Friday, July 31, 2009

The Age of Amateurs

Reviewing Chris Anderson's Free, Virginia Postrel writes:

But there are hints throughout the book that the future of this radical price is to be found in the past, when satisfying work was what one did on the income provided by less satisfying toil, or by investments, patronage or marriage. “Doing things we like without pay often makes us happier than the work we do for a salary,” Anderson writes, adding, “No wonder the Web exploded, driven by volunteer labor — it made people happy to be creative, to contribute, to have an impact and to be recognized as expert in something.”

I'd push Anderson's statement much farther. Some of us still work for the man, or whatever, but a much greater percentage of people now have careers that they love, and what they do for fun has a greater overlap with what they do for pay. Google's 20 percent rule is the most obvious case of this, but more generally this is reflected in the rise of flatter organizations built around collaborative innovation, or in some cases collective innovation. See Clay Shirky's excellent book for more on these topics. If we think of our salaried work and our "real" work in terms of a venn diagram, then the overlap has grown over time. While we are not yet to a single circle, that is the direction we are headed. Read the rest. Via Tim Kane.


Zoltan Acs introduces his newest paper (cauthored with David Hart and Spencer Tracy), which quantifies the role of immigratis in high-tech entrepreneurship in the United States. Over at the Creative Class blog, Zoltan writes:

Only about three percent of the founders of high-impact, high-tech companies are foreigners (60 out of 2034). 97 percent are U.S. citizens, and specifically 87 percent are U.S.-born, while the other 10 percent are naturalized U.S. citizens. Furthermore, most foreign-born founders lived in the US for decades. These founders are statistically very similar to the average U.S. population in terms of birth and immigration status.

An interesting but unanswered aspect of the study is how these high-tech immigrants (many not new), part of the international creative class, help integrate U.S. business in a post-American world? Do they as some have claimed strengthen America in a post-American world, or is it a non-issue? If they strengthen our connection to the rest of the world through “brain circulation” is the flight of the creative class not a major public policy issue?

Via @auerswald, naturally. The full report: High-Tech Immigrant Entrepreneurship in the United States (pdf). A shorter executive summary is also available.

Rhetoric and Persuasion

From the Washington Post:
President Obama has framed the health-care debate in Washington as a campaign against insurance companies whose irresponsible actions, he repeatedly says, must be reined in to control costs and improve patient care. In North Carolina this week, he told an audience that the existing system "works well for the insurance industry, but it doesn't always work well for you."

The message is no accident, as the president's chief pollster made clear in a rare public speech last month. Joel Benenson told the Economic Club of Canada that extensive polling revealed to the White House what many there had guessed: People hate insurance companies.

"Take the public plan, for example," Benenson said. "Initial reaction to it wasn't as positive as it is now. . . . But we figured out that people like the idea of competition versus the insurance company, and that's why you get a number like 72 percent supporting it."
Tangentially, I read lots of writers, like Ruth Marcus, who say the Wyden/ Bennett proposal would be their first choice for health care reform and immediately afterward say that there's no chance anything like it would ever be adopted. This is no doubt true but framing it as something unattainable doesn't do much to improve the bill's chances. I guess they use such statements to indicate that they "get" the political reality and all that, but analysts have a higher calling than just talking about what's politically viable at any one point in time. So, what kind of the rhetoric would push the Wyden/Bennett bill off the back burner?

Wednesday, July 29, 2009

Time Management and Procrastination

Since it's been a week since I've posted, this seems like a timely topic. Tyler Cowen doesn't mince words (CNN): "Always tackle your most important task first thing in the morning." The rest of the short article is generally full of good advice.

Ryan recommends a recent article by Paul Graham, Maker's Schedule, Manager's Schedule. It is very good. A quick bit:
Most powerful people are on the manager's schedule. It's the schedule of command. But there's another way of using time that's common among people who make things, like programmers and writers. They generally prefer to use time in units of half a day at least. You can't write or program well in units of an hour. That's barely enough time to get started.
Finally, for academics, Tomorrow's Professor had a good note in June about completing the PhD. The whole thing might not interest everyone, but their last point about Watson's Syndrome is too good to pass up:

Avoid Watson's Syndrome. Named by R.J. Gelles, this syndrome is a euphemism for procrastination (2). It involves doing everything possible to avoid completing work. It differs from writer's block in that the sufferer substitutes real work that distracts from doing what is necessary for completing the dissertation or for advancing toward an academic career. The work may be outside or inside the university. Examples given by Gelles include:
* remodeling a house
* a never-ending literature review (after all, new papers are being published all the time and they must be referenced)
* data paralysis-making seemingly infinite Statistical Analysis System (SAS) and Statistical Package for Social Sciences (SPSS) runs
* perfectionism that doesn't let you submit until you think it is perfect (and it never is perfect) If you suffer from Watson's Syndrome, finding a mentor (see Hint 5) who pushes you to finish will help you get done. For many, however, particularly those who always waited until the night before an examination to begin studying, the syndrome is professionally fatal.

