Category Archives: business

A tiny sign of the decline in trust and the social contract?

February 11, 2022 By in business Tags: , Leave a comment

Something happened that’s never happened to me, or more accurately us, before: a client filed a credit card chargeback after we’d fulfilled our obligations to the client. The most interesting part of the chargeback experience isn’t that someone filed a chargeback—after two decades, it was bound to occur sooner or later—but what a manager at the credit card processing company said is surprising: according to her, in the last six months, she’s seen a huge jump in number of merchants receiving their first chargebacks, ever. Many are small businesses, like us, and have never had a chargeback. The manager said she’s been much busier dealing with people like us, who are novices to this problem. She’s with one of the largest credit card processors (known as “merchant processors” in the credit card world) and thus positioned to know what’s happening in the company and, likely, industry as a whole. She volunteered that information during the course of the conversation, too, in the tone of someone who’s had this conversation before.

One hears that the number of people behaving badly on airplanes is rising. One sees the videos of people doing organized smash-and-grabs in California, one sees journalist Andy Ngo beaten by a mob in Portland, and one sees claims about the rise in crime more generally (albeit from low rates, and far below the rates of the ’70s or ’80s), and one has to wonder whether these are fleeting epiphenomenon, or something else. Does the possible rise in chargebacks track the distrust in institutions more generally? I’ve not seen any systematic data on the subject. A few brief searches don’t show any obvious public data following this metric, though if anyone has or knows of such data, please leave a link in the comments.

Why management consultants have jobs: Publishing edition

January 26, 2021 By in business, Publishing Tags: , , 1 Comment

“Management consulting” seems to be a puzzle: firms spend huge amounts of money, sometimes hundreds of thousands or millions of dollars, to get reports and opinions generated most often by recent college grads with no domain knowledge, let alone expertise. Why? Here’s one theory, which holds that “most intellectuals underestimate just how dysfunctional most firms are. Firms often have big obvious misallocations of resources, where lots of folks in the firm know about the problems and workable solutions” and “The CEO often understands what needs to be done, but does not have the resources to fight this blocking coalition. But if a prestigious outside consulting firm weighs in, that can turn the status tide.”

I’m thinking about management consulting because, for a project, I spent some time gathering data from book publishers about bulk book sales. No publishers appear to have information about bulk sale rates on their websites. I attempted to call Oxford University Press on January 11 and emailed them the same day with a bulk sales inquiry; I never found the right person to talk to on the phone and got a short email back today, January 26, containing 25 words and the bulk sales information that ought to be on their website—or at least emailed promptly.

If big publishers hired management consultants, one obvious thing a management consultant could say is: “Put the bulk order discount rates on the website. Also, reply to queries within 24 hours, not two weeks.” One publisher sent a four-page PDF form, full of sensitive information, that the publisher wants emailed back in order to place a bulk order (email is not an encrypted medium and that is a good way to lose sensitive information).

Publisher discovery itself is a challenge. A given book has the name of an imprint on it, and listed on Amazon, but the “imprint” often doesn’t correspond to the actual publisher I need to get ahold of. Some imprints have websites that don’t really exist any more (how am I supposed to know in advance that Bantam Spectra books is part of the Penguin-Randomhouse conglomerate? Seriously, type “Bantam Spectra books” into a search engine and see what you find: then repeat this for a bunch of other books, and make sure you keep them straight). I’m not sure what publishers’s websites are optimized for, or who they’re optimized for—bookstores, maybe—but they don’t seem optimized for readers or for buyers who aren’t already initiated into the secrets of the system.

In grad school, I gave a former student a ride to California and talked to him about how little management consulting made sense to me: why would a firm hire 22-year olds, or even 25-year olds, at hundreds of dollars an hour, to opine on the firm’s business? It doesn’t seem to make sense. Now I wonder if that was bad advice: here’s one reason why the smartest college grads might avoid typical corporations in favor of management consulting or startups.

