Tech: Links for 25th June, 2019

I have linked to some of these piece in the past, but this set of posts is still useful in terms of creating a common set of links in one place for you to understand how to think about Aggregation Theory. If you can afford it, I heavily recommend Stratechery!

  1. “What is the critical differentiator for incumbents, and can some aspect of that differentiator be digitized?
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    If that differentiator is digitized, competition shifts to the user experience, which gives a significant advantage to new entrants built around the proper incentives
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    Companies that win the user experience can generate a virtuous cycle where their ownership of consumers/users attracts suppliers which improves the user experience”
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    Begin here: this piece explains what aggregation theory is all about, and why it matters.
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  2. “Super-Aggregators operate multi-sided markets with at least three sides — users, suppliers, and advertisers — and have zero marginal costs on all of them. The only two examples are Facebook and Google, which in addition to attracting users and suppliers for free, also have self-serve advertising models that generate revenue without corresponding variable costs (other social networks like Twitter and Snapchat rely to a much greater degree on sales-force driven ad sales).”
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    Aggregators on steroids: what exactly makes Google and Facebook what they are? This article helps you understand this clearly. Also read the article on super aggregators itself.
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  3. “There is a clear pattern for all four companies: each controls, to varying degrees, the entry point for customers to the category in which they compete. This control of the customer entry point, by extension, gives each company power over the companies actually supplying what each company “sells”, whether that be content, goods, video, or life insurance.”
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    This article explains the FANG playbook, and how they became what they are today: Facebook, Amazon, Netflix, Google.
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  4. “To explain why, it is worth examining all four companies with regards to:Whether or not they have a durable monopoly
    What anticompetitive behavior they are engaging in
    What remedies are available
    What will happen in the future with and without regulator intervention”
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    Ben Thompson states just above this paragraph that he is neither a lawyer nor an economist. But the last two questions in the list above show that he’d make a pretty good economist. He is, in essence, asking what is the opportunity cost of breaking up these firms. As the song goes: with the bad comes the good, and the good comes the bad.
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  5. “All those apps are doing is providing an algorithm that lowers search costs and makes booking easy. Expedia didn’t design, build and maintain the airplane that flew him to Sydney; build or operate the airport; train pilots; or find, produce, refine and transport the necessary jet fuel to power the plane over its continental voyage. Uber didn’t design and manufacture the car used to transport him to his hotel; find, produce, and process the raw materials that go into it (such as steel and aluminium); or actually drive him from the airport to his hotel. AirBnB didn’t design, build, maintain, or clean the house he stayed in, nor supply it with electricity. UberEats and OpenTable didn’t grow and process any raw foodstuffs, or use them to cook a meal, and TripAdvisor didn’t design, manufacture or operate any of the tourist attractions he visited.In fact, all these companies did was write some pretty simple code that made matching buyers with sellers easier and more efficient, and the real question that should be being asked is whether these platform companies are extracting too much value from the supply chain relative to their value-add, and whether that is likely to be a sustainable situation in the long term, or will invite potential disruption and/or an eventual supply-side/regulatory response.”
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    BUT, on the other hand, perhaps this is just old wine in a new bottle?
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Links for 14th May, 2019

  1. “The issue is much simpler: Do you trust Mark Zuckerberg and the other young lords of Silicon Valley to be good stewards of the world’s digital speech?”
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    Via Tyler Cowen, an interesting article about the unintended consequences of the evolution of Facebook. Worth reading to think about free speech, Facebook, Silicon Valley and the benefits of a well-rounded education.
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  2. “When and where should scientists report controversial research ideas that colleagues share with them in confidence? Have scientists acted inappropriately if they provide conventional research advice to someone conducting an unorthodox experiment?”
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    How should you think about policing the cutting edge of science – or anything, for that matter? What is the opportunity cost of policing – and what is the opportunity cost of not policing? I (and the article) don’t have any answers – but you should be thinking of these issues while reading it.
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  3. “It is a path humanity is already on, of course: When was the last time you ever read a map rather than got directions from Google? Or cracked a book to find an errant fact? It’ll be like that for so many things we do, as normal practices change to reflect and take advantage of the convenience and precision of AI.”
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    Kara Shwisher talks about emerging tech, and the (as she puts it) new internet. Worth reading to understand how technology is likely to evolve, and change.
  4. “Maybe Hanson could focus on this in his next book. Nevertheless, this book is a necessary corrective to the center-right, neo-liberal dogma of the last quarter century. To crudely paraphrase David Frum, if liberals and conservatives do not take control of mass immigration, the public will elect authoritarians to do the job because the job needs to be done.”
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    The Quillette reviews a book that defends Trump – a useful read to find out why Trump won, and what the thinking is of the processes that got him to where he is.
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  5. “It was in 1906 when the Indian National Congress, prompted by its leader Lokmanya Tilak and industrialist Ardeshir Godrej among others, promised to introduce the swadeshi element into the production of soaps.Ardeshir Godrej, a lawyer-turned-serial entrepreneur, along with his brother Pirojsha Burjorji co-founded the Godrej & Boyce manufacturing company, which is now a $4.54 billion Indian conglomerate called Godrej Group.”
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    A fascinating story about how the Godrej group got into the soap making business

