Published on 25 Apr 2014
“There’s nothing as dangerous as perfect safety,” says Megan McArdle, author of the new book, The Up Side of Down: Why Failing Well is the Key to Success.
Failure is inevitable, says McArdle, who’s also a Bloomberg View columnist. But how we handle our own failures and whether we learn from them go a long way in shaping individuals, institutions, and entire societies.
Drawing on personal anecdotes, current events, literature, and cutting-edge research, McArdle dissects our beliefs, myths, and cognitive biases about failure.
April 27, 2014
Reason.tv – Megan McArdle: Why Failing Well is the Key to Success
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April 24, 2014
Joe Satriani – world-class musician and self-taught entrepreneur
Inc. Magazine isn’t where you’d normally expect to find profiles of famous musicians, but Jeff Haden’s article covers both the musical and the entrepreneurial sides of Joe Satriani:
Put aside selling millions of critically acclaimed solo albums. Put aside touring with Mick Jagger, Deep Purple, and Chickenfoot. Put aside teaching legendary guitarists like Steve Vai, Kirk Hammett, Andy Timmons, and Alex Skolnick and creating signature guitar and equipment lines. Put aside founding the long-running G3 concert series.
World class musician? Absolutely — but inside 14-time Grammy nominated guitarist Joe Satriani also beats the heart of a true entrepreneur.
This month marks the release of Satriani’s new book, Strange Beautiful Music: A Musical Memoir, as well as his career retrospective box set, The Complete Studio Recordings. It’s the perfect time to talk to him about the business of Joe Satriani. (Spoiler alert: While you might think entrepreneurs have nothing in common with musicians, you’re definitely wrong.)
[…]
It’s almost a given in the music business that artists eventually regret the terms of their first contract. They’re so happy to get signed that they will sign almost anything. Yet your experience was very different.
Success came to me in my late 20s. I had started touring when I was a teenager so I had already seen the good, the bad, and the ugly side of the music business. Plus setting up my own record company taught me a lot.
I walked into Relativity Records as a musician who could not be taken advantage of. That’s why I wound up owning all my own publishing and making a deal that was quite advantageous for a new solo artist. But I really didn’t think of myself as an entrepreneur. I thought of myself as an artist who felt strongly he should control every aspect of his art.
From a business and market opportunity point of view, instrumental rock was not exactly a happening genre. If your goal was to strike while the musical iron was hot your timing was way off.
What you just said is perfect. You encapsulated what I came to grips with when I looked for funding for my first record.
I remember getting turned down by everyone in my local community, and I was just looking for a few thousand dollars. If I had been starting a company to make plastic cups I could probably have gone to a bank and gotten a loan. But a guitar player getting a bank loan to record a record? That was just never going to happen.
After a week of being rejected by local studios and engineers I found this credit card offer in my mailbox. I was pre-approved because of, “My good standing in the community.”
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April 23, 2014
Happy Meal toys as human rights violations
Amy Otto on the attempt to sue McDonald’s because they were handing out “gendered” toys with their Happy Meals:
A recent article in Slate by Antonia Ayres-Brown, a junior in high school, details the valiant feminist struggle she ultimately brought to the Connecticut Commission on Human Rights and Opportunities against McDonald’s for … discriminating on the basis of sex in the distribution of Happy Meal toys. “Despite our evidence showing that, in our test, McDonald’s employees described the toys in gendered terms more than 79 percent of the time, the commission dismissed our allegations as ‘absurd’ and solely for the purposes of ‘titilation [sic] and sociological experimentation,’” she wrote.
Let’s leave aside the fact that Connecticut has a Commission on Human Rights and note that this girl sincerely believes McDonald’s offering toys described, at times, as being for a girl or for a boy is a human rights violation.
While I admire the girl’s plucky disposition and effort, I do hope one day she learns to channel her energy into productive uses that will advance her cause in positive ways. This could have all been solved by her parents simply encouraging her to ask for the toy she wants. If girls are continually taught that they as individuals have no power to negotiate a situation as simple as “I’d like that toy” without the Connecticut Commission on Human Rights getting involved, I submit that these women are proving the case that they should not be put in positions of leadership or power.
By the author’s own admission,“McDonald’s is estimated to sell more than 1 billion Happy Meals each year.” Yet it does not occur to her that the fast food worker giving a “girl’s” toy to a girl is simply trying to give the customer what she wants in the most expeditious manner possible. This is a company that sells a billion of these things a year and gets them in the hands of their customers as fast as possible.
