Tag Archives: business

Marketing to Algorithms?

Toby Gunton :: Computer says no – why brands might end up marketing to algorithms

I know plenty about algorithms, and enough about marketing.1 And despite that, I'm not sure what this headline actually means. It's eye catching, to be sure, but what would marketing to an algorithm look like?

When you get down to it, marketing is applied psychology. Algorithms don't have psyches. Whatever "marketing to algorithms" means, I don't think it's going to be recognizable as marketing.

Would you call what spammers do to slip past your filters "marketing"? (That's not rhetorical.) Does that count as marketing? Because that's pretty much what Gunton seems to be describing.

Setting aside the intriguing possibility of falling in love with an artificial intelligence, the film [Spike Jonez's Her] raises a potentially terrifying possibility for the marketing industry.

It suggests a world where an automated guardian manages our lives, taking away the awkward detail; the boring tasks of daily existence, leaving us with the bits we enjoy, or where we make a contribution. In this world our virtual assistants would quite naturally act as barriers between us and some brands and services.

Great swathes of brand relationships could become automated. Your energy bills and contracts, water, gas, car insurance, home insurance, bank, pension, life assurance, supermarket, home maintenance, transport solutions, IT and entertainment packages; all of these relationships could be managed by your beautiful personal OS.

If you're a electric company whose customers all interact with you via software daeomns, do you even have a brand identity any more? Aren't we discussing a world in which more things will be commoditized? And isn't that a good thing for most of the categories listed?

What do we really care about: getting goods and services, or expressing ourselves through the brands we identify with? Both, to an extent. But if we can no longer do that through our supermarkets or banking, won't we simply shift that focus it to other sectors: clothes, music, etc.

Arnold Kling :: Another Proto-Libertarian

2. Consider that legislation may be an inferior form of law not just recently, or occasionally, but usually. Instead, consider the ideas of Bruno Leoni, which suggest that common law that emerges from individual cases represents a spontaneous order, while legislation represents an attempt at top-down control that works less well.

I'd draw a parallel to Paul Graham's writing on dealing with spam. Bayesian filtering is the bottom-up solution; blacklists and rule sets are the top-down.

Both of these stories remind me of a couple of scenes in Greg Egan's excellent Permutation City. Egan describes a situation where people have daemons to answer their video phones that have learned (bottom-up) how to mimic your reactions well enough to screen out personal calls from automated messages. In turn marketers have software that learns how to recognize if they're talking to a real person or one of these filtering systems. The two have entered an evolutionary race to the point that people's filters are almost full-scale neurocognitive models of their personalities.

  1. Enough to draw a paycheck from a department of marketing for a few years, at least. []
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Some Long Overdue Book Reviews

More Money Than God Cover
"More Money Than God," Mallaby

More Money Than God, Sebastian Mallaby

Excellent. Far too many general audience finance books are written at what I think of as a newspaper reading level. (Defining even the most basic terms, assuming the reader is intimidated by any math as complicated as calculating a percentage, feeling the need to frame everything in a protagonist/antagonist arrangement, etc.) This is way, way better than that. There's an appropriate mix of the human element in there. The more factual stuff is covered well without needing resorting to lots of technicalities. (I have other books for that.)

It's hard to draw large conclusions from this book. One that comes to mind is that hedge funds seem to fail (either catastrophically, or in the more prosaic sense of failing to deliver the expected alpha) when they stop being hedge funds, where "hedge" is the operative word.

This book also made me start thinking more about the connection between financial risk and ecological monoculture. Trading strategies seem to have a discrete lifespan. Traders seem to underestimate how their strategies will be affected by being in a crowded field of other people with the same strategy. LTCM is a good example. Their system worked very well for a while and then crashed and burned. Is it that the system was actually bad all along, or was it great when they were the only ones doing it, and terrible when everyone else in the market was copying them and putting on the same trades? I don't think you can judge a strategy in isolation; you need to consider it's utility in both crowded and sparse niches.

"Panic," Lewis

Panic: The Story of Modern Financial Insanity, Michael Lewis

Very well curated. File under: "nihil sub sole novum," "the more things change," etc.

I think the only piece I would have left out, IIRC, was the Paul Krugman one. But that has more to do with being utterly exhausted at trying to reconcile vintage 1990s Krugman-the-Scholar with late model Krugman-the-Demogogue.

Saga #5
Saga #5

Saga, Volume Two, Brian K Vaughn + Fiona Staples

Saga is still absolutely brilliant. The story and art are both outstanding. Comics needs more Space Opera. The genre cries out for a visual medium, but the budget required to do something like this in film would be off the charts. Only James Cameron gets the opportunity to try something like that. (Although after Pacific Rim maybe del Toro will get the chance too. Or perhaps Neill Blomkamp if Elysium rakes in enough. Sign me up for some widescreen baroque space opera directed by either of them.)

