If you read it you'll find a mistake that showed up in the Wired piece. People in their experiments didn't have the a 50/50 chance of detecting emotional tone -- instead, the chance of picking correctly the intent was no better then random chance. A much more interesting interpretation than 50/50.
There is a long history of academic research substantiating Eply/Kruger thesis that we don't interpret the emotional content (or as they call it, para-linguistic content) of text very well. The first
academic paper that I've found that deals with this topic goes back to:
http://citeseer.ist.psu.edu/context/1589611/0
Sproull, L. and Kiesler, S. 1988. Reducing Social Context Clues: Electronic Mail in Organizational
Communication. Readings in Computer-Supported Cooperative Work, 684--712.
Los Altos, California: Morgan Kaufmann.
5 Stars Rating Systems are Poor Design
on
More iTunes Math
·
· Score: 3, Interesting
If you read my article on the Rating Systems you'll see that 5 point rating systems are a poor way to do ratings. In our analysis, only 10% of raters use the bottom two star in a 5-point scale, and only 2% use the lowest rating of 1 star. The median of the 5-point scale is actually the fourth star, with a neat bell curve arranged around it.
In my own personal use of iTunes, I've forced myself to be much more consistent and lower with my ratings. 1 star means that it has been rated, but in general I don't like it and don't play it. 2 stars means average, which means play it some of the time. 3 stars is above average, and play it more often, but I can get bored with these. 4 is good, and can basically listen to these regularly without getting tired. 5 stars are exemplars -- I try to find more songs like these.
I'd not run into beatpaths before -- it is quite interesting. It appears to be sort of a tourney system for when you can't complete a full set of round-robin or double-elimination competitions, as what happens in NFL during the fall season.
What is also interesting to me is that it introduces a goal for ranking systems that I'd not thought of before -- prediction. The purpose of the beatpath systems is actually focused on predicting the outcome the next set of the weekend games.
An interesting comment was posted by F. Randall Farmer about ever escalating ELO (chess-style) rankings:
A data point on ELO cheating for you: Yahoo! Games uses ELO rankings for several their two-player games. Before recent abuse mitigation changes, some people used robot to accumulate scores in excess of 6,000,000 points. The abuse-the-ranking game had become a totally seperate competition.
For now, Yahoo! has capped the ELO scores at 3,000 (I think.) This removed most of the cheating incentive.
Skotos takes the position that whomever may or may not control the rights to Lovecraft's actual stories, derivative stories have always been widely accepted, with notable authors like Ramsey Campbell, Robert E. Howard, and Stephen King being just a few of those who have built upon Lovecraft's ideas over the years.
Lovecraft actually actively encouraged such derivation, believing that by "wide citation" he could give his works an "air of verisimilitude". Even this year's move "Batman Returns" refers to Arkham Sanitarium, a setting of many Lovecraft stories.
So can you create a comic derived from a specific Lovecraft story that is in dispute, such as "Call of Cthulhu"? That you'd have read the evidence on both sides and decide for yourself. However, can you create a comic that has R'ley as a setting and has cultists trying to raise Cthulhu? That is clearly acceptable.
Actually, that is somewhat deliberate. Skotos ressurected the original Arkham Horror board game, cleaned it up, and licensed it to Fantasy Flight Games, who made further improvements. It was hoped that both would be released around the same time.
The new version has quite a few favorable reviews at Board Game Geek".
Engineers should band together to form venture funds. Start-ups need
more angel funding and they need better-organized angel funding. I'd
like to see a dozen or so $100 million venture funds run by
nerds. These nerd-based venture firms would work at the seed round and
at the next funding round (called the A round). They provide initial
funding and advice and they, with the benefit of professional
financial advice, represent their start-ups in future funding
negotiations with traditional venture firms.
This is basically what my firm, Alacrity Ventures, does. We started after the sale of Consensus Development (who wrote the reference implementations of SSL 3.0 and TLS 1.0) to Certicom. We are not a $100M fund -- only the personal investments of the founders. In over two and a half years of investing, we have yet to have a single company go under, which in these troubled times I believe to be a spectacular record.
However, after investing in over a dozen companies, I have discovered that there are some real reasons why VC's behave the way they do. We too have fallen into some of the behaviors that are described in the article, as much as we resent and dislike them.
It turns out that there are some very interesting economic, sociological, and psychologal reasons why the VCs fill a particular economic niche and why it very difficult to find alternatives. These reasons range from how many startups a person can be really involved in at a time, the economic incentives of associates to become partners, the pressures of repeatedly raising money for the next fund from publically accountable entities, the 'sharks' at the mezzanine rounds, etc.