People do not eat at McDonald’s to get into a gender studies discussion with the teenage kid at the register; they go there to get food fast, hence the term “fast food.” If the author had worked in fast food for any nominal period of time, she might realize that the employee’s main motivation is not to spend any time persecuting women but to make it through his or her shift as painlessly as possible.
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April 22, 2014
Rick Spielman and the fine art of pre-draft deception
The last few weeks before the NFL draft — now pushed back to May — are when even the most hearty draftniks start to flag, having sweated out multiple mock drafts, read far too many scouting reports on can’t-miss players who might be their team’s guarantee of playoff dominance for the next decade, and suffered the agonies of indecision as their team’s management gives out hints of their actual draft plans. It’s a time when every team aside from the Houston Texans (who have the first overall pick) tries with varying degrees of success to obfuscate, confuse, and mislead every other team about who they value as potential draft picks. It’s the time of year when every team press release is written in squid ink.
At such a time, Minnesota football fans get to watch one of the greatest practitioners of pre-draft blather, half-truth, sleight-of-tongue, and deception as he weaves his web of disinformation. Rick Spielman is that guru of illusion at draft time, and Mark Craig is on his tail:
Folks, we’re lost in a choppy sea of predraft chatter with no life preserver and an extra two weeks of dog paddling until Houston mercifully makes the first pick on May 8. The fact that no one has any idea what will happen has not stopped everyone from saying they do.
The original draftnik himself, ESPN’s Mel Kiper Jr., has taken four swings at it (and counting?). He has Bortles going to the Vikings twice followed by Bridgewater (once) and Manziel (once). That’s a 4-for-4 guesstimate that Vikings General Manager Rick Spielman is thinking quarterback all the way.
Meanwhile, Spielman sat in his office this week saying, “We don’t need to reach for a quarterback at No. 8. We signed Matt Cassel.” And that makes sense, although beware. This is the time of year when Spielman is capable of stealing your eyeballs and convincing you that you look better without them.
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April 17, 2014
April 16, 2014
QotD: The wizards of the web
You would have thought this would have sunk in by now. The fact that it hasn’t shows what an extraordinary machine the internet is — quite different to any technology that has gone before it. When the Lovebug struck, few of us lived our lives online. Back then we banked in branches, shopped in shops, met friends and lovers in the pub and obtained jobs by posting CVs. Tweeting was for the birds. Cyberspace was marginal. Now, for billions, the online world is their lives. But there is a problem. Only a tiny, tiny percentage of the people who use the internet have even the faintest clue about how any of it works. “SSL”, for instance, stands for “Secure Sockets Layer”.
I looked it up and sort of understood it — for about five minutes. While most drivers have at least a notion of how an engine works (something about petrol exploding in cylinders and making pistons go up and down and so forth) the very language of the internet — “domain names” and “DNS codes”, endless “protocols” and so forth — is arcane, exclusive; it is, in fact, the language of magic. For all intents and purposes the internet is run by wizards.
And the trouble with letting wizards run things is that when things go wrong we are at their mercy. The world spends several tens of billions of pounds a year on anti-malware programs, which we are exhorted to buy lest the walls of our digital castles collapse around us. Making security software is a huge industry, and whenever there is a problem — either caused by viruses or by a glitch like Heartbleed — the internet security companies rush to be quoted in the media. And guess what, their message is never “keep calm and carry on”. As Professor Ross Anderson of Cambridge University says: “Almost all the cost of cybercrime is the cost of anticipation.”
Michael Hanlon, “Relax, Mumsnet users: don’t lose sleep over Heartbleed hysteria”, Telegraph, 2014-04-16
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North Korean embassy officials upset over London hair salon ad
BBC News on the apparent diplomatic incident taking place at M&M Hair Academy in South Ealing:
North Korean officials paid a visit to a London hair salon to question why it had used their leader Kim Jong-un’s picture in a poster offering haircuts.
The poster in M&M Hair Academy in South Ealing featured the words “Bad Hair Day?” below the leader’s picture.
Barber Karim Nabbach said embassy officials were shown the door and the salon’s manager spoke to the police.
The Met Police said: “We have spoken to all parties involved and no offence has been disclosed.”
The salon put up the poster on 9 April and the next day two men claiming to be officials from the North Korean embassy visited the salon and demanded to meet the manager, Mo Nabbach.
Karim Nabbach said: “We put up posters for an offer for men’s hair cuts through the month of April. Obviously in the current news there has been this story that North Korean men are only allowed one haircut.
H/T to Eric for the link.
