Wille Faler’s Buzzword Bingo

Much has been made of “collective intelligence”, “the wisdom of crowds” and a number of other terms used to describe how a crowd of people acting independently in their own self interest make better decisions than individuals. There is definitely mileage to it, the best example in existence is our economy: a market economy shows the characteristics of the phenomena I just described, lots of independent agents acting in their own self interest, resulting in accurate pricing and production of services and goods to meet human needs. It’s superiority over the socialist and communist centrally planned economy cannot be emphasized strongly enough – the Soviet Union and its satellite states collapsed almost 20 years ago, while countries with functioning markets continue to thrive and prosper.

In the last few years, “Web 2.0″ startups have been quick to try to tap into the “wisdom of crowds” in a number of areas, from ranking of news stories to rating of different vendors. But there is one area where it is bound to fail: so called “Social stock picking”, as popularized by sites such as SocialPicks, Stockpickr and Stocktickr.

Why? The reason is simple, the “wisdom of crowds” is already counted into what they are trying to beat, it’s called “the stock market”. What these sites have is a miniscule subset of all the people acting in the stock market, their “crowd” is smaller and as a result bound to be worse at evaluating the correct price of any stock. It is hard to beat the “wisdom of crowds” by having a dramatically smaller crowd trying to employ the same mechanics.
Some of these sites may try to counterweigh this by ranking the people using the sites by their performance, but this won’t actually add any value until a site has at least 10-15 years worth of performance data. The reason for this is equally simple, past performance is no indicator of future performance: anyone who picked lots of Internet-stocks between 1998-2000 would have looked like a genius based on performance. But in 2002 they would have been pretty much wiped out. Performance ratings are useless unless they are backed up by a consistent and intelligent strategy that will make the investor money in both good and bad markets (fact: almost no investor or fund manager ever beats the index over a longer period of time).

Finally, trying to pick “winning stocks” is a fools game (for a game it is) unless the person can materially influence the strategy of his picks in a positive direction. Anyone who has done a bit of reasonably successful investment will be aware that picking winning stocks is notoriously hard, the key to performance is not about picking individual winners, but allocating capital well into winning sectors and companies that on average will do better than the rest.
Furthermore, making money in a bull market is probably the easiest thing in the world. The great investors are the ones who can limit their losses or even make money in a bear market.

Given all these factors, “Social stock picking” is bound to be a loosing proposition.

(Given the financial nature of this post, I would like to emphasize my disclaimer that is applicable to all posts on this blog).

It’s not news that the patent system is screwed up in many places, perhaps more than anywhere else in the US. There are now reports of tax planning strategies being patented (“no, you can’t use that deduction, it’s patented!”?!), and surgery techniques being patented.

Personally, I have high hopes for my patent application for a “method of standing up while urinating”, if I get it, I will start charging a royalty of $1 per toilette visit for anyone who pees standing up..

Whether you are raising money for a startup, starting an investment fund or whatever, there is sure to be a lot of “consultants” around that claim to be able to help you in raising capital. I have some personal experience from using such consultants, and I have spoken to others who have similar experiences.

Should you use them then? The simple answer is: no! Unless you are going to do an IPO, or sell your company for a massive amount of money (at which point an investment bank is what you want), they are pretty much useless.

They will do very little for you, yet insist on getting a cut of any capital raised, even if you did all the work. That is how they operate, they are parasites by nature, parasites that do very little. In fact, their existence is testament to that claim.
Why? Easy. If they where any good, they wouldn’t be “consultants” in how to raise capital, instead they would raise their own capital and be part of a Venture Capital Fund or Hedge Fund.
If you where in the money raising business and personally had the ability to raise large sums of money almost at will for a given purpose, what would you do: chase small fry (because that is what startups are most of the time) for peanuts, or raise your own money and live comfortably of the 1-2% management fee and 10-20% “carried interest”?

I know what I would do.. I’d rather make millions off management fees and carried interest, than chase small-time startups for fees in the tens of thousands (IF the startups even get money)..

Apparently, there is a new site around, with the purpose of letting candidates and employers rate employment agencies. About time! I was thinking about doing such a thing myself, but now that there is one around, I’d rather see that it gets some support behind it so that data becomes comprehensive.

The wildly varying quality of recruitment agencies in the UK is a big problem: some of them are rather good, a lot of them are incompetent and a few are outright scam-artists. The professionalism and level of ethics in the industry is questionable at best. The only way so far to know who to deal with and who to avoid has really been to deal with everyone, get burnt a few times and put down the names of the bad ones in your personal little notebook.

A site like HireScores should help give the industry some transparency, reward the good agencies by driving business and candidates towards them, and hopefully drive the incompetents and scammers out of the industry.

I’ve got an unfortunate knack for sarcasm and cynicism. To get some outlet for it, I have started yet another blog, Philosotainment – Philosophy & Entertainment, a blog which will have the sole purpose of mocking and making fun of this bizarre world we live in and the people in it through the vehicle of short observations, anecdotes and longer “philosophical” arguments.

