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Category: economics

Office Coffee: A Leading Economic Indicator

Published October 22, 2008 by cgerrish

Office coffee machine

My office supplies coffee, tea and hot chocolate to its employees. There’s filtered cold water and hot water for the tea and chocolate. Coffee requires at bit more work. Someone has to make a pot of coffee which includes putting a filter into the machine and then loading 1 1/2 portions of ground coffee from pre-measured packages. Through experimentation and oral history, I have learned that 1 package of coffee is too weak, and 2 packages of coffee are too strong.

Office coffee is perpetually bad. There many reasons for this. Often the coffee will sit in the pot cooking away for hour after hour– the flavor boiled out of it. Even when cut with milk it’s barely drinkable, an acidic brown liquid. Good office coffee requires social cooperation of a fairly high level. Reasonably good raw materials must be provided. And then the key, there must be a willing group of people dedicated to making and then maintaining the freshness of the brew.

If you think about it, the social contract around the quality of good office coffee requires an effort equal to that of a business like Peets or Starbucks. A single person is unlikely to make that effort; social cooperation is necessary.

The quality of office coffee produced in this manner is a leading economic indicator. We’ll leave to the side for the moment the idea of subsidized office coffee. When the cost of social cooperation to yield a good cup of coffee is sufficiently below the cost of buying a good cup of java– people switch. Labor replaces capital. The better and fresher the office coffee, the worse the surrounding general economy. As the economy improves, the quality and freshness of office coffee will start to deteriorate, and alternatives will start to seem economically feasible. Capital replaces labor (the general replaces the specific).

In a good economy, there are those who will cling to office coffee as a matter of principle. But as the general quality of office coffee will tell you, this is an utopian ideal. Of course “office coffee” is just a variable, we could just as easily be talking about enterprise software.

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Composite Identity: A Collection of Wholes

Published October 14, 2008 by cgerrish

African Masks

Lately I’ve been thinking about identity as a composite. There was a point where I was convinced by the reversal of poles – switching from the system-based identity to the user-centered identity. An individual has many roles and she can reveal whichever identity attributes that are necessary for a particular transaction. We think of these fragments of identity as the pieces that make up the whole. But another way to look at it is to think of identity of a composite of wholes. Some elements match exactly, but live in a different name space. It’s probably not a complete list, or maybe it’s too long, but here’s an an initial take on the modes of identity. Each one could be consider a whole identity.

  • Anonymous
  • Citizen
    • City
    • State
    • Nation
    • Journalist
    • Politician
  • Social
    • Public
    • Private / Restricted
    • Artist/Writer
  • Personal
    • Medical
    • Legal
    • Financial
  • Consumer
    • Public
    • Private / Restricted / VRM
  • Business
    • Employer
    • Employee
    • Contractor
    • Proprietor

If identity is composite, should there be a single control point? If there were to be a single point of access to the management of this identity, authentication would have to be both multi-factor and multi-band.

Should we put all our eggs in one basket? With investment portfolios we preach diversification– we seek assets that don’t correlate in changing markets. It’s called covariance, we don’t want everything to go up or down at the same time. If we can’t risk a single control point, then we need to move to multiple control points. And in fact, even the ownership of identity is in question. We hear a lot about “my data” and “my identity,” but there is no data or identity outside the Network. The idea of multiple control points means more than I control my identity from multiple credential sets, it means I share control of my identity with other entities. The power and political economy of an identity is distributed throughout a network of relations. We don’t live in a frictionless plane, we live as mortals, among mortals, in this world that unfolds around us in the stream of time.

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Permission To Go Live: Don’t Think Twice, It’s Alright

Published October 6, 2008 by cgerrish

There are some recordings by Bob Dylan that I’ve played over and over again. Each time I play them they’re exactly the same. The quality of the sound differs, but the intention is that a recording offers an identical experience. I’ve listened to “Don’t Think Twice, It’s Alright” so many times I’m able to reproduce a facsimile of it in my mind at will.

This morning during my Sunday morning trip to the newsstand, I picked up a copy of UNCUT magazine with Bob Dylan on the cover. I was interested in reading about the latest release in the Bootleg Series called “Tell Tale Signs.” There’s a quote at the top of the article that goes like this:

“Have I ever played any song
twice exactly the same?”

“No, Bob, No”

“See? I don’t do that.”

So while I have a fixed idea of what a particular Dylan song sounds like, Dylan doesn’t think of his songs– or any songs as working that way. He never takes the play out of playing a song. I read somewhere that he never listens to his recordings; the song he carries with him is way on down the road from that day it was mixed down to a master.

In a world of scarcity– there’s only room for one version of a song- the one that will make the record company money. That’s the old model. In a world of abundance, each time we revisit a song, it’s never the same. The trap of the digital is that it only makes identical copies. The freeing potential of the digital is that every version of every page of Wikipedia is available. We now have an economic framework that can support releasing every version. Buy a single instance, or access to all versions– access to the version control system.

This set of ideas can’t be contained in one area of culture or commerce.

Doc Searls writes about the new way that writing is produced:

Traditional journalism is static. Its basic units are the article, the story, the piece. The new journalism is live. It doesn’t have a basic unit any more than a river or a storm have a basic unit. It’s process, not product. Even these things we call posts, texts, tweets and wikis are less unitary than contributory. They add to a flow, which in turn adds to what we know.

Steve Gillmor writes about the way the companies communicate, through official static planned releases of information or with live conversations through the Network.

Real work gets done in these conversations, and typically this work is being performed in the “open� because the participants realize (and have been given “permission� to work at this live level) that they have little to fear from competition because their access to participation trumps others who by definition have to react after the fact. Not only has the value moved on to the next set of conversations, but the product of this work is now being marketed to the audience most likely to buy it.

In both culture and commerce we’re looking for permission to go live, to sing the song a different way every time. But we also need to hear the song differently every time and start a conversation about it. Now, not everyone will want to go down that road. When faced with Bob Dylan in concert, some will be angered by a song sung in a new way. And when we get to that crossroads— most likely you’ll go your way, and I’ll go mine.

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Hambrecht Previews the Next 18 Months

Published September 17, 2008 by cgerrish

Om Malik interviewed my old boss Bill Hambrecht about the state of the economy and the future of the IPO in Silicon Valley. Watch the whole thing. Hambrecht has worked on transparency in the pricing of securities for many years. His ideas about using a modified dutch auction to price initial public offerings are still revolutionary.

Hambrecht’s explanation of the subprime mortgage crisis is one of the clearest I’ve heard. Mortgage backed securities are traded in a dealer-to-dealer market without transparent and continuous pricing. Stocks are priced through a continuous auction on the stock exchanges. When a company has to voluntarily mark down the value of these mortgage-backed securities, they hesitate. When they’re finally forced to mark an asset down, there’s a big jump down in value. That change in value wrecks the balance sheet. Interestingly, it’s not a business or revenue issue– it’s a price/value of assets problem. Hambrecht’s solution has always been to allow the market to discover the appropriate price and make the process transparent.

Hambrecht thinks the consolidation of the bulge bracket investment banks means that big iBanks will only be doing big deals. Their cost structures will dictate a move toward the mega deal. The ground is being prepared for a new crop of boutique investment banks to bring the new crop of small companies public. My favorite quote in the interview? “It’s like 1968 all over again.”

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