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.

Mining is a small part of the blockchain economy

Claims that “by February 2020, [Bitcoin] will use as much electricity as the entire world does today” assume that growth energy consumption will be proportional with cryptocurrency adoption. But mining is a small part of the blockchain economy and blockchain adoption doesn’t equate to more people mining Bitcoin.

The purpose of mining cryptocurrency is to provide a market-based and fraud-resistant platform to establish ownership of Bitcoins. Once ownership is secured, new scaling technologies enable a near-infinite number of transactions can be made with Bitcoins without any additional mining.

In late 2017, the Bitcoin network reached the limits of how fast it could process transactions and in response, the cryptocurrency community shifted its focus to technologies that would enable the network to scale (grow) to support the entire global economy. There is active debate and experimentation about the best solution to scaling Bitcoin, but they all share the goal of enabling more transactions to be processed by the network without dramatically increasing computational, hardware, and energy requirements.

Cryptocurrency mining is just the tip of the blockchain iceberg. Second-layer transaction networks like Lightning Network and other off-chain transactions do not involve mining and are far less energy intensive. While Bitcoin’s total energy usage will grow with adoption, it’s quite possible that mining will never grow beyond the .01% of the world’s energy consumption it uses today.

Consider gold—it takes a lot of energy to extract out of the ground. Once extracted and formed into coins, it takes a lot less additional energy to use gold. As a digital entity, Bitcoin transactions themselves need far less energy than gold or fiat (paper money) transactions, for reasons I will explain below.

Bitcoin will free far more resources than it uses

Here is the most important point Bitcoin critics miss: cryptocurrencies are not a zero-sum game, they were created to solve a real problem. By eliminating the need for intermediaries in financial transactions, Bitcoin and other blockchains can liberate billions of people around the world and free a large segment of the economy for more productive purposes.

We have to understand the problem that Satoshi Nakamoto intended to solve when he invented Bitcoin. His vision is a “purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.” What’s wrong with using financial institutions as intermediaries?

If you live in a western country with low inflation, access to a bank account, and credit cards, you might not see the need for Bitcoin. However, 1.7 billion people worldwide lack access to a bank account, and billions more cannot trust paper money due to high inflation. These people need access to a financial system that allows them to accumulate savings and participate in the global economy.

Likewise, 5.3 billion people don’t have a clear title to their property and “remain trapped by the “tragedy of the commons” where their unregistered assets can be stolen by powerful interests, hurting individuals and broader economic development,” according to economist Hernando de Soto. The United Nations Development Program is now trying blockchain-based property deeds in India that will allow people to build permanent structures, connect to utility networks and buy and sell their property for the first time. What is the climate impact of billions of people who burn firewood and coal for heat because they don’t have title to their own land and cannot accumulate savings for infrastructure improvements? What is the human impact on the citizens of Zimbabwe, Venezuela, the Republic of Congo, or the dozens of other countries who have had their savings evaporated because their governments failed to provide a sound monetary system?

Bitcoin was invented to solve the inefficiencies of legacy financial systems. By cutting out both governments and corporations as intermediaries, it can put idle resources to use and eliminate the economic waste and destruction caused by unreliable monetary systems.

The economic inefficiency from unreliable financial intermediaries is not limited to the developing world. The 2008 financial crisis was caused by both unclear property records and the Federal Reserve’s manipulation of interest rates—what was its energy cost? What about the energy consumption of the banking and financial sector, which expanded massively in response to new regulations passed after the financial crises, and is stealing the best and brightest minds from more productive and meaningful pursuits? What about the trillions of dollars spent by the US government waging wars due to its ability to issue virtually unlimited debt by creating new money? The twentieth-century phenomenon of total war could not have been possible without total economic mobilization as a result of controlling the money supply.

Cryptocurrency won’t fix all of the world’s problems, but our financial system is an antiquated and corrupt mess which generates tremendous inefficiencies and waste.

By eliminating intermediaries, cryptocurrencies eliminate the waste caused by the financial sector

The point is this: money is essential for modern society to exist, and Bitcoin is the culmination of thousands of years in the evolution of money. Linking the function of money to our political system has proven enormously wasteful and destructive during the 20th and 21st centuries. Yes, creating a monetary system costs money and energy: however, Bitcoin is far more efficient than the dominant alternatives.

