This is a fascinating NPR article that discusses the rise of disability in America. It’s also an indictment on the actual rate of unemployment.
At the risk of this blog becoming Oprah’s book club, I recently read “Devils on the Deep Blue Seas: The Dreams, Schemes, and Showdowns that Built America’s Cruise-Ship Empires.” It might not sound like the most scintillating read, but it’s of particular interest to me given I’ve invested in cruise lines. For those who are going on a cruise and enjoy books of the nonfiction variety, I think it’s definitely worth a gander.
Earlier this month, I met Micky Arison, the CEO of Carnival Corporation. He perhaps can be described as a caricature of a self-made South Floridian billionaire (and I mean that in the best way possible). Bronzed from the year-round Miami sun, an impressive Hublot watch shackled to his wrist, and a gargantuan championship ring from the Miami Heat’s 2011 campaign immobilizing his ring finger. Yet, despite his various billions, he was humble enough to talk with a couple of nobodies from California for a few hours.
On my what-would-have-been long and miserable flight back to San Francisco from Miami, I read Sal Khan’s book “The One World Schoolhouse: Education Reimagined.” Recall that Sal Khan founded Khan Academy and is at the forefront of hybrid and innovative learning models.
At its most basic element, the book forces us to at least question why the educational model is the way it is today. For example, schools operating from 8am – 3pm and the concept of summer vacation are both a relic of agrarian times when children needed to help with farming and harvesting. The K-12 model was influenced largely from Prussia, who developed compulsory, tax-supported education as a means of producing loyal and tractable citizens to submit to the clergy and king. Certainly these concepts are outdated, yet as I’ve personally experienced in my life, “the way things have been done before” can be more than just inertia and instead, justification for continuing down an illogical path.
Although I would characterize myself as someone who loves learning, I found that the regimented nature of high school was ill-suited for my personal learning style. I perform better by learning through discovery, rather than inculcation. While this might seem obvious, for many of my friends, I feel that they performed better in the regimented environment of high school than in the independent environment of college. I’ve done better both in college and in my job, where initiative and independence is rewarded more than test-taking and essay-writing discipline. Perhaps that’s why the book struck me – Sal Khan’s recommendations for what K-12 education could be seems like an avenue where many can achieve more effective learning.
Netflix is an interesting case study of a company that, for the most part, can’t control its own destiny. On one side, it can’t control the price of distribution into the home — the cable and telephone companies do that through cable, DSL, and fiber. On the other side, it can’t control the cost of the content that they provide — the media companies do that through what can best be described as a cartel.
In addition, the bevy of well-funded competitors is daunting: Amazon, Apple, Google, Hulu, Cable’s TV Everywhere, HBO Go, Verizon/Redbox JV, just to name a few. And some don’t even view streaming as a standalone business. Take Amazon for example — they use video streaming as a means to an end for greater adoption of Prime.
Netflix is fighting tooth-and-nail for legislation that will prohibit the adoption of “metered” broadband, i.e. pay-as-you-go. Netflix accounts for 30% of peak downstream internet traffic. Currently, they can use this pipe for “free” but the broadband providers want to, and are starting to get traction in, setting up plans to pay by the gigabyte. This business model has been proven in many fixed-cost businesses before: long-distance wireline phone, wireless phone, heck even toll-roads to name a few. Metered broadband would implicitly tax Netflix consumers, and thereby Netflix, for use of fixed-line internet capacity.
Netflix’s profitability is getting squeezed as the media companies are wising up and realize they can charge more and more for their content. Netflix has publicly stated that they are trying emulate HBO to at least control some of the content side. Arrested Development is a show that is being revived, and is produced by and exclusively for Netflix. This model is rather expensive, hit-based, and it remains to be seen whether they can get the critical-mass of must-see content that makes HBO successful. Media companies are more successful at maximizing profits because of bundling; Viacom makes each cable operator pay for MTV, Nickelodeon, and all of their less useful channels like Spike and TV Land — it’s either all of nothing. Netflix, being direct-to-consumer, will go through some growing pains to prove their strategy can work.
