Wikileaks

I've refrained from commenting too much about the Wikileaks case as honestly I've yet to digest the whole situation. On one hand I laud the transparency that the project has brought and how it is increasingly forcing big governments and big business to think about the ways in which they are conducting themselves. But on the other hand I also acknowledge that whereas in an ideal world we could have complete transparency, in our sub-optimal world many things can be a lot less painful if not done in the open.

From a big business perspective, I have a hunch that this is in fact a good thing. I've long held the view that companies adhere to a rather intuitive life cycle of birth, growing stronger, increasing inertia, and eventually falling. In the ideal case after a company reaches the threshold level of inertia, the resources are merely freed up to do other things in more efficient fashion. And that is natural. The problem often is that once big business reaches a certain size, it is occasionally difficult to let the company fall. And sometimes the companies may even begin to behave irresponsibly by abusing its commanding market position to help it stay competitive.

To tackle the problem of the undead incumbents, we have some authorities, such as the anti-trust authorities who enforce competition laws. They have been, to an extent, fairly toothless in the past. This has naturally enabled some companies and some individuals within companies to behave irresponsibly and do things that they shouldn't be doing. It is to this issue that I feel that the trend of leaking and whistle-blowing could offer a counterweight. If chances of getting caught if you do bad things gets closer to 1 and the penalty is heavy enough, this should be a clear demotivator for companies to behave in anti-competitive ways. And if this in turn helps to revitalize industries and create a level playing field once again, all the better.

I would apply a somewhat similar logic to the governments. It still may not solve the agency problem where big government fails to dismantle unneeded structures to increase available resources only to build more rigid structures on an already a very rigid system. But leaks and whistle-blowing will hopefully make big governments think twice about how to conduct its affairs and whether to engage in activities that cannot stand daylight.

Of course there may be multiple problems with the above. Perhaps the irresponsible people opt instead not to document any bad things they are doing and only rely on word-of-mouth instructions and guidance when coordinating their schemes. And perhaps governments may be less inclined to discuss diplomatic issues if they fear that they can't speak in a direct and frank fashion lest someone gets a hold of the material. But despite this, big business and big government is getting increasingly out of control and the checks and balances mechanisms are either not working or completely nonexistent. So maybe, just maybe, the media will now begin to take a more active role again in keeping these increasingly strong actors on their toes. I would like to think that this will have longer term implications and help bring more health to the whole system, but at the same time I am fearing the worst and thinking that maybe nothing large will change in the long term and that this is just normal oscillation within the system.

Requiem for a Tower

Rules

Nicholas Antongiavanni writes the following about how young men should dress:

For it is very ordinary and reasonable that the old should envy the young, to whom it is given to enjoy so many more pleasures, so much more intensely, for so much longer. Truly, we would marvel if they did not envy them. And this envy extends to dress, because old men wish to reserve to themselves the few pleasures which remain to them to enjoy. Thus they get angry when they see young men wearing double-breasted suits and French cuff shirts. It does not seem reasonable to them that young men should enjoy the trappings of eminence before attaining the reality.

He then continues at a later point:

In addition to those modes mentioned above, these especially are to be avoided by the young man: three-piece suits 8especially if the vest is double-breasted), contrast-collar shirts, two-tone or crocodile or anything but solid calf shoes, hats, pocket watches, bow ties, handkerchiefs, bold patterns and bright colors.

But some things are safe ground for young men:

... blazers and khakis, single-breasted suits, plain black shoes, shirts with barrel cuffs and button down collars, striped ties, belts, subtle patterns and somber colors. And if someone should complain that these rules leave him no room within which to make a profession of style but consign him to dreariness, I reply that necessity forces them on him.

Bearing the above in mind and by reflecting against them, I must note that I have scored very badly. Amusingly enough it seems that based on my experiences in Finland, it is the younger folks who tend to be offended by my dress whereas the older people tend to be fairly supportive of proper dress.

But I will concede and leave my elders with the pleasures of wearing hats and pocket watches. As for the other points, everything's fair game...

A trip down memory lane...

While clearing my closets at work I stumbled on a January 2007 issue of The Economist and got around to browsing through it. Some fun quotes below:

The [American] housing market downswing may not yet be over...

And:

The creation of new instruments, such as complicated derivatives, probably makes that financial system stronger in the long run ... But some of these instruments have yet to be tested by a sever revession or a big corporate default. ... there could be an almighty scrampble for the exits when the trend changes

What does a car sound like?

Everyone knows that cars have engines and the fast cars have engines that roar. A car sounds like something and the best car geeks can even determine what the engine and thus what the car most likely is based on the noise it emits. Yet now with the emergence of hybrids and electric cars, the sound of the car is changing. Some parties have now started to worry about whether pedestrians are able to hear the cars anymore and if they can't that this would have implications regarding public health.

What's the solution? Well, as they did with the Chicago river, the logical answer is to reverse the flow of the river. Or in this case to make electric cars emit a sound that resembles that of an roaring internal combustion engine. Voila, problem solved!

But seriously, are the guys jumping over the problem a bit too easily? I personally have noticed that it doesn't really matter what the car actually sounds like as most of the time in urban areas where the problem is most frequent, people tend to listen to their music players with noise-canceling headphones. So the problem actually isn't solved and with the increasingly widespread adoption of portable music players, be they iPods or mobile phones, the problem is getting worse, regardless of whether the electric vehicle sounds like a "real" car or not.

Perhaps another approach could be to go back to the drawing board and think about how the fundamental problem could be changed? But then again, I don't perceive it as a problem: if I'm listening to music, I'm still paying attention to the traffic. And as an engineer the idea of making electric vehicles sound like traditional cars is very silly, in my opinion.

Business 101: Finnair

The employees of Finnair are at it again. This time the flight attendants are on a strike protesting their apparently harsh and cruel working conditions and whatnot. And I'm sure everyone can agree that flying long haul flights requires time to adapt to the timezones and so on. But most people will also acknowledge that the people who have to fly for work will often not get these types of resting times. When the plane lands, off to the meetings you go. So should the flight attendants have their extra time and continue to work 90 hours a month and receive an above average salary (on the Finnish scale)? I don't know, but I do know the following...

Pricing is quite crucial in business. If you price too low, you forgo potential profits. If you price too high, you don't sell. If you price way too low, you sell at a lower price than with which you can sustain the business. Now, the first caveat of pricing is that many people think pricing has something to do with costs. It doesn't. Period. You charge what the customer is willing to pay and you reverse engineer your costs from that amount to see if it's possible to make business out of it. In some cases you will see that even with the highest amounts that you can charge you still can't make up the costs. Hence you should call it a game and move on: there's not business there.

What does this have to do with Finnair or aviation in general? Well, the trend has been changing ever since Southwest came along and made a value innovation and changed the rules of the game. To complement the traditional premium strategies, Southwest created a low-cost competitor: no frills, but the cheapest prices and you still get to go from point A to point B. And lo and behold, there was room in the marketplace for this type of maneuver. This is course leaves the mid-level companies, such as Finnair, in the unfortunate position in which it has to decide what kind of animal it wants to evolve into. The wealthy people will either fly their own planes, charter planes and do the Netjets thing or fly first class in luxury. I on the other hand will optimize the costs associated with the travel and get the cheapest possible ticket. Being in the middle is difficult: you may be able to target the business crowd, but let's face it, in these economic times companies are more than ever before looking at how to reduce travel and where it isn't possible try to get the absolute best rates. It's often cheaper to buy a couple of no frills flights from a low-cost carrier than to get a flexible ticket from the likes of Finnair.

So, the environment has changed and Finnair will need to reinvent itself and think about how to position the company into the marketplace. Based on this, the company will then need to think about its cost structure: if it chooses the low-cost route, the name of the game is scale and minimizing costs as much as possible. Look at Southwest or RyanAir or what have you: standardized fleets, quick turnaround times, optimized costs by flying to remote airports at unattractive time slots to avoid airport fees, and so on. Is Finnair fit to play a game like this? At the current cost structure the answer is definitely not. Can Finnair play the premium game? Well, the premium market in Finland is very limited, i.e. there aren't that many truly rich people (*cough* taxation and the whole shebang). So this may also be a rocky road. And as most people who have flown Finnair will know, the flight attendants never smile. So I'm definitely not going to pay premium prices for grumpy service.

Already the situation is looking quite grim for Finnair. The fact that the different employee groups are trying to suck an already declining company dry may actually be a good thing: my thinking is that the sooner Finnair declares bankruptcy and gets killed off, the sooner we can start from a clean slate and establish a brand new national carrier for Finland which is better positioned in the modern world. This would also take care of the path dependency issues as long as the culture is killed thoroughly enough in the transition. But will this happen? My forecast is no. The Finnish government still has a majority stake in the company and letting a flag carrier fail and at the same time have the staff laid off is something that no politician is willing to do. That is why I am guessing that if the situation gets worse, the government will step in to prop up the company. Mind you, Finnair's brand has already been diluted as a result of the frequent strikes and inability to reliably operate its flights.

