Posts Tagged With: Opinion

Cheap ideas for slowing down speeding cars

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We live on a street that's about 29 feet wide. There are parked cars on either side that take up about 7 feet each, which leaves 15 feet in the middle of the street for through traffic. There are hundreds or thousands of streets like this in San Francisco; here's a screenshot of one at random here.

Cars go really fast on our street - they'll gun it up to 35-40mph, but only when there's no traffic coming in the other direction. When traffic comes in the other direction they need to slow to steer between the oncoming car and the row of parked cars. Speeding cars are not safe for kids and they are leading sources of noise and air pollution.

If there are no cars coming, they can drive very quickly right down the middle of the street. So the obvious first step to slowing down traffic is don't let the cars drive in the middle of the street.

The SFMTA's program to address speeding involves adding a speed bump. A speed bump is very effective at slowing cars, but it's expensive and labor intensive. They only have the budget to address about 30-40 blocks a year.

What if we wanted to fix this for every residential block in the city? You'd want something that you could put in the very middle of the street, to prevent the behavior where cars drive very fast right down the middle. The ideal obstacle would be

  1. cheap
  2. would not cause any damage to the car
  3. very visible
  4. easy to move if necessary

I think a seven inch tall plastic soccer cone fits these criteria. You can buy them on Amazon for less than $1 each.

With a cone in the street, cars would either need to drive over it (undesirable) or around it, which would force them to slow down because there's a lot less space between the cones and the lane of parked cars.

My theory is that this would slow down cars a lot. It's cheap to test! Let me know if you are interested in trying it.

Measuring

To convince the MTA you'd want to do a test to see whether the cone is bringing down speeds. To do this, pick an hour during a weekday and count the car traffic — speeding vs. non-speeding, and then deploy the intervention the next day or next week during the same hour, and count the car traffic, speeding vs. non-speeding. You can then do a statistical test to determine if the results are significant.

You can buy a radar gun for about $100 to measure car speeds, which would be more accurate than eyeballing "speeding" vs. "not speeding" or have someone who doesn't know about the experiment (and can't see the cones) make the judgments.

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Let employees sell their equity

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Sometimes people choose to work for one company over another for reasons related to the work environment, for example what the company does, and whether the other employees create a place that's pleasant to work at. But a major factor is compensation. If Company A and Company B are largely comparable, but Company A offers $30,000 more in base pay per year more than Company B, most people will choose Company A.

At tech companies, compensation usually breaks down into four components: company stock, benefits, cash salary, and bonus. When you get an offer from a company, these are the four areas that the recruiter will walk you through. The equity component is a key part of the compensation at startups. Small startups hope that the potential for a large payoff is worth sacrificing a few years of smaller base pay.

If you join a small startup and you get stock, you generally can't sell it until an "exit event" - an IPO or acquisition - even if your entire stock grant has vested. Generally, any stock sale before an exit event will require approval of the board, and the boards generally frown on stock sales, for reasons I will get into. So while you may own something that is worth a lot of money, you can't convert it into cash you can actually spend for a half decade or more.

By contrast, if you join a public company, your compensation includes equity that you can sell basically immediately after it vests, because it trades on a public exchange. There are hundreds of people who will compete to offer the best price for your shares every day between 9am and 4:30pm.

As an employee, how should you think about the equity component of your offer? One reason to take a big equity stake is to bet on yourself. If you have a great idea about how you can make the company 10%, 50%, or 200% more valuable, and you think you can execute it, you should take an equity stake! After you implement the changes, your equity will be massively more valuable. Broadly speaking this is what "activist investors" try to do; they have a theory about how to improve companies, they buy a stake and hope the value changes in line with the theory.

One problem with this is that you are much likely to be in a position to make these changes if you are someone important like a C-level executive or a distinguished engineer. However, most tech employees are not C-level executives. If you are an engineer on the fraud team, and you try really, really hard at your job for a year, maybe you can increase the value of the company by 1% or 2%. You are just not in a position, scope wise, to drastically alter the trajectory of the company by yourself.

