Month: December 2020

Categories
Audience as Capital Discovery and Curation Life Design Making Money Online

Unlived lives and wormholes

This four thousand-plus word article in the New Yorker – about considering the alternate lives we could have lived if we’d made different choices – is a good longread as this year comes to a close.

This bit interested me:

The nature of work deepens the problem. “Unlike the agricultural and industrial societies that preceded it,” Miller writes, our “professional society” is “made up of specialized careers, ladders of achievement.” You make your choice, forgoing others: year by year, you “clamber up into your future,” thinking back on the ladders unclimbed.

This is by and large true. I had held for a while that I’d have a career in computer architecture and operating systems, either designing chips or OSes that ran on them. Instead I’ve ended up working with early stage startups across a bunch of fields including in finance. And while I’ve stayed in tech, it’s no longer practical to switch to my earlier, specialised tech career.

At the same time, the growth of no-code tools that bring fixed costs down, the proliferation of distribution channels to build your own audience, and several alternate means of financing (one, two) means that know-how and technical skills as barriers to entry are falling every day.

Five years ago the quote from the article would mostly hold; your career would be a journey down an eternally narrowing funnel. But today there are an increasing number of wormholes out of that funnel. Curiosity and passion are now at least as valuable as tech kn0w-how and access to capital.

Categories
Real-World Crypto

Crypto bank and crypto activity in India

Interesting:

Unicas will be providing banking services for both fiat and crypto assets. Services include savings accounts, crypto exchange, crypto loan and debit cards to spend crypto. Users may receive an instant loan digitally by depositing crypto assets in the Unicas wallet and requesting the equivalent value of INR on their card or bank account.

– UNICAS Crypto Bank Opens in India

Also interesting is that the bank is a joint venture between Cashaa of London and the United Multistate Credit Cooperative Society – certainly not a major Indian bank. This Mint article makes this important point:

Multistate Credit Cooperative Societies are regulated by the Central Registrar of Cooperative Societies rather than the RBI. No specific permission from the registrar is required for this

– Crypto platform makes banking entry in India with co-op credit society tie-up

It was the RBI that had forbidden banks in 2018 from providing any services to cryptocurrency exchanges, sending the crypto industry in India into suspended animation for two years before a Supreme Court judgement in March 2020 overturned it.

Also on Medianama:

… since neither the RBI nor the government has introduced new guidelines or restrictions on crypto investing, Indian banks have begun providing various services to domestic exchanges such as payment gateways, working capital loans and other facilities.

– Indian Crypto Currency Trading Volumes Grow 500% Since March

Categories
Uncategorized

Like a river returning to its source

“There is another lineage of sorts, and in a sense we all belong to it. We are connected to this lineage, whether we like it or not. I discovered it in the back room of a bookstore one summer afternoon. I had nothing to do that day, so I walked over to a used bookstore. Once inside, I went over to the religious, spiritual, and psychological section. There were stacks and stacks of books that had just arrived. Hundreds and hundreds of books, all on the subjects that I loved. I was a kid in a candy store.

As I piled up the books I wanted to buy, I noticed that the same name was written in black marker along the binding of each book. RON COHEN the writing said in BIG letters. I paused for a second and looked at the wall of books. It was a mountain! And all of them had the same name on them: Ron Cohen.

When I brought the books over to the counter, I asked the guy who Ron Cohen was. “Oh, him,” he said, “he’s dead. He was a religious “Studies teacher at Illinois State. He taught for forty years, and his family brought them in after he died.”

The rest of the day I thought about that. Here was a man who read all those books. Having lived a long life, he “brought all that knowledge into an understanding, and he must have conveyed that unique understanding in his teachings. Having come together in him, this understanding has now dispersed, like a river returning to its source, without a trace or track. All that was left was a pile of books—that I now own. And one day, someone else will own them.”

– Tying Rocks To Clouds : Meetings and conversations with wise and spiritual people, William Elliott, 1995

(Featured Image Photo Credit: Nick West/Unsplash)

Categories
Uncategorized

The not-often-talked-about risk of climate change to the financial system

This interview with a lecturer in finance at Harvard business school talks about the impact of climate change on the financial system, a linkage not often made – so far, at least. Specifically, the lecturer posits that insurers don’t yet accurately price the risk of extreme weather events due to climate change. Therefore, many properties are being built today in the USA in high-climate-risk zones that are under-insured for these climate events. That low insurance encourages property buying, causing property prices in these high risk areas to rise. People paying more for houses in such areas are at risk of financial ruin should they lose those houses without adequate insurance coverage.

What’s also notable is the parallels the lecturer draws to the financial instruments that causes the 2008 financial crisis, which was also linked to housing in the USA:

Homeowners buy their property/casualty and fire/flood insurance policies through brand-name companies, such as Allstate or Progressive. But these companies often don’t retain all of the exposure to pay for loss events. In particular, they don’t mind being exposed if say one house burns down – the other premiums collected cover that cost.