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April 15, 2014
Are breast implants tax-deductable? Only if they’re “extraordinarily large”
For some reason, the following report at the Tax Foundation website does not have any images to accompany the story:
In filing one’s taxes, it may be necessary to distinguish between breast implants that are merely “large,” and breast implants that are “extraordinarily large.”
The relevant ruling on this subject came in 1994 in a case known as Hess v. Commissioner. The plaintiff, a self-employed exotic dancer, had implants that expanded her bust size to the size 56FF. For tax purposes, she treated these as a deductible business expense on her schedule C. The IRS contested her deduction.
[…]
The relevant issue in Hess was whether breast implants – traditionally thought of as a luxury good bought for personal benefit – could be considered a legitimate business expense. Given that the plaintiff was an exotic dancer, she had a fair argument. But in general, taxpayers aren’t allowed to treat personal appearance expenditures as business expenses unless they aren’t suitable for personal use. Hess, arguing pro se, convincingly established that her implants were inconvenient in everyday life due to the sheer enormity of her breasts. The courts ruled in her favor:
Because petitioner’s implants were so extraordinarily large, we find that they were useful only in her business. Accordingly, we hold that the cost of petitioner’s implant surgery is depreciable.
H/T to Walter Olson, who assures us that this inquiry is strictly business.
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April 14, 2014
In defence of limited corporate liability
The RSS feed that used to track Megan McArdle’s posts at Bloomberg View has been on the fritz for a couple of weeks, so I missed this article when it was posted earlier this month:
The argument for unlimited liability isn’t just a libertarian evergreen; it’s also something you occasionally hear from the far left, because it would basically make the corporate form untenable. Imagine, if you would, that by buying and holding the share of a firm for 10 minutes, you thereby subjected yourself to seizure of all your goods to satisfy potential lawsuit judgments — even if those judgments involved behavior that involved no legal liability at the time of the acts.
Not possible? That’s basically what happened with asbestos liability. Firms that had had no legal liability under the doctrines of the times in which the asbestos was sold or used suddenly found themselves driven into bankruptcy by massive settlements. Moreover, after the first wave of lawsuits exhausted the funds available to pay asbestos claims, plaintiffs’ lawyers started pushing to expand the number of pockets that could be dipped into.
A company that had never manufactured asbestos could be sued and have to spend hundreds of millions of dollars on lawsuits and settlements because it had once bought a company with an insulation division that had formerly manufactured asbestos — even though it had immediately sold off that division in the process of completing the merger. Insurers could be forced to pay out for the whole of a company’s liability if they had sold a company insurance for even a year between the time a company started making or using asbestos and the time that the plaintiff discovered the harm. And “harm” wasn’t limited to getting sick; you could sue for the emotional distress of worrying that you might get sick.
Kind of hard to imagine becoming a shareholder under those circumstances, isn’t it? Maybe you’d better put your money in the bank — a small, privately held bank, of course. Commerce would look something like it did in medieval Italy, where all economic activity was basically organized by the family or the partnership.
Growth would have to be financed by debt or by retained earnings. That’s how British firms financed expansion in the early days of the Industrial Revolution. It’s how small businesses tend to finance expansion now.
The traditional libertarian answer is “insurance”, but that’s a non-starter as well.
To which I answer: What insurance company?
Insurers are also corporations, and their owners get the same valuable shield from liability that everyone else gets from the corporate form. They may have shareholders, or they may be mutually held by their policy holders, but either way, someone is getting protection from lawsuit by the same laws that protect General Motors Co. This sort of liability shield is vital for any large aggregation of capital requiring lots of contributors — which is basically the definition of an insurance company.
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April 13, 2014
Ephemeral apps and the NSA
Bruce Schneier on the rising popularity of apps that only leave your content visible briefly and then automatically removes it:
Ephemeral messaging apps such as Snapchat, Wickr and Frankly, all of which advertise that your photo, message or update will only be accessible for a short period, are on the rise. Snapchat and Frankly, for example, claim they permanently delete messages, photos and videos after 10 seconds. After that, there’s no record.
This notion is especially popular with young people, and these apps are an antidote to sites such as Facebook where everything you post lasts forever unless you take it down—and taking it down is no guarantee that it isn’t still available.
These ephemeral apps are the first concerted push against the permanence of Internet conversation. We started losing ephemeral conversation when computers began to mediate our communications. Computers naturally produce conversation records, and that data was often saved and archived.
[…]
At best, the data is recorded, used, saved and then deliberately deleted. At worst, the ephemeral nature is faked. While the apps make the posts, texts or messages unavailable to users quickly, they probably don’t erase them off their systems immediately. They certainly don’t erase them from their backup tapes, if they end up there.
