Tim Oren's Due Diligence

What I've Read On My Involuntary Vacation

Those who've followed this blog for a few months know that I broke a leg around the end of January and have since been recuperating. I'm driving again, but getting off crutches must await regaining flexibility in the ankle of the injured leg. Rehab is under way - all too slowly.

I didn't realize how much time was being occupied by outdoor recreation and hobbies, and other activities requiring mobility, until I suddenly had it all back on my hands. That's resulted in more blogging activity here, but I've also devoted a lot of it to catching up on the reading queue, expanding into some topics that I might not otherwise have tackled, and beginning a few projects that are on the personal 'bucket list'. For your possible amusement, my 'vacation' reading list so far:

Rereading the entirety of Lois McMaster Bujold's Vorkosigan Saga. In the hospital, while more or less under the influence of a Dilaudid drip. Somehow this was perfectly compatible with the adventures of Miles.

Reread all 20 volumes of Patrick O'Brian's Aubrey/Maturin novels, one after another. Could be the Vicodin helped keep me on track through the entire sea-borne adventure and comedy of manners. Sailing, sailing. When I graduated to plain old Tylenols, I took on some new material.

Timothy Hornyak, "Loving The Machine". Robotics and culture in Japan. I reviewed it here.

Walter Russell Mead, "God and Gold". How the maritime economies of the Netherlands, Britain and the United States came to global power. Not as good as his "Special Providence", but superior to Diamond's "Guns, Germs and Steel" which at times treats the outcome as just a big accident. Yes, I believe in American exceptionalism.

Robert Zubrin, "Energy Victory". Why we should be investing in flex-fuel transportation. Reviewed here.

Neil Shubin, "Your Inner Fish". Human evolution and developmental biology, though the lenses of paleontology and modern genomics. Good sauce for evolution deniers. Found via Clive Thompson and Ole Eichhorn.

Roger Kimball and Hilton Kramer, eds., "Counterpoints". Essays from the New Criterion magazine. I had bought this largely for the political and foreign affairs related essays. I had already read through them and put the book on the back burner before the fatal day. The remaining 'free bonus' cultural pieces turned out to be a welcome and stimulating goulash of things I might never have otherwise noticed.

Ira Brodsky, "The History of Wireless". How you got your personal Star Trek communicator, a few centuries early. Reviewed here.

Patrick Leigh Fermor, "A Time of Gifts" and "Between the Woods and the Water". The travels of a young Briton in 1930s Europe from Holland to Rumania, just as the Nazis were coming to power. Written many years after the fact, and well salted with cultural details. A fortuitous train wreck of travel writing and history. This pick was due to one of the "Counterpoints" essays.

Jonah Goldberg, "Liberal Fascism". While Goldberg spends too much time apologizing for his analysis, and goes off on some tangents sparked by his conservative cultural views, this is a useful antidote to the highly selective memory of the Left. In an odd sort of synchronicity, I was reading this book in parallel with Fermor, and reached Goldberg's reference to Fermor's visit with a young German Communist who had just converted to Nazism, while I was only pages away from that scene in "Time of Gifts".

Michael Yon, "Moment of Truth in Iraq. In the autographed edition. As those who follow his blog know, Yon is a war reporter who doesn't hunker down in the Green Zone compiling reports from stringers of unknown loyalties. He's been out on the lines, in the sh**, and has the combat photographs to prove it. This is based on the experiences reported on the blog, but isn't just a compilation. He's added some details that were likely too sensitive at the time, but also rewritten to provide lessons learned and a narrative backbone. Yon is brutally critical of what he sees as bungled efforts in the invasion and aftermath, and thereby gains credibility for his current assessment. There's a good review (not my own) here.

Still in progress, I have:

Rereading all of Shakespeare, for the first time in at least thirty years. I'm through most of the Historicals and have started nibbling at the Comedies.

A volume of European history from 1648 to 1815, back story for O'Brian and also Fermor's travels in the former Habsburg Empire.

A recent personal finance book, along with rereading some I've used in the past, as a review on my own planning.

Got any suggestions? Put them in the comments, which I've opened up for once.

Review: Wakuriya Restaurant

This one is for you Bay Area and visiting foodies. The rest of you just get to be envious.

