Philip Greenspun’s Weblog

Some friends were discussing Radcliffe College the other day.  When Harvard College, its sibling institution within Harvard University, decided to accept female students, the school was left with a huge endowment and no students.  The bureaucrats running Radcliffe responded by running a fellowship program for female scholars, nearly all of whom were older than college age and working on obscure academic subjects.  Radcliffe faded into oblivion and eventually most of their endowment was stolen by the larger university.

Could they have done something different with their hundreds of millions of dollars?

My idea was that they should have aggressively shucked off their reputation as a snobby northeastern school for rich girls, but kept their mission of educating women aged 18-22.  The growth in U.S. population is happening mostly in the Southwest so the new Radcliffe would be there, perhaps in Phoenix, Santa Fe, or Los Angeles.  To ensure that the graduates took up powerful places in society, the school would have only three majors:  Pre-Med, Pre-Law, 5-year MBA.  To make sure that the press and the public would recognize the new demographic, the school would accept only “women of color”.  No white or Asian-American students would be permitted to apply.

The new school would have been called “Radcliffe Southwestern Pre-Professional College for Women of Color”.  Compare to what they are actually doing these days: http://www.radcliffe.edu/ .

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Approaching his 70th birthday on December 1, Allen complained that ageing was a “terrible thing”. “It’s all just bad news. You deteriorate physically and die!” he said. “All the crap they tell you about — you know, dangling your grandchildren on your knee, and having a kind of wisdom in your golden years — it’s all tripe,” he said. “I’ve gained no wisdom, no insight, no mellowing. I would make all the same mistakes again, today.”

Source: “Sex scandal was my luckiest break, claims Woody Allen”, Sunday Times, November 2, 2005

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The October 3, 2005 issue of Fortune magazine carries a “wall street: special report” called “The Money Game” by Marcia Vickers. This details the investment strategies of David F. Swensen and Jack R. Meyer, who managed the endowments of Yale and Harvard, respectively. While most mutual funds that pick stocks underperform indices, both schools have consistently earned a much better return than the stock indices. How did they do it? Below are their allocations.

Note that Harvard’s total is 105 percent because of leverage, i.e., situations in which they’ve borrowed money to purchase investments. Conspicuously absent from these portfolios are heavy investments in American companies run by Harvard and Yale graduates. “Domestic Equity” are publicly traded stocks such as GE and Microsoft. Harvard and Yale have faith that their graduates will make a lot of money for themselves, but no faith that they will make money for their shareholders.

	Harvard	Yale
Domestic Equity	15%	14%
Foreign Equity	15%	14%
Private Equity	13%	17%
Fixed Income (bonds)	27%	5%
Real Assets	23%	25%
Absolute Return (hedge funds)	12%	25%

 

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Just finished listening to Conspiracy of Fools, a fantastic book about Enron, while driving back and forth to various airports.  One interesting item from the book is that it lays out exactly how much white collar crime pays.  Andrew Fastow and Michael Copper looted from Enron’s shareholders in ways that attracted the ire of the Justice Department.  Fastow earned something like $100 million from his Enron salary and, mostly, the off-books partnerships that he created to enrich himself while helping the Harvard Business School and McKinsey crowd produce the quarterly numbers that they wanted to show the public.  As part of a plea bargain with the Federales, Fastow had to refund about $20 million of his illegal profits and serve up to 10 years in prison.  Copper is in a similar boat, having to refund a small percentage of the tens of $millions that he obtained illegally.  So it would seem that crime pays roughly $8 million per year spent at Club Fed.

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We’re teaching 6.171, Software Engineering for Internet Applications, next semester at MIT (February through May 2006).  We need to find a teaching assistant from among the MIT grad student population.  We’re also looking for client projects.  Clients can be from for-profit or non-profit organizations.  The only requirement is that they need an Internet application built where there is significant user-to-user interaction.

http://philip.greenspun.com/teaching/6171/2006-spring/ta is the teaching assistant ad.  http://philip.greenspun.com/teaching/6171/client-questionnaire is the starting point for potential clients.

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In the 1990s, it was very difficult to get any kind of compensation for developing content and putting it on the Internet.  That’s presumably how we ended up with an Internet that is 99 percent spam, porn, and catalog shopping.  I never liked banner ads and did not place them on any site that I controlled because the ads were so poorly targeted.  It seemed like a waste of everyone’s time and energy when the chance of the reader being interested was so low and therefore the chance of a clickthrough was minimal.  Sure enough, ad rates that had been reasonably high in the 1990s fell to the point that even very popular sites couldn’t get serious money from banner advertising by 2002.