"Hackers and Painters,"

Hackers and Painters, Paul Graham

I read most of these essays back in undergrad but it's great to revisit them. It's interesting how the things that have stuck in my mind aren't the major theses of the essays, but little asides and trivialities. Every CS student and programmer should read this. I think it would also make a good read for the family members, managers, etc. of those people too: anyone who wants to understand how we think and see would benefit. Even when I read Graham discussing completely non-technical subjects (e.g. adolescents and popularity) there's something in his method of analysis which resonates with me as distinctly hackerish. On the flip side, it's nice to have someone else in the computing community who is interested in Art. I would need a whole Paul Graham-level essay to unpack this, but I think there's an unfortunate degree of antagonism between the geek and art tribes.

Unseen Academicals, Terry Pratchett

This is one of my favorite Discworld books so far. I didn't realize going in that the focus of Pratchett's satire here is not just academia but also soccer/football culture.

The War of Art, Steven Pressfield

Too superstitious and mystical, but I think there are a lot of overlaps between the way scientists (and especially doctoral students) work and the way writers and artists work. Learning about how various writers (e.g. Neal Stephenson, DFW) work has helped me to be a better researcher.

A Red Mass for Mars, Jonathan Hickman + Ryan Bodenheim

A little hard to follow the plot, but absolutely gorgeous. Hickman consistently turns out books that are so visually different from most comics. Here there's a great contrast, similar to what he did in Pax Romana, between the stark black inking and the luminous aquarelle of the backgrounds.

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Reading List for 16 July 2013

Evan Miller :: Winkel Tripel Warping Trouble or "How I Found a Bug in the Journal of Surveying Engineering"

All programming blogs need at least one post unofficially titled “Indisputable Proof That I Am Awesome.” These are usually my favorite kind of read, as the protagonist starts out with a head full of hubris, becomes mired in self-doubt, struggles on when others would have quit, and then ultimately triumphs over evil (that is to say, slow or buggy computer code), often at the expense of personal hygiene and/or sanity.

I'm a fan of the debugging narrative, and this is a fine example of the genre. I've been wrestling with code for mapping projections recently, so I feel Miller's pain specifically. In my opinion the Winkel Tripel is mathematically gross, but aesthetically unsurpassed. Hopefully I'll find some time in the next week or so to put up a post about my mapping project.

Irene Global Tweets WInkel Tripel
A screenshot of a project I've been working on to map geotagged tweets.

Kevin Grier :: Breaking down the higher ed wage premium

wage premium by major
Wage premium and popularity of majors

File under "all college degrees are not created equal" or perhaps "no, junior, you may not borrow enough to buy a decent house in order to get a BA in psych."

Aleatha Parker-Wood :: One Shot vs Iterated Games

Social cohesion can be thought of as a manifestation of how "iterated" people feel their interactions are, how likely they are to interact with the same people again and again and  have to deal with long term consequences of locally optimal choices, or whether they feel they can "opt out" of consequences of interacting with some set of people in a poor way.

Mike Munger :: Grade Inflation? Some data

Munger links to some very good analysis but it occurs to me that what is really needed is the variance of grades over time and not just the mean. (Obviously these two things are related since the distribution is bounded by [0, 4]. A mean which has gone from 2.25 to 3.44 will almost certainly result in less variance here.)

I don't much care where the distribution is centered. I care how wide the distribution is — that's what lets observers distinguish one student from another. Rankings need inequality. Without it they convey no information.

Marginal Revolution :: Alex Tabarrok :: The Battle over Junk DNA

I share Graur's and Tabarrok's wariness over "high impact false positives" in science. This is a big problem with no clear solutions.

The Graur et al. paper that Tabarrok discusses is entertaining in its incivility. Sometimes civility is not the correct response to falsehoods. It's refreshing to see scientists being so brutally honest with their opinions. Some might say they are too brutal, but at least they've got the honest part.

Peter McCaffrey :: 5 reasons price gouging should be legal: Especially during disasters

McCaffrey is completely right. But good luck to him reasoning people out of an opinion they were never reasoned into in the first place.

I do like the neologism "sustainable pricing" that he introduces. Bravo for that.

I would add a sixth reason to his list: accusations of "price gouging" are one rhetorical prong in an inescapable triple bind. A seller has three MECE choices: price goods higher than is common, the same as is common, or lower than is common. These choices will result in accusations of price gouging, collusion, and anti-competitive pricing, respectively. Since there is no way to win when dealing with people who level accusations of gouging, the only sensible thing to do is ignore them.