Bay Area fans of Japanese kaiseki cuisine have had the wonderful, but crowded, Kaygetsu restaurant off Sand Hill Road to feed their addiction. Now there's a new choice in town: Kaygetsu's head kaiseki chef has turned entrepreneur and opened up Wakuriya in a small San Mateo shopping center just off highway 92. My wife and I tried it out yesterday evening, to celebrate my 50-somethingth birthday. (Thanks to my partner Mochio Umeda for clueing us in ahead of the crowd.)

The restaurant is nicely decorated but tiny, only three tables plus eight seats at the bar, perhaps 20 patrons at a time. This allows very attentive service, but requires taking their 'reservations recommended' suggestion seriously. The place was 3/4 full, on a mid-week evening two weeks after opening, so the word is already getting around. One lucky couple managed to walk-in while we were there, but don't count on it!

Wakuriya is open for dinner only, and offers the set kaiseki menu only; no separate sushi or other orders. The choice is between the full 9 course meal, or 3 and 6 course subsets. We went for the whole deal. We were unfortunately restricted to a table since I'm still on crutches, so we'll have return another time to watch the chef at work. Expect to spend at least two hours if you do the full experience; but you'll not notice the time passing.

As usual with this style, presentation was immaculate and diverse, ranging from a heated stone to support the beef course, to Japanese style earthenware to appropriately decorated glazed pieces. This extends down to the accessories: a bamboo coaster laser-cut in the shape of a lotus root, for instance.

As you might expect given Wakuriya's genesis, the food is also impeccable. We believe we detected an overall difference in themes - which my wife characterized as 'earthy' - in comparison to the Kaygetsu style. Whether this was an artifact of the particular menu is hard to tell. We'll just have to return to get more more sample points!

I'll pick out two of the courses for special mention: The Zensai plate has a "Slow cooked mountain potato and snap peas with sesame sauce, sliced almonds, Kukonomi (Goji Berry)" selection that takes a potentially bland base vegetable and makes it dance with flavor. The shiso leaf dressed vegetable dish on the same plate is also exquisite. Definitely grab this one if you're doing the sampler menu.

Second, the Age Mono plate has a "Cherry Blosson flavored Ebi-Shinjo (deep fried minced shrimp cake) wrapped with cherry leaf", with macha salt for extra taste. You've never considered eating a cherry leaf? Trust me, you should! The same plate came with a fried lotus root that nicely echoed the table setting.

The restaurant is so new that it doesn't yet have its liquor license. Denied our usual recourse of throwing ourselves on the mercy of chef and server for appropriate sake pairings, we decided to dig into our own cellar. We came up with a dry, floral 2005 Saucelito Canyon sauvignon blanc. It paired well with all the courses but the beef, and dessert. Considering the latter included a layer of sauvignon blanc jelly, perhaps we were on the same wavelength as the chef.

For those already into kaiseki, you know why you need to go to Wakuriya. For others, there's nothing on the menu that would be considered too 'challenging' to an American palate already acclimated to sushi and sashimi. Give it a try and discover one of the great secrets of world cuisine!

For more reviews of Wakuriya try Yelp and - if you read Japanese - this blog post. Enjoy!

Go As Business Metaphor

Business writing and speech are loaded with metaphors drawn from sports and games - home runs, gambits, huddles, assists, game plans, and on and on. At the risk of being overly obscure, I'm going to drag in another source: The ancient Asian game of Go.

About twenty years ago I was working at Apple and had a cube in the De Anza 3 building. One of the campus cafés was downstairs, and I soon discovered there was regular lunch time Go playing group. I had learned the rudiments of the game in college, due to a friend working on a very early attempt at a computerized player. So I was drawn in as a kibitzer and soon active player. I never made it past somewhat decent amateur status before I was (inevitably) re'orged and moved to another office. But my period of play overlapped with a time when I was observing and learning(?) a lot about high tech business in general and software and platform competition in particular. Inevitably the two experiences grew together, and provided some metaphors that have proved interesting over the years, and seem appropriate to current issues.

Likely most people have at least seen a go board and stones (if not, try the Wikipedia article). Very generally speaking, the object of the game is to play groups of stones in order to surround as much space as possible. A group of stones without enough space within will die, and one with too much space inside may be vulnerable to the opponent trying to build his own viable group within that space.

Basic business metaphors can be something like this: The whole board is the available market. The stones played down are investment and expense to go after the market. A space surrounded is the net margin achieved by a product or company (the group). Too little space, and you're squeezed out of the market. Too much margin, and you are inviting competition to jump into your space.

