Kevin Vogelsang

I’ve been reading Atlas Shrugged for the last few months, and I’m finally halfway through.  The book talks a lot about the purpose, use, and meaning of money.  While reading this, I realized that most people don’t really understand money at all. Since this is a topic others have written about, I’ll defer to them.

Marc Fleury, founder of JBoss (and a very interesting character), has a good post about what money is and how it functions: The Financial Crisis for Dummies: Money. Marc is a very intelligent guy and the post has a lot of good points for understanding money.  I’ve included an excerpt below:

Money, it took me 37 years to make a bunch of it and it took me 40 to “get it”. In fact I am not sure I still completely “get” money. I mean that in the theoretical sense. After researching a bit I came to the conclusion that very few people actually understand money the way it works today. I previously discussed this here.

A definition of money
The first attribute of money is as a medium of exchange to make an economy churn. It is very much the oil in the economic engine. The meeting of neeeds is a rare occurence in a economy, but with the intermediation of money, from good to money to good, you can match disparate peoples, specialization occurs because money exists. Without money there is no economy but a limited barter economy. It also serves as a store of value. “Going to cash” is what everyone does when the markets go down because cash doesn’t lose its numerical face value. This leads to the liquidity preference that Keynes talks about. Finally, in a capitalist system a fiat money will be a bearer of interests. Keep that in mind. You can think of the “risk free” interest paid by the US treasuries on money. There are other properties of money that the litterature identifies (fungible, transferable, durable).

Types of money
Anything can serve as a money as long as it has the properties above. Historically gold has played a huge role as a money. As “out there” examples there is this tribe that used to swap shells in the sea as a money. Ownership of the shells meant money. Don’t laugh, we do exactly the same, but instead of sea-shells we use electronic records in computers. Any good history of money will give insights that are valuable into the nature of money but here is a short version: from gold to gold certificates. It is bulky to transport gold and prone to be stolen. Why not exchange the certificates of ownership of gold like the tribes exchanged certificates of ownership of seashells? Then the paper became as good as gold (bretton-woods in a sea-shell) then why not just use the paper and do away with the gold? and if the paper is good why not use binary representation of the paper in computers? That is where we are today, completely virtual instances of “fiat” government money existing only in computers and our imaginations, just like shells in the sea.

Debt is money and vice-versa
All money is a debt. When you give a good to someone and they give you a piece of paper in return, what the piece of paper says is that someone in the economy owes you an equivalent value of goods. Period. Reread this until you get it. So you have a piece of paper that can be redeemed at any time, you have a instant debt. Money is a debt on future production of the economy. US bills say that this “legal tender for all debts private and public”. It is enforced by law. All money is debt.
Vice-versa when someone emits a debt instrument, they are effectively emitting money. That money is in circulation in the economy, buys stuff. Debt is money.

Check out the whole post.

-Kevin
8.20.2010

Generally Negotiation is conceived as the art of getting what you want in a deal and getting all that you can: a better discount, higher prices, competing down the bid.

I’m not sure what real “negotiators” say about this stuff, but I don’t think “getting all that you can” is always the best approach–particularly when there is an ongoing relationship involved.  Take for instance, a tenant’s relationship with the landlord.  Perhaps as a company looking for real estate, you are able to find a great deal because the market is bad and the Landlord needs the cash quickly.  However, due to the situation, the Landlord is left grumbling about how bad a deal he got.  This is likely to come back on you somehow.

For whatever reason, if you somehow make a deal that actually isn’t good for the other party, you may find trouble.

People need to look out for their own interests, and we should expect each other to do so.  However, what I’m saying doesn’t contradict this.

-Kevin
8.19.2010

On step at a time.

That is my mantra for today.  And the rest of this week.  And the week after that.

Reminds me of a friend of mine, a middle-aged man from Lebanon.  He always says, “How do you think Alexander the Great conquered his empire?” He would then pause and say, “one step at a time.”

I suppose it must be true.  However, it’s funny to imagine Alexander waking up, stretching his arms with a yawn, and saying, “oh, another day, another small piece of the world to conquer.”

-Kevin
8.16.2010

Image by Extra Medium via Flickr

I approximated that each of us had likely already met the second-best girl we would see in our entire young-adult lives.

This was a claim made one night in college by my friend Bryan Hernandez.  “Is this true?”, we said.  For some reason, there was something depressing about this (for many of us.) I think largely because it meant, to some degree, our future was already decided for us.