Publishing might also be unusual in that it faces fewer competitive pressures, or different competitive pressures, than other industries; publishing is still a glamor industry that succeeds by getting liberal arts grads from wealthy families to put in a bunch of time at low wages, so maybe publishers don’t care. But come on, two weeks to get a quote? If Seliger + Associates ran that way, we’d not have a business. Alternately, maybe bulk sales to random outsiders aren’t important to publishers, and I’m such a small part of their business that they can’t bother. As long as Amazon and bookstores are happy, nothing else matters. Still, it might be worth a/b testing what putting true rates directly on the site reveals. Maybe there’s a universe of potential buyers who are dissuaded by poor website design. Overall, I’d take the two-week mark to respond to a pricing query as a sign that other parts of the business must be equally poorly managed.

Steve Levine’s “The Powerhouse” and the Chevy Volt

November 29, 2018 By in Books, business, Nonfiction Tags: , , , , 1 Comment

The Powerhouse: America, China, and the Great Battery War describes how we got to today’s electric cars, and it does so by following the vicissitudes of Argonne National Labs, which played a key role in battery development, as well as many of the scientists and players who help develop batteries. Much of the narrative structure comes from GM’s quest to build the Chevy Volt, a car that is amazing and widely underappreciated, because the conditions and assumptions that led to its development have changed.

In the late ’00s and early ’10s, almost no one foresaw the rise of fracking, which has put a lid on oil prices. If fracking hadn’t come along when it did, oil would probably be between $100 and $200 a barrel today, and GM wouldn’t be able to build enough Volts. GM’s management would look like geniuses. Instead, as has been widely reported, GM is closing a bunch of plants, likely including the one that makes Volts. People are short-sighted and, when gas prices fall, we buy bigger cars.

The Volt is neither as cheap as a conventional internal combustion engine (ICE) car nor as interesting as an electric. It appears that most people want a pure electric or a conventional ICE car, and hybrids like the Volt are stuck in between. Most people don’t give a damn about climate change or Saudi and Russian repression, at least as measured by their behaviors when it comes to buying cars (You might argue that this is bad—I would—but, at least in terms of mass behavior, it’s true). Today, articles like, “Why Oil Prices Took Such a Tumble, and What Comes Next” are common:

It was only at the start of October that analysts were wondering if oil would soon cost $100 a barrel. Then a trap door opened and oil prices have been in a rapid descent since, losing nearly a third of their value in about eight weeks.

The spread of electric vehicles is also going to cap oil price rises. As prices rise, more people will shift towards electrics. But people who rag on the Volt don’t understand why it was green-lit in the first place, and they should read The Powerhouse. Aside from being an account of the Volt, The Powerhouse is about the way science and engineering actually get done. Those fields are rarely about single individuals and often about groups, companies, universities, and the interactions among the individuals that compose the larger structures. To be sure, individuals are important (John Goodenough is a battery hero, and there are many others named in the book), but we rarely succeed alone.

The Powerhouse has flaws, as a book. Its timeline jumps around, from chapter to chapter, at times. Most of its chapters are 800 – 2,000 words, a sign that many originated as blog posts or news stories, and their integration isn’t ideal. Levine is a working journalist and so may have had less time than he would have liked to complete the book. The acknowledgements page starts, “When I began to consider a book on batteries, the reception from friends and advisers was all but unanimous: don’t do it.” I’m glad he wrote the book and will recommend it, despite its firm place in a particular time and its structural challenges. Levine created a coherent story out of many disparate pieces, and that alone is admirable.

“Where does the hate for colleges come from?”

February 23, 2018 By in Academia, business Tags: , , 2 Comments

In an online discussion someone asked where the “overwhelming hate” for colleges comes from. I don’t think (many) people hate college or colleges, but many are baffled and unhappy about the higher-education situation—for good reason. I’m immersed in these issues, so to me the answers are obvious, but it’s useful to recall that some points “every knows” in one sub-culture are totally unknown in the wider culture. Plus, there may seem to be more hate towards colleges online because people online are systematically filtered for a set of opinions pretty far outside the mainstream; I suspect most normal people retain a pretty high and pretty positive view of college, colleges, and universities, while those who are familiar with the absurdity that is the modern student loan system and some other common challenges may be less positive. I can enumerate some culprits behind unhappiness with college as it’s presently constituted, including:

1. College costs have been outstripping inflation and wage growth for decades. This is well-known and obvious.

2. It’s not clear that most colleges are actually teaching much most of the time, per the book Academically Adrift—which also matches my own anecdotal teaching experience.

