On The Shoulders Of Giants

Here is an excerpt from BusinessWeek’s article titled “Meet Your New Recruits: They Want to Eat Your Lunch”:

…”We are followers of Warren Buffett,” explains Greene, who says he studies the famed Omaha investor’s letters to shareholders as if they were sacred texts.

High-revving students scoff at advice they sometimes hear about intellectually browsing before settling on a narrow employment path. “Many of my fellow classmates have been planning out their college choices since middle school, so to tell them not to plan for a future career during freshman year is illogical,” says Janet Xu, 22, a senior at Yale and editor of the undergraduate magazine Yale Entrepreneur. She is heading off soon to be an analyst for Sears Holdings (SHLD) in Chicago….

The article talks about a new group of elite college graduates emerging from top American universities who are aiming for the top jobs. At first, I got excited about this phenomenon. After reading the article, I have to tell you that I’m not as optimistic as I was about this new group. It seems like they all want to go to finance and consulting. In my opinion, for a healthy economy, we do need financiers and consultants, but they are one piece of the big picture and they are not the ones creating “value”. I believe “economic value” is created mostly by entrepreneurs, innovators, designers and manufacturers. Let me define what I mean by value (and this is my definition): true economic value is something for which people would pay voluntarily and with adequate relevant information. For example, when you pay $300 to buy a digital camera and you have done research on it before, you have read customer and analyst reviews and you know all the functions of the camera, that must have some true value to you. Value is not equivalent to cash. A pyramid scheme may generate cash for some people but doesn’t create any real value. A hedge fund may make some people richer, but it doesn’t necessarily create economic value. What an economy needs is a lot of value creators and some financiers.

I have spent more than 10 minutes on this website, and I can’t figure out what the blip they are doing. (And I know a thing or two about business.)

When I want to buy a candle, I want to know for how long does the damn thing burn? Is that not something that can be easily measured? And then I want to know how many pennies it would cost me to burn this candle. Why is the candle industry being so secretive about such easily attainable information?

FastCompany had an interesting piece written by Dan and Chip Heath about marketers’ exploitation of shame. I unsuccessfully tried to find a link to the article, so I just quote directly from the article:

…Marketers deliberately construct stigmas for the sake of selling you a solution to the ensuing embarrassment and disgust. They smack you on the head so they can sell you an aspirin for the headache. Why do we put up with this?

…A commercial in Visa’s Check Card campaign shows a deli where people move through the line with elaborate, precise choreography… until the moment when one misguided schlub pulls out some cash. Then everything comes to a crashing halt. No more dancing, no more delight. The cashier looks disgusted.
Yes, Visa and its ad agency, TBWA\Chiat\Day, are trying to make you feel embarrassed for paying for your lunch with cash….

…Procter & Gamble, created the perception that dandruff - traditionally a non-issue for the Chinese - is a social stigma and offered a product (Head & Shoulder anti-dandruff shampoo) to ’solve’ the problem…

…stigma can have subtler effects. A depressed woman, for instance, who is aware of the negative perceptions of the mentally ill, may begin to act more cautiously for fear of the way others may respond to her. Stigmas breed self-censorship…

…That’s icky. Stigma should be reserved for people who violate community standards, like people who willfully park in the handicap spots. It shouldn’t be used as a too-cute-by-half way to peddle some dumb new product…

Finally, semantic web is on the map. There is a new kid in town and it’s called Powerset. This is a smarter search engine for Wikipedia. Go to their website, search for something or type in a simple question and explore the cool features offered for free.

Let’s say Ms. A is a software developer in America and she has developed a very cool and useful software and is selling it for $500 a piece.

Mr. B is an engineer in Canada and he needs the software developed by Ms. A. Mr. B can afford the software by paying 10% of his monthly salary. Mr. B takes out his credit card, fills out an online form and buys the software over the internet, downloads it and starts using it right away. Everybody is happy.

Let’s imagine Ms. C who lives in Congo and she is running a small company. She also needs the software. The GDP per capita of Congo is only $300. There is no way that Ms. C could afford the software. There are two options: 1) Ms. C forgets about the software and sticks to pen and paper which is much less efficient. 2) Ms. C gets a pirated version of the software and uses it. In any case Ms. A is not going to see a dime from Ms. C and Ms. C has to either break the copyright laws or stay at a disadvantaged position. What do we do now? How can we bring Ms. A and Ms. C together, so that everybody is happy?

Let’s look at this from another angle: Ms. A was lucky to be born in America and enjoy the democracy and the prosperity that came with it. She should be thankful. Ms. C was born in Congo and she did not enjoy the things that Ms. A enjoyed. On one level, the software is the intellectual property of Ms. A and she is entitled to benefit from it. On another level, Ms. C is also a human being with real needs.

Here is my solution: Ms. A sells her software all over the world to everyone who needs it, but she adjusts the price tag according to the purchasing power of each consumer. One easy way of doing this is to adjust the price tag by the GDP per capita of every country. If she wants to get into more detail, she could have different pricings for business, education, government and home consumers. And here is why everyone would benefit from this scheme: this method would minimize piracy. If I can comfortably afford an authentic copy of the item that I want, I have much less incentive to turn into low-quality, iffy, pirated replicas. Moreover, Ms. A would actually profit from this scheme. It may not be much, perhaps a few dollars only, but it’s better than zero. Thirdly Ms. A would build a good reputation by doing something humane. And lastly, Ms. C would enjoy the benefits of using that software.

You might say: that sounds pretty complicated. What if Ms. A’s company is small and cannot reach those consumers? My response is that the company doesn’t have to be big. All you need is a legitimate distribution system, that takes the software from Ms. A, prices it and distributes it all over the world, sells it, takes a cut and gives Ms. A her share. You can actually create jobs, increase profits for the authors and gather real customer data which in my opinion is gold.

Bye bye Verizon and LG. Hello at&t and RIM. One less evil company to deal with.

Why is it that most shady businesses like this one or this one have numbers in their web addresses?

A few days ago, Rockstar Games released the fourth version of the popular video game Grand Theft Auto. I have never played this game but I have talked to people who have and the things I hear about this game are pretty disturbing. I understand that this is a “sandbox” game, meaning that there is a whole range of things that you can do including having sex with prostitutes, beating them to death and getting your money back and you don’t necessarily have to do these things to play this game, but I think making money of off such dark “fantasies” is pretty shady. The sad thing is that Microsoft and Sony on whose consoles you can play this game are very excited about the release of this game and happy to collect their royalties and sell more consoles. It seems like sometimes unchecked capitalism can take us to very dark places. It is really sad and disturbing.

HP has managed to make a new (a “fourth”) kind of circuit element called memristors. These are resistors whose resistance depends on the history of the current that has passed through them. If you have ever taken electronics or electromagnetism, take a look at this article. Good job HP!