Saturday, December 27, 2008

A brand new furnace...

Your body.. The New York Times has an amazing article on super sealed homes in Germany that are built without furnaces because they keep warm air in and keep cold air out. Relying on tightly sealed entry ways and windows, plus enhanced ventilation system. The house keeps itself warm by using the ambient heat from electronics (my laptop would be a good candidate) and the occupants body heat.

This is quite amazing and it will be interesting to see if this can take hold in the U.S., the cost of the materials is only 7% more than traditional housing materials. The downside of these designs is they are optimized for 500 square feet per person which while not spacious, is less than the average American household. Of course there does seem to be a movement toward smaller homes. Is this what we call convergence.

Tuesday, December 23, 2008

Is this really an improvement?

One of the challenges of being involved in the creation of new products is that you have to try to figure out something that is novel, useful and in most cases an improvement. This is not a simple task. As someone who is in technology the first breakthrough is impressive, but each version become more comical. I have often described being a Product Manager on MIcrosoft Word being the worst product job in the world, since any improvement you make inevitably will make it worse. Seriously. (Brief aside for the benefit of those not in the tech world, a Product Manager is someone who defines the features and specifies an implementation of a product, they do not necessarily actually implement it. They sort of are a cross between an architect and a draftsman for features of a product). But for the sake of employment and revenue, you have to create a new version to be purchased with new whiz bang things that supposedly make things better.

This is my response to this product that I saw being given away, called the Cool Bar Master which is basically a Mr. Boston's with an LCD display screen. When does something electronic mean it will be better? You need batteries, if you throw it away it cannot be recycled. Someone once remarked that if we invented paper today it would be looked at as a huge advancement. Instantly usable. HIgh resolution. Recyclable and made of renewable resources.No power required. How cool is that.

Now, I know some Product Manager said, hey let's create an electronic guide to mixed drinks, and that person having a job is a good thing. But really why? Is this what got us into this environmental mess, improving something in a way that doesn't improve it?

So if you haven't finished your shopping consider buying things that have long value, and if they don't have long value at least will waste gracefully.

Saturday, December 20, 2008

The rise of the fuddy duddy?

Don't plan on it.

There is something about human nature where we follow the bright, the sexy, the shiny, the amazing. In short we want to believe nonsense. It is so rooted in our psyche that many cultures have parables about fooling ourselves into believing something absurd is true. Who knows with toddlers busy texting, playing video games and surfing the web, but does anyone remember the fable "The Emperor's New Clothes"? Nowhere is this greater than Silicon Valley, where there is a lot of self congratulatory back slapping that we are not Wall Street. I as usual reserve judgment.

I was originally going to title this post "In plain sight, Pt III" but that would get too old, and to be honest I'd be at part 12,653 if I tracked these stories across the news. The next one is Junior league compared to Bernie Madoff and comes from Denmark about the "Entrepreneur of the Year" where a former body builder managed to create the illusion of a high tech company that was really a series of shell companies buying from each other. The fact that this is so old school for anyone who read about a little Houston company called "Enron" that basically did the same thing with "special purpose entities" Do we ever learn, apparently not. What's even better is the "Entrepreneur of the Year" award was issued by auditor Ernst and Young. But it gets better:

KPMG audited IT Factory's accounts from 2005 through 2007. Deloitte did the same in the previous two years. From 2003 through 2007, IT Factory reported that its revenue grew 69 times and its profit rose 288 times, to 121 million kroner ($22 million). This year, says Mr. Jensby, the chairman, IT Factory expected to roughly quadruple its profit.

KPMG in Denmark says it is "shocked" and "cooperating with police." Deloitte's Danish unit said it has double-checked its 2003 and 2004 audits and found no problems.

Ernst & Young, for its part, has now withdrawn the three awards it gave to IT Factory on the day Mr. Bagger took flight. "We feel deceived," said Søren Strøm, head of Ernst & Young's "Entrepreneur of the Year" program, in a statement. The accounting firm, he added, is "unable to understand the last few days' developments."

