Category: Startups

Another financial journalist has republished first year econ theory to add their 2c to the Bitcoinosphere and make their press deadline. To summarize: Mr Coy wants you to understand what deflation is, that it’s a nightmare in an economy where debt exists, and that it slows economic growth to a crawl because everyone holds currency as it gains value.

I’ve taken an interest in Bitcoin not because I think it is a “new currency” or can “replace the dollar” or become the new “reserve currency” – all phrases you’ve seen bandied about in popular media. Instead I’m deeply interested and hope it succeeds because I think it may change the nature of currency itself along with the nature of humans.

Bitcoin challenges the notions that most financiers and business people in western economies cherish and take for granted. For example, the ideas that:

Continued economic growth, meaning a continued increase in economic activity, is imperative. 

and

Most consumers and businesses are in debt and that is a healthy way to be.

Lets take the first item. Continued economic growth is imperative. What if you’re Germany, Russia or Japan with negative population growth? [Source: U.N.]

Presumably the planet can’t support an infinite number of people. So all countries will naturally progress towards negative population growth or a stable population. It’s inevitable.

Since we all have a finite amount of energy to spend purchasing goods and services, the amount of economic activity will also plateau at some point.

So what if a new currency creates an incentive for the inevitable?

I’d also like to challenge the value system that dictates that more consumption is always good and less consumption is always bad. This has a significant environmental impact, one that is seldom mentioned. For example, the environmental benefit in holding off on buying that so called environmentally friendly new Prius in favor of driving your old car until it falls apart is huge.

The idea that “buying more things” is good for the environment is absurd. In fact buying less things and using your old things longer before you dump them is a much more environmentally friendly approach.

So with zero population growth and the inability of our planet to support consumerism, the idea that “economic growth” is good and imperative won’t be around in a few years.

What means of value exchange might a World with decreasing economic activity demand? Perhaps since you’re going to be holding on to your currency anyway in the face of decreasing economic activity, holding onto a currency that becomes worth more over time is a good thing.

Debt is seen as a good thing. It’s something that has become as embedded in our values as the idea that more economic activity is important and good. But philosophers since biblical times have warned of the dangers of usury and debt. Most western countries have laws against usury and yet still allow organizations that lend to sell usurious debt. If you don’t pay your visa card, the interest rate jumps to over 29% per year. But without inflation, no one will borrow. No one will pay Visa shareholders their fair share of wages.

Two millennia ago the author of Proverbs 22:7 [also appears in the Jewish book of Mishle] said: “The rich rules over the poor, and the borrower is the slave of the lender.”. As consumers we’re encouraged to go into debt as we’re encouraged to buy hamburgers or increase economic activity.

There was a time not long ago when:

• Wise people saved their money.
• Debt was seen as something as bad as gambling.
• Reusing products was encouraged.

In a future world with low levels of debt and high levels of saving, where lack of growth in economic activity is not seen as a bad thing – perhaps a deflationary virtual currency that rewards savers, punishes debtors and encourages lower economic activity in favor of the environment is a good thing. Especially if it insulates us from the greed and corruption of those who influence monetary policy and money supply.

That is why I’m deeply interested in Bitcoin. Because it is and does all of the above. That is why I’m frustrated by Bloomberg, the Financial Times and many other traditional financial publications: Because they see Bitcoin through the lens of traditional undergraduate economic theory which simply reinforces the values we’ve come to take for granted. It doesn’t teach how to conduct an economic revolution and what the outcome might look like.

 

 

 

If you use SSH and are often using your cellphone as a mobile hotspot, or use a MiFi as a hotspot, you probably noticed that if you don’t do anything in your SSH window for a while, the connection drops, usually with a ‘Broken Pipe’ message.

Suffer no more…

Create an ‘.ssh’ directory off your home directory in terminal.

Add a .ssh/config file.

Add the following lines:

TCPKeepAlive no
ServerAliveInterval 1
ServerAliveCountMax 99999999

Then go to lunch, come back and your SSH connection will still be alive and kicking without you having to reconnect. Enjoy.

I’m at a loss of what to write about Madiba’s passing. I’m deeply saddened. If you’re expecting an email from me today, forget it. I’m at home, drinking strong beer and remembering the guy who saved South Africa’s ass from the fire of a racist government and post apartheid anger.

