Tim Oren's Due Diligence

Thanks To All The Vets Out There

A propos of Veteran's Day, here's something I found over at Blackfive. Sales of the sound track at iTunes benefit the Warrior Legacy Foundation.

(I've got YouTube streaming to my new HD system. This really rocks with surround and a 50" big screen.)

Thanks to all those who have served, now and in the past.

Kudos To Samsung

I toss enough brickbats at incompetent companies that being 'fair and balanced' (heh) seems to require some appreciation when things go notably right. So...

I'm a laggard when it comes to video technology. Our viewing of 'regular TV' is usually limited to Discovery, Food Network, and some sports. But the proportion of Blu-ray offerings on Netflix finally got to the point of motivating a switch to HD. So the venerable Magnavox rear projection tube was put on the decommissioning list, and it was shopping time.

Given our low duty cycle requirements, I picked a Samsung 50-inch plasma screen, since reviews say that it does a good job at up-converting SD library material (and Amazon dropped the price just when I was doing comparisons). I paired this with a BD-P1600 Blu-ray player from the same manufacturer. This was touted as having built-in interfaces to NetFlix, Youtube and other net media services, so I could replace my improvised net video set up with something more permanent.

Given the potential for Murphy's Law to come into play when doing anything involving consumer electronics and networking at the same time, I approached the install with some trepidation. The plasma screen was first successfully inserted as a 'drop-in' replacement for the old TV. (Rule 1: Always keep a working system.) Then the Bluray player was added: HDMI to screen, Ether to nearby Apple Airport Express and optical to the surround amp.

Power on. Insert SD DVD as a test. Comes up immediately, scaled correctly to the plasma screen. Network test. Works first time. Cross fingers and try Netflix menu item. Get activation code, walk over to laptop and enter at Netflix. Wait one minute, it's activated. Select the top of instant viewing queue, wait a few seconds, and I've got 'Das Boot' streaming onto the big screen.

Elapsed time: Ten minutes after getting things hooked up. No, I didn't read the manual. Needless to say, I'm impressed by the 'out of box experience' particularly given some knowledge of just how deep the rathole can be if anything goes awry. So, a well done to Samsung.

It's worth noting that this worked out so well because Samsung, Apple and even Comcast all did the Right Thing when it came to the IP network stack and general use of public standards. Given the repeated market failure of networked CE devices in the past, the superior of open standards over manufacturer's attempts at proprietary specs is evident. There's still plenty of room to innovate around user experience and quality. (Are you listening, Sony?)

Ah Yes, The Free Market

If you can't win, use the government to raise your competitor's labor costs. Rent seeking and crony capitalism are alive and well in DC.

Against Buzzword Heat-Death

As I've observed before, tech buzzwords that escape into general usage tend to lose their semantics at the hands of wannabes and the media. Commendably, an article at Ars Technica not only notes the phenomenon as it applies to 'cloud', but does something about it by recounting the history and actual meaning behind the term. (And yes, this is another example of the new media kicking the MSM's behind.)

And I should also give further credit-where-due, in noting that Ars has become one of my favorite feeds, due to its willingness to sponsor in-depth pieces, rather than the regurgitated press releases or shallow reviews of the product du jour that prevail at other outlets. Further case in point, this ongoing series on genome sequencing. Well done!

Blogs Are Simply Beating The Sh** Out Of Newspapers

Says Fake Steve, with a blatant example of the NYT blowing the Zynga story, and then pounds it home:

"They're [the blogs] the ones who still dare to go for the throat, while their counterparts at big newspapers just keep reaching for the shrimp cocktail. As for the newspapers: Faced with their own demise, fearful of losing even more advertising, newspapers have made the huge mistake of becoming ever more timid, more cautious, more in bed with the companies they cover.

It's the exact opposite of what they should be doing. The truth is, if newspapers want to survive they should go back to doing what they started out doing -- muckraking, stirring the shit, calling bullshit. The other truth is, when these papers are dead, they will not be missed."

Amen. HT to Ole Eichhorn.

A Message From A Biotech Entrepreneur

This was originally sent to the Instapundit reagrding his posts on biotech innovation. Since I found it as a comment here, I'm going to take it as being an open letter. I'd be pleased to credit the author if he or she will e-mail me:

"I read with interest your links today on pharmaceutical and medical device innovation, including an article of your which I had not seen before. While what both said is true, it overlooks perhaps *the* major source of innovation in this segment: venture financing of start-ups.