Rationally speaking, it does not make much sense for you, an engineer on the fraud team, to double or triple your effort just to make your equity stake worth 1% more. There might be other reasons to do it - you could really buy into the mission, or you hate being yelled at or whatever - but just looking at the compensation, whether you, personally, work really hard or slack off, your stock is probably going to be worth about the same. Unless you are the CEO or other C-level executive, at which point you have a big enough lever that your level of effort matters.

Another way to think about it is, imagine you have invested your money in a broad range of stocks and bonds, and then someone asked you to sell 30% of it and place it all in a single tech stock. Modern portfolio theory would suggest that that is a bad thing to do. You could gain a lot if the stock does well, but on the other hand, if the company's accountant was embezzling funds, or the company lost a lawsuit, or the company lost a database or had the factory struck by lightning or something, you could lose a ton of money that you wouldn't if you were better diversified. It's not worth the risk.

All this goes to say that employees should value their equity substantially less than an equivalent amount of cash. Outside of the C-level, you can't do much to make the equity more valuable, and an extra dollar worth of equity takes your portfolio further away from an ideal portfolio that you could buy if you just had cash. (For more on this topic you should read Lisa Meulbroek (hi, Professor Meulbroek), whose CV is criminally underrated.)

(On the flip side, if your company is small and valuable, it may have its pick of investors to take money from, and be able to dictate investment terms. Holding equity in a company like this is a way to approximate the "deal flow" of a good Silicon Valley investor - as an employee you are getting the chance to buy and hold stock in a company at prices that would not be accessible to you otherwise. This may be true of small, hot startups but it gets less and less true the bigger a company gets and the more fundraising rounds it goes through.)

One implication is that you should prefer to work at public companies. At a public company, you can take your equity compensation and immediately sell it and buy VT (or even QQQ) or whatever and be much better off because you are diversified. You can't do that at a private startup.

Another problem is that public companies tend to have better equity packages. I went through a round of interviews recently and I was stunned at how paltry the equity offers were from private, Series A-C companies. For most of the offers I received, the company valuation would need to increase by 8-20x for the yearly compensation to achieve parity with the first-year offer from a public SF-based company, let alone to exceed it. Even if they did achieve 4 doublings of their valuation, you might not be able to sell the private company stock, so you're still behind the public company.

I expect larger companies to have better compensation, it's part of the deal, but that large of a differential, plus the cash premium to be able to sell instantly, makes it foolish to turn down the public company offer. 1

So how can you compete if you're a smaller company? The obvious answers are what they've always been: recruit people with backgrounds that bigger companies overlook, give people wild amounts of responsibility, sell people on the vision, commit to "not being evil" and actually follow through on it.

But you can also try to eliminate an advantage that public companies have by letting your employees sell their equity. Not just, like, one time, at a huge discount before you go public, or when you get to Stripe's size and want to appease your employees. But routinely; because your employees want to boost their cash base, or buy the stock market, or buy a vacation, or whatever.

There are some objections. Having more than 500 shareholders triggers SEC disclosure requirements, which can be a pain to deal with. So require employees to sell to other employees or existing investors. Cashing out entirely might send the wrong signals, so limit sales to 10-20% of your stake per calendar year. A liquid market might require repricing stock options constantly. So implement quarterly trading windows.

Executives might not want to see what the market value of your stock is at a given time. That's tougher. But a high day-to-day price might convince people to join when they otherwise wouldn't. A low price might convince you to change direction faster than waiting for the next fundraising round.

There are also huge benefits. Employees can cash in earlier in ways that are generally only available to executives. They can take some risk off the table. People who want to double up on their equity position can do so.

Finally, you might be able to attract employees you might not otherwise be able to. A lot of folks who are turned off by the illiquidity of an equity offer might turn their heads when you describe how they can sell a portion at market value every year.

Big companies have big moats. One of them - the ability to convert stock to cash instantly - doesn't need to be one.