As an example of one of these factors: It is common wisdom VC associate can't be meaningfully involved as an advisor in in more then 5 to 7 companies. I found this to be true in my own small company. Yet it is also true that 1 in 5 companies "break even" and 1 in 20 companies "makes the fund", i.e. pays off enough to pay for the fund. Even choosing better companies to start with doesn't necessarily improve the odds much as there are still significant "random" factors, especially if you invest early.
Thus there are significant pressures on the VC associate to attempt to try to be involved with more then 5 to 7 companies, as it based on how he does with these companies that he will earn, or not earn, a right to be a partner when the next round is raised. This contributes to why VC associates often are spread far too thin, and why they don't want to invest "only" a couple of hundred thousand. Also, VC firms only make management fees on money after it is spent, and with the limits of how many people are required to supervise the investments they want to invest millions in each or they'd have to manage too many companies to use up all the money their fund has allocated.
Another factor making it difficult is that you can't just invest in early rounds -- you have to participate all the way through else you risk a subsequent series C-D investor or "mezzanine" investor devalueing your participation. As a for instance, we invested significantly in a Series A round of a company that is doing reasonably well. However, they do need to raise more money now in a Series D as it looks like it will be a while before they can IPO given current market conditions. We can't afford to participate at this level (we only invest at early levels), and because of the funding climate, the lead of the Series D investor is converting all of us Series A investors to common stock.
If we rally the series A investors to reject this (which is a right we have) it doesn't do us any good as it might cause the company to go bankrupt. So we have to accept it. So it isn't just the founders and engineers that are getting screwed, but also the early investors. If we were a large VC fund, we could participate all the way through and prevent such an occurrence, but then we'd have the pressure that the large funds have to invest only in larger chunks and we'd probably not have invested in this firm in the first place.
There are many other reasons why VC behave the way they do that I've discovered over the last few years that are consequences of much more complex things then what this article describes. There are probably more that I haven't discovered yet. Yet like any engineer, I do have some ideas on how things might be done differently, but it requires tweaking some of the VC parameters in radical ways -- it is not a case where tweaking one variable will transform the system, it requires a major redesign of a new system. And like any new system, it will be difficult to test so it will be quite risky.
Here's a third suggestion. I'd like to see an engineer-run start-up
whose goal is to raise $100 million in a public offering. The money
becomes a fund for sponsoring start-ups. It's a public venture firm
and it sells shares to raise money. Investing in start-ups wouldn't be
exclusively for rich people; anyone who could buy stock could be
investing in start-ups. Ideally, the public VC firm would be managed
and run by nerds with empathy for nerds in the start-ups.
This is what CMGI and a couple of other companies did, and they are failing spectacularly. There is a real price for public funding, one of which is that you are constantly beholden to sweet talk to the investment community every quarter, and they don't want to talk to an engineer CEO, they want to talk to someone who speaks their language.
It might still be possible -- we done a lot of thinking about it at Alacrity Ventures, but it is unlikely we'd use a public stock model. Instead, something that is more like a mutal investment fund might be possible.
If anyone is interested in talking about the topic of "Why VCs Behave the Way They Do" further, or on ways to create a different kind of VC investment firm, I'd be glad to talk to them.
-- Christopher Allen
Alacrity Ventures
www.alacrityventures.com
Slashdot Mirror
If you read it you'll find a mistake that showed up in the Wired piece. People in their experiments didn't have the a 50/50 chance of detecting emotional tone -- instead, the chance of picking correctly the intent was no better then random chance. A much more interesting interpretation than 50/50.
There is a long history of academic research substantiating Eply/Kruger thesis that we don't interpret the emotional content (or as they call it, para-linguistic content) of text very well. The first academic paper that I've found that deals with this topic goes back to:
http://citeseer.ist.psu.edu/context/1589611/0 Sproull, L. and Kiesler, S. 1988. Reducing Social Context Clues: Electronic Mail in Organizational Communication. Readings in Computer-Supported Cooperative Work, 684--712. Los Altos, California: Morgan Kaufmann.
I've written more about this topic and other sources for the cycle of flames in my blog at Flames: Emotional Amplification of Text.
