Uber And The False Hopes Of A Sharing Economy

Regulating Ride-Sharing: New York May Be The Model For The Future

Writing On The Wall: London and Vancouver Moving In A Similar Direction

At its inception, Uber touted itself as a shining example of the “sharing economy” described by Jeremy Rifkin, in this now famous book, The Third Industrial Revolution. As time has passed the reality has been radically at odds with a sharing economy.  Among the many issues that have emerged has been the legacy of Uber’s ugly corporate culture, secret apps used to confound regulators, and to intimidate journalists, a Justice Department investigation of illegal practices, including 200 Uber employees conspiring together to attack Lyft’s operations. The proverbial chickens have come home to roost, as municipalities around the world have begun to regain control of transportation policy within their jurisdictions, and the inflated valuations of these unicorns begin to deflate.

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READ MORE: Wharton Newsletter: Regulating Ride-Sharing: New York May Be The Model For The Future

From the Wharton Newsletter/Podcast, August 14, 2018

The largest market for Uber, Lyft and other ride-hailing app companies — New York City — last week had its first successful attempt at regulating the growth of the nascent industry. On Wednesday, the New York City Council passed a series of bills, notably one that places a one-year moratorium on the issue of new for-hire vehicle (FHV) licenses. Other bills establish minimum wage levels for ride-hailing service drivers; require FHVs to submit data on ridership with penalties for failure to do so; and create driver-assistance centers to provide counseling services.

New York City had little option to act, especially after a similar move by Mayor Bill de Blasio fell apart following intense lobbying by Uber. Increasing road congestion by cars was the biggest contributing factor to the passage of the bill capping new licenses, corroborated by a decline in subway ridership. The number of FHVs in the city had grown from 65,000 in 2015 to about 130,000 currently. Uber is the biggest gainer, as shown by its almost hockey-stick growth in ridership.

New York City took the right steps to regulate the FHV industry, according to Wharton professor of operations, information and decisions Senthil Veeraraghavan. “This is the right way to go,” he said. “This is a great experiment that we’re [witnessing].”

“They had to do something,” noted Wharton management professor John R. Kimberly. “This is part of an obviously much deeper story … and the timing seems to be right.”

The move to ensure that drivers receive a minimum pay of $15 an hour after they cover expenses is also significant, said James Parrott, director of economic and fiscal policies at the New School’s Center for New York City Affairs. He had worked on an extensive study for the city’s Taxi and Limousine Commission that looked at the ride-hailing sector and its growth, and in particular its impact on driver earnings.

Kimberly, Veeraraghavan and Parrott discussed the implications of the legislative actions governing New York City’s for-hire vehicle industry on the Knowledge@Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)

“This is the right way to go. This is a great experiment that we’re [witnessing].”–Senthil Veeraraghavan

Incentive to Improve

The establishment of a minimum pay for drivers is an important incentive for ride-hailing app companies to increase the utilization of drivers’ time, said Parrott. Drivers currently have a passenger in the car for only about 36 minutes of every hour, which means they don’t have a paying passenger for 42% of their time, he added.

Up to now, Uber’s business model has been “to flood the streets with cars,” since the firm gets a commission based on every fare, Parrott said. “There’s been no incentive for them to better utilize the drivers’ capital,” he added. “Keep in mind; this is an industry where the capital investment in the rolling stock – the cars – is entirely put up by the drivers. The pay standard gives them an incentive by allowing them to pay a little bit less if they make better utilization of the drivers’ time.”

The city will use the year ahead to study congestion levels in the city and find ways to redress that, including through congestion pricing mechanisms. Last week’s actions took a step in that direction with a surcharge on cabs below 96^th Street ($2 per ride for medallion trips and $2.75 for ride-hailing app cabs). It will also allow the city to monitor how the pay standard works out, and how the ride-hailing app companies make better utilization of drivers’ time, Parrott said.

“Even if you increase utilization by 10 percentage points – from 58% to 68% – you would only increase average wait times across the city about 20 to 30 seconds,” said Parrott, citing his study’s findings. “We sense that most people can live with that.”

According to Parrott, the number of Uber trips in the city increased 100% in 2016 and 70% in 2017. Going forward, he said that figure could probably grow another 40% over the next year, “even without any additional cars on the street – just from increased efficiency.” Those increased efficiencies could come from a variety of quarters, including urging part-time drivers to go full-time and recruiting some of the drivers from the non-app services, such as the traditional livery car segment that has no minimum pay standards.

“Uber and the drivers are on both sides of the story,” noted Veeraraghavan. Riders want low waiting times, which can be achieved with more vehicles. But drivers want fewer drivers, because that would allow them to get better pricing, he said.

“Granted it might have been done a lot sooner, but it seems to me that at least in the city of New York there’s a real, serious effort to get their arms around the problem.”–John Kimberly

Worsening Congestion

Parrott said New York City had first started talking about capping Uber and Lyft cars in 2015, drawing “heavy pushback” from the ride-hailing industry at that point. Between then and now, the number of trips using ride-hailing apps has skyrocketed to 600,000 a day, which is more than five times the level in 2015, he noted. A 2016 study by the mayor’s office proposed several remedial measures including those to reduce congestion, improve air quality, protect drivers’ interests and enhance passenger experiences.