By way of introduction, I run a young biological tools company. Our products will contribute directly to creation of a new generation of pharmaceuticals and of diagnostic tests. At the moment we are funded entirely by NIH, as the venture capital market is moribund. I also serve as a frequent reviewer at both NIH and NSF, on both academic and small business panels, and for a dozen technical journals where research results are disseminated.

These days big pharma does very little research. The innovation comes from the small companies, and those that succeed often acquired by big pharma, or license their drug candidates to them so that the enormous costs of clinical trials are absorbed by the much larger partner.

These small companies live on what can be substantial investment (hundreds of millions of dollars each) by venture capital firms. So the ability of a company to raise money will depend on the VCs being able to generate enough after-tax income for their few successes to fund their failures. Obamacare is squeezing this on both ends. First, the capital gains rate is slated to increase substantially. Second, the revenue potential for the putative new products under whatever form Obamacare takes will undoubtedly decrease. This also affects company value for any potential IPO.

That makes this space a much less attractive investment. Of course companies will still be funded, but they will be far fewer in number and the pressure on them to produce will increase from what is already obnoxious. Since success is partially a numbers game, there will be fewer products that come to market.

No, a company cannot live on grants. A $2 million grant award is a large one, but this is typically the amount that a company raises from venture sources for its *first* funding round (of many). And winning grants these days is really, really challenging: success rates are on the order of 15%. It is nearly impossible to fund a company of any size from grants alone -- only the academics can live on grants since their salary and lab overhead is heavily subsidized by their institution.

I should also note that there are many overhead categories that government grants will not cover, such as intellectual property prosecution. The agency funds the work, and expects you to publish the results, but will not fund obtaining patents. There is a commitment to commercializing new products!

That to me is the major threat to innovation under Obamacare: draining the life blood out of the small-business corpus. That's where the innovation resides, and that's what appears will be hit the hardest."

"Smart Money" Indeed

This is both a gross privacy violation and a fascinating result. Seems some Finnish researchers managed to get their hands on that country's records of IQ tests of its soldiers. They then joined that data with several public databases to correlate the intelligence tests with not only income, but stock market participation and portfolio structure. Multiple regression and factors analysis ensued. The punchline:

...the consumption of smarter individuals, rather than the wealthy, may be what drives the pricing kernel. This latter conclusion is not currently featured in formal neoclassical models of asset pricing. However, it is consistent with neoclassical folk wisdom—that economic behavior, divorced from utility optimization, is irrelevant for market efficiency because savvy investors determine asset prices.

How politically incorrect. How fascinating. Read the whole thing. (Hattip: Tyler Cowen.)

An Open Letter to Rep. Jackie Speier, CA-12

Dear Representative Speier:

I write to urge you to oppose the health care ‘reform’ bill, so-called ObamaCare, that is currently before the Congress. I ask this for two main reasons:

The first reason is the disparate impact that this bill will have on your district. As you may be aware, the bill imposes a 8% employment tax on growing small businesses, raising the cost and discouraging the creation of new jobs. This is a grave error at a time when the national economy needs small business to lead a recovery in employment. It is specifically a problem for your district, as the formation and growth of startup ventures is key to its economic vibrancy, as well as that of the entire Bay Area. Further raising the costs of jobs here will reduce new venture formation, and send more jobs from growing ventures overseas. This will not only adversely affect your constituents, but will reduce the ability of the Bay Area to attract talent from around the United States and abroad.

Another disparate impact is that on biotechnology, now an important employer and source of growth here on the Peninsula. As you may be aware, the bill before Congress directly imposes taxes on medical devices, many of them created here. This will not only affect the ability of local ventures to grow, but will impose higher costs on those who most need such therapies. The indirect effect of the bill is as bad, if not worse. As a venture investor myself, I can attest that the effect of further regulation and the threat of ongoing political interference in an economic sector is to send investment fleeing elsewhere, to other sectors, or abroad. Both the economic health of your district, and the literal health of your constituents in the future will be adversely affected by this bill’s discouragement of investment and innovation in biotech.

