post was originally going to be about technological disruption, innovator dilemmas, and business longevity.  Facebook is doing some amazing stuff to the Internet, and is posing a very interesting threat to the king of the Internet, Google.  The post was originally titled "Why Corporations Die".  But then I got really tired because of how late it was.  So I've renamed the post to be "The Facebook Book Reviews".  Even though it's hard to call this stuff I wrote a real review.  I'll write my actual intended post another day.  :)

Thursday, September 16, 2010

Transaction costs in China: the Chinese economy's biggest problem

OK, story first.  And there's a point to this story.  I just came back from dinner with a co-worker, and I saw this massive cockroach sitting on my couch.  It was maybe 2 or 3 inches long, plus antennae.  I freaked.  I mean, come on, cockroaches in my apartment???  So when I turned on the light, it quickly ran to hide on the backside of the couch, but I could still see its antennae poking up.  Having no clue how to say cockroach or bug spray in Mandarin, I quickly booted up the computer and fired up Google Translate.  End result, I still don't know how to say those words in Mandarin.  Thanks a lot, Google Translate, your Mandarin pronunciation sucks.  Then I went to a neighbour (the first one didn't answer the door, but the second one did) and struggled through an attempt to ask for bug spray.  Eventually, she got it and got some bug spray for me.  Cool.

Back to the couch, I switched on some more lights, and immediately yelped in surprise (it was a yelp, not a scream, I swear!) because I thought I saw a second roach on my bag.  To my relief, my eye had spied my bag's zipper and mistaken it for a roach.  Then I tilted the couch's back (it's foldable), and sprayed like crazy.  The real roach dashed off to a crack between the couch's base and the couch's seat cushions, where I could spray it no longer.  So next I tried lighting up one of those Raid spiral things to hem the roach in, and then relocated the spiral to force the roach out.  I could hear it scattering all around inside the couch's structure, but it never came out.  Finally, it stopped moving.  I don't know whether it went to sleep or it died.  Most likely it died?  But either way, I'm not happy, because I couldn't flush it down the toilet.  A quick web search confirms that cockroaches are cannibalistic, so if it's dead, there's now a clear food source for more cockroaches.  And if it's alive, then dang, it's still alive.  UPDATE:  Halfway through writing this post, the roach escaped the couch, and I was able to trap it into a dustpan and flush it down the toilet.  End score?  PakG1: 1.  Roach: 0.

The thing is, cockroaches enjoy dirty places.  So maybe all of a sudden, I'm going to become a clean freak.  But isn't it interesting that cockroaches are attracted to and thrive in the dirty places?  So here's the question: why can't cockroaches thrive in clean areas?  You can reach your own conclusions with some research.  Let's now talk about economics.

Old Story #1.  I first learned about transaction costs and the Coase Theorem in BUEC 495 while attending my last semester of school at SFU.  BUEC 495 was titled "Economic Analysis of the Law", was led by a professor named Doug Allen, and was easily the most difficult course I ever took.  I never felt so stupid as I did in that course.  Every class, we had to read some major economic paper and come to class prepared to discuss it.  The textbook was written by this guy named Richard Posner, and it was the only textbook I ever read that literally (not figuratively) gave me a headache.  But I came away from that course with two insights: first, economics is really about behaviour, not money, and second, transaction costs and the Coase Theorem are for real.

Old Story #2.  I was attending a one-day annual student conference hosted by the Fraser Institute, an economic think tank in Canada.  The theme that year was about how free markets enable economic development around the world (or something like that); the Fraser Institute is a firm believer in free markets.  One keynote speaker was a journalist from the Vancouver Sun, and a student asked him what was needed to get various 3rd world nations out of poverty.  The journalist based his answer on a study and analysis that had been done by so and so parties about economic development in Africa.  They found that good, long-term, real economic development had three requirements.  I can't remember all three, but the very first one was "respect for the law" (assuming that the law is of course just).

By now you're either asking what's with all the stories, or you've already figured out how to put the puzzle pieces together.

Transaction costs are the costs necessary for a property owner to establish, maintain, and transfer property rights (courtesy of good ole Doug Allen), whether the property be a plot of land, a car, or a trademark.  So for example, the transaction costs of purchasing a new home would be the real estate agent fee, moving costs (unless it's an investment property and you're renting it out), renovation costs (if it's in need of repair or you want to upgrade something), cleaning costs (who doesn't at least clean the carpet before they move in, if not outright replace it?), taxes, insurance, and so on.  The purchase price is really only one part of the equation.  The Coase Theorem states that efficiency (i.e. an optimal state of affairs) is gained when there are zero transaction costs.  Therefore, if transaction costs exist in a transaction, there will naturally be unexploited opportunities that could have created wealth in the absence of said transaction costs.  Or in other words, if we didn't rely on real estate agents, the seller could make some more money and the buyer could save some more money.  Of course, the real estate agent exists because he has a better understanding of the market and thus lowers the search cost and opportunity cost of real estate transactions, which in themselves could have actually turned out to be much more expensive transaction costs for the transacting parties.  So real estate agents will argue that their role actually lowers transaction costs.

Naturally, if an economy has lower transaction costs, it will have a healthier economy.  If businesses can be incorporated quickly at low cost, entrepreneurs can create new value and jobs faster.  People with poorer skills would not need to rely on big business to make money, but would be able to even open up a vendor cart on the street to make enough to get by.  The talented people would really be able to fly.  Stuff like that.