Needless to say I will get back to blogging on a more regular basis. And again thanks to Ryan for recommending Tomorrow's Professor. Now back to work! ... okay, if you want just a bit more distraction from your day, here is one more list from Tomorrow's Professor about avoiding writing procastination.

Wednesday, July 22, 2009

Regulatory Capture

The NYT reports (NYT):
Two weeks ago, the French Energy Regulatory Commission, the C.R.E., decided that Voltalis, a company that installs electricity management devices in homes and businesses and then manages their use, would have to, in effect, pay power producers for the power that it saves.

Voltalis’s Bluepod boxes, free to consumers, plug into the home electrical panel and communicate back to the company’s computers by Internet. When, for example, summer demand on the electrical grid nears a peak, the system would automatically turn off air-conditioners for hundreds or thousands of consumers willing to give up the coolers for a short time to avoid the need for additional electrical production to come on line.
Naturally the ruling by the French authorities is being denounced as a case of too much coziness but it should serve as a warning for other "smart grid" companies. Google, for its part, already seems to be knee deep in talks with policymakers and other influential decisionmakers, both domestically and abroad (Google European Public Policy Blog).

Thursday, July 16, 2009

Support for Community Colleges

Despite the stigma associated with them, community colleges boast small class sizes, excellent faculty whose sole job is good teaching, and many smart and highly motivated students. I took a personal finance class at my local community college while in high school and was pleasantly surprised to find my professor was a Harvard MBA. He fell in love with the California foothills and decided to trade a high paying job for a better lifestyle. He was far from unique.

Since I took that class, the faculty have only improved further. There are simply fewer good tenure track positions available so more PhDs now apply to teach at local community colleges. And some fields, like English, continue to crank out way more graduates than the university market can reasonably bear, so many end up teaching at two year schools. Obviously not all PhDs make good teachers, and many in fact have little interest in teaching, but I just want to drill home the point that for the money and the personal attention you receive, there is no greater value in education than two year schools. Oh, and it also helps applicants when they apply for college as transfer students.

Anyway, it's good to see that President Obama shares my enthusiasm (Time).

Inaugural Martin Feldstein Lecture

The inaugural lecture was delivered July 10, 2009 at the NBER Summer Institute. Stanford economist John Taylor presented on Empirically Evaluating Economic Policy in Real Time. The link will take you to a video of the presentation along with a link to his slides.

Members Only

The growing importance of closed Ning networks for social entrepreneurs and local charities (Stanford Social Innovation Review).

Social Finance in India

Social Earth interviews CapitalConnect about the bottom of the pyramid in India.
SocialEarth: Can you describe the social entrepreneurship environment in India?

CapitalConnect: Indian social entrepreneurship space has myriad of hybrid models with a one billion thinking structure. One billion thinking necessitates cost effective models involving the bottom of the pyramid. The majority of these models are scalable and replicable. In terms of numbers, microfinance space may have the lead over other social enterprises although social enterprises are blooming in other domains as well with the majority of the players operating in service space.

E-Books and the University

The WSJ profiles some university pilot programs that replace conventional textbooks with e-book readers, such as the Sony Reader. The article gives the impression that results were about mixed, at best. So many students are used to video and other supplemental online content that the e-books seem antiquated relative to a similarly sized netbook. But in general, it seems like many students were happy enough to be rid of their textbooks. It looks like the question will be what device students end up using, rather than print vs. digital.

For me, I like reading linear stories on the Kindle and it would probably be wonderful for English majors that want to highlight lots of text and add annotations, but it has some major problems displaying equations properly - as in, sometimes it just puts up wierd squiggley marks rather than the numbers you should see - and isn't so great for flipping around, even with the search features. The good news is that technology is constantly improving.

