Donor-Advised Funds

Some time ago I had a post on using ETFs to invest your money. In this post I'm going to write about a really convenient way to give away your money! I'm talking about Donor-Advised Funds (also known as Charitable Gift Trusts).

What are Donor-Advised Funds?

A Donor-Advised Fund (DAF) is like a charity: contributions to it can be deducted on your taxes in the same way that contributions to a charity can be deducted. You can open a DAF account at many brokerage firms (e.g., at Schwab, Vanguard, and Fidelity). Money contributed to your DAF is an irrevocable gift, i.e., it's not yours any more. However, you can advise the Fund management to make grants to charities that you select. While the final decision regarding such grants lies with the Fund management, they will follow your advice as long as the grant is to a registered US charity. (There are some minor caveats such as that the grant cannot fulfill a pledge you may have made to a charity; remember it's not your money any more.)

Why would one want to use Donor-Advised Funds?

There are lots of good reasons why DAFs make a lot of sense. Here are some that made sense to me:

• Simplify stock or mutual fund donations
  Suppose you have a stock or mutual fund in which you currently have a significant long-term capital gain. For example, suppose the shares are currently worth $5,000 with a $2,000 long-term capital gain. Now, suppose you decided that you wanted to donate $5,000 to charity this year and get a tax deduction for the donation. You could sell these shares and donate the proceeds and deduct $5,000 on your taxes. But doing it this way, you'd still have to pay capital gains taxes on the $2,000. So what you want to do is to donate the shares themselves (without first selling them).
  
  But donating shares directly to a charity is a little complicated, specially if you want to donate to multiple charities. So instead, you donate the shares to your DAF, and then advise the DAF to donate the proceeds to the charities of your choice. It has exactly the same effect: you can deduct $5,000 and you don't pay capital gains taxes and you can distribute the money easily to as many charities as you like.
  
  This strategy is particularly useful when you consider donating shares of mutual funds that you built up over a long period of time using dollar cost averaging (DCA). While DCA may have got you some benefits, it also lands you in tax hell (you have to figure out the tax basis to compute the capital gains). If you donate shares in such a mutual fund (instead of cash), you instantly get rid of this tax hell.
  
  
• Defer the decision on which charity to donate to
  It is the end of the year right now and you might be doing some tax planning. You may have decided to donate a certain amount to charity. But which charity should you donate to? With holidays coming up, you find you don't have the time to research the various causes. No problem: donate to your DAF now and decide on the actual charities later. That gives you the time to make the right charity choices, while getting you a tax deduction this year.
  
  Note that money donated to a DAF can be invested in a variety of mutual funds, ranging from money market funds, to bond funds, to stock funds. (Each DAF provides you with a list of choices.) So you can have your money grow inside the DAF before you finally advise the DAF to donate money to a charity.
  
  
• Estate planning
  As part of your will or trust (you do have a will or trust, specially if you have children, don't you?!) you may have directed a portion of your estate to some charities. But as time passes you may want to change the charities to which you want to leave your money. Instead of having to go back and modify the will or trust, you can simply leave your money to your DAF. You can leave instructions for the DAF on what needs to be done with money contributed to the DAF once you're no more. And you can easily change these instructions.
  
  
• Convenience
  Contributing to the DAF and having it disburse money to various charities is really very convenient. All these DAFs have good websites that allow you to contribute to the DAF, set up grants to charities, and get online reports on your account. You don't have to follow up with individual charities at the end of the year to get receipts---you only need the one receipt from the DAF. The convenience alone is worth a lot.
  

What are the costs?

For all the benefits outlined above, there are some costs. DAFs charge a small annual fee (Schawb's version charges 0.6% of assets or $100, which ever is larger). The capital gain tax savings alone can make up this fee.

All in all, Donor-Advised Funds are a convenient way to organize your charitable giving. If any of the above situations apply to you, I highly recommend you go to your brokerage firm and open a DAF account with them. It is most convenient to open the account with your own brokerage because it simplifies and speeds up the transfer of shares from your brokerage account to your DAF account.

500 Mile Chai

This Thanksgiving we had family visiting from the East coast, so we hosted a small Thanksgiving party. I volunteered to make dessert---a delicious mango pie. I started putting the pie together on Wednesday night and proceeded to mess it up.... Suffice it to say that it had something to do with gelatin not dissolving properly and becoming lumpy, to the point where Mala absolutely refused to serve the resulting "pies" at Thanksgiving!

So it was that I was prowling the aisles of Andronico's on Thursday morning looking for an appropriate Thanksgiving dessert. And this is where I encountered 500 Mile Chai from The Tao of Tea.


It is a masala chai---a blend of organic black tea with ginger, cloves, cardamom, and cinnamon. As to the origins of the name, it:

... originates from the many late night truck drivers stopping at small Chai stands 'Dhabas' on the highway and asking for really strong, sweet Chai to help them drive long distances (... another 500 miles).

But what really clinched it for me was the description of the choice of leaf:

The grade of tea commonly used for Chai is known as 'Cut, Tear and Curl (CTC)', representing a heavily rolled leaf pellet with very low moisture content. It is ideal for boiling...

Growing up I remember buying CTC tea for my mother, without any real understanding of what CTC was! So I had to buy this tea. We served it after dinner, and it was delicious!

Lessig on Obama

Larry Lessig, professor of law at Stanford Law School and an authority on copyright law in the digital age, has a great blog post on why he's supporting Obama. There's much that Lessig likes about Obama:

First ... I know him, which means I know something of his character. "He is the real deal" has become my favorite new phrase." Everything about him ... is what you would dream a candidate should be.

Then there are Obama's policies that Lessig likes a lot:

Clearly on the big issues -- the war and corruption. Obama has made his career fighting both. But also on the issues closest to me [technology] Obama has committed himself to important and importantly balanced positions.

In stark contrast, Lessig sees serious problems with Clinton's candidacy:

The parts I can't get over all relate to the issues around corruption.

That's very interesting, coming from Lessig. Lessig made a name for himself in the area of digital copyright, going on to found Creative Commons (a tool that lets authors mark their creative works with the freedoms they want it to carry). But recently, Lessig decided to focus his research on a completely new topic: corruption.

But that's not the half of it:

...the part that gets me the most about Senator Clinton is the eager embrace of spinelessness. ... Our party seems constitutionally wedded to the idea that you wage a campaign with tiny speech. Say as little as possible. Be as uncontroversial as you can. Embrace the chameleon as the mascot. Fear only that someone would clearly understand what you believe.

And what of the "fact" that Clinton appears to have a stranglehold on the Democratic nomination?

"Don't be ridiculous. This isn't about misplaced courage. Barack is going to win this one easily."

All very interesting. I missed seeing Obama live last week. But I'm looking forward to watch his appearance on video.

The Best American Science Writing 2007

As most of you know, I enjoy reading articles and books on scientific topics (you can read some of my related posts here). So, at the start of a trip last week, I was excited to pick up The Best American Science Writing 2007 at an airport bookstore. And what a treat it was!

The book is the eighth in the series (the first was in 2000). This version was edited by Gina Kolata, science writer for the New York Times. It's a collection of first-class science essays appearing in a variety of different publications including The New York Times Magazine, The New Yorker, Esquire, Harper's, Discover, and so forth. Here's a brief summary of some of the most compelling stories.

Tyler Cabot writes about the quest for The Theory of Everything, including theories like string theory, M-theory, loop quantum gravity, the holographic universe. He touches upon a schism in physics today between string theorists and non-string theorists aired publicly by Lee Smolin, a string theorist turned non-string theorist, in the book The Trouble with Physics. The schism revolves around the fear that string theory is much too theoretical and will never be backed by experiment. Which makes the upcoming experiments with the Large Hadron Collider so important:

...it could help prove that the laws that govern the universe at every scale ... are one and the same. Or else, of course, it could prove that Arkani-Hamed is full of shit.

