Four short links: 22 October 2009

Cognitive Surplus, Scaling, Chinese Blogs, CS Education for Growth

by Nat Torkington | @gnat | comments: 1

1. Eight Billion Minutes Spent on Facebook Daily -- you weren't using that cognitive surplus, were you?
2. How We Made Github Fast -- high-level summary is that the new "fast, good, cheap--pick any two" is "fast, new, easy--pick any two". (via Simon Willison)
3. Isaac Mao, China, 40M Blogs and Counting -- Today, there are 40 million bloggers in China and around 200 million blogs, according to Mao. Some blogs survive only a few days before being shut down by authorities. More than 80% of people in China don’t know that the internet is censored in their country. When riots broke out in Xinjiang province this year, the authorities shut down internet access for the whole region. No one could get online.
4. Congress Endorses CS Education as Driver of Economic Growth -- compare to Economist's Optimism that tech firms will help kick-start economic recovery is overdone.

Ignite Show: Anthony Citrano on Money Remixed

Ignite Show Episode 26

by Brady Forrest | @brady | comments: 1

This week's Ignite Show veers into the current financial situation of the US. The economy is going off a cliff and financial practices are being, ahem, re-evaluated. Anthony Citrano takes this thinking a step further and ponders what would happen if the US dollar disappeared. He suggests that corporations will end up issuing money (like Kong Bucks in Snow Crash).

Anthony Citrano co-founded Pop!Tech and worked on the Obama campaign. He has written for Consumerist, The Huffington Post, Money, the New York Times, Investor's Business Daily, the Wall Street Journal, WIRED, and his blog, The Cosmic Tap. This talk was filmed by Social Animal and was given at the first ignite LA.

The US Online Job Market Improved Slightly in July

by Ben Lorica | @dliman | comments: 12

Measured in terms of online job postings, the U.S. job market^† improved slightly in July. Here are two views of the number of job postings per day: note the slight uptick in July 2009 in both graphs.

The worst year-over-year decline occurred in April, the online job market subsequently shed less postings in May and June. Given that July was an improvement over May/June, one would hope that the stage is set for a sustained upward trend. But with 45% fewer job postings in Jul-09 compared to Jul-08, the U.S. online job market remains far from the levels seen in previous years.

Alternatively, it may take a long period before job postings return to 2008 levels. Instead of looking for green shoots, we may have to brace ourselves and adjust to the New Normal: a stretch of time when job postings remain significantly less than the 2006-2008 period.

There were fewer online job postings in every state, with losses ranging from 36-37% in VA, MD, OK, AK, to 55-58% in DE, WY, MN, WI. The two largest states (CA, TX) had 50% and 43% fewer job postings in 2009 compared to the same period in 2008:

(†) In partnership with SimplyHired and Greenplum, we maintain a data warehouse that contains most U.S. online job postings dating back to mid-2005. Data for this post was through 7/31/2009.

The US Online Job Market Was (still) Down Big In June 2009

by Ben Lorica | @dliman | comments: 5

Updating my post from early June, the U.S. online job market^† still hasn't shown signs of recovering from steady declines that began in September of last year. Compared to the same period last year, there were 50% fewer job postings in June 2009.

An alternate view highlights the start of the downward trend, as well as the smaller than expected seasonal bounce from Dec-08 to Jan/Feb 2009. In a normal year, the number of postings decline in December (as employers table job searches for after the holidays) and recovers sharply the following Jan/Feb. While job postings did bounce back in Jan/Feb 2009, the seasonal bump was less than half of what occurred in previous years.

No geographic region has been exempt from the downturn in online job postings. There have been sharp declines in all states, ranging from -59% in DE, WY, and MN, to -38% in MD, OK, VA.

In closing, we still haven't detected the green shoots that some forecasters have been crowing about over the last few months. If one were to take an optimistic perspective, the worse year-over-year decline occurred in April. OTOH, we are still staring at a 50% decline in June 2009. So while we may have hit the bottom in April, we need a few strong(er) months before we can comfortably announce the arrival of green shoots.