Old Story #2 explains how transaction costs can actually end up becoming high, even if there are valiant attempts to lower those same transaction costs.  It all comes down to trust and the integrity required to follow a just rule of law.  If there is little or no trust between two parties, then there need to be huge transaction costs to ensure a successful transaction.  Escrow services to ensure the seller doesn't con the buyer and just run away with the cash.  Lawyers to draw up big fancy contracts to ensure consequences if something goes wrong or if somebody is unfaithful to the expectations of the transaction.  In transactions between gangs or drug lords, you would probably even have a ton of armed bodyguards at the transaction scene, just to make sure nobody pulls a fast one or attempts murder.  When you don't trust the other party, you have to pay a lot more to make sure the transaction gets done.  And if your transaction costs end up being too high, then it's possible you have to consider whether the transaction is even worth it.  This is how transaction costs can kill transactions, and thereby an economy.  And if there is rampant corruption in an economy, trust is almost nonexistent, and transaction costs such as bribes and quid pro pro are epidemic.  A free market cannot create wealth in this kind of environment because products and services that provide the best value are not able to compete on their own merits, let alone be profitable if the transaction costs are too high.  In the worst-case scenario, it'll be the unsafe products that thrive, creating mass social destruction and scandals galore.

In China, you still have big corruption issues.  One of my managers (it seems I have 3 managers, I'm not sure?) notes that 60 years ago, corruption was not a problem.  If a public official so much as accepted a bribe, he was shot.  I don't know if he was serious that it was a small problem back then, and I'm not an expert on Chinese history, but he seemed pretty serious.  My friend who had visited China earlier this year told me about a night-time barbecue restaurant he learned about in Beijing.  Apparently, the owner had to pay off both the police and the local gangs in order to keep operating, and he still made a healthy profit.  Some may say that this is amazing, wow, the guy must be rolling in dough.  But the problem is that those transaction costs prevented the owner from making hard-earned, well-deserved cash.  Many people are resigned to the idea that this is simply the cost of doing business on this side of the world.  Here's some news.  If it doesn't get cleaned up, the cost of trust in transactions will keep rising, eventually forcing the economy to stagnate and maybe even collapse.

Transaction costs that create some semblance of value are good.  They're necessary components of a transaction due to our inability to know all things and see all things.  However, transaction costs like bribery and "protection payments" are simply a drag on the economy.  They transfer wealth from enterprises that create value to enterprises that don't create value, which in turn leads to weak gross economic output per capita.  Everyone needs to be pulling their own weight for an economy to truly grow, and for everyone to participate like that, they need to be trustworthy so that other parties will be willing to transact with them.  Those who don't pull their own weight and simply figure out a way to ride the coattails of those that do, they only create economic and social costs that have long-term impact. But because it's easy money, those with the ability (and the necessary lack of morality) will jump at the opportunity to get a piece of the action.  In this sense, society is like my apartment.  A clean society with clear just laws and citizens that are willing to obey and uphold those laws will be able to create wealth efficiently and will not indulge in a lot of crime.  Meanwhile, a dirty society with unkempt laws and an even poorer social infrastructure and law enforcement will only allow the criminals to thrive, because unclear laws that cannot be enforced will disable truly good transactions from being profitable, forcing those transactions to instead disappear.  The cockroaches will thrive, even though the transaction costs of untrustworthy transactions would be high.  Fact is, they'd still be more profitable than just transactions in such a dingy social environment.

This is a classic chicken or egg question.  Which needs to be first?  The good economy to dissuade people from turning to crime and creating a morally bankrupt society, or the good society, to ensure a good economy?  I think Rudy Giuliani was able to prove with the city of New York that social infrastructure matters.  Even something as simple as keeping the city clean of graffiti was key to telling people that New York was a city where you could walk around freely and safely to conduct legal and just transactions (both social and economic) as you saw fit.  Perhaps the most interesting insight is from a prominent Chinese economist who concluded that economies built on the ethics found in churches thrive better than those that are not build on such foundations.  He's an interesting story, an atheist who set out to disprove the Bible, but ended up giving up and converting; either before or after that, he wrote his seminal paper on the subject of ethics in churches and ethics in economics.  He now believes that Christianity can have a profound impact on China and China's economy.  We'll probably see this coming decade whether that will actually be the case, the way Christianity is growing in China.  I have my own thoughts on the subject, but I'll keep them to myself for now.  One could say that the growing lack of ethics that the US has recently shown (especially at the executive and investment banking levels) is the biggest reason why subprime had the effects it did, to say nothing of people like Madoff.

Whatever the root causes and potential solutions are, it's clear to me that if foundational societal ethics aren't figured out, transaction costs will remain high, which could indeed lead to economic unsustainability, no matter how high the Chinese economic rocket grows (perhaps the higher, the worse it could be).  I'll end my thoughts with an explanation of how a lot of the tax system here seems to be administrated, as an example of how bad things can get.

The tax system here is quite different from North America.  When you buy something (anything from riding a taxi to reloading your mobile phone with minutes to eating a meal at a restaurant), you can ask for fapiao.  For some reason, everyone translates the word "fapiao" as "invoice", but the way it's used in practice seems much closer to the translation "receipt".   Since I don't know what the truth is, I'll just say fapiao.  Fapiao have official government stamps and often come in denominations like currency; they can also be customized to specific amounts.  Official fapiao are purchased by the seller from the government and are the only truly acceptable receipts; this ensures that sellers report their income properly.  The fapiao that come in denominations are also lottery tickets to ensure that consumers ask for them.  If someone wins the lottery, the company pays the money and then gets reimbursed by the government.

I need official fapiao from my landlord to be able to get certain benefits from my employer.  Guess what?  My landlord didn't want to get the official fapiao, because he wanted to avoid tax.  He would rather cancel the tenant contract.  So then I started looking for a new place to live.  Gah!  Luckily, my search had me meet a knowledgeable real estate agent (see, understanding of the market!) who was able to explain to my landlord how the fapiao system worked, and that it was possible to just get me to pay for it.  Which is not bad, considering that every new prospective landlord I met expected the same.  None of them were willing to pay for their own tax.

Hey, I get it if a landlord doesn't want to pay for tax, the natural effect of many taxes is for the seller to pass the tax on to the buyer in the form of higher prices.  What alarms me is that the government has to enact and administrate a paper-intensive lottery system to ensure that business owners and landlords report their income properly.  Can you imagine the added cost of administrating such a system in a country of 1.4 billion people?  How much value does this system add to the economy?  None, really.  It's a drain on the economy.  It's only there to try to convince companies to report their income, and it generates no revenues of its own for investing into social infrastructure.  This kind of system is unheard of in many nations with solid economic infrastructures, and it's one of the canaries in the coal mine that maybe things aren't as bright as they seem.