Parrott said that while the city bears some responsibility for not acting sooner on the unbridled growth of the FHV industry, it faced a different climate when it attempted that in mid-2015. Uber at the time controlled 90% of the market in the city as opposed to 66% now, he pointed out. Suicides by six cab driversalso highlighted the “economic crisis” and changed public opinion in favor of the changes, he said.

“Theoretically speaking, there’s always a gap between what firms will want to optimize and what society wants to optimize,” said Veeraraghavan. “And it’s hard for individuals to see what’s optimal for this society.” However, as city residents have begun seeing the impact of the FHV industry’s growth — including on public transportation ridership numbers — they now have had a better understanding. “So we have a redo from 2015 to 2017 … and we’re seeing better support for this.”

“Granted, it might have been done a lot sooner, but it seems to me that at least in the city of New York there’s a real, serious effort to get their arms around the problem and to figure out how to solve it,” said Kimberly.

Congestion in New York City has worsened in recent years with not just the influx of cabs, but also other vehicles “providing instant service for a variety of needs that people believe they have,” including delivery vehicles, said Kimberly. “The density of tourists on the sidewalks is so great it spills over into the street – that slows down traffic and makes it hard for cars,” he added. The option of levying congestion pricing is being seriously considered also at the state headquarters in Albany, he noted.

At the same time, “the growth of FHVs has meant that there’s much better transportation access in the outer boroughs, so the city doesn’t want to diminish that newly available service,” said Kimberly. “And yet the city also has a great interest in making sure that the drivers are able to remain economically viable to meet their expenses and to earn a decent living.” Higher wages would also enable drivers to work fewer than the 10-12 hours a day they now put in, he added, and that would have safety benefits as well.

“If they can show that they have stability and regulatory certainty in their largest market in the U.S., that will give investors a lot more certainty….”–James Parrott

Congestion pricing will also help fund investments in maintaining and upgrading the city’s aging subway and public bus system, Parrott said. The decline in mass transit ridership is not just because of the growth of the FHV industry, he noted; commuters are turning away because of “under-investment and under attention to adequately maintaining the mass transit system.”

Uber’s Leadership Challenge

The changes also highlight a “leadership challenge” for Uber, said Kimberly. “They have hundreds of markets around the globe, and each market has its own political configuration, and its own way of doing business,” he noted. “When you think about the challenges of operating an enterprise like Uber on a global basis with all the local idiosyncrasies that need to be taken into account both economically and politically, it’s a really interesting [problem].”

Uber, which is currently valued at about $62 billion, is said to be preparing for an initial public offering of its stock next year. “If they can show that they have stability and regulatory certainty in their largest market in the U.S., that will give investors a lot more certainty about the potential prospects for the company,” said Parrott.

Uber’s impact on employment is also large, Parrott noted. Uber drivers are not legally considered employees, but if they were to be treated as full-time equivalent (FTE) employees, Uber would be the largest private-sector employer in New York City, with about 35,000 FTEs, he said. “[Ride sharing] has become a huge enterprise in New York City, and it and it’s not what people usually think of as gig work where you are doing this to supplement other income. We found that 80% of the drivers bought their cars mainly for the purpose of providing transportation services, and two thirds of the drivers are full-time drivers.”

Parrott noted that both Uber and Lyft embraced the pay standard proposal. But Kimberly thought they had little option in the matter. “I don’t think it’s by accident that they’re embracing the pay standard,” he said. “Left to their own devices, they probably would not have done that. But there’s been so much social criticism – and valid criticism – of their models that they’ve really had no choice.”

The Panama Papers and Thomas Piketty

UPDATE May 5, 2016:  National Public Radio’s Takeaway news analysis program, today interviewed James Henry, senior adviser at the Tax Justice Network and a senior fellow at the Columbia Center for Sustainable Investment. He’s examined World Bank and IMF data over the last 45 years, and has found that kleptocrats have taken $12.1 trillion from developing countries. James’ interview specifically discusses the foreign dark money driving the housing markets in Miami, New York and Vancouver, providing further confirmation of my points.  Audio of the interview begins at 19:45 in the podcast below.

I am sharing this because of its particular relevance to the ongoing revelations about connections between global tax evasion shell companies and real estate markets: London, Miami, New York City, San Francisco and Vancouver.

Reblogged from Foreign Affairs

How the Leak May Transform Politics

By Henry Farrell

The Panama Papers—the massive collection of leaked documents from Mossack Fonseca, a Panamanian law firm that helps set up offshore shell corporations—have already had political consequences. Iceland’s prime minister, Sigmundur David Gunnlaugsson, resigned after the leak revealed that he had partly owned an offshore firm. David Cameron, the British prime minister, is facing criticism over an offshore company that his father set up. In Brazil, many of the people connected to the country’s unfolding corruption scandal appear to have held offshore shell companies set up by Mossack Fonseca. And in Russia, Sergei Roldugin, a cellist who is a close friend of Vladimir Putin, appears to control assets of over $100 million. Roldugin hasclaimed that this fortune is the result of donations from Russian businessmen to help buy expensive musical instruments for poor students. Clearly, classical music has some very generous friends among the Russian business elite.

