Interesting Links for 18-05-2020

[andrewducker]

Smooth sharks are kryptonite for people for who have to be right all the time

(tags:sharks troll funny )

Turns out I'm socially liberal and economically left-wing. I'm shocked!

(tags:politics quiz viaDanielDWilliam )

Children from more disadvantaged families have fewer educational resources and parental support for home learning.

(tags:inequality school children pandemic )

Pizza Arbitrage - why the food delivery business is so awful

(tags:food delivery economics business Doom )

Dutch spies helped Britain's GCHQ break Argentine crypto during Falklands War

(tags:netherlands uk falklands cryptography history war )

What *are* are they teaching British kids about WWII?

(tags:wwii propaganda OhForFucksSake UK education )

Comments

[danieldwilliam]

For the record and for solicitation of further interesting comments ought I to post some of the thoughts from our chat about the Pizza Arbitrage here?

[andrewducker]

Please do!

[danieldwilliam]

Andy and I were chatting about the Pizza Arbitrage article earlier this morning.

Here are a couple of my messages

Some general scepticism on my part about "disruptive tech-firm start ups"

1) I think he's got a good point about ZIRP. I am greatly vexed by the amount of effort that in to making bad business models masquarade as tech firms to hoover up and lose vast sums of cash. Build railyways in Africa instead.

2) I would go further, I am yet to be convinced that businesses like Uber are not a deliberate confidence trick rather than a sincere but flawed attempt at a business.

3) I think it's more deep seated than that. There seems to be a fundamental problem of lots of cash being invested in business ideas that are never going to work or which appear to have fundamentally misunderstood their market.

Uber is a good example of it, the book part of getting a taxi could be better and cheaper but that's not where the costs of running a taxi business are.

4) AirBnB will be another, sure, letting out spare rooms is a neat idea, building a voracious platform for whole holiday rentals is a business, but, it relies on there not being a recession and governments not getting pissed off at what AirBnB platforms to their city centres.

Then we segued on to what to do with the oodles of cash washing around tech-firms instead.

Build railways in Africa I said - but there are some good reasons to not invest money in Africa and Latin America - they have institutions that don't work really well,

However, you could just invest the money in basic utilities in Africa and also invest in businesses in those countries and

1) I'm interested in what happens at the end of businesses like Uber and AirBnB and WeWork. What happens when it becomes apparant that Uber is not going to make money as a legitimate business and its attempt to beat anti-trust and labour regulations has failed. What happens when AirBnB hosts discover that renting a crap flat out in a mediocre city to holiday-renters is not a guaranteed income if everyone else is doing it too. and the taxman wants a cut. What happens when We Work discovers that when you don't match scheduled long-term rental income to scheduled long-term mortgage costs you end up with no cash pretty quickly and the bank wants their office back. What happens when people start to draw conclusions about lots of other "disruptive tech firms" and their actual ability to create a business with value in it.

I get the feeling that there is a lot of solutions in search of a problem, lots of tech entrepreneurs in the US who a have software hammer so everything looks like app nail.

But I think of the returns you would get if you spent the billions Uber are rinsing through on buying a
a mobile phone
a solar panel
an electric light
a sewing machine
a water filter

for every rural village in Africa and India

2) Perhaps the best way is to lend to the governments of eg Tanzania and let them build useful infrastructure and collect the loan payments from the villagers through tax.

Andy points out the bank rate in Tanzania is 13%. Comparted to 0.13% in the UK.

[anna_wing]

Roads, electricity and water and sanitation projects. Infrastructure is what many developing countries need, more than little interventions that might help a few individuals, but don't scale. Once there is a road, things improve by themselves. Even an unpaved road that can take a motorcycle or a pick-up makes the difference between getting your goods to market in two hours, rather than two days on horseback. Kids can get to school, people can get to medical care, hiking tourists can come by and spend money. Infrastructure in the right place is life-changing by itself. Clean water and sanitation raise all the development indices automatically.

Anyone old enough to remember the turn-of-the-century tech boom and best would have stayed well away from the hype around Uber and WeWork....

[jducoeur]

Some thoughts, from a different viewpoint. Among other things, I'm a small-scale entrepreneur -- CEO of my own little startup. It hasn't made any money yet (mostly because I'm rather too honest for the way the game is designed), but I've done my share of startup-CEO stuff, including giving pitches to VCs, going to their conferences, and so on. And I've been mostly startup-focused (albeit in the relatively sane world of Boston, rather than the Valley) for the past 20 years of my career as an engineer. So I know the good, bad and ugly of this world decently well.

