Our precious soil

Top cities became hotbeds of innovative activity against which other places could not easily compete. The people clustered together boosted each others’ employment opportunities and potential income. From Bangalore to Austin, Milan to Paris, land became a scarce and precious resource as a result; the economic potential of a hectare of a rural Kentucky county is dramatically lower than that of a hectare in Silicon Valley’s Santa Clara county. And there is only so much of Santa Clara to go around.
 
Yet more Santa Clara could be built, were it not for the second and more distressing factor behind land’s return: the growing constraint imposed by land-use regulation. The Santa Clara town of Mountain View, for instance, is home to some of the world’s leading technology firms. Yet nearly half of the city’s homes are single-family buildings; the population density is just over 2,300 per square kilometre, three times lower than in none-too-densely populated San Francisco.
 
The spread of land-use regulation is not hard to understand. The clustering that adds to local economic vibrancy has costs, too, as the unregulated urban booms of the 19th century made clear. Crowded slums were fertile soil for crime and epidemics; filthy air and water afflicted rich and poor alike. Officials began imposing new rules on those building in cities and, later, on those extending them: limiting heights and building designs; imposing maximum densities and minimum parking requirements; setting aside “green belts” on which development was prohibited. Such regulations have steadily expanded in scope and spread to cities around the world.
 
As metropolitan economies recovered from their mid-20th-century slump populations began growing again. The numbers of people living in the central parts of London and New York have never been higher. And as demand for quality housing increased the unintended consequences of the thicket of building regulation that had grown up in most cities became apparent.
 

Great piece in the Economist about how land has become a constrained commodity, a brake on our economic growth. A lot of wealth has been made off of rent capture, and most of it accrues to the already wealthy while the middle class are saddled with mortgage debt and the poor, who rent, are just priced out of desirable regions.

This is a nightmarish scenario for the economy. It's bad any time you have any constraint on growth, but when that scarce commodity is land, it seems particularly difficult to remove because it has to be done through a political system that is in thrall to the moneyed, connected, real-estate-owning class.

The ugliest effect of the return of land, though, may be the brake it applies to the economy as a whole. One of the main ways economies increase worker productivity, and thus grow richer, is through the reallocation of people and resources away from low-productivity segments to more efficient ones. In business this means that bad firms go bust and good ones grow to great size. Something similar should hold for cities. Where workers can be put to use at high levels of productivity labour scarcity will lead to fast growing pay packets. Those pay packets will attract workers from other cities. When they migrate and find new, high-paying work, the whole economy benefits.
 
Mediterranean Avenue to Boardwalk
But that process is now breaking down in many economies. For workers to move to the high wages on offer in San Francisco, they must win an auction for a home that provides access to the local labour market. The bidding in that auction pushes up housing costs until there are just enough workers interested in moving in to fill the available housing space. Salaries that should be sending come-hither signals are ending up with rentiers instead, and the unfairness can trigger protest, as it has in San Francisco. Many workers will take lower-paying jobs elsewhere because the income left over after paying for cheaper housing is more attractive. Labour ends up allocating itself toward low-productivity markets, and the whole economy suffers.
 
Chang-Tai Hsieh, of the University of Chicago Booth School of Business, and Enrico Moretti, of the University of California, Berkeley, have made a tentative stab at calculating the size of such effects. But for the tight limits on construction in California’s Bay Area, they reckon, employment there would be about five times larger than it is. In work that has yet to be published they tot up similar distortions across the whole economy from 1964 on and find that American GDP in 2009 was as much as 13.5% lower than it otherwise could have been. At current levels of output that is a cost of more than $2 trillion a year, or nearly $10,000 per person.
 

First and foremost, let's acknowledge that this is all solvable if we just relax land use regulations, build more housing, and increase the population density of our urban centers. Supply and demand still works in this universe. For a variety of reasons, some clear to me, like NIMBYism, some not clear to me, that seems intractable. Does the new David Simon show explain how hopeless it all is? I need to watch it so I find some entertainment value in my despair.

If that's a road to nowhere, can the germ of a solution come from the private sector? Tech companies tend to be creative about trying to solve problems that constrain their growth because they arise from a culture of ignoring accepted impediments. For now, though, they haven't made a ton of progress on this issue. At most they've turned to providing shuttle services with wi-fi that widen the geographic footprint in which their employees can live and still get to work.

But that doesn't work if real estate is expensive everywhere within that radius. What's next? Perhaps a deeper investment in conferencing or virtual reality technology to amplify the sensation of proximity and intimacy of even the furthest flung workers? It's long been a promise of technology, but it has yet to be realized in full.