3. Related to #2, it seems that most colleges have evolved non-educational tracks for those who want them. Students who enter those tracks without realizing what they’re doing may regret their choices later, especially when they have to pay off student loans with low-value degrees that do little to build human capital.

4. See Bryan Caplan’s book The Case Against Education, which argues that most of the education system is about signaling, not human capital formation. If that’s true, we ought to work harder to find other ways to signal—among other things we ought to do differently.

5. It’s not clear where the money for college is going. It’s not going to instructors or instruction. So where is it disappearing into? Many blame administrators, sports, Title IX, bureaucracy, Baumol’s Cost Disease, etc., but I’m not sure what the real answer is.

6. The logical arguments are mostly in books, not online.

Some degrees still make a lot of sense: wages for many kinds of engineers and computer scientists remain high, as do wages for economics majors. The overall college premium is still high, but most of those average college premiums fail to account for major.

Note that the WSJ article, “U.S. Colleges Are Separating Into Winners and Losers: Schools that struggle to prepare students for success losing ground; ‘The shake-out is coming'” observes, “the pay advantage for college graduates over high-school graduates declined” in the past few years. That may be because the signaling value of a degree isn’t as strong as it is when it’s scarce. That may in turn be driving some to get graduate degrees—or to signal in alternative ways, like projects or online portfolios. If education is really a big IQ, conformity, and conscientiousness test, as Caplan argues, then it may be that more people who score low in those traits are still now managing to get degrees, lowering the overall and total premium.

I think the student-loan burden is underrated, too, especially considering the psychology of many undergrads and their families. When I was an undergrad, student loans felt like something to worry about… later. You, dear reader, can point out that this is irrational and stupid, and while you are correct, that mindset also seems to be very common. Apocalyptic language like, “I have seen an entire generation destroyed by student loans” is overwrought but also has some truth. Schools, in the meantime, are mostly party to the problem and have done almost nothing to substantially restrain costs (from the perspective of students). I’ve wondered out loud, “Why hasn’t someone tried to build or fund a very low-cost, very high-quality college?“, and so far I’ve not seen any really good answers.

I’m a very small, unimportant part of the college system, and I’m not seeing a huge amount of the massive amount of money spent on higher-ed come my way. If I had a good I had a good, actionable idea to fix the cost problem from the student and adjunct perspectives, I’d go attempt to implement it—but I don’t. If I saw a company that I thought could really reduce the cost of college, I’d try to go work for it.

At the same time, many if not most students contribute to the challenges by being almost totally uninterested in labor market signals or genuine learning; Caplan covers this as well. Again, yes, I’m sure that you, the person about to leave a well-thought-out comment about how you are/were different, are correct, but you are also a minority.

This comment is also useful, about why academic culture is messed up and incoherent from the grad student and young professor perspective. An incoherent, destructive culture doesn’t matter that much if prices are low. When prices are high, they matter a lot. The tenure system has a bunch of other pernicious problems and outcomes, but this piece is long enough, so we’ll table them.

The Hard Thing About Hard Things — Ben Horowitz

November 9, 2017 By in Books, business, Nonfiction, Reviews Tags: , Leave a comment

The Hard Thing About Hard Things is one of the best books I’ve read recently and one of those books whose subject matter is unlikely to interest most of you, but the execution is so good that you ought to read it anyway. The best books transcend their subject; this is probably the best passage in an already great book:

Most business relationships either become too tense to tolerate or not tense enough to be productive after a while. Either people challenge each other to the point where they don’t like each other or they become complacent about each other’s feedback and no longer benefit from the relationship.

Implicitly, you could strike the adjective “business” and replace it with a lot of others… or perhaps strike it altogether and still achieve a similar effect. I’ve often felt exactly what Horowitz is describing but never conceptualized it that way. Over and over again, I found myself marking passages and putting checkmarks next to them. In most books, that practice falls off a third of the way through; in this one, I kept going to the very end.