But if an entire county or part of a state gets hit hard by a hurricane, they can’t cover losses to all of those homes on their own. They often contract, in bulk, with another tier of insurers called reinsurance companies. These firms include giant but lesser-known companies like Swiss Re, Munich Re, and General Re. Those international firms attempt to spread their exposure across the globe and across many categories of peril like tornado, hurricane, earthquake, wind, and flood.

In addition to diversifying the risks, the reinsurers also can slice off some of the risk into insurance-linked securities — including weather derivatives sometimes known as “catastrophe bonds.” The probability of an event happening and the likely cost of the event are rated by several specialty companies then bought and sold by financial investors — who have zero knowledge of or interest in your particular home or city — who can be paid to accept financial exposure of a defined nature for a fixed period of time in the event that one of the named events occurs.

This means we have a situation where whoever is buying or selling the risk is multiple steps away from the actual property.

Categories
Audience as Capital Discovery and Curation The Dark Forest of the Internet

Independent publishers as the new distributors of controversial content

Major streaming video services have declined to bid on a new documentary about the Saudi Arabian government’s alleged killing of a dissident. Netflix, in particular, was eager to bid on and list Icarus, the director’s previous documentary about the Russian government’s pervasive athlete doping programme but, according to the New York Times, did not even reply to the director about this documentary.

The same market forces that make streaming services great US stocks to own – Netflix, Amazon, Disney among them – also make them less inclined to pursue anything outside of a certain risk-free definition of entertainment, since a broader market inevitably brings broader constraints on what is acceptable.

I see an important role for independent publishers with a direct relationship with their audience in distributing new material like this documentary, especially those that collect payments directly from their readers/subscribers as opposed to via sponsors.

Categories
Products and Design The Next Computer

An alternative future where we could Ship-of-Theseus our laptops

Today at someone’s place I came across a laptop that represented an alternative future: one where manufacturers didn’t relentlessly choose size and weight over extendability. Where a portable machine – just like an assembled desktop – could be upgraded over time instead of having to buy an entirely new one.

This is the Dell Inspiron 14R N4110 from 2011, which runs Windows 7 just fine.

In return for having to lug around over two kilos, you get a DVD read/write drive, three USB ports, two of them USB 3.0, an ethernet port, a VGA port, an HDMI port, an SD card slot, an eSATA port, and audio in and out – and a Kensington lock slot.

Plus, you get a removable battery, a user-accessible slot to pop RAM modules in and out to expand RAM (although only up to 8GB), the ability to replace not just the hard drive with an SSD, not just the display with a higher-resolution one, but also the processor itself!

In fact, Dell itself published a detailed manual [PDF] for laptop owners to access – in addition to the RAM, display, processor and battery – the optical drive, the keyboard, the wireless card, the bluetooth card, the motherboard, the speakers, camera, I/O board, AC adapter and even the coin-cell battery that the boards use to keep internal time. With all this, you could not just use the laptop for well over a decade, but keep it current over that time, simply by upgrading the components that became bottlenecks, or that wore out.

Granted, our laptops would be a lot thicker than the iPad Pro:

In this alternate future, Dell and its ilk would be component manufacturers more than laptop manufacturers – and it’d be a lot more exciting because we’d see a large variety in such components.

I imagine that in this future’s 2020, people forced to work from home who suddenly wanted a better webcam could buy an high-resolution one from Dell and plug it into their laptop’s display. Maybe there’d be a choice of lenses. Instead, our only choices are to either buy an external webcam, becoming one more accessory and cable to carry, or buy a whole new laptop. In that universe, as things improved in the coming years and people began working from a variety of remote places instead of returning to offices, they’d buy larger batteries from Dell – all for the same laptop.

Today we have laptops that are ever-lighter, with some improvement in battery life than in 2011, when the Dell in question was first manufactured. But we have lost nearly all repairability and upgradability. With minimal ports, we have lost a lot of extensibility, unless we buy even more adapters and dongles and cables. We’re turning our computers into appliances and, like appliances, replacing them instead of repairing them – because we can’t.

Categories
Decentralisation and Neutrality Making Money Online The Dark Forest of the Internet

A potential new pillar of an independent internet

The messaging service Telegram intends to make money next year onwards, after being funded by its founder’s fortune. The announcement also makes its principles clear(in bold below):

All the features that are currently free will stay free.
We will add some new features for business teams or power users. Some of these features will require more resources and will be paid for by these premium users. Regular users will be able to keep enjoying Telegram – for free, forever.
All parts of Telegram devoted to messaging will remain ad-free. We think that displaying ads in private 1-to-1 chats or group chats is a bad idea. Communication between people should be free of advertising of any sort.
We will fix [monetisation with intrusive ads in the absence of alternatives] by introducing our own Ad Platform for public one-to-many channels – one that is user-friendly, respects privacy and allows us to cover the costs of servers and traffic.