At first glance, the Panama Papers leak looks a lot like other big leaks, such as the classified documents that U.S. Army soldier Chelsea Manningprovided to WikiLeaks or the former NSA contractor Edward Snowden’s trove of information on international surveillance. Like those leaks, the Panama Papers highlight the hypocrisy of prominent politicians and officials. The leak also recalls a series of less glamorous data leaks on the customers of secretive Swiss and Liechtenstein-based banks, which put pressure on governments to crack down on tax havens and allowed some authorities to pursue cases against tax evaders. Although few may remember, WikiLeaks began with a similar leak from the Swiss bank Julius Baer.

Yet the best comparison—and the best guide to what may happen next—is not to Snowden or Julian Assange but to Thomas Piketty, the famous French economist. Piketty’s book, Capital in the 21^st Century, has been interpreted as an economic history, as a grand economic theory and a gloomy political prognosis. Yet few have paid attention to its closing pages, where Piketty lays out the political bet that underlies his research program: that people simply do not know the full extent of economic inequality, and that politics would be transformed if they ever found out.

Piketty’s research and his political program are motivated by a belief that the true extent of economic inequality is invisible. Everyday statistics simply cannot capture the extent to which the rich are different from ordinary people. They are not designed to. Common techniques of measuring inequality, by comparing the income or wealth of the top ten percent of the population to the rest, do not capture how much richer the top one percent is than the top 10 percent, or how much richer the top 0.1 percent is than the mere one-percenters. As the American political commentator Chris Hayes observed in Twilight of the Elites: America After Meritocracy, inequality is like a fractal in that it gets deeper and stranger the further one investigates it. One reason why Piketty’s research has influenced other economists is that it figures out clever ways, such as using university endowment funds as a proxy for hidden fortunes, to measure the consequences of inequality despite imperfect data.

Piketty’s aspirations may yet be fulfilled, but only if the Panama Papers create a new, self-sustaining politics that demands ever more information on the ways in which wealth is being hidden.

But the problem goes beyond deficient datasets. The truly rich have the means and the incentives to hide their staggering wealth. Piketty’s collaborator, the Berkeley economist Gabriel Zucman, estimates that $7.6 trillion is hidden in offshore arrangements. The London real estate market has been reshaped by oligarchs from Russia and elsewhere who use shell corporations to park their capital in a safe and predictable economic system. Activists run Hollywood-style bus tours of the houses of the new kleptocracy.

YVES HERMAN

An activist shows fake banknotes during a demonstration outside the European Commission headquarters after the Panama Paper revelations, in Brussels, April 2016.

As the economist Branko Milanovic argues in his new book, Global Inequality, these trends are reshaping economic and political development. It used to be that economic elites had an interest in building up the rule of law in their own country, if only to protect their own property. Now they can just transfer the loot to London or New York, where “nobody will ask where the money came from,” Milanovic writes. Financial globalization is building a world similar to the one depicted in William Gibson’s grimly satirical science fiction novel, The Peripheral, in which the truly rich are unaccountable to anyone but themselves.

Piketty wants to map this hidden world and destabilize it. He believes that ordinary people simply don’t understand the extent of wealth because they aren’t able to comprehend it. There is thus an urgent need to generate new information that will help people understand how important wealth is, and who has it. This explains, for example, why Piketty wants a utopian global tax on economic capital. It’s not because such a tax would be a complete solution to inequality but because the tax would generate reporting requirements, and hence information on who holds which assets, allowing democracies to hold a “rational debate about the great challenges facing the world today” and who should pay for them.

Piketty’s perspective provides a different—and more fundamental—way of thinking about the long-term consequences of the Panama Papers. The Panama leaks, measured in gigabytes of information, are far larger than the Snowden and Manning ones. Yet compared with the true size of the offshore sector, they are less a leak than a trickle. Mossack Fonseca is not the only law firm setting up shell corporations to help people avoid taxes and scrutiny. And shell corporations are just one small part of a much larger system designed to hide people’s wealth.  The document release—although significant—is no substitute for the kind of detailed and comprehensive information that a global tax arrangement might provide.

The truly rich have the means and the incentives to hide their staggering wealth.

Still, the leak brings the world one step closer toward better information on global wealth. The United Kingdom, for example, has come under pressure to stop protecting its tax haven dependencies. France and Germany are calling for a blacklist of tax havens, which might be cut off from the SWIFT financial messaging network, a global network that financial institutions use to transmit information securely, if they do not make their ownership structures completely transparent.

STIGTRYGGUR JOHANNSSON / REUTERS

People demonstrate against Iceland’s Prime Minister Sigmundur David Gunnlaugsson in Reykjavik, April 2016.

Perhaps more important, in some countries the revelations are creating a new popular politics around tax avoidance and fraud. The Panama Papers have spurred massive public protests in Iceland and political furor in the United Kingdom. They are connecting technical questions of tax evasion and tax avoidance to everyday politics by identifying well-known politicians, officials, and celebrities who benefit from complex arrangements. Some of Piketty’s hopes for popular debate are being realized.

Even so, the effects have been sporadic. The revelations have had little popular impact in the United States, where no public figures have been identified as taking advantage of Mossack Fonseca. They have also yet to lead to substantial public outcry in countries such as Russia or China, where there are limited channels for public dissent. If this is indeed a first step toward identifying the true extent of global wealth inequality, it is only that.

