Book Review: Disrupted: My Misadventure in the Start-up Bubble

Dan Lyons’ “Disrupted: My Misadventure in the Start-up Bubble” is laugh-out-loud funny in places, as one would expect from Dan, creator of the Fake Steve Jobs blog, comic novelist, and a writer for HBO’s Silicon Valley. But it is also an unexpectedly personal and serious book. Dan doesn’t just lob one-liners from the sidelines, but frankly chronicles his own missteps on a not-very-successful journey of personal reinvention from career journalist to marketing professional at age 52. Along the way he raises some uncomfortable questions about the technology industry.

After being “unceremoniously dumped” as Newsweek’s technology editor and a brief stint editing an economically unsustainable website, he joins HubSpot, a Boston-area marketing automation company. As Dan notes, “Online marketing is not quite as sleazy as Internet porn, but it’s not much better, either.” As if to compensate, his new employer has made “changing the world” its mantra. HubSpot turns out to be the Platonic form of the wanna-be tech company, amping every inane startup trope to 11 while neglecting the actual technology part (the company makes mediocre software with which to spam prospective customers). Most of the humor comes from simply holding a mirror up to its management (or lack thereof), “the Cult of the Orange People” culture and “adult kindergarten” workplace trappings, all of which the New York Times succinctly describes as “self-satirizing”. The excerpt in Fortune captures a lot of this.

My vote for the funniest part is the chapter about attending the Dreamforce conference and realizing that as over the top as HubSpot’s marketing antics may be, they are but a pale east coast imitation of Salesforce:

“There’s an art to this kind of horseshit, and Benioff is its Michelangelo.”

“Now, here in the Moscone Center, the P. T. Barnum of the tech industry is giving a master class in how the game is played.”

“Sure, Benioff is full of shit, but so are we, and Benioff is way better at being full of shit than we are.”

(Note to Dan: don’t rule out Salesforce as a future employer. Seriously).

Wrapped within that tortilla of humor, the book contains two meatier critiques of the technology industry, with HubSpot as poster child but hardly the only offender. One is labor practices that both exploit younger workers (who seemingly are easily distracted away from the size of their paycheck) and cast older workers in a remake of Logan’s Run, with no discernible happy medium between. As a guy who was twice the age of the average employee at HubSpot, Dan experiences the ageism firsthand (plus the CEO of HubSpot is dumb enough to advocate it in a New York Times interview). He also takes aim at tech companies that never make a profit yet whose founders and early funders do extremely well, even if no one else does. “Grow fast, lose money, go public, get rich. That’s the model.” While the book has precipitated some discussion about tech’s treatment of both the young and the olds, not so much for the second topic.

But the book has become a circus unto itself, beyond the one featured in its pages. Fulfilling every author’s wildest promotional fantasy, HubSpot executives evidently tried to obtain a copy of the manuscript before publication. This led to the CMO/co-founder being fired by the board, the CEO “reprimanded”, another executive quitting before he could be fired, all with a chaser of an investigation by the FBI. HubSpot utilized a tone-deaf PR strategy of stonewalling that will surprise no one who has read the book, only allowing that there was “some fishiness” and “really aggressive tactics”. The FBI characterized those tactics as possible extortion and hacking, although they ultimately didn’t press charges. Dan has yet to get an explanation of what they tried to do to him and wonders whether he missed some bigger malfeasance HubSpot was worried would be uncovered in the book.

Reactions to these events have added to the spectacle. HubSpot sympathizers and Boston tech fanboys rallied around the company and basically acted like the Patriots fans most of them are (i.e. the type who would loudly maintain Tom Brady’s innocence – and deity status — even if he were convicted of multiple felonies based on incontrovertible evidence and a full confession). Outside of Boston, VCs who never miss an episode of Silicon Valley were disdainfully harrumphing on Twitter that they had no plans to read the book. How dare he mock these noble entrepreneurs busy changing the world? Struck a little too close to home perhaps, but it underscores the need for an alternative playbook for those companies that aren’t, in fact, “changing the world”.

I’d retain at least a modicum of sympathy for HubSpot and the ridiculous company they have created except that even after all this they’re still out hyping their culture and belief in “radical and uncomfortable transparency”. No acknowledgement whatsoever — much less explanation – of how that vaunted culture led to executive dismissals and an FBI investigation. Or how to reconcile their stonewalling on the whole episode with that deeply held commitment to transparency.

