Welcome to the experience economy, where ownership is a hobby

I love the awesome stuff you can get these days. I was born in Soviet Ukraine and grew up before the internet, before cell phones, before the smart-everything, connected-everything, disposable-everything era. Don’t even get me started about groceries. My second favorite thing about the United States is Costco and their cheap five-pound strawberry crates, giant cheese wedges, and more.

But as much I love stuff, I hate owning things. Ownership is a drag. As soon as I acquire anything, it begins to decay, get outdated, and lose its relevance to me. Every single possession is a liability and a responsibility.

I got a two-pound bag of Costco frozen shrimp the other day, and when I went to put it in my freezer, I couldn’t fit it because I forgot that I got the same thing a few weeks ago. I had to defrost and eat that shrimp ASAP even though I was looking forward to burgers that night. I know, first world problems.

Ownership is a drag on your physical, mental, and financial freedom.

Ownership is a drag on your physical, mental, and financial freedom. I thought I lost my camera tripod and started shopping around for another one—until I found my old one in the closet. I have at least five things of superglue in the house. According to professional organizer Regina Lark, there are 300,000 items in the average American home. We’ve had to triple the size of the average American home over the last 50 years, and many of us still have to rent offsite storage.

The cost of a thing goes far beyond the sticker price. You must allocate physical space to store it and mental space to keep track of it. Then there is the constant mental cost of worrying about it. Nothing lasts forever, and things start to decay as soon as you acquire them—both literally and in your mind. My “indestructible” tungsten-carbide wedding band suddenly shattered after nine years. I thought it would be my only possession to outlast me. Buddhists saw “suffering due to constant change” as one of the three kinds of suffering and advocated the renouncement of all desire as the solution.

Such is the age of mass production, when products and tastes change constantly, unpredictably, forever.

Besides physical rot, there is comparative rot when possessions become outdated compared to new versions today or irrelevant to the you that is now and not the you of 10 years ago. Such is the age of mass production, when products and tastes change constantly, unpredictably, forever.

I don’t advocate renouncing all material things, just renouncing attachment to material things. To get the most out of the modern world, you must learn to value experiences, not things. I love driving my little turbocharged Honda Civic. I hate owning a car. Vehicle registration only costs $20 in Georgia, but I start worrying about it months before my birthday (all vehicle registrations expire on your birthday here).

I love the look and feel of my anodized aluminum MacBook Pro. I love how my iPhone is an ever-present connection to all of human knowledge and that my Apple Watch tracks my every move and gives me little daily activity and meditation goals. I like having a cozy apartment right next to my office, with its grill, pool, and punching bag.

What I value is the experience of using the product. It’s intangible, but it’s the thing that actually adds value to my life.

I try to own all these things as little as possible. I rent, I finance my Civic, my computer was provided by my company, and my iPhone is financed by Apple and my Apple Watch through my health insurance. Modern society forces me to own all these things to an extent, but I eagerly give up the privilege when I can. What I value is the experience of using the product. It’s intangible, but it’s the thing that actually adds value to my life. If my iPhone screen ever cracked, it would annoy the heck out of me, and I would immediately change it out for an identical new model with zero regrets or pain. Such is the wonder of mass production. Every year, Apple gives me a new iPhone and Aetna gives me a new Apple Watch. It’s the ownership experience that I value, not the thing.

Welcome to the experience economy, where each individual is free to focus their time and energy on their area of comparative advantage.

One day soon, owning things will be a hobby while everyone else will pay for ready-made experiences. We are getting there. For example, a middle-class millennial with a fully stocked kitchen is likely to enjoy cooking as an end in itself, while most of her peers go out or buy meal kits. Having a home library is a hobby—for everyone else, there are Kindles and YouTube tutorials. A home with a meticulous formal dining room and stocked bar is a hobby, while everyone else goes out to Ted’s Montana Grill (or maybe that’s just me). When self-driving cars take off, car ownership will be a hobby for auto enthusiasts, while everyone else will take a self-driving Uber, or Waymo, or whatever wins out. Welcome to the experience economy, where each individual is free to focus their time and energy on their area of comparative advantage.

In the old days, before the industrial era, we lived in a commodity economy: you bought hay to feed your horse to ride into town for a hoedown. The Industrial Revolution brought the product economy: you could buy a nice car and roll to the club in style.