If you read my article on the Rating Systems you'll see that 5 point rating systems are a poor way to do ratings. In our analysis, only 10% of raters use the bottom two star in a 5-point scale, and only 2% use the lowest rating of 1 star. The median of the 5-point scale is actually the fourth star, with a neat bell curve arranged around it. In my own personal use of iTunes, I've forced myself to be much more consistent and lower with my ratings. 1 star means that it has been rated, but in general I don't like it and don't play it. 2 stars means average, which means play it some of the time. 3 stars is above average, and play it more often, but I can get bored with these. 4 is good, and can basically listen to these regularly without getting tired. 5 stars are exemplars -- I try to find more songs like these.
What is also interesting to me is that it introduces a goal for ranking systems that I'd not thought of before -- prediction. The purpose of the beatpath systems is actually focused on predicting the outcome the next set of the weekend games.
I've checked this twice, both page 20 http://www.lovecraftcountry.com/comic/return/index .php?thisPage=20&view=comicbook and panel 20 http://www.lovecraftcountry.com/comic/return/index .php?thisPage=20 seem to be fine.
Lovecraft actually actively encouraged such derivation, believing that by "wide citation" he could give his works an "air of verisimilitude". Even this year's move "Batman Returns" refers to Arkham Sanitarium, a setting of many Lovecraft stories.
So can you create a comic derived from a specific Lovecraft story that is in dispute, such as "Call of Cthulhu"? That you'd have read the evidence on both sides and decide for yourself. However, can you create a comic that has R'ley as a setting and has cultists trying to raise Cthulhu? That is clearly acceptable.
The new version has quite a few favorable reviews at Board Game Geek".
This is basically what my firm, Alacrity Ventures, does. We started after the sale of Consensus Development (who wrote the reference implementations of SSL 3.0 and TLS 1.0) to Certicom. We are not a $100M fund -- only the personal investments of the founders. In over two and a half years of investing, we have yet to have a single company go under, which in these troubled times I believe to be a spectacular record.
However, after investing in over a dozen companies, I have discovered that there are some real reasons why VC's behave the way they do. We too have fallen into some of the behaviors that are described in the article, as much as we resent and dislike them.
It turns out that there are some very interesting economic, sociological, and psychologal reasons why the VCs fill a particular economic niche and why it very difficult to find alternatives. These reasons range from how many startups a person can be really involved in at a time, the economic incentives of associates to become partners, the pressures of repeatedly raising money for the next fund from publically accountable entities, the 'sharks' at the mezzanine rounds, etc.
As an example of one of these factors: It is common wisdom VC associate can't be meaningfully involved as an advisor in in more then 5 to 7 companies. I found this to be true in my own small company. Yet it is also true that 1 in 5 companies "break even" and 1 in 20 companies "makes the fund", i.e. pays off enough to pay for the fund. Even choosing better companies to start with doesn't necessarily improve the odds much as there are still significant "random" factors, especially if you invest early. Thus there are significant pressures on the VC associate to attempt to try to be involved with more then 5 to 7 companies, as it based on how he does with these companies that he will earn, or not earn, a right to be a partner when the next round is raised. This contributes to why VC associates often are spread far too thin, and why they don't want to invest "only" a couple of hundred thousand. Also, VC firms only make management fees on money after it is spent, and with the limits of how many people are required to supervise the investments they want to invest millions in each or they'd have to manage too many companies to use up all the money their fund has allocated. Another factor making it difficult is that you can't just invest in early rounds -- you have to participate all the way through else you risk a subsequent series C-D investor or "mezzanine" investor devalueing your participation. As a for instance, we invested significantly in a Series A round of a company that is doing reasonably well. However, they do need to raise more money now in a Series D as it looks like it will be a while before they can IPO given current market conditions. We can't afford to participate at this level (we only invest at early levels), and because of the funding climate, the lead of the Series D investor is converting all of us Series A investors to common stock. If we rally the series A investors to reject this (which is a right we have) it doesn't do us any good as it might cause the company to go bankrupt. So we have to accept it. So it isn't just the founders and engineers that are getting screwed, but also the early investors. If we were a large VC fund, we could participate all the way through and prevent such an occurrence, but then we'd have the pressure that the large funds have to invest only in larger chunks and we'd probably not have invested in this firm in the first place. There are many other reasons why VC behave the way they do that I've discovered over the last few years that are consequences of much more complex things then what this article describes. There are probably more that I haven't discovered yet. Yet like any engineer, I do have some ideas on how things might be done differently, but it requires tweaking some of the VC parameters in radical ways -- it is not a case where tweaking one variable will transform the system, it requires a major redesign of a new system. And like any new system, it will be difficult to test so it will be quite risky.