Finally, while Bitcoin is the dominant cryptocurrency, some projects have attempted “proof of stake” approaches which don’t involve mining. They are competing with Bitcoin for market share, and if any one of them manages to create a decentralized, robust, and scalable alternative to Bitcoin, people will adopt.

Yes, Bitcoin mining uses energy and resources, but far less than legacy financial systems. By separating money from politics, Bitcoin enables many more efficiencies than the cost to produce it.

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.

Why I prefer to live in a small apartment with a family of four

People are shocked when I tell them that prefer living in a one-bedroom, furniture-free apartment with my wife and two kids, even though I can pay cash for a McMansion or two in the ‘burbs. Why do most people need more space? 

Consider my closet: 
When I decide what to wear to work in the morning, every shirt in my closet is a good option. I’ve gotten rid of anything that for whatever reason is not a viable choice. Most people have filled the majority of their closets with clothes that don’t fit, aren’t stylish, too old, etc. My shirts are dividend into dress, casual, and workout shirts, and I can choose any shirt from each section without a second thought. 

By only keeping possessions that continue to add value to my life, I eliminate the physical, financial, and mental drag that comes along with keeping useless possessions. I apply this principle to every aspect of my life:

  • Toys: The toys that many parents choose for their kids reflect a fear of real life. Their toys represent, a safe, “nerfed” plastic version of adult responsibilities. Kids don’t need fake plastic houses, power tools, cooking appliances, cars, or phones because they don’t need to fake adult responsibilities: they can assume them one at a time. Our daughter got her first sharp knife and her kid-sized broom at three and helps out cleaning, preparing her lunch every day, makes her bed, etc.  She acquires adult tools and responsibilities as she becomes physically and mentally able. When she becomes an adult, she will have been doing adult responsibilities and using adult tools for decades. 
    Note: I’m not against toys, just toys which are “nerfed” versions of work that kids are capable of, or providing a plethora toys in an effort to isolate kids in a “play universe” which distracts them from assuming real responsibilities.  For example: A doll or construction blocks are productive toys, fake plastic eating utensils are generally not.
  • Professional projects: Is this project a success story I want to tell about my career? Does this contribute to the goals I set for this quarter?
    My digital data: I fit my life on a single SSD by using visualization and de-duplication tools to see the entire of my digital life and delete what I no longer need.
  • Relationships: Do you add value to my life now? If not, why am I spending my time on you?
  • Furniture: We only keep furniture that improves our lives. Some of our furniture, like our floor-seating dining time, is custom-made to fit our needs. We have no chairs or couch in our home because we decided that our health would be better if we let our bodies do the job of holding us up.
  • Finances: I can tell you how much assets or debt I have in each account, and how all of my investments are distributed. I avoid unnecessary financial commitments, combine/rollover my investments, and use a single app to visualize my entire financial life over my lifetime.
  • Daily time: I jealously guard the commitment and habits I make each day. I use five tools to visualize my the locations I visit, the software I use, and the websites I visit.
  • Television: I don’t watch TV (though I spend too much time on YouTube), but if you do, track and re-evaluate whether you can be doing something more valuable or rewarding with the time you spent on specific shows.
  • Social media use: I use HabitLab and Apple’s ScreenTime to set limits on how much time I spend on social media sites/apps.
    Old hobbies: most people have a bunch of junk from abandoned hobbies in their closets. Sell it and focus on what you do now.
    Books: I sold or gave away all my books and put everything on my Kindle when we moved to China. I have never thought “I wished I kept that book.” Unfortunately, I keep getting new free books – what can I do with used books in Atlanta?
  • Emotions: We carry emotional baggage in the associations between places, people and situations, and the ingrained emotional reactions they have developed habits around. Separate your rational-evaluative self from your reactive-habitual self and consider whether your emotional responses are productive for the situation you are in.
  • Insecurities: Over a lifetime, we accumulate fears and insecurities about problems we used to face and inadequacies we used to hold about ourselves. Focus on the person you are becoming, not who you were in the past.

And that’s why a small apartment works for us. An extra room (at this time) would only add unwanted and unnecessary costs and obligations: the cost of higher rent, the cost to clean it, and especially the daily mental overhead of keeping the room neat and organized, etc. To keep up with an entire house is an enormous responsibility. To whatever extent is possible to me, I want to limit every aspect of my life to the things that continue to give me value and lead me to become the person I want to be – not things that reflect who I was in the past.