So, it doesn't look too promising for Finnair or the tax payers of Finland. The net winners will most likely be the employees in the short-term as they will not need to adapt to the changing world as long as the government continues to bleed money and fight gravity. In the longer term we're all net losers, however, as we are only making a bigger space into the marketplace for foreign competitors to gobble up the space in Finnish aviation and establish routes to compete with the dinosaur that is Finnair. Oh well...

What are you passionate about?

What are the most interesting discussions you've ever had? Are there any common characteristics for them? And what are the opposites of these? I started thinking about why I can sit and have an endless cup of coffee (nicely emulated by refilling a finite cup over and over, mind you...) with some people and with others I just have an immediate reaction to move on. What is exactly going on here?

My working hypothesis is that it has something to do with passion. Some people are very passionate about something, and with these people the discussion is often interesting if you allow yourself to get immersed into the topic. Others will say that these are annoying people as the ramble on and on about something. But have you actually taken the time to think about all the fascinating aspects of what the other person feels so strongly about? Probably not. And the opposite case where a topic isn't discussed deeply and profoundly, chances are that time just won't fly by. Well, that's not entirely true, of course. There are also the conversations which just seem to fly despite the fact that there isn't any specific passionate topic at hand. Maybe the passion is then for witty remarks and rhetorics, which enables the conversation to flow onwards in an interesting way.

But are there people who aren't passionate about anything? Superficial empirical evidence would suggest so, but I'm not truly convinced. Another argument might be that everyone is passionate about at least one thing and some are passionate about more than one. Perhaps the problem is then about communication, which may either imply that some people are not able to clearly communicate their passion and for reasons unknown choose simply to not engage in a discussion. The other alternative would then be that they may have learned the hard way that others may not always be willing to listen to you or immerse themselves in your interests. I have to admit that I'm not always that keen on immersing myself e.g. on the latest Big Brother setup (which appears to have recently ended, judging by the tabloid papers). But that's something that I should work on changing in myself.

From this then emerges the question of when does the passionate discussion lose its passion and why do some discussions slowly die and become tedious? It might have something to do with relativity: perhaps the dynamic is the same as human satisfaction which appears to be defined as the delta, or the change in something. If you're not moving, you're not happy. Or so it would appear to be in the contemporary western world. Is the analogy then that if the discussion around a certain topic does not constantly attempt to push the boundaries forward and venture into the unknown that it then stagnates and dies out? Sort of like how sharks must keep on swimming lest they want to live.

Maybe this is again one of those topics that would need more thought. It's already clear in the 15 minutes spent to write this entry that the implications for this may be very wide.

Collisions

I wonder if much of the perceived problems in education and employment might have something to do with friction between planned systems (education) and emergent, free market systems (employment). Hayek might have something to say about this.

Data visualization

On the state of the church

Recently the discussion surrounding homosexuality and the church's views was jumpstarted again, thanks to a local talk show. What I can surmise is that some political figures and other extremists from within the Evangelical Lutheran church voiced some anti-homosexual views, which has now resulted in a mass-exodus of people from the church. My own position is that the state cannot under any circumstance discriminate against any group of people based on their gender, religion, sexual preference, or other such criteria. But if a closed group of people, such as a church, decides that they want to adhere to some set of rules but don't break laws or take away the individual's freedom, they're free to do whatever they please. But that's just my view.

The more interesting aspect is that apparently the logic behind the mass-exodus is that people want the church to change its policies. The problem here is that the main fuss was the result of what a politician who holds no position of authority within the church said, and thus it cannot really be interpreted as an official position of the church. I'm not entirely certain, not having seen the program, whether there were any official representatives present and if so whether or not they took any strong stances. But if we assume that the outflow of people consists of disgruntled church members who want to push through a point and get the church to change, then that is precisely the wrong course of action to take. Walking away from the situation does not improve it. Instead it merely takes you out of the situation and indicates that you have given up and don't really think you can make any difference. But still the people are quite vocally complaining about the stances of the church, despite the fact that they walked out...

Now, I'm not really a religious person nor do I really care very much about what the church thinks or what its policies are, as long as they don't severely impede and limit my freedom to act as an individual person. But if I cared and wanted to change the church, somehow I get the feeling that I should actually then try to change the group from within using the mechanisms afforded to me by the agreements made by the members. But if everyone who was disgusted by the comments of certain individuals merely walk out, then by logic wouldn't that leave only the extremists in the church and ultimately result in a tighter-knit group of people who then can freely foster their prejudices and avoid having to change their mindset?

Home ownership

I am growing fat. Not necessarily physically, but in other respects. In a sense I've been moving more towards a mode of stagnation, having climbed to what appears to be a local maximum, at least for the time being. I have become comfortable and somewhat lazy. And that is a horribly bad thing that must be changed. And change always involves risk, the jump to the unknown.

At this point I must also note that no, I have not purchased a home, unlike the title might suggest. I have, however, been thinking about home ownership. The current situation seems somewhat annoying: prices of homes in Finland have kept at record levels and the new home owner in the capital area will need to lay down closer to a quarter of a million euros in order to get a decent two room apartment at a reasonable location. That's quite steep.

Now, the question that is begging to be asked is whether or not one needs to own their homes. The current culture and the associated norms seem to suggest so: everyone should have a right to own their home. The trends in the western countries have been towards this direction for the past decades. In certain areas for much longer; for instance in the United Kingdom this trend seems to have started with the fall of the aristocracy, which traditionally was the only class being able own land and estates. With the fall of the aristocracy and the rise of the bourgeoisie the regular man could begin to fathom the possibility of owning property. The fact that property prices have seemed to historically grow rapidly has not really helped the situation: everyone knew up until recently that the price of properties would always go up. In Finland the trend for home ownership is further subsidized by the government, which gives tax rebates to the first home buyers. The signal is clear: the government wants you to own your home. But as the government tends to so often do, it has made a total hash of this as well, as the subsidy tends to go directly into the prices of houses and ultimately push up the already high price level. But the message is still clear.

The collapse of the housing market in the United States, however, tends to send a rather clear message: the direction was not sustainable. So not only does everyone not necessarily need to own their houses, but not everyone deserves to own their houses. In fact, to own your home, you must have income, jobs, and assets. The next question then is whether or not it is even beneficial to own your home. Certainly the world seems like a lot less risky place when you own your home. Especially more so if you've actually paid off your debts. But there as another side to this situation...

Consider the current working life. Job security has been seriously damaged, people are often working fixed term contracts, companies require employees to travel around and become expatriates, and so on. So is your home an asset or a liability? Well, from a flexibility perspective it's in fact quite clear: you are tied down much more if you have invested in owning your own home. Even more so if you have bought your home within the last two years, in which case you will not be able to get rid of your home without tax consequences in the event that you plan to turn a profit from it. So from this perspective you are selling off your flexibility to respond to potentially sudden opportunities. Also, by owning your own home, the emotional bond is that much stronger to the place you occupy. Having the sell your house, as some people who have been laid off have had to, is a bigger personal loss than merely deciding to terminate your contract and renting a new place.

It is very unlikely that we will return to an era of high job security. One of the competitive advantages for the future employees in the search for jobs is precisely the ability to adapt quickly to changing circumstances. And because this is the case, I am becoming increasingly certain that in the foreseeable future there is no point for me to tie my assets down in the form of housing property. That would be merely handicapping myself when I have already determined a very real need to slim myself down and regain my flexibility and begin to move more aggressively into uncharted territories.

Things that annoy me today

• People who wear shoes that go SLAPSLAPSLAPSLAP when they walk. Buy proper shoes and learn to walk.
• People who are either so lazy or so dumb that they cannot understand that if you need to classify P1, P2, ..., Pn into categories I1, I2, ..., In, E where it is trivial to check if Pn doesn't belong in In still place certain Ps into In despite the fact that anyone can see with their forehead that that is not the case.
• People who use read receipts (aka the "kyylätäppä") in emails.
• People who think that it's credible to state that it is possible to do 24 person months of work in 6 months.
• People who don't respect your calendar and still try to book meetings despite the fact that you have explicitly declared that you're busy.
• People who call wrong numbers.

And many other things, but those were the ones that came to mind after about 27 seconds of thinking. But on the other hand, the things that I like at this precise moment:

• The autumn and the way how the leaves in the trees are turning to different shades of red and brown. That's cool.

Courtesy & etiquette in regards to calls

Etiquette has historically dictated to a great extent the way people should behave in different situations. With the advent of casual Fridays and mobile phones, it seems that we have more or less rid ourselves of this type of guiding material. Which is a shame...

