The Now Economy

For many years, game items such as swords or gold have been traded online: virtual objects are sold for real money to the tune of at least $100m a year.

… This month, an “Ultima Online” player set up a scheme to let players donate items and currency to raise money for tsunami relief. Currency exchanges even allow gamers to move funds from one game to another.

…Trading can also be a symptom of mismanagement of the in-game economy. Inflation is rampant in most games, due to the convention that killing a monster yields a monetary reward: rising prices then fuel real-world trading. But newer games have more control over the money supply, which seems to reduce such trading.

(from A model economy)

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In the health care sector, the Health Insurance Portability and Accountability Act of 1996, as its compliance deadlines phase in, is requiring health care providers to turn to higher-tech operations to store and protect patient data and conduct electronic transactions.

Canyonlands Community Health Care, which operates a group of rural clinics in northern Arizona, was keeping records on paper two years ago. With a compliance deadline at its doorstep, it invested $500,000 in a computer network that stores patient records and other data. “That’s a big chunk of change for a nonprofit to commit to,” said Garrett Martin, information technology director of Canyonlands, who was brought in to install the system.

When the system is fully up and running this summer, doctors and nurses will be able to access medical records, e-mail and billing through hand-held computers and a secure, wireless network. “We’ve already realized efficiency, from the time a patient makes an appointment to the time we get them out the door,” Mr. Martin said. Concrete results are the big sell for small businesses.

Frank Muehleman, general manager for small and medium business at Dell, said: “They’re the most discriminating and discerning group when it comes to where and how to spend their money. Small businesses do not buy technology hoping there’ll be some payback in the future. They want immediate payback.”

(from High Tech Isn’t Just for the Big Guys)

Here’s another example of what makes this place so dynamic. Stanford scientist, KJ Cho, developed a great nanotechnology method, but didn’t know how to make a business out of it. He meets a veteran like Bill Miller, who helps him throw a business plan together — and within 18 months, the new company, Nanostellar, has gotten $3 million in venture backing and already cranked out a prototype for a new catalytic converter that aims to undercut prices of existing models, and help save the environment too. Worst case, it may end up one of the nine of ten start-ups that eventually fail — but hey, better the idea is given a chance to fly than to let it die in the labs.

Posted by Matt Marshall on January 19, 2005 08:07 AM

(from SiliconBeat: Silicon Valley’s engine chugs on)

Nanostellar, Enabling Innovation

Dr. William Miller (Chairman, Founder) Dr. Miller is a Herbert Hoover Professor of Public and Private Management and Computer Science Emeritus and he was Vice President and Provost of Stanford University. He is currently serve as Chairman of the Board at Borland Software Corporation. He is also President and CEO Emeritus of SRI International. He has served on the board of directors of several major companies such as National Science Foundation, Wells Fargo Bank, Women.com Networks, and Varian Associates. Dr. Miller also played a role in the founding of the first Mayfield Fund as a special limited partner and advisor to the general partners. He received a Ph.D. in Physics from Purdue University.

MercuryNews.com | 01/19/2005 | Cleaning up cars at atomic level CATALYTIC CONVERTERS ARE MADE BETTER, CHEAPER By Matt Marshall, Mercury News

When Stanford University scientist KJ Cho developed a method to study the qualities of materials at the level of about 30,000 atoms, he had no idea it could help clean up the environment.

Semiconductor companies such as Texas Instruments and Intel used his modeling software to select materials that would let them build chips smaller and smaller. Specifically, Cho’s method was crucial to letting those companies select the right “high-K dielectric” material needed to insulate the semiconductor’s data from its power lines, helping keep electrons from going where they shouldn’t.

But that niche wasn’t big enough to build a business out of, so Cho searched for a better way to put his method to use.

In a brainstorming session in 2003, he and two others — Michael Pak, an engineer who had recently run a DSL company, and Bill Miller, a physicist and former provost of Stanford University — stumbled onto a good idea.

Cho’s method could help find low-cost materials to replace the highly expensive platinum and palladium coatings on catalytic converters.

Catalytic converters facilitate chemical reactions that convert automotive exhaust pollutants such as carbon monoxide into normal atmospheric gases such as nitrogen, carbon dioxide and water.

By introducing cheaper nanomaterials of similar or even superior emission-reducing qualities to platinum, they could reduce the cost of a catalytic converter by 30 percent — the devices average $100 to $300 even for cheaper cars — and help the environment.