I was in The Parade (Cape Town central square at the town hall) when Mandela was released from prison in the early 90’s thanks to the deep political interest my parents had and the vision of realizing we would witness history by attending. I heard his first public speech after being released from Victor Verster Prison far in the distance. I couldn’t make out the words, but being there was enough.

And then we all watched him work a miracle that ensured that South Africa wouldn’t burn. That it would have a shot at prospering.

When I think of Madiba now the visual I have is C. S. Lewis’s Aslan.

Rest in peace Great Lion.

Go now to Tesla.com and listen to Elon Musk’s portion of the shareholder meeting that occurred today from minute 49:00.

It’s probably the best insight you’ll get into how entrenched the USA is on traditional cars and traditional sales channels. It’ll also explain why you consistently have a crap experience buying cars in the USA and why servicing your car costs so much.

Musk gets emotional and my sense is that he is emotionally invested in his company and has big dreams that are being blocked effectively by industry incumbents.

I just became a Tesla fan.

 

The Valley has taken some criticism for massively incentivizing the smartest people in the world to work on problems that won’t really benefit our species – like how to get more ad clicks. But that’s not what really bugs me.

What really bugs me is that in SV, nothing is built to last. Everything is built for an exit.

Imagine a party and a room full of silicon valley entrepreneurs. You are a new entrepreneur to the area and you want to meet the guy who is everything you want to be. Go on. Admit it. It’s that guy in the corner surrounded by people, who arrived 2 years ago, started his company 18 months ago and just sold it to Google for $20 to $50 million and now works for them. That’s the guy everyone wants to talk to because they want to be that guy. That is the epitome of SV success. And it is a massively destructive culture.

SV is attracting the worlds most talented engineers and tech business people. The founders, staff and investors of these companies hope that these folks will build a product for 18 months to 3 years, have the company acquired by a large incumbent and have the product killed within 2 years. Only the team remains as employees for the acquirer.

The dominant business model in SV is not innovation and entrepreneurship but recruitment. And if you arrive in SV and are hoping to build to get acquired, you are really an aspiring recruiter. Your strategy is to assemble a team, find a project that is intellectually interesting enough to them to keep them all in one place for 1.5 to 3 years, and have them demonstrate their talents to a large tech incumbent who is hiring. When the hiring event occurs, the incumbent will acquire the company for somewhere between $1 and $4 million per engineer. The deal will be cash for investors and an earn-out for founders, both of these being the equivalent of recruiting fees.

What makes me sad about this is that many real and talented entrepreneurs who could be building innovation and job creation machines are caught up in this. They are mentored into thinking this is the way things are done and their potentially world-changing businesses are eaten by the system.

Most of the rest of the world has a wonderful natural selection system for defining business success. Good, healthy successful businesses generate cash and lots of it. They create jobs, make people profoundly happy and satisfied and create new products and services that improve lives. They grow organically with their customers as they develop a pattern of making people happy.

Silicon Valley is a wonderful place to raise investment capital for a technology business. My investors are amazing individuals and have empowered us tremendously as entrepreneurs. But basing a business in The Valley feels to me like clearly stating your intent to exit and not build. And I think every entrepreneur’s intent should be to build and not exit.

Push 100,000 elements onto a PHP array() where each element is a four element associative array (a hash in Perl speak). Here’s the data being pushed:

array(
  'owner' => 100,
  'host' => 'www.example.com.co.uk',
  'path' => '/this/is/an/example/path.html',
  'hostkey' => '1111'
)

The memory grows by over 80 megabytes.

Pushing takes less than a second or two but shifting off the first 1000 elements takes over 17 seconds on my machine.

Now take that same data and create a basic FIFO class that has push() and shift() methods. Use pack() and unpack() to store the data in a long string. Total time to push 100,000 and shift the first 1000 elements is around 1 second. Total memory is 7 megabytes which is less than 10% of PHP’s internal array()’s consumption.

PHP’s splFixedArray class which is advertised as mainly having a speed advantage doesn’t fair much better. With a fixed array created of 100,000 elements and loading and unloading the same associative array() it grows by 75 megs but is very fast at half a second. Just for fun I pushed 100,000 elements on an splFixedArray which are simply the values of the test associative array concatenated into a string and it’s still weighs in at 13 megabytes.

