Housing

The Bank of England’s Bank Underground blog has two excellent posts on house prices (first this one, then this one). The basic idea is that houses are assets, not goods, since the “goods” consumed is “living”, which is basically a point in time thing.

As the first of these posts points out:

You can’t buy flowers when they are cheap and store them for months until Valentine’s day. Similarly, you can’t store housing services by, say, renting two flats this year and saving one’s rental services for next year. So the price of rents is determined “on the spot” by the current balance of demand and supply of places to live. Add a load of extra people and/or make them richer and the higher demand pushes up rents. Boost supply and rents fall.

Combined with this comes the news that a friend’s parents have moved to Mysore (from Bangalore) for their retirement.

Taking these blogposts, and this piece of news, together, I’m beginning to reconsider my views on housing.

About 7-8 years back, I got “personal finance advice” that one needs to start “saving for retirement” at age 30, and one of the best ways of doing that is to buy a house. I was about to turn 30 around then, and I took this advice seriously enough to invest in an apartment in 2014. Looking at it five years on, I’m not sure buying a house for retirement in your thirties is the best idea.

For starters, India is (still) a fast-growing and fast-changing nation, so I have no clue what are going to be good places to live 10 years down the line (forget 30 or 40, at which point I’ll retire).

Secondly, my needs from a house now are very different from what they will be 30 or 40 years down the line. For example, right now, my daughter’s school is a “fixed point” (assuming I don’t want to change that), and I need a house that isn’t too far from there. As she grows up and grows out of school, this will cease to be a factor.

Similarly, the work that I do demands a certain pattern of travel in the city, and that again guides my choice of place to live. This is likely to change as the years go by as well.

Then, what I need from my house and my surroundings are likely to change as well. For example, I might want peace and quiet right now, and might be willing to take my car everywhere. At some other point in time, I might place a higher premium on shops in a walkable distance. Similarly, my preferences on entertainment activities might change as well.

Taking all this into account, making a housing decision now on where I want to live 15-20 years down the line is futile. There are simply too many variables and any decision I take now will only lock me in to something that is possibly not optimal.

From that point of view I need to look at my needs over the next 10-15 years (when things will change, but maybe not by that much) to make my current investing decisions. This includes rent/buy/sell decisions, taking into account whatever I’m optimising for now, and will in the next few years. And if I’m setting aside money to “buy a house for retirement” now, I should simply just focus on saving and growing that money so that I can make an informed decision at a time when it matters, and matters are more clear.

Gap in giveaways and disposal

There is a gap in the market between second hand sales and garbage disposal, and I’m not sure what’s a good way to address it.

These are things that you own that might be useful for someone, but you don’t know who it might be useful for. If one such person is located, you are willing to give the stuff away for free, but you don’t want to make any effort or spend anything to dispose it.

The part of London I used to live in had evolved a simple way of achieving this – people would simply leave stuff out in their front yards very close to the footpath (the compounds didn’t have gates). People walking past were free to pick up whatever they wanted, and after things had been left out for a sufficient period of time, the council would be called and they would pick it up as “garbage”.

Unfortunately when I moved out of London earlier this year, the house we were living in was on the main road (right next to Ealing Broadway station), and this method of disposal of unwanted things wasn’t available to us. And we had to incur significant cost to dispose of some of our stuff.

The wife put up some of them on the UK equivalent of OLX, and managed to sell off a lot of our stuff for not very high amounts (though I think we got more for our mixie than what we’d paid for it 10 years ago). We made money, yes, but it possibly wasn’t significant enough to cover the cost of my wife’s time.

And then there were the books – there were no second hand bookshops available that would pay anything reasonable for the books. So I had to actually cart all the books to the local Oxfam centre to be given away to charity (apart from stuff friends picked up).

Clothes, similarly, had to be dropped off at a charity centre (there was a Cancer Research UK shop right across the road from our house, so that helped). Again, I don’t know if everything we left there was used, but that was the lowest cost way for us to dispose of them.

Coming back, this gap in the market exists in India as well. The market is a bit better here because you have house cleaners and cooks and drivers you interact with on a regular basis, who are happy to take your unwanted stuff off you and dispose it. The problem is that they are picky on what they take and dispose – they have transaction costs, just like us, and don’t want to take on stuff that they will find it hard to move on.

And what makes matters worse is that even putting it in the trash is not a proper solution here – the municipal trash collectors ask for a bribe to take these things off you!