(†) In partnership with SimplyHired and Greenplum, we maintain a data warehouse that contains most U.S. online job postings dating back to mid-2005. Data for this post was through 6/28/2009.

Four short links: 26 Mar 2009

by Nat Torkington | @gnat | comments: 2

Books, Money, Collective Despair, and a Dashboard of Doom:

1. Will The Real iPod For Reading Please Stand Up -- Sebastian Mary argues eloquently that we're too focused on long-term writing because of the requirements and constraints imposed upon us by a mass-market paper book, whereas text online is basically an experiment in different lengths and sizes to find new balances for the new medium. a glance at the self-help or business shelves of your local bookshop will show you plenty more. And yet to make economic sense they have to be padded out for publication in 'proper' book size. But to conclude from this (as many unwittingly do) that long-form books are necessarily the best, rather than just the most familiar, way of communicating ideas is mistaken; and to assume that this practice will transplant to e-readers, imagined as a kind of iPod for these long-form essays, is just wrong.
2. What I've Learned in Angel Investing -- fascinating concrete lessons learned by an ex-Yahoo! angel. Be Wary of Entrepreneurs Who are Building for Businesses They Have No Experience In: I don't like it when people are theorizing about how a certain market is or isn't. They will most likely find problems that they have no experience tackling. It's better to find a company who has a veteran of the industry they are tackling so that they have at least have some first hand knowledge of what goes on in that industry.
3. Eco Datamining -- By trawling scientific list-serves, Chinese fish market websites, and local news sources, ecologists think they can use human beings as sensors by mining their communications. Reminiscent of InSTEDD's Golden Shadow project.
4. Check In On the State of the Economy -- a very appealing idea: a dashboard for the economy that is continuously refreshed as new data comes in. The difference between a one-off infographic and a live-updating dashboard is the difference between seeing the train and watching it race towards you. (via >Flowing Data)

Four short links: 10 Mar 2009

by Nat Torkington | @gnat | comments: 1

1. Norwegian Broadcasting Corporation Sets Up Its Own BitTorrent Tracker -- the money shot is not that they're using the same code as Pirate Bay, it's "By using BitTorrent we can reach our audience with full quality media files. Experience from our early tests show that if we’re the best provider of our own content we also gain control of it.". Finally, a broadcaster realizing that they have to jump into the conversation with customers even though they don't know how it ends. (via BoingBoing)
2. Sita Sings The Blues Released -- release of the movie that was mired in copyright strife, now freed under Creative Commons Attribute And No Damn DRM licensing. It still is copyright-entangled: some of the songs in the movie are restricted and if you want to reuse the songs in your reuse of the movie then you'll have to wrangle with the copyright overlords.
3. Crisis of Credit Explained in Infographics -- a great 10m movie explaining the whole disaster from cash to crash, with an infographic-meets-Flash-game feel to it. This is the future of educational films. I've embedded it below. (via Flowing Data)
4. Cowpox Smallpox -- very clear essay from Maciej Ceglowski about how the economic dramas and the climate dramas challenge our democracy in the same way. You might know Maciej from Argentina on two steaks a day or Dabblers and Blowhards. Complexity as a result of feedback loops caught my eye, as that's part of the talk I gave at Webstock, "Better Stronger Failures": "Feedback loops in the financial world are even worse, since the entities being modeled are aware of their behavior - and aware of the models being used to study them. Investors form strategies based not just on market conditions, but on their perceptions of others' perceptions of market conditions, and so on in a hall of mirrors effect. Any algorithm that can reliably predict the behavior of a financial market will be used by participants in that market to earn money, altering the system in a way that leaves you right back where you started. In this sense our ability to model economics will always be worse than our understanding of the weather, since we don't have to worry about a raindrop anticipating that it will hit the ground before it even forms, and taking steps to change the outcome."

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

State of the Computer Book Market 2008, part 4 -- The Languages

by Mike Hendrickson | @mikehatora | comments: 25

In this fourth post (parts one, two and three are found here) on the State of the Computer Book Market, we will look at programming languages and drill in a little on each language area.