How FEE is responding to Facebook’s algorithm changes

In January 2018, Facebook announced major changes to the algorithm which decides what stories appears in users News Feeds. These changes have substantially affected the visibility of content from online publishers on Facebook. While Facebook has always updated the algorithms behind the News Feed on a regular basis, the recent changes have dramatically affected the visibility of publishers with a substantial amount of visits from Facebook (such as FEE.org) and driven some of them bankrupt.

While part of the impetus for the changes is the “fake news” scandal, much of it has to do with the rise of “clickbait” publishers which profit from low-quality, sensational or salacious stories which get high visibility and are highly addictive but do not result in an enjoyable or informative experience overall. The battle between content discovery platforms (i.e. Facebook) and publishers who try to game the rules is currently playing out on Facebook just as it did on Google in the early 2010s.

Facebook’s 2017 – 2018 changes can be summarized as:

  1. The visibility of activity from friends and a user’s community is prioritized relative to online publishers. Also, content which sparks conversation and reactions from friends is prioritized.
  2. “High quality” stories are prioritized over “clickbait.” Quality stories include longer videos, comments, web pages with substantive content and other criteria.

(Source: Bufferapp.com)

Buffer has a detailed timeline and overview of these changes and a detailed analysis of the algorithm changes.

Many publishers who formerly received a large percentage of traffic from Facebook have seen significant drops in traffic. FEE was especially affected as we received nearly 43% of our traffic from Facebook in early 2017 and subsequently saw that drop to 23%.

Are these changes bad for publishers?

While sites like FEE.org have been somewhat unfairly punished as a publisher of “quality” content rather than “clickbait,” it is overly simplistic to see Facebook as the “bad guy” taking away traffic from publishers. Facebook has made a business decision to prioritize content from friends and family. They want to be a social network, not a news discovery platform. It is up to the market to decide whether Facebook becomes more or less valuable as a platform as a result.

Furthermore, in general, publishers of “quality” content will tend to compete in a meritocratic fashion with publishers for users’ organic reach. There are a lot of disclaimers here, but people generally accept that Google’s algorithm is mostly fair (and I believe it is) despite many claims of bias and ruined business models when Google had to adjust to “black-hat” SEO tactics. I believe that Facebook News Feed algorithms will probably come to be seen the same away some years from now.

The impact of social media on FEE.org

FEE.org saw substantial and highly volatile growth in social traffic starting in early 2016. This growth continued until late 2017 when it fell to 2015 levels. Facebook’s algorithm seems to have been responsible for nearly doubling social traffic, before falling back to the 2015 baseline. In other words, Facebook giveth and Facebook taketh away. FEE.org’s success with Facebook was largely due to its popularity with younger audiences that tended to push stories to go viral by repeated sharing. However, the “quality” of this engagement was low: for example, FEE.org’s bounce rate for Facebook referrals was 90%. As of October 2017, the bounce rate has been under 4%. It’s likely that many people who shared or liked our stories did not actually read them.

3-year sessions vs bounce rate for Facebook.com referrals:

(Note: The changes are not as stark as this graph shows due to measurement changes but the overall trend is valid.)

If we look at sessions which came from Facebook.com, we saw fee.org sessions grow from 159K in December 2015 to a peak of 386K in February 2016, before falling back under 100K in September 2017. We speculate that this drop is in part because Facebook lowered the value of sharing posts relative to the value of genuine reactions (likes/comments). (Note: Facebook implements strong and ever-adapting anti-cheat measures to ensure the integrity of “genuine” reactions.)

Traffic Notes:

  1. FEE.org saw a long-term lift of about 300K sessions per month from all sources from 2015 – 2018 — such as external referrals, organic search, and email.
  2. FEE.org traffic follows a strong seasonal pattern (much of our traffic is from students performing research during the school year).

Illustration: 3-year performance — social versus all traffic:

How FEE is Responding to Facebook Rule Changes

The loss of FEE’s #1 traffic source requires adapting our strategy to maintain our business goals. Our primary means of doing so is to replace lost organic reach with paid reach (ads). The team at FEE has learned to do this with some effectiveness, despite ongoing algorithm changes:

Organic vs Paid Reach: January 2017 – April, 2018:

We believe that paid reach should have different business goals than organic reach. In other words, we do not believe in merely paying to replace organic readership with paid readership. This is both expensive and does not generate returning traffic. Instead, FEE’s marketing team had focused our paid reach on specific business goals that serve our organizational priorities, such as email leads, event registrations, market research, and new audience outreach.

