Book Review: The American Way of Eating

I rather enjoyed The American Way of Eating though it's one of those books that you find yourself partly wishing you hadn't read. Ignorance is bliss, etc.

The author, Tracie McMillan, spent a year "undercover" (I place it in quotes because she was sometimes honest about what she was up to, other times not) working in America's food chain. The book chronicles her time spent working in crop fields in California, in a Walmart produce department in Detroit, and at an Applebee's in Brooklyn.

Through all of these, she covers three elements: the role each plays in our food distribution system and how it has evolved over time, the people she meets and how they live and work, and her own attempt to survive on minimum wage (or less).

There are also some 'side trip' portions where she examines food stamp programs to encourage produce consumption, urban community gardens, etc.

Through these, the book is sort of a mash-up of Nickel and Dimed, and Fast Food Nation. Like both of those, it's both an engaging read and strong social commentary. I learned a lot and the book will affect how I look at food and how I choose to consume it.

Consider reading it, it's an important book.

The American Way of Eating: Undercover at Walmart, Applebee's, Farm Fields and the Dinner Table

Book Review: The Age of Turbulence

It took me a while to get through Alan Greenspan's The Age of Turbulence , but it was well worth it.

The book can be thought of as a combination of three things, in overlapping parts. First, Greenspan's autobiography, focusing on the parts of his upbringing and career that led to his chairing the federal reserve. Secondly, a modern history of economics, US economic policy and of the past seven presidential administrations with which he worked, and of his assessment of the state of international economics and its major players. Third, it serves as his assessment of where things are heading, reviewing the major drivers that in his view affect his forecast of the next twenty five years (through 2030 - the book was published in 2007)

One of the two things I liked most about the book as the behind-the-scenes look at his relationship with all the Presidents he got the chance to work with (Presidents Nixon, Ford, Carter, Reagan, Bush I, Clinton, and Bush II). He cites Clinton as the smartest, followed by Nixon (though he found him paranoid and with a worrisome mean streak), and he had some fairly scathing words for G.W. Bush and his policies erasing the budget surpluses that Clinton had helped grow.

The other thing I liked most was that I found the book to be a good crash course in world economics, given from the perspective of someone who developed relationships with many of the world's leaders and/or their chief economists. His view of the future may or may not be correct (see criticisms below) but his view of the factors shaping the future comes from a perspective few others can offer and seems to stand up to scrutiny.

The major criticisms of the book that most seem to raise come from two perspectives. First, he's an unabashed believer in free-market capitalism, and many think his ideology clouds his judgement. This may be the case, but regardless I think he's able to see things with some degree of objectivity. He is above all data-driven, which in most cases keeps his ideology in check.

That said, the second major criticism of the book, related to the above, is that his belief in minimally-regulated free markets, was a major contributor to the housing crisis of recent years, and that even at the time of writing as it seemed the economy was on the edge of a cliff, he didn't see it. This may be true, but I saw a silver lining in this aspect. It's in this aspect of the book that you can see confirmation bias at work, and I found it a sobering reminder than even those with deep expertise are susceptible - perhaps even more so - to such failings.

It's a pretty hefty book to get through but I thought it worth doing so.

The Age of Turbulence: Adventures in a New World

Book Review: Panic!

I really enjoyed Michael Lewis' The Big Short, and so when I saw this previous work at the local library I picked it up.

Panic: The Story of Modern Financial Insanity, is *edited* by Lewis, but is really an anthology of articles from WSJ and other financial news outlets. The book takes a look the last few big financial market panics (the 'black monday' of '87, the Russian crisis, the southeast Asian currency crisis, the dot-com bubble, and the recent real estate crash) and takes select pieces of reporting from before, during, and after each of those panics.

When viewed as whole one is led inevitably conclude three things:

1. That no matter how many instances of "irrational exuberance" we go through, we never learn. We have innate ability to believe that this time it's different. The ability for amateur investors, professional investors, economists and reporters to collectively lose touch with reality and start drinking each other's kool-aid is *amazing*.
2. That after panic hits, after the bomb goes off, and when people finally pop their heads out again, everyone has an equally amazing ability to claim that they knew this was going to occur, and that they called it ahead of time. This level of revisionist history is somewhat akin to how every friend you have that went to Vegas has convinced themselves that they returned "up a couple bucks" (they didn't. Somone is paying for those hotels).
3. That in both the run up to the peak and in the panic afterward, the press is not only not objective, but possibly an even greater contributor to the mob mentality than the investors they later blame for it. Examples from the dot-com era here were an awesome example, buying hook-line-and-sinker the pitch that fundamentals no longer applied and that it was about a land grab now in favor of user revenues later - the press *loved* this story and sang it to whomever would listen.