Overall the market for programming languages was down 5.9% in 2008 when compared with 2007. There were 1,849,974 units sold in 2007 versus 1,740,808 units sold in 2008, which is a decrease of 109,166  units. So the unhealthy 8% loss in the Overall Computer Book Market was not completely fueled by programming-oriented books.

(continue reading)

Four short links: 5 Feb 2009

by Nat Torkington | @gnat | comments: 0

Dearest Reader, for today's compendium of brief pointers to the writings of the world's greatest minds features language not suitable for children. So please stop reading this blog post to your child. Please. Think of the children.

1. Don't Work for Assholes (Derek Powazek) -- sound advice that we all have to learn, then relearn.
2. Broadband Stimulus Package Explained by Yochai Benkler -- understanding the state of the bills in House and Senate, what each proposes to spend, where, and why. I, like many, were surprised to learn that the House's bill gives half the money to the Secretary for Agriculture to spend. There is no sarcastic comment I can make about the Secretary of Agriculture that the Internets have now not already made. (via BoingBoing)
3. The Web In The World -- Slideshare presentation by Timo Arnall. Good intro to pervasive computing. "I think the hyperlink is a flawed model for physical interaction. (via Liz Goodman)
4. Offshoring, Does It Ever Work? -- very interesting responses to this question on Stack Overflow. As far as "does it EVER work" concerned: it does. It doesn't work well though. Most people can run, doesn't mean that most people can run as fast as Usain Bolt.

Big Mo' and The Bears

by Dale Dougherty | @dalepd | comments: 3

If you watch sports, as many will do this with the Super Bowl on Sunday, you know that games can change direction. Something happens and momentum changes quite suddenly. A team that was piling up scores suddenly becomes tentative and defensive, as was the case with the Arizona Cardinals in the NFC Championship game, even though they held on to win the game. A team that is getting badly beaten inexplicably begins doing good things again.

An alert game announcer notices these changes, and comments on them often in advance of the results having changed significantly. Usually in football, it's a turnover, such as a fumble or interception, that opens the door for the other team to change the outcome. Sometimes it's a dumb penalty that incites the other team to action and gets their collective head back in the game.

You can probably guess that I'm really thinking in terms of our dreadful economy. We're on a team that's worse than the Arizona Cardinals ever were. We're up against the Bears, which is unfortunately not just a team from Chicago. The Bears are overpowering and we're really getting beat. Nobody's cheering and a turnaround seems impossible. It's hopeless until we see a sign that things could change. If you're a fan, you watch for these things and hope they'll happen. If you're a player, you've got to make them happen or you're defeated.

An essay by Paulette Miniter in the Christian Science Monitor cautioned people not to panic about their 401ks because stocks will recover before jobs do. She wrote:

Our retirement funds probably aren't too far away from getting back to work. Stocks are down 40 percent from their last peak, putting us deep in the bear den. But since investors can exectute trades much faster than corporations can start hiring en masse again after a recession, stock prices will likely rise before the economic recovery is official.

I don't know if Miniter's right but she's got a hunch that things might change and she tells us where to look. The essay got me thinking about what signs to look for that momentum might be changing. The stock market index seems inadequate as a scoreboard for the economy; it's a reflection of how gamblers think about the game in advance rather than what's actually happening on the field. I wish there was a better way to keep score. However, maybe it's not the score we should be looking at. It's the series of actions -- in the case of football, it's a sustained drive -- that lead to changing the score.

Tim O'Reilly and I saw Web 2.0 coming because we spotted fundamental changes in the way the game was starting to be played and believed that these were signs that momentum had shifted. The Web was making a comeback, executing with a new playbook, like the West Coast offense of Bill Walsh. The Internet/Web space of late 1990's shifted from teams with me-too plans easily getting funding to teams in 2002 that were organized around plans that nobody was funding. The remarkable thing was the determination of these startups despite little or no prospects for success. That is, they had few people believing in them, except eventually their fans -- people who began using services like Blogger, Flickr and Etsy in greater numbers. It's like a team that re-discovers why they're playing the game, and they see that their effort and exertion are causing the cheering in the stands, which only makes them work harder. They stop worrying about losing and focus on playing harder, and on each subsequent play they are playing harder than their opponent. That's why the score eventually changes.

