Starting a Startup - Chris Penner, president and CEO of RemoTV ( Yale University Business and Management netcast):

1. There's no such thing as a finished product.
2. [when we were ready with the product] the market just wasn't there.

The first point indicates the need for a roadmap, both for invention and innovation. Any invention is a work in progress. The technology keeps going forward. Whatever epiphany you are having at the moment will be surpassed later, either by your own idea or by somebody else's. Therefore, it is very important to develop the skills and have the discipline necessary for pushing the initial concept as far as possible. Thus, the roadmap of invention, i.e. a sequence of ideas, a story of the evolution of your thought.

The second point brings up the importance of flexibility, i.e. an ability to turn the base concept into a specific product that addresses a particular, here-and-now, market need. Having a [road]map of ideas is extremely helpful in figuring out the scope for your future flexibility. It's like having a bag of tricks at a kids party: if they don't like the trick you are showing them at the moment, you can always pull out a new one.

3. Don't borrow funds for your startup from your close relatives!

Another good observation from Robert J. Shiller's lecture:

...insurance, like any other risk management device, is an invention. Every risk management device relies on a design and the design is usually complex and has--it all has to work together. In order for a design to work well we have to have every component there. If one component is missing we may have a failure. All these components have to be compatible with each other and it has to work according to a plan, which ultimately is informed by this theory.

What's important here is the completeness principle. In order to perform its function, a system has to be complete. This may sound very trivial, but even experienced inventors forget about the principle. Some are not even aware of its existence. Furthermore, large successful corporations make this mistake. For example, when first MP3 players came out they relied on poorly designed third party software to manage and transfer content from a PC to the player. Apple's iPod, besides being a well designed device, was made even better in combination with iTunes. The complete user experience propelled iPhone to the top of the pack, and created a base not only for other iPods, but also for iPhone. The completeness principle played a huge role in the success of the latter, because it came with iTunes, the software service with almost infinite choice of programs to try and buy. When a system is complete, it is very difficult for the competition to catch up. That's why Microsoft had incredibly hard time with Zune, and now struggles to maintain its initial advantage in software for smart phones.

The President of the Authors Guild doesn't like the new text2speech technology: when it cuts into authors' income:

[Amazon's] Kindle 2 can read books aloud....
I.B.M. has patented a computerized voice that is said to be almost indistinguishable from human ones. This voice is programmed to include “ums,” “ers” and sighs, to cough for attention, even to “shhh” when interrupted. According to Andy Aaron, of I.B.M.’s Thomas J. Watson research group speech team: “These sounds can be incredibly subtle, even unnoticeable, but have a profound psychological effect. It can be extremely reassuring to have a more attentive-sounding voice.”

We've gotten to a point where every type of communication is just an application on the computer: audio, video, text. With a little bit more time and technology we'll have books with embedded movie or voice scripts. Maybe this way writers will be able to charge more for content presented with "real" emotions, rather than the ones generated by computerized voices.

Microsoft said on Wednesday that it is filing two separate patent infringement actions against the GPS navigation company [TomTom]. In complaints before the U.S. District Court in Washington and the International Trade Commission, Microsoft is alleging infringement of eight patents.

Microsoft already has deals with several other GPS system makers including Pioneer, Alpine, and Kenwood as part of its efforts to license its technology, a push that began back in 2003.
"All of these patents have been licensed before by many other companies," Gutierrez said. "We are asking TomTom to do what other companies have done and take a license."

Large operating companies are increasing their effforts to improve return on IP. 

Wired: Recipe for Disaster: The Formula That Killed Wall Street:

For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li's formula hadn't expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system's foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.

via marginalrevolution.com

A good case study on how problems are created rather than solved. The title should probably be how a recipe for success became a recipe for disaster.

A brief history of mobile phones:

It has been more than 35 years since Martin Cooper placed the first call on a mobile phone to his rival at Bell Labs while working at Motorola. Heck, it's been nearly 20 years since Saved by the Bell’s Zack Morris placed a phone call to Kelly Kapowski from his locker. In that time, phones have come a long way.
We now live in a golden age of mobile phones. Or, perhaps more accurately, the end of the age of mobile phones. The iPhone, the G2, the N95, the Bold: These are exceptionally small mobile computers with built-in telephony features.

Phone has become a function on a portable device.