Most recently I overheard a person explain to another person whose phone was ringing that by pressing the button labeled as "Silence" the user of the phone could choose to not respond to the call, but not hang up the ringing. In effect the caller would then just wait for an arbitrary amount of time before either hanging up or leaving a message. Analogically the situation is same as if the recipient of the call had not noticed that someone was calling.

In my opinion that type of behavior is blatantly rude and arrogant. My personal policy is to answer calls if possible. If answering isn't possible, then I hang up the call with the red button, which gives a clear signal to the caller that their call was acknowledged by not taken, instead of leaving them wondering if the recipient didn't hear the phone or whether they are just ignoring the caller. I also attempt to immediately follow up with an SMS stating that I cannot answer at present but that the person can send me a message or if it is a matter of life and death, call again. If the person calls again, then I will answer the call.

The logic, from my perspective, is very simple and at least I feel that the above method is polite to all parties involved. I do not leave calls unanswered or unacknowledged just because I can, because it is not polite. But if I am otherwise engaged, e.g. having lunch with someone, I do not interrupt the engagement unless there is a heavy enough reason to do so, at which point you of course apologize for the fact that you absolutely must take the call.

That's just of course my take on the subject...

Less than two weeks to go...

On financing studies

The discussion around students and whether or not the subsidies they receive rages on again in Finland. One Finnish blog posting by a local student politician went on to complain about how "students are one group of people who are forced to fund their life with debt." Apparently this was a reply to some other comments, which supposedly suggested that students were taking too long to graduate and that "25 year olds are able to get subsidies while doing just about nothing."

Currently the situation is that Finnish students get a 298 euro subsidy from Kela for studies. Additionally Kela subsidizes living costs by 80% and up to 201.6 euros per month. Additionally the state ensures that each student is able to get an additional 300 euros of loans per month. So for an average student living in an apartment that costs over 252 euros a month in rent the state shells out 499.6 euros and an additional 300 euros in guaranteed loans. Students are also eligible for student housing, which is apparently roughly ~200-300 euros for shared apartments (students get their own rooms and share common facilities) or ~300-400 euros for studio apartments. Assuming that the student uses the exact 252 euros for housing, that means that from the 499.6 euros they will have 247.6 euros or 547.6 euros with the debt. With this type of setup the student is allowed to have incomes of up to 11850 euros per year, meaning that if the student studied full time and worked only during the three months of summer vacation, they would be allowed to earn a monthly salary of up to 3950 per month. Or if spread out evenly over the year, the student could earn 987.5 euros per month.

So, assuming that the student is able to employ themselves so that they earn the maximum of 11850 euros per year, it means that in total, including the debt, they are able to accrue 19046.4 euros per year, or an average of 1587.2 euros per month from which they still have to pay all costs of living, including housing.

Alternatively, if we assume that a student is able to tackle a job that pays 10 euros an hour and works 10 hours a week through the semester and 37.5 hours a week during summer, then the income would be 3600 euros during the semester and 4500 euros during summer for a total of 8100 euros of auxiliary income and an average of 1274.7 euros per month including subsidies and debt.

The student gets the above mentioned subsidies for 9 months every year, meaning that in 5 years time they will have used up 45 months of subsidies and accrued 13500 euros of debt (not including interests). At this point of time the student is eligible for tax deductions of 3300 euros as they were able to graduate on time. This essentially means that on graduation, the student now has 10200 euros of debt.

At this point I'm starting to wonder what all the complains are about. If you are willing to put in a bit of work, you are able to get a decent standard of living during your studies while accruing a relatively modest sum of debt. Sure, some may argue that the above scenarios are unrealistic. In my personal experience, for instance, I have entirely foregone state subsidies after my first ~year and a half of studies and financed my studies through working first part-time and then full-time and as of now it appears that I will be graduating in about 6.5 years. Out of those 6.5 years I've worked full time for about four years. During that time I have not accumulated any debt from studies. This may again be slightly unfair as I may be an outlier, but it just goes to illustrate that there are many different possibilities to finance one's studies.

Overall, however, even in the above scenarios, the student should be fairly well able to live off of the current system and further increase their level of living with a minimal amount of work. Even if the student takes the maximum amount of debt, the result is relatively small and the state continues to subsidize through tax discounts. Now, considering that studies are typically an investment in yourself which in turn offers a wider array of choices in regard to lines of work and also often increase your ability to earn money in the future, it still seems a relatively simple choice.

And regarding debt, there are again a few ways to look at it: if you don't want to finance your studies with debt, there are other alternatives as well. Then again, putting up some debt is a good statement in regards to commitment to your studies.

... makes the world go round

I recently popped by New York and one thing was blatantly obvious: the correlation between the size of cities and the affluence of the top tier is quite clear. New York's club scene is a case in point of how money talks and the rules of the game are clear: the clubs are there to maximize their profits. Which isn't really that big a surprise, I guess.

Another interesting aspect related to that was the dynamic with which clubs in the big world operate. To maximize money, you need to maximize the amount of affluent customers who are willing to shell out money. And that typically still means men. So as a man, you can essentially bring two things to the club: money or women. If you bring money, you better bring a hefty pile of it. If you bring women, they better be quite the lookers. The women are actually quite obvious, since naturally the wealthy men will like to be surrounded by beautiful women. And to get things going, men will have to show their colors by shelling out as much cash as possible to get the most expensive bottles. This then naturally attracts the women, who will tend to flock towards these tables either because they are gold diggers, or because they were already paid to do that.

Naturally this dynamic can be ruined if the average material in the club makes the club less desirable. So groups of men need not bother unless they are prepared to drop a thick wad of cash. Interestingly enough this dynamic isn't as present in Finland as it is in London, New York, and other big cities. The conclusion to draw from here is that Helsinki obviously isn't a big city or there aren't that many young and affluent people in Finland. Or both, which is very likely the case. This is, I guess, supported by a recent statistic that an average customer in the night will drop about 20 euros of cash per night, which is two or three orders of magnitude different than the wealthiest customers in the more exclusive clubs of the biggest cities in the world.

Another interesting thing is that despite the whole discourse on gender equality seems to have left the dynamics of the night very much untouched. Sure, some will argue that women on average have the upper hand when it comes to power, but in the more exclusive settings it is still the dollar that has the last say. Which is best illustrated by a question on Craigslist a fair while back in which a girl from NYC was asking about how he might go about bagging an affluent hedge fund manager. The response was that the setting should be looked at as a deal: the girl has nothing to give but her looks, which are melting away, while the guy has status, wealth, and power, which will keep on growing unless he fumbles. So ultimately the girl will want to bag the manager while the manager will want to only lease the girl for a certain while, until he can upgraded to next year's model. Which I guess is precisely how the world works in some circles.

Then, what is left at the end of the day in terms of lessons? Well, for me the very positive realization is that I'm in fact very happy with my life. I can enjoy myself by observing these types of dynamics at play while at the same time being satisfied by knowing that I don't need to partake in these games. And that's a really comforting thing to know.

Energy

Sampo Pankki...

I previously blogged about my experience with Sampo Pankki and how they actively sought me out to sell me stuff and to manage the customer relationship. What followed from that meeting was absolutely hilarious...

The only thing I was interested in was to change my former pankkikortti/credit card which cost something to a free debit/credit card that they were offering for young customers. Well, the contract stuff didn't go as planned as they forgot to have me actually sign the contracts that were needed... So they send them to me and I return them signed. Then I go on vacation and they call me to tell me that they received the contracts. I'm sailing for a week and return just in time to get another phone call from them telling me that I need to send my old card back because they already sent the new one. Which is nice, especially since I haven't really been at home. I promise to send back the old one.

I look at the new card, which the bank decided to give to me in a horrible black color with tiny sprinkles of glitter on it. Yay. They I tell them that the basic layout would've sufficed, especially as I hadn't requested any special theme for the card. And I get told that unfortunately all credit cards will now have some theme. But wait! I ordered a debit/credit card (my exact words were that they should create an "identical" card under the new contract with identical credit limits, debit features, etc.). Apparently they decided to only give me a credit card. And what more, they in fact also altered the terms of the credit by themselves to require repayment of 100% of the balance on the credit card each month (I always pay the credit cards back monthly, but for the sake of security, I like to keep the minimum bill at 10% if for some odd reason some month I just absolutely have to use up ~all of the credit).

At this point my patience runs out. Over the years I've put up with all sorts of shit from Sampo Pankki. Their online bank is broken more often than it isn't. Their card systems are broken so their cards routinely don't get accepted in restaurants. The fees that they charge are significantly higher than their competitors charge. But I've still stayed with them out of some twisted sense of loyalty. But this was it, my patience with Sampo wore out. Fortunately the one thing they did manage to actually get right was the termination of the relevant contracts.