In some sense, this is a classic market design problem – where the transaction cost of the sale overwhelms the value of items being bought and sold. The things we want to dispose of have value to someone, for which they might be willing to pay, but the costs of finding these people are so high that you end up paying to dispose them.

Basically what we need is a service where someone comes and picks up all your “semi-trash”, sorts through it to find stuff that might be useful for someone else and then transfer it to markets where it can reach people who want it. And things that aren’t useful to anyone will go into garbage.

The problem with this service is that there is a natural upper bound on what people will be willing to pay for this service – zero. And when you factor in the market for lemons here (people might use this to dispose of absolute garbage rather than semi-trash that might be useful for someone), you know why “solution doesn’t exist”.

Margaret Atwood doesn’t escape my fate

My book released exactly two years ago (if you haven’t read it yet, you can buy it here). Rather, it was supposed to release two years ago, on 6th of September 2017. As it happened, people who had pre-ordered the book got deliveries a few days early. Amazon had messed up with the release date.

I remember getting in touch with Amazon Customer Care. They didn’t seem to care. I spoke to friends and relatives who worked there, and they suggested a “Jeff B escalation” (an email sent to Jeff Bezos – apparently he reads them). There was no response to that either. And so my book came out in a trickle, being sent to people as they ordered them, rather than with a bang.

I’m possibly feeling a sense of schadenfreude that it’s not just first-time authors like me who got screwed over like this by Amazon in terms of early release of the book. I am in illustrious company – Canadian author Margaret Atwood suffered the same fate this week.

Amazon, the biggest book vendor in the United States, recently started shipping preorders of Margaret Atwood’s book Testaments. The problem, notably, is that Atwood’s book is not supposed to launch until Tuesday, September 10. Amazon is violating the embargo that all sellers of the book have agreed to. And its indie bookselling rivals are pissed.

In my case, Amazon had exclusive sales on the book – thanks to using a small first-time publisher, we didn’t have the network to go wider and get the book into more stores. In that sense, apart from me, there was possibly nobody pissed off at the early release of the book.

Then again, this early release of pre-ordered books was an endemic problem to Amazon, and a high-profile leak such as this one was bound to happen some time or the other. Hopefully this will lead to the retailer to put enough measures in place to prevent this kind of thing from happening again (mainstream publishers have strong relationships with bookshops, so they are likely to put pressure on Amazon).

In any case, I’m glad to have such good company!

PS: If you haven’t listened to Atwood’s conversation with Tyler Cowen, you should do so soon. It’s fantastic (and I say this as someone who hasn’t read any of her works)

Time out of nowhere

I was supposed to be in Mumbai today for a meeting. Heavy rains and a “red alert” meant that the meeting got cancelled and I’m in Bangalore. This was a “high transaction cost” meeting – I was supposed to spend the entire day in Mumbai to be able to do the meeting comfortably. Now the whole day is “free”.

The meeting will be rescheduled for another day, and that day, which as it stands would have been spent in Bangalore, will have to be spent in Mumbai. In that sense the meeting has just been postponed rather than being cancelled.

Yet I feel that “time has been created” thanks to the cancellation. I hadn’t budgeted for any work to be done today outside of that meeting, and now suddenly I have lots of time.

And it has already started – with some Parkinson Principle. I was supposed to finish my presentation for today’s meeting last night. Postponement has meant I’ve been approaching it rather slowly, and still ploughing through it. I expect to finish it by tonight.

OK I just got a call now and it seems the meeting has been rescheduled to tomorrow. So I’m off to Bombay tomorrow morning, and with the meeting being so close, there is no “time gain”, for time gained today is lost tomorrow. Even with a steep discount rate, there’s no benefit here.

However, if the meeting had been postponed to next week, or sometime later, then I would’ve celebrated, and continued to have a gala time today!

Social Media Addiction

Two months back I completely went off social media. I deleted the instagram app from my phone and logged out of Instagram, Twitter, LinkedIn and Facebook on my computer. I needed a detox. And I found myself far more focussed and happier after I did that. And I started writing more here.

My first month off social media was strict. No social media under any circumstance. This was necessary to get rid of the addiction. Then, since I came back from the Maldives trip, I’ve been logging into various social media accounts on and off (about once a day on average) just to see if there are any messages and to browse a bit.

I only do it from my computer, and at a time when I’m not fully working. And as soon as the session is over I make sure I log out immediately. So the instinctive adrenaline-seeking opening of social media tabs is met by a login screen, which is friction, and I close the tab. So far so good.

