The Frustrated CFO

Why Do I Stay Subscribed to Quora Digest?

The truth is I have no idea why I receive Quora Digest emails.  I don't recall subscribing to the feed.  Of course, nowadays one can passively "accept" electronic deliveries of bullshit by failing to unclick some hidden option box.  I am certain, however, that  I'm not registered on Quora website.  I wouldn't.   

Quora, as in plural of Quorum - in the same way as Data is plural of Datum. It is basically a blogging hub masked as a Q&A platform: one registered person posts a question and all other registered contributors are invited to answer.  Strictly speaking, this unrestricted invitation to participate clashes with the name, which refers to "select groups."  Maybe the founders confused it with fora (the Latin plural of forum).  I don't know and I don't care: The whole concept reminds me of Coffee Talk with Linda Richman, when Mike Myers would get "all verklempt" and invite us to talk amongst ourselves by providing a discussion topic.        

Moreover, many things about Quora simply creep me out.  For instance, Quora's T&C state that contributors retain the copyright to their content.  Well, it's great that they threw that in, however, the enforcement appears to be highly problematic.  Questions posted to the site are open for editing by everyone.  This includes official editors and all registered users.  Users can also submit unlimited number of suggestions for editing the responses.  Therefore, the possibilities for modifications of the original material are endless.  The apparent absence of a solution for the copyright sharing basically nullifies the notion of IP protection.

It's weird that the site demands its users to register with their real names instead of handles and go through email verification.  It's not that I think people should hide, but they must remember that Quoara automatically releases users' names to the search engines.  We don't know whether the site gets some sort of fees in return, but it wouldn't surprise me if they do.  Just like it wouldn't surprise me if they intend to sell the subscribers' lists to other marketers as well.  But these are just my speculations.  In the absence of a clear mission statement, that's the only thing one can do - guess.  

In reality, the fact that Adam D'Angelo (CEO) doesn't seem to be interested in generating revenues makes me very suspicious of his actual intentions and motivations.  It seems only logical to suggest that they are spying on the contributors, studying their interests, behavioral patterns, and tastes in preparation for eventual commercialization of the site.  Or is it something even more sinister?  How the hell did they get a $900 million third-round valuation?  What sort of potential revenue this number is based on? 

As I said, it's creepy.  I don't even open Quora Digest emails.  But I'm not unsubscribing either - because of the subject line, which always shows the top question of the day.  I don't want to give up the opportunity to glance at it.  Most of the time, what I see reeks of laziness.  I mean, we live in the Internet age - go on Wikipedia or just google this banal crap!  But once in a while some amazing shit pops up. 

The other day I read: "How can you maximize your happiness in life?"  Wow!  Is this person for real?  60,000 antelopes just died in Kazakhstan for unknown reason and half of Europe is covered in water and mud, but this human is not only happy, he wants to bring the bliss to the next level!  Even crazier, he expects to receive constructive instructions from his fellow Quora members?!  Well, good luck with that!

Actually, it's not this kind of oddities that keep me looking.  I am more interested in patterns and trends.  For instance, recently I've noticed an increase in frequency of the questions concerning material self-sufficiency and economic survival.  Well, it's surprising that people on Quora don't talk about their inability to support themselves all the time.  I'm guessing that most of them consider bringing it up under their real names in front of the strangers embarrassing.  Nevertheless, the number of such queries is apparently spiking. 

Below are three questions I found to be most typical; with my brief comments (remember: I'm not subscribed, so I don't know the answers that followed; I can only provide my own):

1.  "What kind of salary guarantees comfortable living in NYC?"  What a terribly formulated question!  It should've come with a separate note explaining what "comfortable" means to the inquirer.  Cause, what's comfortable to a person fresh out of Idaho who has never spent more than $100 on a pair of shoes and considers a $350 Michael Kors bag a chic statement may mean financial misery to someone with a different background. 

For the sake of argument, let's assume that the questioner is single and actually meant comfortable, but not extravagant, i.e. a good one-bedroom apartment in Manhattan with no roommates; year-round pleasant climate control; full range of cable and streaming entertainments; cell and land phones; a car kept in a garage; designer coffee in a favorite shop; going out for drinks at least once a week; eat out twice a week; cooking with high quality ingredients; good cheese, wine, and fruit in the fridge; mid-range ($800-$1500) outfits; 2-3 new pairs of $500 shoes a year; one new $2000-$3000 bag a year, at least one annual vacation; a play and a concert once in a while.  And the answer is - $250K annual salary should do it, assuming the drinking is actually limited to once a week. 

And you thought that those who made $250K a year are rich?!  Not in this town, baby!

2.  "At Facebook and Google, why are many new CS graduates offered 120K+ with a 30-120K signing bonus while those with a few years experience are offered a baseline salary with no bonus?"  Well, the direct answer to this question is simple: Computer Science, in a sense, is like Medicine and Pharmacology - they continuously undergo major changes and developments.  I mean, double-entry bookkeeping was created 600 years ago and it will remain fundamental as long as accounting records will be needed on this planet.  On the other hand, today's standard surgical techniques were experimental only 5 years ago.  It happens even faster in high-tech where innovations occur pretty much on a monthly basis. 

While doctors never stop studying and researching, most (not all) computer engineers and programmers are not as motivated to stay on top of the game.  Those in training are taught the most up-to-date techniques and methods; they are subjected to the most recent trends.  And that's what Facebooks and Googles want - the newest and the freshest; in order to keep ahead of the rat race.  So, it's not about whether you graduated this year or five years ago - it's the set of skills you put on your resume.  Veteran coders who can match the knacks with 22-year-olds can demand pretty much the same level of compensation. 

But what interests me the most in this inquiry is its fiscal aspect.  There is no way the $120K/year new hires of Facebook and Google will be able to enjoy the comforts similar to those listed in point 1.  These companies operate largely in San Francisco Bay area, which, according to my observations of exactly 2 years ago, is even less affordable than NYC.  Of course, high-tech nerds of both sexes go to work in khakis and polo shirts and don't carry Prada bags to the office.  On the other hand, they buy more electronic devices than any other human and their coffee is far more expensive.  So, some corners will need to be cut.  