Decisions are tough–especially when you have to choose an option, hope that it’s right, and give up surveying all the other options.  And choosing who to marry is arguably one of the most important decisions we’ll make in our lives. So naturally, one should come up with a mathematical strategy to make the best decision! (well maybe…..)

So why did Bryan make this claim?  Here’s what he says in his post on the topic, Modeling the Marriage Decision:

I’ll agree it’s a pretty bold claim, but I had reason.  That week in my Probability and Random Variables class, one of my all-time favorites, we had been studying an area of probability known as Sequential Decision Problems.  This class of problems concerns itself with applying classical probabi

lity theory to questions regarding how to make probabilistically optimal decisions in a sequence of random events.

Here’s the problem Bryan had studied that is analagous if you make some assumptions:

“You are in need of a secretary and only have time to interview N.  You are able to rank the relative quality of each after interviewing her.  At the end of the interview you must either reject the applicant without the ability of accepting him later, or accept him without the ability to continue interviewing the remaining applicants.  What is the strategy that maximizes the probability of selecting the best candidate out of all N?”

Image via Wikipedia

Of course, this isn’t completely how it works.  But go with it.

To make the optimal decision, there is an algorithm you can follow to get the best possible algorithm.  First, estimate how many potential partners you will potentially meet (“N”) during your decision period and apply the following algorithm:

“Interview the first N/e applicants and reject them all.  Select the next applicant that is better than the best out of that first group.”

For a more in depth coverage of this issue, check out Bryan’s full post on the topic: Modeling the Marriage Decision.

Nerds are funny.

-Kevin
8.13.2010

Over the past week or so I’ve written about why it’s important to find your passion and gain expertise.

Blogging can help you with these, and more.

Blogging is an awesome thing.

If you blog consistently, you’ll blog about what’s on your mind.  And soon enough, you will start to understand your natural patterns of thought and what you want to share.  This says a lot about you and helps to build self-awareness.

You’ll talk about things you know.  People will challenge you and ask you questions.  This will cause you to learn more.

People will learn from you.  People will appreciate your experience and the shared experiences between you.

People will also learn about you.  It’s strange how little we know about what is on each other’s minds and what our interests are, even our close friends that live next door to us.  Our minds are in a constant state of flux.  It’s hard to keep up with.  (Ever written something and looked back at it even a few months later?  It almost always gets the response, “Did I write that?  What was I thinking?”)

Blogging gives you an audience to write to.  Writing to people will require you to write clearly, and consequently, think more clearly.  Therefore, you’ll learn from writing.  One of my primary motivators to write is just to figure things out.  When I start writing about a topic, it leads me to unexpected ideas and conclusions.

It’ll give you an avenue to ask for help and share your goals.  And being very public about your goals is a very good idea.

It’ll also help you stay in touch with others and help them stay in touch with you.  You’re constantly offering people something to talk about with you.

When someone writes a comment, or just visits your page,  they provide you with positive feedback.  Your work has been noticed.  As you see your number of visitors slowly increase, you’ll want to keep doing it.  Like running, once you get in shape, once you get in a groove, you won’t want to give it up.

Starting a blog is easy. Just go to WordPress.com .

-Kevin
1.22.2010

Yesterday, I finally took a look at Innocentive, a crowd-sourcing site for tough problems (generally very technical problems).

“I’m pretty clever.  Maybe I’ll find some time to work on one of the challenges,” I thought to myself.

As I took a look, These are very difficult .

And then upon looking at the previous winners’ bios I saw things like this:

Researcher and Professor at the University of Coimbra. PhD from Coimbra University in 1999 in Organic Chemistry. Main research areas: Porphyrins, Polypyrroles and related compounds in Medicinal and Environmental Sciences.

It’s probably not even worth working on any of these.  I don’t have this sort of specialized skill set, I then said.

All the people that had solved the challenges seemed quite impressive and had clearly spent years developing their skills in a given field.  Not to say it would be impossible for me to solve one, but it would take a very large time investment.

Looking at what these people had done, I became a bit bummed.  I can’t do any of these things. Which reminded of two things:

1) Something one of my basketball coaches said to me, “It’s good to watch other good players and see what they’ve learned to do, but don’t forget what you can do.”

2) The plight of the Generalist. A jack-of-all-trades can do almost anything that needs to be done.  Perhaps they develop substantial expertise in an area, but their compulsions cause them to want to work and gain expertise in many fields.  However, they’re always outmatched.

-Kevin
8.4.2010

Duality

Do you have a Gift? a natural talent specific to you? Did it always seem to be a Gift?

Do you have a Curse?  Something about you that keeps you from getting your work done or doing whatever it is you want?  Do you have something that keeps you up at night and won’t leave you alone?