Links for 23rd April, 2019

  1. “Obviously, there are many more novels and memoirs that mention long lists of books than are included here, but I’m limited, as ever, by time, availability of data, and the demands of maintaining sanity. So below, please find twelve books that are filled to the gills with mentions of other books, and feel free to add further suggestions in the comments.”
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    If you, like me, are fond of bookmarking lists that will prove to be useful at some undefined point of time in the future, you might find this useful. Books that contain lists of other books worth reading is an interesting enough article by itself – as an academician, I’d argue it’s the very best way to include a bibliography.
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  2. “Alas, if only healthcare policy were so simple. The reality is messy and there is no magic bullet. Singapore’s success in healthcare is built on a panoply of measures developed and refined over decades. The measures employ a variety of policy tools that both individually and collectively target the market and government failures afflict the healthcare sector. For a comprehensive understanding of health policy in Singapore, we need to understand all the policy tools used and how they operate individually and in relation to each other.”
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    A very readable PDF about what makes Singapore’s healthcare system so very awesome. Truly worth a read to find out how it evolved, and as an Indian, to understand how far we have to go.
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  3. ““You will hardly find women with wombs in these villages. These are villages of womb-less women,” says Manda Ugale, gloom in her eyes. Sitting in her tiny house in Hajipur village, in the drought-affected Beed district of Maharashtra’s Marathwada region, she struggles to talk about the painful topic.”
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    Speaking of a long way to go
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  4. “Facebook’s powerful network effects have kept advertisers from fleeing, and overall user numbers remain healthy if you include people on Insta­gram, which Facebook owns. But the company’s original culture and mission kept creating a set of brutal debts that came due with regularity over the past 16 months. The company floundered, dissembled, and apologized. Even when it told the truth, people didn’t believe it. Critics appeared on all sides, demanding changes that ranged from the essential to the contradictory to the impossible. As crises multiplied and diverged, even the company’s own solutions began to cannibalize each other.”
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    A very long article about the troubles at Facebook, but you can never read too much about the how’s and what’s at Facebook.
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  5. “If that’s an equally unpleasant prospect, consider Andreessen, who’s 47, the perfect messenger. From showy check-writing to weaponizing his popular blog and (before Trump) Twitter account to hiring an army of operational experts in a field built on low-key partnerships, he’s one of Silicon Valley’s poster boys for upending the rules. And it’s worked: In one decade, Andreessen Horowitz joined the elite VC gatekeepers of Silicon Valley while generating $10 billion-plus in estimated profits, at least on paper, to its investors. Over the next year or so, expect no less than five of its unicorns—Airbnb, Lyft, PagerDuty, Pinterest and Slack—to go public.”
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    a16z is a firm everybody should know more about – this article helps. By the way, their podcast is good as well.