There are obviously a lot of other issues that can also hold China back.  For example, the education system is primarily rote learning, leading to students who lack creativity and critical analysis.  I know from my experiences of trying to teach kids English here on a volunteer basis, and some of my Chinese co-workers say it's a big problem in elementary and high schools.  And goodness knows what'll happen as the population ages and a much smaller generation of youngsters tries to take up the torch.  Etcetera, etcetera.  But like I said before, if China can get things figured out, wow.  They'll be a force.  Rome wasn't built in a day.  But Rome did last a long long time before crazies like Nero came along.  Can the new China be a civilization with such longevity or will they collapse under the weight of their transaction costs?  Time will tell, but I'm quite interested in having a front row seat to the action.

As for the roach?  As you read in the update above, I triumphed.  I hope it was the only one.  I think I'll give the place a good cleaning later this week.

Tuesday, September 14, 2010

First Google was making us stupid, now it's just trying to kill us

Nick Carr's piece on Is Google Making Us Stupid was simply brilliant, leading to a huge debate.  Charlie Brooker's Google Instant is trying to kill me is simply sublime.  My favourite quote:

As the name suggests, this all happens instantly. It's the internet on fast-forward, and it's aggressive – like trying to order from a waiter who keeps finishing your sentences while ramming spoonfuls of what he thinks you want directly into your mouth, so you can't even enjoy your blancmange without chewing a gobful of black pudding first.

Naturally, Google is trumpeting it as the best thing since sliced time. In a promotional video, a likable codger gives it a spin and exclaims, "I didn't even have to press enter!" This from a man old enough to remember drying his clothes with a mangle. Google may have released him from the physical misery of pressing enter, but it's destroyed his sense of perspective in the process.

Sublime.  :)

Nokia shows some spunk! Down but not out!

Attaboy, Nokia!  I was really disappointed in the rhetoric that Stephen Elop, Nokia's new CEO, presented when he was the new guy.  Nothing about the future, nothing bold, and a distinct feeling of lack of commitment.  It felt like listening to a defeated leader before the war had even begun.  You don't want to follow a guy like that into battle, methinks?

Well, maybe Elop is strictly a behind-the-scenes kind of guy.  Now that would be a little odd, because you want your CEO to be your leader on the frontlines both taking fire and giving commands.  It's why it's a good idea for Roberto Luongo to give up his position as captain of the Vancouver Canucks, so he doesn't need to deal with the public so much, and can instead focus on being a good goalie.  Usually, it's the COO behind the scenes keeping the wheel steady as the ship forges ahead.  But that doesn't mean that the CEO can't be a behind-the-scenes guy.  There are a bunch of examples out there of CEOs content to stay in the background and drive strategy while others have the spotlight.  Often, the CEO is even grooming those people to take his place one day.  Or maybe Elop just wanted to actually get settled at his new gig before he makes any rousing statements he feels he can't back up without first getting a feel of the company and the trust of his employees.  That's possible too.  Perhaps I was too quick to be disappointed (although his executive track record doesn't exactly show him to be an inspiring visionary of visionaries).

Well, who knows.  But I like what I'm hearing from Nokia right now.  At Nokia World 2010, their annual shindig, they seem to have come out firing on all cylinders.  It seems like their Markets EVP, Niklas Savander, was on fire.  Here are the quotes from this particular article I love the best:

"We're not going to apologise for the fact that we're not Apple or Google or anybody else - we're Nokia and we're unique," markets EVP Niklas Savander said.

On location sharing, Savander said over 800 million people will use GPS-enabled phones by 2013. "Soon, everything on the internet will have a location coordinate - 
it is a space that we intend to OWN."

"I recognise that we haven't been as competitive as we want to be in smartphones. Well, that's about to change. Today, we shift in to high gear in Nokia's fightback in smartphone leadership." Nevermind the past, Savander said: "Today is about the here and now, about three words. NOKIA IS BACK."

Dude, them's fighting words.  That's a vision I would follow into battle.  Because this is war.

As for all the fancy stats Savander presented?  Pshaw.  Horse buggies were an amazing business too back in the day.  And horse buggy companies would have had no problem getting capital from banks to expand their business, even shortly after Henry Ford introduced the horseless carriage.  Of course, the music suddenly stopped, and look where horse carriages went.  Current stats mean nothing; trends are far more important, especially market share trends and long-term profitability in business.  Symbian gross sales have been growing, simply due to the growth of the mobile phone market in general, but their overall market share and profits have been dropping.  Never a good sign.  It means their margins are shrinking, especially for the low-end phones, and as I've noted with the Dell example, it's really hard to fight the low-tech, low-margin, high-volume game in the high tech business.

As for the quitting Anssi Vanjoki's comments on how Nokia invented the smartphone?  Give me a break.  Canada invented basketball.  See how much that helps us win the gold medal in basketball at every Summer Olympics, eh?

But I'm still a bit more excited now.  'Cause them's fighting words.  I see a picture in my head of Savander riding a horse waving a sword as he and  remaining troops attempt to assault the Black Gate:

Sons of Gondor, of Rohan, my brothers! 
I see in your eyes the same fear that would take the heart of me. 
A day may come when the courage of Men fails 
When we forsake our friends and break all bonds of fellowship 
But it is not this day 
An hour of wolves and shattered shields when the Age of Man comes crashing down 
But it is not this day! 
This day we fight! 
By all that you hold dear on this good earth 
I bid you stand, Men of the West!