The goal of monetisation seems to be to cover running costs as Telegram approaches half a billion users, not to create another Big Tech company. The post mentions sustainability and independence as explicit goals:

Telegram is here to stay for a long time… [monetisation] will allow us to keep innovating and keep growing for decades to come… we will remain independent and stay true to our values, redefining how a tech company should operate

The best-case outcome for Telegram is becoming a pillar of the independent internet like Mozilla, Wikipedia, the Tor project, Automattic, GNU, among others.

Making money from your customers, your users is how you avoid being dependent on the largesse of one person or entity. Mozilla has not yet managed to crack it; I hope Telegram does.

Categories
Audience as Capital Data Custody Discovery and Curation Making Money Online The Dark Forest of the Internet Wellness when Always-On Writing

For content platforms, revenue and moderation are inextricably interlinked

The newsletter platform Substack, on its revenue model:

A lot of people suppose that we started Substack to be the next big thing in journalism. But what we’re actually trying to do is subvert the power of the attention economy.

When engagement is the holy metric, trustworthiness doesn’t matter. What matters more than anything else is whether or not the user is stirred. The content and behaviors that keep people coming back – the rage-clicks, the hate-reads, the pile-ons, the conspiracy theories – help sustain giant businesses. When we started Substack to build an alternative to this status quo, we realized that a tweak to an algorithm or a new regulation wouldn’t change things for the better. The only option was to change the entire business model.

Substack’s key metric is not engagement. Our key metric is writer revenue. We make money only when Substack writers make money, by taking a 10% cut of the revenue they make from subscriptions. With subscriptions, writers must seek and reward the ongoing trust of readers.

Substack does two things differently from typical social platforms: one, by encouraging paid publications, readers pay to receive their information fix, which naturally caps the number of newsletters a person receives and by extensions the attention they capture. Two, it has aligned its revenues with these paid publications. These two by themselves are a significant departure from the norm, for the better.

There is always the likelihood, perhaps the inevitability that deliberately divisive, disingenuous polemical publications will publish on Substack for free, making money off sponsorships instead of reader payments, and they may amass large followings too. And Substack too has declared that they will be light with censorship:

we commit to keeping Substack wide open as a platform, accepting of views from across the political spectrum. We will resist public pressure to suppress voices that loud objectors deem unacceptable.

This will be something that Substack will have to reckon with, and perhaps soon. Yes, apublication with a generous enough sponsor – whether public or not – and a large enough audience is better off simply hosting their own newsletter infrastructure, which is not complicated. But they may also simply continue on Substack. What is the company to do then?

The possible answers are for another time. In any case, Substack’s approach to revenue and moderation, its recognition that they are interlinked, and its willingness to publicly articulate it, is commendable.

Categories
Audience as Capital Discovery and Curation Making Money Online Writing

Content may be free but publishers of content can nevertheless be powerful

In a powerful essay that explains the moats that people who publish can create around their work, the reasons behind audience loyalty. This applies to whether the work is writing, video, podcasts or other mediums. I’ve summarised my understanding of the seven points the writer makes:

  1. Scale works differently: Writing has larger fixed costs and relatively low marginal costs, unlike tech businesses of late, which are built around low to zero fixed costs. As a result, investment in quality pays off more than in quantity.
  2. Network effects apply both to content creators as well as to content platforms like social networks, but apply differently. A publisher’s followers build a shared understanding of a small part of the world. At its best, it builds its own subculture.
  3. Publishers with strong points of view that run counter to established narratives are hard for existing players to compete with. Resisting it will fail to retain those who are inherently swayed by it; co-opting it risks alienating incumbents’ very audience
  4. Following naturally from points two and three, once a group of people with a shared interest, opinion and understanding has formed around a person’s published work, it’s hard for them to replicate it elsewhere. In tech terminology, the switching costs are high
  5. The publisher builds a brand that’s clearly identified with what their message is, and that makes it easy for people who’re looking for authority and quality to find them, because the internet’s discovery mechanisms optimise for exactly this.
  6. The publisher’s talent is a scarce resource – as we’ve seen in point one, it’s not easy to build to begin with, and in points two and four, that once built it’s not easy to replicate. And across industries, scarce and desirable resources are valuable.
  7. A final moat is a publisher’s craft, described by the writer as their processes. It’s built up over time and can neither be replicated quickly nor substituted by cash.

There’s significant overlap between them, but then it’s a grab-bag of points, not a framework. Nevertheless, it’s great starting material to understanding your power as a publisher (or ‘content creator’) and creating your own positioning.