In November 2003, Menlo Park’s Nanostellar was born — with Cho’s collaborator, Jonathan Woo, joining in as a founder, and Deepak Srivastava, a NASA scientist, as a scientific adviser.

The trick was to take Cho’s modeling technique and find an efficient way of manufacturing the desired materials.

They moved quickly. By April 2004, the group already was experimenting with products in their lab. By June, they had attracted $3 million, with venture capital firm 3i as lead investor. And by December, Nanostellar delivered its first two prototypes to automobile manufacturers for testing.

Pak, who is chief executive, said one automaker is planning to use Nanostellar’s material for its converters as early as the fourth quarter of this year.

Meantime, the company has 20 full-time employees and is operating off a $1.5 million bridge loan. Cho and his colleagues plan to raise a bigger round of venture capital shortly, but declined to talk about the details.

Pollution is a huge problem,'' Pak said,and government regulations are getting stricter every year. . . . This is a great application to demonstrate the power of nanotechnology.”

They aim to produce the nanomaterials for half the cost of platinum, which generally makes up about 65 percent of the total cost of a catalytic converter.

After solving the platinum-replacement challenge, Nanostellar plans to move to step two: finding even lower-cost materials that will help improve on platinum’s emissions-reducing qualities by reducing the amount of nitrous oxides still not tackled by catalytic converters.

A look at the private sector reveals that software debacles are routine. And the more ambitious the project, the higher the odds of disappointment. It may not be much consolation to taxpayers, but the F.B.I. has a lot of company. Software hell is a very crowded place.

Consider Ford Motor Company’s ambitious effort to write new software for buying supplies. Begun in 2000, the goal of the project, code-named Everest, was to replace Ford’s patchwork of internal purchasing systems with a uniform system that would run over the Internet. The new software was supposed to reduce paperwork, speed orders and slash costs. But the effort sank under its own complexity. When it was rolled out for testing in North America, suppliers rebelled; according to Automotive News, many found the new software to be slower and more cumbersome than the programs it was intended to replace. Last August, Ford abandoned Everest amid reports that the project was as much as $200 million over budget.

A McDonald’s program called Innovate was even more ambitious - and expensive. Started in 1999 with a budget of $1 billion, the network sought to automate pretty much the entire fast-food empire. Software systems would collect information from every restaurant - the number of burgers sold, the speed of customer service, even the temperature of the oil in the French fry vats - and deliver it in a neat bundle to the company’s executives, who would be able to adjust operations moment by moment.

Or so it was promised. Despite the grand goals, the project went nowhere. In late 2002, McDonald’s killed it, writing off the $170 million that had already been spent.

Research by the Standish Group, a software research and consulting firm, illustrates the troubled fates of most big software initiatives. In 1994, researchers found, only 16 percent were completed on time, on budget and fulfilling the original specifications. Nearly a third were canceled outright, and the remainder fell short of their objectives. More than half of the cost overruns amounted to at least 50 percent of the original budget. Of the projects that went off schedule, almost half took more than twice as long as originally planned. A follow-up survey in 2003, however, showed that corporate software projects were doing better; researchers found that the percentage of successful projects had risen to 34 percent.

(from The New York Times: Does Not Compute)

Rumor has it they’re adding an API — but only for advertisers. The goal would be finer-grained campaign scheduling and optimization, but not for publishers to shop which ads they’d like to run. Already, some of the commentary has focused on publishers’ wishes to replace the mapping function that assigns ads to pages — sometimes, the last thing you want to see on a tech news site is yet more ads for microprocessors. Perhaps, as one publisher put it, you’d be better off with 5% of a lobster-and-caviar referral sale at Amazon during the holidays

Lots of additional details in the extended entry…

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Now, what would it take to build an open-source clone of Craigslist one could run locally?

Craigslist Circles the Globe With Online Classifieds, One City at a Time By ERIC PFANNER, International Herald Tribune Published: January 17, 2005

LONDON - A motor scooter in Manchester, an apartment in Amsterdam, a poster in Paris. All are available via Craigslist, an online bulletin board that presents a new challenge to the established players in the estimated $100 billion global market for classified advertising.