In the post-industrial era, the post-ownership service economy, you take an Uber. We are now entering the experience economy, where your Uber, or airline seat, or AirBnB is expected to offer an integrated, immersive experience, not just get you from A to B or a bed for the night.

In Neal Stephenson’s book The Diamond Age, the poor have access to a faucet that provides an endless stream of 3D-printed stuff which can be recycled for any other item while only the wealthy have access to handmade goods. We’re not there yet. Today, people hoard stuff because it takes money to acquire things. Because people live paycheck to paycheck, they can’t count on access to money when they need it, so they hoard possessions. Become financially secure so you can rest assured that you will be able to get a thing when you truly need it and let someone else value it in the meantime. Strive to own things just-in-time rather than just-in-case.

Let go of the idea that possessions will bring happiness or that they are irreplaceable. Don’t make your home a spaceship—a self-contained ecosystem that is expected to provide for all your needs. The world is full of places, experiences, and things you can enjoy without the burden of owning them.

One day, we’ll print anything we want in a Star Trek-style replicator, but today, to embrace the sharing economy, you must become entrepreneurial. Master selling your old stuff on eBay so you can get rid of it as soon as you no longer need it. Rent out your car on Turo so it generates income when you’re not using it. Borrow rather than buy, rent rather than own. Look for opportunities to monetize your idle assets and hobbies.

Above all, don’t judge your success at life by how much you own. When I moved to China, I sold or gave away all my books and got a Kindle. My wife sent all her rare and out-of-print Montessori books to a service that digitized them to put on the iPad. We forever eliminated the anchor of hundreds of books from our life and freed ourselves to move anywhere in the world at a moment’s notice. The experience of living in a variety of places around the country and the world is far more valuable than a house filled with stuff.

Things are a chain that sucks away your money and your life force. Experiences are valuable. Relationships are valuable. Owning stuff is a drag.

Why Hollywood villains have become politically correct

According to the “nothing about us without us” principle of intersectionality, it is verboten to present racism, sexism, homophobia, transphobia, ableism, xenophobia, classism, etc without being a member of the victim group.

As a result, creators not allowed to have their *villains* have such traits unless the writer/producer themselves are in the victim group. For example, the left forced Chinese-American writer Amélie Wen Zhao to withdraw her debut fantasy novel containing slavery because, even though Chinese immigrants experienced racism, they were not actually enslaved.

The only evil which remains a fair target for all? Wealth. Nevermind that virtually none of the writers have any experience with how wealth is created. Capitalists oppress everyone, and therefore, and therefore it is always safe to portray them as evil.

The intersectional concept of “nothing about us without us” was first identified as “polylogism” by Ludwig von Mises in “Theory and History.” Polylogism is the belief that different groups of people reason in fundamentally different ways. This concept has two popular sources:

Karl Marx taught that thought is determined by the thinker’s class position. There is no such thing as truth, only ideology.

The Nazis adapted classist polylogism into racialist polylogism. They believed that thought was determined by “blood and race” – hence the rejection of Einstein’s theory of relativity as “Jewish physics.” For example, US Supreme Court Justice Sotomayor engaged in racialist polylogism when she said that a “wise Latina” would follow different legal principles than a white male.

Polylogism implies a rejection of the very concept of fiction: fiction requires the author to empathize with characters who are unlike him. Even if the protagonist is auto-biographical, other characters cannot all be the author’s clones. Yet this is precisely what the left demands: while it talks about empathy and understanding, they ultimately reject any such possibility.

Education should be “just in time” not “just in case”

Children should not be forced to memorize anything that does not serve a practical purpose. Education beyond basic social function should be “just in time” not “just in case.”

What is “practical?” That depends on the context of the child’s abilities and socio-economic status, but it can be objectively answered. Plumbers don’t need Shakespeare. A plumber is welcome to read Hamlet, but forcing him to spend 16 years in useless classroom rituals wastes both money and the most productive years of his life.

The egalitarian myth is: if all children are given a proper education, they can all have an equal chance at success. But this is an absurd and destructive lie.

In any society, a child’s success in life depends on a few critical intrinsic and extrinsic factors, namely the influence of their parents and their genetic potential.