Thanks to Dan Luu and Alan Shreve for reading drafts of this post.

You may think they were lowballing me, but this was after negotiation with each. Another possibility is that I did differently on the interviews for each, and the smaller companies offered me lower packages because they thought I did worse. I think I did about equally well on the interviews for each.

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Beware tech companies who tell you they don’t negotiate

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Reddit and Duck Duck Go recently announced that they are eliminating salary negotiations, in part to help even the playing field for men and women, since men are more likely to negotiate salaries than women.

Men negotiate harder than women do and sometimes women get penalized when they do negotiate. So as part of our recruiting process, we don’t negotiate with candidates," Pao said in the interview. "We come up with an offer that we think is fair. If you want more equity, we’ll let you swap a little bit of your cash salary for equity, but we aren’t going to reward people who are better negotiators with more compensation."

I am a little skeptical. It's fine for a company to announce this, but they lose nothing from announcing "we don't negotiate offers". The person you really need to ask is the person who has 5 offers from different tech companies. If they go to Reddit or Duck Duck Go and say, "I'll come work for you for another $5k / $10k with the same equity", are they turned down 100% of the time? If yes, then I'll believe a company with a stated policy that says "we don't reward negotiators".

Announcing "We give fair offers" is a smart move on behalf of a negotiator; it lends better credibility to whatever offer is on the table. It's just not in their best interest to disclose that they negotiate.

In my last round of job interviews, one company made me an offer, told me in strong words that "this offer is non negotiable", then ended up offering me both more salary and more equity.

I would also like to remind everyone that, within the last decade, six of the largest tech companies in the USA conspired to depress wages for engineering employees. I will repeat that last sentence. SIX OF THE LARGEST TECH COMPANIES IN THE USA ACTIVELY COLLUDED TO KEEP ENGINEERING SALARIES DOWN FOR FIVE YEARS. Steve Jobs, a person who many tech CEO's admire and try to emulate, threatened Sergey Brin because Google was trying to recruit Safari engineers.

Yes, Reddit and Duck Duck Go are not those companies, but if half of the National League teams are found colluding, I'm going to have a little skepticism when the Rangers tell me "this is the best offer you're going to get". I almost forgot, that example doesn't even work, because all of the MLB owners recently colluded to depress salaries as well. Given the history, as a tech employee you are wise to take anything tech employers say with a grain of salt.

I applaud Reddit and DDG for taking policy steps to address the gaps between pay for men and women. They may find that starting with a high offer helps them close candidates - great! But I am skeptical that "we don't negotiate" is true, or at least, we're not hearing it from the right party in the negotiation.

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Companies Respond To Incentives, Too

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A Google data center

The New York Times has a big new feature up explaining why data centers at Google, Facebook etc. waste tons of electricity. Diego Doval, a former CTO at a popular startup, skewers the NYT with a 5,000 word critique of the factual inaccuracies in the post.

Doval is right on with his critique, but there's a simpler problem with the piece, that I find tends to underlie lots of liberal thought. As the article points out, data centers use 2% of the electricity in the United States. The expense required to power these data centers represents a huge, huge incentive for all of these companies to cut down on their power use as much as possible. To do otherwise, with the amount of money they're spending, would be negligent.

Sadly, people who can write code, and understand the performance and reliability problems faced when running a large data center, are rare enough and highly paid enough that most of them work in the tech sector. When non-technical reporters try to report what's going on without understanding the fundamental issues, you get articles like this one.

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Energy policy isn’t about helping the environment

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It’s worth remembering that lots of our environmental policy is wasteful or distortionary. Virginia Postrel writes about California’s new law banning incandescent light bulbs:

What matters, from a public policy perspective, isn’t any given choice but the total amount of electricity I use. If they’re really interested in environmental quality, policy makers shouldn’t care how households get to that total. They should just raise the price of electricity, through taxes or higher rates, to discourage using it.