Sylvia Nasar, author of A Beautiful Mind, and David Gruber write Manifold Destiny, the saga of the recent award of the Fields Medal to Russian mathematician Grigory Perelman. Perelman was awarded the Fields Medal for solving the Poincare conjecture. The story of the hunt for the solution is exciting enough. But the human story of the major characters is even more compelling. There's Perelman himself, who refused to accept the Fields Medal saying:

"It was completely irrelevent for me, ... Everybody understood that if the proof is correct then no other recognition is needed."

And then there's Shing-Tung Yau, himself a past Fields Medal winner, who turns out to be a master politician working hard to get credit for Perelman's work. As one mathematician put it:

He won every prize to be won. I find it a little mean of him to seem to be trying to get a share of this as well.

It is a reminder that even among these incredibly talented and brilliant people, basic human foibles run strong.

Patricia Gadsby writes a great essay on Cooking for Eggheads. It's an essay on molecular gastronomy---the science of food. Not recipes---which are the technology of food---but the science of food. It is:

... a discipline that would meld physics and chemistry of food and cookery with the physiology of eating and especially the glorious sensual world of taste.

There's a great discussion of cooking eggs. Rather than the standard 10-minute boiled egg cooked at 100 celsius, there's a discussion of what happens if it's cooked at 65 celsius, 67 celsius, 70 celsius, and so forth. The differences stem from the different temperatures at which different egg proteins uncoil and form strands that bind together into a mesh that traps water. As to whether any of these eggs taste better than the standard 10-minute egg, the answer is:

...if your grandmother cooked eggs that way for you, and you adored her and her cooking, there'll be no persuading you of a better way. ... The most important ingredient in cooking is love.

Matthew Chapman, Charles Darwin's great-great-grandson, covers Kitzmiller v. Dover Area School District in God or Gorilla. In this case, eleven parents from the Dover School District sued to remove the teaching of intelligent design from the school curriculum. Chapman starts by saying:

That's the basic story, but if you think you knkow everything there is to know about this you are wrong. Only I know the truth.

He then describes the proceedings in a most hilarious and entertaining manner!

There are lots more great articles, touching on topics ranging from global warming (Butterfly Lessons, In Ancient Fossils, Seeds of a New Debate on Warming) to medicine (The Man on the Table Devised the Surgery, Being There) to many more topics. It's a wonderful collection of articles. I highly recommend the book.

John Doerr's Call to Arms on Climate Change

Yesterday I attended a talk by John Doerr in which he issued a call to arms on climate change. This was essentially the same talk he gave at the TED and available here. Here's a summary of the talk, but I highly recommend you spend the 20 minutes it takes to watch him deliver the TED talk.

Doerr starts by recounting a dinner conversation on climate change in which his daughter tells him that his generation was the one that created the problem, so it was his generation's responsibility to fix it. So Doerr and his partners at Kleiner went about learning about the problem and what could be done about it. Doerr highlighted four major lessons they learned:

• Companies matter: Doerr described the story of how how Walmart decided to go green and cut its energy consumption by something like 20% using a series of simple strategies (painting their roof white, installing skylights, keeping refrigerated food in a separate room). When much admired companies like Walmart take the green route, other companies are bound to follow.
• People matter: People need to make green choices. Doerr described Walmart's big push in selling CFLs: 65 million sold last year with a goal of selling 100 million this year. But consumers won't go green until they understand the full cost of their choices. In particular, consumers need to understand that the CO2 they generate with their choices is not free.
• Policy matters: Doerr talked about the impact that California's AB 32 and Brazil's national policy on ethanol are having. In the talk I heard (but not in the TED version), Doerr talked about how having the Energy Star standard has made household appliances much more efficient, but that the lack of energy standards for flat screen TVs makes those devices quite inefficient.
• Potential of radical innovation: Doerr talked about the promise of synthetic biology. He described how synthetic biology was used to get bugs to synthesize the crucial ingredient of an anti-malaria drug, thereby decreasing the drug cost ten-fold and saving a million lives. Amyris is now using this technique to have bugs synthesize much more efficient biofuels.

But through all of this, Doerr had this refrain: "It's not enough". The magnitude of the problem is enormous, and seemingly large efforts at tackling it (by giant companies like Walmart, by millions of individuals making green choices, and by giant states and countries like California and Brazil) are just not going to be enough.

Part of the problem is China whose green house gas production is now comparable to the US and growing much faster. When asked about his CO2 policy, the mayor of a major Chinese city responded by saying that the West produces seven times more green house gases per capita than China. Why then should China stop its growth while the West continues to lead its profligate lifestyle? Why indeed?

Doerr ended with some things one can do. The most important of these seems to be to lobby Congress to pass some carbon cap and trade legislation (see my previous post on this).

All in all a very fine talk.

Stratify acquired by Iron Mountain

I was thrilled to wake up this morning to hear the news that Stratify has been acquired by Iron Mountain! From the press release:

Iron Mountain Incorporated (NYSE: IRM), the global leader in information protection and storage services, today announced the signing of a definitive agreement to acquire Stratify, Inc. for approximately $158 million in cash. Stratify, a leader in advanced electronic discovery services for the legal market, offers in-depth discovery and data investigation solutions for AmLaw 200 law firms and leading Fortune 500 corporations. With this acquisition, Iron Mountain augments its suite of eDiscovery services, providing businesses with a complete, end-to-end Discovery Services solution that efficiently manages paper and digital information for discovery and data investigations, compliance and associated records management, and litigation matters.

That's a really handsome price and I am so thrilled for Ramana, George, Joy, Meena, Hakan, and the rest of the team who worked so hard for 8 year to make this a success! Congratulations!

A Good Shake!

Yes, we had a medium sized earthquake a few hours ago. The earthquake, centered around the Alum Rock area near San Jose, measured about 5.6 on the Richter scale and was located on the Calveras fault. We were a home getting dinner ready when I felt the house shaking. Having experienced various earthquakes in the past (including the 1989 Loma Prieta quake), it was easy to recognize the shaking as an earthquake. I grabbed our kids and ran out of the house (my wife was out of town). By the time we got out, the shaking subsided, and there was no damage that I could see.

After we got back into the house, we went on the Web to check out the USGS site showing recent earthquakes. But in the minutes after the quake, there was no sign of it. Our younger daughter was quite scared by the whole incident---not so much by the quake itself, but more by my reaction to it. So we spent the time discussing why earthquakes happen (complete with web images of plate tectonics), how houses in the California are generally well constructed to withstand earthquakes, and how earthquakes have caused significant destruction in poorer countries that can't afford high-quality construction.

Some 15 minutes after the quake, we saw the following image on the USGS site, pinpointing the quake.


This quake seems to have caused little damage. But it is a good reminder to update (or create) ones earthquake preparedness plan. A key part of this plan is to have a survival kit. Such kits can be put together inexpensively, but ready-made kits are available as a convenience. Google handed out a really nice kit to all its employees.

How to Change the World

I'm part way through reading this wonderful book: How to Change the World by David Bornstein. This is a book about social entrepreneurs. Social entrepreneurs solve social problems on a large scale. Their ideas improve people's lives and these ideas are implemented across cities, countries, and in some cases the world. The book describes the work of many social entrepreneurs:

• Fabio Rosa took up the cause of rural electrification in Brazil. He realized that poor rice farmers had a big problem: rice needed a lot of water, but the rich farmers who owned all the dams and irrigation channels set the price of water (relative to production costs) at triple the world average. Artesian wells could provide cheap water, but they needed electricity. But Brazil had done a very poor job of rural electrification. So this is the cause that Rosa took up. He systematically attacked all the problems holding back rural electrification (ranging from technical to political). And like a true entrepreneur, he wasn't just about the vision; he delved into the details, always looking for solutions to the problems. And he succeeded in transforming the lives of a lot of poor farmers.
  
