Over on the Measure blog on Medium:
This is the first in a series of posts about building a blockchain protocol for market research. The series is aimed at people in the business of research but many of the interesting and difficult topics center around markets and incentives and trust and are likely interesting to anyone thinking about applying blockchain technology to an industry.
On the Sia blog, Zach Herbert wrote about some of the thinking behind Sia’s two-token cryptoeconomic model. It’s good and worth a read. It prompted me to float some thoughts on revenue-sharing tokens.
Note: I haven’t thought too deeply about Sia’s particular use case so my thoughts/questions here may not be applicable. I’m just speaking about revenue-sharing tokens in general.
It seems to me that revenue-sharing tokens have strange consequences in public protocols and raise the question of what is reasonable/fair compensation for protocol developers.
Founders (and revenue-sharing token holders) are incentivized to maximize network usage. This aligns very well with network participants in the early days of the network where growth is generally beneficial for everyone. Over time, however, alignment seems to diverge.
At some point, for some/most network participants, the network is big enough and diverse enough that it meets their needs and further network growth has diminishing or zero returns. At this point, participants become much more interested in the efficiency of each transaction.
But there is nothing that they, nor any other stakeholder (e.g. miners), can do to drive down the "tax" that they have to pay on every transaction. The revenue-sharing fee is independent of the cost-of-goods and so runs the risk of seeming punitive.
And short of a network revolt, even if revenue-sharing token holders could reduce their fees, they are not incentivized to do so.
In this respect, from the perspective of network participants, single-token models seem to compensate founders more fairly: founders get paid as the network grows but not beyond that. Extracting fees from a network in a steady state smells like rent-seeking.
BTW, I also somewhat disagree with the criticisms of single-token models in the article. I think vesting schedules for founders removes the desire to pump the token in the short term and models such as those suggested in Kyle Samani’s New Models for Utility Tokens can attenuate the velocity problem.
(I'm working on a new crypto project so it's going to get pretty blockchainy around here.)
For anybody interested in crypto, I highly recommend reading through Nick Grossman's recent presentation on Why Tokens Are Fundamental:
"Cryptonetworks" can help us build a more competitive, innovative, secure and decentralized Internet. "Tokens" (also known as cryptocurrencies or cryptoassets) are integral to the operation of cryptonetworks. As we design new laws and regulations in this emerging space, we should keep these concepts in mind, beyond the financial aspects that are today’s primary focus.
It's a good followup to Joel Monegro's seminal post on Fat Protocols.
Great article on Stratechery this week about the recent evolution of Facebook's News Feed and how it might impact users, publishers, and advertisers.
It wasn't really an important point in the context of the article, but I loved Ben Thompson's distillation of the most extreme bear case for Facebook:
At this point, my most extreme Facebook bear case is that the service is the equivalent of an email address: something nearly everyone has because you can’t function without it, even if it’s not their preferred means of communication.
I think this is spot on.
Jason Fried:
There’s nothing wrong with loving what you do, of course – I just don’t think it’s a prerequisite for starting a business or building a fulfilling career, let alone doing great work. In fact, I think it’s disingenuous for really successful people to put so much of the focus on love, just as it’s disingenuous for really rich people to say money doesn’t matter.
I feel like this is a genre: disingenuous things that really X people say about the importance of X (or thing related to X).
Alex Honnold, in a Q&A with Men's Journal about the Dawn Wall climb that Tommy Caldwell and Kevin Jorgeson are close to sending, on what's it's like to live on wall for many days:
I've been on [El Capitan] for four or five days trying to free routes but I've never been on the wall for two weeks. That's kind of like a different level. What people maybe don't appreciate is how hard it is to be living on a wall. I mean they haven't walked in two weeks. They've just been laying and standing and pulling really, really hard on small holds. So the fact that they've had to recover and stay well-fed and hydrated and take care of their bodies while just like laying in a cot. Imagine getting out of your hospital bed and doing like the hardest rock climbing that's ever been done and then getting back on your hospital bed. Like, 'oh, now it's time to recover.' It's not like taking a shower and stretching and taking a stroll for a little a bit. It's hard living.