Piketty’s aspirations may yet be fulfilled, but only if this release of information creates a new, self-sustaining politics that demands ever more information on the ways in which wealth is being hidden. This is a tall order given the complexities of international politics and the incentives for individual states to cheat, but the world is significantly closer to it now than anyone would have predicted three weeks ago.

Cisco System’s Vision For Online Education Is Emerging Now

Google is driving the deployment of Gigabit Fiber to the Home (FTTH), which holds the promise of orders of magnitude higher bandwidth and dramatically lower cost.  But people have asked the question, “what will people do with all of this massive bandwidth?” Having lived with Moore’s Law for most of my career, I smile in bemusement. I can remember a fear that the 256Kb flash memory chip was “too big.” The truth is that if you were asked 20 years ago to predict how we would be using the Internet today, I doubt many would have accurately predicted our current global village.  The few exceptions would be visionaries like Dave Evans, Chief Futurist at Cisco Systems, who authored a Huffington Post article, providing an excellent prediction of how FTTH may impact just one aspect of the future: education.  Read below:

Read more: How Gigabit fiber to the home will transform education way beyond MOOC’s

Now we are seeing actual glimpses into that future,  and how Cisco Systems vision for the future of education is already emerging.

VIDEO: Could your child could benefit from a 24/7 tutor?

The Invasion of the Online Tutors

They teach via chat windows and digital whiteboards

By

SUE SHELLENBARGER

Nov. 12, 2013 7:21 p.m. ET

In the world of on-demand tutoring, kids can log on 24/7 to sites with problems or questions. But how well do these really work? Sue Shellenbarger reports and mother Peggy Bennett shares her own experience. Photo: Justin Clemons for The Wall Street Journal.

It’s a nightly dilemma in many households: A student hits a wall doing homework, and parents are too tired, too busy—or too mystified—to help.

Ordering up a tutor is becoming as easy for kids as grabbing a late-night snack. Amid rapid growth in companies offering online, on-demand tutoring, students can use a credit card to connect, sometimes in less than a minute, with a live tutor. Such 24/7, no-appointment-needed services can be especially helpful to students with tight budgets or tight time frames or those in remote areas.

“All of a sudden, the world opens up to them,” says Michael Horn, executive director of education for the Clayton Christensen Institute, a San Mateo, Calif., education and health-care think tank.

That said, the quality of on-demand scholastic support can be uneven, and the catch-as-catch-can approach to enlisting a tutor may not be best for struggling students who need sustained help. Sessions can bog down on technical glitches, and language barriers can cause problems on sites that rely on tutors from abroad.

Chloe Friedman of Dallas uses Tutor.com for homework help between dance classes. Justin Clemons for The Wall Street Journal

Prices, ranging from about $24 to $45 an hour (and often prorated to the minute), are cheaper than what many skilled tutors charge in a student’s home. And parents and students say the quick homework fix can ease stress and make evenings at home more peaceful.

Whenever Peggy Bennett of Dallas tried to help her 13-year-old daughter, Chloe Friedman, with her eighth-grade physics and algebra homework, “we’d always end up bickering,” Ms. Bennett says, with Chloe often objecting that the teacher did it differently. “It was a lose-lose situation.”

Chloe says she was skeptical when her mom helped her sign up last month on Tutor.com, a New York City-based provider of on-demand tutoring. But after she logged on one evening for algebra help, a tutor, identified only by a first name and last initial, responded within a minute. Chloe says she was guided to figure out the answers, using text chat and an interactive “whiteboard” that displayed their writing and calculations on a shared screen. After hearing nothing but typing for about 10 minutes, Ms. Bennett says she heard Chloe yell from the other room, “They told me I did a good job!” Ms. Bennett adds, “That was all that she needed.”

Chloe, who takes classes in dance, acting and singing, also uses Tutor.com on hersmartphone at the dance studio between classes. She says she recently got help solving a math problem in less than 10 minutes.

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Math Mentoring on the Fly: A text chat between Chloe Friedman of Dallas and her Tutor.com tutor. ‘He didn’t give me the answer,’ she says. ‘He went through it with me like my teacher would at school.’ Justin Clemons for The Wall Street Journal

Ms. Bennett now lets Chloe use her credit card to extend her Tutor.com subscription whenever she needs help. So far, Chloe has spent $79.99 for up to two hours of tutoring. Tutor.com subscribers pay once a month for time used; unused minutes can be carried to the next month.

Most sites enlist moonlighting or retired teachers, college professors or professionals with tutoring experience; most offer scheduled tutoring in addition to on-demand sessions. The most common users are middle- and high-schoolers, and college students taking basic courses.

About 95% of the 1,200 tutors available on Bangalore, India-based TutorVista are recruited from India, says C.S. Swaminathan, president of TutorVista, which was recently acquired by the London-based publishing and education companyPearson PSON.LN -0.76% PLC. Tutoring sessions with its mostly U.S.-based customers are usually held via whiteboard and text chat, to reduce potential language difficulties, Mr. Swaminathan says. Still, students say, language barriers can sometimes slow communication, and grammar glitches can occasionally creep in.