  
• Jeroo Billimoria took up the cause of child protection in Indian cities. She set up Childline, a
  
  ...twenty-four hour helpline and emergency response system for children in distress.
  
  It started in Bombay in 1996 and spread to 30 cities by 2002. "Childline," says Billimoria, "is not a charity service... It is a rights service." It provides number, 1098 (said as ten-nine-eight), that any child can call with any problem and Childline will help them.
  
  
• Erzebet Szekeres took up the cause of assisted living for the disabled in Hungary. At the time, the only option for severely mentally disabled people in Hungary was to be institutionalized, with all the horrors of such places. Szekeres has
  
  ...created a network of 21 centers across Hungary that provide vocational training, work opportunities, and assisted living to more than 600 multiply disabled people. Her facilities have shaken up the mental health and disability establishment...
  
  
• And many more stories.

These stories are wonderful and inspiring. But the book is really about the amazing individual that is the common thread to all these stories: Bill Drayton. Drayton invests in social entrepreneurs!

Drayton was profoundly influenced by Gandhi:

What most fascinated Drayton about Gandhi were his "how-tos": How did Gandhi craft his strategy? How did he build his institutions? How did he market his ideas? Drayton discovered that Gandhi, despite his other-worldy appearance, was fully engaged in the details of politics, administration, and implementation.

In other words, it's about the details, not just the vision.

Drayton founded Ashoka, an organization that seeks out and funds social entrepreneurs. In this sense it is a venture capital firm! Drayton believed that seeking out and supporting social entrepreneurs was the key to social change:

The way to promote innovation was to nuture idea champions. "Let's find these people," he said. "We should be investing in them now---when they are shaky and lonely and a little help means the world."

Drayton seems to have mastered the art of finding high quality social entrepreneurs around the world. As a young Ashoka staffer put it:

I saw the Bill had deeply thought through the question: "How do you find these people?"

All in all, an amazing book about an amazing man and the amazing people he's funding. You cannot read this book without wanting to rush out and support Ashoka---we certainly started sending a portion of our donations to Ashoka after reading this book.

Indian poker players

Stephen Dubner, co-author of Freakonomics, asks the question "Where are all the Indian Poker players"? He is mystified because:

Whenever I see a poker tournament on TV or wander through a casino, I am always struck by a particular absence: there seem to be very few Indian-Americans playing poker. Considering that there are so many Indians of poker age in this country who thrive in finance, computer science, engineering, and other fields that incorporate math, probability, risk, etc. — i.e., the kind of fields that produce a lot of amateur and pro poker players — why should this be so?

The blog post includes thoughts on this question from a number of people including from Sudhir Venkatesh, the sociology student featured in Freakonomics who accidentally befriended a drug gang and discovered that such gangs operate like major corporations. Readers have also weighed in with opinions. There are many opinions, ranging from hypothesizing cultural taboos (but Indians have grown up playing other card games) to being risk averse (but what of all the start-ups founded by Indians?). Naturally, there is no agreement and certainly no hard data,.

I don't have a good answer either. I don't play poker, but some good friends of mine do (including some readers of this blog!). What do you think?

Blog Action Day

Today, Oct 15, is Blog Action Day. The idea is to highlight a single important issue---the environment.

Every blogger will post about the environment in their own way and relating to their own topic.

So I thought I'd add my thoughts on this day. I'm not an environmental activist by any means. Rather, I'm much closer to being a lazy environmentalist. I like the idea of having:

...easy, stylish and super convenient ways to green your lifestyle.

So we own a Highlander Hybrid (okay, it's not a Prius, but it does carry 7, is a lot more spacious for the occassional camping trips, and has 4 WD for our Tahoe trips, all while giving 25-26 mpg). And we're signed up to get our home electricity from green sources (i.e., we pay a little extra and to have our utility increase the fraction of electricity they get from green sources). And I just used a non-toxic concoction (baking soda, white vinegar, and boiling water) to open up a slow drain instead of using some toxic chemicals. And we're considering installing water efficient toilet---either the dual flush Toto Aquia (1.6 gpf/0.9 gpf) or the Toto Eco Drake (1.28 gpf). All these nice "green" things without any sacrifices---being a lazy environmentalist is easy!

The latest thing I'm considering is getting photovoltaic panels on our roof. I'm not yet convinced that having these panels saves money (though there are various rebates and incentives in place). But they do free one from the guilt of using halogen light fixtures that don't take the new CFLs! Have any of you considered photovoltaics? If so, do you find them effective?

Transporting the smallpox vaccine

(I've been very busy over the last month or so and so didn't update this blog. I hope that's changing now so I can write more regularly.)

Tonight over dinner we were talking about which of us would get a flu shot this year. The conversation quickly turned to what vaccines were. I recounted to our kids the story of how Edward Jenner discovered the smallpox vaccine, how smallpox was eradicated, and why unlike the smallpox vaccine we need a flu shot every year.

Through all this, I'm a little ashamed to admit, I had forgotten the name of the smallpox vaccine's discoverer. So I did a quick search and immediately established it was Jenner. I proceeded to browse some of the results, and came across a note on bioterrorism which had this fascinating historical note.

Edward Jenner's original smallpox vaccine was actually the cowpox virus. This was great as long as you had a cowpox-infected cow nearby to get the vaccine. But how does one transport this vaccine?

Absenting cows with cowpox to provide material for inoculation or refrigeration to store and transport stocks of it, people would transfer the vaccine from one person to the next arm-to-arm.

And what is this arm-to-arm technique?

The Spanish brought smallpox vaccine to the New World this way. A group of orphans were recruited for the long voyage, and two children were vaccinated shortly before departure. When cowpox pustules developed on their arms the ship’s doctor would take material from their lesions and use it to vaccinate two more children, repeating this procedure each time new pustules formed in successive children until they reached Venezuela, with yet two more children providing an aliquot of active vaccine for people in South America.

Fascinating!

Madeleine L’Engle

Madeleine L’Engle died last week. Ms. L'Engle was the author A Wrinkle in Time, a truly enchanting book that I thoroughly enjoyed in my youth. The NY Times obituary summarizes her masterpiece as follows:

Meg Murray, with help from her psychic baby brother, uses time travel and extrasensory perception to rescue her father, a gifted scientist, from a planet controlled by the Dark Thing. She does so through the power of love.

As a child, I simply enjoyed the book and had no idea that this book was in any way controversial. However, while some have called her "one of the truly important writers of juvenile fiction...", it came as a surprise to me that:

Such accolades did not come from pulling punches: “Wrinkle” is one of the most banned books because of its treatment of the deity.

And as a testament to how difficult it must be to evaluate great books before they become acknowledged as such:

What turned out to be her masterpiece was rejected by 26 publishers. Editors at Farrar, Straus and Giroux loved it enough to publish it, but told her that she should not be disappointed if it failed.

You have to wonder what those 26 publishers were thinking. Or is it that it is much easier to appreciate a book that is already acknowledged to be great?

More on Fair Use

Vindu Goel of the Mercury News had an article on the Chris Knight v. Viacom saga that I referred to in my previous post on "fair use". His conclusion is that Viacom's use of Knight's video was "fair use", but Knight's posting of the Viacom's video on YouTube was not:

Alas, under the law, Knight is wrong ...

Viacom based its clip on Knight's work, but the show's commentary and editing made it something distinct, with its own copyright protection.

Legally, that means Knight can't post Viacom's clip without permission unless he adds something that would create yet another video - in effect, a commentary on Viacom's commentary. Got it?

"The problem Knight has is what he did with Viacom's work wasn't transformative. It's what I would called unadorned copying," said Anthony Falzone, executive director of Stanford Law School's Fair Use Project.