In my infrequent returns to social media I’ve found that the most “harmless” are LinkedIn and Facebook (it might help that I don’t follow anyone on the latter, and if I want to check out what’s happening in someone’s life I need to explicitly go to their profile rather than them appearing on my timeline). LinkedIn is inane. Two or three posts will tell you it’s a waste of time, and I quickly log out. Facebook is again nothing spectacular.

Twitter is occasionally interesting, and I end up scrolling for a fair bit. For the most part I’m looking for interesting articles rather than look at twitter arguments and fights. I’m convinced  that twitter statements and arguments don’t add much value – they’re most likely ill thought out. Instead a link to a longer form piece leads me to better fleshed out arguments, whether I like it or not.

Mostly after a little bit of twitter scrolling, I find enough pieces of outrage, or news/political stuff that I get tired and log out. It’s only when I really need an adrenaline rush and don’t mind people cribbing that I stay on twitter for a bit of a long time (over five minutes).

Instagram, on the other hand, is like smoking cigarettes. When I smoked my first cigarette in 2004 I felt weak in the knees and a sort of high. It was in my final year of college, so I’d had enough friends tell me that cigarette smoking is addictive. And my first cigarette told my why exactly it was addictive.

So I made a policy decision at that moment that I’d limit myself to a total of one cigarette a year. I’ve probably averaged half a cigarette a year since then. My last one was in 2016.

Instagram is really addictive. It’s full of pictures, and if you avoid the really whiny accounts there is little negativity or politics. People make an effort to look nice, and take nice pictures, for instagram. So there is a lot of beauty in there. And if I choose to, especially when I’m logging in after a long time, I can keep at it for hours.

Instead I need to be conscious that it’s addictive (like my one cigarette a year rule), and pull myself away and force myself to log out. This also means that while I open twitter about once a day, Instagram is less than once a week.

I wonder what this means about the sustainability of social networks!

Fishing in data pukes

When a data puke is presented periodically, consumers of the puke learn to “fish” for insights in it. 

I’ve been wondering why data pukes are so common. After all, they need significant effort on behalf of the consumer to understand what is happening, and to get any sort of insight from it. In contrast, a well-designed dashboard presents the information crisply and concisely.

In practical life, though, most business reports and dashboards I come across can at best be described as data pukes. There is data all over the place, and little insight to help the consumer to find what they’re looking for. In most cases, there is no customisation as well.

The thing with data  pukes is that data pukes beget data pukes. The first time you come across a report or dashboard that is a data puke, and you have no choice but to consume it, you work hard to get your useful nuggets from it. The next time you come across the same data puke (most likely in the next edition of the report, or the next time you come across the dashboard), it takes less effort for you to get your insight. Soon enough, having been exposed to the data puke multiple times, you become an expert at getting insight out of it.

Your ability to sift through this particular data puke and make sense of it becomes your competitive advantage. And so you demand that the puker continue to puke out the data in the same manner. Even if they were to figure out that they can present it in a better way, you (and people like you) will have none of that, for that will then chip away at your competitive advantage.

And so the data puke continues.

 

Taking Intelligence For Granted

There was a point in time when the use of artificial intelligence or machine learning or any other kind of intelligence in a product was a source of competitive advantage and differentiation. Nowadays, however, many people have got so spoiled by the use of intelligence in many products they use that it has become more of a hygiene factor.

Take this morning’s post, for example. One way to look at it is that Spotify with its customisation algorithms and recommendations has spoiled me so much that I find Amazon’s pushing of Indian music irritating (Amazon’s approach can be called as “naive customisation”, where they push Indian music to me only because I’m based in India, and not learn further based on my preferences).

Had I not been exposed to the more intelligent customisation that Spotify offers, I might have found Amazon’s naive customisation interesting. However, Spotify’s degree of customisation has spoilt me so much that Amazon is simply inadequate.

This expectation of intelligence goes beyond product and service classes. When we get used to Spotify recommending music we like based on our preferences, we hold Netflix’s recommendation algorithm to a higher standard. We question why the Flipkart homepage is not customised to us based on our previous shopping. Or why Google Maps doesn’t learn that some of us don’t like driving through small roads when we can help it.

That customers take intelligence for granted nowadays means that businesses have to invest more in offering this intelligence. Easy-to-use data analysis and machine learning packages mean that at least some part of an industry uses intelligence in at least some form (even if they might do it badly in case they fail to throw human intelligence into the mix!).

So if you are in the business of selling to end customers, keep in mind that they are used to seeing intelligence everywhere around them, and whether they state it or not, they expect it from you.