Obviously their lower-compensated older co-workers have even harder time (hence, the exasperation and the bitterness).  Let's hope that they are smart enough to share expenses with their partners/spouses and don't plan on having any kids.

3.  "I'm unemployed, broke, balding, living with my parents, about to turn 30, friendless, depressed, and miserable.  How can I possibly turn it around?"

Ah, and here we come to the reality of the vast majority.  This boy probably forgot to mention that he has a degree(s) in Liberal Arts and no practical skills.  The horde of young people in similar situations is ever-expanding.  They are so far removed from the idea of "comfortable" living that a $120K salary seems just as fantastic to them as a $3 million book advance or a $20 million per movie compensation package.

They were brought up on the illusion that in this Land of Opportunities they have the freedom of pursuing their interests in humanities and, "as long as they work hard," their "rightful" place in the economic system is guaranteed.  They failed to realize that this clinically dead ideal has been kept on life support by the tuition-hungry education institutions for years.  They probably still don't know that the economic system in question has been deformed and became unrecognizable, just like the sociopolitical structures, environmental conditions, and human relationships.

I can just imagine the answers elicited by this question.  They probably fell into two categories: the ones from the peers ("Dude, you are totally fucked!" or "I hear you, bro!") and the ones from the middle-aged politically correct deniers of reality ("It's okay, things will get better" or "There is nothing wrong with being bold").    

As for me, only a few years ago I would've still tried to be motivational and push my entrepreneurial agenda, urging this person to crystallize his aptitudes into a small business idea and work hard on making it happen for himself.  I used to say that if misplaced children of my peers went into landscaping, housekeeping, and maintenance businesses, it would've solved both the employment and the immigration problems in one sweep.  But now we operate under the most severe government interference in the small-business matters (minimum wages, Obamacare tolls, US Treasury restrictions on borrowing, etc.) and the number of illegal immigrants became unmanageable.  So, giving such an advice would be adding insult to injury.  All I can say is - you are totally fucked, dude!                            

Price of a Digitally-Published Word

Some topics simply cannot let you be.  They are just way too potent.  For example, some time ago, in Part I of my Arts & Entertainment by the Numbers series, I already addressed the matter of earnings one can expect to generate if he or she decides to become a "writer."  If you recall, it was established that, with a few exceptions primarily driven by seductive (literally) subjects, or notoriety (oh, I am sorry - fame) of the authors, or some magical (again, literally) mass appeal, there is not much money in writing. 

Of course, I didn't talk about ALL "writing."  That post was focused on books, both fictional and not - the self-contained multi-page opuses that come into public distribution through more or less conventional channels, which in our contemporary world include not only the old-fashioned publishing houses, but also self-publishing (including web-publishing) and on-demand-printing.  The latter have been pretty much commandeered by our ubiquitous mega-villains, Amazon and Google.  

Surprisingly, the vast majority of books are still printed and bound; and pretty much all of them are digitized as AZW, EPUB, IBA, PDF, etc. publications.  From my personal experience I can tell you that royalties on e-books, being profitability based, are actually much higher than on the printed copies.  As you can imagine, distribution of files costs a fraction of physical printing, shipping, etc.

Of course, books are not the only products of the "writing" professionals.  I fitted playwrights into Theater and screenwriters into Movies.  And I didn't want to discuss the earnings of conventional journalists, not only because I am really appalled by the contemporary standards of that trade, but also because there is nothing particularly special about their compensation.  It's basically a pay scale - no different than the one for any back-office workers.      

According to the latest data from the Bureau of Labor Statistics, an average reporter or a correspondent makes about $21 per hour, or $43,780 a year.  Of course, those working in publications with household names, especially in DC or NYC, or at cable and broadcasting venues, earn above average.  But even then we are talking $53K-$60K annual salaries.  Nothing glamorous.

If famous faces of Barbara Walters, or Katie Couric, or Matt Lauer pop into your head, stop it - those people might've started as journalists early in their career, but that's not what they are now - through some peculiar twists in their fates they've become multimillion-dollar TV personalities with roomfuls of staff who do the actual work and get paid what I said above.  Moreover, as far as I am concerned, the professional comedians Jon Stewart, Stephen Colbert, Bill Maher, and John Oliver turned out to be much better newsmen than all those other smiley faces.             

But forget all that!  The remarkable thing about our electronically permeated era (as far as the writing is concerned, of course), is that the majority of the "written" words nowadays floats in the realm of computer codes; resides on some servers in the unknown to the authors locations.  The vast majority of that majority is motivated into existence by a singular intangible incentive - the writer's desire to verbally express his/her opinions and ideas; it's produced for no material reward at all.

This includes over 10,000,000 (that's 10 million!) individual and collective blogs, which produce over 4,000,000 (and that's 4 million!)  posts every day (hence, my utter surprise that my own humble entries are consistently found and read by people from different countries); online fiction publications; fan-fiction entries into various pop-culture Wikias, unpaid entries (in hopes of exposure) into a multitude of e-zines, etc., etc.  It's all created for no pay and mostly available for free (if you don't count the unbearable assault of advertising on more popular sites as your cover charge - I do).   

And even those who appear to be writing not on spec but on assignment or write on spec but get syndicated, possibly generating fees and royalties for their digital words at such giant contentmongers as, for example, The Huffington Post - nobody seems to know for sure how much money they make.  Well, people close to the subject probably have some scattered bits and pieces of information, but it's so sparse and inconsistent, it's impossible to draw any solid conclusions.  In fact, the aforementioned Bureau of Labor Statistics simply gives up on the matter, basically admitting that the new media is so, ahem, new that there are no set rates and no correspondent statistics.    

But I am not an official government agency - I am just a curious person armed with my common sense and capable of making logical conclusions.  Moreover, I have the freedom to extrapolate, speculate, and infer.  And infer I shall.    