It smells of Arthur Andersen all over again, but this is bush league (but given the size of the recent fiasco, Bush league may take on new meaning) in the size. Auditing is so flawed because the agency problem is so prominent and yet we ignore it. (Though to be honest, I'm not sure how to solve it, with a public company who pays for the due diligence? In an acquisition, the buyer does and an audit is just a form of due diligence. Would the government do it better? Probably not because of the dilution of responsibility that occurs.)

So again this is in plain sight again, again in this story there is a beacon of truth and that is in the form of a older woman blogger (hmmm note any similarities to Tanta (aka Doris Dungey) and the housing bubble blow up.) who called it in her blog and her observation:

One person to come out of the mess looking good is Dorte Toft, a 64-year-old free-lance journalist and blogger. She, too, received an email message from Mr. Svensson last year. A former computer programmer, Ms. Toft began swapping notes with Mr. Svensson, whom she initially knew only as "John Doe." In December, she wrote a blog challenging Mr. Bagger's extraordinary growth figures.

But, she says, virtually no one wanted to listen to "an old woman."

Why do we believe who we believe? The messenger is the message!

This reminds me of a CEO I use to work for at a startup who was incapable of separating the messenger from the message. If someone he didn't respect said something that wasn't in line with his belief system, he'd say they were an idiot. And I kid you not, 10 minutes later the same thing said by an executive of a major public networking company and he'd literally reverse his view and align immediately with that view. Well that CEO lives in Atherton and I don't. Explains a lot. How do we telegraph competency --or at least desirability -- (it's not by being a fuddy duddy, calm rational, deliberate apparently). Apparently by being unsustainable. Consider the following research article or from Yahoo! Finance Some excerpts:

Vying for women is simply what men do and have done for hundreds of thousands of years, said study leader Daniel Kruger, a social and evolutionary psychologist at the University of Michigan's School of Public Health. But how they entice mates has evolved.

"Men in the ancestral environment were valued if they were good providers," Kruger said. "Now we have this new consumer culture, so basically we show our potential through the consumer goods that we purchase, rather than being a good hunter or providing protection."
Why we're in debt

Kruger said the results could help to explain why so many people are in a financial mess right now.

"It is partially a result of our economic system and recent financial policies, but I really do think that our evolved mating strategies have an influence," Kruger said. "Our competition for economic displays drives our consumer economy and culture of affluence."

He added, "In terms of the current mortgage crisis, the findings suggest that one of the reasons why we overextend ourselves is that we're basically in a status race. We have expectations that spiral upward as people make more money, and everyone wants to show that they are better than average."

This research involved the secondary analyses of data from a project funded by the Centers for Disease Control and Prevention.

This has been a much longer post than I was hoping, but why do I bring these items up. Understanding how we interpret the world in our economic decisions is going to impact our environmental behavior. Economic Issues ARE Environmental Issues since both deal with the allocation of resources. If we understands what drives our resource decisions (having more, relative status, sex, not looking stupid (oh that's that damn status thing again). Otherwise, the billions of people making bad decisions just isn't just going to scale.

Tuesday, December 16, 2008

In plain sight, part 2.....

The world just gets weirder and weirder by the minute. A friend of mine keeps sending me emails prefaced by the word "CYBTS" or "Can you believe this S***" and the litmus test could I possibly write a screenplay with the premise of what I'm reading in the news. The answer is inevitably no, but then "Law and Order" cornered the market on dramatizing the absurd. The absurdity of the moment is the Madoff, and a word escapes me, Scandal, Fraud, inanity. I have no idea what to call it. But like much of the craziness that grips us, it too was in plain sight. The SEC had ignored signs that something was amiss. I'm not going to recant all the muck of the last financial scandal and instead focus on what maybe the root causes.

Today on the radio I heard about why so many people got swindled in, and the general gist was this. You are sitting at a cocktail party and you ask your party companions how are you doing, where do you have your money? And inevitably someone says, great I'm getting great returns with Madoff. Oh really you reply, how can I get in. And in you do. (I will refrain from any jokes about teenage pregnancy and getting into college). Something about your neighbor making more money than you do seems to bug people, so you want to get in. (Of course competition can be a good motivator if its not about stuff, imagine being in the economics department at U of Chicago, well everyone's got a Nobel prize don't you?) So people get taken in, because there are two things that people feel uncomfortable about among the ambitious and that is being poor or being stupid. (Ironic that so many of those people are now both!)