What about turning office space into living space at night when it lies idle? It's sounds ridiculous, but a company did that with the slack time of cars and seems to raise a billion dollars of capital every other week. I know, it sounds terrible, living at the office, but I'm wary of making paternalistic prescriptions about how a person should spend their free time. Some of my closest friends in life are people I spent a lot of time with at the office at Amazon during my years there.

Maybe tech companies will start their own housing developments? The economic productivity of the average productive tech worker likely still exceeds their compensation, and tech companies, led by Google in particular, have been aggressive in pushing into that gap with increased salary, benefits, stock options, etc. Housing is just another form of investment, and they need not provide it for free, it could just be subsidized. Of course, that means they'd need to acquire land, and that, paired with a thicket of land-use regulations, still restrict the human density achievable with even the most aggressive development.

Finally, solving the problem for just tech workers doesn't feel like a path towards solving it for the rest of the population. Frankly, no one feels much sympathy for tech workers these days (with the exception of some Amazonians who are working long hours, though I'm still suspicious; a lot of it feels secretly like Schadenfreude in disguise). Bay Area complaints about high real estate costs are going to fall on deaf ears, even if it's symptomatic of a dangerous trend for our economy, as noted by the Economist article.

Group all the things I miss the most about NYC, and the root of all of them was the unmatched human density. It's not just the visceral sensation of the people around you (which some dislike), but the diversity of businesses and communities that can sprout and thrive when the potential customer base is so large and tightly packed. The variety of entertainment, like theater and museums, the variety of local cuisine, the ability to find someone to share almost any interest, from curling to revivalist arthouse cinema to hip hop dancing.

I have no answers, only a longing for the Bay Area to experience the liveliness of density in the physical world to match that of the the networks and communities they've built in the virtual space, where real estate is cheap and plentiful.

History lessons from Singer sewing machines

So, this crowdsourced sewing machine could be sold and distributed widely. But why did Singer's prove to be the one with staying power? It was not due to Isaac Singer himself, who Liebhold describes as more of a “scalawag” than a businessman. Rather, it was the smart businessmen who took charge of the company, particularly lawyer Edward Clark, who co-founded I.M. Singer & Co. He created the company’s early advertising campaigns and devised the “hire-purchase plan” for customers who could not afford the machine’s high price—the first installment-payment plan in the United States.
 
[.....]
 
The company expanded the practice of door-to-door sales, in part because the hire-purchase plan required canvassers to collect weekly payments, but which also allowed salesmen to bring the product into prospective customers’ homes, and show them how such a novel machine could simplify their lives. The company opened up flashy showrooms where it could demonstrate how the machines work (a scale model of an original Singer showroom will be included in the exhibit), and took machine demonstrations to county and state fairs.
 
Singer Co. also became active in buying up used sewing machines and tamping down secondary markets of used sewing machines. Like the latest iPhone today, Singer would roll out a new sewing machine model and encourage consumers to replace their old one.
 

A fascinating history of how Singer sewing machines emerged from a pack of companies starting from roughly the same place. In fact, all the companies had joined together to create the first patent pool so that they could shift from litigating the bejesus out of each other to growing the market.

So many of the lessons of Singer's success still echo in today's tech world. How it's not enough to build a better mousetrap, or even the first mousetrap. You need to figure out distribution and how to overcome customer hangups and purchase hurdles. We tend to have a cultural bias against sales and marketing in the tech world, and perhaps in business in general. We revere product design as a craft. In our new networked age, however, the cognitive challenge of getting users to hear about and try out your product or service is quite underrated.

Uber for disembodied companionship

Kashmir Hill worked as an invisible boyfriend/girlfriend for a month. We are already living with one foot in the near future.

With each job, I would see the person’s first name, last initial and hometown; “how we met;” and my own assigned name, age, and which of six personality types they’d given their Invisible. Now I’m adventurous and fun. Now I’m cheerful and outgoing.
 
There were 3 major rules:
1. I was always supposed to be upbeat in my messages.
2. I’m not supposed to break character.
3. No sexting. (Photos are blocked on the service.)
 
I’d get the story of how we met and the last 10 messages we’d exchanged. This setup is designed to create the illusion of continuity; ideally, an Invisible Boyfriend would seem like a steady, stable presence in a user’s life, instead of what it really is: a rotating cast of men and women. And it is both: a woman who works for the service previously told me she prefers playing the role of boyfriend because she knows what a woman wants to hear.
 

Hill probably got paid more for this article than she did for her work as invisible companion.