Instead, the law raises the price of light bulbs, but not the price of using them. In fact, its supporters loudly proclaim that the new bulbs will cost less to use. If true, the savings could encourage people to keep the lights on longer. (via)

In 2009 I wrote about a similar California proposal to ban high-energy-use TV’s.

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Vaccinate your children

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On many policy issues the evidence is mixed. Vaccination is not one of those issues. I used to read about parents not vaccinating their kids in rich areas like Marin County and think that the "trend" would stop when kids started dying. But now, they are dying. From a Boston Globe article on a measles outbreak in Massachusetts,
Measles continues to spread in Massachusetts, with two new cases confirmed this week, including one involving a 23-month-old boy from Boston who had received his first measles vaccination last year, according to the Boston Public Health Commission. The other was a teenage boy from outside the city who was treated at a Boston health care facility. That brings the state total to 17 this year — and counting. In each of the previous four years, Massachusetts has had one to three cases.
Not vaccinating your child makes every other vaccination less effective - in one case cited in the article, a boy who had been vaccinated contracted the measles. I'd like to think that if the state began to prosecute parents of deceased children for manslaughter, more parents would get their children vaccinated, but I doubt it. Normally you could profit from people's misunderstandings by betting against them - in this case betting that their unvaccinated children will contract pertussis or measles, or betting that their vaccinated child will *not* become autistic, or develop pertussis anyway. But in this case unvaccinated children are already losing their lives - it's hard to raise the stakes further than the life of a child. More from Megan McArdle:
It's hard to believe, but we're sliding backwards on two of the three public health achievements of the 20th century: vaccination, antibiotics, and clean water. Antibiotic resistance is a growing problem, one that we're partly inflicting on ourselves by rampant overuse. And now vaccine resistance is spreading among parents who want to free ride on the herd immunity of others. If these diseases were widespread, they'd be rushing to vaccinate their kids. But they can delay, or forgo the vaccines entirely, thanks to other parents who are willing to risk their kids in order to do the right thing. They're already killing little babies who catch pertussis before they can be vaccinated, and now measles has killed six people in France just since the start of the year.
Please, please, vaccinate your children.

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No, I won’t be friends with you on Facebook

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I’m back on Facebook. I probably won’t approve your friend request, however. This tends to upset people and oddly the people who get the most upset are the people with 1000+ friends.

Here are some reasons why I won’t be friends with you on Facebook:

– I don’t want people that I don’t know very well seeing my Wall or photos. At some point in the future, people may have an incentive to make me look bad and reducing the number of people that can access my Wall, and photos, is a good way to help solve that problem. I also don’t want to be worrying all the time about managing what people are tagging and posting to my Wall.

– When I have a small group of friends, all of the updates in my News Feed are from people I care about. It’s easier to keep up with everyone in my social group.

So that’s that. The problem is that a lot of people I know only have Facebook accounts, and use them as their omnibus social media/Internet presence and for these people, adding on Facebook is their way of connecting with me. I don’t see a good way around this problem.

The good news is that if you want to keep up with me, it’s pretty easy – I have a Twitter account, this blog, a quarterly newsletter, a Bitbucket account for sharing code I’ve written recently, a Delicious account for sharing cool links I’ve read lately, and a LinkedIn.

Also, there’s a good chance I’ll add you on Facebook if we’ve spent more than an hour hanging out sometime over the last year. I don’t ever reject anyone, just keep their request pending, in the hopes that we’ll hang out more in the future.

John Graham-Cumming wrote a good post about the same topic over a year ago. I tried to find it, but it’s been swallowed by the Internet.