The first fundamental truth about online presence is that the majority of people religiously believe in its powers of publicity.  Hence, the said number of blogs, shameless exhibitionism of facebook pages and personal sites, endless YouTube videos, etc., etc. - general population thinks that if anybody can "be found" today, it will be online.  A few miraculous stories of the Internet exposure actually leading to "fame" only reinforces this belief.  (And the sea of content is growing exponentially, if you catch my drift - but that's another topic).  In context of our subject this makes me think that those who get published in popular online outlets agree to do so for next to nothing, i.e. for much  less than even conventional writers get.

The second fundamental characteristic of the Internet itself as a business is that the majority of revenues generated by non-eCommerce websites, if any, come from online advertising, at least for now (I think this situation is going to change, but that's, again, another topic).  Advertisers, just like the general public, have their own system of the Internet faith - the click-per-view conversion.  In the web environment, the old admen rule of placement for the maximum consumer impact gets a statistical dress-up: a certain number of views results in a click on the ad's link; a certain number of clicks, in its turn, converts into a consumer acquisition, i.e. a sale.  Everyone is invested into the same idea: the more views, the more clicks, the more sales; hence, the popular pay-per-click pricing formula.  As a result, the online content is monetarily valued on its potential viewership. 

This made me think that the most logical way for an owner of a content-driven website to compensate a contributing writer would be based on some rate-per-view (just like YouTube with its videos).  The question is how much?  What's the digitally published word worth?  Apparently, even Labor Statistics officials don't know - most likely because reporting those earnings is still a gray area.    

Ah, but that's what the Internet is actually for - the information superhighway.  If something piques your interest and you know how to formulate your search, you will find what you need:  like the large UK blogging hub on everything pop WhatCulture.com (they are absolutely right - they have nothing to do with Culture, concentrating primarily on blockbusters and gossip in film, big hits and gossip in TV, mega stars and gossip in music, plus gaming, sports, WWE). 

The site's content model is based on accepting (not guaranteed) and publishing other people's submissions.  On their Write For Us and Get Paid page they openly solicit material from the potential contributors (Lists! Lists! Lists! That's their preferred format - "9 Reasons to Be Excited About Arrested Development Season 5" or "10 Actors Who Really Don't Belong in the Upcoming Movies" and shit like that).  Therefore, the "get-paid" rate is openly disclosed right there: £0.40 ($0.62) per 1,000 views. 

Aha!  With that in hand, let us entertain ourselves with some arithmetical exercising:  Yesterday, the most-read entry in the film section of WhatCulture.com was "10 Things You Need to Know About Captain America: Civil War" - it had 1.3 million views, thus generating its author $806.  Not bad, assuming he put it together pretty quickly.  Theoretically speaking, if you can pop one of this every day, 5 days a week, 52 weeks a year, you can actually earn $210K annual wage! 

But the probability of it, of course, is quite slim - not only because no one on their own can research and write 260 entries a year, but mainly because it's hard to achieve such viewership: for example, the most read TV article had only 223 thousand views ($138.26) and the top one in a deeply hidden Art division (the only one in the whole site I personally found interesting - 10 Up and Coming Portrait Photographers) attracted exactly 2000 readers ($1.32 worth).  The audience's interest is fickle. 

This site is big and popular - the effort of a full-scope statistical analysis goes beyond my level of interest (I am sure the management has all the numbers readily available to them), but my quick-glance conclusion is that the average views per post is about 50,000 or $31 value.  So, ladies and gentlemen, even if you can do three of those a week, the more realistic earnings would be a modest amount of $4,836 per year.  

I say, don't quit your day job for this just yet - that is, of course, if you have one.

Anatomy of an Internet Argument

Judging by the number of memes related specifically to the subject of Internet arguments, the vast majority of people online, at one or another point, have gotten themselves involved into this futile and unpleasant exercise.  It's understandable: Connectivity is the Internet's primary purpose - people come together in the virtual space, communicate, discuss topics (frequently controversial)...  And, when was the last time you have witnessed a discussion of a controversial topic without emotions flaring up and things getting personal?  Humans are acting human - what else is new? 

Of course, the Internet makes fighting especially intense.  In absence of the face-to-face confrontation and a possibility of someone throwing a punch, people feel protected by the distance, their own walls, and virtual anonymity.  We used to say that paper can bear anything.  Well, data cables are even more tenacious.  Some opponents get really wild, frequently vicious, and the keyboard gets it.  It's hard to make your adversary to absorb your words in person.  Online?  Fahgettaboudit!  Hence, the universal opinion that one cannot win an Internet argument.  By the same token, people don't lose Internet arguments either - one of the sides just gives up or runs out of free time.    

I personally have enough controversy in my physical existence.  Plus, ever since the beginnings of the Internet, I have realized that it is not a democratic forum where everyone has the right to their own voice.  On the contrary, it is the most oppressive and hostile equalizer.  This is a "place" where someone with no ability to even comprehend your words and not a single shred of civility feels free to call you "a retard" regardless of who you are and of the level of your intellectual prowess.  So, acutely conscious of my own time (and sanity), I simply don't engage.  I just don't.  I don't even reply to the comments on my own posts. 

Except... That Roger Waters' open letter to Dionne Warwick...  God! It was so bluntly anti-Semitic!  It was fed to me by Pink Floyd's page, which I follow and, I have to be honest, it got me upset.  I strongly oppose political correctness and prefer people express their animosities openly, but the fact that this stark example of hatred was masqueraded as a pro-Palestinian stance - that just stunk of hypocrisy.  

Also, in person or otherwise, I usually don't get into the Middle-East arguments.  Not because I have nothing to say, but because my opinions are too unusual; unacceptable to the majority of the debaters on both sides.  I'm not taking any sides.  And I wasn't planning on getting into it this time either.  But antisemitism is not a political opinion - it's a manifestation of millennia-old bigotry.  And I have a right to judge it according to my personal moral code. 

Thus, for the sake of highlighting Roger Waters' thinly veiled true nature, I ignored my self-imposed restrictions on Internet and Middle-East discussions and commented on the open letter.  What transpired was an incredibly typical example of an online "exchange of thoughts."  It couldn't possibly come out more standardized even if I deliberately scripted it.  It's literally a classic case study.

