1) Hat tip to Information Processing for linking to Inside the Law School Scam, which makes the compelling case the average law school grad has a starting salary of less than $40,000 per year. That is on par with the salary of a science teacher.

2) Massachusetts Institute of Technology has announced the launch of MIT.X, in which non-enrolled students can take MIT courses online and receive certification for a nominal fee.  The elephant in the room is whether this will one day be transferable credit to other colleges.  It is easy to picture students tallying up 1-2 years worth of courses, then transferring them to their current university, effectively halving their tuition.

Google has announced a trial launch of a quick-delivery service for retailers.  The details are still murky, but it makes me wonder: is bricks-and-mortar retail about to undergo a major shift?  With WebVan considered the biggest flop of the DotCom bubble, it is easy to be skeptical about paradigm shifts in retail.  But I would make the case that widespread home delivery is on the horizon.

There are two types of retail experiences: shopping for enjoyment and shopping for necessity. Sometimes a store can combine the two, like Target, but in most cases it is an insurmountable divide.  It is the latter category–shopping for necessity–where the most progress can be made. Picking up groceries after work will never be particularly enjoyable. Going to Walgreens at 11PM to buy shaving cream will always be an annoyance.  It would make my life much easier if I had an app that made my shopping lists for me. I schedule a time for same-day delivery and forget it.

If you add up time-savings and gas over a year, it becomes significant.  In extreme cases, the savings could be 10%+ of a person’s income.  This means there are large economic incentives for bringing this service to market. The problem is that until recently the scaling costs were high, which kept it a niche service for large cities and the affluent.  With major developments in warehouse robotics and machine learning, this is beginning to change.  I would suggest there will be a coalescence of technological and economic factors to make home-delivery for consumer staples the norm by 2017 ± 1 year.

Via Liberty Street Economics.  As the chart below shows, our economy increasingly rewards certain “good” jobs.  One common factor is that they are all fairly data-intensive.

Perhaps I’m way off on this, but I look at these professions –like computers, math, finance, and social science–and can’t help but think a computer will be doing these jobs in ten years. Perhaps more realistically, computers will enable the top 20-30% of people in these fields to reap most of the rewards, while others increasingly find their skill sets devalued.  Perhaps 2015 will be the high-water mark for the data-intensive “good jobs” that simply require a skillset and a pulse.   Note that the legal field saw some of the biggest increases over the past decades, but judging from recent data, starting salaries have effectively plateaued at 2009 levels.

More in under-reported news….Stanford has announced it will release 10 free computer science courses for Winter 2012. Subjects will range from Entrepreneurship to fairly advanced classes in Machine Learning. While a student cannot earn any sort of degree or formal certificate with the classes, they still track roughly with the actual Stanford classes. The actual Stanford courses seem to have more in-depth assignments though, which a motivated student can still complete at his or her leisure. The coursework will be graded by AI.

A few things:
1) At first, I thought this would hurt the for-profit schools the most. But I’m beginning to have doubts. Despite their massive flaws, the for-profits are still living in the 21st century and likely aware of the changing competitive landscape. The non-profits, on the other hand, increasingly look like out-of-touch, Luddite institutions.

2) It’s a matter of time before this technological trend bleeds into subject areas other than computer science. In the immediate future, the course software could easily be applied to most other quantitative fields. As Natural Language Processing improves, you will likely see online courses in grammar and composition. This could arguably provide more value and feedback than the standard freshman English course.

3) As the New York Times reported, leading universities may use these courses to blur the the line between high school and college.

4)While this may not kill undergraduate education, it has a real possibility to put a dent in graduate programs, which can be a cash cows for universities.

I’ve always thought there were two basic flavors of rent-seeking: the public sector kind and the private sector kind. The first typically couches itself in blue-collar entitlement, even if the paychecks are anything but blue collar (See: the $90k garbageman). For the private sector rent-seekers, it’s a far more subtle art–their canvas being corporate boardrooms, charity events, and country clubs of America; the oils being the coded language and norms of Waspdom. The electorate typically tolerates this subtle display until the private sector rent-seekers do something not so subtle–like say, blowing up the world economy. Then later receiving a bonus for it.

There is a great paper making the rounds right now (via EconLog), “Ivies, Extracurriculars, and Exclusion: Elite Employers use of education credentials.” It documents the hiring process for elite firms in consulting, investment banking, and law. There are some real gems.