I don't know what signs will show that things are turning around but I know we need to be looking. The signs might be incidental or accidental, but they will get you to start wondering if change is coming. They'll be early-warning signs that the Bears can be moved back a little and maybe scored on. It will get you believing that the Bears can be beaten, and this belief will occur to you as it occurs to others who will begin playing harder, too. Suddenly Big Mo' changes sides.

Thinking About Wendell Berry's "In Distrust of Movements"

by Tim O'Reilly | @timoreilly | comments: 25

I'm just reading a Wendell Berry essay from 2000, entitled In Distrust of Movements, reprinted on a blog with the inspired name The Irresistible Fleet of Bicycles. I was going to just tweet the link, but realized that more people need to read this, and I ought to quote more extensively. (I hope that fans of Michael Pollan's books like The Omnivore's Dilemma and In Defense of Food will rediscover his great predecessor in thinking about food and its proper role in human society.)

The essence of Berry's argument is that we as a culture need to get away from single-issue movements to fix this or that, and instead embrace holistic thinking about how society as a whole should be organized to achieve our goals. As a farmer, essayist and poet, Berry's focus, is, of course, not on political organization, or industry, but on the more fundamental issue of where our food comes from and how best to produce it. In this time when the broader public is becoming aware, through a variety of economic shocks, that "the way we live now" is unsustainable, Berry's thinking, once perhaps regarded as a relic of the idealistic back-to-the-land movement of the seventies, is finding new relevance in an era in which comparisons between the collapse of the Soviet economy in the 80's and today's collapse in the American economy become a topic of discussion on high tech mailing lists. (I take particular note of the fact that Dmitri Orlov's piece, which provoked that discussion, makes the case that Russia's economy was in many respects more resilient than ours, with one callout being that most Russians still had some ability to grow their own food.) Even the BBC is noting that Food needs 'fundamental rethink'.

What I like best about Berry is his insistence on a holistic approach. He writes:

...if we are concerned about land abuse, we have begun a profound work of economic criticism. Study of the history of land use (and any local history will do) informs us that we have had for a long time an economy that thrives by undermining its own foundations. Industrialism, which is the name of our economy, and which is now virtually the only economy of the world, has been from its beginnings in a state of riot. It is based squarely upon the principle of violence toward everything on which it depends, and it has not mattered whether the form of industrialism was communist or capitalist or whatever; the violence toward nature, human communities, traditional agricultures and local economies has been constant. The bad news is coming in, literally, from all over the world. Can such an economy be fixed without being radically changed? I don’t think it can.

The Captains of Industry have always counselled the rest of us to be “realistic”. Let us, therefore, be realistic. Is it realistic to assume that the present economy would be just fine if only it would stop poisoning the air and water, or if only it would stop soil erosion, or if only it would stop degrading watersheds and forest ecosystems, or if only it would stop seducing children, or if only it would quit buying politicians, or if only it would give women and favoured minorities an equitable share of the loot? Realism, I think, is a very limited programme, but it informs us at least that we should not look for bird eggs in a cuckoo clock.

I love his insight that "environmentalism" as it is so often conceived, preserving wildness for itself, misses the point. The issue is how properly to situate humans in their landscape:

...we need diversified, small-scale land economies that are dependent on people. Therefore, we need people with the knowledge, skills, motives and attitudes required by diversified, small-scale land economies. And all this is clear and comfortable enough, until we recognize the question we have come to: Where are the people?