So much for the basics, but further metaphors can be derived from tactical situations and styles of play. Of these, the one that keeps coming to mind lately is the issue of light vs. heavy plays (karui vs. omoi). These can refer to attempts to extend a group or jump into new territory. Light plays are probes. If the opponent attacks strongly, a stone or small group can be sacrificed to gain advantage elsewhere. Heavy is playing so large a group that it cannot be sacrificed, or fighting over an initial probe that would be better abandoned. This may let a more flexible opponent gain the net advantage.

Of course, such metaphors must be incomplete. The real board is multi-dimensional, and shifts in size and shape. There are usually multiple players, and people are not white and black stones. The board seldom starts empty. The customers get a vote on the moves. But the comparison can sometimes be instructive:

Given the description of light and heavy above (or found on the links), what style would you say Google, Microsoft and Yahoo are each playing? What type of play is best for a startup?

I Need Some Democrats!

Over at Winds of Change, I'm running a political survey that doesn't really fit in here. (It's also an experiment in using Google Docs for such a purpose, and that will be reported here.)

Anyway, my sample is coming in way short of Democrats, so if you're of that persuasion and have five minutes to spare, please give it a try. Or even if you're not.

We now return you to your regularly scheduled programming.

The Roving Eye: A Plan for MSFT - or GOOG, NYT Beats Its Sector, Fred And The Future, and More!

NC, anyone? Don Park has an idea for getting Microsoft out of the Vista trap: Put out an 'operating system' that's just a sandboxed browser, and sell backend services and upgrades. Buy just what you need, not have the whole glutinous mass thrust down your throat. Just one problem for the strategy, as exposed by commenter Rob Breidecker: "Google should do this as well". No, Google should be doing that instead - they don't have a current revenue stream to protect, and they are building a suite of apps that are perforce stripped down to work in a browser environment.

You go, Pinch!. The entire newspaper sector posted a 9.4% year-on-year decline in revenue last year, but the Times managed to beat that, with a 10.6% drop in Q1. And its publisher wants to tell other media moguls how to run their companies...

A must read for entrepreneurs. This is already widely linked, but just in case you haven't seen it VC Fred Wilson posts a think piece about the shortcomings of M&A as a liquidity path and provokes a fascinating discussion. There are the usual number of just plain naive comments, but it's held together by a great dialog among thoughtful veterans like Robert Seidman, Jeff Jarvis, Marc Hedlund and Fred himself. I intend a longer post in this direction, but for now just read the whole thing.

Azeroth invites you... to a science conference in virtual reality. That would be Worlds of Warcraft, not Second Life, though. All the meeting swag is virtual, and after the poster session they'll storm a city. I like the way those guys party. (Hat tip to Ann Laurie.)

Friday Eye Candy. Here's some fine photography to take you off to the weekend. I remember the old drive-in theatre out past Coyote Point, but it was already deserted what I arrived.

The Roving Eye: Macroeconomic Clicks, Mobile Web - Immobile Carriers, Cable Scams & Warranties Too!

Google as economic indicator. The latest search advertising numbers are out, and while Google continues to bomb their competition, their year on year growth rates are off dramatically for the second month in a row. Henry Blodgett has numbers and relays possible interpretations from Mark Mahaney of Citi: "1. Google's ongoing efforts to improve both lead quality for advertisers and the user experience for searches.
2. A macroeconomic dampening of commercial queries by searchers." While Google's always tweaking the algorithms, I'll take door number 2. Over a decade back, when I was at CompuServe, we carried all of Visa's card swipe traffic over our network. We didn't have to guess how good the Xmas season would be, we knew within a few days of its start, from the overall transaction volume. Likewise Google, now at about 2/3 share in search, doesn't just represent the market; it is the market. It seems perfectly reasonable that economic slowing would show up not only in advertiser spending, but in users not clicking on ads for purchases they are going to postpone. Of course, Google's revenue is sort of like California real estate, where people start whining if they don't get double digit growth.

Mobile Web Bubble. Jeff Nolan shares my conviction that mobile Web is over-hyped and over-invested. It's one of those "it's a wonder it works at all" sort of things, but the experience just isn't rewarding enough to justify the cost for most times and uses. Carriers, as usual, are their own worst enemy when it comes to costs and performance. I pick this one to remain a niche. It's well worth clicking through for the ensuing intelligent discussion among Jeff and his commenters. RTWT. (Here's the report of Mowser's demise that brought on Jeff's reflections: "...the mobile traffic just isn't there. It's not there now, and it won't be.")