Saira Sultan, an Irvine, Calif., college student, says the TutorVista tutors she taps several times a week for help with her English and math courses are pleasant and knowledgeable. She recently uploaded a business letter she had been assigned to write for her English class, and the tutor marked errors in the text and texted instructions on correcting verb tenses, rearranging paragraphs and rephrasing sentences to read more smoothly, Ms. Sultan says. The one-on-one edits have helped her learn to write more clearly, she says.

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The drawback, she says, is that communicating via text chat “takes a lot of time.” Mr. Swaminathan says TutorVista can provide audio-chat sessions if scheduled in advance.

As with in-person tutors, knowledge levels and teaching skills can be uneven. Stephanie Dobbs of Los Angeles says one InstaEDU tutor who responded to her daughter Sarah’s request for calculus help “didn’t know the material at all.” But Sarah, who uses the site two to three times a week, says it has so many tutors that switching is easy, and the convenience outweighs any drawbacks.

An InstaEDU spokeswoman says on occasion, tutors can halt billing while they figure out the material, or students can be given refunds or a different tutor.

James Nickerson agrees that on-demand tutors need winnowing. When he turned to InstaEDU recently to help his 16-year-old daughter Emma with an advanced-Latin class (they couldn’t find a skilled Latin tutor in their hometown of Stevens Point, Wis.), he didn’t turn Emma loose online. Instead, he sat beside her while she chose a tutor, urging her to bypass a math major who claimed a sideline expertise in Latin in favor of a New York University grad student majoring in classics. He also helped her schedule sessions, to provide continuity with the same tutor.

Related

• Work & Family Mailbox: Readers’ Questions

On-demand tutoring is just one of a growing array of online homework-help options. Khan Academy, one prominent example, offers interactive tutorials in addition to educational videos. Chegg.com provides answers to homework questions, while crowdsourcing sites such as StudyBlue enable students to share study guides, notes and flashcards.

Some school districts pay New York City-based TutaPoint and other online-tutoring sites to provide free access to students; about 2,000 libraries let students use Tutor.com without cost. Free access to tutoring sites can help level the playing field for students from all income groups—if they provide trained, qualified tutors, conduct background checks and safeguard users’ security, says Nora Carr, president of the National School Public Relations Association, a professional group.

But the sites can also tilt the playing field in favor of kids with plenty of money for tutoring help, creating pressure for other students to have a tutor too. Parents should monitor kids’ use of the sites and track fees, which “can get very expensive very quickly,” says Ms. Carr, who is chief of staff of the Guilford County Schools in Greensboro, N.C.

Yamini Naidu says online tutoring last year through InstaEDU helped her earn As in advanced-placement classes at her Beaverton, Ore., high school. Now a freshman at Yale University, Ms. Naidu works eight hours a week as an InstaEDU tutor.

She says that students who come to sessions with a list of questions or assignments to work on—and who block out time to concentrate—benefit most. Text chats occasionally stall, though, if students are distracted or start multitasking; Ms. Naidu tries to re-engage students by asking questions to spark their interest, she says.

Bharathy Chummar of Plantation, Fla., turned to the online tutoring site Eduboard last summer to help her 15-year-old son Prajwal research possible science-fair topics. Prajwal had a 45-minute audio and text chat with a tutor, who is also a physician, about an idea involving bacteria. The doctor later sent him a research summary with links to more studies.

Online tutors “fill a huge gap that can never be filled by parents,” Ms. Chummar says.

Write to Sue Shellenbarger at sue.shellenbarger@wsj.com

Should Digital Skills Be Required For A Management Degree?

What About Digital Skills For Management Students?

I have a UBC Management student who is an excellent coder. He picked up his skills on his own, probably as far back as junior high school. But in talking with him now, he says that he hates coding. I told him that was perfectly normal and acceptable. Not everyone is cut out to be hacker. But I did emphasize to him that his experience and skills in the world of software would serve him well in his management career.  It is my firm belief that not enough emphasis is placed on these skills in the Brave New World of management, rapidly morphing into one Big Data, Cloud, and Smart Mobile hairball.  We can argue when, where and by whom it should be taught, but I urge all of my students to consider developing some of these skills, as being important to their management success.

In the attached HBR Blog Network article below, students were polled as to the usefulness of one Harvard basic undergraduate course in computer science. My most important take away from that poll was the response from many students, that while they could not code and were not particularly technical, taking the course improved their confidence in dealing with engineering types, software development issues, the Web, and technical computing matters generally.  I had the great good fortune to begin my career in the early days of Intel, but without any technical training. I thank my lucky stars for the education that Intel provided me. That kind of process is no longer feasible.

Read more: Why knowing how to code is so important

Read more: Integrated Big Data, Cloud, and Smart Mobile: Big Deal or Not?

Reblogged from the HBR Blog Network

Should MBAs Learn to Code?

by Thomas R. Eisenmann  |  11:00 AM September 2, 2013

This post was originally published on the author’s blog. It has been edited slightly.

“Should I learn to code?”

MBAs who lack programming skills often ask this question when they pursue careers in technology companies.

Bloggers like Yipit co-founder Vin Vacanti have shared views on the payoff from learning to code, as have several students at Harvard Business School, including Dana Hork, Matt Boys, and Matt Thurmond.