Now, I understand that if you add nothing to a copyrighted work, then it is considered to be "unadorned copying". But if you do add something to a copyrighted work (as Viacom did to Knight's original video), then is it okay? Consider the case of the Grey Album. Illegal-art.org has the following synopsis of the case:

DJ Danger Mouse remixed the vocals from Jay-Z's The Black Album and the Beatles' White Album and called his creation The Grey Album. He sent about 3,000 promo copies out, and was soon served with a cease-and-desist notice from EMI, who owns the rights to the White Album master.

DJ Danger Mouse clearly produced a transformative work. And yet EMI felt within its rights to serve the cease-and-desist notice. This case never went to trial since DJ Danger Mouse complied with the request (another example of the imbalance between the small artists and giant corporations). So we (or rather, I) don't know what the law would say here. But what DJ Danger Mouse did does seem very similar to what Viacom did in the Knight case.

Fair use

Copyright law and the doctrine of "fair use" has become a hot topic in today's digital, interconnected world. Copyright holders have been flexing their muscle as they try to contain the unauthorized distribution of their work (not always successfully; see my earlier post on DRM). The rights of copyright holders is subject to certain limitations. An important limitation is codified in the doctrine of fair use. Section 107 of the Copyright Act says:

...the fair use of a copyrighted work ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.

Unfortunately, the difference between "fair use" and infringement is not always clear. Today something quite interesting happened in the world of copyright and fair use. Chris Knight writes about a video he posted on YouTube. Viacom claimed copyright over this video and sent YouTube a "take down" notice. YouTube obliged and sent Mr. Knight a notice saying that the video was being taken down. The only problem was that the video in question, produced by Viacom subsidiary VH1, was produced---without permission---from a video originally made by Mr. Knight! Mr. Knight is most aggrieved:

Viacom used my video without permission on their commercial television show, and now says that I am infringing on THEIR copyright for showing the clip of the work that Viacom made in violation of my own copyright!

I wonder which of these uses would be considered "fair use". Mr. Knight raises another interesting question:

What does this mean for independent producers of content, if material they create can be co-opted by a giant corporation without permission or apology or compensation? When in fact, said corporations can take punitive action against you for using material that you created on your own?

I wonder what the Electronic Frontier Foundation (EFF) would have to say about this.

Rising Above the Gathering Storm

Much has been written about the advantages and challenges of globalization and out-sourcing. I was first introduced to the issues in Tom Friedman's fine book The Lexus and the Olive Tree. Specifically, I was introduced to the phrase "creative destruction" coined by economist Joseph Schumpeter:

Schumpeter, a former Austrian Minister of Finance and Harvard Business School professor, expressed the view in his classic work Capitalism, Socialism and Democracy that the essence of capitalism is the process of "creative destruction"---the perpetual cycle of destroying the old and less efficient product or service and replacing it with new, more efficient ones.

The essential point is that:

Those countries that are most willing to let capitalism quickly destroy inefficient companies, so that money can be freed up and directed to more innovative ones, will thrive in the era of globalization.

Historically, the US has been very good at destroying inefficient companies and directing capital toward more innovative ones. Which brings us to the current situation. Outsourcing of technology jobs and various business processes is well underway. That's the "destruction" part. But where's the "creative" part? What's going to be the next big thing that will create massive employment in the US? And what can the US do to ensure that this happens?

Congress asked the National Academies these very questions. In response, the National Academies put out a comprehensive report entitled Rising Above the Gathering Storm (the Executive Summary of this report is worth reading). In this report, they take as their starting point Tom Friedman's assertion in The World is Flat that:

...the international economic playing field is now "more level" than it has ever been.

and that

...whether global flatness is good for a particular country depends on whether that country is prepared to compete on the global playing field...

The National Academies identified two key challenges for the US: creating high quality jobs and responding to the nation's need for clean, affordable, and reliable energy. They propose four high-level recommendations and twenty specific implementation steps to address these challenges. The four recommendations are:

• 10,000 teachers, 10 million minds and K-12 science and math education.
  The idea is to increase the talent pool by vastly improving K-12 science and math education.


• Sowing the seeds through science and engineering research.
  The idea is to sustain and strengthen the traditional commitment to long-term basic research that has been the engine of innovation.


• Best and brightest in science and engineering higher education.
  The idea is to make the US the most attractive place to study and perform research so that it can attract and retain the best students from within the US and around the world.


• Incentives for innovation.
  The idea is for government to take actions to modernize the patent system, to enact tax policies that encourage innovation, and to ensure affordable broadband access.
  

Congress and the President seem to have taken these recommendations seriously. As noted in an op-ed by two authors of the above report, earlier this month the 21st Century Competitiveness Act was signed into law with strong bipartisan support. This law substantially increases the basic research and development budgets of key federal agencies (like NSF, NIST, and DoE's Office of Science), and authorizes $43 billion for STEM education: science, technology, engineering and math. Thus, it appears to follow the first two recommendations.

There is, however, a catch. The authors of the op-ed end with:

We are under no illusions. What is authorized by this act is not necessarily what will get funded. If the appropriations committees fail to follow through, the country will lose the opportunity to take a page from its own playbook of 50 years ago and assure American leadership in the world of technology and innovation.

Hopefully the appropriations committees will follow through.

Exchange Traded Funds

Do you have a largish sum of money that you need to invest wisely? Maybe your start-up just got acquired or (better still) went public. Or maybe you just reached the 1 year cliff on your options vesting. Or maybe you switched jobs and you've rolled over your 401k into an IRA at a brokerage firm. Or maybe you inherited some money from a rich uncle.

Whatever the source of the money, are you now faced with the problem of how to invest it wisely? Maybe you've decided against picking your own stocks because you're concerned about risking your nest-egg on a high-flier like AAPL (betting that the iPhone will take Apple to new heights...) or on a beaten down stock like PALM (thinking that it's undervalued because the Treo will make a dramatic comeback...). And maybe you're concerned that paying a financial advisor 0.5%-1.0% of your assets annually is too high a cost for unclear benefits. Maybe you want to invest in mutual funds, but you're not sure which ones to invest in.

Well I have a suggestion for you: invest in a portfolio of Exchange Traded Funds (ETFs). Seeking Alpha has a really great and comprehensive guide to ETFs. But before you read that guide, here's a short summary of the highlights. I'll try and explain what they are, why they're good, when you should avoid them, and a sample portfolio that we use. (Caveat: I'm not a financial advisor. Nor do I have any formal investment background. So you should take everything in this post as my personal opinion only.)

What are ETFs

ETFs are like index mutual funds in that shares in an ETF represent ownership in an underlying basket of securities that track some index (e.g., the S&P 500 index). However, unlike a mutual fund, small retail investors cannot buy (sell) shares directly from (to) the Fund company. Rather, such investors can trade ETF shares with other investors on a stock exchange. One consequence of this is that ETF shares can be traded throughout the day, rather than just at the end of the day like mutual funds.

How do ETFs work

A second consequence of trading ETF shares on a stock exchange is that shares can trade at a premium or a discount to the net asset value (NAV) of the underlying securities. However, as a practical matter, ETF shares trade at prices close to the NAV. Here's why. ETF shares can be exchanged with the Fund company for a basket of the underlying securities. These in-kind exchanges are allowed only for bundles of a large number of shares, typically 100,000 shares. This means that the only entities likely to make such exchanges are large institutions.

So now imagine that ETF shares are trading at a premium to NAV on the stock exchange. A large institution, wanting to profit from this premium, will give the Fund company a basket of securities representing the index (priced at the NAV) and get an equivalent number of ETF shares (priced at the premium). They can now profit by selling these ETF shares on the stock market. But by selling these ETF shares, they drive down the price of the ETF toward the NAV.