Not Comcast This Time! The Instaprof reminds us of one of the bigger consumer hustles out there, overspec'ed and overpriced audio and video cables. I ran into this recently when a Radio Shack clerk tried to talk me into buying you-know-who's gold plated audio patch cord over their house brand. This stuff just fattens up the store's and manufacturer's margins, and likely the clerk's incentives as well. You don't need fancy cables for modern systems. Unless you've got an old turntable in your setup, the signal levels coming out of your components are already high level. Digital standards already include error detection and correction codes to deal with any noise, so fancy copper is even less necessary now. If you've got low level analog signals that need to be protected from noise (satellite dish signals) or high level RF signals that might generate noise, make sure they run in shielded cables. Coax and phono cables are all shielded. Anything more elaborate just fattens someone's margins. I've got 25 year old cables that once starred in my Apple II+ setup, now part of my surround system. They still work great.

Warranty Economics. The Popular Science article linked above also mentions one of the other margin builders, extended warranties. Due to a stint examining the business model of a long dead bubble-era startup, I know a little about the economics of these warranties: On the average, what you pay for the coverage is about twice what the warranty company expects to pay in claims, whether it's electronic gear or automobiles.
When comparison shopping or dickering for a major purchase I always ask about the pricing of the extended warranty. First, it makes the salesman hopeful that he will make some margin on the backend, and so possibly gains some leverage on the item's price. Second, divide the number in two and you've got a rule-of-thumb estimate for repair costs in the out years. Combine that with the reliability rating from Consumer Reports (you checked, right?), and there's a rough indicator of how likely your new purchase is to become a PITA.

Ned for MSFT. This one has already been linked all over the blogosphere, but I'm going to do it too, because it's tone perfect and funny. I'm reminded of this makeover video of a couple years back, which turned out to be an inside job.

The Roving Eye: Harshing Microsoft, An Anthropic Principle For Investing?, Proof God Loves Us

Vista Collapse? And here I thought I was being rough on Microsoft. Now Gartner says Vista (and Office) are becoming irrelevant, and maybe only a Yahoo deal can save Microsoft.

That really depends on how MSFT handles the acquisition, should it close. If it compromises the Yahoo business for the sake of the core, or tries to use the Windows and Office franchise to dragoon users onto the Yahoo properties or worse - both - then both businesses will end up in the same tar pit. In the best interpretation, closing the Yahoo deal could be a gigantic example of the business move known as 'getting pregnant' - spending so much on a venture that it can't be ignored or compromised. If Microsoft forced itself to stop regarding services and anything operational as a red-haired stepchild of the Windows franchise, trying to leverage everything to and from that same franchise, and learned to respond to customer input in real time, it might end up being worth it. But it still wouldn't answer the question about Vista's relevance.

Update: The save XP movement breaks into the mainstream press. Pretty soon people are going to be squirreling away XP discs next to their incandescent light hoard.

What Can't Be Hedged? Physics has the notion that models that don't allow the existence of humans may as well be ignored. An interesting article from Policy Review essentially proposes an investing parallel, with globalization in the place of humanity: Any future in which globalization collapses cannot be hedged, and it's not worth doing it anyway. Globalization is now so deeply entrenched that the magnitude of disruption it would take to break up its economic patterns would leave little future in which to enjoy any proceeds of betting on the ultimate Black Swan. The author, Peter Thiel, is alarmed by the current frequency of bubbles that seem to threaten financial stability, but it doesn't take a lot of reading in (for instance) 19th century history to know that frequent shocks are nothing new. In theory, a more networked society and financial system may generate more frequent excursions, but also be more resilient against them. Thiel's point is that it's only worth taking one side of that bet. (Another interpretation is that this is a public display of how a hedger talks himself into being an optimist...)

Congress, As Seen From Iraq. You can take it from one of the locals or from one of our folks on the scene: The Congress critters trying to smear Gen. Petraeus aren't hurting his reputation, but their own.