As for me, I might ironically end up buying a Nokia phone.  Eventually, I'm going to need a phone to replace this brick I have from the 90s (ironically, also a Nokia), and as I was browsing, I saw a dirt cheap Nokia N95.  Dang, some people still sell those?  Well, it was an awesome phone back in the day.  Here's hoping that Nokia returns to that former glory.  We could always use more competition in the marketplace.

Monday, September 13, 2010

I'll admit this sounds scary

Really scary.  I am quite curious how many people out there have already tried to do this.  If so, why did they fail?


What the heck is Nokia doing?

So I wrote about how I believed that Nokia had just hired the wrong CEO to lead them out of the abyss and into the light.

Now their head product guru is leaving.  What the heck, Nokia?  What happened?  Couldn't give the guy what he needed?  CEO instantly gave a vision he couldn't agree with?  Did he take a look around and realize he was the only one on the Titanic that realized the ship was sinking?  You NEEDED this guy.  And now you have nobody.  @@

Your move, Nokia.  Your move.  You're still a profitable company and still have some chess pieces on the board.  But maybe not for long, according to the trends.  Your queen just died and you have mostly pawns.  Better figure out how to change up those pawns to other pieces fast.

Sunday, September 12, 2010

Dumb pipes and net neutrality

Reading this article about Verizon probably wanting control over content that gets distributed over the iPhone if Apple makes a CDMA-version iPhone brings me back to when I was working at TELUS, a Canadian telecom.  We had just gotten a new VP, and he wanted to meet with our team.  The feeling was mutual, of course.  During the Q&A part of the session, I raised my hand and asked for his thoughts on net neutrality and what TELUS should do about it.  He acknowledged that it was a big issue, especially with market research proving that more and more consumers wanted to watch media on their computer, not TV.  He talked about how frustrating it was that many entities wanted distribute whatever content over TELUS pipes essentially for free, and that TELUS needed to figure out how to best reign in and control traffic so that they could properly profit from it.  In other words, he was against net neutrality, as most Telecoms and ISPs naturally are.  The Verizon-iPhone article isn't about net neutrality, it's about content distribution.  But content distribution and net neutrality is tightly tied together simply because content can be so bandwidth intensive.  So here I am discussing net neutrality.

Now, I myself haven't really decided whether I'm for net neutrality or against it.  Certainly, net neutrality can suck for consumers if the network load exceeds bandwidth capacity.  Everything can slow to a crawl.  Many customers in Vancouver experienced this during the late 90s, and hated the quality of service that various broadband ISPs provided.  However, if bandwidth capacity exceeds network load, you can have some pretty amazing innovation.  The barriers to entry for new Internet-based products are significantly lowered if a new service does not need to pay to get priority in network traffic.  Youtube's perhaps the perfect example.  Youtube would never have been possible back in the 90s, due to the lack of broadband proliferation.  However, now everyone has the ability to upload both silly and insightful videos, and if you're good, you'll hit 6 figures income.  And I don't know a single person who disliked the Old Spice Youtube campaign, especially after the Old Spice man started making videos directed to specific individuals.  Maybe eventually, even Youtube itself will start to add to Google's bottom line; scale is Google's forte, and the cost of running Youtube is simply a scale issue (simply, hah).

Of course, if Youtube ran off a P2P distribution engine, the telcos might be crying bloody murder.  P2P software seems to have this unique ability to maximize your bandwidth usage and strain the network to its limits.  Suddenly, every customer is a distribution and consumption point, having a multiplier effect on traffic volumes.  Well, in Youtube's case, it would depend on Youtube's actual market penetration, as Youtube is a product that's limited in its usage.  Videos have a size limit so the files are small enough that you can watch them on demand; there's no need to queue things up to watch them and lag is generally non-existent.  Consequently, Youtube downloading stops when you stop watching.  But in BitTorrent's case (an example of P2P downloading software), the files are usually gigantic, so it needs to be treated more like a shopping cart.  Put stuff into the shopping cart (queuing), go to checkout (downloading), then come back after your day of work to consume your products.  And you can put more stuff into the shopping cart while you do.  It never stops.  Especially for people who wanted to consume various media but couldn't any other way.  For example:
  • An otaku who just NEEDS to watch that just-released-in-Japan-this-week anime episode, which has no television distribution agreements in North America
  • That rabid fangirl who missed the darn ColdPlay concert, but fortunately found a video recorded by someone who had actually been there
  • Pirates pirating rampantly due to lack of cash and/or ethics (and with eye patches and peg legs)
  • etc, etc
BitTorrent was simply the way to go for many people back in the day.  However, even HD movies these days can be watched via streaming; the bandwidth has simply gotten that good.  For example, I just finished watching Resident Evil 2 on my overpaid 8MB pipe via China Telecom's IPTV service (wow, no plot whatsoever, just guns and zombies).  That's valid proof that bandwidth has caught up for now.  So it's now a totally valid option for consumers if the distribution part of the equation gets figured out (hello Netflix, AppleTV, Google TV, Amazon).  But the telcos are jealous because they don't get any of the money that Netflix, Apple, Google, and Amazon are (or will soon be) making.  As well, data and media are getting bigger, more on-demand, and more in-demand.  So the net neutrality debate is not going to end, which leads to the eternal question: what's an ISP/telco to do?

If a telco decides for net neutrality, their network will naturally clog up to peak capacity with whatever is in vogue, due to Parkinson's Law applied to network bandwidth.  This has the potential (note, potential, it depends on how close to capacity the network load gets) to kill the user experience for most consumers, but anyone will have access to do anything they want.  If the telco decides against net neutrality to give certain products and services priority (eg. dedicated priority for MRIs shared between hospitals to share diagnosis expertise, dedicated priority for live sports events, dedicated priority for same-day movie premiere streaming, etc), then it'll cost money to get anything done.  Privatized health care is maybe a perfect example of what happens when you have a two-tier system.  The pay option becomes amazing (and uber expensive), but the free option kinda sucks if you ever need to get beyond the basics.  And really cool, innovative, new services must get beyond the basics.  If they could run on low-priority bandwidth, would they really be that amazing?  Maybe, maybe not, who's to say?  But certainly, products and services like Youtube, Skype, Google Voice, FaceTime, Pandora, Spotify, and maybe even Facebook Photos would have had trouble launching if net neutrality didn't exist.  What amazing service tomorrow will not be able to launch if net neutrality dies?