6 short months ago, I wrote about watching the A’s play in Spring Training in the Cactus League. Incredible to think that the A’s are playing the Tigers today in the playoffs with homefield advantage despite being 13-games behind the division leader Rangers following the All-Star game.
The following video visually describes why A’s fans are the best.
At my firm, we have made a few media investments and that industry is always one where I’m curious to learn more. Nicholas Negroponte, the head of MIT’s Media Lab, wrote a seminal book in 1995 called “Being Digital,” which I’ve picked up and started reading now.
Negroponte claimed his way to fame in the 1980s by saying the methods of delivering content — TV over airwaves and voice over fixed line — defied all logic. High-bandwidth, localized services like TV should demand wires and low-bandwidth, portable services like voice should be transmitted over-the-air. Thus, the way the world works today.
The level of foresight Negroponte has in “Being Digital” is impressive. At a time when most didn’t have Internet, let alone broadband, Negroponte stated that video rental companies would be the first to fall in our digital world as people would consume this content from bits and bytes. He noted the importance and scarcity of wireless spectrum, despite its seeming ubiquity, which has resulted in the billion-dollar spectrum auctions we see today. In an era where technology evolves over months and days, Negroponte’s book, written-over 20 years ago, remains insightful to this day.
The only magazine I can devote time to read these days is The New Yorker. I enjoy their vignettes on some fascinating, yet esoteric topics — for example, the man who received a face transplant (the skin, like other organs, can be transplanted; he lives his life “wearing” a dead man’s face).
Also amusing are the cartoons. The final page in The New Yorker is dedicated to a caption contest where readers submit their own captions for an uncaptioned cartoon. This week’s contest is below:
What’s hilarious about this cartoon is that it was first thought up in an episode of Seinfeld a number of years back. So this is a caption contest about a sitcom that referenced a caption contest. Seinfeld’s winning entry? ”The pig says, ‘my wife is a slut.’”
Fascinating video describing the high-frequency trading and market dynamics that have kept Facebook trading at the $38 support level for much of its IPO day (11:50am - 11:55am and 3:30pm until market close)
One of the nice things about living in SF is that it is a great biking city, hills notwithstanding. I bought a Specialized road bike a few years ago, mostly to ride in the 100-mile century ride with Team in Training around Lake Tahoe. I added clipless pedals to that bike (where your shoe locks in to the pedal), which is helpful in riding long distances as you get the benefit of pulling up on the pedal as well as pushing down. Those pedals require a cleat on a biking shoe and are unwieldy for just biking around town, which led me to think about getting a new bike.
This narrative takes place over a long and winding decision process spanning last weekend. I hope you won’t be bored by the technical details and triviality of the process (but hey, buying a good bike is important!)
My first thought was to buy an old road bike with either normal pedals or toe clips on Craiglist. I would get a junker with a good frame that needed some fixing up, and I’d install some new components with the help of my how-to guide. Turns out that 1) bikes on Craigslist are often stolen, and 2) adding components one-off is way more expensive than just buying a good whole bike. So two strikes and that’s out.
I talked to my coworker who bikes and he mentioned why not get a single-speed if I don’t need to power up hills on my typical routes. Singles speeds are much more simple to maintain as they only have one gear (eliminating the front and right derailleurs, sprockets, and shifters). Many people confuse single-speed with a fixie, with the difference being fixies have no freewheel, meaning the bike cannot coast without spinning the pedals. Some don’t have brakes either, with the braking component being slowing the pedals or skid-stopping. More on this later.
I heard about this company, Republic Bikes, that sells custom fixies, track bikes, and single-speeds, at about a $400 price point. They build and ship direct, which eliminates the bike retailer in the middle, who I’m guessing probably makes 30%+ gross margins on finished bikes and perhaps 40 - 50% on components. I ordered myself one in a nice black, white, and aqua color scheme, and was on my way to single-speed nirvana. Or so I thought.
