Month: September 2009

the iron quadrangle

~ ginsu ~ Leave a comment

I was talking with a friend tonight about “The Iron Quadrangle” – my name for a concept that I’ve read about and pondered over the years.  Unfortunately, I can’t remember where I first saw it; happily, we agreed that this means I can restate it without attribution . . .

So here is the rule of the Iron Quadrangle:

Friends, family, work and health are the four most meaningful areas of pursuit in life.  The very best that most people can achieve is to be outstanding in two areas, mediocre in one, and barely tolerable in the last.

Be wary of any advice that rigidly proclaims to know which combination is best for everyone.  For example, a lot of well-meaning homilies put family and health above all other values.  But the Iron Quadrangle means that all four values are connected; activity in any one informs all of the others.

Keep in mind that health includes physical and mental health; and that work includes all vocation, whether in pursuit of profit or pursuit of a cause.  Meaningful and lasting friendships are a critical contributor to lifelong health.  Pursuit of your true calling in work should be both emotionally enriching and intellectually revitalizing.

So maximizing your pursuit of family and health, to the exclusion of full effort with friends and work, can limit your achievement in the areas you would want to advance the most.  Would you have given all that you could to your life partner and your children if you never tested your mettle with the greatest challenges at work, or failed to develop rich friendships outside of your family?

Some will try to argue for picking work and family, or friends and family, or health and friends.  Some would claim that the limitation to two outstanding areas is false.  But in my experience and observation, the Iron Quadrangle is pitiless and brooks very few exceptions – and what exceptions I have seen are more a result of extremely fortuitous circumstances than the result of thought and effort.

This isn’t a pessimistic message, but rather a reflection on avoiding regret.  Many high-achieving people in every area look upon their accomplishments with regret for the areas in which they did not excel.  I think regret is only appropriate where people made choices while lying to themselves about the consequences for the other areas.

betting on failure

~ ginsu ~ Leave a comment

It’s interesting to watch reaction to the news of Twitter’s financing at a $1 billion valuation.  The vast majority of commenters seem appalled (or at least cynically amused) at such a lofty valuation for a company with no meaningful revenues.

The shocked reaction misses an important point:  Everyone believes that investments in companies like Twitter are likely to fail, including the investors in Twitter.  For the most part, people who invest their money in companies like Twitter are not putting their life savings into a single company; they are investing their portfolio (or an allocation of it) into high-risk, extremely-high-return-potential companies.  For that high-risk portfolio, it could be rational to invest in companies with a 90% chance of failure, if there is sufficient return for the other 10%.

Now, there aren’t many actual portfolios that are (intentionally) structured with any allocation to a class of investment with a 90% failure rate.  But it would be completely typical if every single non-employee investor in Twitter made their investment from an allocation that has a greater-than -50% failure rate.  In other words, most Twitter investors believe that it’s likelier than not that Twitter will fail.  (Here, “failure” means that the investment will fail to reach the modeled return, not that the company will completely go out of business.)

It’s easy to say that Twitter will probably fail, but how many critics are confident that there is a less than 10% chance at a 10X return?  Investors in Twitter don’t bank on Twitter, they plan that either Twitter or one of the other companies in that allocation of their portfolio will make an outsized return.  Many of those investors have been right time and time again about their projected portfolio performance, which means that as a reward they will continue to invest in companies that are likely to fail.

losing my privacy

~ ginsu ~ Leave a comment

Another burst of news about privacy online, with Ars Technica explaining that removing personal information from data isn’t enough to protect anonymity, and The Monitor giving an overview of how we’re losing our privacy online.

But these people seem to talk on and on about privacy with some seriously flawed assumptions.  They assume that everyone agrees on what privacy is, and that everyone wants privacy in exactly the same way.

I’ve become enamored of the comparison between privacy and religion.  Even without being religious scholars, most people have a basic notion of what the word “religion” means.  And most everyone understands that different people can have very different views about how to practice their religion, or whether to practice any religion at all.

Privacy is the same way, isn’t it?  There is some shared understanding of what the term means, but the specifics of the meaning and practice of privacy can be very different among different people (especially across generations).  Some people don’t believe privacy is important at all, choosing to live without it.

