Vitamins is a $28B+ placebo industry

Based on multiple medical studies, Annals of Internal Medicine declares the multivitamin industry a fraud:

...we believe that the case is closed— supplementing the diet of well-nourished adults with (most) mineral or vitamin supplements has no clear benefit and might even be harmful. These vitamins should not be used for chronic disease prevention. Enough is enough.

Despite sobering evidence of no benefit or possible harm, use of multivitamin supplements increased among U.S. adults from 30% between 1988 to 1994 to 39% between 2003 to 2006, while overall use of dietary supplements increased from 42% to 53% (9). Longitudinal and secular trends show a steady increase in multivitamin supplement use and a decline in use of some individual supplements, such as β-carotene and vitamin E. The decline in use of β-carotene and vitamin E supplements followed reports of adverse outcomes in lung cancer and all-cause mortality, respectively. In contrast, sales of multivitamins and other supplements have not been affected by major studies with null results, and the U.S. supplement industry continues to grow, reaching $28 billion in annual sales in 2010. Similar trends have been observed in the United Kingdom and in other European countries.

The key notion here is "well-nourished." Since people don't know whether they are well-nourished or not, taking vitamins solves an important problem: it simplifies our efforts to find and stick to the right diet. That is, instead of a complex task to select the right food, we can simply take a vitamin pill to make sure we (our children, parents, and pets) get "the right" nourishment.

When food supplies were scares and of low quality supplementing it with vitamins and minerals was a great innovation. As the food industry caught up with the trend, the need for the supplements disappeared, but the perception of the need did not.

Moreover, the trend spread to pets! When we got our dog, the breeder recommended a whole range of dietary supplements from vitamins to "grass" tablets. Needless to say, that dogs don't need any of that stuff because they, unlike humans and monkeys, produce most vitamins internally. Despite being useless, pet food supplements are extremely popular and profitable. And they serve the same purpose as supplements for humans - generate a placebo effect.

I wonder, when a similar "enough is enough" article is going to be published about organic foods.

tags: control, industry, trend, science, biology, business

LunchTalk: Henry Ford and the auto industry.

In the 1920s, Ford Motor Co. was considered the leader in manufacturing technology and practices. Elements of Taylor's scientific management were combined with what economists now call "efficiency wages" (wages well above the general market - the famous $5 day). In this video, workers and others of that era reflect on working at Ford.

The whole series as a playlist.

tags: lunchtalk, industry, business, model

Business model innovation: scutage.

At around 1100, English king Henry II conducted a number of financial and administrative reforms, which allowed him to create a well-trained professional army and conquer territories far beyond the British Isles. Here's how it was implemented:

Rather than relying on the customary military services of forty days owed him annually by his tenants-in-chief with their retainers, he began insisting that these feudal services should be commuted into a cash payment or ‘scutage’ (from the Latin, ‘scutum’, a shield), a process as welcome to the barons as to Henry’s finances. With the proceeds Henry was thus able to build up a more reliable and more mobile, permanent professional army of mercenaries, or ‘soldiers’ as they became known thereafter, from the ‘solidus’ or king’s shilling that they earned.

History of Money, by Glyn Davies. p. 142.

What are the advantages of the new vs the old military service model?

The first advantage would be a greater degree of specialization, which is a common attribute of almost any successful business model innovation. With the introduction of scutage, the barons could specialize in making money, e.g. by improving agriculture, crafts, and trade within their domains, while the king could specialize in soldier selection, training, and military strategy.

Another one, would be a greater control over resources. The barons could now control the timing and scope of labor use, which in the old model could've been taken away from them at arbitrary times, e.g. during harvest gathering or seasonal forest clearing for agricultural needs. At the same time, the king gained direct control over army mobilization time, which in the old model depended on the willingness and ability of barons to provide requested manpower according to the kings needs.

Finally, scoutage led to growth of a new class of professionals - mercenaries whose only purpose in life was warfare.

The structure of this business innovation is similar to the transition undergone by the computer industry in the 1970-80s: from IBM enterprise model, where software and hardware were provided as one package with a series of periodic custom updates, to PC-based shrink-wrap software sales, a model Microsoft eventually rode to world dominance in 1980-90s. In both cases we saw a replacement of obligation-specific (in kind) transactions with obligation-generic (money) ones. As a consequence, a new class of specialists developed, mercenaries in the beginning 12th century, pure software firms in the end of the 20th century.

tags: business, model, innovation, history, software, industry, information, technology, computers

Invention of the day: electric car starter.