It’s hard to put a price on love. But Crowdsource did. It’s worth a whopping five cents. That’s how much I got paid to write each of these texts.
 
If I spent an hour answering texts, and took the full five minutes to write each one, I’d be making 60 cents an hour, far below the minimum wage. This is legal because all the workers on the platform are classified as independent contractors rather than employees. “Contributors have a tremendous amount of control over their decisions—for example, when to perform a task, when to complete it, and even if they want to complete it at all,” said Jeffrey H. Newhouse, an employment lawyer at Hirschler Fleischer, by email. “That means the contributor isn’t an employee and, as a result, employee protections like the minimum wage don’t apply.”
 

Not surprising considering the required skill set is the ability to write with decent grammar, that's reasonably commodified.

As with Uber, the laborers already fear displacement by technology like self-driving cars.

I assumed that, when artificial intelligence is good enough, Invisible would just cut the crowdsourced humans out of the equation and use chat bots, which you don’t have to pay per message, instead.
 
No, he said. “Having humans in the flow is the key to the service,” said Tabor. “There are things that only humans can respond to and understand, like inside jokes.”
 

Loneliness continues to be one of the great problems being tackled by technologists. See also: Her, The Diamond Age.

IoT

Daniel Miessler thinks we're underestimating the Internet of Things.

IoT isn’t about smart gadgets or connecting more things to the Internet. It’s about continuous two-way interaction between everything in the world. It’s about changing how humans and other objects interact with the world around them.
 
It will turn people and objects from static to dynamic, and make them machine-readable and fully interactive entities. Algorithms will continuously optimize the interactions between everyone and everything in the world, and make it so that the environment around humans constantly adjusts based on presence, preference, and desire.
 
The Internet of Things is not an Internet use case. Quite the opposite, the IoT represents the ultimate platform for human interaction with the physical world, and it will turn the Internet into a mere medium.
 

Great succinct read on the key technical components that will make up his vision for IoT.

The Internet of Things is a terrible name, which doesn't help matters. Miessler suggests four alternatives though they don't catch me on first read. Something less tech jargony, not terrifying (the phonetics of daemon aren't great though it's a cool word), shorter (a la the singularity). it sounds silly but a name is all that gives a futuristic scenario like this a personality right now.

Light

The smartphone is the dominant camera in the world now, combining best in class portability with good enough quality. I still own an SLR, though, because for some special situations, the superior lens selection and larger sensor is worth its larger form factor (among other qualities).

Light is a company with a novel approach to bringing smartphone cameras up to SLR quality.

Rather than hewing to this one-to-one ratio, Light aims to put a bunch of small lenses, each paired with its own image sensor, into smartphones and other gadgets. They’ll fire simultaneously when you take a photo, and software will automatically combine the images. This way, Light believes, it can fit the quality and zoom of a bulky, expensive DSLR camera into much smaller, cheaper packages—even phones.
 
Light is still in the early stages, as it doesn’t yet have a prototype of a full product completed. For now it just has camera modules whose pictures can be combined with its software. But the startup says it expects the first Light cameras, with 52-megapixel resolution, to appear in smartphones in 2016.
 

Artist's rendering of what a Light camera array on a smartphone might look like.

I've been curious to see how smartphones continue to improve camera quality. This seems like one credible vector.

Be the side(s) in your multi-sided market

Anyone who's tried to start a multi-sided market business (the most common being a two-sided marketplace, like eBay, with buyers and sellers) knows one of the first major challenges is the chicken-and-egg problem. In order to attract sellers, you need buyers, but in order to attract buyers, you need sellers. On a dating service, the two sides are obvious. And so on.

How to get out of this infinite loop of emptiness? Kickstart things by being one or more of the sides in your multi-sided market. In other words, fake it til you make it.

Seeding and Weeding
 
Dating services simulate initial traction by creating fake profiles and conversations. Users who come to the site see some activity and are incentivized to stay on. Marketplace sites may also show fake activity to attract buyers and sellers.
 
Seeding Demand
 
In the book, Paypal Wars, Eric M. Jackson talks about how PayPal grew a base of sellers who accepted PayPal by creating demand for the service among buyers. When Paypal figured that eBay was their key distribution platform, they came up with an ingenious plan to simulate demand. They created a bot that bought goods on eBay and then, insisted on paying for it using PayPal. Not only did sellers come to know about the service, they rushed onto it as it already seemed to be getting popular. The fact that it was way better than every other payment mechanism on eBay only helped repeated usage.
 

Other great war stories and tips within.