Well, all of us who live in the suffering rural landscapes of the United States know that most people are available to those landscapes only recreationally. We see them bicycling or boating or hiking or camping or hunting or fishing or driving along and looking around. They do not, in Mary Austin’s phrase, “summer and winter with the land”. They are unacquainted with the land’s human and natural economies. Though people have not progressed beyond the need to eat food and drink water and wear clothes and live in houses, most people have progressed beyond the domestic arts — the husbandry and wifery of the world — by which those needful things are produced and conserved. In fact, the comparative few who still practise that necessary husbandry and wifery often are inclined to apologize for doing so, having been carefully taught in our education system that those arts are degrading and unworthy of people’s talents. Educated minds, in the modern era, are unlikely to know anything about food and drink, clothing and shelter. In merely taking these things for granted, the modern educated mind reveals itself also to be as superstitious a mind as ever has existed in the world. What could be more superstitious than the idea that money brings forth food?

I AM NOT SUGGESTING, of course, that everybody ought to be a farmer or a forester. Heaven forbid! I am suggesting that most people now are living on the far side of a broken connection, and that this is potentially catastrophic. Most people are now fed, clothed and sheltered from sources toward which they feel no gratitude and exercise no responsibility. There is no significant urban constituency, no formidable consumer lobby, no noticeable political leadership, for good land-use practices, for good farming and good forestry, for restoration of abused land, or for halting the destruction of land by so-called “development”.

We are involved now in a profound failure of imagination. Most of us cannot imagine the wheat beyond the bread, or the farmer beyond the wheat, or the farm beyond the farmer, or the history beyond the farm. Most people cannot imagine the forest and the forest economy that produced their houses and furniture and paper; or the landscapes, the streams and the weather that fill their pitchers and bathtubs and swimming pools with water. Most people appear to assume that when they have paid their money for these things they have entirely met their obligations.

Money does not bring forth food. Neither does the technology of the food system. Food comes from nature and from the work of people. If the supply of food is to be continuous for a long time, then people must work in harmony with nature. That means that people must find the right answers to a lot of hard practical questions.

While it is almost certainly true that the sustainable landscape of small farms that Berry treasures is a difficult fit with the scale of modern society, it's also true that we are teetering on a precipice, that just maybe, we are getting the first signs that our society as a whole (and not just our financial system) is a kind of gigantic Ponzi scheme that will one day run out of room for growth, with disastrous consequences.

I know that there are those who will counter that with the right technology we can grow our way out of anything. I used to believe that, but I'm not sure I do any more. I don't know that Berry has the right answer to the challenge we are facing, but he definitely has the right framing for the questions we need to be asking ourselves:

The proper business of a human economy is to make one whole thing of ourselves and this world.

Catch 22: Too Big To Fail, Too Big To Succeed

by Joshua-Michéle Ross | @jmichele | comments: 19

Hat in hand the U.S. Auto Industry lined up for their slice of government aid and it appears as of this posting that they will get the money they are asking for. These titans spent years hiding behind the “free market” shibboleth when convenient (the market wants gas guzzling SUV’s) and when punished by that same market we hear that they are victims of factors outside their control and that they are “too big to fail.” It has become a hackneyed expression precisely because it summarizes the situation so well; this is the privatization of profit and the socialization of loss.

The very concept of “Too Big To Fail” points to a deeper truth: the U.S.’s auto industry does not operate within the “free market” at all. Far from it. As their moniker suggests, the “Big Three” are an oligopoly with a long record of eschewing innovation (electric cars, hybrids etc.), killing off alternatives like mass transit and bullying public policy (lobbying against CAFÉ standards, environmental and tax policies [Hummer owners get a $34K tax credit!], the threat of relocating factories etc.) all in an effort to conform the not so “free market” to its lumbering non-strategies of pursuing short-term profit.

Now that their short-term thinking has met with long-term reality we are faced with bailing them out. Fair enough. There are millions of jobs connected to the automobile industry. But do we now trust these same institutions to deliver and execute the plan for a sustainable U.S. transportation industry?