OK, through the course of writing this post, I think I've decided.  I'm for net neutrality, if only so that people can have the ability to change the world through their entrepreneurial efforts.  I think that's something every economy absolutely needs to have in order to move forward: the opportunity and ability to innovate.  If you need major cash infusions in order to even try... well, we'll no doubt still have innovations, they just might not always be the best.  Wouldn't you rather have 1,000,000 entities attacking various global problems and opportunities instead of a small 1,000 who were able to attract the major funding necessary for bandwidth?  Of course, this could swamp the telecom networks.  But come on telco guys.  You're in the telecom business.  Invest in your network infrastructure.  Make money off of selling more bandwidth, not optimizing utilization of non-upgraded infrastructure.  Invest in your business and don't stand still.  I realize this is sometimes difficult when it might mean ripping up concrete streets to lay down fibre in busy cities where politics can get in the way.  But it's your business, so invest in it.  And stay away from content distribution.  If anything, I think we've seen over the years (the point in the Verizon-iPhone article only being the latest example) that you suck at content distribution.  Especially in a world where consumers have now tasted the choice offered by long tail economics.  That's just too difficult for you to handle.  Let someone else build amazing software systems for taking care of that piece (again, hello, Netflix, AppleTV, Google TV, Amazon).

OK, I know I have some former colleagues in telcos who read this blog from time to time.  Any of you reading this?  Anybody want to comment?  Please, my comments section is lonely.  :)

And seeing this kind of stuff on Twitter is fun and cool.  That may not have transpired the way it did in a pre-Twitter world.  But we see politicians and other public figures taking shots at each other in public all the time.  So I don't think this is exactly new.  Fun, but still only another example of, "if the news is important (or interesting, noteworthy, funny, etc), it will find me."

Friday, September 10, 2010

Seems like Nokia just hired the wrong guy?

Apple is dominating the mobile platform world in terms of influence right now with iOS.  Google seems clamped onto the #2 spot with Android, but maybe they can hit #1.  Microsoft is charging fast to catch up with their Windows Phone 7 efforts.  And who knows if HP might ever want to get into the phone business after acquiring Palm (although they seem only focused on tablets)?  Finally, there's everyone's fading but still strong enterprise addiction, RIM and their Blackberry.  What's a company like Nokia, sinking fast despite being the former world leader in mobile platforms with Symbian, supposed to do?

How about fire their CEO and hire a new guy?  Don't cry for Olli-Pekka Kallasvuo, it seems he's getting quite the nice package (but maybe not as nice as Carly Fiorina's when she got fired from HP).  Clearly, the board lost faith in Kallasvuo.  Did he really pay $8.1 billion for a company that sells maps?  Just license the maps from the company like Google, Yahoo, and everyone else.  Chee.  But more important than that, they obviously felt like he couldn't be the guy to lead them head to head against the likes of Apple, Google, and Microsoft (and all the OEMs who make phones using Android and soon Windows Phone 7).

Thing is, I don't like the sound of the new guy, Stephen Elop.  His statements to the press sound too reactive, not proactive.  The number one thing that's been hammered into my head over the years as I've watched the tech industry (and bashfully tried to do something in it myself) is the fact that good innovation is not created by listening to the customer and reacting quickly.  As Peter Drucker once noted (UPDATE: oh dude, my bad, it was Alan Kay, I hang my head in shame!), the best way to predict the future is to create it.  By listening to customers, you're not even making predictions, you're a step behind because you're following.  Maybe by the time you make it, someone's already beaten you to the punch, except the punch is in a location that you never would have imagined because you listened to the customer.  Customers have proven again and again that they don't know what they want if it hasn't been created yet.  As such, it takes an exceptional product visionary to create something new that people will buy in droves.  Henry Ford once noted, "If I had asked people what they wanted, they would have said faster horses."

Instead of talking about creating the future, Stephen Elop is talking about reacting to customer preferences to deliver solutions that make sense today.  He can't do that.  He needs to deliver solutions that make sense tomorrow.  Today's war has already been almost won, essentially now only a two-horse race between Apple and Google.  Tomorrow's war, we don't know what will happen.  Nokia needs to be working towards winning THAT war, the war that will happen in the age where functionality nonexistent today will be considered mainstream.  I dunno what it would be.  Augmented holographic UIs.  Super miniaturization.  Something that we consider absolutely stupid and useless today, but can't do without tomorrow.  Don't listen to the customer if you need to innovate.  It's death.  You need to give them pleasant surprises instead.  Better yet, mindbending pleasant surprises.  Why does he bring up so many examples of disruptive technologies that changed the world if he isn't going to say the words that commit Nokia to becoming a disruptor?  If they're just going to keep up with the Joneses, they might as well close up shop.  Technology has shown throughout history that it keeps falling in price, despite getting better and better.  You don't think we'll get what's considered an amazing iPhone today for less than $100 tomorrow?  It'll get there, which is why playing the low-innovation low-margin game is not a viable long-term strategy.  Look at Dell.

I'm especially worried because Elop's statements don't exactly enthuse commitment.  I hear him talk about guiding the company through a difficult period of change.  I don't hear him talking about leading the company out of that chaos to dominate the world.  He sounds like a classic turnaround CEO.  Keep the company alive, finally turn some profits, get the stock price to unexpected heights, and then cash out before things get bad because there's no real foundation for the future.  He and Mark Hurd would probably be good buddies.  Hurd, despite all the allegations of infidelity, looks like he was actually fired due to his poor CEO rating from his employees.  Too much focus on cost cutting and efficiency, not enough attention to R&D, innovation, and the future.  Yeah, HP managed to get amazing profits and market share, which surprised everyone, including me, but none of us realized it was at the sacrifice of technological innovation for the future.