Amazon and Sony Liv

Amazon is pretty bad at design of products they’re not pioneers in. They’ve built a great shopping engine (25 years ago) and a great cloud service (15 years ago), but these were both things they were pioneers in.

Amazon being Amazon, however, they have a compulsive need to be in pretty much every industry, and so they’ve launched clones of lots of other businesses. However, their product design in these is far from optimal, and the user experience is generally very underwhelming.

Prime Video has a worse user experience than Netflix. The search function is much worse. The machine learning (for recommendations) isn’t great. The X-ray is good, but overall I don’t have as pleasant a time watching Prime as I do with Netflix.

However, the degree to which Prime Video is worse than Netflix is far far smaller than the degree to which Amazon Music is worse than Spotify. The only thing going for Amazon Music (which I only use because it comes free with my prime delivery membership in India) is that they have inventory.

Spotify in India has been unable to secure rights to a lot of classic rock and metal bands, such as Iron Maiden and Black Sabbath and Led Zeppelin and Dream Theater. And these form a heavy part of my routine listening. And so I’m forced to use Amazon Music (Apple Music has these bands as well, but I have to pay extra for that).

The product (Amazon Music) is atrocious. The learning is next to nothing. After five months of using the service to exclusively listen to Classic Rock and Heavy Metal, and zero Indian music, the home page still recommends to me Bollywood, Punjabi and Tamil stuff! History is not properly maintained. Getting to the album or playlist (the less said about playlists on Amazon, the better) I want takes way too much more effort than it does on Spotify.

In other words, the only thing that keeps Amazon going in businesses they’re not pioneers in is inventory – Prime Video works because it has movies and shows other streaming services don’t have. Amazon Music is used because it has music that Spotify doesn’t.

I figured it is a similar case with Sony Liv, Sony’s streaming service in India. They sit on a bunch of lucrative monopolies, such as rights to broadcasting Test cricket in a lot of countries (all three Test series being played right now are on Sony, for example), Champions League football and so on. Beyond that it’s an atrocity to watch them.

I remember missing a goal in the Liverpool-Porto Champions League quarterfinal because of a temporary power cut. There was no way in the broadcast to go back and see the goal. If I by mistake pause for a couple of seconds, I’m forever behind “live” (unless I refresh). Yesterday during the classic Ashes Test, the app simply gave up when I tried to load the game.

The product is atrocious (actually more atrocious than Amazon Music), but people are forced to use it only because they have a monopoly on content. And in that way, it is similar to Amazon, which can get away with atrocious products only because they have the inventory!

I’m glad the Premier League is on Hotstar, which is mostly a pleasure to watch! (actually back in the day when I had cable TV, the star sports bouquet had significantly superior production values to the sony-zee-ten bouquet)

Content Flooding

I just came across this nice article on content flooding, which is about how the same sort of content “floods” us from all possible sources. All newspapers and news website (not to mention news TV), at any point in time, are “flooding” us with articles about the same thing. This quote from the article possibly makes the point:

Ravi Somaiya wrote in the Columbia Journalism Review last year. In the cacophony of content and conversation around that content, the most familiar voices at the largest, fastest, trendiest outlets carry the farthest; according to SimilarWeb, which tracks website statistics, only five sites dominatearound 50 percent of the share of newspaper traffic in the U.S. CJR also reports that newspapers online, now with a borderless audience, publish more than twice as many stories as they used to, often with a much smaller staff. So what you get are dailies that operate like news channels, dissecting stories (sometimes even original ones) for ratings, which basically means they cover more of less . “Faced with a sea of headlines, in every permutation,” wrote Somaiya, “even the most determined mind rebels and begins to dismiss it all as noise.”

(ed: emphasis added)

Now I don’t intent to reinforce flooding, but I’ve written about this topic before, about how Twitter is like Times Now. However, in the last month or so, when I’ve been mostly off social media, one primary reason why I went off was to avoid flooding. Rather than getting lots of news about the same topic from all sorts of sources I want to learn about a variety of things.

And I’ve tried to tune my media consumption to try and avoid this kind of flooding. I’m off social media now, for there everyone talks about the same topic of the day most of the time. I haven’t watched news TV for some 10-15 years now. I get my article and blog content from RSS feeds (if you have any RSS feeds you think I might like, do share!), and from a bunch of newsletters I’m subscribed to (the article shared at the beginning of this post came from a newsletter by the Guardian).

And by myself being not part of the flooding monoculture (on twitter), I end up writing about stuff that other people may not be writing about at that point in time. And that’s my little contribution to reduce flooding in the world!