I thought it’d be helpful to supplement bloggers’ perspectives with some survey data. I received responses from 24 of the 41 HBS students who enrolled over the past two years in CS50, the introductory computer science course at Harvard College.

My survey didn’t ask for comments on the quality of CS50 itself. The course is widely acclaimed; my colleague David Malan has grown its enrollment five-fold to 715 students over the six years he has served as lead instructor. Rather, my goal with the survey was to learn whether MBAs saw this well designed and rigorous course as a good investment of their time, given their career objectives and other course options. The tradeoffs are tricky: survey respondents reported spending an average of 16.3 hours per week on CS50 — perhaps 2-3x more time than they would spend on an MBA elective that yielded equivalent academic credit.

So, was it worth it? Of the 18 survey respondents who founded a startup, joined an existing startup, or went to work for a big tech company upon graduation, 83% answered “yes” to the question, “On reflection, was taking CS50 worth it for you?” and 17% said “not sure.” Of these 18 respondents, none said that taking CS50 was not worth it. By contrast, of the six respondents who pursued jobs outside of the tech sector — say, in consulting or private equity — only two said CS50 was a worthwhile investment; three said it was not; and one was not sure.

Benefits

Respondents cited several benefits from taking CS50.

Writing Software. Respondents differed in their assessments of their current ability to contribute working code on the job, based on their CS50 learning. Several said they regularly do so, for example:

Kyle Watkins, who joined an existing startup, said he has “used CS50 skills to create a half dozen VBA programs that will likely save the startup I’m working for tens of thousands of dollars.”

Michael Belkin, who founded his own startup, said, “After taking CS50, I was able to build an MVP that would have cost at least $40K to outsource. And it was better, because I understood all the small details that drive a user’s experience. After HBS, I became one of the lead developers at my startup, which has saved the company several hundred thousand dollars.”

Communicating with Developers. Other respondents, especially those employed in large tech companies, said they couldn’t really write production software, but felt more confident in their ability to discuss technical issues with developers as a result of taking CS50. For example:

Jon Einkauf, a product manager for Amazon AWS, said, “I work with developers on my team every day to define and build new features. In addition, the users of my product are developers and data scientists. Taking CS50 gave me a glimpse of what it’s like to be a developer — to get excited about complex computer science problems, to get frustrated when you hit a bug. It taught me enough about software development that I don’t feel lost in my current job. I can ask intelligent questions, I can push back on the developers when necessary, and I am confident that I could teach myself anything else I need to learn.”

Luke Langford, who joined Zynga as a product manager upon graduation, said that CS50 “gave me a working knowledge and confidence to be able to review code. Product managers at Zynga don’t often work in code, but there were several times when I was able to diagnose issues and help the engineers identify why certain algorithms that calculated scores were wrong. Pre-CS50, I wouldn’t have been able to do that.”

Recruiting. Several respondents mentioned that their CS50 experience had helped persuade recruiters that they were committed to a career in technology. As one anonymous respondent reported, “I wanted to get a job at a tech startup and ended up as a product manager at one of NYC’s hottest tech startups. The founder, who is a CS PhD, was really impressed that I’d learned to code. I think it made a difference in getting the offer.”

Costs

The benefits from CS50 came at a considerable cost, however, in terms of workload. In addition to lectures and section meetings, the course has weekly problem sets, two mid-terms exams, and a final project that requires students to design and build an application.

Beyond the heavy workload, respondents who were less sanguine about the payoff from CS50 often cited its use of C to teach fundamentals such as functions, loops and arrays, rather than a more modern programming language. While acknowledging that C is well suited for this purpose, these students would have preferred more focus on languages used in web development (e.g., JavaScript, HTML, and PHP), which are covered in the last one-third of CS50’s syllabus. Likewise, some students said they understood why certain “academic” concepts (e.g., algorithm run times, security) were covered in an introductory CS course, but they did not view such concepts as salient to their “just learn to code” personal priorities.

Many respondents acknowledged that there are online options for learning to code that would not require as big a time commitment as CS50. However, they saw a graded course for academic credit as good way to ensure they would actually get the work done. An anonymous respondent said, “I knew that I would never learn programming if I didn’t have something — a problem set or test — to keep me accountable every week. I don’t want to generalize, but I highly doubt that most HBS people after doing their cases/travel/socializing are going to set aside time to consistently do Codecademy or Treehouse every week.”

Justin Ekins added, “You can learn everything in this course online, but, let’s face it, you’re not going to force yourself to do that. And you won’t get the depth of knowledge that CS50 will provide. It’s an outstanding course, and it’s incredibly well taught. I’d recommend taking it and then spending J term [three weeks in January when regular HBS classes do not meet] with Stanford’s online CS193P, which will get you to the point of building iPhone apps.”