The companies offering these apps might very well analyze their content and make that information available to advertisers. We don’t know how much metadata is saved. In SnapChat, users can see the metadata even though they can’t see the content and what it’s used for. And if the government demanded copies of those conversations — either through a secret NSA demand or a more normal legal process involving an employer or school — the companies would have no choice but to hand them over.
Even worse, if the FBI or NSA demanded that American companies secretly store those conversations and not tell their users, breaking their promise of deletion, the companies would have no choice but to comply.
That last bit isn’t just paranoia.
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April 9, 2014
Being “pro-business” does not mean the same as being “pro-market”
It’s a common misunderstanding (especially with people who don’t know what laissez faire actually means):
For years, Republicans benefited from economic growth. So did pretty much everyone else, of course. But I have something specific in mind. Politically, when the economy is booming — or merely improving at a satisfactory clip — the distinction between being pro-business and pro-market is blurry. The distinction is also fuzzy when the economy is shrinking or imploding.
But when the economy is simply limping along — not good, not disastrous — like it is now, the line is easier to see. And GOP politicians typically don’t want to admit they see it.
Just to clarify, the difference between being pro-business and pro-market is categorical. A politician who is a “friend of business” is exactly that, a guy who does favors for his friends. A politician who is pro-market is a referee who will refuse to help protect his friends (or anyone else) from competition unless the competitors have broken the rules. The friend of business supports industry-specific or even business-specific loans, grants, tariffs, or tax breaks. The pro-market referee opposes special treatment for anyone.
[…]
GOP politicians can’t have it both ways anymore. An economic system that simply doles out favors to established stakeholders becomes less dynamic and makes job growth less likely. (Most jobs are created by new businesses.) Politically, the longer we’re in a “new normal” of lousy growth, the more the focus of politics turns to wealth redistribution. That’s bad for the country and just awful politics for Republicans. In that environment, being the party of less — less entitlement spending, less redistribution — is a losing proposition.
Also, for the first time in years, there’s an organized — or mostly organized — grassroots constituency for the market. Historically, the advantage of the pro-business crowd is that its members pick up the phone and call when politicians shaft them. The market, meanwhile, was like a bad Jewish son; it never called and never wrote. Now, there’s an infrastructure of tea-party-affiliated and other free-market groups forcing Republicans to stop fudging.
A big test will be on the Export-Import Bank, which is up for reauthorization this year. A bank in name only, the taxpayer-backed agency rewards big businesses in the name of maximizing exports that often don’t need the help (hence its nickname, “Boeing’s Bank”). In 2008, even then-senator Barack Obama said it was “little more than a fund for corporate welfare.” The bank, however, has thrived on Obama’s watch. It’s even subsidizing the sale of private jets. Remember when Obama hated tax breaks for corporate jets?
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April 5, 2014
Grade inflation at US universities
Stu Burguiere looks at the remarkable increase in higher grades handed out at US universities:
I never went to college so I missed out on all the keg parties and, apparently, a surplus of good grades.
Contrary to the concept of school as you knew it growing up, A’s are pretty easy to come by these days. In fact the only thing you have to work really hard to get are D’s and F’s. In college today, an A is over four times as common as a D or an F combined.
It’s a drastic change from the 15% of students who received A’s in 1960.
The pool is a little higher today. Ok, it’s a lot higher. If you look at this chart you’ll see that 43% of all letter grades given today are A’s.
And this sort of makes sense if you think about it. No one wants to pay $40,000 a year to hear that they’re dumb.
College is one of the rare businesses in which you pay them and at the end of the experience they tell you how well they did. If you’re a parent and you send your kids to school and they get A’s you feel good about the purchase. But if your kids get F’s you feel like they wasted your money.
And amazingly these institutions of higher learning, that do little other than indoctrinate kids against the evils of capitalism, sure do understand incentives.
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Tired of wine snobbery? Now trending – beer snobbery
In the Wall Street Journal, William Bostwick looks at a new aspect of the craft beer world — age-worthy beers and ales:
Still, you can’t buy just anything and lay it down to age. Not all beers get better with time. Hop-driven IPAs lose their kick quickly as light, heat and oxygen degrade the flavorful flowers’ acids and oils. Stone Brewing Co.’s Enjoy By IPA touts its bottled-on date as a badge, and the brewery’s cicerone [the beer version of a sommelier], Bill Sysak, recommends immediate consumption. Instead, Mr. Sysak stocks his personal cellar — 2,800 bottles and counting — with strong, dark and bottle-conditioned beers. The sometimes overpowering fusel alcohol notes of stronger beers, 8% ABV (alcohol by volume) and up, mellow over time; living yeast in bottle-conditioned beers adds character as it continues to ferment residual sugars.