Finally, while Facebook has moved away from a focus on publishers, there are other platforms which are focused on story discovery. FEE has experimented with Apple News, Quora, Flipboard, Medium, Reddit and other platforms which may surpass Facebook as content discovery mechanisms.

Reacting to Facebook Ad Strategy Changes

We’ve also had to adapt to ongoing changes in Facebook’s ad platform in response to events such as ads by alt-right extremists, the Cambridge Analytica leak, and intense competition from other businesses who were “exiled” from organic reach by algorithm changes in 2018.

We’ve noticed a significant change in the effectiveness of our paid lead generation ads. We ran the same ad for our Essential Guide to Health Care Reform in November and April and had wildly different results. In November 2017, we paid on average $0.72 per email address. In April 2018, the cost per email rose to $5.07.

Our current strategies include:

  • Experimenting with landing page view ads instead of lead gen ads.
  • Relying more on popups than Facebook ads to collect email addresses.
  • Boosting content that gets great organic reach (>80% usual reach) to try to “ride the wave” of the organic traffic.

Focusing on Quality of Interactions vs Quantity

As explained above, in the last two years, both Facebook and Google have made efforts to limit content reach to the subset of users with “genuine” engagement or interest. The downside for us is that fewer people see our content. The upside is that the people who do see our content, are more likely to pay attention to it. Furthermore, we have a chance to be rewarded for more meaningful and useful content.

To measure meaningful engagement, we will try to prioritize meaningful engagement: active time on page (provided by Parse.ly analytics), longer video views, email captures on FEE.org, Facebook Ads, and landing pages, and Facebook/YouTube subscriptions. We will also try to improve the quality of our content by sharing fewer stories from other sites on FEE.org and writing more in-depth analysis and practical career/life guidance.

Reposted from FEE.org

How and why I hire freelancers via UpWork

The other day I mentioned on LinkedIn that I was looking for a freelancer web developer. A USA-based agency messaged me to express interest. Their rate — $150/hour. This a common rate for an experienced US-based web developer. The project I need help with has a budget of about $1000 per month, so this rate would give me under six hours of work, once rounding and communications overhead (or project manager) is factored in. I ended up going to UpWork.com and hiring two developers: one from Ukraine for $20/hour, and one from India for $10 per hour. The Indian developer will do close to 100 hours of work for the same cost. So that’s the basic case for sourcing your own freelancers. The details are considerably more complicated: sometimes a $150/hour developer is a better value than a $10/hour one: a good programmer can be far more productive than an average one, and a bad one will just waste your time and money. The trouble is that if you don’t know what you’re doing, you may end up paying high-end prices for shoddy or useless work. Here is how I approach hiring freelancers:

Good people are hard to find

Whether you’re hiring app developers, artists, video editors, or a project manager, there are usually huge differences between the productivity and quality of freelancers. The average quality of the people who will apply or be recommended for your freelance job posts will be quite low. Most highly-skilled engineers are not interested in freelancing or busy with existing projects, while the bad apples bounce from one project to another.
UpWork makes an effort to recommend the most qualified people for the job, but the candidates often engage in deceptive tactics boost their ratings. Freelancers will steal the information from good profiles, lie about their skills and experience, promise to take on projects they don’t have skills for, or hold your work hostage in exchange for good ratings (yes, this has happened to me).
If you add more rigorous qualifications or required experience to your post, they will use them against you: the frauds will promise to be experts, but honest freelancers (people are rarely a perfect fit) will move on. Many will try to circumvent UpWork: they will email and call you, your boss, your coworkers, and anyone else associated with you on your LinkedIn profile.
It’s possible to screen out the worst applicants (see below), but the only way to identify the 1% who are affordable and qualified is to test them.