Amusingly enough I did call their competitor with whom I'm also a customer and told the nice lady there what had happened and how it would be really cool if they'd set me up with a similar setup as I had in Sampo as I would like to move my daily bank activities to their bank. And that I'm in a bit of a hurry as I cut my Sampo cards in half and I'm leaving shortly to NYC for a trip and would like to actually have something to pay with on that trip. And lo and behold, this competitor actually delivered everything brilliantly within a couple of work days. Amazing.

So, to sum up the key lessons from this experience: if you're living in Finland and thinking about which bank to go to, stay the hell away from Sampo Pankki. They absolutely, positively suck at more or less everything they do.

Criteria

I again stumbled upon some Finnish blogs (yes, I know, I should refrain from reading these as they just result in me digging blood from my own nose...) and lo and behold the topic of the day was about the criteria that people, in this case women, have for selecting their partners. The topic is naturally as old as humanity and one of the more common discussions online. That said, I got around to thinking about it again and came up with the following angle.

My approach is that people typically have various dimensions to their lives. In the western hemisphere and especially in the regions plagued by the protestant work ethic one of the core dimensions is work. Another could be social life, friends, and the related stuff. A third could be continuous learning, sparring with ideas, and the pursuit of intellectual satisfaction. Then we could have physical well being and so on. I haven't spent very long with the taxonomy and I bet that someone could devise a more elaborate one and ensure that the categories are as orthogonal as possible to minimize overlapping. But for the sake of conversation, let's say that we have these categories to our lives. Finally, one of these categories is naturally that which contains your romantic life, your partner, etc.

The amount of time people spend thinking about this category seems to be disproportionately large compared to the fact that there are more things to life than selecting a partner. And people can be satisfied despite being single. For the sake of discussion again, let's say that for each category there's a certain threshold level that the person needs to achieve in order to be content with that aspect of their life. You can, to an extent, manually adjust the threshold level, but in some cases there are certain boundaries within which you must work. For instance, I couldn't say that currently I'd be satisfied in my professional life if I'd be cleaning streets; I'm currently way more competitive and want to move upwards and achieve things. So because of my character and nature, I can't really set the threshold level lower than a certain boundary.

But regardless, we now have categories and threshold levels. The name of the game is now to live a fulfilling life and pursue happiness. My hypothesis is that in order to achieve that, you should initially ensure that every category achieves the threshold level. I might be very successful at work, but if my social life is significantly below the threshold level, I would still be unhappy. Maximizing a single category is thus a very sub-optimal strategy and it's bound to fail in the long run.

Thus the amount of effort that people seem to allocate for their love life is very disproportionate. And defining hard criteria to define who you can and cannot date is not only a somewhat bad idea, but also eventually bound to backfire as you're going to undoubtedly set the threshold levels too high and cause yourself to be very unhappy. The dynamic here is that it's a multifold game: first you have to find the set of people who fill your criteria. Then you have to have individual games with each of the people to see if they're interested in you. And this is followed by the typical dating games and so on. If you have set your threshold levels high, then naturally this will cause the set of potentially interesting people to decrease drastically. This then also has the added fun factor involved in the fact that if you are very selective, then typically the other person can also be very selective. Are you special enough to pass their criteria lists? If not, then it's game over for you unless you split and re-evaluate your own criteria.

Then there's the aspect of the criteria lists in general. Apparently very often a certain group of women wants their potential partners to be good looking, well educated and smart, wealthy, successful, and so on. What's the point in that? Now that we're striving for gender equality, my understanding is that women should be able to finance their own lives and thus they wouldn't have to be dependent on men. These types of lists still sound to me as if certain women still see the world as a place where the name of the game is that they trade certain traits that they possess for an affluent and powerful spouse who will then support their lives. Hmm... Well educated? What does this matter? If your partner is incredibly well educated in a certain area, let's say in some specific area of string theory, chances of you actually understanding anything about it are very slim. So you most likely won't have interesting discussions about that aspect of their life with them. Unless of course you're also into that specific thing and rank in the top 10 researchers on the subject. This of course was a provocative example, but I guess the underlying point is that specialization of your spouse in a certain academic field is very much irrelevant in regards to your love life. Then there's of course the whole discussion regarding whether or not the level of education can be used as a proxy for intelligence.

So, my take on the criteria lists is that there is essentially one criteria for me regarding whether or not I want to spend my life with someone. And that criteria is essentially whether or not I love them. If I don't, then that's that. And if I do, that's simple enough again. The whole process of dating is merely to check out the compatibility, and there's no need to analyze it deeper with lists of criteria. If it clicks, it clicks. Having shallow lists of criteria merely makes your job harder as you might in fact potentially also miss interesting people who could've been the perfect match for you despite the fact that they might miss some mundane bit of criteria by being e.g. 169 centimeters tall instead of being over 170 centimeters.

And once you do find someone who you love and can share your life with, then I guess the natural thing to do is spend the leftover time to work on the other areas of your life which still need working. Because if you don't, then eventually you're anyway going to end up with an unhappy life. Or that's my take on the subject, anyway.

Food

These days organic foods and whatnots seem to be all the rage. And as usual, I can't really understand what the fuss is about. As a disclaimer, I have no firm understanding of the subject, but if I understood correctly, the core arguments from the proponents of organic food revolve around the notions that 1) organic food is healthier for humans and 2) organic food is more environmentally friendly. The first point seems to relate to the fact that with no pesticides, growth hormones, and other more or less interesting things the resulting food, be it vegetables or meat, is more natural and thus humans don't get exposed to all the unknown nasties in the non-organic stuff that are stuffed into plants and animals to get them to grow faster. The second point relates to the first in the sense that due to the limited use of fertilizers and other stuff, we don't pollute the ground as much.

I guess there may be some truth in both points. One question that springs to mind immediately concerns the efficient agriculture that we have going these days: can we organically produce enough food to ensure that everyone can eat and survive? Some argue that organic food is less efficient to grow and plowing down the rainforest is the only way to go organic on a global scale. To be honest, I can't judge whether this is true or not, but it does sound plausible. Secondly, the health aspect is something that I again find myself wondering about. My understanding is that due to the organic philosophy, farms that grow organic food have much stricter control mechanisms for ensuring quality. Which is good. But building on that, I would argue that non-organic food should perhaps be put through tighter quality requirements as well and mishandling of food should be punished more strictly. Perhaps this would drive the prices up, but then we would have higher quality food. As part of the stricter controls, perhaps even more emphasis should be placed on researching the stuff that goes into the foods.

Personally I'm not too concerned with the extra stuff that goes into foods as long as blatant mishandling and high quality are ensured in the production process. The thinking behind my view is essentially that if you look at the organic crowd, they're arguing for a return to the basics: no extra stuff in the food. But if you want to go back to basics, why stop there? I've recently been tuning in on some discussions about hunter-gatherers, and I guess the ultimate argument is that agriculture itself was the worst invention man has ever come up with (I believe someone attributed this comment to Jared Diamond). The idea is that since agriculture came along, we stopped acting in a way that was natural for humans, got lazy and fat and began focusing on things that seemed like good ideas, but ultimately had little to do with our health. So ultimately you should just run around gathering berries and hunting animals all day long. Not only would you then have a healthier diet but also focus on other important aspects of health, i.e. proper exercise and fitness. To be even more provocative, ever since we shifted into an agrarian lifestyle, the size of human brains has began to decrease, and the notions that IQs have risen are also meaningless since naturally people will adapt and become better at predefined tests.

I may not necessarily be that much of a hardliner in the above thinking, but it does sound reasonable. While I still may not necessarily change my eating habits too much, what I will do is think about the hunger-gatherer aspect in the context of exercise. That topic may actually warrant another entry after I think about it a bit more.

Jobs and ethics

I was recently approached by a bank who's customer I am as they wanted to have a meeting to talk about thing, mainly about selling me all types of products. The meeting itself was rather interesting, as they had supplied me with some barely 20-year-old girl to sell cards and mutual funds and whatnot. Naturally she may not have had too much clue about what she was in fact selling or how ("You appear to pay currently 40e per year for this card and 0.5e per month for this other, if you pay us 5.7e per month, you'll get both..."), but this raised some questions about the ethics of doing business...

In this specific case besides the blatant problem of attempting to overcharge (especially as a different bank has already given me everything she was offering for free...) there is a question whether or not the bank would've looked out for my interest. Naturally I'm not a big customer, so I don't get to talk to the more experienced people, but trying to sell me some obscure mutual fund which invests into other funds with a distribution of 25% to stock funds and 75% into bond funds at a time during which we have the whole Greek situation going on with an argument that the fund has made 13% since last summer is questionable (just for record, comparing with a year back, I guess the only possible way to have actually lost money would've been to invest in NOK...). When asked about this, the bank's representative didn't really appear to be too much on the map. Neither when I asked her if she actually understood about all the hidden costs associated with her product (the answer was: "But it's free, there's no fee!").