Links for 20th March, 2019

  1. “In 1950, cement production was equal to that of steel; in the years since, it has increased 25-fold, more than three times as fast as its metallic construction partner.”
    A mostly negative view of concrete, and how pervasive it has become over the years and across the world, in the Guardian. I wouldn’t necessarily argue the view that concrete is all bad, but the data is worth thinking about. Also keep an eye out for a mention of Vaclav Smil later on in the article – an author worth reading.
  2. “Achieving victory over another man, defeating them, forcing them to submit—it’s not about saying “I’m better than you.” It’s saying “I’m better than I was yesterday.” It’s why almost every competition ends with a hug and a thank you. Because each gave the other something—the opportunity to learn, to progress and to become better. At “Camp Settle This Like Men,” and at MMA gyms around the world, black belt instructors lend their time and expertise to lead classes on kickboxing, jiu jitsu, boxing and self-defense. When we teach others our skills, we make them better, hone our own knowledge, and create stronger opponents, that we can measure ourselves against.”
    An article from the Quillette about “Camp Settle This Like Men”. Interesting on multiple levels – masculine toxicity, respect (the earning and the giving of it), and about the plus side of mixed martial arts.
  3. “You have no idea how hard it is. Yes, there’s a lot of work that goes into getting the teams aligned and getting the right leaders in place who believe in these priorities, and being able to execute on that. And even the process of writing something like this is really helpful, because you can talk about a lot of things in the abstract. But it’s not until you actually put it down on paper and say, “Yeah, here are the trade-offs. We’re going to focus on reducing the permanence of how much data we have around, and that’s going to make these things harder.” Then you get all these teams inside the company that come out of the woodwork with all the issues that that’s going to cause for other things that we really care about.”
    Maybe it is because I was teaching industrial organization this semester – but rather than everything else that everybody focused upon, this is the part of the interview that leaped out for me. Organizing a firm is hard. Organizing teams within a firm is harder. There’s a very long reading list that suggests itself about this – it begins from Coase, and ends at Horowitz – for now.
  4. “Today, we’re celebrating the objects and ideas dreamt up and created by inventors, scientists and dreamers. Thanks to over 110 institutions, including National Council of Science Museums and Tata Institute of Fundamental Research from India, as well as dedicated curators and archivists from 23 countries around the world, you can explore a millennia of human progress in Once Upon a Try, now available on Google Arts & Culture. With over 400 interactive collections, it’s the largest online exhibition about inventions, discoveries, and innovations ever created.”
    What a time to be alive. I haven’t seen a lot on the site, principally because I would get nothing else done – but this is a truly bookmark-able resource. Again, what a time to be alive.
  5. “In India, in my opinion, we ape the West too much, particularly America too much. I lived in Silicon Valley so I know both the strengths and the weaknesses. The weaknesses, the short-termist thinking. Very few companies stay the long haul and we have taken more inspiration from the Japanese on these than from the Americans, in this particular area.”
    Lots and lots of interesting stuff here, and the whole interview is worth listening/reading. But of all of those things, this was the most interesting one to me – the influence of Japanese and American start-up culture on Zoho – a remarkable Indian firm.

