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jstrauss – Page 4

Mas Edward Sharpe

First of all, my life does not suck. Last night I was hanging at TechStars (and having my company mistaken for one of theirs 😉 ), this afternoon I was having lunch with the Gnip team in beautiful Boulder, and tonight I was filming a concert by one of my favorite new bands.

I’ve now seen Edward Sharpe and the Magnetic Zeros 5 times in the month since Ty and I first saw them at La Cita. And thanks to Dave at LittleRadio, I was invited to be part of the crew that filmed their three show residency at the Regent which ended tonight. That footage is in the capable hands of the Artificial Army crew, but here’s some stuff I shot at last week’s show with my G7. I’m primarily putting this up for Ryan, who has been at every one of the 5 shows I’ve attended 🙂

Delicious Bookmarks for May 3rd

These are my Delicious links for May 3rd:

Delicious Bookmarks for April 27th through April 29th

These are my Delicious links for April 27th through April 29th:

Delicious Bookmarks for April 17th through April 21st

These are my Delicious links for April 17th through April 21st:

Where’s the Bottom?

Like many investors right now, I’m spending a lot of time trying to figure out whether the stock market has actually hit a stable ‘bottom’ or whether it still has further to fall. My dad and I had a long discussion last night about different methodologies for calculating what  equity prices *should* be based on historical market behavior and the dynamics of the current situation. The two main factors that have driven the slide from the heights of October 2007 (DJIA @ 14,279.96 and S&P 500 @ 1,576.09) are the sudden de-leveraging of the financial markets (i.e. some major investors being forced to liquidate >75% of their positions) and the macroeconomic effects of a recessionary cycle (i.e. higher unemployment, lower consumer spending, deflation).

While theoretically possible, I believe modeling the impact of these two factors is a practical impossibility because they are so intertwined — de-leveraging sparked the recession and the recession is driving further de-leveraging. You could also do a technical analysis where you try to match current market behavior to past patterns and extrapolate what happens next based on what happened before. But that method requires making a bet on which past patterns to match against, i.e. is our current situation more similar to the Great Depression or all the recessions since. And that’s a big bet.

So, I propose a different (and much simpler) approach: assume a realistically sustainable growth rate over a long enough period and figure out where we would be if the market had grown at that pace. I picked 20 years as the period and charted the monthly percent change of the Dow Jones Industrial Average (DJIA) from 2,342.32 at the end of January 1989 to 8,131.33 at Friday’s close. The actual percent change is the blue line, and I plotted 3 other lines against it: 10% annualized growth in green; 6% annualized growth in orange; and 2% annualized growth in red.

Here’s what that period looks like in annual percent change for the DJIA and S&P 500:

And here’s the annualized rate of return for both the S&P 500 and the DJIA since 1989:

Over the course of this 20 year period, there were only 6 years in which the market declined *at all* (one of which, 2005, was basically break-even) and there were 10 years in which the market gained *more than 10%* and in 7 of those it gained *more than 20%*. Even after the tech bubble “burst” taking the market from 11,497.12 at the end of 1999 to 8,341.63 at the end of 2002 (a 27.4% decline in 3 years), the market would still have delivered a *10.1%* annualized rate of return over the prior 12 years. From where we sit today, it’s no wonder the DJIA declined 33.85% in 2008 (taking us to a still very respectable annualized rate of return since 1989 of 7.24%). But that doesn’t answer the question of how much further down it needs to go before we can consider the value of the equity markets stable. 

That’s where the annual growth rate analysis comes in. It is still highly subjective — depending on what one believes to be a representative sample period and sustainable annualized growth over that period. But I like it because it helps me think about the broader market in terms I feel more comfortable making assumptions about, like what do I think is a reasonable rate of value creation for the economy as a whole over a given period. In the case of the 20 years since 1989, do I believe there’s a reason that the equity markets should have averaged ~10% annual growth while our Real GNP achieved only 2.76% annual growth over the same period? No, and obviously neither does the market at this point.