If these are the flaws of the industry, consider their current leadership; The CEOs of these failing behemoths flew in on corporate jets, asked for $25 billion dollars, brought literally not one shred of documentation on what they intended to do differently and couldn’t explain how they arrived at the 25 billion dollar figure in the first place. When asked if they would accept a $1 dollar per year salary (Iacoca style) in exchange responses from GM and Ford ranged from non-committal to sarcastic (“I don’t have a position on that today” - Rick Wagoner of GM, “I think I am OK where I am today.” Ford’s Alan Mulally who earns $22m per year).

Oligopolies like The Big Three thrive on standardization, scale and market manipulation - not innovation. It is precisely their structure, size and leadership DNA that I believe precludes them from any chance of successful innovation. So there is the Catch 22. They may be too big to fail - but they are too big, bloated and corrupt to succeed. If we are the taxpayers funding the bailout, what are the alternatives?

Unintended Consequences of Nationalizing Banks

by Robert Passarella | comments: 8

This is not a post for or against the actions of the Treasury. This is a quick look at what may be on the horizon--so that we can all keep our collective eyes open. I invite you to add your own observations and questions in the comments. I'd like to start you off with a couple.

Now that the US government has decided to force nine of the biggest financial institutions to take funds, what does that really mean?

• What impact will there be on the internal risk allocation and compensation programs at these institutions?
• In reference to JP Morgan, Goldman Sachs, and the rest, if the US government is going to limit risk in the short-term as a backstop to the taxpayer's investment--what risks to they choose to limit and why?
• Will some of these firms exit proprietary trading as a whole?
• How will limiting risk affect shareholder expectation of returns?
• Also, if you limit compensation, I don't think it will be just CEOs singing the Paulson Prison Blues. What will attract the entry-level talent that looks to high performance bonuses at the upper levels as a goal?

This also means that the game for Wall Street is about to shift to new players. Make no mistake, a "Neo" Wall Street will arise from this action. The Citadels, SACs and others will fill the risk vacuum left unoccupied by the "old" investment banks. Also, key star players and their groups will migrate or go independent to escape financial and operational collars. And given that a lot of their options/equity compensation is underwater, the long-term incentives may be lacking to keep them in their current seats. The game may be changing, but this is not the end to global finance and capitalism.

My friend Roger Ehrenberg wrote down some of his thoughts on this issue, as well. Check out his two most recent posts:

Bailouts, Nationalism and Diplomacy

A Few Quick Thoughts on the Fed Plan

Torkington's Law

by Nat Torkington | @gnat | comments: 3

Here are two presentations that I've found particularly instructive in the market meltdown:

• Making Sense of the Mortgage Meltdown: many numbers, tables, and charts to help you see the full number of sigmas the last few years represent.
• Sequoia Capital on Startups and the Economic Downturn: this is a presentation from VCs about how startups should deal with the new market conditions. In short: batten down the hatches.

Sequoia is right on the money in my opinion: lock down, there's tough times a-coming. They say that if you don't have a year's cash in the bank, you're in trouble. I can believe it. Their best advice is to become cashflow positive as soon as possible. Hmm, weren't smart people saying this before? No, not just 37 Signals and our very own Marc Hedlund ... oh right! Sequoia were saying it in 2001.

I hereby reveal Torkington's Law: when VCs no longer emphasize becoming cashflow positive as soon as possible, you're officially in a bubble. You don't thank me now, but just wait four years until there's a new instrument that lets bankers manufacture money from thin air. When VCs smell silly money exits again, they'll remove those "unnecessarily limiting" bits of advice from their presentations because "this is a new world" and "this new market makes greater growth possible, justifying any temporary debt", and when they do you'll recognize it for the convenient self-serving venal lie that it is and cry "Torkington's Law! We're in a bubble!". The guy beside you in the soup kitchen line will look at you strangely, but ignore old Badger Pants Pete and rush out to start one of these new Web 3.0 companies all the kids are talking about so you can get some of that silly money for yourself. After all, the only reason to hate a boom is if you didn't get in before it ended, right? Right?

I think I need a bailout for my faith in human nature ....