The opposite happens if ETF shares are trading at a discount to NAV. The large institution will buy ETF shares (priced at the discount) on the stock market and return them to the Fund company, getting back the basket of securities (priced at the NAV), thus making a profit. But by buying these ETF shares, they drive the price of the ETF up toward the NAV.

The net effect of all of this is that the price of an ETF usually stays very close to the NAV.

Taxes

With mutual funds, when other investors redeem shares, the Fund may have to liquidate some of the underlying securities to fund the redemption. This can generate capital gains, which are shared proportionally by all investors in the Fund. Thus you can incur capital gains when someone else redeems shares.

This doesn't happen with ETFs. Since all exchanges with the Fund are in-kind, the Fund incurs no capital gains as a result of exchanges. When retail investors sell ETF shares, there's no change in the Fund's holdings of the underlying securities. So, once again, the Fund incurs no capital gains. Thus, investors in the fund incur no capital gains when others sell or exchange shares.

The only way fund investors incur capital gains is if the underlying index changes (so the Fund has to sell some securities and buy others to come in line with the index), or if investors themselves sell ETF shares. As with mutual funds, investors get their proportional share of interest and/or dividends thrown off by the underlying securities.

Costs

Since ETFs are essentially index funds, one of their big advantages is low costs. A typical ETF following a major index may have costs under 0.2%. This is in contrast to an actively managed stock mutual fund that may have costs in excess of 1.0%. (Note that there has been a proliferation of specialized ETFs following sectors or small sections of the market and these might have higher costs.) ETF costs are usually deducted directly from the interest and dividends thrown off by the underlying securities.

One cautionary note on ETF costs: since ETF shares are traded on the stock exchange, they do incur trading costs. Thus, to keep these trading costs low, you need to trade a significant amount. For example, suppose that your discount broker offers trades at $10 per trade. If you now buy ETF shares worth $1,000, then the trading costs are 1.0%. That really works against the low cost advantage of ETFs. To keep the low cost advantage, you'll need to trade larger amounts, e.g., at least $5,000 for a 0.2% cost. The main consequence of this limitation is that ETFs are not a good vehicle for dollar cost averaging over a period of time by, say, investing $500 per month. This is the reason for the introduction to this post where I talk about having a largish sum to invest.

ETF Portfolios

By now you're probably thinking, "Okay, okay, you've convinced me that ETFs are great. But which ones should I invest in?" The ETF guide I linked to above suggests a core portfolio consisting of 10 funds and a low-maintenance portfolio consisting of only 5 funds.

We've been using a different portfolio consisting of 13 funds. It is one of the portfolios originally recommended by Burton Malkiel, professor of Economics at Princeton and author of the classic investment book A Random Walk Down Wall Street. I heard a talk by Malkiel about 2 years ago in which he extolled the virtues of ETFs and suggested four different ETF portfolios for different levels of risk. You can find these four portfolios here. (Caveat: These were recommended 2 years ago, and there's no reason to believe Malkiel hasn't changed his recommendations since then.)

I don't want to imply that these portfolios are the best available. But I will say that you could do a lot worse by following some active management strategy (unless you really know what you're doing). Following one of these portfolios allows you the comfort of knowing that you're going to do pretty well, probably better than a majority of investors, with almost no effort at all. And no stress either: whether the stock market is up or down, your investment strategy doesn't change.

One other thing that Malkiel mentioned is to rebalance the portfolio once a year. The idea is some ETFs may do much better than others and may grow to take on a disproportionate share of your portfolio. You then sell some of that fund and buy funds that haven't performed as well. Of course, you need to do this carefully because rebalancing always incurs costs.

Perseid meteor shower

Last Sunday we went out to watch the Perseid meteor shower. This meteor shower occurs because the Earth passes through the debris left behind by the comet Swift-Tuttle. The particles in the debris are very small, ranging from grains of sand to small pebbles. (Someone described them to be similar to the contents of a box of Grape-Nuts.) These particles travel through the Earth's atmosphere at speeds of up to 130,000 mph and instantly burn up and produce beautiful shooting stars in the sky.

Sunday night was the peak of this year's Perseids. We went to bed early and woke up at midnight. We joined a friend and her kids (so we were 3 adults and 4 kids in our party) and drove up Page Mill Road to the parking lot of the Monte Bello Open Space Preserve. I picked this location because it is relatively close and because it seems many amateur astronomers use it for star gazing parties. It turned out to be a pretty good location: it was very dark and while there was some light pollution from Bay Area lights, it wasn't too bad and mostly affected the eastern horizon. Once our eyes dark adapted, you could see the Milky Way overhead (though it wasn't as clear as the view I had from the remote rural location of the village of Bordi in Gujarat, India).

And then we started seeing meteors! They were great. They'd flash by in different parts of the sky at an enormous pace: before you could react they were gone. Not that it stopped us from reacting---we were with kids and they would excitedly yell out "There's one!" each time they saw a meteor. But, of course, if you missed it, there was no point looking to where they were pointing. We were probably the noisiest group there with their regular squeals of joy! The newspaper had suggested that one should go meteor watching with someone with whom you'd enjoy sitting in the dark. This is certainly good advice, but I'd add that it's even more fun to go with excited kids!

Each of us saw roughly a dozen meteors (some saw more, some less). But, of course, not everyone saw the same meteors, so there were at least two dozen meteors in the 30-45 minutes that we were there. That means meteors were showing up at the rate of about one every two minutes or so. It was lots of fun! If you've never seen a meteor shower, I highly recommend it. You can find information about other meteor showers here.

Carbon taxes and cap-and-trade

Global warming has become one of the key issues in this presidential election cycle. Various proposals have been floated to combat it, including alternate energy sources, carbon taxes, cap-and-trade policies. Greg Mankiw, Professor of Economics at Harvard and the Chairman of the President's Council of Economic Advisers from 2003 to 2005, is a strong advocate of a $1 per gallon gas tax. (Such a gas tax is a Pigovian tax levied "...to correct the negative externalities of a market activity.") Back in Oct, 2006, he wrote a manifesto for such a Pigovian tax for the Wall Street Journal (reprinted in his blog). He makes quite a compelling case, though he ends by recognizing the political hurdles in passing such a tax:

But don't expect those vying for office to come around until the American people recognize that while higher gas taxes are unattractive, the alternatives are even worse.

Interestingly, it seems that Barack Obama may be considering something that may be equivalent to this Pigovian tax. In a recent blog post, Mankiw points to an interview with Obama in which Obama says that he prefers a cap-and-trade system in which permits are auctioned of rather than being freely given away. Obama says that:

...as I roll out my proposals for a cap-and-trade system, I will price permits so that it has much of the same effect as a carbon tax.

I don't understand the cap-and-trade system or what it means to auction off permits. But the idea of using auctions seems like a good way to price things (cf. Google's auction for keyword ads). And if it has the effect of a carbon tax, but is more palatable because it's more market-driven, then this sounds like a good thing.

Where were you for 756*?

While I'm not a big baseball fan, I've been following Barry Bonds's chase of the home run record with great interest. As luck would have it, I dropped off some friends at the airport this evening and as I started the drive home I turned on the radio to see what was happening. And what do you know: Bonds was up next for his third at-bat after having hit a double and a single in his first two at-bats! The crowd was electric, chanting "Barry! Barry!" Once Bonds got in, the count quickly reached three and two. And then Bonds got a fastball. And he launched it 435 feet for his record breaking 756th home run...! The crowd went absolutely crazy! All very exciting!

What followed was a lesson in taking the high road. With the steroid controversy engulfing Bonds, Hank Aaron had previously refused to attend Barry's record breaking run. But when Barry came out on the field with Willie Mays, Aaron appeared on the big stadium screen and very graciously congratulated Barry on his singular achievement:

It is a great accomplishment which required skill, longevity and determination. Throughout the past century, the home run has held a special place in baseball and I have been privileged to hold this record for 33 of those years. I move over now and offer my best wishes to Barry and his family on this historic achievement. My hope today, as it was on that April evening in 1974, is that the achievement of this record will inspire others to chase their own dreams.