In addition to focusing on the relative status of others, there is another thing that tugs at our strings. And that is the lure of "Money for nothing" we know no free lunch exists, but we want it nonetheless. Like the "Dire Straits" song "Money for Nothing"

Now look at them yo-yos thats the way you do it
You play the guitar on the mtv
That aint workin thats the way you do it
Money for nothin and chicks for free
Now that aint workin thats the way you do it
Lemme tell ya them guys aint dumb
Maybe get a blister on your little finger
Maybe get a blister on your thumb

So instead of playing the guitar on the MTV, we believed that we could play the "Bloomberg on the CNBC" Same silliness, different blister. Now as usual, I tend to meander to get to my point of how this relates to the environment and that in fixing the environmental crisis what are the "money for nothing" fixes.

1) Technology will solve everything. - We can live exactly the same way we do now, because we will come up with technologies that are more efficient. Not, even at 100% efficiency in automobiles and combustion engines. We still have to deal with the issue of deforestation.

2) Personal behavior is enough. - we like to think that we are good people. And in general we are, but because we think we are good, we tend to avoid our faults. Choices are hard under the best circumstances, we don't need more choice we need rational choice already made for us. Legislation can do that. If you disagree, look at the difference between the U.S. Mobile Phone market and the rest of the world. We had choices galore, technologies mixing and not matching and as a result we lose out. In Europe they said, this one technology is good enough. Note, I didn't say it was the best, I said it was good enough. We need to make reasonable choices now even if they are suboptimal.

So what are the environmental "Money for nothings" that confront us and how do we avoid them?

In plain sight...

This post has been simmering way too long, and I really should be heading to sleep but one needs to make progress in his or her craft. In this case it's a mention of the blogger over at Calculated Risk called Tanta aka Doris Dungey who recently passed away. It's a bit sad that while widely respected by many, she wasn't recognized when she as alive as witnessed by such memorial articles about the impact she had. Others have waxed more poetically and more eloquently about her analysis and expository talent and I will not add to the chorus, there's no need to. But the long and the short (no pun intended) of it is that she saw the financial bust before it bubbled to the surface in our current mess.

Instead, what interests me is that if you look at the timing of Tanta's posts, there were many years ago, and her analysis were not grounded in complex mathematical models (but it's clear she understood much of that) but in acknowledging what was in plain sight. Much of what led to this financial fiasco was well known, and I really don't buy that people didn't know what was going on. They actively chose not to know what was going on since there was quite honestly too much money to be made. Nothing is grander than a bubble, except when you forget the bubble is just that and start deluding yourself that it will go on forever. The key to being a great gambler is knowing when to walk away from the table. Everyone knows the odds are not in your favor.

Many people derided the posts of Tanta and others who said there was no housing bubble, that this time it's different. But it wasn't. So the question that begs me is who are the ones who have the environmental forecast nailed down, who say that we are in dire straits. Much of the signals are there, our pollution, or climate changes, the keeling curve. But so many people are saying, that it's just alarmists who are panicked. Despite the evidence, despite the common sense of the analysis, people still say that everything is ok. What scares me the most, is that the people who said there was no housing bubble are the same ones saying there's no environmental crisis. Funny how that works.

Tuesday, December 09, 2008

A chance to do it right...

The past decade has revealed some incredible incompetency. Not just from Wall Street, but also Main Street (if people actually lived near anything that resembled a Main Street). In the past decade, our housing glut was powered by cheap houses built miles from nowhere that required a car. We created an architecture of our cities that was untenable, and more importantly unlivable. The building of roads at the beginning is actually pretty easy, since no one is on them, you just have to roll them out. But once you have traffic on them, repairing them is the real trick. Who is going to maintain these little roads for few people.

Granted, that mass transit use was up last year, mostly driven by the crazy cost of gas. But the cries of investing in mass transit miss the point, unless we choose the masses where our transit goes to, it's never going to solve our problems. So it's time to raze the exurbs, rebuild, infill and revitalize places closer to home and then the investments in mass transit will make sense.