Shawn Regan :: Everyone calm down, there is no “bee-pocalypse”

Executive summary: apiarists have agency, and the world isn't static. If the death rate of colonies increases, they respond by creating more colonies. Crisis averted.

Eliezer Yudkowsky :: Betting Therapy

"Betting Therapy" should be a thing. You go to a betting therapist and describe your fears — everything you're afraid will happen if you do X — and then the therapist offers to bet money on whether it actually happens to you or not. After you lose enough money, you stop being afraid.

Sign me up.

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An Untold Stories Tax?

Carnivale - Season 2HBO canceled Carnivàle, a serial show with deep mythology, after two of a planned six seasons. The remainder of Creator Daniel Knauf's story was never told.

The AV Club :: Daniel Knauf tells us his plan for the end of Carnivàle

AVC: Have you ever considered trying to do it as a novel or a comic book [of the remaining story line]?

DK: Constantly. Yeah. Marvel, we had it all set up. At one point, they wanted to go forward and do a series of graphic novels, and they just couldn’t turn the corner with HBO. Since then, yeah, I’ve considered it. But one of the things that makes me a little crazy about Hollywood is, they’re idiots when it comes to their contractual stuff. If I write a novel, it’s like Random House publishes the novel, copyrights it, but when you do business in Hollywood, they say, “Everything in this thing, in all forms, in all potential forms invented and uninvented…” The language is draconian! “…throughout the universe. We own everything in your head. We own everything.” And it’s like, “If you own everything, at least exploit those rights, please. Could you please exploit the rights? And if you’re not going to exploit the rights, can I at least have them back, so I can exploit them?” It’s just a silly way of doing business. [...]

It didn’t make sense to spend $3.5 million an episode. So let’s do a graphic novel. Let’s tell the story!” But they’re on to other toys now. It’s like doing business with that kid down the street whose parents give him really bitchin’ toys, and he’d just leave them broken in the backyard. It makes me crazy, Hollywood.

I think you could make an analogy to Georgist taxation here, or perhaps more generally Gobry's argument in favor of the French wealth tax.

If property ultimately derives from mixing your labor with things, it's not unreasonable to suggest that people have an ongoing responsibility to continue doing so. If you hold some property, most especially land, you may have a responsibility to society to put it to productive use. (We're talking about theory here, not practice. The arbitration of what counts as responsible, productive use is nearly impossible in practice and so even if you had such a responsibility in theory it is likely best if that responsibility is never legislated into reality.) Gobry's argument is, briefly, that capital gains taxes discourage people to put their resources to use, while wealth taxes do the opposite. In essence, capital gains taxes makes it more expensive to put your resources to work, so people do less of that. OTOH if you're going to loose %1 of your accumulated resources anyway to a wealth tax that gives you reason to put your resources out in the world to try to get them to grow more than the amount you'll lose.

If a studio owns the rights to further adaptations in other media, do they have a responsibility to society to actually use those rights? Land may be a special case of property, because people aren't making any more of it. Or so I gather the Georgists, the Diggers, etc. would say. But people aren't making any more Carnivàle either. That idea can only be invented once, only to be owned by one person, just like a particular acre of land. Does that put an extra responsibility on HBO to do something with it? If an owner of arable land has a onus to see it cultivated, does the owner of fecund IP have a similar onus to see it reified?

I have absolutely no idea how you would actually structure this as a policy. Doing so in a way that wouldn't put the actual tax burden on the creators rather than studios would be harder yet. Even so, I think it's an interesting way to look at the ethical responsibility of content owners, if not a way to structure their legal responsibility.

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Google is shutting down the Google Reader service, as you may have heard.

I am not happy about this, but I'm also not throwing fits about it. I spent more time in my Reader tab than any other by a huge margin. I'm sure there's some other service out there that will fill the void. Google is also being pretty considerate about this: they're giving users several months warning and they've made tools available to export your subscription data.

RWCG has had a couple of posts taking the wind out the sails of all the people who are tearing out their hair and rending their garments and casting the evil eye towards Mountain View. Overall I think he's on the right track, but this post doesn't quite line up for me:

RWCG | Crimson Reach | Google Reader: The end of the ‘free’ era

How dare Google shut down a service I made heavy use of for years and years and paid nothing whatsoever for! [...] I wonder if this event marks the end of the ‘free’ era. You know the free era, it’s the era where this was the prevailing business philosophy:

1. Drive competing services out of business with a free service (subsidized by a profitable product).
2. Cancel free service.
3. ???

