Category: Economics of Technology

Cloud-Computing Firms Run Key Services on Private Servers

(p. B8) For nearly a decade, Amazon Web Services, the giant retailer’s cloud computing division, has told prospective customers: Ditch your data center and trust us to run your applications, store your data and host your internal software development.
Yet Amazon.com Inc. itself doesn’t fully run in the cloud.
Amazon isn’t alone. The other top cloud providers– Google Inc., Microsoft Corp. and International Business Machines Corp.–use their own cloud services for some purposes, but they continue to keep certain functions on private servers. Their struggles are a microcosm of the issues that dog their customers: Worries about reliability, security and risks inherent with change that have made it hard to move critical computing tasks to the public cloud.
“The vast majority of Amazon.com runs on AWS,” a company spokesperson said, and it intends to run everything there eventually.
The fact that Amazon still uses private servers is “ironic,” said Ed Anderson, an analyst with Gartner, which advises customers on both cloud services and data center servers. “That’s exactly why we tell people evaluating cloud services, ‘Do not buy into the hype. Do not buy into the myths. You have to be pragmatic, just like these vendors are,'” he said.

For the full story, see:
ROBERT MCMILLAN. “Companies Touting Cloud-Computing Don’t Always Use It.” The Wall Street Journal (Weds., Aug. 5, 2015): B8.
(Note: the online version of the story has the date Aug. 4, 2015, and has the title “Cloud-Computing Kingpins Slow to Adapt to Own Movement.”)

Students Learn Less, and Score Worse, When Hot

(p. 11) A clever new working paper by Jisung Park, a Ph.D. student in economics at Harvard, compared the performances of New York City students on 4.6 million exams with the day’s temperature. He found that students taking a New York State Regents exam on a 90-degree day have a 12 percent greater chance of failing than when the temperature is 72 degrees.
The Regents exams help determine whether a student graduates and goes to college, and Park finds that when a student has the bad luck to have Regents exams fall on very hot days, he or she is slightly less likely to graduate on time.
Likewise, Park finds that when a school year has an unusual number of hot days, students do worse at the end of the year on their Regents exams, presumably because they’ve learned less. A school year with five extra days above 80 degrees leads students to perform significantly worse on Regents exams.
The New York City students in Park’s study do poorly on hot days even though the majority of city schools are air-conditioned (perhaps in part because the air-conditioning often barely works).

For the full commentary, see:
Kristof, Nicholas. “Temperatures Rise, and We’re Cooked.” The New York Times, SundayReview Section (Sun., SEPT. 11, 2016): 11.
(Note: the online version of the commentary has the date SEPT. 10, 2016.)

The working paper by Jisung Park on the effects of heat, is:
Park, Jisung. “Heat Stress and Human Capital Production.” Harvard University, 2016.

Invention Requires More than Just Necessity

If necessity is the mother of invention, why did it take 2,000 years for necessity to give birth?

(p. D2) Archaeological evidence suggests that after setting sail from the Solomon Islands, people crossed more than 2,000 miles of open ocean to colonize islands like Tonga and Samoa. But after 300 years of island hopping, they halted their expansion for 2,000 years more before continuing — a period known as the Long Pause that represents an intriguing puzzle for researchers of the cultures of the South Pacific.
“Why is it that the people stopped for 2,000 years?” said Dr. Montenegro. “Clearly they were interested and capable. Why did they stop after having great success for a great time?”
To answer these questions, Dr. Montenegro and his colleagues ran numerous voyage simulations and concluded that the Long Pause that delayed humans from reaching Hawaii, Tahiti and New Zealand occurred because the early explorers were unable to sail through the strong winds that surround Tonga and Samoa. They reported their results last week in the journal of the Proceedings of the National Academy of Sciences.
“Our paper supports the idea that what people needed was boating technology or navigation technology that would allow them to move efficiently against the wind,” Dr. Montenegro said.