Here’s the FIFO class:

class wfArray {
        private $data = "";
        private $shiftPtr = 0;
        public function __construct($keys){
                $this->keys = $keys;
        }
        public function push($val){ //associative array with keys that match those given to constructor
                foreach($this->keys as $key){
                        $this->data .= pack('N', strlen($val[$key])) . $val[$key];
                }
        }
        public function shift(){
                $arr = array();
                if(strlen($this->data) < 1){ return null; }
                foreach($this->keys as $key){
                        $len = unpack('N', substr($this->data, $this->shiftPtr, 4));
                        $len = $len[1];
                        $arr[$key] = substr($this->data, $this->shiftPtr + 4, $len);
                        $this->shiftPtr += 4 + $len;
                }
                return $arr;
        }
}

Here’s the test script using the FIFO class with the array() tests commented out.

require_once('wfArray.php');
error_reporting(E_ALL);
$p1 = memory_get_peak_usage();
$stime = microtime(true);
//$arr = array();
$arr = new wfArray(array('owner', 'host', 'path', 'hostkey'));
for($i = 0; $i < 100000; $i++){
        //array_push($arr, array(
        $arr->push(array(
                'owner' => 100,
                'host' => 'www.example.com.co.uk',
                'path' => '/this/is/an/example/path.html',
                'hostkey' => '1111'
                ));
        if($i % 1000 == 0){ echo $i . "\n"; }
}
$i = 0;
while($elem = $arr->shift()){
//while($elem = array_shift($arr)){
        $i++;
        if($i > 1000){ break; }
        if(! ($elem['owner'] == 100 && $elem['host'] == 'www.example.com.co.uk' && $elem['path'] == '/this/is/an/example/path.html' && $elem['hostkey'] == '1111')){
                die("Problem");
        }
}
echo "\nTotal time: " . sprintf('%.3f', microtime(true) - $stime) . "\n";
$p2 = memory_get_peak_usage();
echo "Grew: " . ($p2 - $p1) . "\n";

Spain has been all over the press this weekend with a 100 Billion euro bailout agreed to by   Eurozone finance ministers. I spent the last three days in Spain and I find the coverage I’m reading somewhat disconnected with reality.

I drove down to Madrid from where I live in Southern France and spent Thursday, Friday and Saturday morning there, then drove back home and spent Saturday evening in Pamplona where the San Fermin festival starts in a month with the running of the bulls.

Madrid is a shining jewel in Europe. The city is immaculately clean and has a wonderful mix of new buildings like the Cuatro Torres that make for a spectacular modern skyline juxtaposed against gorgeous old buildings like the Royal Palace.

Walking in the Parque del Oeste where the Egyptian temple of Debod was moved to save it from the Aswan Dam, the park is filled with locals who have come out at night for their evening walk. Kids playing, groups of older women or men walking together, lovers in a quiet secluded spot in the park. Everyone is happy and full of life.

Driving around Spain there is an incredible amount of active road construction and the roads that aren’t being worked on are in great condition with many spectacular bridges.

Pamplona was absolutely heaving with party-goers on Saturday night including a huge Spanish rock festival, packed bars and pubs and streets literally filled from wall to wall in the older part of town – and the newer part was full of locals out for their evening walk. I visited a heavy metal bar with an Iron Maiden cover band doing a terrible rendition of Maiden’s older stuff and the standing-room-only crowd loving every second of it.

While in Madrid I got chatting to a local shopkeeper and went out on a limb and asked her about the informal or under-the-table economy in Spain. She explained that many people are employed off the books. I asked why, speculating that the tax in Spain is very high. She explained yes that’s one reason, but taxes are higher in Italy where she’s originally from. Another reason is to keep getting social benefits like a housing benefit. She also said it’s popular to pay someone only 70% of what they’re really paid into their bank account and the rest in cash to avoid tax.

More evidence that there’s a thriving off-the-books economy is that when we stayed in Madrid, we rented self catering accommodation. The proprietor asked that we pay the roughly 200 euros bill in cash.

All the economic indicators used to describe the “Spanish crisis” and provide rationales for bailing out spain or to predict how bad the “coming collapse” will be don’t take the informal economy into account. It also makes it difficult to understand the needs of the Spanish people, what the GDP really is, how dependent they really are on social programs and what Spain’s real ability is to service it’s debt.

To some the informal economy in Spain may seem to be immoral because conventional wisdom holds that one should “pay your taxes” and put your money in a safe place like a bank. But the Spanish people seem to be discovering a way to live without banks and government visibility on how much they earn or what they do with their money. I suspect many of the government assistance programs are over subscribed and do little to serve their intended targets.

It makes one wonder who the Eurozone is really bailing out.