How I do freelancer screening

A typical job, assuming a decent description will get about 100 applicants. If you get significantly less than that, your job needs a more detailed description of your project.
You can screen out 90% of candidates by filtering for a 90% job success rate, 1000+ hours worked, good reviews, a credible portfolio, and 10+ high test scores. However, this will usually raise the hourly rate.
1 Screening questions:
I typically do minimal profile screening simply because good profiles are easy to fake. Many individual profiles are secretly teams or agencies, and 1000+ hours on UpWork doesn’t mean anything when they put a brand new guy on your job. I also just don’t have time to screen 100+ applications for each job:
My screening process has three parts:
I ask simple questions which require job-specific experience to answer.
For a web designer: What’s your favorite CSS3 feature?
WordPress e-commerce developer: What version of WooCommerce have you worked with? (Candidates who are not paying attention usually give a WordPress version instead.)
Graphic artist: What navigation pattern would you use for this design?
2 Setup process: With developers, I ask them to follow a specific process which includes
(1) checkout out the code,
(2) messaging me on Slack for a test DB,
(3) sending me a screenshot of their configured dev environment
3 Trial task
(4) suggesting a trial task from the issue list.
90% of applicants will not complete this process correctly. Some tell me “I don’t work for free.” I respect this, and instead ask how they would solve a specific task.
For a complex software development job, 100 applicants followed by a 90% rejection rate still leaves 10 candidates. Each of these 10 receives a trial task. I try to simple, self-contained, well-described tasks with a $100–200 budget. Typically, about 5 candidates will complete the task, and 1 or 2 will deliver quality work. Sometimes none will, and I have to find more applicants. Getting through this process can be frustrating: you will be charged for work that isn’t delivered or must be discarded, will terminate nice guys who can’t deliver on time, and probably find that the best candidate(s) are not the favorites you bet on when you started.
Things are easier for non-developer positions. Artists and graphic designers are easier to screen, but tend to be more flaky with their time estimates. Being patient and understanding, yet severe and final with your judgment is essential in this process.

Establish a good onboarding process

Early in my freelancer management experience, I struggled with managing the cost of onboarding. Some agencies charge thousands of dollars to setup a dev environment and learn your systems. Since then, I’ve developed guides for new developers which communicate three things: expectations, system design/architecture, and development process (“definition of done”). This allows qualified engineers to complete setup without my help — and disqualifies those who struggle.
Here are three such guides I’ve created:

Use collaboration tools to coordinate distributed teams

It’s important to establish a mature development environment before you begin work. The development environment allows you to clearly communicate requirements and task assignments to freelancers, allows you to monitor the progress of code and functionality, and allows you to perform releases to end users in a deliberate manner.
These tools include (this is what I use):
  • Issue tracking tools for developers and stakeholders: JIRA or Bitbucket issues
  • Source code control: BitBucket or GitHub
  • Continuous integration: I use TeamCity or a PHP deploy script
  • Development environment: I use AWS-hosted servers
  • Collaboration tools: Slack for chat & Skype for team status calls
  • Documentation and specifications: Google Docs, JIRA Confluence

Establish working relationships before starting a big project

A good software team is a complex system: it requires a lot of momentum (aka money and time) to start up and keep going. If you’re planning to kick off a big project, it’s essential to get your team lined up first. Even after you complete a screening process and trial tasks, some turnover is to be expected. Various startup challenges will need to be overcome. You need to get momentum going with a small project before you begin one that is essential to your business.
Sometimes your business needs will require a pause in development, so you will have to invent work for your freelancers to keep the team together, lest they drift away, and you have to rebuild a new team all over again.
If this process sounds too risky, stressful, and complex for you, paying $150/hour+ for a reputable US-based developer or professional agency (with a 30% management overhead) is probably a better deal for you. Alternatively, you can skip the headache and hire me to do all of the above 🙂
Originally published at https://www.linkedin.com on June 8, 2017.

FEE Content Team: Strategies and Results

(Guest post by By Jeffrey A. Tucker, Director of Content for FEE)

Introduction: a bold experiment in reaching mainstream culture

Two years ago, FEE embarked on an experiment born of frustration. FEE’s website was not a product of its own but rather a kind of information board for advertising the institution. It had low performance. Brand recognition of the institution was not increasing.

And yet there was clearly opportunity. When you look at the venues considered to be mainstream distributors of ideas, they all trend toward the progressive and social democratic, i.e., statist. They fill up the smartphone feeds of millennials. They speak to them on all their social media platforms. Their websites enjoy millions of hits a week. They are profoundly affecting culture – not through political activism, policy study, or academic work, but rather through public commentary on the passing scene. They define what is fashionable.

What is preventing the ideas of liberty from entering this space? Truly nothing but talent, cleverness, and dedication. FEE aspired to apply these traits to our work. We pursued dramatic technological, distribution, and content changes designed to enter into the realm of public culture in a way that directly competes with mainstream venues. We deployed a series of objective measurements to assess our progress. We also set out to be adaptive in all these areas so we could continue to achieve this goal as the tools grew and adapted themselves.