There's a class of inventions that improve original breakthrough technologies to such a degree that the breakthroughs reach the mass market. In the beginning of the 21st century, invention of blogging democratized web publishing by helping people who didn't want to learn HTML create their own web pages. Even now, most blogging services, including blogspot and LiveJournal I use regularly, offer two editing modes, HTML and direct. With the latter, you don't need to know any HTML tags to orchestrate your text so that the browser understands how do display the content when it pulled from the server to your PC or mobile. The removal of the user skill constraint enables explosive growth.

 A hundred years ago the same thing happened to the automobile when Vincent Bendix invented an electric starter for gasoline engines. The starter is a miniature electric motor coupled to the main gas engine to crank up the engine from a dead stop. Today, you only need to turn on the ignition key or press a button to open a flow of electric current from the battery in your car to the starter. The starter turns and, being linked mechanically to the rest of the system, turns the crankshaft of the engine.
 
Before the invention, the driver had to do it manually. That is, using a hand crank, the driver had to crank up the engine - a feat that not only required significant physical abilities, but also the willingness to get down and dirty with mechanical tools on the road. (Just like a web designer would have to learn HTML codes, scripts, frames, etc. to put together a passable web page.) People who eschewed the mechanics of automobiles had to either hire a chauffeur or stay away from the automobile market altogether.

Introduction of the starter eliminated the problem, especially for middle class men and women. The horseless carriage, which most people at the time perceived as an expensive toy for men, became a mass market product that drove American innovations for more than 50 years. Consumer loans, the highway system, the oil and gas industry, tire manufacturing, suburban homes and other features of the modern life we love and loath are direct consequences of the automobile revolution. I can't say that Vincent Bendix of Memphis, Tennessee started it one hundred years ago, but he definitely contributed to the process.


tags: invention, problem, technology, improvement, industry, infrastructure, innovation, system,  constraint

e-mail must die - 2

Distribution of information in the form of document files is bound to create content security problems because every computer where the information is stored becomes a hacking target.

CNet reports on an ongoing industrial espionage investigation of another attack from China:

For years, companies in the oil and energy industry have been the victims of attempts to steal e-mail and other sensitive information from hackers believed to be in China, according to a new report from McAfee.

And the attack was at least partially successful, McAfee said: "Files of interest focused on operational oil and gas field production systems and financial documents related to field exploration and bidding that were later copied from the compromised hosts or via extranet servers. In some cases, the files were copied to and downloaded from company Web servers by the attackers.

tags: information, control, security, s-curve, payload, content, industry, system

Recessions are great for entertainment companies because people have a lot of free time on their hands. Moreover, playing social games is much cheaper than even going to the movies, so we can expect a strong new industry emerge from this economic downturn.

TechCrunch: Google has quietly (secretly, one might say) invested somewhere between $100 million and $200 million in social gaming behemoth Zynga, we’ve confirmed from multiple sources. The company has raised somewhere around half a billion dollars in venture capital in the last year alone.
...
Zynga’s revenues for the first half of 2010 will be a stunning $350 million, half of which is operating profit. Zynga is projecting at least $1.0 billion in revenue in 2011.

Another quiet milestone along a similar path was reported by Bloomberg about a week ago:

Microsoft Corp.’s Xbox Live online video-game service probably broke the $1 billion revenue mark for the first time in the year that just ended, helped by sales of movies, avatar accessories and extra game levels.

tags: games, internet, business, industry, entertainment, economy, microsoft

Why PhDs voted overwhelmingly for Barak Obama in this election cycle?

One explanation would be that so far the scientific community took the biggest employment hit during this recession, therefore people voted with their wallets. For example, Monster Employment Index for the San Francisco Bay Area shows that over the last 12 months job demand in Life, Physical, and Social Sciences category fell 50% ( Oct, 07 - 121; Oct, 08 - 61).
http://corporate.monster.com/Press_Room/MEI/Oct08/DMA/MonsterLEI_SF_Oct08.pdf

Military and Maintenance/Repair jobs were among the least affected.