My comment was:  

"Oh, a son of a British communist from Surrey is an anti-Semite?  Why are people surprised?  I expect nothing else.  In fact, the pro-Palestinian stand is a total sham: It's all about hating the Jews.  Roger Waters doesn't care about Palestinians.  Otherwise, he would try to convince them to raise their children in the comfortable houses the Israelis have built instead of burning them down.  But he wouldn't, because he is blinded by hatred.  And how silly for him to call ANYONE ignorant!  This is not the first concept he has been confused about: Remember his total misinterpretation of George Orwell?  Then again, people should stop expecting enlightenment from celebrities.  As humans, most of them are nothing special - just your average schmucks touched by God's gifts; the channeling instruments.  And I always said that one should separate an artist from the art."

I didn't criticize pro-Palestinians or pro-Israelis in general - just expressed my reaction specifically to Roger Waters' letter.  Yet, of course, it didn't matter what I actually wrote.  People don't take time to comprehend the message- like bulls they only see the red flags, in this case "anti-Semite."  I got almost an immediate reply from "Agus Alexander", who, judging by his latest photo, is about 20 and appears to be a student.  He is originally from Ireland, spent some time in Argentina (probably as an exchange student), and now lives in Nova Scotia.  (This is actually very important, because that Canadian province is heavily populated by immigrants from Arabic countries.  Personal experience shows that Nova Scotian youth interacts far more frequently with Arabs than with Jews). 

He wrote:        

"So pro-Palestine is equal to anti-Semite .... Nice one I almost bought it but I'm not that dumb. You see what you are saying is either or you buy the whole pro Israel package or you are a fucking holocausting anti-Semite... Check how much deaths from each side have been through this years in this war and then refrain of your beliefs"

Note, that young Mr. Agus completely overlooked the fact that I explicitly expressed my doubts about Roger Waters' pro-Palestinian position.  Moreover, nothing in my comment suggested that I consider everyone who is not pro-Israel an anti-Semite.  And while I was taken aback by the suggestion that a primitive death count would change any of my beliefs (none of which I expressed, by the way), I decided to underscore my focus one more time:    

"Pro-Palestinian who is not an anti-Semite (and I mean deep in the heart of hearts, not PC bullshit)?  I personally have not met one, but theoretically, sure, it's possible.  However, if you actually read Mr. Waters' open letter, you know that he doesn't qualify as one.  And as I said, he doesn't qualify as pro-Palestinian either - just an anti-Semite."

It turns out that while I was writing those few lines, another reply to my original comment was posted.  This one by Beto Gabriel - a male facebooker in his mid-30s, who occupies himself by investing his money through ShareBuilder - CapitalOne's alternative to day-trading.  Remarkably (you will see in a moment!) he is an incessant quoter of snippets from Humanity Healing (a "spiritual activism" network).  Here it goes (all caps are original):    

"You stupid IDIOT... Palestinians dont want handouts, THEY WANT THEIR HOMELAND BACK. Yes they do hate, but its a JUST HATE. Their homeland was taken away and they became refugees in their own land... JUST IMAGINE THE MEXICANS OCCUPYING THE STATES AND TAKING YOUR HOUSE AND FORCING U OUT INTO A DESIGNATED AREA..."

As soon as I read the words "stupid IDIOT," I was out of this exchange.  It was over for me.  Not because I'm known to back out, but because bullies are better handled in a face-to-face confrontations.  They are not really as brave in person and the arguments end much faster.  My timing constraints are not a match to the luxurious freedom of a day-trader.  Plus, one cannot encourage further bad-mannered insolence. 

I even ignored the delicious morsels of bait such as "homeland" and "Just Hate." (Is that what they teach at Humanity Healing?  How to justify hate?)  How did Beto Gabriel concluded that I am an intellectually disabled person with a complete lack of reason from that one comment of mine and what qualifies him as an expert in human intellectuality?  We will never know that.  As I said, I was out.

For the sake of completeness of the arguments' dissection, let me note that while I was staring at Beto Gabriel's berserk outburst, Agus Alexander opened up about his true confusion a little bit more:             

"I strongly encourage you Marina to think.. Outside the tv box and the popular opinion. Yes there are lots of people who consider what Israel is doing what it really is a holocaust... But they are afraid to speak because they will instantly labeled as antisemites, I have nothing against Israel  except for their actions. But I respect all religions what does that make me?"

Wow!  What a mess of thoughts!  Plus, the little boy invites me a.) to think period (implying that I don't) and b.) to think outside of "the TV box and the popular opinion."  Hilarious!!!  But, of course, he has no idea who I am.  And I cannot take it seriously - these people have no flexibility of mind; they learn three-four formulaic phrases, which become their slogans du jour, and they throw them around regardless of the substance of the actual discussion.     

Of course, I could've replied to Beto Gabriel that if I were a nomad in, let's say, Nevada desert with no roof over my head, living hand-to-mouth, and my daughter was running around barefoot (this American boy I know, who served in Israeli Army, told me how sad those barefoot Palestine children made him), I would've welcomed any type of shelter with plumbing provided by Mexicans or whoever, let alone high-quality private housing.  Motherhood carries far more important responsibilities than political stands devised by vicious males.  And by they way, that Nevada desert, together with 7 giant states (1 million square miles - 117 times more than the entire State of Israel) was taken by the US from Mexico only 100 years before the formation of Israel.       

And to Agus Alexander's question with regards to what his supposed respect for all religions makes him I could've answered that it makes him a very poorly informed young man who cannot expand his mind beyond his immediate surroundings.  Antisemitism has very little to do with religion.  My maternal great-grandparents were not religious.  Yet, it didn't stop the Nazis from burying them alive in the field near their hometown together with all other Jews that lived there.  The majority of the 6 million Jews killed in WWII and of those killed in pogroms before and after the war were secular.  Hitler/Himmler's the Ultimate Solution documents stated in writing that ALL ethnic Jews were to be wiped out from the face of this planet; religion was explicitly disregarded.  That what Holocaust means.  Look it up!