But, this still begs the question of ethics and looking out for the customer's interest. Lack of knowledge is something that I don't like at all and if you sell me something, you're in a really sticky spot if you insist on knowing something that you in fact don't. That's just dangerous and not looking out for my interest. There's of course the separate case where the seller might in fact know better but doesn't care about me. For these cases I suggest you to read about the behavior of bankers during the 1980s in Michael Lewis's Liar's Poker. Business is business, but still...

This got me also thinking a bit about myself. What do I in fact know about my line of work and is it beneficial for my employer, my customers, or the society at large? I guess the scary answer is that I don't know. I would like to think so, but I'm not entirely convinced. But I do think about it and try to understand the world a bit more and based on my studies, there are certainly many cases where standards are beneficial for the customers and society. Are they always beneficial for the company? It depends...

Oh, and a final note, the meeting with the bank did go decently well. I reduced all of my costs to zero while retaining essentially the same products. Which is nice.

Inches

Dreams

Overconsumption

“The wealthy are spending more now simply because they have more money. But their spending has led others to spend more as well, including middle-income families. If the real incomes of middle-class families have grown only slightly, how have they financed this additional consumption? In part by working longer hours, but mainly by saving less and borrowing more.”

That's borrowed from Krugman's slides, who in turn attributes that to Robert Frank. That may very well be true, judging by personal experience. I still maintain that it's ok to have variable costs with a more or less wide variance as long as you can control it, if need be, and also keep your fixed costs under tight control.

Zagat for Finland

I've recently fallen in love with one of the more useful "Web2.0" applications around here in Finland which is aptly called eat.fi. The concept is very simple and very old: rate restaurants. And as is all the rage, then there's the possibility to meta-rate. But all in all the whole setup is as simple as can be, and what more, it solves a practical problem and question for me: where should I eat today?

As a consumer I'm fairly in line with your typical Finn. I do get very annoyed very quickly if things don't go right in a restaurant, be it an improperly prepared dish or incompetent waiting staff. But I seldom take it out on the staff, preferring instead to send feedback directly to the upper echelons of the restaurant, if at all possible. In my view this cuts through the crap and takes the problem directly to the people who need to be aware of it: the upper levels of the company, perhaps even the owners. What is the point of giving feedback to a waitress who may not necessarily be too receptive towards criticism from a random customer when instead you can reflect a bit about what exactly happened and then try to offer a bit of analysis to the leadership of the company. I also don't typically attach my details to the feedback as I don't really want to appear like the type of guy who would be fishing for compensatory gifts from the company. It's enough that I've hopefully raised some points and in the future the restaurant is able to function better.

But with eat.fi, the whole eating experience has in fact gotten another dimension altogether: the social aspect. Not only do I finally have the possibility of publicly giving praise for places I like, but I can also find the people who appear to like similar places as I do and follow their ventures. And I must admit that the whole concept of meta-ratings makes sure that instead of deteriorating to a rant, I instead try to keep the feedback brief, simple, and as objective as possible. Oh, and I like points.

But yeah, long story short, I'm absolutely hooked on the system and my account is available here. If you're also a member at eat.fi, drop me a line.

Meet Ari Gold

Ages and roles and the Marine Corps

As has been the theme for this Spring, I've been thinking about what is wrong with big companies. Another aspect that came to mind is the age old dynamic between young and old people: young people think older people are complete fossils and the old people think the younger people are obnoxiously arrogant and don't respect age. But the thing is that the last couple of generations of work force are part of a very fundamental shift in technology, which can be shortly characterized as the first time in history when technology life cycles have become shorter than the working lives of people. What this in practice means that your technical skills will be significantly outdated well before you ever reach retirement.

In practice this is quite obvious if you look at technological evolution. Agricultural technology took a lot longer to become widespread than the printing press, which in turn had a longer life cycle than the steam engine, which in turn was outpaced by radio technology, and so on leading up to the niches of today's IT world. To put it blatantly, I'm twentysomething and I've already sort of fallen out of the cutting edge of technological evolution that I once was very much into. In the current world of the world wide webs, cycles are measured in years, at best, and in months at worst. So while all of the above might not necessarily be exactly accurate enough to be an academic thesis, the trend is still clear.

This in fact led me to think about how different people create value. As an analogy I started thinking about a friend of mine who plays floorball very actively and is apparently quite good at it. The situation that he is encountering is that now that he's about 30, he can no longer keep up with the young guys. So instead he has to start playing with more intelligence. I also get the impression that he also brings a lot of spirit into the team and is in fact very crucial in fostering the team spirit and acting as an "older brother". So in brief, the value add that he brings is different from the value add that the 20-year-old guy brings to the team.

Related to this, I was recently skimming over the US Marine Corp's document named MCDP 1: Warfighting. It is a very interesting read and one of the things that I think fits here nicely is the concept of different levels of war, which range from strategic to operational to tactical. In brief, the strategic level is focused on the question of how to win wars. The operational level in turn focuses on how to win campaigns, while the tactical level addresses how to win battles. So if we apply this type of approach in a very raw fashion to the floorball analogy and ages, we might get something like the following situation: the 20-year-old guy operates on the tactical level, i.e. how to win over the ball and score goals. The 30-year-old guy operates on the operational level and works on keeping the spirits up, the team functioning during the match and is ultimately looking at how to win games. Then, the coach, who I guess can be of various ages but for the sake of discussion is now 40, then operates on the strategic level and is focused on how to win the whole season.

So it's clear that the value add that each of these guys brings to the table is fundamentally different and is based on each one's intrinsic capabilities, which are also very much tied to age. The 20-year-old guy is often very self-centered and focuses on shorter time horizons (take it from someone who is still twentysomething... :). The 30-year-old is getting into the family-fostering mode, to be provocative. While the 40-year-old is slowly starting to realize that if he wants to leave behind any type of legacy, then now is the time to start doing so or else it's not going to happen. But these guys can't generally operate very efficiently on each others' levels as they don't have the capabilities for that. And there's nothing wrong with that, because everyone is still needed.

Now, how does this in any way relate to big companies? Well, in big companies it's not so different: recent graduates are very keen on technology and represent the running power of the athlete and are able to do the heavy lifting. Slightly older guys in turn have slightly more perspective and experience and while no longer representing the cutting edge of technology, they might still be able to contribute by being efficient in managing the younger guys and pointing them in the right direction while being able to support and serve their subordinates in their daily jobs. And eventually we should ideally have people who have seen how the world works, have become the statesmanlike leaders that the world needs and are still able to stand solidly enough to keep things sane (we younger guys tend to like to run very fast and if we're not careful, we often just run for the sake of running and occasionally in the wrong direction). But again, to overly simplify the situation, these roles and the types of people may have difficulty operating on the wrong levels.

The problem, then, is when this nice and neat theoretical approach doesn't work out in practice. You have the middle-aged guy who is painfully outdated technologically trying to keep up in the role that's in fact meant for the twentysomethings. Or when a recent graduate is thrown into the difficult task of making longer-term strategic decisions without the capabilities and the experience of truly understanding or appreciating the complexity and trickiness of the task at hand. And this, I argue, is one large problem in large incumbent companies. How should one solve this, then? That's a completely different question and hopefully the statesmanlike leaders are able to solve that question. Because I sure can't...

Why some people play with sharp knives...

By talking to a couple of people who have practiced Krav Maga for quite a while I heard of an interesting trend: at some point people tend to start practicing with sharp, real knives. I talked about this with other people and most of them held the view that it is incredibly stupid to do something like that as the probability of something bad happening in the form of an unintentional accident increases dramatically. However, reading a paper by Chet Richards had an interesting quote from Musashi's The Book of Five Rings, which actually sheds some light on this:

Most warriors only perform tricks … In order to understand life and death, you must actually be in a situation where the possibility of death exists ... Through constant practice, you become free of your own ideas of what and how things should work

It actually makes sense...

On gifts

The culture of gift giving is a very fascinating thing: while the fundamental ideas are good, I keep getting a strong feeling that nowadays it is dominated by selfishness and self-entitlement: people are no longer pleasantly surprised by gifts but instead they implicitly expect and demand them. Nowhere is this more evident than in weddings, where I guess traditionally the concept was to help the new couple create their new home. But times change and these days couples that are getting married often already have been living together for a while and thus the need for cutlery and coffee machines should have been satisfied. But lo and behold, these days we have interactive gift lists with detailed descriptions and specifications for what is expected and acceptable to the couple. Or if you don't find anything from the list that you want to give, don't just wing it but instead give cold hard cash...