First, what do most hiring managers value? In order: school prestige, extracurriculars, grades, and employment prestige.

Work experience, track record, major…not so much.

Of course, most hiring managers present it as hiring the best and brightest. But compare this to the hiring practices in the tech industry, which does in fact hire the best and brightest.  The tech industry is the most competitive and likely the most lucrative.  On the venture capital side of tech industry, it often takes a proven track record to break in (a common complaint among MBA’s and finance majors). So it’s odd that an industry that so heavily recruits the best and brightest also scrutinizes professional track records and work experience so closely.  T0 a certain extent, the hiring practices of the tech industry are the inverse of those above.

I suspect for consulting, investment banking, and law, the hiring practices are mostly about branding and building the future roladex of the company.  One anonymous hiring manager put it candidly about potential employees:

[An employee] will probably quit in two years, but I want people from Yale Law to walk through our doors. They are highly unlikely to be failing at life and she could potentially one day be a judge or a congresswoman, or a client, or a politician. And if she has a connection to our firm, it bodes well for us in the future.

The relative merits of an employee’s work product are not mentioned.

Google Instant Search is an interesting thing. For example, this Holiday Season, if you type in “where can I get a…”, you’ll be able to locate a new IPad or an abortion clinic, depending on your needs. Try out enough different queries and you see a noticeable pattern: kids are increasingly turning to the internet for advice on things both big and small.

Go on, you too can get answers to those age old questions like:
“Why aren’t my breasts getting bigger?”
“How do I tell a girl I like her?”
“Why do my parents hate me?”
“Where does Justin Bieber live?”

It all seems fairly innocuous now, but as the Internet evolves into an all-immersive, Being John Malcovich-like tunnel system of the collective consciousness, it makes me wonder: will parents, like you know, become irrelevant?

I’m a big proponent of the idea there will be a seismic, cultural shift for the generation being born today. Many of the things we consider to be permanent fixtures of civilization will likely have little relevance for these children.  The Internet raising a generation of kids will be yet another layer to this onion.

This will sound presumptuous with Apple having a market cap of $320 billion and me being a random internet blogger, but I’ll say it anyway.  If Apple stays on its current course it will likely face upheaval in its business model.

Two trends are at work. First, mobile device manufacturers are catching up to Apple.   Further out on the timeline, hardware will become so commoditized and inexpensive that some unexpected players will enter the market: namely, apparel manufacturers.  It’s this latter trend what would keep me up at night if I were an Apple executive.

Trend #1: It’s not news that Apple is beginning to see a pullback.   As the Wall Street Journal noted, relative to the S&P 500  Apple’s pullback began in September.

Source: Wall Street Journal

Okay, so no big deal. It’s just a minor downturn until the Ipad3 comes out, right?

Well, two things. The premature (and likely, avoidable) death of Steve Jobs was a bodyblow to the Apple’s advertising and branding — particularly in a time where advertising is undergoing a seismic shift.  Regardless of what people think of Jobs as an inventor or as a person, one thing is certain: he’s right up there with Warren Buffet in his virtuosity to manage/manipulate public opinion. While this may sound cynical, Apple is a business. When a business loses a charismatic figurehead who can cut through the white noise and convince consumers “it’s not really about the money”,  it translates into a financial loss.

Secondly, on the mobile front, Apple is running out of options to land the next big device. Apple will likely continue to develop more polished products than its competitors, but it has lost its ability to catch them off-guard.  How did Apple do this for the past several years? Several reasons.

It brought polished mobile products to market several months ahead of its competitors, and to do so, charged a premium.  In reality, they could charge even higher prices based on a streamlined retail experience and brand loyalty.  Secondly, it would often tie up the global supply chain to further delay the competition.  BusinessWeek has a good article on this. 

"Stay hungry. Stay foolish."

There are still some fairly amazing features yet to be added to mobile devices, like pico projectors, but they are exactly that, features, not entirely new devices themselves. Apple may be the first to bring them to market, but competitors will likely be close behind.   And the closer the release dates, the more it becomes about price. That is a battle Apple would like to avoid.

But what about Siri?  It sounds heretical, but I don’t think voice-command is the future of mobile search. There is definitely a place for it, but the most natural use for Siri is in your car.  It is more plausible to have a powerful computer built into your car — which will likely be your primary voice-operated personal assistant — than to delegate to your cellphone.   Of the big tech companies, who is making the biggest strides in the automotive industry? So far, Microsoft. And obviously Google is doing amazing things of its own. If Apple is going to move on the automotive front, it needs to be soon.