Thoughts on the Financial Crisis

by Tim O'Reilly | @timoreilly | comments: 24

The other day, we received a blistering email from a Radar reader complaining about our silence on the subject of the economic meltdown. I wrote back:

There are a lot of people bloviating about the financial crisis. It's outside of our area of expertise, so there didn't seem to be a lot of urgency to add to the hot air. Even professional economists and financial experts disagree on where this is going. I've been reading a lot, and sharing the best links via my twitter feed, but frankly, I'm feeling that we're in the middle of a wave that no one completely understands.

Meanwhile, I did in fact spend my NY Web Expo talk on the idea that "I sense a storm coming" (Rilke quote), and the idea that companies and individuals need robust strategies (ones that can work even in uncertain times), with one robust strategy being to "work on stuff that matters."

That Rilke quote, from the poem The Man Watching, translated by Robert Bly, has this great line about letting ourselves be washed over by events greater than ourselves:

I can tell by the way the trees beat, after
so many dull days, on my worried windowpanes
that a storm is coming...

What we choose to fight is so tiny!
What fights us is so great!
If only we would let ourselves be dominated
as things do by some immense storm,
we would become strong too, and not need names.

I've been feeling a lot like that. Watchful. Listening. Learning. Not rushing about fighting the small things of the moment but letting the storm wash in. It will change us. That can be good. And as the storm washes through, it will become clear what we have to do.

I've been quoting that poem in my talks since Why I Love Hackers at ETech in March. It ends with a ringing invocation to work on challenging problems, problems that stretch us, as the wrestlers of the Old Testament were challenged by wrestling with the angel. That seems to me to be the heart of what we need to do now.

I hadn't thought to do this earlier, but it occurs to me that I might also share here the message that I sent out to all O'Reilly employees by email a week or so ago (edited slightly to remove a few company-specific details):

Many of you have no doubt been alarmed by the developments of the last couple of weeks in financial markets, so I wanted to put a few thoughts out to all of you before disappearing on a combination of vacation and business travel for the next 3+ weeks.

...at the last company meeting, I talked about a theme that I've expanded on in public talks like the one I did at Ignite Boston and at Web 2.0 Expo in New York the week before last: the idea that robust strategies are ones you'd adopt in good times and in bad. And I argued that we probably end up with more robust strategies if we assume the worst rather than the best.

We could be in for a long, rough time in the economy. I'm not going to say otherwise.

But I also want to point out that rough times are often the best times for creativity, opportunity and change. We transformed ourselves from a technical writing consulting company into a book publishing company as a result of the huge economic downturn of the mid-80s. After the dotcom bust in 2001, we launched Safari Books Online, Missing Manuals, the Web 2.0 conferences, Foo Camp, Make: magazine, the O'Reilly School of Technology, and a host of other initiatives that have fueled our growth and that define the company today. We diversified and invested in new ideas.

It was a painful period but one that made us better and stronger as a company.

And if you look at history, you see that this has always and everywhere been true. It's not an accident that economist Joseph Schumpeter talked about the "creative destruction" inherent in capitalism. Great problems are also great opportunities for those who know how to solve them. And looking ahead, I can see great opportunities.

The energy crisis (both global warming and the oil price shock) is helping people to focus on how technology can transform the energy sector. The financial crisis has demonstrated just how out-of-whack an unregulated, proprietary, black-box approach can get. This will lead to an emphasis on regulation, but I hope, above all, on transparency. This is of course analogous to what happened with open source software. Meanwhile, the mobile revolution will continue, regardless of the state of the economy. If it can prosper in Africa, it can prosper even in an American downturn. And all the stuff we're exploring with Make: new materials, new approaches to manufacturing, and the "open source" approach applied to hardware, will take us in unexpected directions. And all of these areas can benefit from what we do best: capturing and spreading the knowledge of innovators.

We don't know yet how problems in the overall economy will affect our business. But what we can do now are the things we ought to be doing anyway:

• Work on stuff that matters: Assuming that the world does go to hell in a handbasket, what would we still want to be working on? What will people need to know? (Chances are good that they need to know these things in a world where we all continue to muddle along as well.)

