East Coast Study Trip

2013-03-24 22.45.242013-03-29 23.48.38

After a quick 2-day trial hop to visit a few firms like Boeing and Starbucks in Seattle in November, the Sloan Class of 2013 spent a full week of our spring break on East Coast. This time it was less about the particular companies and public organisations we saw, but more about the people, the leaders we met and their learnings and ideas.

All of our hosts had a little theme tip on “resilience” included in their brief (inspired by the Resilience: Why Things Bounce Back book by Andrew Zolli), which some of them chose to focus on and others less so. But most importantly, everyone seemed to just be themselves – which, mind you, can mean something quite different in bluntly direct New York compared to politically polished Washington, D.C.

I certainly appreciated the trust of the open conversations and I am holding back on too detailed notes from the meetings. Yet, just listing the names would be boring too – so let me include just one or two ideas from each. Which, as I am doing this weeks after the actual trip and by heart, are implicitly the concepts or questions that stuck with me – even if the wordings are my interpretation, not direct quotes.

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Week 12: Discounting the Future, SEC Investigations and Visiting Founders

Stanford GSB Sloan Study Notes, Week 2, Autumn quarter

Covered in this issue:

  • Rational decision making. Why and by how much discount the future?
  • In search for a strategic fit – those sweet moments when stars actually align for a while. Resulting competitive advantage that holds due to the complexity of interdependencies. Cases: CapitalOne (data driven mass-personalisation) and Lincoln Electric (super productive manufacturing).
  • Real-Life Ethics: Guest Michael Marks on being bullied by huge OEMs while Flextronics CEO. And should a SEC-inestigated company throw an innocent CFO over board to settle? Role of the board in backing the CEO.
  • Guest selling their story: Smule co-founders Jeff Smith & Ge Wang. Andrew Mason of Groupon.
  • Peer-organized public company valuation training.
  • Analysis of a persuasive argument: 1 man turning 11 jurors around in the 12 Angry Men movie. The case of Silicon Valley’s most effective networker.
  • Cash flow reporting. And intangible assets, especially software.

And here on to the full notes: Read the rest of this entry »

Week 11: Instant Gratification, In and Out of Orgs and Biases

Stanford GSB Sloan Study Notes, Week 1, Autumn quarter

The gearshift to the fall quarter was quite a big one. Going from 13 to 19 units (full schedule here) means days starting at 8am and running straight to 5pm two days a week, leaving slightly more time for prep reading and writing on others. We have been assigned to new study groups (mostly for Strategy, where we need to pick a company and country none of us are familiar with and devise the plans for their entry to that market) and generally get to hang much less with other Sloans due to differing elective schedules.

Pardon for the longest notes yet below. I guess I should become more selective as the courseload goes up? Or maybe not, if the filter remains “write down interesting stuff and aha moments only”… If there is any comfort – there are videos, again.

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Week 9: Kant, Golden Balls, Nash and Jack Bauer

Stanford GSB Sloan Study Notes, Week 9, Summer quarter done

Pages assigned for reading: who cares now? 🙂

And this is it, one quarter of our year here is done already, with an awesome Ethics crash course finale competing with TechCrunch Disrupt SF (not part of official curriculum, but stealing a lot of attention from most of the class anyway, esp with their sweet -90% student discount) and all culminating with our last exam, Microeconomics this morning. In which, as you can see from the picture of the scoring table below, I am quite confident to bring home at least 5 points:

Yes, we have been warned about this year passing (too) fast, but I still didn’t expect this blink… And here’s what we learned in the last summer week, before the MBAs stormed the campus for their Week Zero and took most of the spots in the lunch line at Arbuckle:

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Week 8: Eating Dogs, Price Meddling and Whitegoods

Stanford GSB Sloan Study Notes, Week 8, Summer quarter

Pages assigned for reading: ~135

This was also a week of Strategy Beyond Markets exam (24 hours to answer ~10 questions in “hopefully less than” 3 hours and 16 pages; took me 5h and 10 pages -we’ll see…), a very inspiring guest speaker session with Phil Libin of Evernote (with a surprising amount of cultural parallels to early-days Skype) and series of visiting friends on campus, with Ott actually surviving an entire Microeconomics class (photo courtesy of another guest, Silver):

Usual format of study notes follow, with maybe more than usual further reading / viewing links in the end.

