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Olson’s Observations

Technology. Innovation. Science. VC. Media. :: by Eric Olson

Archive for May, 2006

The Military’s Effect on Technology

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This memorial day I found my thoughts drifting to war and how it has shaped the world in which we live. America, the land of opportunity, was born out of a war. Americans then went forward and fought wars to end tyranny across the globe and to liberate other people from oppression. My grandfather was one of those Americans. He served in the Air Force during WWII and I am forever grateful for his sacrifice. It, along with the sacrifices of others, has allowed us to live our lives as free people and pursue what we love. War also yields advances in technology. These advances in technology have affected our daily lives in ways we may not even know. Let’s explore some of the ways military technology affects our daily lives and what military technology may shape our future.

Most of us don’t think about jet engines much today. However, they power a lot of what we do. They make the world smaller and that has certainly helped move the global economy further along. It is not uncommon now for businesses to start working internationally right from the get go and jet aircraft certainly make the essential face to face meetings possible. Jet engines took off, so to speak, in the 11th century. The technology was pioneered by the Chinese who initially used rockets to propel fireworks but quickly moved to using the technology to propel weapons. Moving forward in time to WWII, the Germans and Japanese began using jet engines on airplanes to overcome propeller efficiency issues – propeller efficiency began to level off as the blades moved closer to the speed of sound – and the planes they developed, while crude, were seen as the future of aviation. After the war, engineers began to devote more time to the jet engine concept and, while producing some fantastic aircraft for the military, began to produce more and more civilian jet aircraft which have definitely changed our lives (this was a brief history of jet engine development – please see wikipedia for more detailed information).

Another piece of military technology that has significantly altered the way we live is, you guessed it, the internet. The internet started out as a project put together by the newly formed Defense Advanced Research Products Agency, or DARPA. DARPA was formed as a way for the Unites States to regain the technical lead over the USSR who had recently launched Sputnik. The fruits of DARPA’s hard work, ARPANET, launched on October 29, 1969 and we have never looked back since. In the early 1990s the growing (mostly academic) network gained a public face called the World Wide Web which was ushered along through Tim Berners-Lee’s developments of HTML and HTTP. Shortly after the emergence of the World Wide Web researchers at University of Illinois at Urbana-Champaign created the first mosaic web browser, what would eventually be called Netscape, which gave the public an easy way to navigate the WWW and ushered in the information age.

Those are just two of the many technologies spawned by the military the ended up affecting our daily lives in significant ways. The military is still developing new technologies to help our troops and defend our freedom. Some of these technologies are also likely to change the way in which our daily lives unfold. The two technologies that I will explore are mesh networks and nanotechnology enabled photovoltaic cells.

Mesh networking is a fascinating concept. Essentially, mesh networks will allow you to group sensors together in an efficient way to gather data about the physical world in ways never thought possible. Mesh networks also have the ability to configure themselves and heal broken connections. The main company in this space right now is Dust Networks, a venture backed company that counts the governments VC fund, In-Q-Tel, as one of its investors.

The military is behind the idea of mesh networks because it will allow for easy to set-up distributed systems that can reliably inform soldiers of perimeter breaches by the enemy and give them essential battlefield data on widespread areas without putting soldiers in harms way. The data they can retrieve will allow the soldiers to make crucial decisions that will save lives. Mesh networking also has many uses in our everyday lives.

The main application today allows mesh networks to be set up at various points in an assembly line and in complex machinery. The network is then able to inform workers quickly and efficiently of anything that is going wrong or not performing. Mesh networks can also be helpful in building automation. Temperature controls, lighting controls, environmental modeling, and security systems can all be controlled more efficiently through mesh networks. The mesh networks that Dust Networks is creating will allow both soldiers and civilians more control over their environments which will lead to lives saved and energy costs reduced.

Energy reduction through mesh networks is important as our energy consumption is far too high. Scientists are constantly looking for ways to reduce energy cosumption and to create “green” ways to generate energy. One green energy generator is the sun. We can harness the energy of the sun through photovoltaic cells, more commonly referred to as solar panels. Solar panels have been around for a long time but they are hard to implement. You need a very large area of cells to generate a meaningful amount of energy and the solar cells are not easy to transport. Enter Konarka.

Konarka is a Lowell, Massachusetts based company that is using nanotechnology to create what they call “power plastics.” Essentially they have figured out how to make efficient solar cells that are also flexible and easy to transport. Their cells can also be colored or patterned to suit customer needs and the colors and patterns do not affect the efficiency or flexibility of the cells.