I could've made a list of the times through my life I was called a dirty Jew to my face.  And I could've shared how I felt listening to my parents talking about the Munich Massacre in 1972.  And I might've described how terrified I was flying from Rome to New York with my little daughter at the peak of Palestinian hijackings in the late 80s.   

But I didn't reply with any of that to either of the men, because they lost me at "stupid IDIOT."  At the end of the day, this is what you get for breaking your own rules twice. 

In all these Middle-Eastern debates, one thing perplexes me, though:  Why nobody ever throws stones at the entities that initiated this mess in the first place?  Don't people remember that Palestine was a British colony until 1948 and that it was United Nations' 1947 decision that implemented FDR's "visions" of giving Palestine freedom from the protectorate and creating the State of Israel at the same time?  I guess 70 years back is way too much history for them.    

Quote of the Week: Mike Judge, the Prophet

"Data creation is exploding.  With all the selfies and useless files people refuse to delete on the Cloud - 92% of the world's data was created in the last two years alone.  At the current rate, the world's data storage capiacity will be overtaken by next Spring.  It will be nothing short of a catastrophe: data shortages, data rationing, data black markets...  Datageddon!"

                            Gavin Belson, founder & CEO of Hooli, Inc.

                    (Silicon Valley, co-created by Mike Judge, episode 2.1)

The Frustrated CFO's commentary:  For years now, the genius that lives in my home has been responding to all innovations of information technology with the same mantra: "As long as the servers can bear it."  I humbly concur.  And it is reassuring that exactly the same sentiments are finally being verbalized through a pop-culture medium, such as HBO.  It is especially awesome and scary that this confirmation of the imminent future comes courtesy of the prophetic marvel Mike Judge - the one third of, what I call, the Trinity of the Eye-Opening Truth (Trey Parker, Matt Stone, and Mike Judge).  It's scary because the man possesses  Cassandra's foresight: In 2006 when the incredible cult classic Idiocracy came out, it was written off by distributors as a campy sci-fi; eight years later people started creating lists of Mike Judge's predictions that already came true: on birth rates, on advertising, on entertainment, on language, on political process, etc.  Not everyone is as fortunate as I am to have a warning oracle at home.   Hence, they should pay attention to Mr. Judge and his collaborators.      

IBM Predictive Analytics, or Are We There Yet, Watson?

I have no clue what a Venn diagram for conjuction of this blog's readers and tennis fans would look like - probably unnoticeable to human eye, but whether you care about professional tennis or not, bear with me and I'll explain its relevance to the subject at hand.

Those who watched Australian Open during the last two weeks of January on ESPN2 (or any grand slam in the past few years) incidentally exposed themselves to various elements of IBM's "Let's Build a Smarter Planet" promotional campaign.  IBM has been sponsoring ATP and WTA tours for years. They don't limit themselves to the ads that run during commercial breaks, but it's a good starting point for our topic. 

The current versions of these TV spots are a lot of fun - very slick, very futuristic, very high-tech, very white-surface, and they feature Dominic Cooper (whom I first saw on stage [I cannot help myself, can I?] back in 2006 as Stuart Dakin in Alan Bennett's The History Boys)!  Handsome, in the contemporary sense of the word, and serious, but tongue-in-cheek, British actor promotes IBM's cloud, smart day in the office, and... PREDICTIVE ANALYTICS. 

Aha!  Very interesting:  Did IBM branch out into Astrology Charts and Crystal Balls?  The advertisement's copywriters are appropriately non-specific and vague so not to bore an averagely challenged viewer, but let's look a bit closer at the core issue here.

Predictive Analytics belong to the realm of other popular concepts, such as business intelligence and performance assessment - none of them new ideas, by the way.  Data warehousing may sound like a novelty, but collecting and organizing records in a particular order for easier access existed for centuries. The concept of information as a key to business success is millennia old.  In ancient times tribal chiefs were estimating how many spearheads their craftsmen needed to make in order to win a battle.

Yet, in the past 10-15 years, the obsession with gauges, graphs, and all other forms of Key Performance Indicators (KPIs) have become pervasive to the point of silliness, especially in business, financial, and data-management spheres.  Everyone and their mothers are absolutely convinced that they MUST have KPIs or they will be running a danger of failing, while analysts and software developers just know that they MUST provide KPI capabilities or their services will be deemed obsolete. 

Truth be told, the escalation of urgency is totally understandable.  The pace and
vulnerability of the business environment and entire human existence have increased exponentially.  Today, more than ever, we need to have timely and valid data that has a power of springing us into immediate corrective actions. 

Of course, as it always happens, the form obscures substance and common sense.  In most cases, the procurers of reports with colorful dials, bars, and pyramids end up just staring at pretty pictures, nothing more.

Now, the Predictive Analytics are a very special brand of information manipulation because they claim that on the other side of chewing up and digesting tons of historical data they can poop out specific recommendations for WHAT NEEDS TO BE DONE IN ORDER TO SUCCEED, i.e. an action plan for a prosperous future.

And I have to say, when it comes to chomping massive inputs of data, while allowing flexible and customized outputs, various IBM Business Intelligence Suites, including Cognos, are probably the best performance analytics software out there in the land of information management - terribly expensive, of course, but awfully powerful in terms of the facts-and-figures consumption (imagine Coneheads at breakfast).

And as noted, IBM wants to take you a step further on the road to the future of business intelligence.  In 2009 the computing giant bought SPSS, which stands for Statistical Package for the Social Science, a software product that was created in 1970 to deal specifically with the analysis of what I personally call “data with a psychological twist.”   In other word, it digests information that doesn’t necessarily have dollar signs or volume units attached to it.  It was widely used in sociology, marketing, health care, education, and government. 

In its current developmental stage SPSS has become an integral part of IBM's predictive analytics solutions, which presumably  can be applied in any field.  According to IBM’s own description, the SPSS’s mission is “to help organizations to predict what will happen next, so that they can make smarter decisions to improve business outcomes."