GSBGEN259 – Ethics (prof Krehbiel)

  • Four less-than-adequate, yet popular basic theories for right conduct:
    • Ethical egoism: an act is right when it best promotes the individual’s long-term self-interest
      • Challenge: a murderer and resisting victim are both morally right and neither could be judged
    • Ethical relativism: right and wrong are a function of the moral teachings of a particular society
      • Challenge: based deeply on tolerance (an universal moral value), yet it followed through, would require one to also tolerate a deeply intolerant society militantly enforcing its values on another society. E.g no external judging of genocide if it is considered right by one side?
    • Religious/Revealed Ethics: ethical guidance and instruction derived of a particular religious tradition and sacred texts
      • Challenges: diversity of religious disciplines. Virtually no sacred scripture or teaching is self-explanatory and needs interpretation (independent rational basis of judgement). A statement that a God is “just and loving” is based on… the ordinary human meanings of these terms (infinite loop if right is defined as the “will of God”?)
      • Most religious/revealed ethics are a superset of, and thus largely compatible with secular/rational ethics (e.g most condemn violence, theft, dishonesty, etc)
    • Right as conscience alone: right defined by “internal dictate” alone, with nothing more said
      • Challenge: personal moral judgement should a reflective and reasoned act, seeking to understand and decide weather a course of action is right or wrong. Isolation and lack of dialogue make “conscience” an impenetrable back box anyone can use to justify any conduct.
      • Read the rest of this entry »

Week 7: Drugs, Perfect Competition and Rock’n’Roll

Stanford GSB Sloan Study Notes, Week 7, Summer quarter

Pages assigned for reading: only 108!

With the Negotiations crash course ending, due date and presentations of the group projects in Strategy Beyond Markets and all kinds of housekeeping for study groups and Winter/Spring quarter high demand class application “superrounds” and now a long Labour Day weekend ahead, this week turned out to be quite a gear shift down… But a few notes to take down still.

POLECON239 – Strategy Beyond Markets (prof Jha)

  •  “You can always trust the USA to do the right thing, once they have exhausted all other alternatives” – Churchill
  • The public pressure on AIDS drugs pricing in Sub-Saharan Africa made US government to stop pressuringdeveloping countries on pharma IP issues in 90s
    • Did not officially change their view on TRIPS and other international agreements – those still in force
    • Yet “closed” an eye so that Brazil, Thailand, South Africa, India could start producing cheap copies
    • US own GlaxoSmithkline put into substantially worse competitive situation
  • Class-triggered open question to self: what happens to the pharma IP dynamic in the context of medical singularity (e.g when less than a year of treatment can add more than a year to a human’s lifespan)?
    • typical conflict cases (pricing, access to drugs in developing world) to date seem to focus on medication that is intended to reduce suffering, fix diseases, delay death through sickness
    • how will the global relations and corporate VS public needs play out when the drugs are not about fixing diseases, but enhancing/prolonging healthy life? Read the rest of this entry »

Week 6: Torts, the Samurai and Dance of Joy

Stanford GSB Sloan Study Notes, Week 6, Summer quarter

Pages assigned for reading: 157

POLECON239 – Strategy Beyond Markets (prof Jha)

  • Tort anecdotes:
    • The famous 1992 case where jury awarded $2.7M to Stella Riebeck who was burned by McDonald’s coffee she spilled…
      • In class discussion: “This could not happen in Italy. a) espressos are smaller and b) when you spill coffee on yourself, you say “I am stupid” and move on”
    • A Batman costume manufacturer needs to add labels with: “Parents, please exercise caution, cape does not enable users to fly”
    • When Vespa scooters with a storage compartment under the seat are produced, only the ones sent to US market get a warning label: “do not store babies or pets under the seat”

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Week 5: Supply & Demand, Patent Wars & Negotiations

Stanford GSB Sloan Study Notes, Week 5, Summer quarter

Pages assigned for reading: 339

MGTECON209 – Statistics & Economics (prof Oyer)

  • 4/5 cars sold in China in 2011 were to first time buyers.
  • Economists generally study people’s wants, rather than needs.
    • For added confusion, in wealthy countries calling something a “need” is often a value judgement.
  • Talk is cheap because supply exceeds demand 🙂
  • 800(!) occupations in US require a licence issued by local/state/federal government – thus meddling with supply.
    • In 1950s <5% of workforce, >29% in 2008
    • 40% of workers with post-college education also need a licence to work in their field
  • Price sensitivity is a concept, elasticity a mathematical term expressing it
  • Simplifying the elasticity formula
    • (% change in quantity / % change in price) = (change in Q / Q) / (change in P / P) = Slope of Demand/Supply function * (P/Q)
    • important that plugging the slope only works if the graph was drawn the “right” (e.g the unintuitive economist way) where quantity = X axis
  • Elasticity is negative over a products own price, yet positive over direct substitute’s price
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Estonian State Budget Visualized

Garage48.org guys had another one of their weekend hackathon events, returning to homely Estonia (after Helsinki and before Riga and Stockholm events – check them out) to focus more narrowly on building working apps that address some public service need.

There has been some fair coverage already, on the high quality output from the event (see the project list here) and some of the impediments the event revealed about things like government providing access to data freely for all kinds of app developers. (if you speak Estonian make sure to read Teller and Memokraat).

But more specifically I wanted to share a few thoughts on a special prize I got to hand out – for the state budget visualization app MeieRaha.eu (OurMoney in Estonian):


Why do I think it is important to visualize something seemingly as boring as a state budget?