Many sections just demonstrate that Horowitz gets things. Like:

“What would you do if capital were free?” is a dangerous question to ask an entrepreneur. It’s kind of like asking a fat person, “What would you do if ice cream had the exact same nutritional value as broccoli?” The thinking this question leads to can be extremely dangerous.

Wishful thinking can block useful thinking. Which most of us don’t think, or don’t think consciously.

He’s thinking about antifragility before Nassim Taleb wrote the eponymous book:

The close call was a sign to me that the entire operation was far too fragile. I got another sign when our largest competitor, Exodus, filed for bankruptcy on September 26. It was a truly incredible bankruptcy in that the company had been valued at $50 billion a little more than a year earlier. It was also remarkable because Exodus had raised $800 million on a “fully funded plan” just nine months earlier. An Exodus executive later joked to me: “When we drove off a cliff, we left no skid marks.” It Exodus could lose $50 billion in market capitalization and $800 million in cash that fast, I needed a backup plan.

I’m surprised there aren’t more novels set among venture capitalists or startups. The drama is all there. Maybe most writers don’t realize it, but Horowitz is good at stakes and drama. His stories are too often to quote in full, but they’re full of narrative drama and tension in a way most books aren’t. And some character descriptions are as good as anything in fiction:

Wow. I had no idea who I was dealing with until that point. Understanding how differently Frank viewed the world than the people at Opsware helped clarify my thoughts. Frank expected to get screwed by us. It’s what always happened to him in his job and presumably in his personal life. We needed something dramatic to break his psychology. We needed to be associated with the airport bar, not with his job or his family.

Horowitz had an epiphany and he acted on it. Hard Things could be seen as a series of epiphanies, and we get to follow him through.

We’re often told to attend to data, likely because most people don’t, but once you attend to data, “Sometimes only the founder has the courage to ignore the data.” Like Peter Thiel, Horowitz argues that your life is not a lottery ticket and that markets are often wrong (or at least that insiders can see things that the outsiders who create market values cannot):

If I’d learned anything it was that conventional wisdom had nothing to do with the truth and the efficient markets hypothesis was deceptive. How else could one explain Opsware trading at half of the cash we had in the bank when we had a $20 million a year contract and fifty of the smartest engineers in the world? No, markets weren’t “efficient” at finding the truth; they were just very efficient at converging on a conclusion—often the wrong conclusion.

Almost anyone trying to do anything useful should be thinking about what good ideas are not being pursued: “Wall Street does not believe Opsware is a good idea, but I do.”

“The wrong conclusion:” if markets can converge on “the wrong conclusion,” so can individuals and societies. Some of Hard Things can be read as a critique of American society: “My single biggest personal improvement as CEO occurred on the day when I stopped being too positive.” American society is regularly considered to be positive, but in a way that isn’t necessarily founded on skill or improvement. The “self-esteem” movement is part of this trend, even though moving towards self-efficacy would be an improvement. In class, when I started teaching I was often too positive. Now I’m less positive and more likely to emphasize that growth often comes from pain and struggle. The deadlift doesn’t get higher without some pain, and the best lifters learn to love the pain. Same with intellectual, psychological, or emotional growth. Yet we have a society that shies away from those truths.

I’ve heard about Hard Things many times but this recommendation tipped me into reading it, and I hope my recommendation tips you. The best books can be read many ways and applied to many situations, and this is one of the best. I didn’t expect it to be, which makes it all the more delightful.

The real estate market is peaking:

April 9, 2016 By in business, Cities Tags: , , 1 Comment

My Dad met a woman in her early 60s who went back to work as a flight attendant on Jet Blue. Which is a fine and excellent occupation. But she also just got a real estate license, and her plan is to buy houses in Culver City for around $600,000 – $900,000, fix them up, and then flip them—for much more, presumably.

Maybe she doesn’t have the cash to pull off the purchases in the first place. Maybe she won’t be able to get the mortgages. Maybe it’s all hot air.

But maybe it isn’t. In the last two years a real estate frenzy seems to have built up in some markets. The flight attendant needs to find a greater fool before she gets crushed by the carry costs of the houses she’s buying or trying to buy.