Links for 8th March, 2019

  1. “The canonical source for enforcement is Facebook’s public community guidelines — which consist of two sets of documents: the publicly posted ones, and the longer internal guidelines, which offer more granular detail on complex issues. These documents are further augmented by a 15,000-word secondary document, called “Known Questions,” which offers additional commentary and guidance on thorny questions of moderation — a kind of Talmud to the community guidelines’ Torah. Known Questions used to occupy a single lengthy document that moderators had to cross-reference daily; last year it was incorporated into the internal community guidelines for easier searching.A third major source of truth is the discussions moderators have among themselves. During breaking news events, such as a mass shooting, moderators will try to reach a consensus on whether a graphic image meets the criteria to be deleted or marked as disturbing. But sometimes they reach the wrong consensus, moderators said, and managers have to walk the floor explaining the correct decision.”
    The Verge (Casey Newton, specifically), reporting on Facebook moderators – the human ones. This article is about the troubles they go through, and the costs they have to bear while doing so. A sobering read.
  2. “Our international panel of judges — Pete Souza, Austin Mann, Annet de Graaf, Luísa Dörr, Chen Man, Phil Schiller, Kaiann Drance, Brooks Kraft, Sebastien Marineau-Mes, Jon McCormack and Arem Duplessis — gave some insight on why they loved these shots. ”
    Worth it for at least two reasons – make that three. One, how skilled would you have to be, in the not too distant past, to take photographs as good as this? Two, the photographs themselves are quite breathtaking. Three, the commentary after each photograph helps you understand why those photographs are, in the opinion of the judges, so good.
  3. “India has the potential to be the single largest democratic free market economy in the world. But it needs to simultaneously cut down on its corruption, create jobs for millions of new entrants to the labor economy every year, stand up a new generation of digital-first behemoths, all the while balancing the needs of an incredibly diverse and cacophonous democracy buffeted by global markets and tastes. That’s ultimately a tall order, but if India wants to migrate from a “billionaire raj” to an “entrepreneur raj,” it will have to do all of that — at once.”
    The tech website TechCrunch, on India’s challenges in terms of becoming the next – not Silicon Valley – but China. If you want a more in-depth analysis of what is being spoken about here, I’d highly, highly recommend How Asia Works, by Joe Studwell.
  4. “Econocrats and academic scholars need to take a hard look at the rising implications of intellectual property law, cooperative agreements and proprietary agglomerations of data in stifling competitive behaviour and mobility of new firms. Aggregating more information on firm-level growth narratives and better information dissemination (for researchers) will help analyse firm-level productivity impacts on market growth and overall industrial productivity levels over time.”
    Somewhat related to what is linked to above, but also linked to a Twitter thread I linked to this past Saturday by Atif Mian. An interesting, if somewhat complicated read.
  5. “The National Company Law Appellate Tribunal ordered that no lender can declare its exposure to embattled IL&FS Group as nonperforming without its permission – even if there is a default. The ruling by the bankruptcy court, which is overseeing the government-sponsored $12.8 billion insolvency of the infrastructure financier-operator, undermines the Reserve Bank of India’s powers to make banks and nonbank finance firms present a truthful account of their financial position at all times.”
    This isn’t getting quite the coverage it should, but we’re putting a lot of stuff under what is very quickly becoming a very large blanket.

Links for 20th February, 2019

  1. “There is no amount of growth that can’t be destroyed by an investor’s temptation to grab too much of it. And there is no opportunity so appealing that it will catch the eye of someone who refuses to look.But greed and fear aren’t always character flaws. People with the best intentions and ethics fall for their temptation. The two traits evolve from something innocent: the amount of confidence we have that our actions influence our outcomes.”
    I am currently teaching, at the Gokhale Institute, a course on Behavioral Finance. This blog post will be a part of the required reading when I teach the section on overconfidence (and it’s mirror image)
  2. “A Facebook press officer said, in a prepared statement: “This is one study of many on this topic, and it should be considered that way.” The statement quoted from the study itself, which noted that “Facebook produces large benefits for its users,” and that “any discussion of social media’s downsides should not obscure the fact that it fulfills deep and widespread needs.”
    What happens if you go cold turkey on Facebook? I haven’t read the paper itself, but this article from the NYT is a useful read – but not for the usual Facebook bashing reasons. There are benefits to using Facebook, for all of us. I myself no longer have the Facebook app on my phone, but freely admit to checking Facebook every now and then on the browser on my phone.
  3. “Mere hours into the first day of the Google block, my devices have tried to reach Google’s servers more often than the 15,000 times they tried to ping Facebook’s the entire week before. By the end of the week, my devices have tried to communicate with Google’s servers over 100,000 times, comparable to Amazon, at 293,000 times during its block. Most of Google’s pings seem to be in the form of trackers, ads, and resources built into websites. ”
    Speaking of which, what might life look like if you decided to go cold turkey on Google? Much worse, it turns out – your productivity takes a direct hit, as the article above makes clear.
  4. “We’ve made the case for the divergence among equipment manufacturers before: Ultimately robots and excavators aren’t dependent on the same business cycles. This is now playing out.”
    Partially because my own research during the PhD was on this topic, but also because it is a useful way to start thinking about which sectors in the economy tend to move together, and which don’t. More – does this relationship hold over time?
  5. “But the rental market is largely fragmented and unorganized. The build-to-rent model that has worked well globally in many countries hasn’t even scratched the surface here. It is a space ripe for disruption.And in the past 3-4 years, a slew of startups have begun to do just that, particularly targeting young adults and millennials (those in their 20s and early 30s) who need a place to stay when they move out of their parents’ nest or are moving to a new city.”
    This had to happen sooner or later in India – it was simply a function of the way the real estate market is, and has been in India for some time. Watch this space – I’d argue that future growth in India’s real estate sector will happen in this fashion.