This is true regardless of whether they live in a totalitarian dictatorship or free-market capitalism. The only difference is how parental influence is measured (political pull or wealth) and what genetic traits are rewarded — a skill at rote memorization, realpolitik power-hunger, or entrepreneurial spirit. By the age of five, it is possible to predict where any given child will end up in life based on his society, his parents, and his character.

The question is, therefore — what system most efficiently nurtures the inherent potential of the child given his inherent abilities and social influences? The answer is: a system which recognizes and respects the uniqueness of every child, and allows him to develop into the mold of his choosing and according to his abilities. The factory schooling system defies human nature and human society by attempting to fit every child into a common mold — which fits no one. This wastes decades of the lives of children and young adults and destroys the child’s natural curiosity, his power of self-motivation, and his unique perspective on the world.



Three Key Differences Between Traditional and Crypto Markets

What is the real market value of cryptocurrencies like Bitcoin?

The numbers used to explain the performance of Bitcoin and other cryptocurrencies are less meaningful than most assume.

Cryptocurrencies are not exactly like stocks, and cryptocurrency exchanges do not work like traditional securities markets. As a result, many crypto-asset investment strategies based on conventional definitions of market share, capitalization, volatility, and trading volume are deeply flawed. Misleading numbers mean that cryptocurrency valuation and adoption is poorly understood, which creates a false perception by the media and investors about cryptocurrencies such as Bitcoin.  One implication of this analysis is that Bitcoin has captured the vast majority of the long-term upside in the cryptocurrency market despite having about half the nominal market share.

Most cryptocurrencies and crypto exchanges manipulate numbers in ways that publicly traded companies and traditional exchanges like NASDAQ and NYSE wouldn’t dream of.  As a result, “market capitalization” and “trading volume” are at best rough and relative measures of cryptocurrency adoption. Even when intentional manipulation is not involved, crypto-asset markets fundamentally just do not function like securities markets. It’s important to understand these differences to asses the state of cryptocurrency and crypto asset adoption.

Let’s look at three important differences between how cryptocurrencies and traditional securities markets work:

Will Bitcoin burn the planet to ashes? Not so fast.

Environmentalists have recently become concerned about the impact Bitcoin mining has on global warming. Headlines such as “Bitcoin Will Burn the Planet Down. The Question: How Fast?” and “Bitcoin Mining Alone Could Raise Global Temperatures Above Critical Limit By 2033” suggest that Bitcoin is an unfolding environmental disaster.

However, those panicking about crypto make three fundamental errors. First, they do not understand how Bitcoin works, second, they do not understand what mass adoption would look like, and third, they do not understand the problem Bitcoin is intended to solve.

Regardless of your opinion on the danger of global warming, Bitcoin does not use nearly as much energy as claimed, will become far more efficient as it grows, and most importantly, solves one of the greatest causes of resource inefficiency, corruption, and human suffering.

Bitcoin mining is a market-based process that taps underutilized energy sources

When Bitcoin critics focus on the raw energy usage of Bitcoin mining, they miss the bigger picture: cryptocurrency production is a competitive market process.

Because the cost of Bitcoin mining comes mostly from electricity consumption, Bitcoin mining is concentrated in places with cheap or surplus energy. Industrial-scale mining facilities are located in far-flung locations with cheap hydro-electric, nuclear, geothermal power, or undeveloped industrial regions with excess production. Energy costs money, and miners will always look for the world’s best sources of cheap and efficient energy. Cryptocurrency mining is a means to tap underutilized energy resources for a valuable purpose—the maintenance of a monetary system. No other industry can rapidly move into an industrial ghost town and create value the way Bitcoin mining firms do.

Furthermore, the total energy usage of Bitcoin is limited by economics: crypto-miners will only keep mining when their profit is higher than the cost of electricity. The Bitcoin network automatically adjusts the difficulty of mining new blocks in response to the “hash rate” or the net mining capacity of the network. This means that Bitcoin has a built-in cap on energy use, and can dynamically adjust in response to energy prices and innovation in computational hardware.  Currently, humanity consumes around 17.7 Terawatts per year. The Economist estimates that Bitcoin uses 2.55 gigawatts or .014% of that. Some estimate the total use of cryptocurrencies at 7.7 gigawatts, but it’s likely that a single cryptocurrency will dominate after the current shakeout period.