Are they succeeding in this futuristic endeavor?  It’s hard to tell, because there is not enough readily available feedback: everyone’s KPIs are proprietary.  Even public companies will not disclose how IBM’s predictive analytics compare to the actual results.  Fortunately, there is one application of IBM’s analytical intelligence that is very public.  Here's where tennis comes back into the picture, offering us an opportunity to look at the system’s predictive aptitude. 

Nowadays, IBM's sponsorship of the Grand Slams also includes the powering of the websites of individual tournaments, including the Wimbledon, Australian, French, and US Opens.  And so, if you go on one of these sites’ home page you will see right there, in the top-right corner:  Smarter Analytics by IBM.

Well, right now it says “Completed Matches” above it because we are still almost 7 months away from the US Open 2015, but if you were to track a live match during a tournament, you can observe the IBM’s predictive functionality in real time:

This here is one of the most important predictive KPIs provided by Smarter Analytics - it is designed to show most important milestones one must achieve to reach one’s goals, and supposedly it is applicable to any data set. 

In tennis application they call them Keys to the Match.  Right there on the screen, in just two sentences IBM delivers the gist of the chart, explaining both the terminology and the methodology: “Keys to the Match system identifies key performance indicators – what players need to do to succeed in a match.  Each player’s performance is measured against their keys and updated in real time.”

This one in particular was for the 2014 Championship match between our very own champion extraordinaire Serena Williams and Caroline Wozniacki.  The system isolated three performance keys for Serena: 1^st serve points, medium rallies, and the returns of the opponent’s 1^st serve. 

According to the system’s algorithm these parameters are the most impactful in terms of the winning statistics.  The calculated "musts" are in blue and according to the statistical analysis of the historical data, Serena won 74% of sets when she won more than 61% of points on her own serve; 87% of sets when she won more than 49% of medium rallies, and 81% of sets when she won more than 38% of points returning her opponents 1^st serve.  

The red sectors show where Serena was in this match.  She exceeded all requirements: reaching 62% in the first parameter (very close), 54% in the second (also pretty relevant), and 68% in the third.  It is no surprise that she won the Championship match, but that wild discrepancy between the prediction and the actual in the third indicator (38% vs. 68%) makes me question its relevance.

We will come back to my doubts about the validity of the entire model in a moment.  Now, let’s see how we would apply the same approach to a business.  Here is a chart that identifies AZ Company’s Keys to a Successful Month: what needs to be done to achieve sufficient profitability and positive cash flow.

These are very familiar to all business runners and highly vital parameters.  Product mix is a crucial profitability factor.  The same goes for the portion of the gross profit eaten up by the overhead.  And, of course, the speed with which we manage to turn our inventories into receivables and receivables into cash determines whether we can generate more cash than we disburse during a particular period, in other words, produce a positive cash flow. 

The green bars represent the levels of the parameters at the moment this snapshot was taken.  Orange ones are the objectives that simply must be achieved, and pinks are desirable targets that supposedly guarantee a financially successful performance. 

According to the model’s algorithm the share of the highly profitable product X in the
trading mix should be at least 39%, because 69% of the months when such mark
was achieved were profitable. Obviously the overhead has far more definitive impact on the bottom line - the model confirms it by calculating a higher probability of success (79%) at its relatively lower levels.  There is even closer interrelationship between receivables and inventory turnovers on one side and the positive cash flow on the other – respectively 80 and 85 percent. 

Many business owners and executive managers, when they see a chart like that, get very excited by the prospective of having a system that can “see the future” – they think they’ve got the ultimate solution in their hands.  The widespread assumption is that Technology is smarter than a human, calculates everything faster and with higher accuracy.  And this application presumably eliminates the need to process information yourself - analyze, ponder, be anxious, listen to your gut feelings, or rely on anybody’s expertise.  Just follow the model’s suggestions and everything will be fine. 

If you sense sarcasm between the lines it’s because I am very resentful to such a blind reverence of computing technology.  And coming from me it’s a very serious statement, because I love progressive computerization.  But I cannot tolerate the lack of common sense.

Look, the selected parameters themselves are great – no question about it, but do we need a fancy program to tell us that the business is going to be okay if we push sales of a high-margin product to nearly 40% of the volume and turn most of our beginning-of-the-month AR into cash?  I don’t think so.  The years of our own expertise will kick in and reassure us – we don’t really need the statistical confirmation of the possibly successful outcome.     

But I have even more troubling concerns about this “keys to success” model.  Let me show you that the examples we just reviewed are fraught with at least two serious problems. 

The first one is the size of the statistical sample.  In quantitative research, you need a sufficiently large sample in order to be able to pinpoint trends with an acceptable level of realism.   Did you notice that Serena’s KPIs were related
to sets rather than matches?  That's understandable.  The Smarter Analytics uses just 8 years of grand slam performance.  In the period from 2007 through 2014 Serena Williams played 157 matches in the four major tournaments of the year.

Women play “win-2-out-of -3-sets” matches. Sometimes it’s 2 sets, sometimes it’s 3, and sometimes your opponent retires before you get to finish the first set. Serena has a high percentage of straight-set wins, so we can safely estimate her average at 2.25 sets per match.  This means that the predictions produced by IBM are based on a pool of
data collected over 353 sets.  It’s not US census, of course, but it's an okay sample size.

Now, in business, to approximate the tennis-model’s reliability of conclusions we would need to look at least at 30 years of a company's monthly performance data.  And that's a lot to hope for: 25 years ago the majority of small to mid-size companies were not even computerized and the paper journals and ledgers are either rotting in some storage unit or gone!          

But the bigger problem is the quality of the historical data, its relevance to the very specific, very present moment in time.  We operate in remarkably dynamic environments.  Business conditions change every moment.  One day everything is going great and another day everything falls apart.   Labor costs grow exponentially in every corner of the world.  Foreign exchange policies force one currency to soar and another currency to drop below everyone’s expectations.  Cyclicality shifts all the time: what was true for February of 2005 may not be applicable at all for this month.  And there are multitudes of industry-specific stressors. 

For decades Kodak was competing with BASF, TDK, etc. for the worldwide market share of film distribution.  Who knew that the biggest challenge would come from the photo and video equipment that didn’t need any film at all? 