Wednesday, July 15, 2009

New College Graduates, the Business Cycle, and the Prospects for New Firm Formation

In what should be a familiar theme to our readers by this point, below is the abstract for an interesting new paper on the link between entrepreneurship and the business cycle. Stopping Start-ups: How the Business Cycle Affects Entrepreneurship, by Li Yu, Peter F. Orazem and Robert W. Jolly at the Iowa State University. Abstract:
This study analyzes whether economic conditions at the time of labor market entry affect entrepreneurship, using difference in business start-ups between cohorts of college students graduating in boom or bust economic conditions. Those graduating during an economic bust tend to delay their business start-ups relative to boom period graduates by about two years. Our results are consistent with additional findings that higher unemployment rates at time of graduation significantly delay the first business start-up across all college graduation cohorts over the 1982-2004 period. The adverse effect of a bust is temporary, delaying but not preventing self-employment over the life-cycle.

The Entrepreneurial Economy

A new study from Deloitte (The Shift Index) talks about the increase in competitiveness of the U.S. economy over the past 30-40 years. Alex Tabarrok has a very good summary of the piece along with two graphs from the paper. It is your must read post of the day.

Deloitte also released a version in the Harvard Business Review, available here as a pdf. I'll say more after I get a chance to read it. Also, if you need to know what the Herfindal-Hirschman Index (HHI) is just see Wikipedia or Investopedia.

Tuesday, July 14, 2009

What Matters: Innovation

McKinsey's What Matters features several important thinkers discussing innovation policy in a global economy. A few highlights: Robert Atkinson (ITIF) , and Iqbal Quadir (from MIT's Legatum Center; and co-editor, Innovations Journal), debate whether innovation is moving to China and India in the 21st century (McKinsey). On a related note, see the NYT for a discussion of China's increasing emphasis on renewable and green technologies, complete with its own de facto "Buy-America" provisions.

McKinsey's Jonathan Bays and Paul Jansen describe the increasing use of prizes, and Peter Diamandis, founder of the X PRIZE Foundation, discusses the same subject in a podcast. Richard Florida has two short articles that are adapted from Who's Your City (I think because the paperback was recently released). The first looks at knowledge and cities (Talentopolis). Interested readers should also look at two short pieces by Ed Glaeser (City Journal) and Luigi Zingales for a good perspective on these issues as they relate to New York City(City Journal). Florida's second short article revisits his Bohemian-Gay index as it relates to housing prices. Finally, there is a rich archive full of additional resources, so if you haven't spent any time on the What Matters site, do check it out.

Monday, July 13, 2009

Kiva's Lending

June was another good month for Kiva borrowers. Thus far Kiva's lending has weathered the credit crisis pretty well. Via Kiva's blog:
The total of all loans made through Kiva in June was $4,909,050.00 That makes June the fifth record month on Kiva in a row. To recap the past four record months:

February: $3,828,825.00
March: $4,282,625.00
April: $4,487,875.00
May: $4,643,100.00

Thursday, July 9, 2009

Assorted Links

A few ideas I wish I had more time to discuss:
  1. Who is The Small Business Majority? (NYT).
  2. David Altig, from the Federal Reserve Bank of Atlanta writes a good post titled: "Markets work, even when they don’t." Or as the GMU Economists might say, "Markets fail, let's use markets." The article is a response to a Vanity Fair article by Joe Stiglitz.
  3. Free is now free, in more than one form.
  4. Taxes: (a) Who Pays No Income Tax? (b) is this a win for small business and entrepreneurs?
  5. New Directions for SSRN? (Organizations and Markets)
  6. Understanding the "common good" (The Entrepreneurial Mind)
  7. Campus Entrepreneurs create new guitar company (Coil Guitars): An engineering professor became inspired after buying a new electric guitar that didn't perform as well as he expected. So he ended up teaching an engineering class on guitars: ENEE 159b: Electric Guitar Design, and with some students, and funding from the University of Maryland formed a new enterprise through the school's startup lab. You can now buy their guitars online. Also note that money from the company is now going back to the university to support research, part of the philanthropic cycle Zoltan Acs talks about.

Wednesday, July 8, 2009

Mobile Phones vs. Computers

From the same post I just linked to (Google Blog):
Last week's launch of SMS services in Uganda is the direct result of this research — it's based on listening to what people want and finding a way to get it to them. Our research enabled us to observe first-hand how people instinctively wanted to interact with a mobile phone. We let people select the language they wanted to use. We gained deep insights into the way people formulate their questions and what questions really matter to them. On top of that, we saw the excitement on people's faces when they got their first-ever search results, and we realized that some of the information we could deliver to these users, such as health information, has the power to truly change lives. These new services in Uganda are just one step on the path to providing information to people who have little or no access to the web. This research will help us as we continue to develop more services to increase access to
information all around the world.
It's not surprising how much you can accomplish just by asking people what they want and observing how they use a new technology. Short of internet cafes or other shared space, there's virtually no way that you can reach the same number of people via computers that you can with mobile phones. Especially among populations with limited education. So good job Google, and hopefully they keep working on what people actually want, rather than imposing top down solutions based on what they think people want.