Book Review: Whiskey Tango Foxtrot

The latest in digital technology and Big Data in particular are increasingly fodder for novelists. Whiskey Tango Foxtrot by David Shafer is a wry story of mostly earnest millennials who end up in “pitched battle with a fascist consortium of data miners”. The Google–esque bad guys are too nerdy and tone-deaf to achieve full-on Bond villain status, but Google is inexorably becoming the template for the next generation of thriller/movie villains (after The Interview, the only villains left seem to be evil corporations lest we offend even the most backward of movie-going audiences and/or their hereditary dictators, although they pale in comparison with classic villains in their menace, reach and ambition).

Shafer has some great turns of phrase in addition to exploring the dark side of Big Data:

They call it the cloud, but that’s wrong, isn’t it? Their cloud is heavy and metal and whirring.

But maybe that’s not how life works at all. Maybe you’re not supposed to put up so much resistance. Maybe a lot of that is pride and ego and pointless in the end. In which case she’d been misled by all that required reading and by the Die Hard movies.

Besides, there is the scrape of luck in everything, from the missed bus, to the dinged chromosome, to the hurtling asteroid.

“Why the hell would you be collecting shit like this?” Mark said, looking straight at Cole. “It’s public. It’s over our network. We call dibs on it.” Dibs? They were calling dibs? “But it’s illegal, to spy on people like this.” “Information is free. Storage is unlimited,” said Cole, totally unbothered. “Our privacy policy is reviewed regularly, and our mandate to collect is spelled out in the implied-consent decree of 2001. We’re just keeping this stuff safe, anyway. The other server giants have terrible vulnerabilities; they could be erased so easily.” Did he just smirk? “But that’s not really my department.”

“And what is the product, exactly?” asked Mark, a little desperately. “It’s a product and a service,” said Straw proudly. “It’s order. It’s the safeguarding of all of our clients’ personal information and assets. But it may be a while before our clients discover that they are our clients.”

“And yes, right now this part runs up against something called the ‘right to privacy’”—she made air quotes—“which is a notion that hasn’t really meant much in thirty years and means less every day. You may as well defend people’s right to own steamboats. Someone’s going to control access to all the data and all the knowledge. All of it. Everything that every government, every company, and every poor schmuck needs to get through the day. You want that to be the other guys? Once everyone’s on our network, the old, unwired world will be worthless.”

The Rise of the Machines – A Reading List

Cyberdyne Systems

A recurring theme from this summer’s reading:

  • The Fear Index – Robert Harris
    Harris is best known for relatively highbrow historical thrillers spanning ancient Rome to the Second World War but has been inhabiting the present of late. Here he delivers a taut thriller where a quant hedge fund’s black box moves beyond trading the markets to manipulating them, to the consternation of its creators.
  • Kill Decision – Daniel Suarez
    After his incendiary debut with Daemon and its surprisingly disappointing sequel Freedom(tm), Suarez is back in form looking at the impact of autonomous military drones. He is great at extrapolating today’s technology a relatively short distance into the future for a step function impact, and delivers almost cinematic action scenes while raising deeper geopolitical issues. Like Daemon, it ends in media res, so a sequel is coming.
  • Angelmaker – Nick Harkaway
    More focused than his The Gone-Away World, Harkaway restrains his propensity for discursive back-story and existential protagonist issues to deliver a more focused story about a throw-back mechanical doomsday machine threatening the world, with a rotating (and superbly named) cast of clockmakers, super villains, sinister bureaucrats, gangsters, octogenarian superspies, piranhas and others.
  • Ready Player One – Ernest Cline
    The humans ultimately manage to pass down control over the machines, but this is a trailer park Neuromancer paying homage to the music, movies and video games of the 1980s in thoroughly creative fashion. Must read if you spent any of your formative years in that decade. 
  • Race Against the Machine – Erik Brynjolfsson and Andrew McAfee
    Non-fiction from a couple of MIT professors where the subtitle is almost as long as the book itself.  They argue that our economic woes do not stem from the Keynesians’ misplaced aggregate demand or too little innovation (see The Great Stagnation), but rather too much innovation. The median worker is losing out to the exponential growth of computing as it devours more and more human tasks. Structural unemployment ensues as people cannot re-skill fast enough in the face of creative destruction. While the diagnosis is thought provoking, the policy prescriptions are banal as seems par for the course with such books.

Still in my pile:  Avogadro and Robopocalypse.  What else should be there?