The end of routine work

In recessions of the 1960s and 1970s, routine jobs would fall during the recession but quickly snap back. But after the recession in 1990, something changed. Routine jobs fell and, as a share of the population, never recovered. In the recessions in 2001 and in 2007-09 they fell even further. The snapback never occurred, suggesting that many firms began coping with recessions by scrapping tasks that could be automated or more easily outsourced.
 
For his part, Mr. Siu thinks jobs have been taken away by automation, more than by outsourcing. While some manufacturing jobs have clearly gone overseas, “it’s hard to offshore a secretary.” These tasks more likely became unnecessary due to improving technology, he said.
 
In the late 1980s, routine cognitive jobs were held by about 17% of the population and routine manual jobs by about 16%. Today, that’s declined to about 13.5% and 12%. (The figures are not seasonally adjusted and so are displayed in the chart as 12-month moving averages, to remove seasonal fluctuations).

...

But they are not among the labor market’s pessimists who fear that robots will render humans obsolete. Their work shows the economy has continued to generate jobs, but with a focus on nonroutine work, especially cognitive. Since the late 1980s, such occupations have added more than 22 million workers.
 

By Josh Zumbrun. The idea that U.S. unemployment has jumped to a higher plateau because of jobs moving overseas or because they're replaced by technology is not a new one, but it's useful to see data and charts to support the claim.

Brad Delong comments:

Note that these jobs are “routine” only in the sense that they involve using the human brain as a cybernetic control processor in a manner that was outside the capability of automatic physical machinery or software until a generation ago. In the words of Adam Smith (who probably garbled the story):
 
In the first fire-engines, a boy was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve which opened this communication to another part of the machine, the valve would open and shut without his assistance, and leave him at liberty to divert himself with his playfellows. One of the greatest improvements that has been made upon this machine, since it was first invented, was in this manner the discovery of a boy who wanted to save his own labour…
 
And Siu and Jaimovich seem to have gotten the classification wrong: A home-appliance repair technician is not doing a routine job–those jobs are disappearing precisely because they are not routine, require considerable expertise, are hence expensive, and so swirly swapping out the defective appliance for a new one is becoming more and more attractive.
 

As any economist would prescribe, it's become more critical when thinking about one's career and education to focus on humans' comparative advantage versus computers. But I also recommend people focus on their own unique comparative advantage: any intelligent person can do many things, but what can you do better than most anyone else? In winner-take-all markets, more common in this third industrial revolution, it's ideal to give yourself the best chance to be one of those winners, and consider it a bonus that those areas often overlap with one's personal passions (whatever you think of the 10,000 hour rule, most would agree it's easier to sustain through so many hours if one is more emotionally invested).

It's also best to accept that one will have to learn new skills many times in one lifetime. It used to be that once you finished college, the education phase of life was considered over. This is already obsolete for many. Even most programmers, supposedly the most insulated workers from technological job obsolescence, have to learn new programming languages or technologies on the job every few years now.

In the future, education will generally be accepted to mean a lifelong process. Continuing education will be the default. An undergraduate degree will simply be a first milestone in signaling one's skills and sociability to potential employers. More time will have to be set aside to level up, and resources and services to support this lifelong education continue to proliferate. I view the need for lifelong learning as a positive. Who was it that said that you're young at heart to the degree that what you want to learn exceeds what you already know?

Seriously, who said that? I don't know. Add that to my list of things to learn.

Payments as social network

Generally speaking, Venmo peaks around 7 pm on the east coast of the US and stays fairly strong until about 3am, which is midnight on the west coast. The timing—and corresponding emoji—suggests the preponderance of Venmo transactions are people paying each other back for dinner and drinks.
 
Emoji use is markedly different at quieter times of the day. For example, the house emoji ranks highly from 7 am to 3pm EST. And the car and taxi emoji crack the top five between 5am and 8am EST.
 
...
 
Some of these data are skewed by messages containing a lot of emoji. The “pile of poop” emoji only holds the top spot in the midnight hour because a single payment used it 1,116 times.
 

On the usage patterns for the payment service Venmo, as interpreted by the emoji used to tag public transactions.

I like to think I'm young at heart, but the fact that Venmo is also a social network makes me feel old. Payment transactions are one form of community interaction, sure, but looking through my Venmo feed feels like peering through a fog of data pollution. Perhaps the next generation of kids really does live with their default life privacy settings toggled to public.

Speaking of the pile of poop emoji, it seems only a matter of time until someone releases an app that allows you to broadcast when you are taking a poop. It should be a mobile app just called Poop. I leave it to the design geniuses at Apple to figure out what type of haptic feedback a poop notification should emit on the Apple Watch.