The remainder of this post addresses the content aspect of the strategy.

Fixes and Changes


We first set out to perform a number of technical fixes: in-sourcing the website code for full control and fast development, tagging thousands of articles according to topic, cleaning up legacy cruft, adding missing metadata to articles, and so on. It was a huge job.

We set out to stop the traffic leakage we were experiencing (people hitting the site and leaving) with a series of strategies to capture email addresses. We then built up our daily sending list, from 3,000 two years ago to 45,000 today. As time went on, we added browser notifications for new articles, a new web design to enhance site credibility, and infinite scroll on content display.

We then turned to new content itself. As we looked back at FEE material over the decades, we found a contrast with the way it appeared in the 1950s and 1960s. Back then, the material was directed toward a general audience. It did not use in-group language. It didn’t presume that people were already on board with the libertarian vision. But as time marched forward, there was a subtle change. The language became ever more insular and in-group focused, aimed at movement edification rather than culture-wide influence. The editors presumed, probably rightly, that they were speaking to a marginal group about a narrow topic.

Outreach

It was renewed interesting in growth among new audiences that motivated a move toward achieving a broader reach. Today, the purpose of FEE’s content is to describe and explain current events, history, policy, and social and economic theory in light of the ideas of liberty, as articulated by the liberal tradition and exemplified by FEE’s 70-year history.

The purpose is to expand the network of users and broaden the base of people who are exposed to a liberty perspective. The metric for us is summed up in one word: traffic, which is a fair proxy for audience. Without this essential component, not much else matters. You can have the perfect product, the perfect prose, the best analysis, the most wonderful presentation, the most correct doctrine. But if no one sees it, there is a problem. The element of traffic also intensifies the commitment to quality work. As Peter Drucker said, “What gets measured gets managed.” You have some accountability. You can begin to craft your product in line with consumer preferences, and thereby replicate the essential dynamic and driving force of the market itself. After that, we look at demographics, granulated data about types of content, what they do, and how sticky their traffic is.

For traffic metrics, we depend on Google Analytics for granulated data and Alexa for ordinal ranking of our site relative to others. In two years, we’ve moved from the 130,000th most popular site on the web up to a stable 22,000. Our institutional goal is always up, with the hope that we will eventually stabilize in the range of 1,000. We have no estimate for when or even if this will happen.

Growth depends on content sharing – not just a first-round of readership but a second, third, and fourth. The content has to spread, not hit the wall of in-group consumption. Why do people share? There are many reasons. Sometimes a hard-edged ideological piece can work for what we call in-reach. But too much ideological vernacular can also discourage sharing, simply because what appears on people’s social timelines becomes a reflection of how they want to present themselves to a wide range of people within their friend networks.

Because social media is a main source of news today, FEE set out to present content that didn’t so much preach the doctrine but illustrate it in a mainstream and credible voice, and provide excitement about how liberal ideas can provide a better and more fulfilling understanding of the world around us. This content should not only feed our fans, but reach outside our existing audience.

Inreach vs. Outreach

For moment-by-moment analytics (and the team truly does follow traffic patterns all day and through the evening), we use Parse.ly, a platform specifically developed for editorial use. It logs on an ongoing basis what percentage of users are new or returning, a metric we use to determine whether a piece has in-reach power or out-reach power.
 Screen Shot 2017-01-12 at 5.01.43 PM.png
These two examples come from the day I’m writing this post. A piece on Google’s new translation algorithm posts these results from today.

This is successful outreach. For each new user, we try our best to harvest email, obtain approval for browser notifications, and keep people on the site by pushing more material along the same lines, dropping cookies that are capable of machine learning according to a user’s browsing habits.
 Screen Shot 2017-01-12 at 5.05.41 PM.png
On the other hand, here is a much more complex piece on libertarian strategy and the role of ideas – a piece we had intentionally decided for in-reach in order to deepen reader’s relationship with the liberal idea. And sure enough, the reader results are very different.

To be sure, every piece we publish starts out with nearly 100% returning visitors. It is not possible to bypass this group but for paid and targeted advertising. Given that people mostly reach our content via social media, it would be expected that the people who see it first are the fan base on FEE (and this fan base has grown by a factor of 10 in two years). We depend on them to share further outside our network and into theirs. But the path the content takes following that initial release depends heavily on the topic and approach we take with the content itself.

