Mr. Swensen manages Yale University’s endowment and is the inventor of the so-called “Yale Model.”  Basically this is a model for people who manage the largest pools of capital in the world – universities, pension funds, wealthy family funds, etc.  The major idea behind the Yale Model is to put significant portions of one’s fund into “alternative asset classes” like venture capital.   Yale had phenomenal returns for many years (until this year, which was a disaster) and thus was copied by fund managers around the world.  This created demand to invest hundreds of billions of dollars into VC funds.  This in turn radically increased competition amongst VCs, thereby driving down their returns (public pension funds like California’s release the returns of their VC investments and they aren’t pretty).

What this means is that there are lots of VCs out there with huge funds and very little chance of getting “carry” (performance fees), since most will have negative returns (and they know it).  So instead they are collecting management fees (typically, 2% of the fund for 10 years, so 20% of the total fund).  They need to justify collecting these fees, which is why if you hang out with VCs you’ll often hear them talk about needing to “put more money to work.”  I would bet that the new investors were the ones arguing for Twitter to raise more and more money, even if it meant a higher valuation.  I’ve seen it happen many times.

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Go Hunch!

Today, I was on gap.com and forgot my password.  When you put in an email on their login page and click “I forgot my password” they show you your password hint.  You can put in any email address and find out their password hint this way.  This is a great way for hackers to figure out your password.  (How many people just use the password itself as their hint?  I bet a lot).

When I saw my own hint I put in a long time ago, I had to chuckle at my obnoxious former self :

For the first 4 hours or so it was acting strange (speaker didn’t work, home button didn’t either) but now works perfectly.

Now if they could just make an iPhone that stopped dropping calls it would be the perfect device!

accompanying sign reads “The night we took back america”

read more

link

i think this whole website thing might be big!

I am embarassed to say it is so addictive I won all 50 levels on Enigmo last weekend.  It’s really an incredibly clever and fun game and better on the Mac (although still good on the iPhone).

I found Enigmo 2 interesting at first (the laser and magnets are neat) but the true 3d interface gets kind of tedious.  Instead I downloaded some user created levels for Enigmo 1, and continue to enjoy it (albeit in smaller, healthier doses!).

dissappointing games: monkey ball (too hard to control), cro-mag (ok mario kart clone),

need to play more to decide:  AquaForest

really fun to show off your iphone and cool technology:  shazam

what’s the point: nytimes (no better than website), AIM (can’t run in background)

seems like they have a lot of potential:  AOL Radio, Pandora

Useful if you live in NYC: CityTransit

Kind of useful no matter where you live:  BoxOffice

Silly free ones that are kind of fun:  World 9, phone saber, life game

don’t really get it and it seems overhyped: Loopt

UPDATE:  aquaforest isn’t good.   AIM would be good if you could run apps in the background on the iphone. actually the only iphone apps i’ve liked so far are labyrinth and enigmo.

from nevver

MIT dome on the left.

more truck spills here

action pose

dinner at Outback steakhouse, Route 23, New Jersey

from daamn, via information aesthetics

(see also ohshiit)

please let this be the end of the primary.

i wish.  actually it’s a hotel in switzerland.

But in the equity markets, it may be easier to make a case for the hidden costs of perhaps too much ease of trading. The usual scapegoat for Corporate America’s short-termism is options-based executive pay. But another culprit is the lack of long-term shareholders. I should verify this independently, but a McKinsey director told me not long ago that the average NYSE stock is held seven months, down from eleven months around 2000. No wonder CEOs feel they can pay themselves whatever they want to. They truly aren’t beholden to anyone. Transient stockholders deserve no loyalty, but the loyal owners wind up being comparatively few in number (I’d love to see a chart showing the full distribution).

Because public shareholders can sell their shares at anytime, many of those shareholders only care about the short-term price of the stock. Contrast this to private companies such as VC-backed startups where it is standard for all shareholders to have non-transferable, illiquid stock and are therefore in it for the long haul.

Maybe public companies that want long term shareholders should issue shares that have restrictions on selling before a certain time (e.g. 1 year)?

from The Daily Batman via this isn’t happiness

Consider security software that tries to detect and block phishing sites. McAfee’s free Site Advisor and paid Site Advisor Plus products do a good job. Symantec has similar features built into its large security suites, Norton 360 2.0 and Norton Internet Security 2008.

A few years ago he had a longer review.

I’ve read a fair number of books about business over the years, especially ones with a tech focus. I find that most of these books are too long, having enough interesting content to maybe fill a magazine article, not a book.

Here are 3 books I think are worth reading in their entirety.

Crossing the Chasm - although a bit too enterprise (vs consumer) focused for my taste, this is an extremely intelligent and useful book. You’ve probably heard about the central thesis (lots of startups get stuck in the “chasm”- in between early adopter and mainstream customers) but there are lots of other juicy anecdotes in the book and it actually prescribes an actionable set of strategies for overcoming the chasm. I’ve reread this one a couple of times. The sequel Inside the Tornado is good too.

Information Rules- “Real economists” talk about the economics of information goods (roughly defined as zero marginal cost goods). Sometimes a bit obvious if you’ve studied economics before but overall a really interesting read. Especially like the parts on different ways to tier pricing for information goods.

Innovators Dilemma – Popularized the (often misused) phrase “disruptive technology.” But there’s a lot more than that one (big) idea. Interesting insights into the “dynamics” (=changes over time) of markets. E.g. Most people just assume markets commoditize over time, as if it’s some unexplainable, irreducible phenomenon. Christensen breaks this down and shows how commoditization is a result of tech supply outpacing tech demand. Interesting corollary to his theory: disruptive technologies always look like “toys” to the powerful incumbents. (Think of mainframe makers talking about PCs, telco’s talking about Skype, etc).

Some other pretty good business books:

Bandwagon Effects – What the author calls “Bandwagon effects” most people call network effects. If you are thinking about starting or investing in a business with network effects, this is the
best (and only good?) book on the topic.

The Entrepreneurs Guide to Business Law – A bit painful if you aren’t into legal details (I’m not), but perhaps the most useful business book you can ever read.

Other good (if totally cliche) recommendations: A Random Walk Down Wall Street, Liars Poker (and anything else by Michael Lewis), Barbarians at the Gate, and Den of Thieves.

babbage machine

kids discovering joys of computing, circa 1970

all from boingboing

I made this program using Flash about 10 years ago just for fun. It was based on an old “recreational computing” Scientific American article by A.K. Dewdney. You can find more elaborate versions of Wator elsewhere, for example here. I tried to make my version focusing more on aesthetics than on customizability.

The basic idea behind Wator is that the brown dots represent “sharks” and the blue dots represent “fish”. Sharks survive by eating fish and fish survive by breeding and not getting eaten by sharks. From these very simple rules you can see what looks like the ebb and flow of real population changes.

It is quite easy for the sharks to eat all the fish and then themselves all die out since they have no more food (insert your own lesson about future of the human race etc here). Whether and how long the shark & fish populations survive depends on the parameters you set such as shark breeding time, fish breeding time etc. In the case of my program I “cheated” by adding an “I am Legend” rule that when there is only 1 shark left, that shark can’t die (ok-can’t remember if that’s actually consistent with I am Legend). If you watch the flash movie for a while you’ll see this happen occasionally.