So, what is a reasonable expectation for a bottom? Your guess on the underlying assumptions is as good as mine. But if one believes technical advancements over the last 20 year period enabled us to double efficiency (i.e. extract twice as much profit from the same revenues), then the markets *should* have grown at around twice the rate of Real GNP. In that case, we would be expecting 5.51% annualized growth in the markets since 1989 as of the end of 2008. Starting from 1989 closing prices of 2,753 on the DJIA and 353.4 on the S&P 500, 19 years of organic equity growth pegged at 2x GNP growth should have closed 2008 at 7,634.38 and 979.95, respectively (actuals were 8,766.39 and 903.25).

Update: Dad accurately points out that GNP is a trailing indicator and equity prices are leading indicators. So, this analysis shouldn’t be considered anything other than directional. I find it helpful as one factor in my overall assessment of the current situation, but as Howard reminds us no one really has all the answers.

This final chart shows the actual level of the DJIA (blue) compared to what it would be if it was pegged at 1x GNP Growth (red), 2x GNP Growth (orange), and 3x GNP Growth (green). It is essentially the same as the chart at the top but now instead of arbitrarily picking annual growth rates, we have pegged them as multiples of Real GNP (i.e. ratios of business efficiency). As you can see, for most of the last 20 years the markets were assuming >300% improvements in business efficiency.

All the above charts and underlying analysis can be found in this spreadsheet.

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Delicious Bookmarks for April 10th through April 15th

These are my Delicious links for April 10th through April 15th:

  • 15 Places to Find Great Fonts | Lists | Tutorial Blog – A list of sites where one can find free fonts.
  • The Quiet Coup – The Atlantic(May 2009) – A very interesting in-depth analysis of the rise of the financial oligarchy in the US over the last 20 years and how it has created dynamics similar to those of emerging market economic crises, according to a former chief economist of the IMF. “In a society that celebrates the idea of making money, it was easy to infer that the interests of the financial sector were the same as the interests of the country—and that the winners in the financial sector knew better what was good for America than did the career civil servants in Washington. Faith in free financial markets grew into conventional wisdom—trumpeted on the editorial pages of The Wall Street Journal and on the floor of Congress.”

Edward Sharpe Rawks My F*%$ing Socks!

My new favorite live band hands-down is Edward Sharpe and the Magnetic Zeros. I saw them twice in 5 days and would go see them again tonight (and tomorrow night, and the night after that) if I could. They’re apparently starting a ‘residency’ at the Regent Theater in downtown LA on April 30, and I’ve already asked Dave at LittleRadio if my cousin Ben and I can shoot a proper concert video one of the nights.

In the meantime, here’s some footage I shot of their show at The Echo on Monday night (YouTube HD doesn’t quite do the 1080p footage from Kelly’s Canon 5D Mark II, aka my dream camera, justice):

And here are the photos:

Kelly (and her camera) had to leave a couple of songs into the Edward Sharpe set (I had told her they went on at 10pm and they didn’t end up starting until 12:30am). So, what you see here is just them getting started — to give you a sense of where it ended up, Alex, the lead singer (formerly of IMA Robot), spent a good deal of the show shirtless in the audience. I’m actually kinda glad I didn’t have the option of documenting the rest of their set, because I got to go crazy with the rest of the crowd instead. But I’d gladly give up a night of rocking out in order to have the opportunity to properly document this incredible spectacle. Dave, call me! 😉

P.S. I first discovered Edward Sharpe and the Magnetic Zeros through the most excellent NPR All Songs Considered Live Concerts podcast (originally via Ian, of course).

Update: Here’s some video of the opener, Fool’s Gold:

I have 1 more Edward Sharpe video, but it’s just barely over YouTube’s 1GB upload cap. So, I guess I’m gonna keep it to myself for now.

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Dear Digg, here’s how to get people to STFU about the DiggBar

Dear Digg,

I think you’re missing the point of the uproar over the DiggBar. It isn’t about SEO or search engine ‘juice’ or 3rd-party traffic stats or even about the structure of the web, it’s about control. Publishers like to know they at least have the option to be in control of how a visitor interacts with their site, and you have ignored that need.gruberdigg

Personally, I feel you’re perfectly within your rights as a driver of traffic to do whatever you want with your outbound links. And publishers, like John Gruber, are perfectly within their rights to do whatever they want to visitors from your pages. But, why do you guys have to fight about it? Do you hear any similar outcry over Facebook’s ‘action bar’, which arguably intercepts a lot more overall traffic than the DiggBar ever will? I haven’t, and I think it’s simply because from the start they have given publishers a simple way to opt-out.