For the full story, see:
NICHOLAS ST. FLEUR. “Long Layovers: A 2,000-Year Pause in Exploring Oceania.” The New York Times (Sat., November 8, 2016): D2.
(Note: the online version of the story has the date NOV. 1 [sic], 2016, and has the title “How Ancient Humans Reached Remote South Pacific Islands.” The passages quoted above are from the much-longer online version of the article.)

Montenegro’s academic article, mentioned above, is:
Montenegro, Álvaro, Richard T. Callaghan, and Scott M. Fitzpatrick. “Using Seafaring Simulations and Shortest-Hop Trajectories to Model the Prehistoric Colonization of Remote Oceania.” Proceedings of the National Academy of Sciences 113, no. 45 (Nov. 8, 2016): 12685-90.

Air-Conditioning Is “a Critical Adaptation” that Saves Lives

(p. A3) Air-conditioning is not just a luxury. It’s a critical adaptation tool in a warming world, with the ability to save lives.
. . .
In our continuing research, my colleagues and I have found that hot days in India have a strikingly big impact on mortality. Specifically, the mortality effects of each additional day in which the average temperature exceeds 95 degrees Fahrenheit are 25 times greater in India than in the United States.
. . .
The effect of very hot days on mortality in the United States is so low in part because of the widespread use of air-conditioning. A recent study I did with colleagues showed that deaths as a result of these very hot days in the United States declined by more than 80 percent from 1960 to 2004 — and it was the adoption of air-conditioning that accounted for nearly the entire decline.

For the full story, see:
Michael Greenstone. “‘India’s Air-Conditioning and Climate Change Quandary.” The New York Times (Thurs., OCT. 27, 2016): A3.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 26, 2016.)

The Greenstone study mentioned above on heat mortality in the U.S., is:
Barreca, Alan, Karen Clay, Olivier Deschenes, Michael Greenstone, and Joseph S. Shapiro. “Adapting to Climate Change: The Remarkable Decline in the Us Temperature-Mortality Relationship over the Twentieth Century.” Journal of Political Economy 124, no. 1 (Feb. 2016): 105-59.

Blockchain Can Cut Out Financial Middlemen

(p. A9) Blockchains are basically a much better way of managing information. They are distributed ledgers, run on multiple computers all over the world, for recording transactions in a way that is fast, limitless, secure and transparent. There is no central database overseen by a single institution responsible for auditing and recording what goes on. If you and I were to engage in a transaction, it would be executed, settled and recorded on the blockchain and evident for all to see, yet encrypted so as to be villain-proof. “The new platform enables a reconciliation of digital records regarding just about everything in real time,” write the Tapscotts. No more waiting for that check to clear. It would all be done and recorded for eternity before you know it.
The digital currency bitcoin is currently the best-known blockchain technology. If I wanted to pay you using bitcoin, I would start with a bitcoin wallet on my computer or phone and buy bitcoins using dollars. I would then send you a message identifying the bitcoin I would like to send you and sign the transaction using a private key. The heavily encrypted reassignment of the bitcoin to your wallet is recorded and verified in the bitcoin ledger for all to see, and they are now yours to spend. The transaction is likely more secure and cheaper than a traditional bank transfer.
. . .
The layman, . . . , might want to wait for a more penetrable explanation of blockchains to come along–as one surely will if the authors’ predictions are even one-zillionth right.​

For the full review, see:
PHILIP DELVES BROUGHTON. “BOOKSHELF; Bitcoin Is Just The Beginning; Imagine a personal-identity service that gives us control over selling our personal data. Right now, Google and Facebook reap the profit.” The Wall Street Journal (Fri., May 27, 2016): A9.
(Note: ellipses added.)
(Note: the online version of the review has the date May 26, 2016.)

The book under review, is:
Tapscott, Don, and Alex Tapscott. Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World. New York: Portfolio, 2016.