Or maybe that's Elop's game.  Everything's lost in today's war anyway, so just buckle down, stabilize things, plug the leaks, and let someone else come in later to figure out the innovation bit.  But then what about the necessary R&D lead time?  What are they looking for, a fundamental change in our understanding of physics before they can start investing in becoming a technology leader again?  Righting the ship is important, but let the helmsman and the first officer take care of it.  The captain needs to plot the course.  Nokia's in a heavy 2nd (3rd, 4th, 5th?) mover position right now.  They've been leapfrogged by so many companies, it's hard to believe that any phones still run on Symbian.  Make no mistake, Symbian phones aren't exactly ripping up the market at the moment for new buyers.  They're at a critical point where they need to have a razor sharp focus to do something amazing, to totally and completely reinvent themselves culturally and technologically to be able to compete for the long-term future, like GM did.  I worry that we are seeing the death of a company that used to make really cool products.

OK, originally, I wanted to talk quickly about Google Instant.  But I'll limit my comment to this.  I'm really annoyed when a technologist talks about how technology will save time, as if our lives will become simpler and easier.  Technology has shown us throughout the past few decades that whenever it tries to make our lives easier by saving us time, it only makes our time more complicated and busy.  This would be due to Parkinson's Law, applied to capacity of time.  So please, can we please stop making those kinds of statements?  :)

Oh, and I haven't heard about the wondergirl Jessica Mah for a while.  Back when I read her blog now and then, she was obviously smart from how early she had graduated from school and all.  But I couldn't help but get the impression that she was really a bimbo.  Heck, she was making jokes about people coming to her blog for the sex appeal (OK, probably true, how many teenage female entrepreneurs are there?).  But I gotta say, what the heck?  This girl's gotta be for real, otherwise, how could she get so many A-listers investing, and even have to turn away investors?  OK, so now I'm jealous.  There, I said it.  :)

Thursday, September 09, 2010

Bring it on, Lightning!

OK, the lightning just kicked it up a notch.  I'm so glad my various electronics are on surge protectors.  But just in case, I plugged in an extra surge protector for the air conditioner.  Would suck to have that thing go down while I sleep.

I'm ready, Lightning.  Do your worst.  Any coincidence that Linkin Park's High Voltage just started playing on my WMP?  :)

Lightning, lightning, go away!

Dang.... the lightning JUST KEEPS FLASHING.  Like there are no breaks.  Constant lightning.  Insane.  The thunder too.  I wonder if I'm gonna have a restful sleep tonight.  I'm definitely not going outside.  It's almost bed time anyway.

I hear some sirens when I'm near the window.  The air looks like it's just cascading water.  Insane.

I hope it's not like this tomorrow morning.  Getting to work would be crazy.  @@

Wednesday, September 08, 2010

Rain, rain, go away

So a little while back, it was raining.  Like REALLY raining.  Like maybe monsoon raining.  I was kinda weirded out, because the sky is usually pretty blue here, but on Thursday, it was jet gray.  My colleagues told me that it was because a typhoon was coming to hit the coast.  And then Friday night, it POURED.  I saw a guy riding a bike, but then he fell into a pothole and disappeared, bike and all.  Just like that.

OK, I'm kidding.  But it was pouring pretty bad, such that the roads seemed covered with a quarter inch of running water.  Cars were driving on running water, not road.

So wow.  Typhoons?  That's crazy.  I wonder what it would have been like to be on the beach at peak time.

I've always wondered, what's the difference between a typhoon and a hurricane?  About the only thing I honestly knew about typhoons was the Typhoon character from the WWF when I was a kid (not that I watched WWF much, you just couldn't avoid it on TV sometimes).  Well, now I know.

It's now flashing lightning here in Nanshan (the district where I live in Shenzhen), so I expect it to rain again tonight and probably throughout tomorrow?  And I forgot my umbrella at a restaurant.  :(  Luckily, a colleague lent me her umbrella, she has another at home, and she'll call the restaurant to make sure they keep mine there.  I'll get mine back from the restaurant tomorrow, I hope.  Gosh darn, I need to figure out how to remember my umbrellas.  This is why I don't own an umbrella in Vancouver.  I can make do with a raincoat.  Except it's too hot in Shenzhen to use a raincoat.  :(

Chinese buses

Some people have been asking how come I'm posting so much on Facebook now or something, way more than usual.  Well, it's not that I'm posting on Facebook.  It's rather that I'm blogging, and I've set Facebook to automatically import my blog's RSS (or was it Atom?) feed.  And I don't have access to Facebook or Blogger at the moment, this is done through e-mail blogging.  That's that.

So here's your post on buses.  But first this.

Like DANG!

OK, traffic in Shenzhen isn't THAT bad.  But it can sometimes get pretty jam packed.  And getting on a bus these days in the morning can be difficult, since school has just started up again.  All those university kids have to attend class now, you know.

There are two types of buses that operate in the public transit: the constant pay and the variable pay.  The constant pay buses are straightforward.  You pay your cash or swipe your card at the front when you get on the bus.  Swiping your card is better, because this gives you a discount each trip; buy a card if you're going to be here long-term.  Of course, this took me a little bit to figure out because at the beginning, all the buses I took were variable pay.

Variable pay buses work like this.  You have a lady who walks around the bus with a scanner (for those who want to swipe their cards) and a fistful of change and ticket stubs (for those who don't want to swipe cards).  Basically, you get charged depending on where you're planning to get off.  As such, it's very important that you know where you're going, so the lady will know how much to charge you.  Specifically, you say at which bus station (or region) you're planning to get off.  I've gotten pretty good at memorizing the various places where I go, and I'm getting a good grasp of which buses go where.  But at the beginning, it was a bit confusing.

"Hi, I want to go to the High Tech Park (Gaoxinyuan)."
"Where you getting off?"
"Uh, Gaoxinyuan!"
"So where are you getting off?"
"Uh... Gaoxinyuan Subway Station?"
"Gaoxinyuan Subway Station!"
"Oh, get off at Dachong."