From the Facebook Share Partners page (click ‘What is the blue bar that appears over my webpage? Is there a way to prevent it from appearing?’):

When someone clicks on your shared item, they are redirected to your page, and a small action bar is added above your site. The action bar promotes further sharing so that more people can see your content If you would like to disable this feature, simply add this code to your web page:

  <script type=”text/javascript”>
    if (top.location != location) {
     top.location.href = document.location.href;
    }
  </script>

Is anyone actually using this? Probably not. Would most publishers want to block the DiggBar? I highly doubt it. As TechCrunch implies, traffic is still king for most publishers:

If the Diggbar can [drive a 20% boost in traffic] consistently going forward, nobody is going to be complaining about it anymore—even if URL shorteners are still evil.

Those publishers who have different priorities, as is their right, *will* find ways to block the DiggBar, which in this case results in a crappy experience for visitors coming from your site. But if you were to officially support opt-out on a per site basis (a la Facebook), publishers could could control their sites as they wish without the end-user experience having to suffer for the sake of an argument most of them don’t understand or care about.

Love,
-jonathan

Disclosure: I run a publisher services company building a product that happens to shorten URLs. For the record, I don’t think URL shorteners are evil, just misunderstood 🙂

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Delicious Bookmarks for April 5th through April 9th

These are my Delicious links for April 5th through April 9th:

  • Digg support, Brazilian shortener, and all sorts of other awe.sm-ness « feed your blog to twitter – Announcement of the first third-party tool to officially support awe.sm 😀
  • L.A. starts buying up foreclosed homes with federal aid – Los Angeles Times – This is the best use of federal bailout money I've heard yet: the city of Los Angeles is buying up foreclosed residential properties and turning them into low-income housing. This is toxic-asset relief (buying foreclosed properties puts a value on their mortgages) with real equity for the government and a social benefit. I hope more funding goes towards programs like this.
  • The Banker Who Said No – Forbes.com – A fascinating profile of banker D. Andrew Beal, who runs Texas-based Beal Bank. Beal Bank is privately held and approaching $7 billion. But the most interesting part is how they got there: by essentially sitting out the market 2004-2007. Seeing the state of the lending market in 2004, Beal essentially put his bank into hibernation by suspending new loans, hoarding cash, laying off half his workforce, and working half-days. Over the next 3 years, he was mocked by mortgage brokers and scrutinized by regulators for sitting on the sidelines. But his intuition, conviction, and self-restraint have paid off in a big way as he is now using his cash stockpile to acquire assets at pennies on the dollar. IMHO, no publicly traded bank would have been able to pull this off even if they had wanted to.

Delicious Bookmarks for March 31st through April 2nd

These are my Delicious links for March 31st through April 2nd:

  • Social Media ROI – Solid presentation on how to approach social media marketing from a quantitative perspective. Most interesting are the examples of different types of social media campaigns to drive different business goals. There is no one-size-fits all social media marketing campaign.
  • The Lab – A web-based Sass -> CSS compiler. Sass is basically a shorthand way to write stylesheets for your website. It allows for nesting with two spaces. Also, it can do some basic math with constants. No more going around your CSS files updating the size or color of something.
  • Newspapers and Thinking the Unthinkable « Clay Shirky – "When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse…With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves — the incredible difficulty, complexity, and expense of making something available to the public — has stopped being a problem."
  • Changing Nature of Virality: Facebook and Twitter – A consolidation of interesting stats from Hitwise on percentages of traffic to entertainment sites driven by Twitter and Facebook. For example, perezhilton.com's biggest week ever was driven primarily by traffic from Facebook (8.70%) over Google (7.62%). It is clear that for certain types of sites, particularly entertainment-oriented, 'viral' discovery is an increasingly important discovery mechanism being fueled by the growth of social media sites like Facebook and Twitter.
  • The Rising Power Of Social Media As A Traffic Driver – Fred Wilson on the impact he's seeing to traffic on his own blog from Twitter and Facebook: "Links are the currency of the web and traffic is money so these are important trends for our portfolio companies and for everyone who does business on the web."
  • Tony Hsieh: Zappos In The Business of Selling “Happiness” – This was a really great presentation that i was lucky enough to attend in person. Some of my favorite quotes were "Hire slowly, fire quicky", "When all your employees live the brand, you don't need to rely on marketing and PR to handle all your communications", and "We decided to take all the money we would have put into marketing and put it into making the customer experience better." While I do feel that Zappos sounds more like a management/corporate culture experiment than a business, I still think there are a ton of great lessons that less altruistic businesses can apply. My primary takeaway was probably on Slide 17 of the presentation, the idea of "Committable Core Values": having a company mission that is actionable for every employee.
  • Economy Tech trends in 2009 by Mary Meeker (Morgan Stanley) – An omnibus presentation on the current economic climate and the high-level trends that will drive the technology industry in the near future. The first ~40 slides contain some really interesting data and charts on the larger macroeconomic situation and are worth looking at even for people not interested in the technology industry.
  • The Memefication of Your Band – A more pragmatic take on the entertainment-as-a-service concept focused on how musical artists can more effectively promote themselves. "Your band must invade the Perception Economy. Your Band must no longer be a band. Your band must be a meme. A Meme Which Generates subMemes. These memes must be compelling, intriguing, and interesting enough for people to ‘follow’ or at least think that you are ‘worth following.’"
  • High-tech Market Research and Consulting – Quantitative application of the Lanchester model, a WWII military strategy framework, to business in which market share is the proxy for number of troops. Interesting theoretical construct for understanding how players with differing market share should seek to compete in order to maximize their competitive advantage — i.e. smaller players should seek to segment a larger market into smaller pieces in which they can compete closer to market share parity while larger players should seek to compete in the broadest market possible to maximize the value of their dominance.
  • WordPress › WP Greet Box « WordPress Plugins – A very useful WordPress plugin that shows visitors to your blog a unique greeting message depending on the page they are visiting from. E.g. Ask users coming from Digg.com to Digg your post, etc.
  • Chat Catcher – An interesting service to help you track mentions of your blog posts across Twitter, FriendFeed and identi.ca and aggregate them back to your blog. The coolest thing is probably the 'Scriptless' version which can run on WordPress.com and other hosted blogs.
  • Viral Arts: Making you money… Virally – A potentially interesting service that matches YouTube video producers with brands willing to pay them for product placement.
  • The changing face of usability testing: Optimal Workshop releases free service called Treejack » VentureBeat – Basic DIY usability testing tools that allow you to test designs in the form of online surveys. Simple, elegant, and IMHO 80/20 effective (vs full-service usability testing software).
  • Why Bit.ly Will Upstage Digg – Definitely what I would be working on if I was in charge of bit.ly. While analytics were the initial draw for sharers to use bit.ly, recognition as an influencer could be a differentiator now that others like cli.gs and tr.im are commoditizing analytics for shortened URLs. I totally agree with Om that a bit.ly powered Digg (Bigg?) would produce much more interesting and representative results than Digg, which has come to be dominated by an idiosyncratic user community. Also, I think it would be foolish of Bigg to be reserved to bit.ly URLs. Why wouldn't they want share/click data from all the shortened URLs they can get it for?
  • Topspin » “Josh Freese. What are you doin’? This summer.” – Brilliant (and hilarious) showcase of how the internet can make even the way you sell your art part of the experience. Definitely worth the read! My favorite is the $10k package, which includes: "Josh takes you and a guest to Club 33 (the super-duper exclusive and private restaurant at Disneyland located above Pirates of the Caribbean) and then hit a couple rides afterward (preferably the Tiki Room, the Haunted Mansion and Tower of Terror) / At the end of the day at Disneyland, drive away in Josh’s Volvo station wagon. It’s all yours … take it. Just drop him off on your way home, though, please."
  • Relationship Symmetry in Social Networks: Why Facebook will go Fully Asymmetric – Bokardo – A very interesting analysis of the difference between the asymmetric relationship model of Twitter (arguably pioneered by Flickr) and the mostly symmetric relationship model of Facebook today and why the reality of attention inequality is a barrier to Facebook's growth as long as they stick to symmetric relationships.
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