Somehow these types of things annoy me incredibly: I give gifts if I feel like giving them. If someone is demanding something from me, I don't typically give it to them merely on the grounds of them demanding it. And when friendships and relationships are in question, demanding material is in my opinion very much questionable.

Now, another funny aspect of the dominant demand-culture is that if you actually look at only the cash flow, it's a silly cycle of people sending money between themselves. While thinking about this topic, I browsed over some blogs and comments where people were giving out all types of guidelines about how much cash they typically give if they attend the wedding and how much if they don't attend. Then there are the people who motivate the discussion by noting that they do demand gifts and money because they have given gifts and money, which just results in this cycle. Money is good as you can shuffle it back and forth, but for some odd reason these same people tend to dislike it if they have given you a gift and you give it back to them when they have a celebration.

What I typically do during Christmas, for instance, is that if A gives me chocolate (C1) and B gives me chocolate (C2), I just act as a proxy and give A the C2 chocolate and B the C1 chocolate. If I get chocolate from more people, then I just hand them out in a random fashion back to the people. That way everyone is happy and I, not liking huge amounts of chocolate, don't get stuck with any useless stuff.

At this point I guess I should just say it out loud very clearly: I do not want or expect presents. If you must give me something, please donate to some good cause and tell me about it. It's a lot more useful than filling my already small apartment with all sorts of crap that I don't need. Alternatively if you don't want to help charitable foundations and still want to give me something as a present, please call me and I'll tell what equities you can purchase and transfer under my name to complement my existing investment portfolio.

Mission statements

Zephyr Holdings aims to build and consolidate leadership positions in its chosen markets, forging profitable growth opportunities by developing strong relationships between internal and external business units and coordinating a strategic, consolidated approach to achieve maximum returns for its stakeholders.

Well, maybe not. But visions and missions are in fact important. And doing the properly is bloody difficult... (And the above is from Max Barry's brilliant book, Company.)

Small cap, medium cap, large cap

If big company executives aren't necessarily a good fit for small companies and if small companies are the ones driving the change and the big companies need to change, does the big company executive have any role in a changing organization?

Of course, but Ben Horowitz has an interesting blog post about the mismatches between big company execs and small companies. I was just thinking a couple of steps ahead and wondering if the big companies should bring in small company executives to drive the change. A provocative thought...

Eating out

In the past half a decade I can trace a very clear trend in regards to eating out. During my time as a freshman eating out was something that you did out of necessity: I am incredibly bad at cooking and I had to get food somewhere. It had to be cheap and there had to be lots of it. The typical student strategy, which more often than not resulted in government subsidized student meals twice a day, once at 10.30 when the restaurants opened and another time at 18:00 just before the restaurants closed. In retrospect the food was horrible but I survived.

Eventually your income starts rising and quality of life improving. As a proxy of this phenomenon someone once suggested the size of your stomach: you must be wealthy if you can afford to be fat. That may have worked in the era when only wealthy people could avoid manual labor and grow fat off of their capital income. But, for me the increases in income resulted in middle-of-the-road dining experiences. Chain restaurants. Bad service, mediocre food, and extraordinarily astronomical prices compared to what you got. So in a way this was not my finest hour, but something necessary to learn a bit more about how the world works: there are too many fools that can be ripped off by restaurant chains that play the volume game.

As is typical, after the dark ages people start getting wise again. And in my case my renaissance began when a couple of lawyers provided dinner at Chez Dom. I got interested and checked out the prices, and lo and behold, they were not even that bad. Nowadays a two Michelin star restaurant will serve you lunch for 30 euros: amuse-bouche and three courses. Relatively speaking a fair bit more expensive than your typical 10 euro lunch, but in absolute terms not that horrible. And this was the crème de la crème of Helsinki, mind you.

So, since then I've changed my strategy in regards to eating out. If I'm just hungry, I typically keep a mental list of the places with the cheapest prices for the most amount of food with the boundary condition of a certain threshold in regard to the quality of food (the "no frills" strategy, so to say). And then I have a separate list of places where I will eat if I eat out with other people. The common aspect for those places is that none of them is a chain restaurant, none of them is in the absolute high-end category, but just below (the best is if you are able to find a restaurant that is destined to get their star, but hasn't gotten it yet, so the price point is still slightly lower but the food and service is fantastic). And interestingly enough more often than not the prices are in fact only marginally higher than with chain restaurants and the other places that rip off ignorant middle classes.

And as a result, I can finally say that I am eating better than ever and at a fraction of the cost that I thought this type of life style would require. Unfortunately many people don't see the above dynamic about how middle-of-the-road restaurants rip you off and how much you could better your experience with a marginal increase to the cost. This ignorance also shows up in other aspects of certain people from this group, namely the inability to handle simple processes like reserving tables, arranging dinners, and so on. Fortunately we all have the possibility of choosing who we eat out with and who we engage with. Thank god.

On rejuvenating a company

As has been noted before, my recent interest revolves around aspects of evolution, especially that of industries and companies. Again, the age-old question of why companies die and how that can be avoided remains something of a key question.

Interestingly enough a few months back I was listening to Aubrey de Grey talk about aging and the provocative thought of near-eternal life. The argument supposedly goes metabolism causes unwanted side-effects (or damage) in our bodies over time. Eventually due to the accumulation of damage we end up dying, which on an individual level can be a rather unpleasant experience, depending on circumstances. Anyway, the idea is that by repairing the damage periodically we can rejuvenate the body and in a way turn back the clock. Advances in technology paired with iterative rejuvenation should then result in a situation where we would supposedly escape death indefinitely.

Regardless of whether or not we believe de Grey, I see an interesting analogy between this and what is killing off companies. If we start from a small start up, typically things are very ad hoc and agile, unorganized and clear. With a small amount of people making up the company, things just work. Of course this structure is very fragile and susceptible to all types of problems due to the lack of experience, much like children. The company can stray from its path and end up killed by being run over by competition. But such is life.

Over time the companies that aren't killed get smarter and smarter. They learn how to survive, how to satisfy customers, and so on. The growth is thus happening and typically in order to get the revenue to grow, companies need to scale up and thus recruit new employees. Over time the company must put on some excess weight, or overhead, in the form of administrative roles and structures (e.g. reporting structures, organizational structures, etc.). The structures typically appear to solve some problem. Reporting structures attempt to solve the problem of communication, which arises when enough people work in an organization and it is no longer feasible or possible to have everyone talking to everyone. So, structures in a way should be subordinate to problems.

With size and wealth comes relative stability. A single failure might no longer cause death and the company also learns to view and evaluate the world (or the industry it operates in, which is pretty much the same thing in this case) from the perspective of survival: the organization has learned from past mistakes. Enter path dependence and the increasingly heavy bag of history. Culture and status quo forms and the company keeps growing. Implicit knowledge is taught to new employees and the culture grows. People start doing things in a certain way since that's how it has always been done. The structures solidify and become axiomatic.

Unlike humans who grow and function in a more or less unchanged environment (where the change is so slow that it does not matter from the perspective of an individual human), companies operate in a much more unstable environment. Thus as the market demand changes, the companies must evolve to address new situations. Humans very often don't need to do this: the sun rises tomorrow, much like it did today. But the company must change, it must act differently at different parts of an industry's life cycle. The structures which served one purpose need to be changed to accommodate the changing environment. But as the structures become more and more rigid, change becomes more difficult. Inertia creeps in and damage begins to build up. Eventually if the company isn't able to reinvent or rejuvenate itself, it dies.

I'll admit that the analogy isn't perfect, but the parallels are surprisingly much aligned. Now, what is the practical implication? The older the company, the fatter the organization, the more unable it is to change and eventually it will get killed off, either by its own inability to function or alternatively it will get eaten up by the new breed of predators. Some people have argued that action comes from structure, and if we accept this, then its clear that to get different action the structure must change. So thus, to put it very bluntly, the rejuvenation of the company means the breaking of existing structures to build room for new structures.

First impressions

I recently had a learning experience interviewing people for a job. It was my first experience with something like that and what a learning experience it was to sit on the other side of the table and look at the situation from a completely different perspective. I thought that I would try to summarize some key things to keep in mind if and when I'm on the "regular" side of the table again in the future...

1) First impression matters. Exclamation mark. Seriously, it's a cliche, but I would say that judging by my experience it held very much true. The impression that I got from the first few minutes would typically hold true for the entire course of the interview. So try to get that right.

2) Be prepared and have your papers in order. Due to various reasons I didn't have the possibility to get very much acquainted with the CVs in advance, so it would be beneficial to bring a complete set of all relevant documents to the interview. If you intend to show something, be prepared in advance; asking the interviewer to lend you a laptop for showing something from online is somewhat awkward.