Why's it called Dachong, when the subway station and whole region seems to be called Gaoxinyuan?  Or maybe I'm wrong and the region's actually Dachong?  But you get the picture.  One thing I haven't figured out is how they manage to keep that fistful of money and ticket stubs in their hand and never drop any of it, while fighting through a jam-packed bus (we're talking sardines in a can) during peak hours.  It makes no sense to me.  I think my hands would get tired and sweaty after a while, wouldn't yours?

So then I started also boarding the constant pay buses.  These are for when the route's fairly short or fairly long, but the point is, riders ride a consistent length, so there's no purpose in charging a variable rate.  The #70 costs 2.5 RMB, while the K359 bus costs 6 RMB.  You get the picture.  So on the variable buses, you just get on the bus (front door, back door, doesn't matter), and the lady will come find you.  On the constant pay buses, you have to pay up front as you board.  That means you board at the front, exit at the back.  If you board at the back and don't pay, the bus driver will often know and call you out.  Good facial recognition capabilities.  What often happens in this situation, you pass your card up to the front through an ad hoc human chain, where it is then swiped and then handed back to you.  I've successfully performed the ad hoc chain swipe twice now.  You get to bond with your fellow passengers.  /LOL

Another thing about these buses is that they seem to have little to no shock absorbers.  Consequently, it can be quite a bumpy ride.  So some of these buses will have plastic bags up at the front, hanging by the driver's seat.  You guessed it!  Barf bags!  On one recent trip, I saw a girl get up, grab a bag, go back to her seat, and then proceed to barf into the bag, not once, not twice, but three times.  And nobody offered to hold back her hair.  I can see how long hair can sometimes be inconvenient....  I seriously wonder how much it would cost to upgrade all the buses in Shenzhen to have better shock absorbers, and if there would be any noticeable change in quality of service.  The cost is probably not worth the benefit, as these buses are all already jam packed anyway, there's probably not much you can do to increase ridership.  And the buses aren't exactly scarce either, like in Vancouver.  Sometimes, I see them come in 30-second intervals, I'm not kidding.  So seriously.  In that kind of situation, you almost want to decrease ridership, huh?  Of course you never would, just would be tempted in a twisted sort of way.  :)

The buses do have some redeeming features, but I'd consider them luxuries, not necessities.  The shock absorbers should really come before the luxuries, but that's just my opinion, I suppose.  For example, most of the buses will have several LCD screens for showing TV shows and keeping the passengers entertained.  Also, the buses ALL have air conditioning.  Although, I suppose in this heat, maybe that should be considered a necessity.  :)

The last thing I want to comment on is the quality of Chinese drivers.  I think I've mentioned it before somewhere on this blog, but I'll say it again.  It's not that Chinese are bad drivers.  Far from it.  They're actually very talented, demonstrated by their ability to pull of maneuvers that seem impossible.  Hmm, so let me rephrase.  It's not that they're bad drivers in that they have no aptitude for driving.  Rather, it's that they're bad drivers in that they're poorly behaved, reckless, and perhaps too gutsy to create a safe road for everyone.  Defensive driving doesn't exist here, it's all offense.  I'm of the firm belief that the only reason why there are so few accidents on the road is because everyone's driving skill level is so high, so they can keep up with each other.  But it does make for a shaky bus ride sometimes.  There have been a few times where the bus driver had to slam on the breaks because a car driver to the left ignored his right of way and decided to speed through an opening before two lanes completed merging.  Except he hit the hole when a normal North American driver would consider the decision point past the point of no return.  So if you're not sitting down, you have to be able to keep your balance well for situations like that.  Fortunately, it doesn't happen often.

I'm going to write about transaction costs next, I think.  Maybe.  :)  Toodooloo.

Monday, September 06, 2010

Ice cream is better than Twitter

Really, I wanted to talk about my experiences on Chinese buses (it's pretty interesting), but that can always be written whenever.  Rather, I wanna just talk quickly about this article here, because to write it later would not be very timely, you know?

Given my previous post on Twitter, one could say that how this news story about the Ford Explorer and the baseball player broke is the perfect example of why Twitter is so awesome.  I disagree, precisely because if the news is important, it will find me.  You see, I don't need Twitter to be the way for it to find me.  In fact, the likelihood that I'll miss it on Twitter could possibly be much higher (unless it's so big that EVERYONE's retweeting it, in which case, it'll probably be big enough for me to see it anywhere else online or offline).  If that's all Twitter's good for, isn't that just redundant?  How's it any better than the combination of Facebook, e-mail, IM, and all the face-to-face interactions that happen offline?

In fact, I'd warrant that Twitter exacerbates the negative issues discussed in Carr's article than not.  The ease with which one can type out speedy snippets and spread them to rapidly to the rest of the world, combined with the pressure journalists (and everyday individuals) have to be first and get the glory, makes for a situation where fact checking will occur even less.  This in turn would potentially make quality suffer even more.

Here are my three points again:
1.  Time is scarce.
2.  Quality is hard.
3.  Lasting value will stand the test of time.

You can't create solid quality at such a frenetic pace consistently in the long run.  Sprinters can't run marathons.  But more and more, people are trying to sprint to both produce and consume information.  We should all relax a bit before society suffers from a postmodern aneurysm.

Ah yes, and then there's also the fact that Kanye West is now baring his soul on Twitter, apologizing to Taylor Swift and all.  Twitter's been a fascinating social experiment on how celebrities can connect and converse with everyday individuals.  I'll admit that's cool.  It rescued Conan O'Brien, allows Justin Bieber to try to calm down his rabid fangirls, and gives Ashton Kutcher an outlet for his desire to just have fun.  That's interesting to watch.  Admittedly, it's still not for me though.  It's like eating a grape picked by a superstar.  Then he gives out the grapes to everyone else too.  Hey!  You get a grape!  You get a grape too!  Believe me, these grapes are awesome, so tasty and juicy!  Oh, you can't get enough?  Here are more grapes, I got plenty!