Some critics of the book claim that the analysis here isn't deep enough, and that solutions to the crisis (or future ones) weren't offered or expanded on. However, I don't think this is the point. I think the book is a valuable one if only to view how important it is to lift your head up from whatever current trending thought there is and ask yourself if there isn't myopic group think happening once again.

In this sense, the book serves it's purpose, and so provides insight as well as a fun little history lesson.

Panic: The Story of Modern Financial Insanity

Book Review: Outrageous Fortunes

Did this one as an audio book. It's not bad, but has some flaws.

Outrageous Fortunes is a look at "Twelve Trends That Will Shape the Global Economy". They are mostly macro-economic and political trends that the author claims will shape the world in ways that most pundits aren't predicting.

Ideas covered range from predicting a stemming of China's growth curve, to theorizing about the potential collapse of the World Trade Organization and what might follow in its wake.

I'm not sure I believe all the theories presented in the book. I'm not versed enough in most of the subject matter to call the author out on any of them, but it does seem like he's as single-minded in some of his predictions as the pundits he's claiming are getting it wrong.

Regardless, I do like the contrarian thinking, and the gaming out he does in approaching some of these ideas. At the very least, it'll get you thinking about implications of some of these things.

Outrageous Fortunes: The Twelve Surprising Trends That Will Reshape the Global Economy

Book Review: The Undercover Economist

Another disappointment. Bought this one on a whim from a sale shelf at Powell's, figuring I'd found a Freakonomics-style lightweight tour through different businesses.

Instead The Undercover Economist was, IMHO, difficult to tolerate. There were some good explanations of basic economic theory. However I found the tone overconfident, and many of the examples poorly investigated, or at least lacking the backing material to support his cases. Thus, I can't recommend it.

Book Review: Secrets of the Moneylab

This book surprised me and is probably one of my favorites of the year, at least as it is really timely for our industry, as I'll soon explain.

Technology companies generally have laboratories in which they do research & experimentation. Game developers often do so as well. Perhaps not formally in R&D labs (though some of the larger publishers have them), but certainly doing experiments for new rendering techniques, AI models, physics experiments, etc.

For all this though, it's surprising how little science is put into the business side of the business. Things like pricing, to pick one example, are often done using some gut-feel starting point and by following competition.

Kay-Yut Chen, author of Secrets of the Moneylab, runs a lab at Hewlett Packard. He is also an economist. The lab he runs does research on behavioral economics and it's application in the tech industry. The book runs through experiments they did on consumer pricing, marketing, supply chain management, and much more. Also, they look at a number of different experiments from different industries.

Why is this so timely?

Consider the point made by Neal Young of NGMoco at his GDC2010 keynote, where he said that for the first time in the games industry, the business model is in the hands of the game designers. Add to that the fact that digital distribution channels and competing appstores will mean that developers have the opportunity to try many different experiments as they bring their games to market on different platforms (Something Dave Edery at Spry Fox has been doing).

Success on these emerging platforms is going to come from people's ability to put some science into the business side of their business, and this book provides an excellent start to getting your head around that kind of thinking.

Secrets of the Moneylab: How Behavioral Economics Can Improve Your Business

[note: I'm post-dating a couple of these posts as I didn't have a chance to sync them while I was travelling, and I like to track by when I read the book]

Book Review: Free

Free: The Future of a Radical Price

Man, I really wanted to not like this book. I'm not sure any other book has been cited, oft out of context, to me over the past year. The fact it was cited to me to make points I disagreed was what made me want to read it. I realized it was often being cited incorrectly or out of context, but did have other issues with the book.

After reading it, while I *do* have issues with it, I have to highly recommend it nonetheless.

The basic thesis is as follows: As the marginal cost of creating & delivering a product drops towards zero, its price will do the same. It then goes on to discuss how when the price goes to zero, interesting things happen.