Actually no, that’s still snarky. It’s more like this:

1. Company gives away something for free.
2. People like it and use it.
3. This makes people think the company is cool. Their friend.
4. When it goes public, they buy its stock, cuz it’s so cool, and everyone they know uses and likes it. Surely that’s gotta mean something, stock-wise.
5. People continue to use the free thing and come to not only rely on it but expect it as their birthright.
6. ...
7. Profit?

According to this philosophy, giving away cool stuff for free was the wave of the future. It’s what all smart, cool companies did. Only backward knuckle-dragging idiots couldn’t figure out how this added up to a business model. Economic realities were no longer reality.

I think he's short-changing the business potential of a product ("product"?) like Google Reader. There's no direct line between "make Reader & give it away free" and "profit," but this approach still has some uses.

1. Yes, it makes people think you're cool and friendly and not-evil. Many firms do things for that reason alone. They spend billions on things way outside their core competencies just so people think they're cool and friendly. Isn't that the entire point of the "Corporate Social Responsibility" fad?

Google paying its employees to create Reader is in it's wheelhouse; it makes sense. Far more sense than, for example, Chrysler paying its employees to lay bathroom tile in poor neighborhoods.

2. Providing services like Reader makes Google look cool to people generally, but more importantly it makes them look cool to geeks. It's a punchline that a firm's number one asset is it's people, but that's pretty true about Google. They can do what they do because they get the pick of the litter of hackers.

I went to career fair my CS department sponsored a month or so ago. The line for the Google table was literally out the door. Most people in my graduate program are angling for academic jobs. Google is one of maybe four private companies that people will be impressed you're interviewing with.

3. Projects like Reader not only motivate applicants, they motivate employees.

Talent and productivity are extremely unevenly distributed in coders. The best are many orders of magnitude better than the median; the bottom decile (conservatively) have negative productivity. You usually don't get the best by offering them orders of magnitude more money, you get them by giving them cool problems to work on.

If you're excited about spending some time developing X, there's a good chance Google will let you do that. (At least in comparison to if you were working at Initech.) What's more, there's a chance Google will roll out X to millions of people, like they did with Reader. I can't stress enough how big of a motivator that can be.

4. Google's strategy for a while has been that anything they do to make people want to use the internet more is good for them, because they capture a dominant slice of the ad revenue online. More people spending more time online is better for Google, period. Reader fits into that. That's not a strategy that will work forever, or for many (any?) other companies. It can also be used to justify a lot of wasted "investments." But it's also true.

5. Google lives and dies off of data. Reader could have been generating that for them. I have no idea how much they actually learned from people's reading habits, if anything, but it had the potential to be a goldmine.

If you can predict people's age, race, religion, political party and drug use only using publicly available "likes" on Facebook, what could you do with my online reading habits? (Answer: sooooo much.)

I have no idea if it was a good idea or a bad one for Google to shut off Reader. I'm skeptical, but I realize I have none of the facts. I can't imagine it would cost that much to keep it running as is, especially compared to their other projects. I'm not sure what better use they have for the resources they're redeploying. I'm curious that they didn't even try to make it ad supported. Hell, I would have even paid directly to keep using it, and I pay for approximately zero online subscriptions.

Again, I don't know what they know. But I do know that "there's no revenue from this free product; let's shut it down" should not be the beginning and end of this decision making.

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Netflix, again: HBR misses the point

I don't intend for this blog to be nothing but commentary about Netflix. I promise. But this is the intersection of business and technology and art, so it's got my attention.

HBR :: Grant McCracken :: Will Netflix Flourish Where Hollywood Failed?

So does Netflix have an edge? Is there any reason to think they can flourish where so many have failed? The apparent answer is data. Netflix has lots and lots of data. They know what we watch, when we watch, where we stop watching, where we repeat a scene, where we reach for the fast-forward button, and most critically, when we break off and move on. They know which movies sell well at 8:00 on a Friday night and which ones we like to watch on Sunday afternoon. They can surmise which directors, writers, and stars produce the most watchable entertainment. They have magnificent data.

(1) Yes, data is their edge. (2) They don't need to make better content than everyone else. They just need to make content good enough to give them bargaining chips when they strike deals with other content makers and distributors.

And that's a tragedy. Netflix has so much data that they are going to be tempted to climb into the creative tent and start offering "advice."

This is almost exactly wrong. Or not wrong, but useless. Producers are constantly offering "advice." The difference is that Netflix's advice will be based on numbers, while other producers' advice is based on sophistry and illusion. ("Does it contain any abstract reasoning concerning quantity or number? No. Does it contain any experimental reasoning concerning matter of fact and existence? No. Consign it then to the flames: For it can contain nothing but sophistry and illusion.")