How I Built a Bitcoin Exchange: Design Principles & Risk Management

In 2013, I designed and built a cryptocurrency exchange for the China market.  The basic concept & architecture only took a few days, but the full implementation required several years.   I shared the basic architecture in 2013, and with the recent spike in interest in Bitcoin and Ethereum, I thought I would share additional details on the concept.

I wrote the trading engine for the exchange over a long weekend in Shanghai.  It turns out that building a large-scale cryptocurrency exchange is quite complex, and it finally (and successfully) launched in 2016.  The notes below describe my design vision from 2013 – the implementation followed this specification fairly closely.  There is a lot of detail and documentation to many of the sections below – some of which I will elaborate in future posts.  If you want more detail on something specific, comment below or find me on LinkedIn.

Happy 10th birthday to Bitcoin!

Happy birthday to Bitcoin! 10 years ago, Satoshi Nakamoto published a white paper for “a Peer-to-Peer Electronic Cash System” which would “allow online payments to be sent directly from one party to another without going through a financial institution.” Just a few short months later, the Bitcoin network launched on 3 January 2009.

Bitcoin is the culmination of thousands of years in the evolution in money. It is durable, portable, divisible, uniform, and limited by design. Over the span of human history, money has taken the form of shells, salt, coins, banknotes, and fiat bills. While money serves a crucial role in facilitating trade and wealth creation in society, it has often suffered from hidden inflation, outright confiscation, or the exclusion of unpopular groups from the economy. In the 100 years, the inherent flaws in fiat paper money have been used by governments to fund wars, corruption, and cronyism through the hidden tax of inflation.

Bitcoin is the first credible alternative to fiat currency and offers real, sound money made for the information age. The decentralized nature of Bitcoin has revolutionary potential for both the global economic order and billions of people who suffer from lack of access to financial institutions and corrupt governments and corporations. The concept of a distributed ledger stored on the blockchain has applications well beyond money, with the promise of creating a durable and credible record of property ownership, which has the potential to transform how we record property deeds, corporate shares, insurance claims, business contracts, and many more applications.

After the basic concepts of Bitcoin and the blockchain were discovered in 2009-2013, Bitcoin and the blockchain space entered the infrastructure stage. We are now building the ecosystem of tools, vendors, and relationships to make Bitcoin as easy or easier to use than products of legacy financial institutions. Once a mature infrastructure is in place for cryptocurrencies, the stage will be set mass adoption. Billions of people will have the devices, services, and vendor networks to use Bitcoin for everyday transactions, meeting the final requirement for money: widespread acceptability.

The mass adoption of cryptocurrencies will not create a utopia – it is more likely to be hugely disruptive to the economic-political order. However, genuine sound money is what humanity desperately needs to build a harmonious, robust, and integrated global digital economy on the backbone of the Internet.

Is your “side hustle”​ holding back or advancing your career?

I encourage people to develop a “side hustle,” but they are not suitable for everyone, and many people get hustles that do more harm than good.

The proper function of a side hustle is not to earn a few extra dollars — it’s to grow your value proposition and train for a life of financial independence and entrepreneurship.

Many people get a side hustle that distracts rather than enhances their career. Driving Uber at night or hosting Airbnb guests every night is not going to enhance your career unless your dream is to be a chauffeur or enter the hospitality industry. Same with being a jack-of-all-trades who takes whatever job he comes across.

Is your side hustle causing you to sleepwalk through the workday or work on your gigs from the office? Are you spending more money on tools and supplies for each new gig that you bring in? Are you growing as a professional and building a sustainable, revenue stream with customers that come back to you, or are you doing random, one-off jobs, often for free? Are you giving up new projects at work, a promotion or a demanding new job for your side hustle? If so, it’s holding you back rather than helping you. You don’t need more spending money: you need to create opportunities for you to grow.

A good side hustle should help you to grow in your career or to explore a new one. You should come to the office excited to try out new ideas, not just tired from staying up all night working in an unrelated field. And if your idea is so great that you can’t perform your day job, don’t try to do both: quit and pursue it full time. You’ve saved up your reserve fund already, right?