3) Answer the questions. It was quite surprising to me to run across some cases where people wouldn't answer the question they were asked. They would instead circle around the question. If you don't know the answer, the next best thing from my view would be to admit it. If you may have some clue, you could open up your thinking by explaining out loud, but in this case it should be clear where you're going with your answer. As a spin off of this, know what you know and more importantly know what you don't know. Trying to bluff the interviewer is hazardous: it is very much possible that the interviewer will know more than you and if you get caught bluffing, that is not good.

4) Open questions are a lot more fun for the interviewer. If, however, the interviewer starts asking simple and direct, closed questions, this may potentially be a bad sign. In my case once I didn't get satisfactory answers for open questions and I needed to just see if the interviewee knew anything of the subject, I would narrow my questions and form them more like exam questions and ditch the discussion or dialogue approach.

5) Be active. If the interviewer needs to drag out all the bits and details from you, it reflects somewhat badly on the perception that people are getting from you: are you really the go-getter type of person? Ask questions, show interest.

I guess there were also other things I noticed, but these were some of the top things that came to my mind. Now that I've written them down on paper, most of them seem like common sense. And I guess they are precisely that.

A short introduction to investment banking...

On human capital

Being in a happy position of still retaining the title of student I've been able to talk to a fair amount of different companies and their representatives. On top of the network of people who you've sat with and solved differential equations in Mat-1.1120 also talk a bit about where they've ended up and what they're doing. The insights about how the market and employers work is a rather illuminating experience and it seems that the age old rules of thumb still apply...

Some say that if you truly want to learn, go to a small company or start your own. You get your hands dirty and learn by doing. The salaries aren't that great, but you get a sense of accomplishment when you ship something to the customers or finish a project and see how you've made a tangible difference somewhere. It's also a world where bullshit doesn't fly; the small companies don't have the luxury of employing the standard mid-level management. If it doesn't contribute to the bottom line in one way or another, it won't fly.

On the other end of the scale we have the multinationals. Compared to the startups the difference is drastic: you actually get paid every month regardless of the financial success of your company, which is sort of cool. The nature of the game also changes: you start doing more abstract things and at times it may not even be clear who exactly is paying your salary and why they are doing so. But it enables you to spend a lot more time just thinking about things instead of having to run around trying to ensure that the company will survive next month as well, which is often the top priority in smaller companies.

Salary-wise it's actually interesting. I guess with large companies the salaries follow a bell curve with the average being some decent middle-class figure. The start-up world in turn may also follow a bell curve, but the average is way lower and the variance is very much higher: you get shitty salary but if things go will, your equity stake will be worth a nice and tidy sum... Something that doesn't typically happen in the Fortune 500 companies. Or that's anyway the feeling I had. Recently I've started to think that maybe even the large companies are not that uniform: some get a totally shitty salary, more people get a decent salary, then there's a gap, and finally the few get paid enormous amounts in various types of compensations.

But the practical implication, then, is the age old notion that if you want to do cool stuff, go start companies or join small companies. You won't necessarily get great financial rewards, but it'll be pretty goddamn fun. If, on the other hand, you want to be sure that you'll never make a difference in anything but aren't hanging by a thin thread either, go to a big company.

The question is thus the following: having experienced both worlds, which one do I actually want to belong to? The sense of accomplishment is far greater in the startup world, but the big companies are places where you can grow old and fat without having to really worry about anything...

Speed of technology cycles and process/product innovation

The speed that new technology emerges has been speeding up over the course of our history with the reasons being plentiful. The idea in essence is that for instance writing took pretty darn long to emerge in its current form and be widely adopted throughout the world, but for instance computers went through the same cycle in a fraction of that time. I don't have the references off the cuff now, but I recall running across some papers on this issue a year or few back.

Recently I've also had to go back to basics and read a bit of Utterback and Abernathy, and other such guys, on industry evolution, ecology, and the whole shebang. Well, ok, Utterback and Abernathy looked at the swings between process and product innovation, and the simple thought from that is well summarized in Nelson's paper from 2001: product innovation is driven by the amount of firms in an industry, process innovation by the size of firms. In practice this means that when an industry or technology is emerging, small entrants are plentiful and thus product innovation is abound. Then when dominant designs begin emerging some companies fare better than others and thus we get big companies. Or alternatively existing big companies enter the industry. The end result anyway is that the competitive advantage shifts to process innovations as the big companies tend to be good at throwing resources at things and developing processes. Scale benefits and such then ensure that small companies either exit or gravitate toward non-mainstream niches.

But what if you lump these two things together? Technology cycles become shorter, thus meaning that the time window for big companies to reap benefits based on process innovations is shortened (I guess that product innovation cycles will also shorten, but I think the point is that to have relevant process innovation, you first need a product and the business, otherwise it's pointless). Will this, then, imply that big companies will be at an increasing disadvantage because of their inertia and inability to perform product innovations, at least on the level that start-ups can? And will this, then, imply that from an evolutionary perspective the days of the big companies are outnumbered?

Books and covers

I ran across Fantastic Plastic Machine quite some years ago, mainly by stumbling on the first track of FPM's third album, Luxury. The track was quite aptly named Theme of Luxury, which I fell in love with right from get-go. Trying to describe it would only discredit it. Yes, it's that good. Unfortunately (or fortunately?) the rest of the album was, well, very different. As a matter of fact the album itself is as eclectic and diverse as they come. So I was somewhat disappointed with the album and it has been lying around ever since. Well, up until recently, anyway, when I finally picked it up again and started to listen to it, and lo-and-behold, it is in fact very good.

I guess the underlying dynamic here is that based on the first track, I was expecting something. The album didn't deliver that, and that was the letdown. But what it does deliver is something else, which is equally good, just different. It's like picking up the swimsuit edition of Sports Illustrated and finding out it reads like The Economist. Well, not really, but you get the idea.

Tuition fees

We've traditionally had free university in Finland, meaning that in practice students do not pay for their education. This system has essentially afforded equal opportunities for people regardless of socio-economic background to educate themselves in universities. Now, recently there's been talk of introducing tuition fees in Finland. This presentation made by a group doing a report for the government would suggest a yearly fee of 1000 euros per student, translating to an extra 250 million euros of income per year for the education system (calculations done by Helsingin Sanomat). The rationale behind this move would be to get students to graduate faster as well has help in hiring new faculty, and so on.

Technically the goals of this initiative sound good: who wouldn't want to graduate faster and have more faculty per student than before. However, this somewhat undermines the free education principle. Some people stand very firmly behind the principle, but I don't consider myself as much of a hardliner on this issue. From a practical standpoint, however, I'm am somewhat worried about this turn of events: if the system was working and someone could guarantee that the extra 250 million would be spent wisely and would in practice improve the quality of education, I wouldn't necessarily be that much against it. But I fear that the extra money wouldn't matter; it would be squandered on pointless exercises and real tangible value would fail to materialize for the students.

Aalto University, the merger between Helsinki University of Technology, Helsinki School of Economics, and the University of Art and Design Helsinki, promised lots of new and unique opportunities for students. The jury is still out on this one, but as far as I'm concerned this seemed precisely like an exercise that could bring synergies via increased economies of scale: reducing overlapping functions and bureaucracy and refocusing the left over resources on improving quality. Instead my current feeling is that this isn't happening. I don't have any hard evidence, but I have a feeling that the bureaucracy has in fact increased and thus I'm not so sure throwing extra money helps. There's a saying that states that only when money runs out does the thinking start. So in practice as long as there is an abundance of resources nothing will really change as it doesn't really have to.

So based on this I would argue that the system shouldn't be rewarded with more resources before it can clearly demonstrate that it will not spend the resources on completely pointless work groups consisting of bureaucrats who just like to spend their time in glorified workshops in remote locations.

As for the tuition fees themselves, that's also somewhat of a difficult issue. On one hand I somewhat understand the logic of putting some pressure on students: if you want to study, you have to be confident enough in what your doing to put some money where your mouth is. But many students are already doing this as traditionally the state support for students hasn't been that great in Finland and students are often forced to take jobs on the side (as a curious side note, I argue that this habit of taking up extra work is especially good for engineering students who clearly benefit from the overlapping of school and work and are thus, in my opinion, better prepared to face future challenges when compared to being merely school educated and lacking all practical experience coming out of school).

From the point of view of an individual student the net effect isn't too different if you consider two options: 1) institute tuition fees or 2) reduce state support for students. The result is less money for the student, meaning more work or more loans. I am a proponent for the work-while-studying approach, but that's mainly in the cases where the work actually supports studies. In cases where the work is routine manual labor and doesn't really overlap with your studies, the benefits are not as many. And ultimately I'm not sure either approach is necessarily that good, despite the fact that provocatively enough I often do argue that students need to indeed be ready put up a bit more of a stake than merely saying that "Yeah, I'll graduate, maybe..."