They can claim to know exactly what works and what does not. Well, sorry, no. Knowing that something works leaves us a long way from knowing why something works. And this leaves us a long way from knowing how to reproduce it in another movie. The only thing this data can be absolutely sure to produce is arrogance. We have seen this mistake before.

Yes, they can claim to know exactly what works and what does not and why. Or they could not. There's nothing inherent in a quantitative approach that rules out epistemic humility. In fact, there's much to quantitative reasoning that makes it more humble. When's the last time you saw someone run a t-test on an executive's intuitions or gut feelings?

This means that whatever the data say, Netflix cannot tell a director, "We need a fight scene here." And it really can't say, "We need a fight scene at the 14-minute mark." Doing so, will not only drive creatives away, but viewers as well. As Henry Jenkins has said, viewers are newly sophisticated and critical. They can see formula a long way off. They can see plot mechanics the second they hit the screen. And the moment this happens, they are off.

Hold on a minute. Why would you assume that Netflix's results would be more formulaic than the traditional Hollywood approach? Humans can only sort out cause and effect when there are a couple of moving pieces. Computerized pattern recognition can do so in much more complicated environments. Doesn't it stand to reason that Netflix's discovered patterns will be more complex, and therefore less formulaic and noticeable, than the patterns that intuition- and tradition-guided producers hew to?

Netflix, therefore, will have to temper their itch to intervene. Naturally, we are not talking carte blanche here. We are not saying that we take any artist and turn them loose. Because we know a great deal of capital has been squandered by creatives keen to prove how artistic and avant garde they are. No, what we need are culture producers who are — in the language of Goldilocks — "just right." They need to be able to tell a story and obey some of the story-telling conventions even as they do new and interesting things to break and bend those conventions. Only then will painters paint and patrons watch.

The advice in this post true for every company producing creative output. It's masquerading as being specifically about Netflix. It's not only more general than it's made out to be, it's arguably less applicable to Netflix than to their competitors.

I'm also more than a little weary of critiques being made against numerical decision making without any consideration of the faults of the non-numeric decision making it's displacing.

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Netflix Marathon

Tyler Cowen :: Will marathon viewing become the TV norm?

On Friday, Netflix will release a drama expressly designed to be consumed in one sitting: “House of Cards,” a political thriller starring Kevin Spacey and Robin Wright. Rather than introducing one episode a week, as distributors have done since the days of black-and-white TVs, all 13 episodes will be streamed at the same time. “Our goal is to shut down a portion of America for a whole day,” the producer Beau Willimon said with a laugh.

Ad-financed shows — still a clear majority of viewing — may prefer to have impressions from the ads spread out over weeks and months rather than concentrated in one long marathon sitting.

On the other hand, when watching an hour long show — or even a half-hour — I routinely see the same ad multiple times. Not ads for the same product or service, but the very same advertisement. I am sure there is a lot of literature about the trade-offs between repetition and staleness to doing this. (Note to self: ask about this at the next marketing quant lunch.)


Cowen continues:

Furthermore the show itself relies more heavily on an effective and immediate burst of concentrated marketing, with little room to build word of mouth and roll out a campaign with stages.

Yes, you lose word-of-mouth, but you also lose the inevitable week-to-week decay as people drop out of the viewership pool. Most TV shows show a remarkably consistent exponential decay in viewership. It's not at all clear to me that the gaining from WOM and the losing from audience decay is preferable to having neither.

This is being framed as a contest between watching 13 episodes in one day and watching them over four months. My wife and I have been watching one episode of "House of Cards" every day or so. I think this middle ground may be a better solution than either extreme. A two week roll-out keeps viewers focused and concentrates marketing, but doesn't roll the dice on one big push.

Note that Netflix has an advantage that other outlets don't: they can continue to advertise the show for free through their service. This won't drive new members to subscribe, but I think they benefit even when existing members watch the show. True, it doesn't boost revenue, but racking up higher viewership both makes it easier for them to create high-quality shows in the future, and it strengthens their in-house productions as a bargaining chip when negotiating with other content producers and distributors, which I think is the real value of "House of Cards."

One media market which is still highly serialized and has clearly not come to grips with the implications of that is comics. Here is just one recent piece about this. People have been fretting over the serialization-vs-collection transition and the friction it causes since I started reading comics six years ago, and they don't seem any closer to resolving the tension.

PS "House of Cards" is very highly recommended. I haven't had a show I was this excited about binge-watching in a couple of years.

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