The day after I ordered my bike, I went to a BBQ where I talked at length with a Mission hipster who doubled as a veritable bike snob. When I told her about my new Republic Bike purchase, she had to do anything to keep from vomiting in her mouth. I believe the analogy was like “buying a bike from Walmart,” although I’m sure Walmart is the largest bike retailer in the world. But whatever, you get the point.
As far as single speed / fixie bikes go, turns out that Bianchi (pronounced “bee-ahn-KEY”, not “CHI”), is supposedly top-of-the line (they make a mean road bike as well!). And you’ll need to get the matching teal bar tapes and throw in a $100 Brooks saddle. And I had to get it at a reputable bike dealer, as the good bike brands don’t sell online (they want to preserve the channel relations with their all-important retailers). Like I said, this was the height of bike snobbery.
I wanted a quality bike that would last me many years, so the next day I ventured to Pacific Bikes in SOMA. I found a Bianchi Pista fixed-gear (remember, no brakes, no freewheel) on sale for $499. Luckily this was not in my size; it was a 57cm and I’m probably a 58cm - 60cm (by the way, bike snobs probably talk about bike sizes more than they do shoe size or inseam, but I digress). I say luckily it’s not in my size because a bike with no brakes is quite possibly extremely dangerous in the city; these bikes were originally meant for racing in the velodromes. Fixies really came into popularity a few years ago, for who knows what reason, and there has been a subculture as evidenced by the below video. Note the skid-stopping.
Needless to say, that’s probably not the smartest thing you could be doing without a helmet. I came out of the store with a classic-looking Masi Fixed Ultimate with modern componentry and pretty high-quality parts. It’s a single-speed with Reynolds 525 Chromoly tubing, Brev.M pedals, dropbar, and saddle, Weinmann freewheel / rims, and Tektro 510A front and rear brakes (at this point I’m throwing out as much jargon out as I can). I plan on riding this beauty for a good while and always welcome new biking companions!
Inspirational video of a para-soccer player in Africa. Stricken with polio in an environment that I can only assume offers limited medical support, Austin Ishatayo still manages to turn lemons into lemonade. A humbling reminder to always make the most of the hand that you’re dealt.
I recently visited Phoenix and was able to attend one of the A’s Cactus League games against the Cubs during spring training. The Cactus League is made of 15 MLB teams that play in Arizona for their spring games, while the balance of the MLB teams play in the Grapefruit League in Florida.
People from all over the country fly in to Phoenix to watch these games, and I can understand why. It’s truly a great fan experience — something like $35 tickets can get you 5th row seats to watch major league players in a minor league stadium. You can also watch the Giants one day, then drive a few miles to watch the Rangers or White Sox the next day.
The reason I was in Arizona in the first place was to look at some of our land investments in the region, made following the downturn. Even after the mortgage crisis in 2008, it’s amazing how easily you can buy a home if you have decent credit (a big if, but nonetheless). With a USDA home loan, people will generally ok credit scores can pay $800 a month, zero money down, for a brand new 1,500 square foot house a few miles from central Phoenix. That’s some good living!
One of the many storylines of the Jeremy Lin saga is that earlier this month, the Knicks were considering waiving his contract which would have otherwise been guaranteed starting February 7th. Luckily for Jeremy, his breakout appearance occurred February 4th against the New Jersey Nets and the rest is history. Lin is owed $762,195, which is the league minimum for a player in his second year.
So that’s what Jeremy Lin cost the Knicks, but what is he worth to the Knicks? The stock market would say $250 million, which is how much Madison Square Garden, Inc. (Nasdaq:MSG) has increased in market cap since Jeremy Lin took the court. Shares of MSG have gone up 10% vs. S&P’s 0.5% since February 3rd — driven up perhaps due to increased prospective ticket sales, greater TV viewership, exuberant fans bidding up the price of MSG shares, and leverage in MSG’s negotiations with Time Warner Cable (TWC, one of New York’s largest cable providers, stopped carrying MSG Networks which broadcasts Knicks games due to contention over subscriber revenue rates). Put another way, the Knicks picking Jeremy Lin off of waivers translated to a 32,700% financial gain in 1 week — a return that would make any fund manager salivate.