The only way that is going to happen is if counties zone in ways that prevent mad developers, then the public won't be naively driven to short term housing. We have a unique opportunity not to just rebuild our roads, but rebuild the way we look at how we live.

Sunday, December 07, 2008

Moments of truth and conviction....

Like every other asset based model of value, the recycling business is being crushed by the market. An economy hypercharged by super-consumption collapses on itself when the collateral funding the borrowing for such items collapses, sucking down with it the markets for recycled materials. This is basically the premise behind a New York Times article on the piling up of recyclable materials due to the collapse of the recyclables market. There was one excerpt in the article that really stood out.

“Before, you could be green by being greedy,” said Jim Wilcox, a professor at the Haas School of Business at the University of California, Berkeley. “Now you’ve really got to rely more on your notions of civic participation.”

Much of the social entrepreneurship movement has been predicated on appealing to our worse instinct. Hardly inspirational and does lack the leadership that one expects. That said, I will acknowledge that it is highly pragmatic, and that is something that one has to consider. We are human beings, not saints, so we need to appeal to our self interest, but a life based exclusively on self interest is neither realistic, it lacks a certain humanity. No one in the market wants a child that is sick or handicapped, but it happens. We take efforts as a society to do things, because we realize there are values to be upheld for there to be a society. Though this economic crisis makes me think that we may be saying, "We're all Hobbesians now." (by which I mean this not that).

Perhaps, failing to recycle could be recategorized as a mortal Sin, of which I like the following definition

a sin committed with a clear knowledge of its guilt, with full consent of the will, and concerning a grave matter; where circumstances allow

I have always believed that economics can temper our policy but it cannot define our policy. In the end, circumstances of life dictate that we do not live lives exclusively of our choice. Greed is not an environmental policy.

Thursday, December 04, 2008

Self Righteousness.....

I'm starting to realize that the big crisis of our age is not pollution, it's not global warming, it's not even the economy. Instead it's self-righteousness and the power to act on one's self righteousness to disasterous consequences. One of the most healthy things in the world is a degree of doubt in one's conviction because it opens the door to understanding. However, there is always a group of people who feel absolutely certain in their views. With that courage in their convictions, they act with malice and are convinced of their lack of malice.

We see this in the last 8 years with terrorist acts, fabricated presence of weapons, rampant speculation and a general sense of entitlement polluting human interaction. What's different in that the foibles of human nature now can be leveraged to new levels. That is the danger of our environmental and economic peril. We have seen economic weapons of mass destruction, the question to ask now is what is our environmental WMD that is in clear sight. Many people knew what was going on with the sub-prime crisis, and it was stewing over time before it just blew up. Are we at a same point environmentally where things can spin out of control?

What amazes me about the environmental naysayers is how confident that they are right. Granted the doomsday advocates can be just as shrill, and in the same way they are weakening their argument. They have the danger of being accused of crying wolf. If you meet someone who is self righteous in anything, you should be scared. For those who cannot believe they can be wrong, usually are at somebody else's expense. What gives me hope is that we have an incoming administration that focuses less on rhetoric and litmus tests, and on understanding the limited understanding of the world that we have. Knowing our limits and our weakness is what makes us better, accepting them is called humility. If you read that as giving up, read the post again.

Tuesday, December 02, 2008

The season of reuse....

Today I was looking over my freecycle email lists, and a sign of the times is clearly upon us. A person was asking for a mobile phone since she was just laid off and the company was going to take her phone away from her. She was going to get added to her husband's plan. But just couldn't afford the new phone. There is a strong irony that the past couple of years we have lived beyond our means and many upgraded their phones more frequently than others. I am guilty of that, mostly because I am in the industry. But it does remind us that replacing something that is broken or lost is actually more rare than maybe replacing something just because they are bored with it. So we are going to be working through our glut of junk.

So in this time of need and time of giving, one route is to clean up your garage and give to those who can use a hand. The challenges to the earth really focus on unsustainability of our lifestyle. Our consume consume consume habits are being broken, so it's time to look at the value of that around us. Sign up for Freecycle and see how your discards can keep on giving.