Book Review: Cognitive Surplus – Clay Shirky

Cognitive SurplusSubtitled “Creativity and Generosity in a Connected Age”, this is social media theorist Clay Shirky’s second book after Here Comes Everybody, which concerned itself with the dynamics of using social tools to “organize without organizations”.

Cognitive Surplus starts with a potent historical parallel and an astonishing data point.  Early 18th century England had a “Gin Craze” as the population tried to anesthetize themselves against dramatic social changes accompanying the industrial revolution.  Shirky asserts television has played the same role over the last 50 years, absorbing the vast preponderance of free time in the developed world: “The sitcom has been our gin, an infinitely expandable response to the crisis of social transformation”.  He takes a little time to catalog television’s pernicious effects, and makes the point along the way that the asymmetric dynamic between broadcasters and passive audiences of the 20th century media was an anomaly that isn’t going to be reinstated on the Internet any time soon.

The astonishing data point arises from a television producer’s reaction to his relating the story of Wikipedia: “Where do people find the time?”  The impolitic answer of course is Wikipedia’s creators aren’t watching television.  Shirky estimates that Wikipedia is the result of on the order of 100 million hours of work by a vast number of participants.  This seems staggering until he puts it in context: Americans watch 200 billion hours of television every year and “we spend roughly a hundred million hours every weekend just watching commercials.”  That tees up the book: there is a vast collective cognitive surplus available to be harnessed if we can just turn off the television.  What happens when billions of couch potatoes begin to participate, create and share collectively?

The bulk of the book is an exploration of why and how people engage in social production.  In short, he says, it is means, motive and opportunity (just like the common criminal).  He offers a bunch of examples, though open source and Wikipedia remain by far the most powerful and impactful, as well as a variety of psychological research that helps explain personal and public motivations.

There are some suggestions for how to bootstrap and manage services that harvest cognitive surplus, but mostly the book culminates in a desperate plea for “As Much Chaos As We Can Stand” experimentation.  We must keep entrenched interests from squashing new efforts, but also not listen too much to the crazy innovators as they really have no idea what the real impact of their efforts will be.

Here Comes Everybody is a little more actionable for practitioners, while Cognitive Surplus is more of a manifesto (and we love a good manifesto), but well worth the read for insight on the future of media and the new social production model that lies beyond the market or government diktat.

Book Review: Daemon – Daniel Suarez

image Daniel Suarez’s Daemon is a kick in the head akin to Neuromancer or Snow Crash.  But unlike those two, it is set in essentially the present day and can be realized with today’s technology or close to it.  Prepare to open your eyes to a whole new vector of malevolent computing.  No doubt the book will inspire a whole new generation of bot-net creators.  It is a good thriller and even gets into some deeper political and philosophical issues without being trite the way most techno-thrillers are.  Some fine throwaway lines like:

“Anyone who has ever tried to share pizza with roommates knows that Communism cannot ever work. If Lenin and Marx had just shared an apartment, perhaps a hundred million lives might have been spared and put to productive use making sneakers and office furniture.”

Highly recommended and there is even a sequel due next year.  And if you do dismiss the book as just fiction, listen to Suarez’s speech on the true extent of today’s bot-mediated reality.

UPDATE: WSJ interview with Suarez.

Book Review: The Big Switch

Nick Carr made his name with the provocative Harvard Business Review article “IT Doesn’t Matter” (free version here), its expansion into a less definitively titled book Does IT Matter? and his generally erudite blog.  The charge of irrelevance hit the industry hard and elicited mostly incoherent and ineffective rebuttals (e.g. “hogwash”), which hampered real discussion of Carr’s argument.

I have gently mocked his thesis previously but found it a mix of the obvious (yes, things get commoditized over time, so you focus on the top of the stack and of course further commoditize the rest of the stack) and the ridiculous (IT had apparently previously been a source of everlasting strategic differentiation, but with the democratization of computing making technology widely available, we should write off the industry in its entirety).  It is like arguing that since everyone has a brain, don’t bother thinking…

Carr has a new book, The Big Switch: Rewiring the World, From Edison to Google, in which he contemplates the future of computing and speculates on the broader societal impact of that future.  The book is lucid, well-written and uses lots of historical examples to make the narrative and arguments come alive.  The first half of the book looks back at the evolution of the electrical industry and argues the computing industry will follow the same path.  The later half offers up social, economic and cultural consequences of the shift, again using electrification as an example of how new technologies have secondary and unforeseen effects.  Carr is less than excited about the consequences of the technology path he believes is inevitable– no one will mistake him for an Internet optimist.