Udacity Entrepreneur Counters Creeping Credentialism

(p. B2) Udacity, an online learning start-up founded by a pioneer of self-driving cars, is finally taking the wraps off a job trial program it has worked on for the last year with 80 small companies.
The program, called Blitz, provides what is essentially a brief contract assignment, much like an internship. Employers tell Udacity the skills they need, and Udacity suggests a single candidate or a few. For the contract assignment, which usually lasts about three months, Udacity takes a fee worth 10 to 20 percent of the worker’s salary. If the person is then hired, Udacity does not collect any other fees, such as a finder’s fee.
For small start-ups, a hiring decision that goes bad can be a time-consuming, costly distraction. “This lets companies ease their way into hiring without the hurdle of making a commitment upfront,” said Sebastian Thrun, co-founder and chairman of Udacity.
. . .
Mr. Thrun, a former Stanford professor and Google engineer who led the company’s effort in self-driving cars, said he was also trying to nudge the tech industry’s hiring beyond its elite-college bias.
“For every Stanford graduate, there are hundreds of people without that kind of pedigree who can do just as well,” he said.

For the full story, see:
STEVE LOHR. “Udacity, an Education Start-Up, Offers Tech Job Tryouts.” The New York Times (Fri., NOV. 18, 2016): B2.
(Note: ellipsis added.)
(Note: the online version of the story has the date NOV. 17, 2016, and has the title “Udacity, an Online Learning Start-Up, Offers Tech Job Trials.”)

Space Trash Start-Up Aims to Be Quicker than Government

(p. D1) Mr. Okada is an entrepreneur with a vision of creating the first trash collection company dedicated to cleaning up some of humanity’s hardest-to-reach rubbish: the spent rocket stages, inert satellites and other debris that have been collecting above Earth since Sputnik ushered in the space age. He launched Astroscale three years ago in the belief that national space agencies were dragging their feet in facing the problem, which could be tackled more quickly by a small private company motivated by profit.
“Let’s face it, waste management isn’t sexy enough for a space agency to convince taxpayers to allocate money,” said Mr. Okada, 43, who put Astroscale’s headquarters in start-up-friendly Singapore but is building its spacecraft in his native Japan, where he found more engineers. “My breakthrough is figuring out how to make this into a business.”
. . .
(p. D3) “The projects all smelled like government, not crisp or quick,” he said of conferences he attended to learn about other efforts. “I came from the start-up world where we think in days or weeks, not years.”
. . .
He also said that Astroscale would start by contracting with companies that will operate big satellite networks to remove their own malfunctioning satellites. He said that if a company has a thousand satellites, several are bound to fail. Astroscale will remove these, allowing the company to fill the gap in its network by replacing the failed unit with a functioning satellite.
“Our first targets won’t be random debris, but our clients’ own satellites,” he said. “We can build up to removing debris as we perfect our technology.”

For the full story, see:

MARTIN FACKLER. “Building a Garbage Truck for Space.” The New York Times (Tues., Nov. 29, 2016): D1 & D3.
(Note: the online version of the story has the date Nov. 28, 2016, and has the title “Space’s Trash Collector? A Japanese Entrepreneur Wants the Job.”)

About 90% of Current Jobs Include Tasks that Are Hard to Automate

(p. B1) They replaced horses, didn’t they? That’s how the late, great economist Wassily Leontief responded 35 years ago to those who argued technology would never really replace people’s work.
. . .
(p. B6) A research paper published last month by the Organization for Economic Cooperation and Development argued that even the occupations most at risk of being replaced by machines contained lots of tasks that were hard to automate, like face-to-face interaction with customers.
It concluded that only 9 percent of American workers faced a high risk of being replaced by an automaton. Austrians, Germans and Spaniards were the most vulnerable, but only 12 percent of them risked losing their jobs to information technology.

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; Contemplating the End of Human Workhorse.” The New York Times (Weds., JUNE 8, 2016): B1 & B6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date JUNE 7, 2016, and has the title “ECONOMIC SCENE; Jobs Threatened by Machines: A Once ‘Stupid’ Concern Gains Respect.”)

The Organization for Economic Cooperation and Development paper mentioned above, is:
Arntz, Melanie, Terry Gregory, and Ulrich Zierahn. “The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis.” OECD Social, Employment and Migration Working Papers, No. 189. Paris: OECD Publishing, 2016.

