business

The contradictions of conservatism

From Alan Wolfe’s “Why Conservatives Can’t Govern” (The Washington Monthly: July/August 2006):

A conservative in America, in short, is someone who advocates ends that cannot be realized through means that can never be justified, at least not on the terrain of conservatism itself. In the past, the ends sought were the preservation of hierarchy, even if the means included appeals to democratic sentiment. In more recent times, conservatives promised order and stability through means dependent upon the uncertainties and insecurities of the market.

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The power of PR

From Paul Graham’s “The Submarine” (April 2005):

Why do the media keep running stories saying suits are back? Because PR firms tell them to. One of the most surprising things I discovered during my brief business career was the existence of the PR industry, lurking like a huge, quiet submarine beneath the news. Of the stories you read in traditional media that aren’t about politics, crimes, or disasters, more than half probably come from PR firms.

I know because I spent years hunting such “press hits.” Our startup spent its entire marketing budget on PR: at a time when we were assembling our own computers to save money, we were paying a PR firm $16,000 a month. And they were worth it. PR is the news equivalent of search engine optimization; instead of buying ads, which readers ignore, you get yourself inserted directly into the stories. …

If anyone is dishonest, it’s the reporters. The main reason PR firms exist is that reporters are lazy. Or, to put it more nicely, overworked. Really they ought to be out there digging up stories for themselves. But it’s so tempting to sit in their offices and let PR firms bring the stories to them. After all, they know good PR firms won’t lie to them.

A good flatterer doesn’t lie, but tells his victim selective truths (what a nice color your eyes are). Good PR firms use the same strategy: they give reporters stories that are true, but whose truth favors their clients. …

Where the work of PR firms really does get deliberately misleading is in the generation of “buzz.” They usually feed the same story to several different publications at once. And when readers see similar stories in multiple places, they think there is some important trend afoot. Which is exactly what they’re supposed to think. …

Remember the exercises in critical reading you did in school, where you had to look at a piece of writing and step back and ask whether the author was telling the whole truth? If you really want to be a critical reader, it turns out you have to step back one step further, and ask not just whether the author is telling the truth, but why he’s writing about this subject at all.

Online, the answer tends to be a lot simpler. Most people who publish online write what they write for the simple reason that they want to. You can’t see the fingerprints of PR firms all over the articles, as you can in so many print publications — which is one of the reasons, though they may not consciously realize it, that readers trust bloggers more than Business Week. …

I didn’t realize, till there was an alternative, just how artificial most of the writing in the mainstream media was. I’m not saying I used to believe what I read in Time and Newsweek. Since high school, at least, I’ve thought of magazines like that more as guides to what ordinary people were being told to think than as sources of information.

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A new fraud: faking an entire company

From David Lague’s “Next step in pirating: Faking a company” (International Herald Tribune: 28 April 2006):

At first it seemed to be nothing more than a routine, if damaging, case of counterfeiting in a country where faking it has become an industry.

Reports filtering back to the Tokyo headquarters of the Japanese electronics giant NEC in mid-2004 alerted managers that pirated keyboards and recordable CD and DVD discs bearing the company’s brand were on sale in retail outlets in Beijing and Hong Kong.

Like hundreds, if not thousands, of manufacturers now locked in a war of attrition with intellectual property thieves in China, the company hired an investigator to track down the pirates.

After two years and thousands of hours of investigation in conjunction with law enforcement agencies in China, Taiwan and Japan, the company said it had uncovered something far more ambitious than clandestine workshops turning out inferior copies of NEC products. The pirates were faking the entire company.

Evidence seized in raids on 18 factories and warehouses in China and Taiwan over the past year showed that the counterfeiters had set up what amounted to a parallel NEC brand with links to a network of more than 50 electronics factories in China, Hong Kong and Taiwan.

In the name of NEC, the pirates copied NEC products, and went as far as developing their own range of consumer electronic products – everything from home entertainment centers to MP3 players. They also coordinated manufacturing and distribution, collecting all the proceeds.

The Japanese company even received complaints about products – which were of generally good quality – that they did not make or provide with warranties.

NEC said it was unable to estimate the total value of the pirated goods from these factories, but the company believed the organizers had “profited substantially” from the operation.

“These entities are part of a sophisticated ring, coordinated by two key entities based in Taiwan and Japan, which has attempted to completely assume the NEC brand,” said Fujio Okada, the NEC senior vice president and legal division general manager, in written answers to questions.