FEE, then, faces a dual obligation: reach new people and feed an existing fan base to further inspire them toward a deeper commitment. Each is important. But given the desire to grow our audience, FEE takes seriously the obligation to seek and explain to all willing listeners of goodwill. We adhere to principle but don’t necessarily wear our ideology on our sleeve or throw labels around, any more than The Atlantic explicitly advocates social democratic ideology in its articles. We show more than tell, in a way that reflects confidence. To put it another way, our philosophy is our musical scale but our literary output is our song.

Editorial Roadmap

We’ve discerned that the path to success must be discovered day-to-day through trial-and-error by a creative and venturesome team. It’s a matter of balance: energy with dignity, boldness with class, accessibility with substance, always striving for impact, excellence, improvement, and growth, while modeling the spirit of freedom.

Below are rules of the road we’ve established that reflect the mission and spirit of FEE.

  1. Illustrate the social, moral, and practical merit of liberty as a principle of human association, and present this radical idea in a mainstream voice;
  2. Achieve a balance of news, think pieces, long form and short form, inreach and outreach, classics, reprints from partner organizations, history, law, economics, cultural criticism, personal advice, biography, and so on;
  3. Transcend the left-right paradigm, with roots in “mainline” intellectual traditions;
  4. Strive to be engaging and interesting, with a harmony of graphics, title, and content with a premium on good writing and not just on taking the right position;
  5. Contain no profanity and avoid tacky and vulgar expressions and images;
  6. Eschew overly technical jargon or esoteric topics;
  7. Avoid overly inflammatory rhetoric that panders to ideological biases or otherwise deploys capricious anger, ridicule, name-calling, and invective;
  8. Avoid in-group, insular language and buzz phrases that can only be understood by our most learned fans while making new readers feel unwelcome;
  9. Avoid appearing to push vendettas against individuals or groups or to attack the person, as opposed to the person’s ideas;
  10. Avoid anything that smacks of partisan politicking.

Social Media

Social media provides the most referrals to FEE.org. Among the platforms, Facebook is the referral engine for 60% of traffic. The next highest known source is Twitter with 5%, then follows Reddit, StumbleUpon, HackerNews, LinkedIn, Youtube, and Blogger. Instagram refers no traffic. It might provide some brand recognition value, but the ROI is unknown. The low level of traffic from Twitter is a bit misleading because these are high-level influencers who then post to their own pages and to Facebook itself. So Twitter works more as a spark than a flame. Screen Shot 2017-01-13 at 10.39.44 AM.png

For Facebook, we use the Instant Articles application, which speeds up viewing on digital devices. We do almost no paid boosting of articles because we’ve found that if an article is going to do well, it does so without boosting, and if it is going to fail, it will fail regardless of boosting. We do pay for targeted impressions of particular content on individuals’ news feeds, based on carefully selected demographics. Using emails drawn from Salesforce data, we are in the position to place content on donor pages and others based on web-viewing habits.

Intriguingly, 30% of our social referrals qualify as dark social, that is via private messages, private groups, private forums, SMS, and so on. This is a powerful source of traffic but it is neither traceable nor influenceable. As for Reddit, we’ve discovered what others have found: there is no viable way to focus on feeding this source, for the platform is extremely averse to perceived gaming. All we can really do is provide a Reddit link at the top of articles and invite readers to use it.

We automate as much of our social as we can. Every new article (we publish eight per weekday and three to five on both Saturday and Sunday) is automatically posted to Facebook and Twitter using the service Zapier. This massively reduces the chance of error. We post every 45 minutes during the day and every two hours following close of business. Other postings are done by hand by a specialist who follows trending topics and posts relevant legacy content. We have not typically reposted material from other places on the web, but have opted for the publishing strategy described below. In addition, we use Facebook to post institutional news and media.

We use two additional publication venues: Medium.com and Flipboard.com. Using both hand and automated tools, we attempt to keep a solid lineup of articles published at those distribution channels. While Flipboard provides direct traffic to FEE.org, Medium does not – that is, articles “live” on Medium. However, it does account for some referrals, and it also increases brand awareness and realizes certain mission goals with very low cost.

