Month: October 2011

The Valuation of Trust

Lorin Olsen


 
Thanks to +Edward Coles and +Merlina Sapphire for sharing this video. It is a good overview of the basics of money and financing. I used the video to launch a rousing discussion on Google+.

This is fundamental Econ 101 stuff. But it is great to see it explained so simply and understandably.
Nevertheless, the narrator makes a simplifying assumption: increases in the money supply gain their value from the existing money supply itself. This assumption is misstated. The value of newly created money is directly proportional to the trust that we place in the banking system and the measure of trust we place in the repayment of debts. When we stop trusting the system, we withdraw our funds and create a run on the banking establishment. And as we saw in the Great Depression, no bank could provide the funds required if all demand deposits were demanded.
So what is the #OccupyWallStreet movement? In my mind, it is an effort to diminish and/or destroy the trust that America has in its banking system. The threat of flagging trust in our system must be challenged. We must begin to trust each other to repay the debts that we owe. And we must trust our banks as institutional that we trust to fulfill the promises/contracts that we have made with them.

After submitting the above text for discussion on Google+, I got some very rousing debate on the issue of trust and the kinds of change that we should be advocating.  Here was my response to one reader:

+Jonathan Xavier, I think we can all agree on the definition of the problem. Where we disagree is on the root cause of the problem and/or the solution that we would propose to address the inherent ills in the system.
At a macro level, the issues relate to a lack of trust. We do not trust the banks. And the banks don’t trust their customers. I know of many people that have simply walked away from the commitments that they made to bankers and their depositors. This is true of home mortgages as well as student loans. Any system that makes it simple to abandon promises is a flawed system. If you default on a loan, there should be penalties. But in today’s culture, walking away from your commitment to repay the people that have invested their savings in the bank is wholly unsatisfactory.
At the same time, our banks should not be treating us as a carcass from which they can nourish their bloated excesses. If you thought that current banking fees were unreasonable, just wait for transaction fees that are coming for ATM’s and for mobile phone transactions via NFC. The banking institutions exist as a public trust. And they should be held accountable for that position of trust.
But what are the causes of these troubles?
From my perspective, the challenge is not systemic but personal. We have lost our position as a moral authority in the world because we have failed to act in ethical and moral ways. We need to foster a culture where we work together – not separately. We need to act as communities – not collections of individuals. I need to honor my commitments and hold others to honoring the commitments that they have made to me.
But how do we foster a disciplined and moral personal life that can be replicated throughout out communities? Let’s deal with first things first. Hold yourself accountable for making moral decisions. This is not a question of legalities but of ethics. Our culture has become fascinated with “letter of the law” obedience. Instead, we need to hold ourselves to the “spirit of the law” in our lives.
As for me and my family, we will serve the Lord. And we will honor our commitments. And we will try to live intentional lives – not accidental lives. Let your every decision be something that you consider and decide. And make sure that your frame of reference is something beyond yourself. Too many of us live without a system of values. And then we are surprised when others don’t act compassionately or even honestly.
Our culture was based upon a shared view of ethics. And these ethics were personified in the Ten Commandments. [Note: I’m not advocating religious tests. I’m speaking of the Ten Commandments in their most basic and ethical sense.] If we hope to reclaim stability in times of transition, we must all be using the same moral compass as our guide.
Phew. I need to take a breath. Sorry for the screed. But I believe that in order to make substantive changes in our society, we need to address the root causes that are inherent in the system. BTW, I don’t know that we should impose this on one another until we enact it within our own lives. And as noted before, I believe that change starts within each heart. So I am covenanting (to myself and everyone who can read this) to live by a simple metric: WWJD.