The second-to-last episode of Very Bad Wizards features a marathon interview with Sam Harris that focuses on free will and moral responsiblity. If you have even an ounce of philosophy in your bones, I can't recommend this highly enough.
In a nutshell, the lads all reject the concept of libertarian free will, but have various disagreements on the implications of this, at least in terms of moral responsibility and blameworthiness.
When you've finished listening to the episode, go and read Daniel Miessler's response. His reaction was very similar to mine. In particular, he was frustrated that they seemed to have lost sight of what appeared to be the krux of the issue:
Once we as individuals, or as a society, accept that free will does not exist, what justification remains for moral responsibility outside of a consequentialist framework?
Since listening to the discussion, I've become more sympathetic to the positions of David and Tamler (David Pizarro and Tamler Sommers, that is, the wizards), but I still take Sam's position. I think the part of Tamler's alternative that frustrates me is that the point at which one draws the line between morally responsible (or blameworthy) and not seems to move based not on whether an individual accepts that an action was causally determined, but on whether an individual feels the emotional and intellectual weight of that fact. It bugs me that the position of that line will change over time (as people increasingly feel the weight of determinism) and also that there is bound to be some situations, perhaps even the drunk driving situation hypothesized in the discussion, for which some people will never feel the weight. This distinction feels too squishy to hang a moral framework on. (But perhaps good moral philosophy is bound to feel squishy. We are, after all, meat roombas.)
(Note that I'm not at all sure that Tamler would agree that that's where he draws the line. That's simply my understanding.)
Anyway, when you're done with Daniel's response, go and read Billie Pritchett's summary. It's incisive and clarifying and provides a rich philosophical backdrop to the discussion. He pegs Sam as a global consequentialist, Tamler as a virtue ethicists of sentiments, and David as a deontologist. I'd love to hear whether or not they agree with these labels.
Also in that summary is a lovely little diversion on global consequentialism and the recusive moral computations it entails:
Harris doesn't say this on the podcast, but he's a consequentialist of a particular type, a global consequentialist. A global consequentialist is someone who believes that when judging the consequences of human well-being, we have to take everything into account. This would include taking judgments into account now and judgments as they would be at some optimal state of the species. Whatever could contribute to well-being, even perhaps the consequences of accepting the things that we think would contribute to well-being into well-being, ought to be considered, and when we do, we will actually improve well-being. Notice the odd but cool (?) recursive quality to the position.
Finally, you should listen to the followup episode of the podcast, the first half is a continuation of this discussion, the second half is typical VBW goodness.
And jeez, just go and subscribe, you bum.
BTW, I've linked to this episode and the posts mentioned above on Twitter a few times already. One of those tweets included a quote from the show:
'Ok, but the bridge of "fuck it" doesn't really seem like a philosophically deep argument' @SamHarrisOrg on latest @verybadwizards
This was said by Sam in response to a throw-away line by a temporarily exasperated Tamler. On the followup episode Tamler complained about the legion of Twitter brats that threw this line back at him (presumably as evidence of a hollow argument). To assuage my guilt I just want to say that I quoted it merely because I thought it was a funny line from the show, not to make a any sort of philosophical point. Philosophy full of f-bombs is my jam.
A corollary for product managers to Ben Horowitz’s Peacetime CEO/Wartime CEO:
Peacetime PM writes 25-page comprehensive specs. Wartime PM writes 3-page specs that addresses non-obvious issues and contentious questions.
Bob Hoffman, the Ad Contrarian, caustic and on point:
What marketers still refuse to comprehend is that, at best, advertising is a minor annoyance. It is pretty clear that most consumers are willing to go to substantial lengths to avoid it.
Yieldmo summarizes their top 5 mobile ad experiments of 2014. These are all really interesting veins to mine: intentionality, engagement, viewability, urgency, and user interruption.
