Disgusted with the California Budget
First, let me apologize for the posting lull. I’ve been busy with work and also struggling with a sinus issue that has sapped my discretionary intellectual energy. But enough about me.
In honor of California’s special election on budget measures, I thought I’d shed a little light on the fundamental problem. Contrary to what polticians are saying, the cause of the budget problem is not falling revenues in a recession. Rather, the cause is a dramatic increase in spending over the last 10 years.
On the Advice of Counsel…
Yesterday, the attorney for my new company advised me that I should be careful about what I disclose to the public about the company’s activities. The company operates in a highly regulated field. Evidently, any open discussion of what the company does, especially of any offerings it may or may not hypothetically be considering, could be construed as a solicitation.
From an economics point of view, I think that such restrictions, however well meaning their original intent, tend to merely protect incumbents from competition. Nevertheless, I obviously don’t want the company to get into any trouble. Therefore, I have edited or redacted any potentially problematic revelations from these posts
- What I’m Working On: Supercharging Innovation
- Revolutionizing Angel Funding
- You Can’t Pick Winners at the Seed Stage
If you have any questions, post a comment here and I will contact you privately.
Even Assuming Global Warming, We Shouldn't Worry?
In order for you to believe we should do something about anthropogenic global warming (AGW) such as impose a carbon tax, you really need to believe all of these things:
- CO2 causes a direct temperature increase
- Positive feedbacks amplify the direct temperature increase several fold
- The effects on humans of the total temperature increase are significantly bad
- The cost of reducing CO2 emissions is less than the bad effects we can avoid
Nearly all scientifically literate skeptics agree with (1). Most typically argue against points (2) and (4). Indur M. Golakny has a nice series of posts over at Watts Up With That that looks at (3).
You Can’t Pick Winners at the Seed Stage
[EDITED 05/08/2009: see here] The majority of people I’ve talked to like the idea of revolutionizing angel funding. Among the skeptical minority, there are several common objections. Perhaps the weakest is that individual angels can pick winners at the seed stage.
Now, those who make this objection usually don’t state it that bluntly. They might say that investors need technical expertise to evaluate the feasibility of a technology, or industry expertise to evaluate the likelihood of demand materializing, or business expertise to evaluate the evaluate the plausibility of the revenue model. But whatever the detailed form of the assertion, it is predicated upon angels possessing specialized knowledge that allows them to reliably predict the future success of seed-stage companies in which they invest.
It should be no surprise to readers that I find this assertion hard to defend. Given the difficulty in principle of predicting the future state of a complex system given its initial state, one should produce very strong evidence to make such a claim and I haven’t seen any from proponents of angels’ abilities. Moreover, the general evidence of human’s ability to predict these sorts of outcomes makes it unlikely for a person to have a significant degree of forecasting skill in this area.
Revolutionizing Angel Funding
[EDITED 05/08/2009: see here] We are finally ready to go semi-public with our revolutionary new angel funding concept! For the last year, Dave Lambert (the Tiltboy also known as Diceboy) and I have been working on an alternative mechanism for delivering seed funding to technology companies. [REDACTED 05/08/2009: see here].
Here’s the summary. The market for seed capital is clearly broken. Most individual angels will only do about 1 deal per year, which means their portfolios lose money 40% of the time due to insufficient diversification. Even premier angel groups like the Band of Angels say they only do about 8 deals per year. Our math says you need to do 125 to achieve good diversification. On the other side of the table, only 14% of entrepreneurs who want angel funding will find it. Those that do will spend about 6 months looking for money instead of building their businesses.
This is a sorry state of affairs for a market where the overall annual return is 25%+. Here’s a straightforward application of portfolio theory that can fix it. Have a large enough pool of money so one entity can do 125-200 deals per year. Then use an online screening process to give founders a yes or no in two weeks. Obviously, there are a ton of details beyond this, but those are what we’ve spent the last year figuring out. If you’re curious, let me know in a comment here and I will contact you privately.[Links to files REDACTED 05/08/2009: see here].
More Environmental Tradeoffs
The Corporate Average Fuel Economy (CAFE) standards will rise from 27.5 mpg to 35 mpg from now until 2020. That should decrease any pollutant associated with burning fossils fuels. All good, right? Wrong.
There is a trade off in safety. You are much more likely to die in a small car. The WSJ Online reports on a recent Insurance Insititute for Highway Safety (IIHS) study that shows small cars like the Honda Fit and Toyota Yaris fair very poorly in two-car frontal offset crash tests against the Honda Accord and Toyota Camry. This is against mid-sized cars from the same manufacturer, so a reasonable comparison.
Looking Forward to the Sports Injury Revolution
When I was 16, I dislocated my elbow. The ensuing re-injuries and calcification of the ligaments ended my competitive wrestling career. Last year, I separated my shoulder and while it’s pretty well healed, it’s going to have some annoying weaknesses the rest of my life.
I’m not the only one. Most of the people I know who have been reasonably active through age 40 have some sort of permanent impairment from a ligament, cartilage, or tendon injury. Today, I was wondering if extracellular matrix (ECM) might be the answer.
Supplementation Report: Quercetin
I’ve been taking quercetin for a few months now and thought I’d report on my experience. As you can see from the Wikipedia link, quercetin is believed to have anti-inflammatory and anti-tumor properties. This is not why I’m taking it.
Rather, I had a record number of colds this season. 4 major ones from Thanksgiving to mid-Feb. I have been training unusually hard for the last year and an increased incidence of upper respiratory infections (URIs) is a known problem for endurance athletes. A little research turned up this article where quercetin reduced the incidence of URIs in marathoners.
If I Were In Charge, Health Care Edition
I have no desire to be in charge. I’d have to suffer too many fools and forego too much sleep. But I take comfort from knowing that, if I were in charge, I could confidently propose solutions to many of the common problems politicians hem and haw about. It’s not just that I’m smarter and better trained than most of them, I simply wouldn’t care about getting re-elected. So the obvious solutions that piss people off would be fine with me.
Unfortunately, health care is not one of these problems. The solution really isn’t obvious. So I’ve been thinking about it lately. I’ve got some preliminary ideas that I’d like to share. But be nice. I’m not saying these are the answers. They are just the best out-of-the-box thinking I’ve been able to come up with so far.
Approaching the Singularity from Two Points
I happened to come across two interesting posts with Singularity implications that I thought you might be interested in. First, the Singularity Hub reports that Osiris has a promising phase II trial underway for a treatment that uses foreign stem cells to repair the muscle damage from heart attacks. If you’re about 40 like Rafe and I, this means your chances of dying from heart disease could go way down. Now if we can just make some progress on cancer, we’ll be centenarians.
Second, via Prometheus, Wired reports on a robot-software combination that was able to generate, test, and refine it’s own hypotheses to identify coding for orphan enzymes in yeast. Obviously, this is a very special purpose kind of science. But the fact they got a closed loop is very impressive. I also like the fact that it’s in the biological sciences. Hey, maybe some descendant of this program can solve the aformentioned cancer problem.
Possible Insight 