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It’s alright to fail at a startup when you’re young

From Paul Graham’s “Hiring is Obsolete” (May 2005):

The math is brutal. While perhaps 9 out of 10 startups fail, the one that succeeds will pay the founders more than 10 times what they would have made in an ordinary job. That’s the sense in which startups pay better “on average.”

Remember that. If you start a startup, you’ll probably fail. Most startups fail. It’s the nature of the business. But it’s not necessarily a mistake to try something that has a 90% chance of failing, if you can afford the risk. Failing at 40, when you have a family to support, could be serious. But if you fail at 22, so what? If you try to start a startup right out of college and it tanks, you’ll end up at 23 broke and a lot smarter. Which, if you think about it, is roughly what you hope to get from a graduate program.

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Why big co’s are bad are creating new products

From Paul Graham’s “Hiring is Obsolete” (May 2005):

Buying startups also solves another problem afflicting big companies: they can’t do product development. Big companies are good at extracting the value from existing products, but bad at creating new ones.

Why? It’s worth studying this phenomenon in detail, because this is the raison d’etre of startups.

To start with, most big companies have some kind of turf to protect, and this tends to warp their development decisions. For example, Web-based applications are hot now, but within Microsoft there must be a lot of ambivalence about them, because the very idea of Web-based software threatens the desktop. So any Web-based application that Microsoft ends up with, will probably, like Hotmail, be something developed outside the company.

Another reason big companies are bad at developing new products is that the kind of people who do that tend not to have much power in big companies (unless they happen to be the CEO). Disruptive technologies are developed by disruptive people. And they either don’t work for the big company, or have been outmaneuvered by yes-men and have comparatively little influence.

Big companies also lose because they usually only build one of each thing. When you only have one Web browser, you can’t do anything really risky with it. If ten different startups design ten different Web browsers and you take the best, you’ll probably get something better.

The more general version of this problem is that there are too many new ideas for companies to explore them all. There might be 500 startups right now who think they’re making something Microsoft might buy. Even Microsoft probably couldn’t manage 500 development projects in-house.

Big companies also don’t pay people the right way. People developing a new product at a big company get paid roughly the same whether it succeeds or fails. People at a startup expect to get rich if the product succeeds, and get nothing if it fails. So naturally the people at the startup work a lot harder.

The mere bigness of big companies is an obstacle. In startups, developers are often forced to talk directly to users, whether they want to or not, because there is no one else to do sales and support. It’s painful doing sales, but you learn much more from trying to sell people something than reading what they said in focus groups.

And then of course, big companies are bad at product development because they’re bad at everything. Everything happens slower in big companies than small ones, and product development is something that has to happen fast, because you have to go through a lot of iterations to get something good.

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Jobs are unnecessary – just build something valuable

From Paul Graham’s “Hiring is Obsolete” (May 2005):

I think most undergrads don’t realize yet that the economic cage is open. A lot have been told by their parents that the route to success is to get a good job. This was true when their parents were in college, but it’s less true now. The route to success is to build something valuable, and you don’t have to be working for an existing company to do that. Indeed, you can often do it better if you’re not.

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It’s hard to judge the young, but the market can

From Paul Graham’s “Hiring is Obsolete” (May 2005):

It’s hard to judge the young because (a) they change rapidly, (b) there is great variation between them, and (c) they’re individually inconsistent. That last one is a big problem. When you’re young, you occasionally say and do stupid things even when you’re smart. So if the algorithm is to filter out people who say stupid things, as many investors and employers unconsciously do, you’re going to get a lot of false positives. …

The market is a lot more discerning than any employer. And it is completely non-discriminatory. On the Internet, nobody knows you’re a dog. And more to the point, nobody knows you’re 22. All users care about is whether your site or software gives them what they want. They don’t care if the person behind it is a high school kid.

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The real vs. stated purpose of PowerPoint

From Paul Graham’s “Hiring is Obsolete” (May 2005):

For example, the stated purpose of Powerpoint is to present ideas. Its real role is to overcome people’s fear of public speaking. It allows you to give an impressive-looking talk about nothing, and it causes the audience to sit in a dark room looking at slides, instead of a bright one looking at you.

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Why is American design so often terrible compared to Japanese design?