Back in the 19th century, companies generated their own power locally, whether through water, steam or early electrical generation.  The advent of alternating current meant power could be generated remotely and transmitted afar, allowing companies to get out of the power business and buy electricity from the new electrical utilities. 

Carr tells the story of Thomas Edison and his former clerk Samuel Insull.  Edison, with his bet on direct current which didn’t lend itself to long distance transmission, focused on small-scale generators that ran “on-premise”.  His model was to sell every business equipment to generate their own electricity.  Insull predicted the rise of the electrical utility, foresaw it would eclipse the equipment business and left Edison to join what became Commonwealth Edison.  (Empires of Light is a great account of the battle between Edison and direct current versus Tesla and Westinghouse who championed alternating current).

By offering electricity to multiple customers, utilities could balance demand and reap economies of scale that drove a virtuous cycle, allowing them to drive down the cost of power and thereby attract even more customers.  Their strategy was predicated on maximizing generator utilization and the standardization of electrical current.  Companies that outsourced their power generation to utilities no longer had to worry about generating their own electricity, reducing cost, staff, technology risk and management distraction.

Turning towards computing, Carr reprises his “IT Doesn’t Matter” death knell: IT is an infrastructural commodity that every company has access to, so there is no differentiation available, which means it is a dead cost.  He recounts the history of computing, showing a particular fondness for the punch card, and excoriates the industry for cost, complexity and waste.  Siebel is the chief punching bag (while deservedly so, it is an easy target).

His future trajectory for the industry has the Internet playing the role of alternating current, allowing computing to be performed remotely which in turn enables a new breed of computing utilities (with Amazon Web Services, Google and Salesforce as early poster children).  The end result is companies no longer have to run their own complex computing operations.  He calls this new era of computing the “utility age” and states “the future of computing belongs to the new utilitarians”.

Enterprise computing vendors who sell “on-premise” solutions will be marginalized like Edison, unless they can reinvent themselves (as Edison’s company ultimately did, shifting both technology and customer allegience – they’re still around today, a little outfit called General Electric).  Carr dwells on Microsoft’s recent embrace of cloud computing, but questions whether the company can navigate the difficult transition of embracing a new model while continuing to harvest profits from the old model.

Is the Big Switch Big or Not?

I have two critiques of the first half of the book.  The first is mild schizophrenia.  The Big Switch is — wait for it — as follows:

“In the years ahead, more and more of the information processing tasks we rely on, at home and at work, will be handled by big data centers located out on the Internet.”

Wow.  Gather now at the knee of the S-curve to learn what the future holds.  Perhaps he is aiming the book at a more general audience, but with over a billion people regularly accessing the Internet, there are an awful lot of people who have already made the “big switch”.  He does some hand-waving about broadband penetration to explain why the book isn’t over a decade late, with no mention of the failure of the late 20th century’s application service providers.

Carr can’t quite decide whether the big switch to his utility age is a revolution or not.  He equivocates about whether a wave of creative destruction is crashing down today or if it will take decades to play out.  He also qualifies the move to the cloud and how far it will go with suggestions that the future may actually consist of cloud-based services working in conjunction with local computers in corporate data centers and/or local PCs.  This qualification I think stems from his general tendency to paint everything with a very broad brush.  In practice, there are many segments and technologies, each with their own dynamics.  He also plays fast and loose with topology, enlisting highly distributed examples to support a centralized thesis.

The Fallacy of the Perfect Analogy

My second critique is that the book turns on the idea that computing is basically similar enough to electricity that it will inexorably follow the same path.  While there are similarities, it is a mistake to assume they are alike in every aspect.  There are enough differences that blind adherence to an analogy is dangerous:

  • Electrons are fungible, CPU cycles arguably are, but information is not fungible.  While the flow of electrons could be standardized, the flow of information can’t.  His tendency to blur, conflate or confuse hardware and software, clients and
    servers and individuals and IT doesn’t help. 