The Observer, Sunday 4 January 2004 :

A study comparing the weight and growth of pupils fed on a 1940s diet with those on a contemporary menu rich in junk food underlines the growing concern over obesity levels in Britain's youngsters. The current generation of eight-year-olds consumes on average 1,200 calories a day more than their counterparts 60 years ago.

In addition, those fed on wartime rations grew significantly taller while shedding substantially more weight compared to those on a modern diet of school meals and packed lunches.

Professor Philip James, head of global think-tank the International Obesity Task Force, said children were far healthier during the war than now, when the choice of food has never been greater.

Greater choice does not necessarily lead to better choices. It's the selection criteria and one's ability to follow through with it that makes all the difference.

Also see Nudge, by R.H.Thaler and The Time Paradox, by P.G. Zimbardo.

New Scientist reports on new anti-ageing research in mole rats:

Ageing is often blamed on the oxidising compounds we produce in our bodies, which gradually wear down DNA and proteins. These damaged molecules then go on to wreak havoc in cells. [Researchers] found twice as many undamaged proteins in naked mole rats as in mice. What's more, the rats' protein recycling machinery was exceptionally active (Proceedings of the National Academy of Sciences, DOI: 10.1073/pnas.0809620106). The team suspects that naked mole rats manufacture extra quantities of molecules that are responsible for labelling damaged proteins that need to be recycled quickly to minimise their effect on cells.

A very good illustration of how a successfull solution to a detection problem leads to a greatly improved  overall control system. In this case, efficient detection and labelling of "bad agents" serves as a perfect setup for the work of an in-cell recycling mechanism. Of course, the research team still has to prove its intuition, but if they do, we might be on a road to eternal life. :)

It took competitors just 18 months to create a multitude of iPhone copycats. Now, they all have iPhone's remarkable features: multi-touch screen interface, Alice-in-wonderland-like zoom-in/out web browsing, wi-fi, and others. What they don't have is iTunes, both an application and a service. These two components are much harder to immitate than just some clever hardware. Therefore, it's signifcant that top software contenders in this space are Google and Microsoft. Most likely, they will try to commoditize hardware, which is traditionally Apple's biggest strength.

Will iPhone go the way Apple's Lisa went?

In nature, ant queens mate during just one period of time but mate with many males during that time (this causes the queen to build up a sizeable sperm bank.) Queens can store sperm and lay eggs during their entire lifetime [15-20 years].

Here's a youtube talk about ant colonies by Bert Holldoble, the author of "The Super-Organism: The Beauty, Elegance and Strangeness of Insect Societies".


Will humans still need males when the society masters the sperm bank technology? Or vice verse, will we need females, if an egg bank can be maintanied indefinitely?

In any case, storage is a very important element that often emerges during system evolution. Very often it indicates a new stage in system development. Specifically, it makes it easier to control the lifecycle of the system and extend it into new domains. E.g. money banks, food banks (Egypt, Mesopotamia), Tivo, oil and gas storage reserves, etc. One of the problems with the use of electricity is that we have not figured out a good way to store it.

Solving the Innovator's Dilemma

Listening to your customers is a double-edged sword. One one hand, customers guide the evolution of your existing products. On the other hand, as Henry Ford famously noted their desire for a faster horse, rather than an automobile, customers can lead you to a road with constant low-margin modifications of obsolete products.

Herbert M. Allison (YC '65), Chairman, President and CEO of TIAA-CREF, in his talk in the Yale Business & Management lecture series ( 3/23/06) mentions a solution to this problem. He says that listening to your customers should actually mean listening to two different groups of people: the ones that you already have as your customers and the ones the you would like to have as your future customers. He gives example of General Motors that got extremely good at building large rear-drive vehicles, and for a long time looked at its European and Japanese competitors as a distraction, rather than a sign of emerging customer preference.

Allison's point undelines the challenge of product innovation, especially for large successful companies. The are so good at "owning" their current customer base that they forget to identify emerging opportunities. Monopolies like Microsoft can easily fall into this trap. Just consider the Vista fiasco. The operating system that took thousands of programming man-years to develop could not compete Windows XP, its own previous version.

The solution to the Innovator's Dilemma ["you have to listen to your customers, and you don't have to listen to your customers"] lies in aplying the separation principles. First, separate in space, e.g. find a different set of customers; second, in time, e.g. over time develop different needs within the same customer base.