Konarka’s solar technology is of great interest to the military who has already started working with Konarka to develop portable solar cells for their soldiers as well as portable camouflage electricity producing buildings ($1.6mm contract). The solar cells will help soldiers power battlefield laptops and communications systems while the portable solar barracks will allow the military to have more range as they will no longer need to be near a power source. These portable solar cells will also help civilians manage their essential electronic devices. Forgot to charge your cell phone, blackberry, iPod, and laptop? Not to worry! You can just pull out your ultra thin Konarka solar panel, unfold it, plug it in to your device and, assuming you are in the sun, it will begin charging up. I know I would love to get one of these cells as I tend to forget to charge my cell phone at times. Konarka’s overall goal is to eventually be able to take anything that exists today and allow it to create energy. Who knows, someday the walls of your house may be generating your energy.

Well, I hope you have enjoyed this (very brief) look into military technology and how it has and will change our lives going forward. It has been fun to look back on and into the future of technology as well as to reflect on the great sacrifice our soldiers make everyday to keep us free and able to create fun technology and new companies. If you know a soldier or see one on the street go ahead and thank them for everything they do and, while you’re at it, why not ask them about any cool technologies they have been using. You never know, it may end up in your hands in the not to distant future.

Written by Eric Olson

May 29th, 2006 at 11:27 pm

Posted in Science, Technology

Technology and Baseball

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I saw an article a couple weeks back that really made me happy. It turns out that my beloved Boston Red Sox are the techiest (is that even a word) baseball team in all of Major League Baseball. Turns out the Red Sox rely on two servers, one that is mobile for road trips and one that stays in the office. The road server holds digital video of every at bat for 2005 and select at bats from 1999 - 2004. Since teams aren’t allowed to bring technology into the dugout, the players just head into the clubhouse to view the video when they need to.

The Red Sox even credited their road server with some of the 2004 playoff success saying it was a crucial tool that brought about the greatest comeback in sports history and the eventual 2004 World Series title. This is what Red Sox IT Director Steve Conley had to say about it:

“In the sixth inning of that game, Dave Roberts pulled up every at-bat he could find of [Yankees reliever] Mariano Rivera pitching with a runner on first base,” Conley says. “He played that on a loop. He was trying to gain an edge. Then he went in as a pinch runner in the ninth inning, stole second base and scored, and we turned things around. Having that video was another tool in the shed.”

The Red Sox have an IT budget of around $1.5mm which is about the cost of an average utility infielder. While it is hard to determine the ROI on their technology spending since it does not have any direct financial implications, the ownership and players really believe that it works. I have to say I agree with them.

Baseball is a very unique sport. Statistics can be used very effectively (see Moneyball and Bill James) to gain an edge and there is time to review prior at bats in the club house and study the other team via (digital) video. This is true because there are so many measureable/recordable instances that happen in a game. Teams (and players) that are embracing and studying this special aspect of the game are doing incrementally better than they would just by spending the money they have. In essence, they are creating higher alpha through technology and mathematics. It’s a beautiful thing!

Disclaimer: I am a huge baseball nut and a proud member of Red Sox Nation so this article is admittedly a bit biased. Go Sox!

Written by Eric Olson

May 18th, 2006 at 10:22 pm

Wal-Mart - The High Cost of Low Prices

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I finally had a chance to sit down and watch Robert Greenwald’s documentary “Wal-Mart: The High Cost of Low Price” last night. I went into the film with an open mind and expected the film to be good but probably not fair and balanced since Greenwald obviously had a point he wanted to get across (otherwise, why would he make the film?). However, at the end of the film I just sat in silence for a little while. Both my girlfriend and I were stunned by the claims the film made. The major things that hit me were:

  • Wal-Mart driving down the retail wage
  • Wal-Mart encouraging employees to use government programs rather than give employees better treatment
  • Wal-Marts practice of having people work off the clock so they don’t have to pay overtime
  • International factory worker treatment

When the whole issue with Wal-Mart first arose I was upset that the local mom & pops were going out of business due to lost sales. However, I thought that was just capitalism, survival of the fittest, and to meddle with it wasn’t the right answer. I was also under the impression that Wal-Mart took care of their employees really well so what was the big deal anyway. They can just go work at Wal-Mart. It’s not so bad. Well, the documentary claims this may not be the case.

In fact, one example in the documentary shows an independent grocery store owner who had to close his store because a Wal-Mart opened near by. The store owner talks about how he paid his employees well, took care of 100% of their healthcare insurance costs, and provided them with a 401(k) plan. Wal-Mart, on the other hand, has supposedly driven down the retail wage to a point where workers will make less at Wal-Mart then they would at their previous jobs (and the average employee lives below the poverty line even when working full-time - oh, and full-time may mean a lot less than 40 hours for most employees).