Intentionality is incredibly important in mobile. I suspect that the accidental click problem is much larger than any of us want to admit.
However, what I'm really encouraged by is the inclusion of user interruption:
Imagine recapping the day’s tweets on your phone. Suddenly, someone wrenches the device from your hands and shoves an ad in your face. It sounds awful doesn’t it? It also sounds like a lot of mobile advertising today. At Yieldmo, we’re constantly experimenting with how to deliver pleasant ads that keep users on the page and engaged with the content they came for. Worried that this will harm the ad’s performance? You’d be surprised.
I think user experience, holistically, is the biggest opportunity in digital advertising, mobile or otherwise. Furthermore, I suspect that, in the short/medium term, there is more easy ground to be taken in identifying and avoiding negative user experiences than there is in doubling down on positive experiences. But these are two sides of the same coin and so any real progress here, whether towards positive experiences or away from negative ones, is more than welcome. I have a lot more to say about this topic, but I'll leave that for another day.
I think Yieldmo are my favorite ad tech startup right now.
Last week, Dr Dobbs, the respected, elder statesman of programming journals, announced that they were closing:
Why would a well-known site, dearly loved by its readers and coming off a year of record page views, be sunset by its owner?
In one word, revenue. Four years ago, when I came to Dr. Dobb's, we had healthy profits and revenue, almost all of it from advertising. Despite our excellent growth on the editorial side, our revenue declined such that today it's barely 30% of what it was when I started. While some of this drop is undoubtedly due to turnover in our sales staff, even if the staff had been stable and executed perfectly, revenue would be much the same and future prospects would surely point to upcoming losses. This is because in the last 18 months, there has been a marked shift in how vendors value website advertising. They've come to realize that website ads tend to be less effective than they once were. Given that I've never bought a single item by clicking on an ad on a website, this conclusion seems correct in the small.
This is too much whimper and not enough bang for such a great, old property. I'll miss it.
It points at the larger cosmic shame of advertising suitability, which is that there is very little correlation between the quality or worthiness of a piece of content or property and its suitability for advertising.
Reading this essay has modified my world model re: rereading.
Reading and experience train your model of the world. And even if you forget the experience or what you read, its effect on your model of the world persists. Your mind is like a compiled program you've lost the source of. It works, but you don't know why.
VentureBeat write about a new piece of research Nielsen and AOL have released on how attention plays into the consumption of TV and online video and how that relates to ad effectiveness.
(This is a topic that is close to us at YuMe, in fact, we've done a bunch of research with IPG on it.)
The results are mostly obvious – we all play with our mobile devices while we watch TV and as a result pay less attention to the ads – but there are interesting and specific numerics. The recommendations, however, are pretty depressing:
These are logical, I guess, but are only going to make the problem worse. Nobody wants the TV to start shouting at them. Repeatedly.
More data is available at AOL's site.
I've been thinking a lot about advertising in terms of first principles lately. One of the things I've been wondering about is the ways in which advertising can be a net positive on the world. I think there are three:
Advertising can be useful for finding out about products and services.
Obviously. Perhaps the most acute example of this is Google's search ads.
Advertising can be entertaining.
Whether or not a particular ad is useful, it can be entertaining. There are many sub-genres of this. Ads can be entertaining in the same way that content or art can be entertaining, i.e. they can be funny, inspiring, educational, beautiful, titilating, arresting, etc. Super Bowl ads are usually great examples of this.
Advertising can support great content and endeavors.
It's hard to do a controlled experiment here and be certain that a world devoid of advertising would have less great content in it than a world full of advertising. However, it does seem likely. Regardless, the world we live in has substantial advertising infrastructure in place, and, happily, that infrastructure is able to provide financial support to many great journalists and artists and adventurers and athletes.
Perhaps not surprisingly, it seems that when most people are asked this question they immediately think about public service ads such as anti-smoking or AIDs awareness campaigns. I agree, but I happen to think that those are simply instances of 1 and 2.
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