Uber is a good example of it, the book part of getting a taxi could be better and cheaper but that's not where the costs of running a taxi business are.

Correct, although I think you're looking at it through the wrong lens. Uber understands that perfectly well.

A few years ago, I attended a fascinating panel composed of VCs and startup CEOs; one of the CEOs was founding a small, local, less-evil version of Uber, so conversation turned to that topic. The VCs were absolutely crystal-clear about why they found Uber attractive, and it had nothing to do with apps or software or fluffy stuff like that. What they liked was the way that it shifted the capital investment (that is, the car ownership) and risk away from the central owner (as it is in a taxi company) to the drivers, resulting in a much more capital-light company.

You can argue (quite persuasively, I think) that that's unethical. And it's clear that Uber's business model doesn't work nearly as well as they had hoped in a market that has actual competition, because their marketing costs are idiotically high. But the spherical-horse version of the business plan does actually make sense -- it was just never subjected to enough hard scrutiny in light of reality.

4) AirBnB will be another, sure, letting out spare rooms is a neat idea, building a voracious platform for whole holiday rentals is a business, but, it relies on there not being a recession and governments not getting pissed off at what AirBnB platforms to their city centres.

On the one hand, yes, but this is a true success-failure: an inability to realize that your company's enormous success will actually change society in noticeable ways. I'm not going to fault them too much for not seeing that one coming.

What happens when AirBnB hosts discover that renting a crap flat out in a mediocre city to holiday-renters is not a guaranteed income if everyone else is doing it too. and the taxman wants a cut.

That's true, but seems like it is predicated on "the users are stupid", and many really aren't. My family has been doing vacation rentals for 15 years now, and are deeply aware of the pros and cons of this particular platform. AirBnB is too monopolistic (and probably should have been prevented from acquiring competitors like VRBO), but their business plan is sound and sensible. It just turns out that it gets *used* far too much in some specific areas, which causes societal ills, and they couldn't really plan for a pandemic, neither of which is the sort of thing one pictures in business plans.

However, you could just invest the money in basic utilities in Africa and also invest in businesses in those countries and

In principle, sure -- in practice, the devil is in the details. Dealing with often-corrupt governments and poor infrastructure are each hard; dealing with both at once is dauntingly difficult. And serious attempts to tackle those issues very quickly raise reasonable accusations of colonialism.

Tackling something like that as philanthropy, with an explicit acceptance that you might lose it all for no gain -- sure. But spinning it as a sensible investment with a good risk/reward is challenging. Not necessarily impossible, and I'd love to see more folks try, but it requires a *lot* of guts on everyone's part. And for all that they paint themselves as brave masters of the universe, courage is *not* a common trait among The Money, most of whom are follow-the-herd cowards.

Andy points out the bank rate in Tanzania is 13%. Comparted to 0.13% in the UK.

Absolutely true -- but what is the risk of default? Loans always have to take that into account: the chance of losing much or all of your money is *vastly* higher in much of the developing world, whereas the risk is generally considered to be nearly zero somewhere like the UK or US.

So while I agree that this is a reasonable thing to do, it's by no means a no-brainer: you always have to do hard risk/reward calculations if you're going to treat something as an actual investment.

[andrewducker]

Thank you for that, that was fascinating.

[calimac]

2. The political-values test says that many such tests "attempt to spin the questions to have the respondent come out in agreement with their own political view." True, but I've taken the well-known slanted libertarian test and came out the same conventional left-liberal I've always been.

However, I mostly avoid such tests because my response to the questions doesn't fit onto the sliding agree/disagree scale offered. That's certainly true of the first question which is all you can see until you answer it. (I hate tests that don't let you review the whole thing before responding.)

4. The main lesson I took away (sorry) from this is: if ordering food by phone, don't use the number on Yelp. Check the restaurant's own website.

[conuly]

4. The main lesson I took away (sorry) from this is: if ordering food by phone, don't use the number on Yelp. Check the restaurant's own website.

Or any of those companies. Always go straight to the source.

[cmcmck]

So am I!

Who knew eh? :o)

[conuly]

That shark post, though. Some people just have no sense of humor.

[anna_wing]

My closest match is democratic socialism, which doesn't surprise me, though obviously all those questions were geared to a very specific ideological approach. Utilitarian consequentialism doesn't seem to be in their philosophical spectrum at all.