Are Gifts and Curses so different?

I don’t think so.  In fact, I believe that, most of the time, they’re the same thing.  And when something feels like a Curse, you’re in the wrong context, ignoring a part of yourself, and wasting something.

If ideas keep you up at night, use them.

If you love talking with people and building relationships, you’re a social beast. Find a job that harnesses it.

If you’re hopelessly distracted, try putting yourself in a more intense environment that demands swift action.  See what happens.

If you’re obsessive over the details to the point it’s problematic, find work that is clean and neat that needs someone to obsess over the details.  You’ll do things no one else can.

Or maybe you just need a change in perspective.  Even afflictions classified as severe disorders can bear Gifts.

Talents and intrinsic qualities tend to be highly specialized.  The human mind is incredibly diverse; the brain is capable of many things.  And when a quality or a talent isn’t being used or recognized, it starts to rebel.

-Kevin

3.10.2010

Image via Wikipedia

“We are the middle children of history, raised by television to believe that someday we’ll be millionaires and movie stars and rock stars, but we won’t.  And we’re just learning this fact.”–Tyler Durden, Chuck Palahniuk’s Fight Club

Fight Club is the literary classic of my generation.   And this quote hits it right on the head–even more than I thought when I first read it.

In school, if you had some talent, we were praised as being “very smart”, as a “leader”, as someone that will be successful.  Our parents were educated, worked a  job, took care of their parents, and took care of us.  They found a way to make sure we got to every extracurricular and had everything we needed to excel.  We then brought to light the “stressful” competition to get into the best colleges.  We had instant access to the world’s information through the internet and instant access to people through mobile phones.  Those of us who didn’t take to academics had ADD.

We had everything we needed, and now we want to change the world and have an impact……

How exactly do we do that?

These are strokes so broad that they’re annoying, but I think this does describe the dilemma of my generation.  We’re a group of people built on stability, technology, and great expectations–which is incredible. But, the culture got something wrong.  And I think this has helped create a group of people that are talented, but even more lost.

This sounds a bit pessimistic (I prefer to be realistic.) I’ll end with this: we will undoubtedly change the world.

-Kevin
7.27.2010

After working for a month or so in a more “proper job”, one thing that is very refreshing is to see a very clear, large market and having the capabilities to go get it.  Of course, market entry and figuring out how to attack it is always a problem. But, it’s there.

The experience has reminded me of two things: 1) how many stupid startups there are (allow me to unravel that statement at a later date, it needs a lot of unraveling) and 2) my friend Antonio Rodriguez‘s post about “execution context”.  Instead of me telling you about it, I’ve re-posted it here:

Startups and Experience: Context Matters

Chris Dixon had a provocative post on how young engineers choosing to join big companies like Google is bad for the startup ecosystem, a common sentiment among the folks that I have been meeting over the last few weeks here in the rekindled Boston startup scene.

But I’m not sure it is right for one simple reason: for the most part, young founders tend to breed stupid startup ideas. Not because they are themselves stupid, but because they lack the proper execution context.

And while there is a lot of merit to apprenticing at established (funded) startups, I’m not sure that most of these provide adequate execution context either.

So if context truly is king, what does the proper execution context look like? Ideally, the right context exposes one to a whole host of business problems that need solutions because the current ones are being provided by big dumb companies that have grown fat and complacent of the profits produced by innovations whose progenitors are long gone. This is even better when the problems can be solved through new innovation that is itself only possible as technology is shifting.

Let me take a local example: here in Boston we have an existing cluster around storage, anchored by one of the biggest, dumbest tech companies I’ve ever seen: EMC. If I were betting on disruptive startups, I’d much rather take the folks who have spent time selling billions of dollars worth of storage into big companies, government contracts, and just about everyone else. Certainly more so than the folks that have spent burned cycles trying to copy Dropbox or Carbonite because that is the context they understand.

One of my heroes, Alan Kay, said that the right perspective is worth 80 IQ points. In my experience, execution context is not dissimilar.

-Kevin
7.20.2010

Struggle plays an interesting role in our lives.  On one hand, it sucks; we struggle when things are very hard.  However, when we look back on it, we have a sense of awe for where we’ve been, the importance of that part of the story, all the things we learned, the people we grew closer to, and the excitement of wondering if we were going to make it.

If only we were better at recognizing these things in the moment.  This is the road we’re on, and this will be part of our defining moment.

I suppose, with this in mind, struggle should be embraced all the more.  It’s the backbone of our fantastic voyage.

-Kevin
7.16.2010