From Paul Graham’s “Made in USA” (November 2004):

Americans are good at some things and bad at others. We’re good at making movies and software, and bad at making cars and cities. And I think we may be good at what we’re good at for the same reason we’re bad at what we’re bad at. We’re impatient. In America, if you want to do something, you don’t worry that it might come out badly, or upset delicate social balances, or that people might think you’re getting above yourself. If you want to do something, as Nike says, just do it. …

For centuries the Japanese have made finer things than we have in the West. When you look at swords they made in 1200, you just can’t believe the date on the label is right. Presumably their cars fit together more precisely than ours for the same reason their joinery always has. They’re obsessed with making things well.

Not us. When we make something in America, our aim is just to get the job done. Once we reach that point, we take one of two routes. We can stop there, and have something crude but serviceable, like a Vise-grip. Or we can improve it, which usually means encrusting it with gratuitous ornament. When we want to make a car “better,” we stick tail fins on it, or make it longer, or make the windows smaller, depending on the current fashion. …

Letting focus groups design your cars for you only wins in the short term. In the long term, it pays to bet on good design. The focus group may say they want the meretricious feature du jour, but what they want even more is to imitate sophisticated buyers, and they, though a small minority, really do care about good design. Eventually the pimps and drug dealers notice that the doctors and lawyers have switched from Cadillac to Lexus, and do the same.

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Who made money during the era of railroads

From Paul Graham’s “What the Bubble Got Right” (September 2004):

In fact most of the money to be made from big trends is made indirectly. It was not the railroads themselves that made the most money during the railroad boom, but the companies on either side, like Carnegie’s steelworks, which made the rails, and Standard Oil, which used railroads to get oil to the East Coast, where it could be shipped to Europe.

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What successful startups need

From Paul Graham’s “How to Start a Startup” (March 2005):

You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed. …

I can think of several heuristics for generating ideas for startups, but most reduce to this: look at something people are trying to do, and figure out how to do it in a way that doesn’t suck. …

What matters is not ideas, but the people who have them. Good people can fix bad ideas, but good ideas can’t save bad people.

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Why disclosure laws are good

From Bruce Schneier’s “Identity-Theft Disclosure Laws” (Crypto-Gram Newsletter: 15 May 2006):

Disclosure laws force companies to make these security breaches public. This is a good idea for three reasons. One, it is good security practice to notify potential identity theft victims that their personal information has been lost or stolen. Two, statistics on actual data thefts are valuable for research purposes. And three, the potential cost of the notification and the associated bad publicity naturally leads companies to spend more money on protecting personal information — or to refrain from collecting it in the first place.

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Exploits used for corporate espionage

From Ryan Naraine’s “Microsoft Confirms Excel Zero-Day Attack Under Way” (eWeek: 16 June 2006):

Microsoft June 15 confirmed that a new, undocumented flaw in its widely used Excel spreadsheet program was being used in an attack against an unnamed target.

The company’s warning comes less than a month after a code-execution hole in Microsoft Word was exploited in what is described as a “super, super targeted attack” against business interests overseas.

The back-to-back zero-day attacks closely resemble each other and suggest that well-organized criminals are conducting corporate espionage using critical flaws purchased from underground hackers.

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Change the AMD K8 CPU without authentication checks

From Bruce Schneier’s Crypto-Gram Newsletter (15 August 2004):

Here’s an interesting hardware security vulnerability. Turns out that it’s possible to update the AMD K8 processor (Athlon64 or Opteron) microcode. And, get this, there’s no authentication check. So it’s possible that an attacker who has access to a machine can backdoor the CPU.

[See http://www.realworldtech.com/forums/index.cfm?action=detail&id=35446&threadid=35446&roomid=11]

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1st 2 questions AOL tech support asks

From Spare me the details (The Economist: 28 October 2004):

LISA HOOK, an executive at AOL, one of the biggest providers of traditional (“dial-up”) internet access, has learned amazing things by listening in on the calls to AOL’s help desk. Usually, the problem is that users cannot get online. The help desk’s first question is: “Do you have a computer?” Surprisingly often the answer is no, and the customer was trying to shove the installation CD into the stereo or TV set. The help desk’s next question is: “Do you have a second telephone line?” Again, surprisingly often the answer is no, which means that the customer cannot get on to the internet because he is on the line to the help desk. And so it goes on. …

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Why Microsoft is threatened by open source

From How Microsoft played the patent card, and failed (The Register: 23 December 2004):

… the joint lead on the Samba project, Jeremy Allison …: “Microsoft has bought off and paid off every competitor it has, except open source. Every single player they could buy out, they did. That leaves Real, and FOSS. And they can’t buy us out, because you can’t buy off a social movement.”