So what should be done, then? I actually think that tuition fees shouldn't be instituted. I also don't think that student support from a financial standpoint should be increased either. I do, however, think that one thing where students could use support is with affordable housing. To an extent this mechanism is already in use as student housing is given to students for a certain period of time with the assumption that students will eventually graduate or then get kicked out of their apartments after some years. It's the cheap housing which then enables students to have slightly more cash with which to improve their lives, and more money can then be obtained via working or lending money from the bank.

But yeah, by no means is this a simple issue and the problems are very much real. However, I think that both the students and the government are coming at the problem in a way too hardliner way which to an extent frightens me. Schools don't deserve any more money as far as they're as fat as they currently are and tuition fees are a bad idea, but also giving students too much financial aid (as opposed to loans) is also somewhat questionable. The fact that students take quite long (~6-7 years, I would guess) to graduate may not necessarily be a bad thing, and the government should try to understand that point as well. As for the students whose studies drag on and on, I would argue that there's hardly any extra cost (after the already sunk costs) for the state as these people often don't attend lectures and classes and are merely trying to finish their thesis or do the last couple of exams and are thus hardly more than a few bits in a data system.

These were just my two cents on the subject from the top of my head, so again I reserve the right to change my view in the morning after I sleep a bit...

Strike!

AKT, the Finnish transport workers' union, went on strike yesterday. Today the strike ended with both the employer and employee sides still unsatisfied. The strike itself brought Finland, to an extent, to a halt as all forms of automotive transport from public transport to cargo traffic came to a halt. Without going into the employee side's demands, this illustrates an interesting dynamic: in effect a single union can hold more or less an entire nation hostage. This situation seems completely absurd as in a sense the union seems to have a type of a monopoly on the human capital that its members essentially sell to companies.

Building off this analogy, it's interesting that this type of behavior is allowed from a legislative perspective. If we would have a company with a monopoly position behaving in a similar way, using it's monopoly to hold its customers hostage and forcing its own will on others in this respect, I'm quite certain that many regulatory entities would have a field day beating the company around with antitrust legislation.

Collars

I recently gathered quite a strong opposition by arguing for contrast collars and cuffs. It seems that very many people don't like the look, which begs a question regarding why. As we know from history, the wealthier individuals have traditionally clustered towards white shirts, namely to demonstrate wealth by being able to keep the shirts white when the lesser people would soil them quickly. The story goes that white shirts eventually became boring and thus some individuals took to wearing also colored shirts, but opted for white collars and cuffs as these were the parts which would soil most frequently, thus still being able to differentiate from the pure blue collared group. Since then it seems that most people associate contrast collars with bankers and other suspicious types.

So thus it seems that ultimately there would be three potential reasons for why people might object to contrast collars: 1) because they are, to an extent, a sign of wealth, 2) because they are, to an extent, associated with questionable people who aren't too well liked these days, or 3) because of aesthetic reasons. The first point is easy to discard as it would imply that the same people would also need to object to white shirts, something which isn't as widely spread as a viewpoint as the hatred towards contrast collars. So then it must have something to do with the links to certain shady occupations or pure aesthetics.

We can't do much about the second point, but the third point warrants some more discussing. My girl friend is very open about her distaste towards these types of shirts and bases her argument on the fact that they just look horrible. There are some theories as to why contrast collars might appear horrible. Some say that if the tie is too pale it will get lost in the color of the shirt and thus allow the collar to stand out too much. This point is increasingly relevant as the contrast between the shirt and tie increases, namely by making the shirt out of stronger colors than the traditional light blue or light pink. Others suggest that the white collars draw the attention upwards and into the face of the person, and that this wouldn't be a good thing. I can't for the love of life recall the reasoning behind this argument, but I guess a tongue-in-cheek interpretation might include the face in question in the equation: if you have an ugly face, you won't want to draw attention to it... Discarding the second point we still find two things to bear in mind: make sure that your tie dominates the shirt, not the other way around, and that the contrast between the shirt and the collar doesn't become too drastic.

Moving on, to provoke people even more, I decided to go ahead and order yet another MTM shirt from France, this time with a nice 120s poplin with blue and white stripes combined with contrast collars and cuffs. And to ensure that there are enough stares, I also ordered a pair of braces from the UK to conclude the slimy banker look, which should be perfect for the upcoming premiere of Wall Street, the sequel.

Bow ties

I may have to start wearing bow ties way more often in the future, if only for the fact that it's incredibly good looking to lounge around with an untied bow tie around your neck and a bit of whisky in your glass.

And on an unrelated note, Gounod's interpretation of Goethe's Faust, as performed by the Finnish National Opera, was somewhat of a let down. I was expecting the devil to be a bit more sinister.

"I could talk about that, but I won't..."

The sheer energy of the guy is amazing... Both inspiring and funny...

On taxation

The tax debate is in full swing in Finland again, this time regarding capital income and how it should be taxed progressively. It seems to me that progression is the trendy word these days, so I'm going to leap-frog myself over it and discover the next big trend around the corner: regression. What I propose is simple: regressive taxation. The more you earn, the more you pay taxes in absolute sense. But in relative sense your tax rate should decrease as a function of your income (be it salary or capital based).

But, this is still merely a stop-gap on our way to the ultimate goal: regressive taxation where relative taxes decrease so as to ensure that everyone pays an equal amount (in an absolute sense) of taxes, regardless of income levels. This would naturally be the ultimate fair and reasonable solution! Everyone would finally be equal, regardless of race, gender, wealth, and so on... ;)

Research questions

One of the biggest challenges so far is nothing new to anyone who has ever written academic papers: how to define what it is exactly that you want to do and how to scope it? This often manifests itself as the difficult of defining a good research question. By instinct I would say that the difficulty is in trying to define a set of questions which are not only interesting, but also solvable while not being entirely naive. There may be more aspects as well, but those came to mind right away.

Regardless, the broad strokes of my thesis have been more or less clear for a while:

1. I want to look at two industries (automobile and ICT).
2. I want to use the industry evolution viewpoint and systems thinking (more specifically system dynamics) to hit stuff with.

What then happened was that I decided to more or less climb up a tree arse first, as I typically do. So I figured that maybe these two industries have links between each other, which could be manifested in various ways (e.g. by the emergence of ICT stuff in your everyday cars). Building off of this, I got excited and decided that obviously I could find some smaller subindustries from beneath the two and argue that they are moving towards each other, in which case my core idea would be to speculate on a collision test: how do two industries (or subindustries in this case) collide, what are the aspects related to something like this, and what does theory say about industry convergence or industry formation.

When I woke up this morning I decided that maybe I'm going at it the wrong way. Getting anything empirical from the above would possibly prove rather tricky. So I had another Idea, despite the fact that more intelligent people than I have said that when writing a thesis, if you get any type of idea you should immediately kill it as MSc theses are no places for ideas. I know these people to be true, but come on, I have an Idea and I trust myself implicitly!

So, maybe my problem is that I'm making too many assumptions about what might be happening. How the hell could I know what exactly is going on between two massive industries when I haven't even talked to any of the companies directly and tried to get an idea of what is actually happening. But one thing is certain: companies in these two industries are talking. Can't deny that. But will it result in industry convergence or industry formation? Perhaps not, as both are large, well established industries themselves. So maybe there isn't any collision to look at per se. But there are obviously cross-industry interactions going on in the form of companies talking with each other, doing products which interface increasingly with each other, participating in the same industry discussion platforms, talking with the same regulators, and so on.

Now, maybe a more dialed down version of an approach could be as follows:

• What are the mechanisms for companies to interact (e.g. collaborate) across different industries?
• How do cross-industry interactions shape the evolution of an industry? And vice versa?
• What is (and has been) happening with the automobile and ICT industries: what does theory say, what does practice say?

This set of questions seems, from my point of view, to be a lot less assuming than the original approach. They're also slightly more boring, and I've yet to figure out what exactly the really cool thing would be. But herein lies another point that I often overlook: maybe my thesis doesn't in fact need to create any type of radical new insight, maybe it's enough that I just apply the scientific method and solve at least the questions above. Getting empirical material for the above questions should be too difficult, so in this regard it also seems doable.

Finally, let me conclude by saying that most of the thinking I was doing while I was writing. And I spent about 15 minutes performing the act of writing. So I reserve the right to decide to revamp the approach at least three more times by lunch, and continue at that pace for as long as I see fit. But hey, it's better to have these types of mood swings at this point of the process, as opposed to the end of the process (I have experience about that as well: I ended up writing my BSc thesis three times during which I slightly evolved my viewpoint during every iteration: I can't suggest that approach too much...).