The second major reason to oppose the bill is moral. In our free economy, employees and entrepreneurs alike trade their efforts and the literal time of their lives in the hopes of monetary rewards. How great an imposition is it to tell them how they must, or may not, spend those rewards to enhance their lives, including protecting them with insurance or therapies? Beyond the outrage of using such force against free citizens, the rationing and discouragement of medical advances that accompany government interference in healthcare will affect their very lives. It is apparently more convenient for our government to impose on American’s lives, than to honestly and openly fund medical transfer payments on the budget. American are unlikely to forget or forgive those who would so damage their freedoms.

Sincerely,

Tim Oren

(The original of this letter was handed in at the representative's San Mateo office yesterday.)

The Consumer and Recovery: This Time It's Different

An excellent analytic piece on consumer credit and spending at Zero Hedge.

Good reading for anyone investing in consumer sector stocks, or consumer-facing startups. Not only is it a tough analysis of what lies ahead, but it assumes a recovery started in Q3. If, like myself, you see that less than one percent GDP growth as a self-serving number put out by a government that has largely p***ed away the stimulus money in unsustainable and unproductive directions, you may need to slide everything right by a few quarters as well.

Saturday AM Serendip

(By Oren Lavie, via Vanderleun.)

Meiji Japan in 3D

Fun Japanophile blog Pink Tentacle has a series of 19th century stereoscope views with the dual views scanned and overlaid in a animated GIF. This yields a very reasonable color (probably hand tinted) 3D facsimile of life in pre-industrial Japan. Fascinating! (I would not suggest viewing this if you have any epileptic tendencies...)

Caught in the Crossfire

"I sat on TV, while my hero Tommy Smothers yelled in my face how pissed off he was at me for appearing on Glenn Beck. It broke my heart. "

(Via Vanderleun.)

I find this clip incredibly poignant. A man who believes we can still talk about it meets one who's drawn battle lines. In many ways, an archetypal representation of our society in this final year of the 'aughts'.

Zombies Identified

Because only zombie companies would put up with this. And like movie zombies, these - Bank of America, American International Group, Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial - will soon, if not already, be shambling around groaning for "braaaiiinnnsss!!1!1!" because the few left there will be gone. But at least now you know some of the companies you don't want to do business with, in spite of the administration's efforts to conceal the extent of damage under the TARP.

And here I was taught in school that 'progressives' were in favor of breaking up trusts and big companies. Now being 'too big to fail' is a ticket to becoming a taxpayer-subsidized arm of the government. Somewhere, the meaning of 'progressive' changed a bit. Just like movie zombies, the best thing to do with these is to blow them to bits, and give those a decent burial.

Update: Nearly half the top execs at the Zombie Seven have already left since June. Good luck with getting decent people to back fill. If it isn't clear from above, I regard the Original Sin as being the bailouts. That extra-legal deviation from standard bankruptcy proceedings not only diminished investor confidence in every sector touched, but is the direct cause and excuse for this abrogation of contracts. Obama's (and Bush's) shillings come dearly, and we'll be paying for them in taxes, inflation, and reduced trust in the market for years to come.

Synthetic Biology Primer

If you're trying to keep up with the rapid progress in synthetic biology or genomics generally, here's a nice get-you-up-to-speed primer (PDF) from Scott Mohr. Dating from mid-2007, it only contains one of three sections advertised in the front matter, that on 'Molecular Biology for Novices', but that's 73 pages of reasonably dense material right there.

I grew up on "Blue Book Biology" a 'few years' ago, and amazingly it's still in print, in its ninth edition. That plus the intervening years of perusing the odd Scientific American (more recently, American Scientist) article left me able to follow things like the Church and Venter talk, but lacking confidence that I had the whole story. Mohr's piece is a good level set for those with similar aging or informal backgrounds. What's interesting is that the understanding of what is going on in the cell hasn't changed that much from my high school BSCS days, but the understanding of how it happens has grown immensely more sophisticated and - increasingly - modifiable.

A Well-Deserved Nobel

No, not that one. It's the economics Nobel awarded to Oliver Williamson and Elinor Ostrom. I don't know Ostrom's work first hand, but Williamson's bridges between Coase's concept of transaction costs and an analysis of the various ways of organizing economics activity through markets, contracting and firms. The guys at Marginal Revolution have a more complete take on his work. For many years, Williamson's Economic Institutions of Capitalism has been my go-to reference to stimulate thinking about economic reorganizations precipitated by the net and other technology innovations. (Copyright 1985, so it's safely pre-net, forcing you to think it through yourself.) So I'm glad to see the good professor get his recognition, and I will hoist a drink in his honor this evening.