Now that's classy. Quite unlike Bud Selig's classless performance in San Diego when Bonds hit 755.

Indian Ocean concert

Couple of weeks ago we attended a concert by the band Indian Ocean. As I noted in a previous post, Indian Ocean is a fusion band that combines Western rock music with Indian classical music. The concert was a fund raiser for AID.

The concert was fantastic! They started around 5:15 in the evening and played for almost 4 hours with only one short break in the middle. I was completely enthralled by the whole experience! You can hear little snippets of their various songs on their website (click on "Albums" and select any album to hear songs from that album).

In addition to great music and great lyrics (Asheem Chakravarty has a particularly amazing voice), the songs also have meaningful lyrics. For example, Kya Maloom from the album Kandisa is about the Kargil war where they wonder why it is that people are killing each other in this deathly cold area. The answer: kya maloom (who knows). The Boll Weevil song from the album Desert Rain is about refusing to give a bribe. This song was particularly appropriate to the fund raiser since AID is focusing heavily on anti-corruption efforts. And the song Ma Rewa from Kandisa sings about the Narmada and was adopted by the Narmada Bachao (save the Narmada) activists.

But, as Rahul Ram noted in the concert, you don't need to think about the lyrics if you don't want to; you can simply enjoy the music! In addition to the above songs, the highlights of the concert included an amazing rendition of Hille Le to end of the first half, the hauntingly beautiful Kandisa, and for the encore at the end the song that I absolutely adore: Kaun.

All the above songs sound great on CD. But it's a totally different experience live. Not only is the sound much richer (and louder!), but seeing the band in action is great. In one of the songs (I think it was Hille Le) Asheem, who normally plays the tabla, started drumming on the strings of Rahul's bass guitar and played a jugalbandi with Amit Kilam, the drummer! And in Ma Rewa Amit played a strange little instrument that he held in his arm pit and made a sound like running water! I strongly recommend you go see them if they're in your area. You can get a list of their upcoming concerts here.

IIT 2007: Cosmology

In a previous post I talked about some thoughts on leadership that I gleaned at the IIT 2007 Global Alumni Conference. There was another very interesting panel I attended. This one had two Physics Nobel Laureates: Arno Penzias and George Smoot. They were interviewed by UC Berkeley Physics Professor Alex Filippenko. Penzias got the Nobel Prize with Robert Wilson for discovering the cosmic microwave background (CMB) radiation---the most direct evidence we have for the Big Bang. Smoot got the Nobel Prize with John Mather for discovering that the CMB radiation is anisotropic, i.e., the temperature of the radiation is irregular, rather than smooth. The anisotropy of the CMB radiation in the early universe eventually evolved into the planets, stars, galaxies, and galaxy clusters. Filippenko is an amazing lecturer, having won two of UC Berkeley's most coveted teaching awards and being voted "Best Professor" on campus five times.

The panel started with Filippenko giving a fascinating 20-30 minute tour of the developments in cosmology over the last century, starting with Edwin Hubble's discovery of the expanding universe, through the discoveries of Penzias and Smoot, to recent conundrums in cosmology involving dark energy and dark matter (which together account for about 96% of all the "stuff" in the universe!). This exposition itself was worth attending the panel. He then interviewed each Nobel Laureate, asking them about their work and what it felt like to receive the Nobel Prize.

The most surprising thing they said was that they both spent roughly a whole year after their experiments were done verifying that there were no bugs in their experiment! They wanted to be absolutely sure that what they had measured truly provided evidence for the CMB and its properties. This involved a lot of grungy low-level work, unlike the cool and exciting work of taking the measurements in the first place. Penzias and Wilson would do things like ensure that pigeon poop wasn't corrupting the signals in their radio telescope! And Smoot offered a round-trip ticket to anywhere in the world for any one on his team who discovered a problem with the experiment! This is an amazing demonstration of dedication to what we term QA (or Quality Assurance) in software engineering.

All in all, I thoroughly enjoyed this panel. Before I attended the panel, I wondered why the IIT 2007 organizer had arranged it---it's not as if any of the panelists were IIT alums. But then it struck me that most of the attendees, being IIT alumni, were just as geeky as me and no doubt enjoyed the panel just as much!

Harry Potter

So the last day of hype is almost over, and tomorrow we'll see how the book stacks up against the hype. There's been a lot written about Harry Potter over the last week or two. Here are some of the more interesting tidbits I picked up.

The NY Times had an op-ed back on July 8th where they asked four authors to write about how the series would end. The fourth one was particularly interesting, reminiscent of Stephen King's Song of Sussanah (book 6 of The Dark Tower saga) in which "...the author weaves his own character into this unpredictable saga...".

The Mercury News recently reprinted an article from back in May by John Orr where he makes some guesses about how the final book will unfold. He had a really interesting hypothesis about the events at the end of book 6 involving Dumbledore and Snape.

Of course, not everyone is a fan: a Washington Post op-ed by a book critic takes the rather unpopular view that Harry Potter has caused the death of reading! His main point is:

Perhaps submerging the world in an orgy of marketing hysteria doesn't encourage the kind of contemplation, independence and solitude that real engagement with books demands -- and rewards.

Nonetheless, hordes of kids and adults will be at bookstores across the country at 12:05 am tonight to get their hands on the final edition of the Harry Potter saga. As for me, I'm going to get a good night's sleep and show up at Costco tomorrow at 10am to pick up my copy!

Freedom Writers

So we finally got around to seeing Freedom Writers last night. I had written earlier about attending a wonderfully inspirational and moving talk by Erin Gruwell. And I have to say that the movie definitely lived up to my expectations.

Gruwell had talked about many of the events portrayed in the movie and those were, of course, wonderful. But many of the events I hadn't heard about before were equally moving. I particularly liked the visit to the Holocaust Museum and the visit by Miep Gies (the lady who hid Anne Frank's family).

But I have to agree with my colleague: while Hilary Swank did a great job in the movie, Erin Gruwell is much more inspirational in real life! And I found the portrayal of the English Department Head to be a little too caricatured. But all in all, I highly recommend the movie.

IIT 2007: On Leadership

Last weekend I attended the IIT 2007 Global Alumni Conference in Santa Clara, CA. Naturally, the highlight was catching up with old friends and making new ones. But many of the talks and panels were also very interesting. Arun Sarin, CEO of Vodafone Group and 1975 IIT Kharagpur graduate, gave a compelling keynote on Saturday morning. The subject of his keynote was leadership.

Sarin started by encouraging, or even exhorting, members of the audience to work towards getting to leadership positions within their organizations. He outlined the three important parts of leadership:

• Strategic leadership: This is what we commonly think of as leadership: the "vision thing". A leader has to have a clear, well articulated idea of where the organization should head.
• Operational leadership: This is the execution skill: a leader should be able to make the vision come true. There are invariably a host of hurdles---competitive pressures, market conditions, internal politics, and so forth. The leader must have a single minded focus on the goal, and do what it takes to overcome all these hurdles.
• People leadership: A leader must have the ability to inspire and motivate his or her team to pull together to overcome all the hurdles and get to the goal.

Sarin gave a number of examples from his own experience, including Vodafone's recent acquisition of Hutch Essar (India's 4th largest cell phone provider) and an internal initiative to increase female representation in the senior executive ranks of Vodafone from 1% to 20%.

Sarin then made an important point: one does not need to be born with these skills---they can be acquired. And the way to acquire them is to constantly seek out new challenges that take you outside your comfort zone. This is a crucial point. We all have some skills, but we are often comfortable staying within the comfort zone defined by those skills and are loath to take on new challenges where we lack the relevant skills. But it is only by going outside ones comfort zone that one can develop all the skills needed to become a leader.