How to make the most of the 2018 Google Ad Grants rule changes

ad-ban

Does that big red message look familiar? If your non-profit received a Google Ads Grant (if not, apply here), you may have noticed a major change in Google Ad Grants policy in 2018. Here is a summary of the new rules from Google, and here is a more comprehensive writeup. (Note: Neither list is perfectly accurate as these rules are not 100% enforced.) The bottom line with the 2018 rule changes is that you must have relevant, narrowly-targeted, high-performing ads with conversion tracking and relevant landing pages or your Google Grant account will be suspended. That’s the bad news. The good news is that Google removed the $2 bid limit, so you can bid more per click and compete for keywords that were previously off-limits. Below are some points for what I’ve learned for surviving and thriving with the new Google Ad Grant policy: The main success criteria for an Ad Grants account are:

  • High click-through rate – low (< 5%) CTR is the main reason accounts get suspended. If your account does not maintain a 5% rate for two months, you will get suspended. Loophole: AdWords Express accounts are exempt from this rule.
  • Low landing page bounce rate – visitors immediately navigating away from the ad page is another reason accounts get suspended.
  • A high percentage (75% is my goal) used of the monthly Grant budget.
  • Conversion tracking: clicks are a start, but you should also be tracking on-site conversions (i.e. leads and purchases). This is not just valuable to measure the effectiveness of your campaigns, but is now required by Google.

In the process of managing FEE’s $40,000/month account, we were suspended three times, and learned a lot about the new rules in the process. It is possible to maximize your spend, but the game is a lot harder, and you will have to put a lot more thought into the process. There are three strategies for being successful with a Grants account:

  1. Well defined audiences: this includes both narrowly targeted search keywords, demographic filters, and retarding (if possible)
  2. Relevant landing pages: landing pages should be specific to the search phrase and have enough information and call to action so that user can complete their search
  3. Enough campaigns targeting high-volume keywords with > 5% CTR to maximize the Grants budget. For example: with an average cost of $2/click, hitting 100% of a $10,000 budget requires 5,000 clicks*5%CTR = 100,000 searches, or 50 ad sets with 2,000 searches each. These are hypothetical numbers, but 50 campaigns targeting 100K searches seems like a reasonable target to hit a $10K budget. Here is FEE for comparison: about 40 campaigns, 272,000 searches, 22,563 clicks, $28,000/month current spend. That is: 8.3% CTR, $1.23 per click, 1092 leads generated, or $25 per lead.

The three key build-out steps you should take to implement to an effective Grants campaign are:

  1. Build customer personas: work with your team to build profiles of the demographics and interests, and potential search phrases
  2. Research search phrases: use the Google Keyword Planner, Moz Pro and other tools to find the intersection of
  3. high-volume search phrases
  4. suitable landing pages on your site
  5. low keyword difficulty
  6. Build out Ad campaigns: using the keywords and landing pages previous identified, build out

The following practices will be needed on an ongoing monthly basis: Review campaign performance, stop low-performing campaigns (important to prevent Grants account suspensions) and replace them with new ones. Campaigns may also experience fatigue for some phrases and require rotation.

  1. Research and recommend new landing pages to take advantage of target keywords
  2. Implement business goal tracking to optimize for lead generation and bounce rate/session duration in addition to click-through rates
  3. Review and implement with Google Ads feedback (Google provides ongoing feedback and optimization suggestions) and resolve account suspensions.

Finally: landing page considerations:You must have relevant landing pages with clear mission-specific, non-commercial content. One way I did this is by creating “essential guides” for the topics in various campaigns. Another strategy which works great for both organic and paid traffic is to compile pillar pages. Do not expect to be successful by sending all your paid clicks to your homepage. Google states that “your homepage and frequently visited web pages may not be used for Destination goal types” Requesting reactivation: Is your account suspended? Once you’ve complied with all rules above, request reactivation here.

If it’s not on your calendar, it’s not in your heart

When you have an important business meeting coming up, you put it on your calendar, right?

Why? Because putting things on your calendar prevents double-booked or forgotten plans.

What about your family? Are commitments made to your partner or kids less important than to your coworkers?

What about your commitments to yourself – your health, your education, your career development, etc.

Are you sabotaging your personal life because you subconsciously value your family — or yourself — as not deserving of the same commitment and undivided focus as you do your job?

If it’s worth doing, it’s worth doing well, which means making and keeping commitments.

If it’s not on your calendar, it’s not in your heart.