November 10, 2010

Will Disaggregation and Outsourcing Destroy the “Apprenticeship” Model?

Lawyers, consultants, and investment bankers follow a fairly similar career path: excessive hours and tedious work at the start of their careers, followed by vastly better compensation and marginally better hours later on.

This makes a certain amount of sense: the fastest way to get a decade of experience is do work double-time for five years.

The system works for people who are already in the industry: they get their grunt-work done. It works for people who are joining the industry: they learn everything they need to know, and the difficulty of the work allows the industry to keep an “up or out” structure along with a steady path for advancement.
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November 9, 2010

The Illusion of Social Progress

In the last 20 years, smoking has been transformed from something that seemed totally normal into a rather seedy habit: from something movie stars did in publicity shots to something small huddles of addicts do outside the doors of office buildings. A lot of the change was due to legislation, of course, but the legislation couldn’t have happened if customs hadn’t already changed.

—Paul Graham, The Acceleration of Addiction

“Whig History” is history rewritten to support a narrative of constant progress. The single best example I’ve found comes from David Brin’s essay on Lord of the Rings: JRR Tolkein — Enemy of Progress:

It’s only been 200 years or so — an eye blink — that “scientific enlightenment” began waging its rebellion against the nearly universal pattern called feudalism, a hierarchic system that ruled our ancestors in every culture that developed both metallurgy and agriculture. Wherever human beings acquired both plows and swords, gangs of large men picked up the latter and took other men’s women and wheat. (Sexist language is meaningfully accurate here; those cultures had no word for “sexism,” it was simply assumed.)

They then proceeded to announce rules and “traditions” ensuring that their sons would inherit everything.

Putting aside cultural superficialities, on every continent society quickly shaped itself into a pyramid with a few well-armed bullies at the top — accompanied by some fast-talking guys with painted faces or spangled cloaks, who curried favor by weaving stories to explain why the bullies should remain on top.

Only something exceptional started happening…

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November 8, 2010

The Iron Law of Online Marketing: Why Your Ads (Almost Always) Can’t Be Your Competitive Advantage

There is only one interesting way to make money, in any field: develop and exploit a durable competitive advantage.1 Berkshire Hathaway wins because they are the buyer of first resort for good businesses that want to sell, and they can get cheap capital through superior underwriting; Facebook wins because to achieve parity with them, you have to recreate a 500 million-node social graph; the corner bodega turns a profit because that particular corner has a bodega and a half’s worth of foot traffic. In every one of these cases, it’s theoretically possible to compete with the incumbent, but there’s a better ROI in just letting them dominate the industry.

One thing these companies have in common is that their competitive advantage applies to the product or the process—either they can make the same thing for less money, or they can make something nobody else can make. What they don’t rely on is superior advertising. With good reason:

In the long term, the best advertising—the best creative, the best placement—will be sold to the high bidder. And the high bidder is whoever’s competitive advantage lets them earn more from a given customer. Read the rest of this entry »