First and foremost, it is definitely one set of data any country has to have that while touching every single person in a country is almost completely detached from any comprehension by those people. The reasons are multifold:

  • access to data – frequently checking some spreadsheet files on Ministry of Finance webpages as a pasttime, anyone?
  • volume of data – apparently the 2011 budget of relatively tiny Estonia is about 500 pages
  • bureaucratic structure and terminology – regular people have mental models derived from their own life (kids/health/work…) rather than government structure or department responsibilities (different ministries, state vs municipal, etc)
  • just too large numbers – a normal person can freely count money in the scale that they receive monthly on their own bank account, and maybe avoid major mistakes in the range of their annual income. (To argue for anything beyond look at consumer behavior before your average mortage crisis). For too many a million, 100 million or a billion blend together into abstract “a lot of money” that they are not able to grasp pragmatically, let alone have a comparative discussion around.

Understanding the dynamics of our budget, keeping it balanced, the relative scale and interconnections between income and expenditure items becomes double important before the elections (such as the ones we are in right now, to close this Sunday). Every party pays top dollar to put forward oversimplified promises in heavy pre-election advertising – but it is very hard for a voter to understand what the real cost (or alternative cost) of “free higher education for everyone”, “4-lane road from Tallinn to Riga”, “higher pensions for mothers” or rather silly “citizen salary for everyone” would be.

Taking the above thinking and some recent examples by New York Times Budget Puzzle or The Guardian’s Spending Review or Where Does My Money Go? (really, all worth checking out!), we were chatting with a few friends about a month ago on how to create something similar in Estonia before the March elections. As a citizen and technologist I am a huge supporter of anything that creates more transparency, better understanding, less populism and ultimately – more educated decisions in democracy. But as usual, everyone in that particular Skype chat though feeling very much the same played the always handy “I’m really busy this week” card and while at it I also added that if someone gets it done I’m happy to put some money in.

Though Garage48 events are never about the prospect of pay I was extremely glad that some people (namely Rene Lasseron, Tanel Kärp, Helena Rebane, Konstantin Tretjakov, Martin Grüner, Reigo Kinusar, Hegle Sarapuu, Henri Laupmaa – let me know if I’m missing someone!) came along with the idea and actually made it happen – and I got to keep my promise.

The site today works showing the actual approved 2011 budget for Republic of Estonia. You can fold items apart and together, resize the bubbles to see cross-dependencies, drag in comparison items (those gray bubbles on the bottom) and attempt to push the budget out of balance (the scales in the middle). Yes, there are a bunch of glitches here and there, but hey: what was the last piece of working software you delivered in a weekend?

On this baseline I hope at least part of the team will stick together and leverage some more organized support from research bodies like Praxis, one of the most prominent policy thinktanks around here (disclaimer: I happen to sit on the board there). There is a bunch of obvious improvements to prioritize and deliver now:

  • translations to Russian, English and other languages
  • automated and ordered data exchange with the government to manage updates (both budget changes inside a year as well as annual regular updates)
  • improved engine for budget item interdependencies, to answer questions on what could happen if unemployment rates change and thus the actual tax collection goes up or down inside a year
  • support for budget item “bundles”, for example to layer a number of budget item changes (like a certain party’s promises all together) on top of the baseline
  • figure out the social possibilities on top of this data – how do people want to customize, record and share their versions of budget changes created by a tool
  • tools for mainstream media to use this tool as a standard way to illustrate the impact of any ongoing public policy discussion
  • … — please do leave more ideas in the comments!


China Is Larger Than Germany

“Well, duh”, you might say, but actually until recently it was not. GDP-wise that is. Based on 2007 numbers, the top economies in the world were:

  1. the US of A, $13.8 trillion
  2. Japan, $4.38 trillion
  3. China, $3.38 trillion
  4. Germany, $3.32 trillion

Media coverage around this change has a lot of interesting facts, worth reading Bloomberg and Washington Post for example:

China’s economy is 70 times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free- market reforms in 1978.

China also has a big stake in the U.S. economy, holding $652.9 billion of U.S. Treasuries.

Since introducing free-market policies, China has lifted 300 million citizens out of poverty, according to the United Nations

Global interests spanning African oilfields and South American mines are encouraging China to add to its military might.

And speaking of the future. If both China and US were both to keep their average growth rates, it would take 18 years to change the top spot. However, in the ongoing recession the curves will start changing:

China is one of the few major economies that is on track to have positive GDP growth this year. Merrill Lynch calculates that China will have a GDP growth of 8 percent as compared with a 2.8 percent decline for the United States, a 1.3 percent decline for Japan and a 0.6 percent decline for the European Union.

Under these circumstances, we’re rather talking about a decade?

If you are interested in this power play, I recommend reading the ChinAfrica post from last summer. Or even just see the foreign exchange reserves graph from there.