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Sleep

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  • My most productive time of the day to work is early in the morning. However if I have the choice to wake up early or sleep in, I will sleep in, so it's very rare that I'm up that early. If I am up that early, it's usually because of class or finishing an assignment, so I can't actually do the kind of work that would be great to do early in the morning.
  • I am very optimistic in setting my alarm. When I live by myself, I often just snooze through when I said I was going to wake up. When I live with a roommate I will wake up at the correct time, but I haven't ever got along with someone sleeping in the same room as me. So there's a tradeoff there.
  • I can't sleep in very late (past noon or so) so staying up late is a good way to maximize the time I'm awake. When I get up early after staying up late, I get really excited, that I'm competing or really getting after it (I still feel pretty awful and tired). Given the choice between staying up really late and not, I'll choose to sleep more however.
  • No matter how much sleep I get, I feel awful for the first thirty minutes I am awake. So it's best if there's something that I must do in the first thirty minutes.
I figure I could gain around 500 productive hours a year with an optimal sleeping scheme.

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The Robert Day School is hurting CMC’s leadership efforts

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Note: I wrote this last year a few days after I was rejected from the Robert Day Scholars Program. This year’s Scholars were just announced, and I thought it was worth reposting.

Let’s say you had $360,000 to give away every year to undergraduates and you wanted to encourage future leaders, or increase the net amount of business success enjoyed by undergraduates at your school. What would be the best way to spend the money?

Observation #1: It’s difficult to predict who is going to be successful and who isn’t. Arguably, 2 of the top 3 earners that CMC has produced were C students when they were here. Robin Williams went to CMC and dropped out; so did Ben Casnocha. I have heard that Robert Day himself, and Henry Kravis, were C students; George Roberts would bet on horses at Santa Anita every day after class. Clearly, the Robert Day program wants to maximize the number of future Kravises and Robert Days, but Kravis and Day probably would not have had the grades to get into the program.

We can observe which students have taken leadership roles, and which students have high status, and we can give a work sample assessment, but these are merely rough indicators – the work sample assessment has only a 0.52 correlation with future job success.

One crucial factor is luck; people have to be at the right place at the right time, and it’s hard to predict which fields are going to be huge, or which person will start the right company or strike up the right conversation at a bar, or join the right startup. Maybe we can assign a percentage chance of wild success to every student, but I would guess that the difference between students in the top GPA decile and students in the bottom GPA decile is maybe 0.4.

Observation #2: If you want students to succeed, instead of telling students they are smart, tell them they are not working hard enough. There’s a reason successful coaches don’t tell their players, “You guys are so athletic and so good. You deserve your #1 ranking and you are all surefire lottery picks. Let me buy you some pizza.” Complacency is not a good leadership trait, and successful students/athletes hear “You’re so smart” more than enough as it is. It’s not clear that, even if you could identify successful students, that giving them a large chunk of cash is ideal, if it could make them complacent. While we give scholarship money to athletes, this is largely a prize so that they want to choose our program, and we take it away if they are unmotivated, or unsuccessful.

Indeed, the students who are rejected from the cash/status giveaway program might develop a chip on their shoulder and become more motivated than the students accepted to the program. I am reminded of Michael Jordan, who was cut from his high school JV team, or CMC trustee Augie Nieto, who was told by his thesis adviser that his plan to develop a series of exercise machines would not work, and he went on to turn the thesis into the multimillion dollar LifeFitness company. There is a selection bias at play here, but it would be good to study if the Robert Day program had a measurable effect, and if so, what that effect was.

Observation #3: Leadership skills, as well as skill at becoming exceptional, can be taught. Some high status students are natural leaders and others have the decision-making skills to become leaders but maybe not the body language, or ability to inspire others. Where should we focus our attention: on making the potential stars into superstars or on sharpening the diamonds in the rough? Given the luck-based nature of success, I would be tempted to focus at the margin but it depends on your estimates of the your ability to make a difference, as well as the goal of your program.

Recommendation: The key is to design your program to send different messages to different groups. To the group of super-bright, super-driven, super-body language, super-ability to inspire students, you want to send a message that says, Don’t get complacent, no one’s looking out for you, if you want to get anywhere you need to work harder. These students are probably going to out-earn their peers, and everyone knows it; if you gave this group money, you would probably get the least bang for your buck, as well as cause resentment among other students and professors.