Berners-Lee Suggests Web Micropayments Replace Ad Revenue

(p. B1) SAN FRANCISCO — Twenty-seven years ago, Tim Berners-Lee created the World Wide Web as a way for scientists to easily find information. It has since become the world’s most powerful medium for knowledge, communications and commerce — but that doesn’t mean Mr. Berners-Lee is happy with all of the consequences.
. . .
So on Tuesday [June 7, 2016], Mr. Berners-Lee gathered in San Francisco with other top computer scientists — including Brewster Kahle, head of the nonprofit Internet Archive and an internet activist — to discuss a new phase for the web.
. . .
(p. B6) Consider payments. In many cases, people pay for things online by entering credit card information, not much different from handing a card to a merchant for an imprint.”
At the session on Tuesday [June 7, 2016], computer scientists talked about how new payment technologies could increase individual control over money. For example, if people adapted the so-called ledger system by which digital currencies are used, a musician might potentially be able to sell records without intermediaries like Apple’s iTunes. News sites might be able to have a system of micropayments for reading a single article, instead of counting on web ads for money.
“Ad revenue is the only model for too many people on the web now,” Mr. Berners-Lee said. “People assume today’s consumer has to make a deal with a marketing machine to get stuff for ‘free,’ even if they’re horrified by what happens with their data. Imagine a world where paying for things was easy on both sides.”

For the full story, see:
QUENTIN HARDY. “World Wide Web’s Creator Looks to Reinvent It.” The New York Times (Weds., JUNE 8, 2016): B1 & B6.
(Note: ellipses, and bracketed dates, added.)
(Note: the online version of the story has the date JUNE 7, 2016, and has the title “The Web’s Creator Looks to Reinvent It.” )

Tech Start-Up Grows with No Outside Money

(p. B6) . . . , it’s possible to create a huge tech company without taking venture capital, and without spending far beyond your means. It’s possible, in other words, to start a tech company that runs more like a normal business than a debt-fueled rocket ship careening out of control. Believe it or not, start-ups don’t even have to be headquartered in San Francisco or Silicon Valley.
There is perhaps no better example of this other way than MailChimp, a 16-year-old Atlanta-based company that makes marketing software for small businesses. If you’ve heard of MailChimp, it’s either because you are one of its 12 million customers or because you were hooked on “Serial,” the blockbuster true-crime podcast that MailChimp sponsored.
Under the radar, slowly and steadily, and without ever taking a dime in outside funding or spending more than it earned, MailChimp has been building a behemoth. According to Ben Chestnut, MailChimp’s co-founder and chief executive, the company recorded $280 million in revenue in 2015 and is on track to top $400 million in 2016. MailChimp has always been profitable, Mr. Chestnut said, though he declined to divulge exact margins. The company — which has repeatedly turned down overtures from venture capitalists and is wholly owned by Mr. Chestnut and his co-founder, Dan Kurzius — now employs about 550 people, and by next year it will be close to 700.
As a private company, MailChimp has long kept its business metrics secret, but Mr. Chestnut wants to publicize its numbers now to show the road less traveled: If you want to run a successful tech company, you don’t have to follow the path of “Silicon Valley.” You can simply start a business, run it to serve your customers, and forget about outside investors and growth at any cost.
. . .
“Every time we sat down with potential investors, they never seemed to understand small business,” Mr. Chestnut said. Venture capitalists always wanted MailChimp to serve “enterprise companies,” large businesses with thousands of employees and, potentially, thousands to spend.
“Everybody we talked to said, ‘You’re sitting on a gold mine, and if you pivot to enterprise, you could be huge,'” Mr. Chestnut said. “But something in our gut always said that didn’t feel right.”

For the full story, see:
Farhad Manjoo. “STATE OF THE ART; A Road Less Traveled to Success as a Start-Up.” The New York Times (Thurs., Oct. 6, 2016): B1 & B6.
(Note: ellipses added.)
(Note: the online version of the story has the date Oct. 5, 2016, and has the title “STATE OF THE ART; MailChimp and the Un-Silicon Valley Way to Make It as a Start-Up.”)