A friend convinced me that perhaps it was time to give Google Ads a try.  The ads are targeted by looking at the words on the page where they appear.  The ads are text, so they’re not graphically obnoxious.  I started my experiment by adding Google ads into the bulletin board pages at http://www.greenspun.com/bboard/ .  This is a server that suffered a database meltdown six months ago.  Nobody is going there to post anymore.  I had planned to throw the machine out.  Google’s terms prohibit me from writing about the clickthrough rate, but not the bottom line.  After about 10 days, it seems that the ads are bringing in a steady $60 per day or nearly $20,000 per year.  Encouraged, I put some ads into a few of the pages at http://philip.greenspun.com, including the materialism, flying, and aquarium subdirectories.  These bring in another $20-30 per day and the click through rates are high enough that I don’t feel too embarrassed for wasting screen space and reader attention.

Could it be that we are going to enter a golden age of content, fueled by the Google Ads team?

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The controversy over “intelligent design” just won’t disappear from the news.  My biologist friends here in Cambridge are upset with George W. Bush, which I find surprising.

The most plausible outcome of teaching intelligent design in public schools is nil.  All of the people who are currently advocating intelligent design were themselves taught evolution in public school.  They either forgot what they’d been taught, or did not find the unionized civil servant’s (teacher’s) explanation convincing.

You’d expect anyone to be delighted that the President of the United States was paying attention to them or their group.  Saddam Hussein loved having his name in the papers and in W’s speeches so much that he was willing to risk war.  Imagine the delight of physicists if W said that he was staying awake nights worrying about how muons turn into tau neutrinos.  Or of computer scientists if the President were to mention how outraged he was at the syntax of Haskell.  The only thing worse than being talked about badly is not being talked about at all.

Most importantly, you’d expect PhD scientists, who, adjusted for IQ and education, probably have America’s worst career prospects, to be delighted that the next generation will be hobbled.  Consider a 30-year-old soccer player.  What hope can he have of twenty more years of collecting a paycheck unless a Tonya Harding follower comes along to break the knees of all the 15-year-old soccer players?  Similarly for biologists.  A 35-year-old, $35,000/year postdoc’s best hope for a long-term job is the mental crippling of young people so that they can’t conduct experiments successfully.

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Harvard has picked a new investment manager for its $26 billion in liquid assets (the university is weathier than this but much of its wealth is in real estate).  According to this New York Times story, Mohamed A. El-Erian is “an emerging markets bond specialist” from “the bond powerhouse Pimco”.  Choosing someone like this to manage its money is essentially a vote that public equities (stocks) will continue to perform poorly for some years to come.  How is it possible for stock prices to remain stalled while corporations earn reasonably good profits and only pay out a small percentage of those profits as dividends (the average S&P 500 company pays out 32 percent of profits as a dividend)?  Looting and dilution by managers granting themselves stock options.  So Harvard, which has been mostly right since World War II and earned more than 19 percent in the last fiscal year, seems to be betting on the continued looting of American corporations by their managers and is apparently planning to put its money to work in foreign countries and via debt instruments.

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… old people must really be stupid and lazy.  http://www.paulgraham.com/sfp.html is a report on what happens when you give seed capital to 18-21-year-olds so that they can start little tech companies.  My personal theory is that most supranormal profits are the result of people who understand one class of customer better than anyone else.  College-aged kids generally haven’t spent enough time with customers to know anything at all.  They might have a lot of energy, skill, and dedication, but have not seen customers first-hand.  The programmers who built SAP, for example, spent years at IBM doing consulting work.  After having seen 10+ companies’ problems and built 10+ similar solutions they decided to go off on their own, rewrite it all, package it up, and sell it.

Graham has introduced some bias into the experiment by hand-picking companies to fund.  The teams that he funded were the ones who came to him with the ideas that he liked best.  On the other hand, if these guys are succeeding as well as he suggests it must mean that the competition is very weak.  Who are the competitors?  Older programmers working in bureaucracies at larger companies, which have strong brands and near-infinite capital.  So basically what Graham is proving is that these folks are incredibly unproductive and their aggregate work product is almost worthless.

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Apple has released a new iPod that is supposed to set the world, and its stock, on fire.  This is the video-capable iPod, a 30 GB version of which will be available for $299.  Let’s compare this to the Creative Zen Vision, which came out last month.

• Apple:  2.5″ screen, 320×240 pixels of resolution, 5 ounces, batteries stuck inside the case, $299 at amazon, shipping soon?
  
• Creative: 3.7″ screen, 640×480 pixels, 8.4 ounces, removable batteries, $399 at amazon, in-stock now

For photographers who want to show off and video fans who just love their TV, the Creative seems like a better value due to its vastly bigger screen and higher resolution.  What do folks think?  Will adding video to the iPod be any more significant than adding video capture capability has been to little point-and-shoot digicams or cell phones?

Personally I have always preferred the user interface of the Creative MP3 jukeboxes, which have more buttons than their Apple counterparts, and don’t rely on a control wheel so much.  Creative’s desktop PC software was rather clunky last I tried it (two years ago) and I prefer simply to sync the player using Windows Media Player.

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