Wal-Mart also asks its employees to work off the clock so they don’t have to pay overtime which further drives down the wage people should be earning. I have seen this first hand - a couple friends from high school worked at Wal-mart for a while and their managers asked them to do this quite frequently. Management would also move any clocked overtime to the following week so it would only be paid as regular time. At the time I didn’t know any better. I just thought management was picking on the high school kids and that it was probably an isolated incident.

One thing I found very intriguing was the claim that Wal-Mart encourages its employees to seek out government assistance in the form of welfare, medicaid, etc. rather than just providing better plans for their employees. If this is true, in the end, we pay for the lower prices at Wal-Mart through our tax dollars and, even more interesting, if you don’t already shop at Wal-Mart you are still subsidizing the cost of their products!

Something that hit close to home (microfinancially speaking) was the treatment of workers in Wal-Mart factories outside the US. I am sure the documentary was a bit dramatized but it claimed that most of the workers in Wal-Mart’s overseas factories make less that $1 per day. That is the same number that microfinance is trying to help people rise above. I used to think of microfinance clients as people who did not work for a large wealthy corporation and were “on their own” so-to-speak. A pretty naive view, I suppose.

In conclusion, I want to mention that I have not done any in-depth research into these claims. I know that statistics can be manipulated to tell whatever story one needs to which is why I am cautious about claiming the movie is all truth. I encourage all of you to check out the facts for yourself, do some research, and make up your own mind. In fact, I would love to hear some feedback on this in the comments. It is an interesting issue and, if this is all true, I will be very upset that something like this is happening in America. This is not what capitalism was intended to foster.

Written by Eric Olson

May 18th, 2006 at 2:21 pm

Posted in General Thoughts

Microfinance at a Crossroads

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As most of you know, I was lucky enough to be able to attend the microfinance conference at the University of Chicago recently. The topic of the conference was “Microfinance at a Crossroads.” There were many distinguished speakers at the conference who spoke a lot about where microfinance is going and where it should be going. Three common themes emerged.

  • Adding more products that extend beyond microcredit.
  • Making microfinance more efficient/treating it like a business.
  • Making more of an effort to reach the poorest of the poor and to rural areas.

I have already talked about treating microfinance like a business in another post so I won’t bring that up again. Also, I don’t think much more needs to be said about making an effort to truly reach the poorest of the poor including those in rural areas. That’s the goal and we are all aware of it. On a side note, I think it will be easier to reach to poorest of the poor, even those in rural areas, as microfinance becomes more efficient. That said, in this post I would like to focus on the addition of more products into the microfinance mix.

Most microfinance institutions out there today are providing microcredit, or small loans, to the people they serve. Microcredit has proven throughout the last 30+ years to be a great asset in the fight against poverty. However, the word finance implies a network of many different financial services that work together. Therefore, microfinance should also have other products in its arsenal. These other products will build on the success of microcredit by creating a fully integrated microfinancial infrastructure.

You may be wondering why we need other products if microcredit is doing such a great job. Answering that question is as simple as thinking about your daily financial life. What if you could take out a loan but had no savings/checking account, no insurance, no retirement fund… See what I mean? Finance is so much more than credit.

Creating microsavings, microinsurance and microretirement will aid in the transition from just living above the poverty line (thanks to microcredit) to living comfortably above the poverty line with a chance to eventually retire. It will also help with disaster relief. We sometimes forget that most of the places where microcredit has been successful are the same places that are disaster prone. It can take a borrower years to rebuild the small business they lost in a disaster. If they had insurance or savings the disaster would cause less of a blow since they would be able to get back on their feet faster.

There are already some microfinance institutions working on these products. In fact, I believe Accion is experimenting with some savings products and I know Opportunity International is providing microinsurance. The Grameen Bank has also been doing some innovative things like their cell phone service, housing loans and educational scholarships. It is great to see microfinance institutions moving forward and becoming complete financial networks.

Efficiency will be key to making this work and good, inexpensive technology (like Grameen USA’s open source MFI software) will certainly drive efficiency through better back end management of all the new product offerings. It’s time to put our financial and technical skills to work to help finally eradicate poverty. It can happen in our lifetime.

Written by Eric Olson

May 11th, 2006 at 3:46 pm

Posted in Microfinance

Dean, Dean, Baby - Video from Columbia B-School

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Check out this video from Dean Glen Hubbard of Columbia B-School. Set to Ice, Ice, Baby it was destined to be a hit but the lyrics will make it a legend!

“… and the powerpoint pumping”

“… got a spreadsheet with a built in solver”

“… if excel was a drug, I’d sell it by the gram”

There are even references to Bejamin Graham’s “Intelligent Investor” and calculating yields of 10-year t-bills. My entire undergrad experience boiled down into a hillarious song! Warning: only finance geeks like myself will probably find this funny. Enjoy!

Written by Eric Olson

May 4th, 2006 at 4:31 pm

Posted in General Thoughts