20 years ago American agricultural sector exported nearly 3 million tons of frozen meat and poultry to Eastern Europe.  Then came 1999 and protectionist governments in the region declared US produce unsanitary.  Prices tanked and multiple industries contracted. 

15 years ago fashion industry had six major seasons.  Today it operates in micro-cycles with styles changing every two weeks. This dramatically altered the landscape of apparel importation. 

Well, business insiders live and breath this knowledge, but does the prediction model take into account all these factors?  It simply cannot – any mathematical algorithm can only account for a limited number of time-proven constraints.  How can we presume then that what might have been true historically will apply to our current conditions?

Even Serena’s keys to success, as far as I am concerned, are not too trustworthy, even though they are based on the game that have been played by the same rules year after year, on exactly the same courts, tended in exactly the same way.  But was it the same winning Serena Williams in September 2014 as she was in 2007, when she fell away in quarterfinals?  Or was she even the same in January of 2014, at Australian Open?  Can you spot the difference that made a significant improvement to her swing?

Can IMB’s "social" software comprehend that?  I don't think so! 

There is no way I'm putting away the years of expertise and my business instincts to start relying 100% on some computerized predictions in my strategic and tactical decision-making.  It may be a good contributing tool (again if you can afford it), but a computer is nothing more than a sidekick to the human brain; even if it's the IBM’s star artificial-intelligence child Watson.  Hence, the appropriate name it's given.  Yes, it can answer questions posed in natural language and wins Jeopardy! thanks to the 4 terabytes of information stored inside its metal guts.  Yet it's not able to intuit the right response to a simple clue “This hat is elementary, my dear contestant!”  My mind, on the other hand, serves up the answer instantaneously.

An expert with a common sense should be able to formulate her conclusions and make fast decisions herself, without any magical software, as long as she is steadily provided with timely and relevant information - whatever it is: business, sports, or arts.  It's as I always say: give me sensible data and I will tell you what needs to be done.

    

 

Video Quote of the Week: Truth About Lying

The Frustrated CFO's Intro: Just a tiny bit of magic, a very cool synchronization app, and some undeniable truth about deception as an integral part of human nature - voila, a very entertaining TED Talk! (And how about the strength of that bluetooth connection!)

Enjoy!

 

World Wide Web is 25! Oh, Baby!

Oh, boy, World Wide Web!  You are 25!  So young, yet so much happened to you already! You are like a fucking child rock star!

When you were born, I was still in my 20s; so were Madonna and Michael Jackson; Brad Pitt was 25 (he just turned 50 - the jury is still out on whether you are good at math or not).  Now I run to you to roll time back and see people who witnessed your birth being young and alive - you keep them all and more inside your multitude of brains.

In only a quarter of a century that flew by with incredible acceleration you have spread yourself wide and deep.  You became a source of memories, references, entertainment, political battles, nationalistic agendas, a wide range of freedom and "freedom" fights, and the supreme motherbitch of it all - communication.  Oh, the connectivity of it! 

Just like other immature tech moguls born in the eighties you strive for world domination without any care about what you have and will destroy on your way to that lofty goal.  Just like them, you carelessly offer your services to those who uphold personal liberties and those who do whatever they can to extinguish them.

Talking about mixed emotions!  On one hand, it seems that I cannot exist without you and I don't even want to remember how I managed, oh, so many things before you were born.  Hey, you gave me this very outlet of self-expression!  On the other hand, I think you are a source of some major-scale evil; you made everyone more stupid; you will accelerate further retardation of minds and  degradation of humanity - all before you exhaust your own sources of existence (aka energy and servers' capacity) and bring life functions that rely on you to a grinding halt.  So, as much as I need you, I still keep my Britannica; I still buy hardcover books, CDs, and Blurays; and I still write checks.  I use you, but I don't trust you.  If I look closely I see that you are a sneaky creep.

What can I wish you on your 25th birthday?  What can you wish anyone on their 25th birthday?  To become a mature and responsible adult.  You go and figure out what it means.  I still didn't.       

Social Media Bewilderment

Forgive me for being inattentive to such extra-accommodating bells and whistles, but I only noticed it yesterday night: after you finish watching a TV show's episode or a movie on Hulu Plus, a little window with both facebook and Twitter logos/links appears in the middle of your screen.  I take it that this is Hulu's offer to its subscribers to share the news of just procured entertainment experience with their personal social network.

My God!  Do people actually do that?  Like in self-admiring way, or something?  I just watched an episode of "Brooklyn 99" on Hulu Plus.  So fucking cool!  Or: "Persona" on Hulu Plus, just now.  Fucking rad! Attention seeking much?  How boring are these people's lives? How heartbreakingly pathetic!     

Quote of the Week: More on the Intelligent Machines

"I am not afraid of computers taking over the world.  They're just sitting there.  I can hit them with a two by four."

Thom Yorke

                    (suggested by Yana Alexandra Crow)

Some Economists Say That a Robot Can Replace My Paige. For Real?

There are quite a few optimistic economists out there who convinced themselves that,  even though the Industrial Revolution, which was responsible for the unprecedented economic development of the United States since the 19th century, is pretty much over, there is no need to panic and envision impending doom.  According to them, we are yet to pull through.  Do you know what will save us?  Artificial intelligence and 3D printing, i.e. fucking robots and compressed plastic powder.  

Ok, let's leave the 3D printing alone for now. I'm quite impressed with the replication capabilities of the so-called printers: the manufacturing of complex forms, moving parts and all directly from scanned or modeled images looks like magic; and I do think that this innovation will revolutionize toy-making and change sculpture forever.  However, because the "printing" powder recipes are kept secret, I cannot really say anything about the quality and/or safety of the household items, tools, auto parts, etc. made this way.  I hear the plastic guns shoot people dead pretty well, but what else is new?

I am more curious about the robotized future though.  From the vantage point of the economists in question, 65% of American employees are engaged in tasks that they classify as "information processing" (sounds pretty arbitrary to me, but let's go with it) and these poor "dehumanized" worker bees will be replaced with super-efficient highly intelligent machines, who never get depressed because information is what they do. And it doesn't matter that the damn toasters will never be able to look at a plant and pick an appropriate tool to trim it (it's just something that cannot be programmed). 