This will not change the frequency of blogging, or the theme of this blog: I will still make amusing observations on dysfunctionalities in the corporate world and software development from time to time, as these tend to be more industry “inside jokes” than anything else. The new blog will have more of a “general theme” when it comes to the things it mocks (mass hysteria, politics, media, general stupidity etc etc).

I’ve noted over the past few years that people who debate outsourcing and offshoring of software development fall into two broad categories (and a few smaller, more pragmatic ones):

• Those who believe it is a Silver Bullet(tm) that will completely eliminate all “lower level” software development jobs in western Europe and the US.
• Those who have an irrational fear of it, either due to buying into the Silver Bullet-camps propaganda, or because they think it is pure Evil designed with the sole purpose of destroying peoples lives and livelihoods in the west.

To be perfectly honest, I find the first viewpoint just stupid. The second one, I find to be a mix of closet-racism and ignorance.
Neither viewpoint is right, nor particularly rational: first of all, the drive to cut cost is a reasonable one, thanks to competition, the savings can be passed on to consumers, meaning lower prices for the products and services we buy, hardly anything evil? Secondly, change is scary, but there is always something else we can do: 200 years ago 90+ percent of people in western Europe worked in agriculture, today the number is approximately 2% (and needlessly held up by destructive subsidies), yet despite this people are not dying in the streets. Even with a population boom, new and better jobs have popped up for people.

Secondly, outsourcing and offshoring will hardly destroy jobs “onshore”, having worked on several projects utilizing offshore software development, I can tell you it is no silver bullet. It may be applicable in some context, but far from all.
The primary mistake made in offshoring is the underlying premise most use to do it: de-skill and dumb-down the development so that developers do not need to understand the business side of things by means of overly specific requirement specifications.
This premise is faulty in a number of ways, but the primary problem is that it cannot be done. To be able to solve business problems with software, you need to both be able to understand the underlying business problems at least to some level, and be able to communicate efficiently with someone who does understands the business well. Neither of these things are used nor understood by most large consultancies employing offshoring at this time.

If you want to effectively develop bespoke software, you need to have local access to deep business knowledge. Trying to de-skill and dumb-down development is the anti-thesis of this. If you’re offshoring software development, you need to offshore business knowledge to some degree as well.

What does this imply? Well, for bespoke software that is usually developed by consultancies and the like, offshoring will be an unfeasible route most of the time. The end result and total cost will be better served by having a small expert team with business and technology skills locally instead of an army of developers offshore.
On the other hand, offshoring might be feasible in the instances where ample business knowledge can effectively be placed together with the offshore development team, and requirements are expected to be reasonably stable (for example development of in-house off-the-shelf software to be sold in a standard way).

I’ve said it before and I’ll say it again: software development is above all a communication sport. If you can’t facilitate quick, effective face-to-face communication between critical stakeholders on a development project, you might as well kill the project in the cradle, because it will fail miserably.
The notion that you can dumb-down developers to mindless drones and code-monkeys just reading off written specs, tapping away code, with no business knowledge whatsoever is one of the most moronic ideas of the last 30 years. Anyone who thinks they can be successful that way will not only fail, they deserve to fail.

The success or failure of a software project will, given the correct mix of skills and resources, be almost solely decided by the efficiency of communication. That is a simple rule that will decide the success of any project, “onshore” or “offshore”.

..there have been reports of inches of snowfall in northern Sweden. In July. It’s a bloody cold country, but not that cold. It shouldn’t be snowing in July outside of the northernmost mountain regions..

* Note: neither myth is entirely true.. Polar bears are not indigenous to Sweden, and the most common natural hair colour for Swedish women is dark blonde/light brown.

(YouTube video)

“Hey, we’re not paying for it this instant, so who cares we’ll pay ten times as much over the next 2 years for the alternative?”

Looking for your next role is always a frustrating experience: It takes time, you get approached about roles that are entirely inappropriate or uninteresting to you, you get turned down for roles that look perfect for you, and you have to deal with agents that range from friendly and competent to frustratingly stupid and arrogant. Not only that, you have to compete for attention with a bunch of people who lie blatantly about their skills and experience on their CV’s, put them together with the types of agents mentioned last, and you have a frustrating mix.

Today, I had one of those experiences: I called up an agent I had spoken to about a role a few days ago, on paper I looked as perfect for it as is possible, ticked every box, and there where a lot of boxes to tick. Yet I was baffled to hear the agent say: “oh, we didn’t forward you, we decided to forward another person with more J2EE-experience”.

It baffled me not so much because I have some overinflated view of my own skills, but because whomever they forwarded must have been a clueless liar. Why?
Because I’ve been working with J2EE in one form or another since 1999. And if memory serves me correctly, the 1.0 spec of J2EE was released at the end of 1999. In other words, I’ve been working with J2EE pretty much since its inception, and with some of the technologies in J2EE since before they where bundled up under the J2EE umbrella.

First of all, years of experience is usually not a good indicator of skill anyway (beyond a certain degree), but someone who claims they have “10 years of experience” in a technology that is 8 years old probably doesn’t have much of a clue about said technology..
The painful part is, some agents actually fall for that crap, thus rewarding liars and penalizing honest people.