I will be pondering this issue for a while as I think I have more to consider – especially as such conversations prompt deep thought over a protracted period of time.  Here’s hoping that the musings and discussions will lead me to a deeper understanding of myself and my place in this society.
-Roo

The Real Cloud Computing Transformation

Lorin Olsen


I recently gave the keynote address at a Kansas City symposium on cloud computing. So when I saw this article, my interest was piqued. The author believes that cloud computing is devouring itself. Um, alright. I guess I can buy the premise. But I think the author may be too absorbed with the technical layers of the infrastructure rather than focusing on the real transformation.
From my vantage point (as a consumer and as a technologist), I see this wave of transformation as being more about business and less about technology. Maybe even more important is the fact that tech-centric companies are moving from a capex-centric budgeting model to an opex-centric budgeting model.
What does this imply? First, it means that businesses are seeing IT as fundamental to their future. But while it is fundamental, it is no longer a strategic differentiator. Indeed, most companies are frustrated after spending thousands of dollars (or millions or billions) on IT capital without any real strategic benefit. The cloud allows a company to abandon capex investments in favor of opex outlays. This means that companies can be nimble – assuming that the cloud vendors are nimble enough to meet their customers’ needs.
But the larger and more fundamental implication of this capex/opex migration is that businesses are moving to an even more short-term focus. With a capex focus, companies were thinking about tax advantages and long-term viability. With an opex focus, they are looking at short-term return to the owners/shareholders. This does ensure that a company is competitive as long as it is agile.
But are we abandoning the future by focusing even more acutely on the short term? I am not certain. It does mean that on a micro-level, individual companies are trusting their future to their partners. On a macro-level, we may not be losing future investment streams to other countries. But we are pushing capital investment into the hands of a smaller number of companies that will be managing public or private clouds on behalf of other companies.
If this is indeed what is happening, then the savvy investor will need to look at hosting providers within the tech sector as these companies will be the real capital aggregation points. I’m looking at HP, Rackspace and Amazon being some of the biggest players in this space. And I would throw Salesforce.com into the mix as a software aggregation point.

I Remember When…

Lorin Olsen


…remote control was either difficult or expensive.
You could choose the Microsoft approach.  You could use the RDP solution from any client.  But if you wanted to actually connect to a desktop, that system needed to be running a “professional” version of the OS.  That meant that you could have remote control from Microsoft if you paid them first.
But if you refused to pay the Microsoft tax, you could always pay Citirix for the right to use their remote control tool.  Yes, it worked well.  And it didn’t require a special version of the operating system.  Instead, you just paid a license to Citrix and you could help whoever you wanted to help.  But licensing was horribly complex.  You had to have a license for a certain number of supported desktops or every desktop had to have a license of its own.  So if you wanted to get help, you had to set stuff up BEFORE you had a problem.
Fortunately, you could always roll your own solution.  You could install a VNC client and server on the systems that you wanted to access remotely.  And if you wanted real security, you could always use an SSH client and server to make sure that your connection was encrypted.  It was so easy to do that… OK, it wasn’t that easy to do.  If you had an uber-geek for a spouse (or any teenage child could substitute), then you could brute force your way through the maze of complexity.
So the choice was simple: build a terribly complex solution or pay for someone else to do it for you.  Now you have another option: Chrome Remote Desktop.
Google is building the Chrome OS.  And they need to have a way to provide for remote desktop administration.   It has to be secure and it has to be simple to use.   So how do you do both?  You build a tool on top of other infrastructure that already exists.

  1. You need a rendering engine that can run anywhere.  So build it on your browser.
  2. You need a transport mechanism that is easily secured and can pass through almost any firewall.   So build it on secure HTTP (https/443).
  3. You need an extensible platform that can encode almost anything into an XML stream.  So use jabber (i.e., xmpp) as the transport and stream platform.
  4. Finally, you need a well known means of connecting users to each other.  So use GTalk as the central nexus for interconnecting people.

In the end, what you have is a secure infrastructure that can easily be implemented via Google accounts and extensions to the Chrome browser.
I’m still a little leery of anything that is so simple and easy to use.  But I think that this one may be a real winner.