Categories
Audience as Capital Discovery and Curation Personal Finance Products and Design Wellness when Always-On

Herd mentality

I read recently about the USA investing app Robinhood being charged with “gamifying” investing and not putting in place “proper controls to safeguard inexperienced investors.” I was curious about what gamification techniques the service actually uses. Here’s what I found:

“Robinhood’s Role in the ‘Gamification’ of Investing: QuickTake”, Bloomberg, Dec 2020

Investors are congratulated for their first trade with a confetti animation. They’re offered a (tiny) chance of snagging a share of a high-price glamour stock such as Apple Inc. if they get a friend to sign up. They can browse the 100 most-held stocks among fellow users for inspiration. An entertainment ecosystem has risen up alongside Robinhood; TikTok videos under #robinhoodstocks have millions of views.

“Robinhood’s Addictive App Made Trading a Pandemic Pastime”, Bloomberg, Oct 2020

Robinhood’s app emphasizes social interaction by using the possibility of getting a free share of stock in exchange for inviting friends to sign up. You have a tiny chance of snagging a high-price glamour stock such as Apple Inc., Robinhood says, if your friend signs up and links a bank account. If you find your well of investment ideas running dry—or perhaps don’t know where to start—you can browse the 100 most-held stocks among fellow Robinhood users for inspiration.]

Robinhood and the Gamification of the Stock Market, McGill Business Review, Jul 2020

Through a Candy Crush-esque UX design with additions like confetti showers to celebrate transactions, the app gamifies the stock market, sending millions of bored-in-the-house millennials into a trading frenzy through a seemingly playful environment with dangerously real consequences.

Robinhood Has Gamified Online Trading Into an Addiction, Scott Galloway, Jun 2020

Confetti falls to celebrate transactions.
Colorful Candy Crush interface.
Users can tap up to 1,000x per day to improve their position on the waitlist for Robinhood’s cash management feature (essentially a high-yield checking account on the app).

Designed to distract: Stock app Robinhood nudges users to take risks, NBC News, Sep 2019

When smartphone owners pull up Robinhood’s investment app, they’re greeted with a variety of dazzling touches: bursts of confetti to celebrate transactions, the price of bitcoin in neon pink and a list of popular stocks to trade.

A critique of Robinhood’s gamified interface, Georgetown Collegiate Investors, Aug 2020

For starters, the flashing green and red lights, as well as the confetti, often lead users to act on their emotions instead of keeping a calm and level head. The green lights and confetti serve as subtle but prevalent psychological rewards for users. Likewise, the red numbers on the screen invoke feelings of anxiety and fear that may drive users to make irrational choices.

It’s surprising how over the course of a whole year and more, all the articles criticising Robinhood about its gamified interface don’t go beyond the confetti and a detail-less reference to Candy Crush-like design.

Further, nearly every post I’ve read on this topic follows a familiar narrative: that Robinhood encourages poor investing decisions because it doesn’t charge commissions, that it turns investing into a game, that it is disingenuous about how it makes money (payment for order flow to high-speed trading firms), that a customer once took his life after misinterpreting a large negative balance, quotes from ‘industry experts’ about Robinhood being the vanguard of a disturbing trend towards casual DIY investing. It’s astonishing how similar these articles are.

Ironically, the only post with any more detail and actual screenshots is this one, which praises Robinhood interface:

Robinhood is gamified from the start. They reward users that have just signed up with one free share of a stock, chosen by chance. The app doesn’t simply present the free stock to the user from the beginning. The process is similar to something you’d see at a casino. Users are presented with three blank cards, and are prompted to choose one. When chosen, the card flips and the free stock is revealed, with confetti and all…
The black background and bright primary accent colors are reminiscent of a Pacman game. Red is used when a stock has moved down, and green when a stock is up, creating a sense that the user is winning or losing

Obviously, this isn’t about what I think of Robinhood the service. It’s that the onus of understanding an issue in depth seems to be on the reader. And it doesn’t seem to be practical – the only reason I read over a dozen articles on the specific topic of Robinhood’s gamification of stock investing was because that was what I was curious about. The average reader’s just going to read one of these and form an opinion, unaware that all the other coverage of this issue is identical and narrow.

Ultimately this means that we, as individuals, need to choose carefully what topics we are interested in, since, as we’ve seen, the quality of online coverage leaves the duty of diligence to us. And finally, curators will almost certainly become even more important, moving beyond their role as tastemakers and influencers to shapers of world-views.

[Addition 5 Jan 2021] The clearest description of Robinhood’s techniques to drive impulse-based purchases is from a Twitter thread. If you are at all curious about what Robinhood’s gamification means, read through this:

https://twitter.com/petershk/status/1344286419380916228?s=20

(Featured Image Photo Credit: Austin Distel/Unsplash)