Google's New SMS Services

The Google Blog has a post about their latest efforts in Africa and about the research that got them there. Very interesting. A teaser:
Last week, we announced a suite of SMS services in Uganda, a country where someone's first experience of the Internet is far more likely to be on a mobile device rather than a PC. We are really excited about this project in part because it is the result of more than a year of true user-centered research and design. We knew we wanted to build useful mobile services tailored to the needs of people in sub-Saharan Africa, but how could we find out what people want from the Internet when they don't have access to it already? What would people who had never used search before want to search for if we gave them a mobile phone and said "Ask any question you like"?
Read the rest.

Monday, July 6, 2009

Backlash Against Kiva

Last month Kiva began offering loans to entrepreneurs in the United States. I expected an outcry based on opposition to "payday lending," but so far that hasn't been a problem. However:

A group of about 400 Kiva lenders — originally called "Pissed Off Kiva Lenders," but now crusading as "Unhappy Kiva Lenders" — has signed on to a scathing critique on the Kiva site.

"The U.S. is the wealthiest and most resource-full nation in world history," Tom Behan of Seattle, leader of the insurrection, wrote on Kiva's site. "To think that we are asking lenders from around the world to even consider lending in the U.S. is a shameful, disgraceful decision by Kiva management, CEO Matt Flannery in particular."

Behan and others say Kiva has changed its mission. The U.S. borrowers on the site enjoy a higher standard of living than borrowers in the developing world. U.S. borrowers are low-income while many of their developing-world counterparts are no income. The critics worry that loans going to U.S. borrowers will divert money that otherwise would be loaned to the poor in developing countries such as Vietnam, India and Kenya.

Kiva's management is listening:

They are taking a poll on that shows respondents, by a 5-to-4 ratio, approve of Kiva loans in the United States. And on July 15, they'll hold a worldwide conference call where interested parties can call in and voice their concerns over U.S. lending.
From Mike Cassidy at the San Jose Mercury News. TechCrunch has additional coverage. My own impression with Kiva is that there will be little to no crowding out from loans to US entrepreneurs. As it is Kiva is having trouble keeping up with growing demand and I see little reason for this to change. Even as the debacle in credit markets has curtailed lending in other sectors, Kiva has continued to increase its business, although there are some signs that lending is finally slowing. At the end of the day, I think lending to fellow Americans will increase the lending base for Kiva and will increase, rather than limit, loans for other entrepreneurs.

Sunday, July 5, 2009

Textbook Rentals, a textbook rental site, seems to be doing well after learning from an earlier flop (NYT):
Now, as Chegg prepares for its third academic year in the textbook rental business, the business is growing rapidly. Jim Safka, a former chief executive of and who was recently recruited to run Chegg, said the company’s revenue in 2008 was more than $10 million. This year, Chegg surpassed that in January alone, Mr. Safka said.
Creative Bootstrapping:
Chegg began renting books before it owned any, so when an order came in, its employees would surf the Web to find a cheap copy. They would buy the book using Mr. Rashid’s American Express card and have it shipped to the student. Eventually, Chegg automated the system.

But as the orders multiplied, Mr. Rashid said, so did the traffic on his credit card, leading American Express to suspect fraud and threaten to suspend the account.

Wednesday, July 1, 2009

Highlighting Innovative Non-Profits

President Obama, speaking yesterday about the importance of private action to help alleviate public problems (
The bottom line is clear: Solutions to America's challenges are being developed every day at the grass roots -- and government shouldn't be supplanting those efforts, it should be supporting those efforts. Instead of wasting taxpayer money on programs that are obsolete or ineffective, government should be seeking out creative, results-oriented programs like the ones here today and helping them replicate their efforts across America.

So if the Harlem Children's Zone can turn around neighborhoods in New York, then why not Detroit, or San Antonio, or Los Angeles or Indianapolis? If Bonnie Clac can help working people purchase cars and manage their finances in New Hampshire, then they can probably do it in Vermont or all across New England, or all across America.It will be interesting to see what programs and organizations the $50 million innovation fund ends up recommending and supporting.