  • Even when you do computing remotely, you still compute locally as well.  A search engine query, for example, gets run in a giant data center somewhere off in the cloud, but there is still processing that happens locally to submit, display and act upon the results.  The browser is hardly a dumb terminal and the trend is to exploit even more processing locally for cloud-based applications (with AJAX and RIA techniques).  Further, there are strong business incentives to use local code to differentiate the user experience and allow eyeball businesses to push interaction rather than just relying on user pull.  Computing is likely to be much more distributed than electricity production, especially when you consider… 
  • I am not aware of a dynamic like Moore’s Law (and similar rapid improvements in storage capacity and bandwith) for electrical generation, which both projects significant performance improvements over time and introduces the concept of relative scarcity and abundance.  This dynamic undermines the parallel of CPU utilization and generator utilization.  Those who best exploit relative abundance and put the processing closest to the data will prevail (I remain a Jim Gray disciple).
  • Distance still matters at scale. For the same reason that the aluminum industry located near cheap sources of electricity, the algorithm for siting new new half-billion-dollar data centers looks at proximity to both cheap power and end customers.  Likewise, Akamai offers proximity with its edge caching network, which in turn means lower cost and more responsive services.
  • Just as the computing industry is looking longingly at the electrical utilities, the electrical utilities are envious of the more distributed nature of the computing industry.  A less centralized and more intelligent electrical grid promises greater efficiency and resiliency.  The availability of realtime pricing information can increase conservation and reduce peak-loads.  Distributed generation allows locally produced power to be sold back to the grid, making alternative energy sources more compelling.  Digital power opens up new, differentiated offerings for utilities based on the quality of power.  And a more decentralized grid means that a single point of failure doesn’t take down power for 50 million people.  All these trends suggest the electricity industry will look more distributed and information-rich in the future.
  • There are probably other relevant differences as well.

So while the book gets the broad trend to more computing in the cloud right, Carr’s extended analogy obscures a lot of the differences and subtleties that will make or break cloud computing endeavors.  Between the caveats and the broad definitions, there is a lot of leeway in his technical vision (admittedly the mark of a savvy forecaster).  Victory will go to those who best exploit both the cloud and the edge of the network.  Carr’s own examples — Napster, Second Life and the CERN Grid — make this case, even if he either misses their distributed nature or chooses to ignore it.

Utility, Not Utopia

The second half of the book focuses on the broader social and economic consequences of the move to utility computing.  It is the bolder and more thought provoking part of the book. 

Carr again begins by looking back through the lens of electrification.  He succinctly credits electrification with ushering in the modern corporation, unleashing a wave of industrial creative destruction, improving working conditions by displacing craftsmanship for the modern assembly line and the gospel of Frederick W. Taylor, improving productivity which begat a broad middle class and white collar jobs to coordinate more complex organizations, the broadening of public education, expanding demand for entertainment, and enabling the suburbs (cheap cars relied on cheap electrical power to power the assembly line).

He also notes that the early years of electrification were accompanied by great optimism and even utopianism about what the future would hold.  Carr, however, leaves his rose-colored glasses at home as he ponders his utility future:

“Although as we saw with electrification, optimism is a natural response to the arrival of a powerful and mysterious new technology, it can blind us to more troubling portents…. As we will see, there is reason to believe that our cybernetic meadow may be something less than a new Eden.”

Carr basically finds his utility future dystopian.  He spends the remainder of the book worrying about:

The Hollowing Out of the Workforce – the utility future has little need for workers, which reverses the positive virtuous cycle of employment driven by electrification.  He points to increasing returns businesses like YouTube, Skype, craigslist, PlentyofFish and giant data centers with small staffs leading the way “from the many to the few”.  They are free riders on a fiber backbone paid for by others and are ushering in a world where “people aren’t necessary”.  “Social production” (aka “user-generated content”) is simply digital sharecropping and reduces the need for workers further.  Unlike electrification which “played a decisive role” in building an egalitarian society, the utility age “may concentrate wealth in the hands of a small number of individuals, eroding the middle class and widening the divide between haves and have-nots”.

The Decline of Mainstream Media – while electrification “hastened the expansion of America’s mass culture” and gave rise to mass media, the Internet is undermining the media with its explosion of voices and “some of the most cherished creative works may not survive the transition to the Web’s teaming bazaar”.  Newspapers are of course the foremost example.  The shift from scarcity to abundance of content is not a good thing to Carr and “the economic efficiency that would be welcomed in most markets may have less salutary effects when applied to the building blocks of culture.”  The result is a decline of media and shared culture, the polarization of virtual communities (exacerbated by personalization engines) , “social impoverishment and social fragmentation”.