• Exert visionary leadership in our markets. In tough times, people look for inspiration and vision. The big ideas we care about will still matter, perhaps even more when people are looking for a way forward. (Remember how Web 2.0 gave hope and a story line to an industry struggling its way out of the dotcom bust.)

• Be prudent in what we spend money on. Get rid of the "nice to do" things, and focus on the "must do" things to accelerate them.

  These are all things we should be doing every day anyway. Sometimes, though, a crisis can provide an unexpected gift, a reminder that nobody promised us tomorrow, so we need to make what we do today count.

This seems like good advice for Radar readers as well. I will try to write further on the theme of "work on stuff that matters" in the days ahead.

The Connected Economy

by Nat Torkington | @gnat | comments: 10

As the financial markets battle the fallout of years of poorly regulated unwise greed, the language of analysis is revealing. Commentators talk of "contagion spreading", financial "gears jammed", and "turbulent" markets. This is the language of non-obvious connection, where it's theoretically possible but impossible in practice to predict the future state.

Listening to This American Life's new episode on the spreading financial market failures brought this home. It talked about Credit Default Swaps (CDS) and how hedge funds would both buy and sell these so that they were making money from the interest even as their clients were covering each other's principals. This worked fine for a while, but because hedge funds were each others' clients there arose these long lines of dependencies—if A failed to pay B, then B couldn't pay C, who couldn't pay D, and so on. When the markets started to choke on rotting mortgages, the CDS chains began to unravel.

The CDS game was a bugger because it was easy to check one fund's books and say "yes, we are covered". But there was no way to identify these chains of dependency: the connections between funds were invisible. And, as it turned out, the connections between funds were so much more impotant. Just as one person dying isn't as important as the fact that they can infect others, so too one hedge fund going belly up wouldn't have been anything like the disaster of the dependencies. With globalisation, these connections can span markets, borders, currencies, and languages.

This newly-realized importance of the network reminds me of biology, where we thought we could understand an organism by mapping its genes. Now we realize an organism is a complex mixture of manufactured and transformed chemicals and even other organisms, and the genetic blueprint is necessary but not sufficient for understanding. You can no more understand how an organism works by reading its DNA than you can understand how San Francisco works by reading its phonebook. This "whole organism" multi-level integrative approach is called systems biology.

Nodes often aren't as important as the connections between them. Reductionist science and analysis from the 19th and 20th centuries focused on nodes. I believe 21st century science, economics, political science, and computer science will use more complex systems theory to understand the interactions between chemicals, speculators, nations, and users.

Social network mining, exemplified by Duncan Watts' six degrees work, is just the tip of the iceberg. I think this kind of modern network analysis can make the world a safer place, our futures more secure, and even our bodies more comprehensible. In 100 years time, historians will say that this century's Einstein, Watson, Crick, and Feynman were students of network analysis, and that this was the Connected Century.

Nice Visualization of Candidates' Speeches

by Tim O'Reilly | @timoreilly | comments: 0

Paul Kedrosky pointed to a great visualization of what the candidates are talking about, from the new Dow Jones Insight Election Blog:

Biggest one to note: Health care remains big for the Democrats (24% of all mentions) and small for the GOP (9%). The economy is No. 1 for everyone.

The difference in domestic issue coverage between Obama and Clinton is slight, with the concept of "terrorism" and "health care" being the only places where there is noticeable difference. Obama gets more mentions in close proximity to terrorism to Clinton's edge in health care....

Terrorism continues to be McCain's issue, second only to the economy.

Click on the image above to see a readable copy.

There aren't a lot of details about their methodology, but presumably this is a demonstration of what you get when you subscribe to Dow Jones Insight and can point it to your own topics of interest. Unfortunately, they suffer from the corporate inaccessibility that dooms so many great products to avoidance by early adopters. Rather than giving you any real information, they ask for your info so a sales person can contact you. (I remember having this argument with the folks at Microsoft about their "sign up for a sales call" mapping APIs, before Google blew them all away by providing simple self-service sign-up.)

Nonetheless, this is definitely a blog I'm going to be following from now on.