Aging beers truly is an adventure. Sweet, bottle-conditioned Belgians dry out; fiery barley wines turn smooth and caramelly. Stone’s Imperial Russian Stout, Mr. Sysak said, “might be astringent, fresh, like espresso. But aged, it’s a delicious chocolate-coffee dessert.” One of the oldest he’s tried, a 1968 Thomas Hardy’s Ale, “was like an Oloroso Sherry: nuts, toffee, leather and smoke.”
The beers may be strong, but they must be aged gently. Aim for 54 degrees Fahrenheit — a mini-fridge with a temperature control is nice, but a dark interior closet works too. Mr. Sysak found a sweet spot in his guest bathroom. “People would open the cupboard and find all these rare bottles,” he said. Above all, you want consistency. Temperature fluctuations will age beer prematurely and might throw its proteins out of solution, turning the brew hazy.
He also provides a short list of age-worthy beers to start with, but (of course) none of them are generally available in Ontario.
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April 4, 2014
“Why do these bigots still have jobs? Let’s go get them”
In Slate, Will Saletan digs through the data to find the next set of targets:
Some of my colleagues are celebrating. They call Eich a bigot who got what he deserved. I agree. But let’s not stop here. If we’re serious about enforcing the new standard, thousands of other employees who donated to the same anti-gay ballot measure must be punished.
More than 35,000 people gave money to the campaign for Proposition 8, the 2008 ballot measure that declared, “Only marriage between a man and a woman is valid or recognized in California.” You can download the entire list, via the Los Angeles Times, as a compressed spreadsheet. (Click the link that says, “Download CSV.”) Each row lists the donor’s employer. If you organize the data by company, you can add up the total number of donors and dollars that came from people associated with that company.
The first thing you’ll notice, if you search for Eich, is that he’s the only Mozilla employee who gave to the campaign for Prop 8. His $1,000 was more than canceled out by three Mozilla employees who donated to the other side.
The next thing you’ll notice is that other companies, including other tech firms, substantially outscored Mozilla in pro-Prop 8 contributions attributed to their employees. That includes Adobe, Apple, Google, Microsoft, Oracle, Sun Microsystems, and Yahoo, as well as Disney, DreamWorks, Gap, and Warner Bros.
Thirty-seven companies in the database are linked to more than 1,300 employees who gave nearly $1 million in combined contributions to the campaign for Prop 8. Twenty-five tech companies are linked to 435 employees who gave more than $300,000. Many of these employees gave $1,000 apiece, if not more. Some, like Eich, are probably senior executives.
Why do these bigots still have jobs? Let’s go get them.
April 2, 2014
People are less inclined to shop or bank online after NSA surveillance reports
Among the side-effects of government surveillance revelations, ordinary people are deciding to be a bit less involved in online activities, according to a new Harris Poll:
Online banking and shopping in America are being negatively impacted by ongoing revelations about the National Security Agency’s digital surveillance activities. That is the clear implication of a recent ESET-commissioned Harris poll which asked more than 2,000 U.S. adults ages 18 and older whether or not, given the news about the NSA’s activities, they have changed their approach to online activity.
Almost half of respondents (47%) said that they have changed their online behavior and think more carefully about where they go, what they say, and what they do online.
When it comes to specific Internet activities, such as email or online banking, this change in behavior translates into a worrying trend for the online economy: over one quarter of respondents (26%) said that, based on what they have learned about secret government surveillance, they are now doing less banking online and less online shopping. This shift in behavior is not good news for companies that rely on sustained or increased use of the Internet for their business model.
[…]
Whether or not we have seen the full extent of the public’s reaction to state-sponsored mass surveillance is hard to predict, but based on this survey and the one we did last year, I would say that, if the NSA revelations continue – and I am sure they will – and if government reassurances fail to impress the public, then it is possible that the trends in behavior we are seeing right now will continue. For example, I do not see many people finding reassurance in President Obama’s recently announced plan to transfer the storage of millions of telephone records from the government to private phone companies. As we will document in our next installment of survey findings, data gathering by companies is even more of a privacy concern for some Americans than government surveillance.
And in case anyone is tempted to think that this is a narrow issue of concern only to news junkies and security geeks, let me be clear: according to this latest survey, 85% of adult Americans are now at least somewhat familiar with the news about secret government surveillance of private citizens’ phone calls, emails, online activity, and so on.
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