Email as a Product

As implausible as it might sound, email remains one of the most valuable digital products, and, hence a solid infrastructure of email contacts is essential. Because we are producing daily content, we put a high premium on the number of people who received daily emails. Two years ago, we sent to 300 but today send to 45,000, in part by defaulting our email signups to become a daily subscription. We’ve used third-party popups via AddThis but our signups increased 5-10 times by creating our own internal version. Of course popups tend to annoy people and, for this reason, nonprofits might try to avoid them. This is a mistake, in our view, for one reason: they work. We need this infrastructure for our operations.

Of course this also places an extra burden on FEE to turn its daily email into a valuable commodity, something not just for promotion but that also provides delight on its own. Subject lines are chosen carefully to be engaging, and they are different each day. Each send – and we send every day at the noon hour – includes a charming and witty moving gif that is related to the article. The idea here is to create a sense of drama for each day: what gif will I get to see today? As a result, though our numbers of gone up dramatically, our open rates remain very steady. It is a product that people consume on a daily basis, thus increasing brand awareness and gratitude that translates to donor support.

Republishing and Author Payments


FEE has attempted to foster a culture of content sharing within the movement generally. We first put all our content in the Creative Commons, choosing the license Attribution 4.0, which allows for any kind of republishing on any basis provided the source is credited. We negotiated a number of agreements with partner organizations to re-publish their material. We estimate the ratio of “original” to “republished” to be around 40-60%. In terms of traffic, we can discern no trends to predict the reach of either type. Much depends on title, image, trending topic, and compelling content.

Our RSS feeds are set to retrieve the full article content so it can be republished on any site in full. In addition, there is a separate feed automatically created for every author on the site (more than 2,000).

We ended author payments – a break with a 70-year practice, so far as we can tell – because we saw no relationship between the quality of submission and financial compensation. As a result of ending all author payments, we lost perhaps 3 of our stable of 75 or so contributors of original content. In contrast, we have added cash prizes to incentivize authors as a way of broadcasting that we do value writing talent. What authors do value is speed of response, carefulness of editing, and a quick turnaround time.

Most outside contributors receive a personalized response within an hour of submission during the work day, and accepted articles appear on the site within 24 hours. This speed and responsiveness is the best way that FEE can show its appreciation to those who choose our venue as their preferred outlet. And here is another case for keeping traffic as high as we can: FEE can get the word out.

The Team and the Division of Labor

The content team is made up of five people currently: editor, managing editor, associate editor, and two content interns. The skill set required: high-level literacy, proofing skills, basic html, speed, low-level image manipulation, facility with the content management system (Umbraco, which is an open-source management system designed for Dot Net), creativity with titles, and a willingness to work all hours including nights, weekends, and holidays since digital media has no hours of operation. We try to maintain a content mix of original and republished material on a full range of topics. We consult with each other throughout the day and otherwise, in person and on Slack, which is FEE’s internal communication system.

Our work flow attempts to stay one day ahead of the publication schedule. All progress is logged on Trello, a collaboration board that allows for attachments and conversations as material moves through the production structure.

Screen Shot 2017-01-13 at 12.56.36 PM.png

We use Feedly for aggregating content for possible republication. This permits us to navigate content quickly, so that we are not wasting time with random web browsing. Everything we publish is flexible within minutes of going live. Once the publication lineup is ready for the next day, all staff are encouraged to work on writing original content.

The Future

FEE is committed to retaining its existing user base and growing it in every way possible, as quickly as possible. We want to contribute to making the ideas of freedom familiar and credible for the rising generation, thus fulfilling FEE’s historic mission and serving as a beacon of excellence in digital publishing. We are confident that we can achieve this with a continued outward focus on customer needs, adherence to the metrics as a main indicator of success and/or failure, and an unrelenting willingness to adapt to changing conditions in the world’s fast-moving market for information.

Technology Summary

  • Slack: internal office communications; replaces email
  • Feedly: news aggregator for editorial use
  • Parse.ly: real-time metrics reporting and content analysis
  • Umbraco: open-source CMS for ASP.net
  • Zapier: automation of social media
  • Trello: management tool for editorial tasks
  • Flipboard.com: magazine portal for mobile devices
  • Medium.com: popular publishing platform
  • Creative Commons licensing: alternative to restrictive copyright
  • Facebook Instant Articles: dramatic speed increases over old FB browser
  • Zendesk: collaboration tool for external communication
  • Grammerly: handy grammar checker
  • Hubspot: information portal for customer relationships
  • Mailchimp: email sending