CNet reports on a PinchMedia study of iPhone application market:

 Just 30 percent of people who buy an iPhone application actually use it the day after it was purchased, according to Pinch Media, which analyzed over 30 million downloads from Apple's App Store. And the numbers plunge from there: after 20 days, less than 5 percent of those who downloaded an application are actively using it. The drop-off is worse for free applications.

 

We should expect emergence of a small stable core of iPhone applications. Most likely the emergence will coincide with proliferation of business-related "cloud" services. Quite possible that Microsoft will be successful in extending its Office franchise into the mobile space.

New Scientist has a gallery of Designs 2009, a range of innovative products for personal and public use. My favorite one is a street lamp with a propeller(!) from, you guessed it, The Netherlands :)

Tradeoff-busting solution of the day

 Prof Shiller:

Also, in the nineteenth century, the typewriter was invented. Of course, that may be the core idea of a computer. Your computer looks like a typewriter, but a typewriter just speeds recording of information. Tests show in the nineteenth century that people could type four or five times as fast as they could handwrite and there's no ambiguity because it's very clear what key was struck; whereas, handwritten--fast handwriting becomes impossible to read--or difficult.

Typewriter broke the tradeoff between the speed of writing and the speed/acuracy of subsequent reading.  The next stage: tradeoff between speech and typing ( voice recognition). And the next: voice expression and drawing vs speed of thinking.

Professor Robert Shiller on finance as an innovation domain:

... the history of finance is the history of invention just as much as it is in other fields, notably engineering. The idea that I want to develop is that the history of finance is a history of discrete inventions. Non-obvious ideas were conceived of to solve these problems of long-term risks and to get around the psychological barriers imposed by framing biases and psychological biases, in order to allow people to actually manage the risk and to get around moral hazard. It's a difficult thing to do these things and that's why we need invention.

From an invention/innovation perspective, the whole lecture is interesting throughout because it shows how it takes years, if not centuries, to solve problems that have "obvious" solutions.

CNet via TechCrunch notes:

Market researcher ComScore reported that LinkedIn's unique visitors rose to 7.7 million, a 22 percent increase over December. And not only are more people visiting LinkedIn, but they're hanging around longer as well. Total minutes spent on the site last month more than doubled from December to 96.8 million, according to TechCrunch.

 Relationship network capitalizes on change in the environment. In a very similar pattern, facebook built up its initial membership among students who moved from high school into university environment. Nowadays, many professionals find themselves involuntary moved from industry jobs to unemployment rolls.

Keith E. Stanovich and Richard F. West in their research paper on the relationship between IQ and common thinking biases emphasize that:

...for a given task, the mindware is available to carry out override (whether the procedures and declarative knowledge are available to substitute an analytic response for a heuristic one). If the relevant mindware is not available, then the person must, of necessity, respond heuristically. It is immaterial whether the person detects the necessity for override or has the capacity to sustain override if the normatively appropriate response is simply not available. If the relevant mindware (probabilistic thinking skills, falsifiability tendencies, disposition to search for alternative explanations, sensitivity to contradiction, etc.) is not present, then participants will end up at what has been termed in the figure Path 1 to a heuristic response.

 In other words, if the problem-solver doesn't know rational methods to solve a problem (mindware), neither his/her general intelligence, nor the awareness of the bias, are going to help come up with a good solution.

Journal of Personality and Social Psychology, 2008, Vol. 94, No. 4, 672–695
( reference to the paper from marginalrevolution.com)

Futulitycloset.com warns inventors with this story:

A man about 43 years of age giving the name Joshua Coppersmith has been arrested for attempting to extort funds from ignorant and superstitious people by exhibiting a device which he says will convey the human voice any distance over metallic wires. He calls the instrument a 'telephone,' which is obviously intended to imitate the word 'telegraph' and win the confidence of those who know the success of the latter instrument. Well informed people know that it is impossible to transmit the human voice over wires, as may be done by dots and dashes and signals of the Morse Code. The authorities who apprehended this criminal are to be congratulated and it is hoped that punishment will be prompt and fitting, and that it may serve as an example to other conscienceless schemers who enrich themselves at the expense of their fellow creatures.

– Boston newspaper, 1865, quoted by Edison's assistant Francis Jehl in Menlo Park Reminiscences, 1937