To the group of marginal students, who maybe aren’t as driven as the top group, you want to send an encouraging message, and spend more attention, in the hopes of boosting their leadership skills and giving them confidence and a better chance of success in the workplace. In theory, you could achieve this by setting up a status and cash-conferring scholarship for a select group of students and then deliberately choosing the candidates you think are second-best.

Either way, you’re not touching the C students who might turn out to be brilliant, or lucky, businessmen. I’d probably want to arrange lectures for everyone on how they can increase their impressiveness, and on the importance of body language. I would purchase cameras for every teacher and instruct them to film students any time they present something, and also randomly during class discussion, and then give the tape to students so that they can see the effects themselves. Given that the group who will attend lectures will self-select to be the group that needs it least, I’d want to consistently emphasize the importance of these qualities, maybe give out a cash prize for attendance or include them in the core curriculum.

Conclusion: If I’m in a position to have $360,000 to give away every year, I’m probably interested in showing that I care about future leaders by giving away money, and less interested in actually increasing the number or success of future leaders, e.g. how the program is designed. At the margin, of course.

If I’m so negative about the effects of the Robert Day School on the student body, then why would I bother to apply? It’s usually easier to change organizations from within, and given that the opportunity exists, it would be silly to turn it down. I would like to see more CMC students become future leaders, as they are my peers, and it will make me feel prouder to affiliate with CMC. That said, being a rejected applicant, it will be difficult to suggest and implement any changes to the program, as most of my suggestions will be taken as sour grapes.

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Watson and Jeopardy

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My roommates and I usually catch Jeopardy at least once a week, so we were of course excited to watch Watson, the IBM machine, take on Ken Jennings and Brad Rutter in Jeopardy. So far, Watson's done extremely well, getting 13 straight answers right last night, and finishing way ahead of the competition at the end of the game yesterday. In particular I was intrigued by a few things:
  • In case you haven't watched football with me, I generally annoy everyone else in the room the entire game by urging the team with the ball to be more aggressive: pass more, go for it on 4th down, and stop kicking field goals. The data backs me up. Similarly when I watch Jeopardy, I get upset when players land on the Daily Double - the one chance they have to win a ton of money very quickly - and bet very conservatively, throwing away their chance to leave their competition in the dust. So I was intrigued by this comment from Ken Jennings on Watson's performance:
    Daily Doubles aren't distributed randomly...basically, it had thousands of old Jeopardy games in its head and knew where to look. And got very lucky. Most players go top-down, but some hunt for Daily Doubles like Watson. Brad Rutter calls this an arms race: if one player does it, you have to join in to keep up.
    Clearly Watson, as a computer that can compute expected value and forecast his expected winning percentage, has figured out that the Daily Doubles are valuable - he routinely picks questions in the $800 and $1000 row to start the game, and bets big - $6000 at one point - on the question. This play is forcing the other players in the game to improve their strategies. Hopefully this trend will extend to normal games of Jeopardy, as it increases the variance and makes the game more fun to watch. However, Jeopardy's normally a one-off game so it's possible player strategy won't improve.
  • Lots of people make the mistake of assuming a person is "smart" because they are good at Jeopardy. I don't think Jeopardy is a very good measure of intelligence; it measures your knowledge of obscure trivia, as well as your ability to recall it, but there's more to intelligence than an encyclopedia. It's possible this skill is correlated with intelligence (maybe intelligent people read widely, or have better recall), but Jeopardy skill doesn't prove intelligence per se. It's good to see people realizing Watson knows a lot but isn't "smart" - it can't recognize when another contestant gave the same answer, for example.
  • Watson's buzzer pressing mechanism is lightning fast, so it wins the buzzer on every question where it computes the answer by the time Trebek finishes reading the question. I thought this was unfair, but then realized putting an artificial damper on Watson's reaction time would be stupid - if it's a better Jeopardy player under the current rules, then great, and if it's unfair, they should change the rules so everyone gets an equal shot at the question, or use some other mechanism to award first crack at an answer.

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