Bad Guys – the Internet in the utility age promises to be a magnet for bad guys, including  criminals, terrorists, botnet operators, spammers, perpetuators of denial of service attacks and fiber optic cable-snapping earthquakes.  The underlying infrastructure is fragile and vulnerable yet critical to the global economy.  This was the least forward-looking of his pessimistic projections.  He mostly reiterates issues.  About the only new claim about the future was that pressure to protect the Internet from “misuse and abuse” will stress the sovereignty of nations  as utility functions migrate to countries with the lowest operating costs.  He is surprisingly silent on whether we should expect the heavily regulated nature of electrical utilities to also apply to computing in the future.

Privacy and the Control Revolution – don’t even think about having any privacy in the utility age:

of us are aware of the extent to which we’ve disclosed details about our identities and lives or the way those details can be mined from search logs or other databases and linked back to us.”

Carr believes computing always has and always will be fundamentally a tool of oppression for the Man, the computing revolution is really just part of a broader “Control Revolution” and the empowerment of the personal computer will be “short-lived” as the Man inevitably reasserts control:

“The sense of the Web as personally “empowering”…is almost universal. …  It’s a stirring thought, but like most myths its at best a half-truth and at worst a fantasy.  Computer systems in general and the Internet in particular put enormous power into the hands of individuals, but they put even greater power into the hands of companies, governments, and other institutions whose business it is to control individuals.  Computer systems are not at their core technologies of emancipation.  They are technologies of control.  They were designed as tools for monitoring and influencing human behavior, for controlling what people do and how they do it.  As we spend more time online, filling databases with the details of our lives and desires, software programs will grow ever more capable of discovering and exploiting subtle patterns in our behavior.  The people or organizations using the programs will be able to discern what we want, what motivates us, and how we’re likely to react to various stimuli.  They will, to use a cliche that happens in this case to be true, know more about us than we know about ourselves.”

Carr is particularly full of disdain for the PC as a device but is conflicted about personal computing.  He readily acknowledges the empowering impact of personal computing, yet simultaneously promotes a dumb terminal future while lamenting the inevitable reassertion of control by the Man (somehow those seem related…).

He concludes on the cheery note that the utility future is no less than another front on “humanity’s struggle for survival”.  Actually, I took that quote from the Gears of War 2 announcement, but it would not be out of place in Carr’s conclusion.  He fears the utility age may devalue quintessential human attributes, making us (even) more superficial, undermining the coherence of the family and relegating us to mere “hyperefficient data processors, as cogs in an intellectual machine whose workings and ends are beyond us”.  Bummer, dude. 

The second half of The Big Switch is kind of a dour read and the utility future is boldly painted with a Luddite, elitist and generally defeatist brush:

“…we may question the technological imperative and even withstand it, but such acts will always be lonely and in the end futile.”

In a book full of references to big thinkers, from Jean-Jacques Rousseau to Alexander Solzhenitsyn, Ned Ludd does not merit a mention, even though the Luddite fear of automation hollowing out the workforce is repeated almost verbatim.  He doesn’t acknowledge the parallel or make a case for why the Luddite fears are more warranted now, despite failing to come to pass in the Industrial Revolution.

And while he bemoans the rise of “a new digital elite”, the shifts in media, and survival of our “most cherished” work, he manages to come across as an elitist himself (not that there is anything wrong with being an elitist of course…).  I’m just not sure the Brahmins get to decide what is and isn’t worthy media.

It is hard to argue with his position on privacy (read No Place to Hide to shatter any lingering techno-optimism on this front — large-scale databases go awry, period), but he doesn’t make the case that the black helicopters of the Control Revolution are just over the horizon.  Individual freedom is pretty much at an all-time high in world history and information technology gets at least some credit for that.  Carr does admit technology is “dual use”, but you won’t find much on the positive uses in the book.

The Big Switch is well worth reading if you’re thinking about the evolution to cloud computing.  It provokes and stimulates as this long-winded review shows.  Carr’s technical foundation is shaky, but he is a good social critic and forecaster, and a great polemicist (and that is a compliment).  My view is Carr’s dystopian future is not inevitable, but averting it will take a conscious and proactive effort.  If nothing else, the later part of the book is a call to arms for what must be avoided.  If the Control Revolution is indeed a revolution, it is time for a counter-revolution.