Have you seen The Big Short, or read the book? History is repeating itself. The car loan market is already flashing warning signs. That woman’s whole financial life is going to fall apart if she starts trying to flip and the housing market falls.

People who bought real estate in 2009 – 2012 look like geniuses today. But by 2017, the people who bought from 2014 – 2016 might not look geniuses. I hear a lot of people around my age who want to buy stuff because they feel like they’ll be priced out forever if they don’t. That’s the kind of talk that makes me nervous.

In college all everyone talked about was art, drugs, ideas, sex, and parties. The shift to real estate and mortgages is a worrisome one.

Cameras are above all else about sharing

February 5, 2016 By in business, Culture, photos Tags: , , , Leave a comment

In “Sony’s latest camera and some disappointing sensor sales results,” Phillip Greenspun writes that the reward for Sony’s technically innovative sensors has been flat or declining sales. That’s because Sony misses the point: The number one thing camera companies need to do is integrate with Facebook. Camera companies have no one but themselves to blame for their decline. Way back in 2011 Flip Video had a plan for Wi-Fi enabled video cameras that had a Vine- or YouTube-like social system and interface. Every Flip camera was going to have Wi-Fi as a first-class feature. Cisco unfortunately killed Flip right before the launch, but Flip was at least a company that understood what was happening. In the intervening year zero camera companies have attempted to do what Flip was ready to launch.

Olympus_OMD-1351Which is an amazing story in the annals of corporate stupidity. For the vast majority of people images are ways of signaling: signaling their character, their sense of fun, their sexuality, their lives. Image quality is not terribly important for that purpose, and image quality became “good enough” for most people with the iPhone 4 (which, not coincidentally, Instagram was founded). In 2010. Six years ago. Normal people don’t do detailed technical comparisons of their phone cameras. At most they ask, “Is yours good?” and the reply is usually “Yeah, it’s pretty good.”

The camera companies are technical geniuses and social morons. They ignore the absolute most important use case for 95 – 98% of their market. By now it may be too late to attract users accustomed to high-quality smartphone interfaces. But the camera companies are still barely even fine. The interface for getting photos from the modern cameras I have to my phone is horrific.

Apart from a relative handful of nerds like me, no one gives a shit about image quality once it reaches some acceptable level that it reached long ago. No one wants to recharge batteries or stick the SD card in the computer. For the last five or so years every camera iteration has gotten better autofocus and better low-light performance and a host of other handy but marginal features that no one cares about except professionals and Internet gear wankers.

I wrote about this dynamic in “Photography and Tyler Cowen’s Average is Over.” Others have written about it elsewhere. In that post I also observed that photography companies are also marketing morons. They still are. Greenspun is excited by the release of the Sony A6300. That camera is technically incredible. It also has a terrible name that likely means nothing to 99% of readers of this blog. Except for people who follow cameras with the passion normal people reserve for sports or celebrities, “A6300” means nothing. Sony is missing the main point with its sensors and its cameras. They need more anthropologists / sociologists and fewer outright engineers.

Tuft & Needle is doing good things for mattresses:

November 24, 2014 By in business, Links Leave a comment

A friend wrote me to say, “I actually got s bed from tuft and needle (the 10 inch one) on your blog recc and it’s great!”

Admittedly the link wasn’t in the email, but the fact that she likes the bed says good things about the company and the for possibility that they might disrupt the very nasty mattress industry.

Tyler Cowen on Paul Krugman on Amazon on the buzz

October 20, 2014 By in Books, business, Publishing Tags: , , , 3 Comments

In “What is the welfare cost of Amazon supply restrictions on books?” Tyler Cowen writes on whether Amazon’s much-publicized maneuvers against publishers are welfare-enhancing or welfare-destroying; most of the former answers tend to come from readers and indie publishers, while most of the latter answers tend to come from publishers and established authors. I however was compelled to comment on a separate and to my mind under-discussed issue: the lack of any sense of history in most of these discussions.