In case you are wondering, the other 35% will be occupied in professions and functions that require superior intelligence and talent: executive management (you wouldn't believe how many executive dumbasses I know, but whatever!), strategic planning, creative work, and of course, gardening (on account of the robots' deficiencies mentioned above).  

Seriously though, I hope you agree with me that defining ALL tasks performed by office employees as "information processing" essentially turns these people into some sort of robots already, which creates an illusion that replacing imperfect human tools with slick intelligent machines is an efficient, easy, and necessary process.  And yes, some of the office routines can be tedious and dehumanizing.  Yet, the reality is that only in large companies, marked by narrow specialization, standardization, and redundancy, work can be likened to the repetitive conveyor operations.  Everywhere else people multitask!        

Ever since my doctoral studies of economics (many year ago), I had a problem with the pervasive tendency of theoretical generalization; with the application of the macroeconomic approach to microeconomic systems.  Again, maybe such abstractions are somewhat pertinent to giant enterprises, but you and I know that every small business operates differently - none of them will fit into an artificially constructed etalon.  It scares me to think that these pseudo-scientists possibly envision the future without any entrepreneurship at all - just fucking GMs, GEs, Microsofts, Starbucks, Smithfields, Apples, Googles, COSTCOs, and Carl's Jr. (Wait a minute, doesn't this ring a pretty loud bell?)

But what if this nightmare doesn't come true? (Call me a fucking optimist!) Imagine that 20 years from now small businesses still exist, but now they can be outfitted with highly efficient (and affordable!) intelligent machines available to step in as your trusted office workers. Let's conduct a mental experiment and see how a robot will deal with three (could've been 100) straightforward issues customarily handled by one of my most reliable and teachable subordinates of all time (I call her "my Paige").  In other words, let's see if a robot can really replace my Paige.

#1.  A commercial customer has a $300K credit line.  The total of the customer's open invoices is $265K.  A $51K order for the product your company really needs to move is transmitted  for the robot's credit approval.  Of course, a discretionary flexibility is programmed into the algorithm (robot designers are not stupid) - it's 5% above the limit (remember, standardization is unavoidable with machines), making the total allowable credit exposure $315k.  But approving the order would exceed it by a mere $1,000.  The robot rejects it, denying its employer an opportunity to move the product, increase the revenue, make a nice profit.  In addition, the relationship with a long-time customer is at jeopardy over a thousand bucks; and the salesperson is mad because he lost his commissions.  And what are you going to do?  Fire the robot?  It cost the company a fucking mint!         

#2.  The operations department (also robots)  needs to make sufficient room in the storage facility to accommodate the upcoming delivery of 5000 mt of a product from overseas.  They transmit a message to Sales to start pushing the shit faster.  Sales plea and beg customers to take as much product as they can - discounts and all kinds of other tokens of gratitude are flowing.  One customer says that he can take a delivery on September 29th, but he doesn't want the inventory on his books just yet and the invoices must be dated October 14th (the "I do something for you, you do something for me" principle).  This information is relayed to my accounting robot.  It's perplexed: It's programmed to record sales according to the order terms; the terms in this case are Delivered; the proof of delivery transmitted into his system by the trucking branch states September 29th; yet, somebody is overriding his algorithm and forces the wrong date!  SCREECH!  SYSTEM FAILURE!      

#3.  The payments-to-suppliers program kicks in.  The robot tallies all invoices that need to be paid - the total is $3.3M.  Now, funds-sufficiency program kicks in: there is only $300K available on the account and the robot transmits a funding request to the CFO's all-in-one communication device installed into her left ear's diamond stud.  The borrowing and investing functions are still done by the human CFO, because the risk of some crafty thief hacking into a fucking toaster is, as you can imagine, pretty high.  The problem is that the CFO is in London dining with a Financial Director of a company her employer targeted for acquisition.  She is trying to pump the stiff for some information beyond the official reports, and she just got him talking, and there is no way she can lose this opportunity on account of some payments.  But the robot must do his job - he must be timely, the payments must be made.  Yet, he sees that, if he actually makes the payments, the account will be overdrafted by $3 million.  The conflicting algorithms are tearing the machine apart, literally - it short-circuits.  

What? Are you telling me that the economists don't have these tasks in mind; that these are semi-managerial-somewhat-analytical duties? Guess what, Mr. Big-Shot-Futurologist? That's what's going on in small businesses with flat structures: Every sector of the value chain is manned by one executive/manager and a handful of her direct reports aka the "the information processors." No middle management. You cannot possibly reassign these minute but essential issues to CFO's and Controllers - that's just too expensive in terms of the compensation, wasteful in terms of the time taken away from more strategic obligations, and demeaning in terms of the moral incentives. And if I have to buy robots AND keep my subordinates for the semi-managerial-somewhat-analytical work, what kind of progress is that?

According to the US Census data, there are over 6 million companies in this country with less than 100 employees.  Obviously, they are too small to see from the top of the theoretical mountain. So, in articles for academic magazines and thick manuscripts for Wiley publications, their diverse office workers first get bundled together with the narrow-niched redundant zombies of large bureaucracies, and then replaced by robots in one sweep of a Montblanc pen.

Just for argument's sake let's get back for a second to the scary possibility: The economists, politicians , and the big businesses paying for them actually erase small companies from the national map. The intellectual flexibility is ignored in the interest of standardization, and all of the "information processors" in the remaining giant conglomerates are replaced by machines. What kind of plans do the movers and shakers have for these 65% of American workers?  How about their children, lately multiplying at the three-per-family rate?  Considering the dramatically falling IQs of the general population, it's unlikely that they will be viable candidates for high-level managerial or creative work.  So, how is the robotization going to make the whole nation wealthier in the same way the Industrial Revolution did?  I see a more polarized society with hordes of people pushed below the poverty level.

But the biggest question I have for the big-time big-picture economists is: Where the fuck are you going to get the energy to power all those robots and their managing network servers?