Moreover, I suspect future search engines will be more like predictive suggestion engines or advice engines, with the end user playing a more passive role. With the advancements in machine learning, I think this is closer to reality than most people realize.  Data is a premium for any company in this field. In that regard, it would seem that Google is winning.

The only other “next big mobile device” I can see on the horizon is an augmented reality device (video projected on top your surroundings) or a virtual reality device (TV glasses). It sounds SciFi, but Apple filed a patent for a virtual reality device. Sony recently released the HMZ-T1 virtual reality device in Japan for $800.  So far, the only retail augmented reality device I can find is the Vuzix VR1200, which retails for $600.

Some observations about these devices. They are crude first attempts. In my even cruder estimation, it will likely be at least two years before we see an affordable, consumer-ready virtual reality device. For augmented reality, it will likely be longer.  More importantly, most major electronics companies see the potential in this. Hell, anyone can see the potential in this.  So unless Apple brings these to market soon, it will likely be a crowded field.

Trend #2:  I see this playing out over the long-term horizon (maybe 5+ years).  If you look at current mobile devices, there are some undeniable trends at play.

• Mobile devices are becoming smaller and more powerful, more or less on schedule with Moore’s Law.
• There is a trend towards flexible displays in the immediate future. 
• The power efficiency of devices is increasing exponentially.
• Innovations will fundamentally alter battery storage stretching battery life out into days or weeks.

Some may indignantly ask, “So what?”

It’s not hard to imagine mobile technology ultimately blurring the line between electronics and apparel/accessories.  If this sounds far-fetched, then realize Apple is aware of this trend.  In 2010, they hired on Richard DeVaul, an expert in wearable computers.  (He was subsequently hired by Google).

We’re already seeing the beginnings of this trend with the Nike Sportwatch+ and the Motorola ACTV.  These devices are just the primitive first steps.   It’s not that much more of a stretch, if you take Moore’s Law seriously, to imagine that hardware will become so inexpensive and commoditized, that apparel companies will be among the main players in the mobile market.

Consider one example scenario: a partnership between Apple and an apparel company. While Apple has the experience on the hardware side, apparel companies will have the overwhelming advantage in advertising and marketing.  Moreover, as time progresses,  it will be easier for apparel companies to embed computers in accessories or clothing than for Apple to make and market apparel.

This presents problems.  First, if Apple were to partner with say, Gucci, it introduces a barrier between Apple and consumers.  While these sort of partnerships can start off nicely, technological change can fundamentally alter the dynamics of the relationship.  Look at Amazon and Borders.   Secondly, for every pair of Gucci+Apple glasses sold at Nordstrom, that is one less customer walking into the Apple store, which has been a big part of their success to date.

Of course, the other option is for Apple to start making accessories themselves.  But does Apple really want to do that? I just can’t see it.

Perhaps this is why it was so incredibly short-sighted for some to dismiss the emergence of the Android operating system.   The amount of money Google makes from it is inconsequential. But if Android becomes the dominant mobile OS now, then it is much more likely that Google search will dominate in a world where wireless technology is ubiquitous and everything is interconnected — from wallets to televisions.  If that happens then Google will enjoy a comfortable software perch from which it can see hardware companies below scrambling to adapt, one of which may be Apple.

I’m not saying all of this will come to pass. After all, I’m just a blogger. But if I were an Apple executive, it would keep me awake at night.

I’ve just about finished Throw Them All Out by Peter Schweizer.  Most of his books have a strong right-wing bent.  I’m still glad to have read this, as I feel it’s one of the more important political books to come out this year. It deals with Congressional insider trading and rampant graft.

Consider former Speaker of the House, Dennis Hastert. According to Schweizer, he had a net worth of roughly $300,000 when he became Speaker in January 1999. By the time he stepped down in Jan 2007, he had a net worth of $11 million.  Assuming he saved $100,000 of his yearly income (no easy feat), that would give him  a ~50% annualized return on his savings over that period.   Move over John Paulson.  Apparently, Hastert made millions after steering federal earmarks towards building a highway near farmland he owned. He sold the land months after the highway was completed.  Where he made the rest, I have no clue.  BusinessInsider lists more of the  egregious offenders.