The thesis is sound. And the important part relevant to many cases cited (e.g. print, music) is that when the cost of *creation* of the product is near zero, then you have a market where the cost of delivery is the biggest factor, and when that falls to zero, things go non-linear. (Divide by zero = undefined :-)

I agree with this 100%, and it's clearly had huge impact in many areas, some of which are cited in the book. Craigslist decimates Newspaper classifieds. Online distribution completely tips the music industry on it's side, Amateur journalism gives pro a run for its money, etc.

There are a couple issues I have with the book:

1. Inconsistent definition of "Free". The author cites many different versions of 'free', some of which have been around a long time. Take for example "free prize inside". Early in the book, he points out that this isn't really what he means by free, because it's just bundled into the price of the product. Yet later in the book, he cites this as an example model of free. I think this a case of the author falling into the very common trap of trying to stretch the thesis too far. This happens a lot in business books, and it's a shame, because it dulls and confuses the fundamental point, which is a really good one.
2. The author doesn't adequately take the cost of creating the product into account. He mentions it, but often only looks at the cost of distributing the product. He gets around this by saying that when the product is made of bits, the distribution cost goes to zero, the development cost is sunk, and therefore can be viewed as negligible. However, there are two cases where the cost of development cannot be ignored. One is when the market for a product is limited. At the end of the day, the development cost has to be distributed across the total customer base, and if that is finite, then lowering your distribution costs may let you get more efficient, but once you saturate the market, that's it. The second issue (and it's kind of the same) is when the cost of developing the product is really high. If you made a film that takes $100M to produce, and you beleive it has a market of 100M people, then the per user cost doesn't go to zero, it goes to $1 (given perfect efficiency, etc). Anyhow, I would have liked this more thoroughly taken into account.
3. Free doesn't exist in a vaccuum. While the simple thesis looks at cost of developing a product and cost of distributing the product, these are only a couple factors. Lip service is paid to things like cost of supporting a product, shelf life of a product, value of scarcity (real or perceived), value of exclusivity (real or perceived), etc. While these are mentioned, it is only in passing. Depending on the product or business being looked at, the value of these things may be a signficant factor that needs to be taken into account.

These issues aside, the book is highly recommended. At the very least it'll give you some food for thought about your business. As a bonus, there are many examples included from the games space, including demos/trials, freemimum models, etc.

I'll post another set of thoughts about some implications for the games industry when I get a few moments.

Book Review: The Post-American World

I listened through The Post-American World in audio form during a drive up to Seattle and back, and then finished it off during this week's commute.

The author talks about the rise of, well, everyone, but in particular China and India, and how this results not in America's downfall, but in the inevitable erosion of America's leadership as everyone else catches up. He compares and contrasts this with the fall of the British empire and other periods of history. Plenty of interesting history here, and also large numbers of impressive statistics and anecdotes to drive home the scale of Chinese and Indian growth (in case you don't already get it).

There's a prescriptive close to the book that is a little dated (I think it was written 'pre-Obama', but published post-Obama) but mostly still holds. It should be mandatory reading for everyone in government!

The Numbers

I was in SFO last week and hooked up for a conversation with a developer friend after my meetings, etc.

Among the many topics discussed, he raised some concerns about our industry's lack of "sharing" numbers. (Further conversation defined 'sharing' as 'widely available numbers through sharing/leaking/research/analysts/etc'). The conversation was precipitated from a discussion of Valve's disclosure of some numbers last week, the coverage of which didn't discuss some of the titles/genres that haven't fared as well on Steam (some titles that have been released on PSN, WiiWare, etc, are rumored to have fared far better than on XBLA's 

I pointed to VG Chartz as one example of how people are making some numbers available (whether released or reverse-engineered in the case of XBLA titles).

As a comparison point, he pointed me to the AWESOME site, The Numbers, which covers the movie industry and has just about every data point you'd ever want to pull.

He cited this as an example of a different attitude to sharing numbers within Hollywood. I beleived it was a symptom of supply and demand. Bigger industry, more demand for the numbers, more people figuring out ways to make money off covering that scene. I think we'll get there over time, though a change in attitude could possibly accelerate it.

Now, as a cleansing sorbet: a couple tidbits off this site:

For those that continue to beleive this crazy notion that games are bigger than hollywood (less beleived these days), I offer the following:

GTA 4 was projected to do as much as $400M. Some claim WoW as the biggest with perhaps $1B in lifetime revenue.

Titanic did $600M[corrected from B] in box office receipts. Wall-E did $112M... in DVD sales... in two weeks.