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A profile of phishers & their jobs

From Lee Gomes’s Phisher Tales: How Webs of Scammers Pull Off Internet Fraud (The Wall Street Journal: 20 June 2005):

The typical phisher, he discovered, isn’t a movie-style villain but a Romanian teenager, albeit one who belongs to a social and economic infrastructure that is both remarkably sophisticated and utterly ragtag.

If, in the early days, phishing scams were one-person operations, they have since become so complicated that, just as with medicine or law, the labor has become specialized.

Phishers with different skills will trade with each other in IRC chat rooms, says Mr. Abad. Some might have access to computers around the world that have been hijacked, and can thus be used in connection with a phishing attack. Others might design realistic “scam pages,” which are the actual emails that phishers send. …

But even if a phisher has a “full,” the real work has yet to begin. The goal of most phishers is to use the information they glean to withdraw money from your bank account. Western Union is one way. Another is making a fake ATM card using a blank credit card and a special magnetic stripe reader/writer, which is easy to purchase online.

A phisher, though, may not have the wherewithal to do either of those. He might, for instance, be stuck in a small town where the Internet is his only connection to the outside world. In that case, he’ll go into an IRC chat room and look for a “casher,” someone who can do the dirty work of actually walking up to an ATM. Cashers, says Mr. Abad, usually take a cut of the proceeds and then wire the rest back to the phisher.

Certain chat rooms are thus full of cashers looking for work. “I cash out,” advertised “CCPower” last week on an IRC channel that had 80 other people logged onto it. “Msg me for deal. 65% your share.”

The average nonphisher might wonder what would prevent a casher from simply taking the money and running. It turns out, says Mr. Abad, that phishers have a reputation-monitoring system much like eBay’s. If you rip someone off, your rating goes down. Not only that, phishers post nasty notices about you on IRC. “Sox and Bagzy are rippers,” warned a message posted last week.

Phishers, not surprisingly, are savvy about their targets. For instance, it wasn’t just a coincidence that Washington Mutual was a phisher favorite. Mr. Abad says it was widely known in the phishing underground that a flaw in the communications between the bank’s ATM machines and its mainframe computers made it especially easy to manufacture fake Washington Mutual ATM cards. The bank fixed the problem a few months ago, Mr. Abad says, and the incidence of Washington Mutual-related phishing quickly plummeted. …

Mr. Abad himself is just 23 years old, but he has spent much of the past 10 years hanging out in IRC chat rooms, encountering all manner of hackers and other colorful characters. One thing that’s different about phishers, he says, is how little they like to gab.

“Real hackers will engage in conversation,” he says. “With phishers, it’s a job.”

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Al Qaeda hijacks web server to distribute video

From Matt Tanase’s Don’t let this happen to you:

Smaller companies often assume they have nothing of interest to hackers. Often times that is the case, but they are still after resources, as in this case. Unfortunately, the hackers in this case are tied to Al Qaeda. They placed the recent hostage video on a California companies server. Imagine all of the lovely publicity this brought in.

From New24’s US firm spread hostage video (17 June 2004):

Video images of a US engineer taken hostage in Saudi Arabia, possibly by the al-Qaeda network, could have been put on the internet via a US firm based in California, Der Spiegel magazine reported on Thursday.

The video was released on Tuesday and shows relatively high-quality film of hostage Paul Johnson, who kidnappers from a group called “al-Qaeda in the Arabian Peninsula” have threatened to kill by Friday.

The origin of the video was traced to Silicon Valley Land Surveying Incorporated, a California land surveying and mapping company, said Spiegel online, the internet service for the respected German weekly.

The magazine said that according to its research the move was the first time al-Qaeda had “hijacked” a website to broadcast its propaganda.

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Friendster doesn’t get security

From Annalee Newitz’s Cracking the Code to Romance (Wired: June 2004):

Moore’s buddy Matt Chisholm chimes in to tell me about a similar hack, a JavaScript app he wrote with Moore that works on Friendster. It mines for information about anyone who looks at his profile and clicks through to his Web site. “I get their user ID, email address, age, plus their full name. Neither their full name nor their email is ever supposed to be revealed,” he says.

Notified of the security holes Moore and Chisholm exploit, Friendster rep Lisa Kopp insists, “We have a policy that we are not being hacked.”

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