Both religion and privacy deserve the protection of our laws, and for very much the same reason:  the practice of these matters according to one’s own belief is essential for building and maintaining a sense of meaning in life.  In simpler terms, a personal view of these things are required elements of the pursuit of happiness.

Our laws protect religion (and atheism) without saying that “religion” must include a single deity, or prayer at sunset, or robes or hats or ritual.  It’s a mistake to think we should protect privacy by defining exactly what data people should consider private.

Breaking my tradition of linking privacy posts to ’80s songs, because this early ’90s song has perfectly apt lyrics:

Every whisper
Of every waking hour I’m
Choosing my confessions
Trying to keep an eye on you
Like a hurt lost and blinded fool, fool
Oh no, I’ve said too much

I see you, you see me

~ ginsu ~ 1 Comment

Does anyone care about online privacy?

The New York Times thinks so:  just since I’ve been paying attention, I’ve noticed – 1 2 3 4 5 6 7 8 – eight articles about the threat to consumer privacy posed by increasingly effective online behavioral ad targeting.

Jeremy Liew is concerned that the recent public interest push for privacy regulation will threaten startup media companies, suggesting that the ad networks should band together to lobby against online privacy regulation.  He says “While it is always hard to argue against privacy, the impact of this level of restriction would be enormous for companies relying on online advertising.”

It’s not that hard to argue against privacy, it’s just . . . delicate.  And I think simply saying that a lot of money is at stake isn’t enough of an argument.  So I’ll try to make a better argument for why privacy legislation of online advertising is likely to cause more harm than good.

I’m actually a huge fan of the Electronic Frontier Foundation and Consumers Union, and I think their hearts are in the right place on this.  I’m generally in favor of legislation that protects consumers from predatory practices in the marketplace.  But although privacy is a special value, it is not something that is well served by detailed regulation.

The problem is that privacy means many different things to different people, so everybody’s expectations can be quite different in terms of both substance and process.

The substance of privacy is the content of what you want to keep private.  Some people don’t care if you know whether they are male or female, but they don’t want to reveal their age.  Some are ok with gender and age, but not job and income – etc, etc.

The process of privacy is about the availability, collection and use of the information.  Some people want to opt-in to every interaction, some prefer to have opt-out control.  Some are ok with information used in the aggregate but not the individual, or even vice versa.  Some are ok with information being used by private parties, but not the government, or for a day or a month, but not a year or a decade.  Etc ad nauseum.  Few of us are ever thinking about exactly the same thing when we think about privacy.

Privacy may be a fundamental right, but it’s more like the right to freedom of religion than the right to trial by jury.  The latter is a specific procedural right, which we want everyone to have in a very clearly defined way.  The former protects an abstract and highly personal set of values, which each person may regard in a different way.

In the US, we don’t protect religion by telling people what it means; we protect it by saying that the government won’t promote any particular form of religion, and people can exercise any form they choose.  The failing of the public interest proposal on online privacy is that it presumes to define privacy for everyone.  That’s a dangerously unsophisticated view of a standard that varies from person to person and evolves across generations.  A time-traveler from before the Internet would not recognize what the average Facebook user calls “privacy.”

So how do I think privacy concerns should be addressed?  Well, by the market, of course. Don’t get the wrong idea:  despite my love of entrepreneurism and therefore capitalism, I don’t believe that the market is infallible, nor do I believe a free market must be unregulated.  But where you have complex consumer preferences and an infinite variety of potential solutions, a market is often the best way to satisfy the most people.  Think again back to religion:  people basically make their religious choices in a free market as well.

Consumers should have a large variety of choices about how their personal marketing-relevant data is collected and used by advertisers.  The role of governmental regulation here should be limited to traditional consumer protections about clear and full disclosure, contracts of adhesion, and anti-competitive practices.

The government just needs to make a level playing field.  People do care about privacy, and companies that can address those concerns correctly and creatively will make a lot of money.   And that matters not just because it’s a lot of money, but because it’s a case where consumer interest and the pursuit of money can be aligned.

[Apparently I’ve decided that my posts on online privacy must be titled by reference to 80’s hits.]