I'd rather the superstar cook me a 7-course meal and explain to me why he loves these recipes so much.  If you get my analogy.  But so few people have the time necessary to actually do that.  Which is why Twitter seems to be filling the gap quite admirably.  But it's not enough for me to want to really use the service, since I've never been much of a celebrity stalker in the first place anyway.  Honestly, if my favourite celebrity's true thoughts can be expressed in only 140 characters or less, I'm not quite sure I'd sit at his feet to hear him throw out those 140 character anecdotes.  You know?  Give me the infrequent full lecture any day, and let me live my life with the rest of my time.

I remember someone once commenting that Twitter wasn't very useful, so @Ev (or was it Biz Stone?) shot back, "Neither is ice cream."  Well... ice cream is an amazing comfort food that has provided joy throughout the ages and has stood the test of time.  I still wonder if Twitter can, especially when it can't even get a single bite from some like me (while others end up joining Tweeters Anonymous to stop the pain).

Edit:  Besides, ice cream was never meant to be eaten in a constant voluminous stream handed to you like Twitter.  With ice cream, YOU get to choose the EXACT flavour and quantity, and you do it infrequently, preferably as a dessert after a scrumptious dinner or as a snack on a sweltering hot day.  That way, you can enjoy its amazing variety and also never fatigue of it.

I'm going to go play tennis now.  :)

Friday, September 03, 2010

This is not my house

Well, I've finally learned why I've been having such difficult Internet issues here in China.  You see, it's not the Internet that's the issue.  The Internet works fine here in China.  Heck my IPTV works fine (a little lag here and there, but very rare).  It's the overseas access that's the issue.

I know that various websites are blocked in China.  I get it.  I get the rationale too (whether or not I agree with it is not my place to say, but I do get the rationale).  But what about websites that aren't blocked, I can access those fine, right?  Sort of there.  There have been issues.  And certain software services are impossible (my Dropbox to date has not been able to sync, and I was forced to completely uninstall Covenant Eyes).  I could never figure out why, I thought I just had a bad net connection.  But how?  I paid for 8MB ADSL!  And like I said, the IPTV seems to work fine!  (Even though I have no clue what I'm watching, so I barely turn the TV on).  So what's the issue?

Wow.  You have GOT to be kidding me.  Seriously?

Blocked sites, fine, OK, I can roll with the punches.  But you're telling me it's ALL foreign sites?  It's true.  My expat co-workers all tell me they all experience the same thing.  Just spoke with a guy right now, he has 4MB service.  300k download speed on Chinese websites, but once you try to access foreign websites, it slows to a crawl.  It's good enough when the site's purely text and stuff, but as soon as you start adding any kind of media or integrated web services, the lag starts to hit. usually gives me a D.  Last night, it gave me an F!  And yet, a test on Tudou demonstrated that my net connection is uber fast.

When I visited China in April to research what it would take to find work here and live here, the meeting that sticks out most in my mind was with a guy named Victor.  Victor's from Europe, and he's currently the deputy general manager for a high tech park in Chengdu.  I got to meet him through a real estate developer I met at a European Chamber of Commerce event.  Victor and I had breakfast together the morning I was due to fly back to Vancouver via Shanghai.  Victor said something really poignant: "China has rules, you know."

China has rules.  It's a sovereign state, and one of the intrinsic advantages of a sovereign state is the ability to rule itself independently without foreign interference, especially from the likes of an uppity foreign corporation, let alone from insignificant individuals.  Victor talked about the necessity to adapt to China's perspective of the world and China's requirements if one wanted to live and work in China.  It's China's house.  Therefore, it's China's rules.  Foreigners be damned.  And so many of us still want to come here anyway, because we see China as the growth engine for the next decade (official theme of this year's APCAC conference, organized by the Chinese chapter of the American Chamber of Commerce in Beijing, which I was fortunate to attend in April).

China's a huge place with even huger potential.  Victor's convinced that China will have the world's best infrastructure in as little as five years.  He thinks it's simply because all the top politicians are engineers by training, and so they're just into building stuff.  It's hard to disagree with him when you look at the trends.  The American Chamber of Commerce believes that China will be the world's main economic growth driver for the next 10 years.  Heck, everyone wants in.

Admittedly, China still has its issues.  There are still corruption scandals.  There are still product safety scandals.  There's still a lower standard of living and acceptable quality compared to many first world nations.  However, China's working hard to become world-class and is attempting to deal with each of these issues.  It's just much more complicated when you have a population of 1.4 billion people.  Anything at high scale inherently has high complexity.  It's why being mayor of New York is probably more difficult than being governor of Hawaii (no offense Hawaiians, everyone's jealous of you anyway).  Is it feasible to get this machine organized so that it can keep growing and sustain itself, or will it collapse due to its own immense complexity and issues?

I listened to the presentation of a doctor who had done a lot of work in China this year.  He noted that there's no doubt that China will be the world's next superpower.  The question was would it be a good superpower?  Maybe, maybe not.  But whatever the case, the population is so huge that if it can figure things out, it can run by itself to create a huge economy.  Imports, exports, whatever, who cares at some point.  You've got something potentially bigger than the entire European Union or NAFTA sitting inside a single country's borders.  Foreign direct investment is really useful in the ramp-up.  What happens after the ramp-up is done and China becomes the investor of funds, rather than the recipient of funds?  That's already happening today.  But it's still cheap enough to get a place at the table.  And that's why everyone's trying to get a ticket.

But if you want to play here, you gotta play by the rules.  So maybe my Internet experience will continue to suck, unless China decides to eventually relax some restrictions.  I overpaid for a year of ADSL.  What's the likelihood of China Telecom giving me some of that money back?  Zilch, you think?  Probably.... well, one can always try.  :(

We're not in Kansas anymore, Toto.