Continuing on the theme, on Sunday there was a panel consisting of some very accomplished individuals, including IIT Delhi graduate Vinod Khosla of Khosla Ventures, talking about leadership. In Khosla's view, leadership had two critical elements:

• Forming a defensible opinion about where things are headed: This is analogous to Sarin's strategic leadership. But Khosla particularly emphasized the importance of the vision being "defensible". He gave an example of his recent efforts on ethanol (I've previously summarized his well thought out position here). He said he always likes to hear the opinions of naysayers so that he can further sharpen and strengthen the arguments for his position.
• Empathy: This is possibly analogous to Sarin's people leadership. Khosla's point is that one needs to put oneself in the shoes of everyone affected by the stand you're taking: whether they by employees, customers, competitors, ... By putting yourself in their shoes, by empathizing with their viewpoint, one can more clearly see the hurdles and shortcomings in your position. And you can use this understanding to further strengthen your position to increase your chances of success.

All in all, I found both Sarin's talk and Sunday's panel quite thought provoking and insightful.

Lea Maurer

About two weeks ago, our daughter attended a swim camp at Stanford run by Lea Maurer, the coach of the Stanford women's swim team. Maurer swam for Stanford in the 90's and won the 100 m backstroke in the 1998 World Championships.

On the penultimate day of the camp, Maurer invited parents to join the kids for a wide-ranging question and answer session with her. She started with a brief overview of her own career, following which the kids (and some parents) asked all sorts of questions about how she dealt with her training, her failures and successes, and so forth. It was great to have the kids exposed to this discussion. Here are some of the most important points that came up.

Setting goals: Maurer emphasized the importance of setting big goals. Only if you set big, audacious goals can you reach your full potential. In her case, her coach had set them the goal of having her win nationals. This was a daunting goal, even for someone with with Maurer's talent.

Focus on today: When Maurer first started competing in the nationals, she would come in 65th or 69th out of a hundred participants. When this happened, she got quite down about it and went back to her coach not knowing what to do next. But her coach simply said that the next day they would go back to doing what they did every day: continue working on the goal of winning the nationals! This was a crucial lesson for Maurer: however poorly (or well) she swam on the previous day, today was a new day. Focus on doing your best today; don't dwell on the past.

Don't give up mentally: Your body can be pushed well beyond the point that your mind believes it's time to give up. To illustrate this, Maurer described an event in the weight room. Her swimmers were doing bench presses. Maurer had instructed the spotters not to jump in to help with the weights until the swimmer physically faltered. One of her swimmers did a set of bench presses and felt she couldn't do any more. So she asked for her spotter to help. As the spotter started to help, Maurer jumped in with a warning: no help until the swimmer physically falters. This caused both the swimmer and spotter to burst into tears----they clearly thought she really couldn't do any more. But she forced herself to try, and went on to do 6 more repetitions before faltering!

Importance of preparation: Maurer emphasized the importance of training and preparation. One cannot win in competition unless one is thoroughly prepared for every eventuality. You have to approach each training swim with a specific goal: whether it is speed, or endurance, or technique. And you have to practice your response to all kinds of situations. When you get to your race, you are never surprised by whatever situation you encounter---you've seen it all in practice.

While the above points were made in the context of competitive swimming, they apply equally well in any walk of life. The kids in the camp are fortunate indeed to have heard these from a role model like Lea Maurer.

Everest base camp

Coincidences are always fun. For example, have you noticed how once you learn a new word you suddenly see it being used a number of times within a week! Something like that just happened to me with Mt. Everest. I hadn't really thought of Everest in a while, perhaps not since I read Into Thin Air many years ago. Then yesterday I read my friend Alon's blog post describing his recent trip to Tibet. It's a really nice and detailed account of their trip, including their 800 km detour to see Mt. Everest:

We started at 7am, and drove for 12 hours through multiple mountain passes, very rural areas of Tibet and a couple of other hurdles that I was advised not to blog about. At 7pm, we were standing at 5000m elevation, looking at Mount Everest and its sibling peaks (Makalu, Lohtse, and Cho Oyu). ... At 7pm we started a 300km drive back to Shigatse, the closest place with a reasonable hotel.

He did tell me about that-which-he-will-not-blog-about! It all sounds really exciting (and here's a picture they took with Everest in the background).

Now imagine my surprise when today's NY Times has an op-ed contribution by Michael Kodas on Mt. Everest! Those of you who have read Into Thin Air (or are mountaineering junkies like Ajit) know that it takes at least a hard week of trekking to get to Everest base camp on the Nepalese side. It's quite a different story on the Tibetan side:

... on the Chinese side almost all of the climbers have been arriving in vehicles for decades.

And within an hour of the base camp is:

A multistory hotel has been open for years now, ... with hot meals, cold beer, soft beds and a telescope aimed at the mountaintop.

And it's going to get even better... It seems the Chinese are building a:

...blacktop highway fenced with undulating guardrails...

running all the way to base camp to:

...ease the Olympic torch’s trip to the summit...

They're going to take the Olympic torch to the summit of Everest! I shouldn't be so surprised---it seems they've already done a dry run. In any case, read the rest of the article to see how Mt. Everest has become the:

...first arena, and profit center, of its Olympic Games.

Commencement speeches

Until very recently my favorite commencement speech was Steve Jobs's speech at Stanford. In this speech he tells three stories from his life. They are all great stories, but I found the first one most compelling. In it he talks about how he dropped out of college and happened to attend some calligraphy classes:

If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.

Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

I love this sentiment: focus on doing what you love to do; the rest will take care of itself.

Any way, earlier this week my favorite commencement speech switched to being Bill Gates's speech at Harvard. I have long admired Bill Gates for the fine work of the Bill and Melinda Gates Foundation. And his commencement speech lived up to this fine work. It starts by saying:

I left Harvard with no real awareness of the awful inequities in the world.

But decades later when he finally learnt about the seriousness of the problem, he was faced with the same challenge that we are all faced with, albeit on a significantly larger scale:

For Melinda and for me, the challenge is the same: how can we do the most good for the greatest number with the resources we have.

He goes on to describe the work that the Foundation has been focusing on before issuing a compelling call to arms to the members of the Harvard community to step up to their responsibilities to the world:

My mother was very ill with cancer at the time, but she saw one more opportunity to deliver her message, and at the close of the letter she said: “From those to whom much is given, much is expected.”

When you consider what those of us here in this Yard have been given – in talent, privilege, and opportunity – there is almost no limit to what the world has a right to expect from us.

What a wonderful sentiment. We are all so privileged. Are we doing enough with our gift?

What a gas!

I just read the Father's Day Freakonomics blog post by Steve Levitt discussing his father's greatest contribution to science. It is the funniest article I've read on a such serious scientific matter...! I guarantee it'll totally crack you up. More importantly, it will appeal to your inner boy! And even if you are not of the male persuasion, I guarantee you'll enjoy it---even though you may never admit to enjoying it!

Ed Lazowska's defense of Computer Science research

Scott Aaronson writes the Shtetl-Optimized blog. Scott is a post-doctoral researcher in computational complexity and quantum computing, and a soon-to-be Assistant Professor of Computer Science at at MIT. I don't know Scott at all, but I enjoy reading his blog. His recent blog post is a report from FCRC (Federated Computing Research Conference). The most interesting part of this post was his summary of Ed Lazowska's plenary talk on "Computer Science: Past, Present, and Future". Lazowska is at the University of Washington (where he used to be the Chair), and as Aaronson puts it: this is the guy we want in charge of our field. Lazowska's talk was a rousing defense of Computer Science research.