Book Review: Options – Fake Steve Jobs

For the uninitiated, Fake Steve Jobs originated as a blog purportedly written by the CEO of Apple (but whose author was eventually revealed to be Dan Lyons who writes for Forbes), where he shares his inner-most thoughts in a way the head of a public company would never even remotely consider, not even in a world without Sarbanes-Oxley, the SEC or trial lawyers.  The blog offers funny and often trenchant industry analysis and portrays Jobs as a neurotic, perfectionist, aesthetic, ruthless, monochromatic, quantitatively- and geographically-challenged, mock turtleneck-wearing, ’60s-throwback/New Age-devotee waging a lonely battle against ugly things and pretty much the entire world.  Options puts the blog’s character into a book (a medium about which I believe Gutenberg once said “Dude, I friggin invented the printing press”.  I’ll leave the shared middle name and resemblance of Johannes in the Wikipedia image to Osama Bin Laden for another post).

Both the blog and the book really shine in their characters and the language.  In addition to wonderful caricature of Jobs himself, Bono, Larry Ellison, Al Gore and Yoko Ono all make recurring and larger-than-life appearances.  Larry’s introduction as a great humanitarian is one of the funniest parts of the book.  Fake Steve has a whole set of catchphrases including “I’m Steve Jobs, I invented the friggin’ iPod – have you heard of it?” and the desire to “re-instill a child-like sense of wonder”.  The blog has propelled the  epithet “frigtard” into broader usage in my circle anyway along with its open source cousin “freetard”, the ecological “greentard” and other *tard derivatives.

The blog regularly marinates the technology industry news of the day in these characters and voice, plus regularly cuts through industry absurdity straight to the bone (e.g. Second Life, open source inconsistencies and politics, pretty much any Sun initiative), to great effect.

The book keeps the same cast and style, but instead of bite-sized pieces on the daily antics of the technology industry, its backdrop is the investigation into the backdating of stock options at Apple.  The on-going prosecution of Apple’s former general counsel and CFO plus Steve Job’s upcoming deposition where it is not clear if he is simply a witness in that case or a target for future charges gives this fictional work some topicality.  Dan’s publicist is probably praying for an indictment.

Overall, Options features the same posse of great characters from the blog, makes for a quick and crisply-written read, is laugh-out-loud funny in parts and holds together as a real book and not just a bunch of random blog posts strung together.

Book Review: The Black Swan

The Black Swan, by Nassim Nicholas Taleb is sort of a follow-up to his earlier Fooled By the Randomness, which dealt with why people are poorly suited to decision-making in the face of uncertainty.

The Black Swan deals with the “impact of the highly improbable” and argues that these events, dubbed Black Swans, are far more common then we think, in part because of the perverse influence of modern statistics which assumes all kinds of things are normally distributed except for the minor detail that they aren’t.  When they make the book into a movie, Carl Friedrich Gauss will be the villain (who should be played by Max Von Sydow).  Events like 9/11, the collapse of Long-Term Capital Management and most wars are Black Swans.  No one sees them coming, but in retrospect people manage to explain them.

The book is full of wide-ranging applications of his thesis, great asides and mildly misanthropic comments about businesspeople, anyone in finance, economists, particularly Nobel Prize winners, German philosophers, forecasters of any kind, opera fans and the French.

The core of the book is the distinction between Mediocristan and Extremistan.  Mediocristan is the world of the normal distribution, where outliers are extremely rare.  Many physical characteristics have a normal distribution, such as height or weight.  In Mediocristan, it is not at all likely that an additional observation will impact the sum of all observations in any significant way.  Extremistan is very different and is the domain of the power law distribution (think of the power law curve in The Long Tail except the Taleb is all about why the head is way more important than the tail because in the real world you don’t know whether you’ve observed the head of the head yet).  An outlier observation can dwarf the sum of all previous observations, such as Bill Gates entering the room when you’re observing wealth.  Big swathes of the real world, particularly social dynamics and informational goods, are in Extremistan, are not normally distributed and we treat them as Mediocristan at our peril.

The bulk of the book examines why we are so blind to Black Swans and gets into a fair amount of behavioral psychology like the earlier book.  Not surprisingly, we tend to look for things that reaffirm our beliefs as opposed to contradict them; we’re good at constructing stories to explain things after the fact; we tend to ignore the silent evidence “of cemeteries” and focus disproportionately on the winners (think survivorship bias); assume the real world abides by clear and understandable rules; and we generally overestimate what we know and underestimate what we don’t.

The book is kind of a bummer in that he doesn’t have much of a prescription for how to survive and thrive in Extremistan: 

“I care about the premises more than the theories, and I want to minimize reliance on the theories, stay light on my feet and reduce my surprises.  I want to be broadly right rather than precisely wrong.  Elegance in the theories is often indicative of Platonicity and weakness – it invites you to seek elegance for elegance’s sake.  A theory is like medicine (or government): often useless, sometimes necessary, always self-serving, and on occasion lethal.  So it needs to be used with care, moderation and close adult supervision.”