More blog posts by Thomas R. Eisenmann

More on: Entrepreneurship, Information & technology, Tech industry

THOMAS R. EISENMANN

Tom Eisenmann is the Howard H. Stevenson Professor of Business Administration at the Harvard Business School, where he chairs the 2nd year of the MBA Program, co-chairs the Rock Center for Entrepreneurship, and leads the faculty team that teaches The Entrepreneurial Manager, a required 1st-year MBA course. He also blogs at Platforms & Networks. Follow him on Twitter @teisenmann

5 Ways Big Data Is Going To Blow Your Mind

“Big Data, Big Deal or Not?” Debate Continues

The Gigaom Structure Data Conference has just concluded in New York City. It has added significantly to the discussion and the debate on the significance of this phenomenon.  The author, Derek Harris, has summarized my own view on the issue in his first paragraph.  The notion that Big Data is little more than business intelligence on steriods is just wrong, and those who fail to understand its importance and exploit it, may well be the losers.

5 ways Big Data is going to blow your mind and change your world

by Derrick Harris

photo: Shutterstock / GrandDuc

SUMMARY:

Call it whatever you want — big data, data science, data intelligence — but be prepared to have your mind blown. Imagination and technology are on a collision course that will change the world in profound ways.

Some people say big data is wallowing in the trough of disillusionment, but that’s a limited worldview. If you only look at it like an IT issue it might be easy to see big data as little more than business intelligence on steroids. If you only see data science as a means to serving better ads, it might be easy to ask yourself what all the fuss is about.

If you’re like me, though, all you see are the bright lights ahead. They might be some sort of data nirvana, or they might be a privacy-destroying 18-wheeler bearing down on us. They might be both. But we’re going to find out, and we’re we’re going to find out sooner rather than later.

This is because there are small pockets of technologists who are letting their imaginations lead the way. In a suddenly cliché way of saying it, they’re aiming for 10x improvement rather than 10 percent improvement. They can do that because they now have a base set of analytic technologies and techniques that are well positioned to solve, with relatively little effort, whatever data problems are thrown their way.

Here are some themes from our just-concluded Structure: Data conference that I think highlight the promise of data, but also the challenges that lie ahead.

Man and machine unite

Machine learning is already infiltrating nearly every aspect of our digital lives, but its ultimate promise will only be realized when it becomes more human. That doesn’t necessarily mean making machines think like human brains (although, granted, that’s a vision currently driving billions of research dollars), but just letting people better interact with the systems and models trying to discover the hidden patterns in everything around us.

Whatever shape it takes, the results will be revolutionary. We’ll treat diseases once thought untreatable, tackle difficult socio-economic and cultural issues, and learn to experience the world around in entirely new ways. Maybe that consumer-experience scourge known as advertising might actually become helpful rather than annoying.

That would really be something.

Man and Machine Unite

Data science, or data intelligence?

I’m not sure there needs to be a distinction between data science and data intelligence, but the latter does connote a grander goal. It’s about trying to solve meaningful problems rather than just serving ads; about trying to understand why things happen just as well as when they’ll happen. This means learning to work with smaller, messier data than we might like — certainly smaller and messier than the data sets underneath most of the massive web-company data science undertakings.

But just think about being able to go beyond predictive models and into a world of preventative — or even professorial — models. If you know what I like, where I go and who my friends are, it might be fairly easy to predict what I want to buy. Figuring out how my decision to buy something might affect my overall well-being and then telling me why? That’s a little more difficult and a lot more beneficial.

Telling stories with data

Have you ever looked at a chart and wondered what the heck it was supposed to be telling you? Or downloaded a report of your Facebook activity only to ask yourself if all the disparate data points come together to paint a bigger picture? Or tried — and failed — to stop a terrorist before his movement to recruit an army of followers gained critical mass?

A big problem with a lot data analysis right now is that it still treats data points as entities unto themselves, largely disconnected from those around them. However, data needs context in order to be really useful; it’s context that turns disparate data points into a story. Don’t just tell me how many steps I took today or the time of day I’m most active on Facebook, but tell me how that relates to the rest of my life.

And don’t just tell me that someone said he wants to kill Americans. Rather, tell me a story about how much more frequently he’s saying it and how much more inciteful his words are becoming.

The internet of things knows all

The mobile phone in your pocket is tracking your every movement and can also monitor the sounds that are surrounding you. That fitness tracker you’re wearing is identifying you by how you walk. Your smart meter data shows when you’re home, when you’re away and when you’re in the shower. Sensors in everything from toothbrushes to cars are quantifying every aspect of our lives.

This volume of data can still be a lot to deal with in terms of its volume, velocity and variety, and we’re still not quite sure what to do with it even if the right tools were in place. But all sorts of entrepreneurs, powerful institutions and intelligence agents have ideas. The technological pieces are coming along nicely, too. Just sayin’ …

This semantic life

The semantic web lives on; only it’s spreading well beyond our search engines and even our web browsers. Soon enough, we’ll be able to surface relevant content and people simply by highlighting passage of text in whatever we’re reading — web page or not — on any type of device. When we speak to our devices, they’ll not only know what we’re saying, but also what we really want even without the help of specific commands or keywords.

That’s a powerful proposition in a world where we increasingly expect our interactions to be hands-free and our answers to come as fast as our questions. Of course, what’s powerful in the hands of consumers driving in their cars or sitting on their couches iseven more powerful in the hands of doctors trying to diagnose difficult diseases or aid workers trying lend a helping hand in places where they don’t know the customs or even speak the language.