The same class of writers who five years ago were aghast at the lack of support for literary fiction among publishers now decry Amazon; they’re supporting the same publishers who were until recently the cravenly commercial forces destroying “quality” literary fiction. “The plight of literary fiction” has been an evergreen essay topic for as long as I’ve been cognizant of literary culture. Literary fiction was (or is) in plight because publishers supposedly don’t support and readers are too busy masturbating to romance fiction or science fiction tech fantasies (or whatever) to read lit fic.

Tangentially, I’m also amazed that, in rereading the preceding sentence, it seems to make sense and flow nicely without any commas. Perhaps it is the influence of Steven Pinker’s The Sense of Style, which I bought naturally from Amazon and which has me thinking about nesting and recursion more than any time since CS 102.

The link in the preceding paragraph also goes to Amazon.

Guest Post: I Was Customer Number One for Uber Fresh Yesterday!

August 27, 2014 By in business Tags: , , , 2 Comments

This post is by my Dad, Isaac Seliger.

It’s hard to be first at anything in America, but yesterday I was the very first Uber Fresh lunch delivery customer. Uber, which is of course taking on the taxi cartels with reasonable success, is trying to become something like a local Amazon–delivering restaurant meals, late-night rolling papers and condoms, for example, or taking the dog to the groomer, and so on. Since no one—including Uber or Amazon—actually knows how to do this, Uber chose this week to test the lunch delivery market in my neighborhood, Downtown Santa Monica.

Downtown SaMo,* as we locals call it, is Santa Monica’s version of the East Village, where Jake lives now, Capitol Hill in Seattle, where he once lived. Which is to say, the area is composed of lots of apartment buildings occupied either by young hipsters like Jake or geezers like me, but few people in between, since the in-betweeners are in prime family time. In Santa Monica, lots of earnest bars selling hand-crafted $12 cocktails ($15 in the East civet pixVillage), $20 small plates of roasted beets and kale, and $5 cups of pour-over coffee. The tragically hip Funnel Mill coffee shop two blocks from me actually sells $90/cup Kopi Luwak Civet Shit coffee, which Jake and I did not try when he last visited.

In short Downtown SaMo is perfect to test Uber Fresh. This week Uber is testing is a single lunch selection from a local restaurant each day, starting yesterday, which is delivered for $12—including the Uber driver’s cut. At 11:30 AM I placed my order using the Uber app and, as promised, the Uber guy showed up within ten minutes. That’s a big improvement on most delivery, which can take anywhere from ten minutes to an hour to never.

Unlike ordering from Eat24 or GrubHub, however, the Uber driver won’t come upstairs, so I met him at the curb. To me this is a big negative: by the time I overcome inertia sufficiently to get myself together to go downstairs, I might as well continue out the door to the dozens of takeout places within a few blocks of me. Death to inconvenience! That could be the rallying cry of a lot of modern consumer-facing startups. It’s not a bad tagline for my own company, Seliger + Associates.

Anyway, the driver turned out to be the typical Uber driver with an an odd, vaguely Eastern European name and accent, accompanied by an Uberette in her late 20s. She popped out of car with a big smile and a free cookie and declared I was the very first Uber Fresh delivery! It helps that the Uber Development Office is nearby.

But how was the food? The lunch was from Tender Greens, an LA-based salad bar chain, which is okay but not exciting. This described lunch, which consisted of a cup of tepid chicken soup, an ordinary Caesar Salad, and, in my case, a very tasty cookie. The best part the container: a nifty black Uber bag. Sort of a party favor or “party favorite,” as Jake’s younger sister used to call them when she was about four.

uber_bag-1148Although being Customer Numero Uno was interesting, I wouldn’t rush to order Uber Fresh again anytime soon. The food was kind of meh, fairly expensive at $12 and, since I had to go downstairs anyway, I could have walked to about 20 lunch places in ten minutes. As a business, the single-meal option is interesting but also problematic given the target demographic, since just about every resident of SaMo (or the East Village or Capitol Hill), except me, has some kind of food concern/issue, and most will want a vegan/gluten free/non-GMO or something alternative. Jake doesn’t like simple carbs, for example. But, as Joe Bob Briggs likes to say, you might want to check it out.

* [Jake’s note: They do?]

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