Basically, he attributes success to “undirected trial and error” and encourages you to maximize your exposure to as many positive Black Swans as possible.  Better to be lucky than good:

“Capitalism is, amongst other things, the revitalization of the world thanks to the opportunity to be lucky.”

“Everything is transitory.  Luck both made and unmade Carthage; it both made and unmade Rome.”

He applies his thinking to a variety of different realms with very intriguing results.  As a former options trader, he basically denounces Modern Portfolio Theory as complete bunk, a castle built on shifting Gaussian sands.  He asserts that a mere ten days over the last fifty years account for HALF of the market’s performance (I assume it to be true but will adopt his stance of skeptical empiricism in the absence of verifying it).  Needless to say, that means some very fat tails.  He also revels in the various explanations of the blow-up of Long-Term Capital Management (which Roger Lowenstein chronicles quite well in the succinct When Genius Failed) and needles the Nobel Prize winning economists who were involved at length.  Taleb implied in an interview that his own portfolio is roughly 80% T-bills and 20% exposure to positive Black Swans with unlimited upside which sounds like venture capital of some form.

He arrives at a similar conclusion as Andy Kessler on globalization and division of labor.  Don’t sweat the US’s trade deficit.  That is just revenue: just look at the balance of profits (where the US runs a surplus).  He believes the US has focused on scaleable businesses where your revenue is not limited by your number of labor hours, but rather those that involve creativity and are often winner-take-all in the global economy.  We export jobs for the non-scaleable elements to others who are happy to be paid by the hour: “There is more money in designing a shoe than actually making it; Nike, Dell and Boeing can get paid for just thinking, organizing and leveraging their know-how and ideas while subcontracted factories in developing countries do the grunt work and engineers in cultured and mathematical states do the noncreative technical grind”.

He also looks at innovation.  I’ve always believed that any successful technology has a strong element of serendipity in its adoption (standards body denizens hate it when you point this out and this would be a wonderful area to add up the “silent evidence” of failures) and he makes the same point, even using the word serendipity:

“If you think that the inventions we see around us came from someone sitting in a cubicle and concocting them according to a timetable, think again: almost everything of the moment is the product of serendipity.” 

I’ll save a discussion of the role of Black Swans in Microsoft’s history for my oft-mentioned, but entirely un-started book.

In short, it is a great and thought-provoking read.  It is rife with parenth
eticals and asides like the following that also make it entertaining:

“You can even include Frenchmen (but please, not too many out of consideration for the others in the group)…”

“Line up a thousand authors (or people begging to get published, but calling themselves authors instead of waiters)…”

“The person becomes more vulnerable to all manner of fads, such as astrology, superstitions, economics. and tarot-card reading.”

“They will probably take up, depending on their temperaments, bird-watching, Scrabble, piracy, or other pastimes.”

“Everyone has an idea of utopia.  For many it means equality, universal justice, freedom from oppression, freedom from work (for some it may be the more modest, though no more attainable, society with commuter trains free of lawyers on cell phones).”

“Eventually, authors who are not often cited will drop out of the game by, say, going to work for the government (if they are of a gentle nature), or for the Mafia, or for a Wall Street firm (if they have a high level of hormones).” 

“When you are employed, hence dependent on other people’s judgment, looking busy can help you claim responsibility for the results in a random environment.  The appearance of busyness reinforces the perception of causality, of the link between results and ones’ role in them.”

“Being an executive does not require very developed frontal lobes, but rather a combination of charisma, a capacity to sustain boredom, and the ability to shallowly perform on harrying schedules.  Add to these tasks the “duty” of attending opera performances.”

“Economics is the most insular of fields; it is the one that quotes least outside itself!  Economics is perhaps the subject that currently has the highest number of philistine scholars — scholarship without erudition and natural curiosity can close your mind and lead to the fragmentation of disciplines.”

“Optimization is a case of sterile modeling…  It had no practical (or even theoretical) use, and so it became principally a competition for academic positions, a way to make people compete with mathematical muscle.  It kept Platonified economists out of the bars, solving equations at night.”

“Alas, it turns out that it was [Paul] Samuelson and most of his followers who did not know much math, or did not know how to use what math they knew, how to apply it to reality.  They only knew enough math to be blinded by it.”