I was able to locate the slides of Lazowska's talk. I won't summarize the talk; for that just read Aaronson's post for the highlights. But I must draw attention to the next to last slide entitled "Dispel these Myths". In that slide Lazowska highlights a whole series of myths about Computer Science research including:

• Programming is a solitary activity
• Eventually, all the programming jobs will be overseas
• Computer science lacks opportunities to make a positive impact on society
• Computer Science lacks compelling research visions
• ... and many more

Presumably in the talk itself, he proceeds to dispel all these myths. The slides were good, but I wish I could have seen the talk.

Which brings me to my final point. My friend Alon (who was, until recently, a Professor of Computer Science at the University of Washington with Lazowska) had a recent blog post on SigTube. The idea is to have a short 5 minute video presentation to accompany each paper presented at a conference. The idea is that:

A 5-minute presentation (done well) can give quite a bit of information and insight about a publication, certainly more than the 100-word abstract or the paper's introduction.

I think this is a great idea. The only difficulty might be the logistics of getting all these video presentations done. If this is too hard to do, I hope conferences will at least do the following: videotape all the plenary sessions and publish them on some video sharing site. These talks are often excellent overviews of a field, where it's been and where it's going. I know I'd love to watch such talks. And I would start by watching Lazowska's talk!

Enterprise in Dharavi

The other day we spent about an hour outside the Rahman concert in the cold waiting for our tickets to arrive. So the discussion turned to leather jackets. Mythili said that on her recent visit to Mumbai she bought very nice, incredibly low priced leather jackets in Dharavi. Dharavi is Asia's largest slum. So the prospect of going into Dharavi to buy leather goods is quite surprising. We made jokes about this and moved on to other topics.

Imagine my surprise a few days later while reading the Freakonomics blog when I encountered an article on the thriving enterprise in Dharavi:

But strip away its squalid veneer and Dharavi bares a unique entrepreneurial spirit, and multi-million dollar micro-businesses, that breaks all the stereotypes of a slum.

Every home in Dharavi is a little cottage industry ranging from recycling plastic to selling pickles.

Dharavi has about 5,000 single-room factories and hundreds of cottage industries that together have a turnover of around $1 billion.

That's one billion dollars! And, yes:

In Dharavi, leather is the main product, much of which is exported to the Middle East.

So Mythili went to exactly the right place for her jackets. Of course, Dharavi has lots of infrastruture problems:

Residents are only too aware of the basic lack of necessities: health care, sanitation, education and even a lack of toilets...

So Dharavi's economic engine chugs along in spite of a complete lack of very basic infrastructure. This makes it a microcosm of what is happening in many parts of India; Bangalore's vibrant software industry, set in the midst of Bangalore's crumbling infrastructure, is perhaps the most visible example of this. I hope the Indian government has the political will to address the infrastructure challenges facing India.

Map your DNA

I recently hiked up the PG&E Trail in Rancho San Antonio Park with my team from work. During the hike we happened to talk about 23andMe. 23andMe is a biotech startup that aims to bring you closer to your genome to provide you "... personal insight into ancestry, genealogy, and inherited traits."

So the question came up: would you have your genome read so that you have a better sense for the health risks you face. That is, would you like to know that you are at a higher risk for prostate/breast cancer, or that you're more likely to get Alzheimer's? Mark was of the opinion that, as long as you understood probability theory and Bayes rule, you should be happy to get a better handle on your risks---the more you know, the better your decisions.

I wasn't so sure I wanted my genome read. Of course, there are situations where it makes sense: if your genome could make predictions with the certainty of a diabetes test or a blood pressure reading and one could treat the resulting condition much the way you can treat diabetes with insulin or hypertension with ACE inhibitors, then I'm all for having my genome read.

But if you get results that say something like "you are 10 times more likely to get cancer or Alzheimer's", then how is that useful? On the one hand, maybe your chances have gone from something like 1 in 10,000 to 1 in 1,000---by no means a certainty. On the other hand, even if you did knew it with certainty, there isn't much you could do other than general healthy living: eat more fruits and vegetables, exercise regularly, keep your brain engaged with crosswords :-), that kind of thing! And on the downside, I can't help but think that knowing you're 10 times more likely to fall prey to a terrible disease only increases your stress levels. I'd rather do without the stress and simply engage in healthy living, blissfully unaware of what fate has in store for me!

Recently the NY Times had an interesting editorial, entitled The Discoverer's DNA, that touched upon this very issue:

Recently, the director of the Human Genome Sequencing Center at the Baylor College of Medicine gave James D. Watson — who with Francis Crick discovered the structure of the DNA molecule — two DVDs that contained the complete sequence of Mr. Watson’s DNA.

And what did Dr. Watson have to say about this:

Dr. Watson has asked not to be told about his version of a gene that has been linked to a predisposition for Alzheimer’s.

The editorial ends with the following:

The possibility of individual genomic sequencing inevitably raises feelings of hope and fear. Both emotions are caused by the same prospect — having a clearer idea of who we are. For now, the most appropriate response is patience.

As DNA science advances and we have a better sense for what companies like 23andMe can do, I might change my mind and have by genome sequenced. But right now, I'm happy to live in ignorance. What would you do?

Ravi Kuchimanchi and AID

Recently I had the pleasure of meeting with Ravi Kuchimanchi. Ravi and I were classmates at IIT-Bombay more than 20 years ago. Much more importantly, Ravi is the founder of the Association for India's Development (AID). AID describes itself as a "... volunteer movement committed to promoting sustainable, equitable and just development" in India.

Ravi founded AID in 1991 while he was still a doctoral student in Physics at the University of Maryland. I asked him how it started. Ravi said that he'd always been interested in doing something to help development in India. One day he decided to do something about it: he sent an email to a host of friends suggesting that they all agree to contribute $10 per month to fund a school in a village that had no school. When he sent this message Ravi didn't have any particular village in mind. But this email got people pretty excited, and soon somebody suggested a village that didn't have a school. And that started things off.

AID is quite a remarkable organization. It works with grassroots organizations and initiates efforts in a variety of different areas including education, livelihood, health, women's empowerment, and social justice. I remember reading that AID was one of the first relief organizations on the ground following the tsunami in southern India.

One of its distinguishing characteristics is that much of its volunteer corps is highly educated, often in science and engineering. This means they make an effort to get to the root cause of a problem before coming up with a solution. I asked Ravi for an example of such analysis. He gave me many such examples, but here's a nice one.

In spite of significant government investment in rural electrification, a large number of villagers in rural India live without electricity. A superficial analysis of the situation might suggest that this is caused by poverty. But a more detailed analysis shows otherwise. Most of these villagers who lack electricity use kerosene lamps to provide light in their homes. Kerosene lamps are not an efficient method for generating light---burning kerosene generates a lot of heat. One can generate equivalent, or more, light from an electric bulb for less money. So these villagers are more than capable of paying the monthly electricity bills to light their homes.

The problem turns out to be corruption: the villagers need to bribe a low-level official to have an electricity cable run from the main line (often running outside the home to a street lamp) to the home. And it is the bribe that is unaffordable. Once AID understood this problem, they assisted villagers by helping to prepare applications for a group of 50 or more homes. When the low-level official asks for a bribe, they threaten to take the case to a high-level anti-corruption officer. This leads to a negotiation where the low-level official agrees to provide electricity connections to poorer people without a bribe, as long as he can still get bribes from the rich! AID has used this strategy successfully in a large number of villages.

In addition to its development work, AID is now starting to fight corruption. It uses 2 landmark legislations as its tools: the Right to Information Act and the National Rural Employment Guarantee Watch. Ravi told some very interesting stories of how AID is using these laws; their work is a good example of the maxim "Knowledge is Power".

We have been supporters of AID for some years now. But as I told Ravi, it is easy to write checks; it is hard to be on the ground and do the work that AID's volunteers and staff do. I wish them the very best in their efforts.