In Memoriam: Aaron Swartz, Internet Activist, RSS Pioneer, and Co-Founder of Reddit

Aaron Swartz, Internet Visionary Has Left Us

UPDATE

Tweet from (Sir) Tim Berners-Lee on the death of Aaron Swartz”  “Aaron dead. World wanderers, we have lost a wise elder. Hackers for right, we are one down. Parents all, we have lost a child. Let us weep.” And the web wept.

Today the blogosphere and media have lit up with tributes and obituaries to Aaron Swartz: not least of these include The Economist Magazine “Babbage” editorial page, and The Harvard Business Review blog

Read more, Babbage, The Economist:  http://www.economist.com/blogs/babbage/2013/01/remembering-aaron-swartz?fsrc=nlw|newe|1-14-2013|4609454|34901933|NA

 Read more, HBR blog:   http://blogs.hbr.org/cs/2013/01/aaron_swartzs_crime_and_the_bu.html

ORIGINAL POST

Only 26 years old, Aaron Swartz took his own life late last week.  Swartz was an Internet intellectual giant, recognized as such since his early teenage years..  We have lost a second generation Internet visionary..someone who could have helped us get to the next level of The Global Village..

At the age of 14, Swartz was credited with inventing RSS, known as “rich site summary,” a format for delivering to users content from sites that change constantly, such as news pages and blogs. We all use it.

The problem was that the powers that want corporate control the Internet did not like Aaron.. They want us to pay big corporations big bucks and they see the Internet as a threat to their power.  I personally view Swartz’ suicide as an existential act of immense courage, making the ultimate statement with his life, screaming at us that we need to “wake the fuck up”  as Samuel L. Jackson screamed at us in his viral video, during the US Presidential campaign.

Swartz faced trouble in July 2011, when he was indicted by a federal grand jury of wire fraud, computer fraud and other charges related to allegedly stealing millions of academic articles and journals from a digital archive at the Massachusetts Institute of Technology.

According to the federal indictment, Swartz – who was a fellow at Harvard University’s Edmond J Safra Center for Ethics – used MIT’s computer networks to steal more than 4 million articles from JSTOR, an online archive and journal distribution service. JSTOR did not press charges against Swartz after the digitised copies of the articles were returned, according to media reports at the time.  So why did the US Attorney insist on driving Aaron to commit suicide?

Swartz, who pleaded not guilty to all counts, faced 35 years in prison and a $1 million fine if convicted. He was released on bond. His trial was scheduled to start later this year.  Many legal scholars who have studied the case,  have described the US federal prosecution as a travesty, and out of all proportion to the facts..

Most importantly, if the United States views the Internet as a strategic national security resource, they completely fucked up by forcing the suicide of one of its most important new geniuses. You can’t get more fucked up than that. 

On Saturday, online tributes to Swartz flooded across cyberspace. “Aaron had an unbeatable combination of political insight, technical skill and intelligence about people and issues,” Cory Doctorow, Canadian blogger and science fiction writer, co-editor of the weblog Boing Boing, wrote on the site. Doctorow wrote that Swartz had “problems with depression for many years.”  Depression, mood swings and even bipolar disorder are commonly associated with extremely bright people.

We lost Steve Jobs.. Now we have lost Aaron as well.  He could have been our next generation Marshall McLuhan, showing us the way…. But it was not to happen.  I am so angry I could spit.

 

Don’t Believe In Human Caused Climate Change? Talk To Your Insurance Agent…

Megastorm Sandy caught everyone offguard.  More importantly, it has reignited the debate about human caused climate change and the forecasts for weather extremes of all types.  The most poignant response I have heard is if you don’t believe in human caused climate change, “ask your insurance agent.”  Insurance companies have been feeling the brunt of human caused climate change for years.  With Megastorm Sandy the facts have overwhelmed debate.

Toronto Emits Way More Carbon Per Day Than New York City

Yesterday, New York City‘s Sustainability Office put out this video to graphically visualize the reality of how much carbon, in tonnes is produced by New York City in one day..

The amazing fact from all of this is that Toronto apparently produces almost 15% more carbon per day than NYC… Then add the fact that urban environments, by their nature tend to emit less carbon than suburban and rural areas.

Is this why Canada missed its carbon reduction commitment by more than 30%???

I am deeply perplexed by climate change deniers.  I have had in depth conversations with scientists and engineers who follow the “scientific method,”  and though the preponderant majority of scientists are convinced by the data that they have collected, others seem consumed by the elegance of their “method,”  and how the scientific method offers them an opportunity to become famous by looking for possible flaws in the data.    I do understand that point. Copernicus and Leonardo Da Vinci were pioneers of elegant new ideas. But at some point the law of diminishing return applies, and you must acknowledge that Copernicus is right. More weird, many focus on denial of the fact that human activity and fossil fuels are the base explanation in the data.  It is all just natural cycles.   One said to me that the scientific method is not democratic.

By now one would assume that while we may find minor issues, no one is going to become the next Copernicus or Leonardo by denying human caused climate change. In frustation with climate change deniers, I have offered the position that “sustainability is the right thing to do, either way.”

Of course, there is documented evidence that the Koch brothers and others have a financial and political agenda, and are actively funding climate change denial…

To me it is just mental masturbation as our grandchildren face living with our environmental mess..  Right wingers say the same about Keynsian economics and deficits.