Craigslist was started 10 years ago by Craig Newmark, an Internet pioneer in San Francisco, as a way of keeping friends up to date on events in the Bay Area. It spread through the United States before going international in 2003, with sites in London and Toronto. The expansion accelerated in late 2004 with a flurry of sites, including ones for Paris, Berlin, Tokyo and Sydney. About a dozen other international start-ups are planned in the next few months.

Chris Masse’s year end summary of Prediction Markets activity for 2004 gave a pointer to an article from Time Magazine back in July that I had skimmed earlier. When I looked at it again, I found references to internal markets at Microsoft, Eli Lilly, and Intel that I hadn’t noticed before. It seems worth the time to gather together references to all the internal market experiments I’ve heard about, since most of them haven’t been written up formally as far as I’ve been able to tell.

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* I should mention that the BP case was trading internal pollution credits, while all the others seem to have been Idea Futures markets.

I’ve added several more examples to a copy of this table on the CommerceNet wiki. They include Google, Corning, and Rite Solutions

Yaron Goland’s thoughts on Tor suggest an interesting decentralized system…

You don’t know what you have to hide and by the time you figure it out, it will likely be too late. This is where Tor comes in. It makes it much easier to hide. The reason to use Tor isn’t so much because you have something to hide, the reason to use Tor is so when you find out you had something to hide you can rest a little easier knowing that your secret may be protected.

He has some interesting design notes about constructing a network of routers to serve this purpose.

Ben Sittler noticed that Kenosis got Slashdotted yesterday:

UnderScan writes “Eric Ries, writer/programmer/CTO, authored an article ‘Kenosis and the World Free Web’ at Freshmeat [Owned by Slashdot's Parent OSTG]. Kenosis is described as a ‘fully-distributed peer-to-peer RPC system built on top of XMLRPC.’ He has combined his Kenosis with BitTorrent & removed the need for a centralized tracker. He states: ‘To demonstrate Kenosis’s suitability for these new applications, we have used it to improve upon another peer-to-peer filesharing application that Just Works: BitTorrent. BitTorrent does one thing incredibly well. Using a centralized “tracker,” BitTorrent manages efficient distribution of data that is in high demand. We have extended BitTorrent, using Kenosis, to eliminate this dependence on a centralized tracker.’ See also the Kenosis README for details on using Kenosis-enabled BitTorrent.”

From http://kenosis.sourceforge.net/ Kenosis is:

• a fully-distributed p2p RPC system built on top of XMLRPC.
• zero-defect software.
• highly compatible.

Four years ago, I wrote an article for freshmeat called “The World Free Web” in which I described a way to make Web content available in a distributed and anonymous way via Freenet. Back then, I expected, as did many others, that Freenet was on the verge of completion, and all that remained was to think of interesting new applications to write on this new platform.

Now, for the record, I still have high hopes for Freenet and am still a contributor to the Freenet Foundation. But as it stands, Freenet simply does not work, and it is not a suitable platform for the development of new applications.

Two years ago, Malcolm Handley and I started the Dasein Software Partnership in order to create new peer-to-peer tools and applications for the Free Software world. We started writing applications for Freenet, but grew frustrated with Freenet’s lack of stability. Next, we switched to The Circle, a distributed hashtable based on Chord. Despite its maturity, it too is not stable or reliable enough to form a suitable platform.

So we decided that we would need to create a new system, designed from the ground up for simplicity, stability, and scalability. We call that system Kenosis.

Kenosis is a fully-distributed peer-to-peer RPC system built on top of XMLRPC. Nodes are automatically connected to each other via a Kademlia-style network and can route RPC requests efficiently to any online node. Kenosis does not rely on a central server; any Kenosis node can effectively join the network (”bootstrap”) from any connected node.

Rohit pointed out that Reader’s Digest, of all things, had an article (not on-line apparently) this month on how researchers are using fMRI to contribute new insights in behavioral economics.

Monkeys (and the article’s author) were observed using fMRI while participating in artificial trading games to investigate what parts of the brain are activated when the traders encounter cooperative or uncooperative behavior. The Cingulate cortext, long known to be involved in emotional and abstract thinking, shows particularly heightened activity after one player betrays another. The researchers hope to draw conclusions about what conditions build trust in trading communities

fMRI studies with monkeys who were trained in simple games of chance have located particular neurons in the monkeys’ brains that fire at a rate proportional to the expected utility of the payoff for whichever outcome is currently being examined. This places these kinds of evaluation functions at a more basic level than had previously been suggested.