plus/minus epsilon

I used to work on the Crypto Team at my company, and while I was there I got introduced to a lot of different crypto projects and asked to evaluate if they were something it made sense for us to support. The answer was usually no.

The only financial skill I have that I haven’t seen other people do better than me is DuPont analysis. DuPont analysis tries to find the drivers of a company’s Return on Equity by factoring it into three parts:

1. Profitability as measured by Net Profit Margin, or how much profit a company is able to keep from its revenue.
2. Efficiency as measured by Asset Turnover, or how much revenue a company is able to produce from its assets.
3. Financial Leverage which is how much the company relies on debt as a funding source.

Serverless is powerful because:

• It’s often cheaper than running the same application on a VPS. Right now, this may be mostly because it’s under-priced. But it does actually require fewer physical resources, since applications scale on-demand and many applications can share the same physical host more efficiently.

• Possibly also falling under “cheaper,” it has a lower operational burden. Developers simply upload their code and the cloud provider handles process management and scaling.

• Applications that run on serverless platforms are faster because they’re always hosted near the end-user.

E2E encryption possibly fits into the model for disruptive technology:

1. It’s disproportionately valued by a small set of people.
2. Established companies are unable to effectively deploy it because they either consider plaintext data valuable, or they’ve built a product which is technically unable to be offered in an end-to-end encrypted fashion.

However, it’s not clear that sufficiently developed E2E encryption is able to provide the same service better than an unencrypted alternative would be able to.

Disruptive innovation requires the creation of a new disruptive technology. So if Wikipedia is an example of disruptive innovation, what technology did they create? Like most people, I hear “new technology” and my mind naturally starts looking for machinery and gears combining to accomplish something that nobody thought was possible before. But that’s not here: Wikipedia is widely considered technically unremarkable. Instead, what stands out to me about Wikipedia and makes me think “that shouldn’t work” is anonymous contribution.

Alternate Title: Cloudflare’s Plan for World Domination (Not Really (Maybe))

Cloudflare’s browser product will mark the beginning of a two-sided network. That is, we’ll have answers to the two following questions:

What do people like about their jobs (besides money)?

1. Social interaction: A sense of community
2. Autonomy: An ability to decide how they work
3. Variety: A defense against boredom
4. Feedback: Knowing if they’ve done a good job
5. Sense of contribution: An understanding of how their effort helps the company achieve its mission

Wikipedia is a classic, underrated example of disruptive innovation. They started out by serving the low-end market of people that want information immediately, for free, and are fine with that information not necessarily being high quality. This was previously a market that print encyclopedias like Britannica served with door-to-door salespeople, but while trying to grow their revenue they naturally pursued higher-margin opportunities with universities and academic researchers.

Surprisingly often, well-managed companies fail to compete against startups that pursue their customer base. By not competing, these large companies lose market share and often go out of business, even though they have substantially more resources than their startup competition.