Oh, and the top grossing *franchise* of all time? James Bond at almost $5B dollars WW gross to date. Narrowly beating out Harry Potter and Star Wars. I did my bit by going to see Quantum of Solace last night.

We are clearly still a spec on Hollywood's radar. For now...

Economy: Well, at least we all agree

I was at a business dinner last night where the subject of the economy came up. Opinions ranged from "everything back to normal in 6 months" to "slump for 3-4 years".

At least the games publishers are in agreement. From back-to-back articles on Gamasutra:

Ubisoft: Next year will be great! Yay!

Take Two: It doesn't look promising! Boo!

Microsoft: There'll be some impact, but we're pretty comfortable! Meh!

Brash Entertainment unavailable for comment!

It should be noted that the comments above were mostly in response to questions about this holiday season's sales. On that front, I fall in the camp of 'modest impact'. 

PS3 as the pricier platform is going to feel some hurt. Nintendo's going to further rocket ahead due to their price-focused hail mary with the Wii. Good for them. Xbox should do well too, offering value beyond the PS3 for the hardcore gamer. Title sales should be fine for the A titles, but I wonder whether the falloff curve for B titles will be steeper.

I'm really pessimistic about long-term prospects though. I think pubs are going to tighten the reins on any projects they don't feel are absolutely on track and solid prospects for AAA hits, which means a lot of projects that would have stayed afloat previously now will get canned. That's going to mean a lot of studios having the rug pulled out from under them, and if they aren't sitting on a pile of cash (and many aren't), there's no access to credit to make payroll & keep projects alive while they line up a new publisher. I really hope I'm wrong.

I had a lunch discussion with someone yesterday about a studio we'd done some work with that went under when their publisher funding got cut. Someone commented that it was stupid to be running a high-burn rate operation with no cash in the bank.

I made the analogy that it was like playing poker in the following situation: You are short stack or perhaps close to it. You don't have the money to buy in, but someone is willing to back you. You manage to double up every couple hands, but to your frustration, the blinds are actually doubling every couple hands as well. You are constantly at risk of getting blinded out. Logic would dictate that you go to another table with smaller stakes, but you look around and realize the other tables are playing blackjack, baccarat, etc, and you only know how (or only want) to play poker. You keep having to turn to your backer and ask for a little bit of money to buy in. If he at some point says he wants his money back, you're done.

The 'other tables' here might be XBLA, iPhone or Facebook games, but if you are a 30-person studio building a big FPS or MMO, that's not exactly an easy switch of gears.

The Virtual World Taxman Cometh

As aluded to previously, we all knew it was coming.

Raph points us to this: Virtual Worlds News: China Levies 20% Tax on Virtual Currencies

And notes:

[the ruling] seems to apply whether or not the value is cashed out.

(and goes on to note)

However, if the value is not cashed out and taxes are still paid, that could mean (maybe should mean) that the companies are liable if they manage to accidentally delete some of it. In other words, they’re banks.

I commented on his post that non-Chinese MMOs like Wow are probably glad they licensed the right to run servers in that country to other parties. Boggles the mind to think how something like this would apply, be determined, be policed, etc, if numerous countries were to institute similar laws. Thousands of individuals all paying taxes on income incurred in other countries (where the servers reside), and businesses in some cases being run from elsewhere than where the servers reside. Blech. What a mess!

It's already moderately messy to do taxes for, say, stock purchases & sales, if you do anything moderately frequent in the way of trading. Now imagine that on a micro-scale at an accelerated pace. 

As I understand it, in the USA, Internet commerce has been relatively hands-off in the area of taxation; as an incentive to promote growth. However that can't last forever, can it? At some point, growth has happened. Plus, no one is doing VW business in the US only going forward. 

This whole idea of 'countries' is obsolete :-)

Don't know much about History...

In researching some stuff for work, I ended up out in the weeds a bit and came across two fascinating (and unrelated) bits of history that I highly recommend reading.

If they share anything in common, it's an element of 'strange factors and events in history have had ramifications on the way things work today'.

First up:

This Q&A with the author of a book on the history of counterfeiting, which goes quite a bit into the history of currency and banking in this country. Really interesting.

And secondly:

This overview of the Berlin Airlift, a pivotal point early in the cold war, and a logistics effort that would spawn techniques and devices still used in modern manufacturing and shipping today. I can't beleive this was never made into a movie!