The Religion of Beer. Speaking of Iraqis, some of them have their heads screwed on straight. As soon as Sadr's militia got kicked out of town, the Basrawis got their priorities in order. Perhaps they were inspired by one of America's founders, but more likely the cradle of civilizations was among the first to display mankind's proclivity to ferment anything that will, and sample the results. Meanwhile, back in California, one of our 'esteemed' legislators wants to make beer so expensive we'll be resorting to homebrew ourselves. Brilliant!

Web 2.0 Investors: Pay Attention To Caja

Anyone playing in the "Web 2.0" domain, even if non-technical, has likely heard of such essential components of the Web applications style as AJAX and JSON. The 'J' in these acronyms stands for JavaScript, on which these standards are built. So the strengths and weaknesses of JavaScript are directly related to what can be built in the common Web 2.0 style, and therefore what business ideas can be implemented. Now there's another JavaScript related technology coming along quietly but quickly, and so far little noticed outside of developers' circles. It is called Caja, and it may have a major impact on what can and can't be accomplished by JavaScript-based Web 2.0 sites.

The Roving Eye: Eqyptian Unrest News Source, Howl's Moving Moonbase, Yahoo's Ad Platform

Unofficial Eqyptian Media. The Egyptian Sand Monkey is blogging up a storm about the revolt and riots there. There don't seem to be any Western journalists on the scene, and the police are trying to shut down the city and strikers, so Internet reports funneled out through blogs are the best information source.

Miyazaki On The Moon? Fans of a certain Japanese animated film might get a bit of déja vu from this NASA proposal for a mobile moon base for astronauts. Miyazaki always loved airships, but this is above and beyond.

Ad Vapor From Yahoo. Yahoo preannounces an ad management platform, that might help to enable the kind of site ad network that I blogged about before. The catch is that the rollout won't start until Q3, which won't have any impact on the current Microsoft takeover attempt. On the other hand, this could enable the type of destination site grand alliance that I mentioned in that post, combining the Microsoft and Yahoo properties and other big exposure ad venues, where the Google approach to ads hasn't worked so well.

Mistitled Robot Article. New Scientist has an interesting article titled "The Rise of Emotional Robots". The title, however, is pretty much backwards, as the content largely describes humans that get emotional about their bots, including milbots that get blown up in Iraq. For those who've followed the area of human computer interaction, finding humans projecting emotions - often unconsciously - onto machine displaying complex behaviors is not a surprise at all. More interesting is one cited study showing people when questioned about robot interactions don't believe the bots are 'thinking', perhaps due to their skepticism about current technical capabilities. Matching the likely human reaction to the task being accomplished by the robot is a very complex problem.

The Roving Eye: Bad Debt Decoded, Stories From The Front, Is No Media Cow Sacred?

Debt Crunch In Plain English. Many of the indirect consequences of the subprime mortgage meltdown have become so arcane and obscure that investors can be surprised when a bit of not-so-prime toxin turns up in a part of their portfolios they thought was safe. DLA Piper has a nice page with a (fairly) plain English explanation of the auction rate securities market meltdown.

No Editor, No Spin The US Army has put up a fascinating archive of debriefings of personnel returning from Iraq and other combat locations. (Click GWOT Oral History Program on the sidebar). There are hundreds of items from the top generals all the way to front line infantrymen. I've only dabbled in the archive, but there's some fascinating stuff there, like this story of the Thunder Run into Baghdad. This should be incredibly valuable for the historian, or for any pundit who's actually willing to read something from those on the ground before spouting off. Anyone up for correlating these reports against the MSM stories of the time?

Last As It Was First. The book was the first medium to go 'mass', back in the day of Gutenberg. Ironically, the advent of the net and the Long Tail phenomenon typified by Amazon, along with well-entrenched habits for print consumption, may have provided an Indian summer for the medium. But the distribution chain was in trouble, first the independent book shops, and now the big boys are being squeezed. (Update: More at the WaPo.) Along with all the time displaced to reading Web pages, we may finally have a successful electronic book with the Kindle. In common with vested interests from other old media, old style authors have noticed, and are screeching about the end of the world as we know it. Labels Studios Publishers are being squeezed as well, and cutting back on their risk-reducing activities of fronting advances to authors and absorbing returns from the channel, leading author Roger Simon to wonder "what's the point of the publisher?"

Sea-borne Owl. This place needs a Friday animal post occasionally. Aw, isn't that cute?? Every carrier group needs a licensed falconer on board.