I suspect they can get away with this sort of thing because the public is simply unaware. However, as this data migrates into a digital format, it will be mined by wonks on both sides of the political aisle. In doing so, it will shine a light on many aspects of our society that special interests would prefer to go unseen.

I was looking forward to watching CNN’s special, Black in America 4, which chronicled eight black entrepreneurs vying for funding in Silicon Valley. I was hoping it would address some uncomfortable truths about a supposedly meritocratic industry.

In the show’s lead up, race was portrayed as the giant elephant in the room.  But when I sat down to watch, some things immediately jumped out. The eight entrepreneurs would face an uphill battle for several reasons, the least of which was skin color.

Several things I noticed that would likely hurt their chances of funding:

• For Silicon Valley entrepreneurs, the group was fairly old, with the average age of 32.  As Mike Moritz of Sequoia Capital put it, “By the age 35, Mozart was dead.”  Silicon Valley venture capitalists tend to favor youth.
• As far as I could tell, two entrepreneurs had children. The woman who ran the startup incubator was a single mother of three. The unspoken reality is that a startup is an all-encompassing venture with limited odds of success. It helps to be a little delusional and free of serious commitments. If there were ever one sobering reality that can kill a pipedream, it is children.  VC’s aren’t blind to this.
• None of the entrepreneurs lived in Silicon Valley. At the end of the special, only two of the eight were willing to relocate (one of which got funding).
• None of the entrepreneurs were coming from a big tech company. Only one was coming from a renowned tech university, MIT.

Many of the things listed above may seem cold and unfair, but hey, people want their Facebook and gmail for free. That’s the nature of the beast.  While I don’t think any one of the above things would torpedo a tech entrepreneur, I think a combination of the above would greatly reduce the odds of success.

One thing the show did touch on was “pattern matching”, where venture capitalists look for the same characteristics in entrepreneurs — often white, male, young, and geeky. Perhaps this attributable to racial bias. But examine it more closely.  Tech startups are highly scalable, operate lean, and require long hours. If you have three employees, then the personal life of one team member can quickly affect the whole business. To name a few examples: marriage, children, becoming burnt out, homesickness, the need for financial stability, etc. For a venture capitalist, funding a startup is like buying a racehorse in the moonlight. It will require a great deal of generalization and unfair, but perhaps necessary, assumption.

From watching the special, I feel the blame lies less with Silicon Valley financiers and more with public education. One one hand, you have the future Zuckerbergs coding from the age of 14 onward. On the other, you have kids coming from high schools, areas, and cultures that leave a lot to be desired. The deck is obviously stacked against the latter. One of the show’s best moments occurred during an interview with Anthony, one of the entrepreneurs. To paraphrase him: “If I could only go back tell myself at 14 what I know now about computers. It would be different.” In any competitive industry, there is a lot of truth to that sentiment.

At the end of the day, the US tech industry is the only industry on earth where someone in their their thirties, with a limited track-record, can show up and actually have a shot for several million dollars in funding. To imagine that in any other industry, seems absurd. And it is worth noting, 2 of the 8 entrepreneurs did receive funding.

The MF Global debacle is more evidence for what many have long suspected: C-level executives are among the least accountable employees in a publicly-traded company.

I have a few lingering suspicions as to why this is:

This being a blog about technology, I’ll go ahead suggest something crazy. If there were ever a job suited for Artificial Intelligence, it would be managing/overseeing a large company.  Even on their best days people struggle with uncertainty and bias. While these things may get smoothed over in aggregate market behavior, they have very real effects on companies controlled by a handful of decision-makers.

What would be possible near-term application of AI? Have AI reverse engineer information flow within a company and weed out the various cliques and factions–i.e., get rid of the politics and backbiting. These sort of applications can already be seen in e-discovery and crime prevention software.   People may lie with their words, not so much with their metadata.

In the long-term (2020 and beyond), it wouldn’t surprise me if computers took on strategic roles. What they lack in general intelligence, they will likely make up with their ability to mine huge amounts of data and flesh out subtle statistical relationships that people would likely overlook.  In the same way quant funds currently recruit top network engineers and programmers, business may one day recruit them to build the next CEO, or at least, co-CEO.

Many people talk about AI displacing low-income jobs. Perhaps, but in my opinion, the most fertile areas for AI are high-stakes jobs that require a great deal of trust. And ironically, these are among the prestigious jobs in our economy.