MSG owns the Knicks, Rangers, the namesake arena, and its regional sports network. Or perhaps more eloquently: “In Chinatown, Asian dishes full of MSG. In Manhattan, MSG full of Asian dishes.”
Sal Khan is probably your average guy — president of his class at MIT, double major in EECS and mathematics, product manager at Oracle, analyst at a hedge fund, MBA from Harvard, etc. Through my brief exposure to education and the transformative opportunity that blended learning can provide, I stumbled upon Sal Khan’s Khan Academy. What initially began as a series of YouTube videos teaching his niece math problems led to a full-fledged non-profit organization dedicated to computer-based learning.
To (perhaps unfairly) generalize, the emergence of blended learning and Khan Academy is a byproduct of the fact that under traditional teaching models, students will necessarily get left behind. A lack of comprehensive understanding in arithmetic leads to under-performance in algebra and no shot in trigonometry. In many underprivileged schools, it’s possible for a high school teacher to be faced with the same number of students with 9th grade proficiency as there is 4th grade proficiency — teaching to that cohort effectively using traditional methods is nearly impossible. The use of computer-based learning can aid students by teaching a subject and working on specific problems until a concept is mastered, before moving on to the next topic.
I found Khan’s organization inspirational because not only is he passionate in the cause, but he creates the videos himself, thereby having at least topical knowledge on tons of subjects. In one lecture he’ll talk about the concept of red shift in physics and another he’ll discuss the French invasion of Russia. I’ll leave you with one of his videos on why we have seasons, a concept that’s probably misunderstood more often than not.
With Hostess filing for bankruptcy, many have wondered what would happen to the beloved Twinkie. Chock full of vitamins and minerals (euphemism for fat and sugar), it’s certainly been a staple at carnivals (the deep-fried variant) and pantries around the world.
Empirical evidence would suggest that maybe it hasn’t been doing that well overall. As consumers shift into healthier eating patterns, “legacy products” (read: heavily processed) are facing pressures as demand changes. For the food products industry, Hostess is heavily overweight (pun) Twinkies, as its other brands are things like HoHos and DingDongs. While those snacks get an A for alliteration, they don’t score quite as highly on capturing market share.
The graph above indicates Hostess had to continuously decrease the price of Twinkies in order to maintain share. With 34% of the American population obese, “the demise of the Twinkie” might not be such a bad thing after all.
As the working environment gets more competitive and seemingly everyone is racing to get JDs, MBAs, and other advanced degrees, it’s easy to forget that many can’t even get a decent primary education. A harsh truth in life is that demographics often define destiny. While I wouldn’t hasten to comment on education reform, I think one of the interesting trends in the past two decades has been the emergence of for-profit charter schools.
Charter schools are open-enrollment primary and secondary schools that receive public money in lieu of tuition. Charter schools are ‘public’ in the sense that they receive per-pupil reimbursement from the government and are not allowed to charge tuition, but ‘private’ in that the administration and management of these schools are not dictated directly by a public school board or district. One of the practical truths of charter schools, although not mandated directly, is that they mostly serve underprivileged, low-income families. The thought here is that to obtain a school charter, one must demonstrate educational qualifications and an ability to create value in public education; and if that’s the case, why waste efforts and talent educating the kids of lawyers and bankers where the education gap is not an issue?
The educational efficacy of charter schools is debatable. Some studies would show that charter schools as a whole don’t perform better than demographically-adjusted public school counterparts. However, I’m inclined to believe that a well-managed, well-performing school network such as KIPP is scalable and replicable. Many schools are established on one-off charters from zealous parents and perhaps more likely to fail.
Financially, I think charter schools make a lot of sense. Reimbursement rates per pupil are typically 20 - 25% lower than funding at public schools. The idea of a for-profit school can attract investment dollars from the private sector — most likely from those who are passionate about education, aren’t looking to make a quick buck, but where the financial return can warrant an investment.
The education landscape has been shifting dramatically over the past few decades and I’m curious to see how this will all play out.