Saturday, November 29, 2008

Demand aggregation in utility computing

This is a section of a working paper for the MIT Sloan School of Management.  I am interested in further discussions with anyone who has an interest in the dynamics of pricing utility computing services.

Key to the value proposition offered by utility computing is the ability to share resources across multiple users. If the peak computing requirements of a customer are not correlated, then the total peak demand will smooth out. In G.A. Paleologo’s paper, he illustrates the phenomena with a simple example. Imagine a customer whose demand oscillates between 5 and 10 service units per day, with an average of 7.5. If the customer were to build their own computing system, they would need 10 service units per day to meet the peak demand. The average utilization of the system is 7.5/10, or 75%. If there are 8 customers running the same system with the same demand profile, a utility can aggregate them. The total demand would be smoothed, and the capacity required would be 66, to serve an average demand of 60. The average utilization is 60/66, or 91%, a 16% gain. (Paleologo, 2004)

Businesses with Variability: In modeling businesses that do have variations, there will be gamut of profiles. Obviously, a relatively established business will differ from a new business (for example, venture backed startup). In stochastic modeling, the potential large variation in demand that goes hand-in-hand with some of the dynamics of the Internet must be taken into account.  

Constant Demand Profiles: A substantial portion of the demand for computing services will have constant demand profiles without the peaks and valleys of typical business users. These users include bioinformatics processing and other scientific simulations that will run around the clock. Sellers of utility computing services would do well to segment these customers out and offer them lower prices. First off, since their demand is easily forecast and stable, the value proposition of being able to smooth out demand peaks does not apply to these customers. As such, their willingness to pay should be lower per unit of computing power. They will still benefits shorter time to deployment, disaster recovery and other benefits of utility computing. These customers offer a significant potential advantage for utility computing vendors – they will provide consistent utilization at lower demand times of the day and year. In many cases, they may be able to shift their usage to maximize capacity utilization (for example, some customers may need X units per day performed and are indifferent to whether that is one processing node running all day or a number of them running in parallel during off peak hours.

Pricing for Utility Computing

Pricing for utility computing services will be challenging in a number of ways, particularly as the service matures. In traditional pricing models, demand is forecast, the cost of meeting that demand at an optimal level is gathered, and a certain markup is applied. (Hall and Hitch, 1939; Paleologo, 2004) Demand will initially be difficult to forecast, and it will take times for economies of scale and demand smoothing from having large quantities of customers to be realized.

G.A. Paleologo suggests a pricing-at-risk methodology. This model leverages stochastic modeling of the uncertain parameters involved in forecasting demand, utilization and adoption. Such a model would allow for a best and worst case scenario and run optimization models for the scenarios in between. The result will be a probability curve. Varying the price as the independent variable and using Net Present Value as the dependent gives a picture of how various scenarios would play out. The tricky part of this is that the elasticity of demand is not well understood. Paleologo’s model assumes a monopoly situation – we know that this will not be the case in the utility computing space.

Social Entrepreneurship Update

MoCa Update: 

Leo Anthony Celi, our MD advisor from Harvard Medical School recruited new partners in ASEAN Centers for E-Health and Telemedicine as well as the following universities:

Universiti Sains Malaysia (Malaysia)
Institut dela Francophonie pour Medicine Tropicale (Laos)
University of the Philippines Manila (Philippines)
University of Gadjah Mada (Indonesia)
Ciputra Univerity (Indonesia)
Hanoi Medical University (Vietnam)

We're looking at deploying in the Phillipines in January through March and learning more about how MoCa can meet the needs of patients there.  Things are breaking fast for MoCa - there seems to be a ton of interest in our solution. 

Olive Arbor Update:

Olive Arbor is coming along as well.  We've gotten a number of data sets in and certain companies are starting to fill up with interesting data.  I wish that Claire and I had a little more time to move this forward quickly, but we're getting a few interns to help us over winter break.  That should help a lot in terms of getting the data sets we need to provide a comprehensive views on a core set of companies and social criterion.   There's got to be a re-design before we do a true launch in the spring, but the core components are falling into space.

Wednesday, November 26, 2008

Text-free interfaces for illiterate and semi-literate users

Here's a presentation that I recently gave about a paper written by Indrani Medhi, Aman Sagar and Kentaro Toyama about how to build text-free interfaces for illiterate and semi-literate users. This paper is valuable for folks like myself who are thinking about how to build systems and processes in the developing world where literacy rates are poor.

"Text-Free User Interfaces for Illiterate and Semi-Illiterate Users" from Nicole Prowell on Vimeo.

Here's the Powerpoint for anyone interested.  
Text Free Interfaces for Semi-Literate Users
Get your own at Scribd or explore others: Technology

Apparently, someone cared enough about this presentation to Twitter about it, which throughly amuses me:

the only reliable solution is to test your interface with the actual end user.
matrices and spreadsheets are hard to understand by other cultures. 
Programming is inherently text based. However, digital tools, or applications, are not. 
Are computers pushing humanity towards a post-textual civilization? Perhaps in terms of users. Developers still have to WRITE code. 
Ted claims that literacy rates in Africa are less than 60%. It makes sense.
entiendes espaƱol? 
do you write from right to left or from left to right? 
text free user interfaces for illiterate users. 
Ted's point is that visual metaphors are context dependent in terms of cultural background. Usability then is not an universal practice. 
"Thumbs up" is an obscenity in Iran. 
Ted Chan is asking us about what the "thumbs up" mean. 
santiago has a crush on umberto eco 
how much do we take for granted? how much of our culture do we consider universal? 
bathrooms are represented by icons of people in a lot of places. 

Tuesday, November 25, 2008

Why Global Health in Africa: Warren Buffett and the Ovarian Lottery

This is an excerpt from something I wrote about why I'm working on Global Health Delivery projects. As mentioned, one project is Moca, an open-source mobile diagnosis and imaging solution for the developing world. Another, through MIT's Global Entrepreneurship Lab is with the Mass Development Association of Dar-es-Salaam, in Tanzania.

When I met the great Warren Buffett last year, he said something that really stuck in my mind. He told us to imagine it is the day before you are born, and there is going to be an ovarian lottery to determine what person you will be. You could be born rich or poor, mentally retarded or brilliant, healthy or diseased, in America or Africa. Mr. Buffett’s question to us was as follows: not knowing which lottery number you would draw, what type of society would you design? Answer the question, and this should define your views and priorities on what type of world we should live in and work to create.

In this way, Mr. Buffett justifies both capitalist society and a progressive and humane one. He believed that capitalism meant “lots of stuff” would be created, making a bigger pie for everyone. It also means that though of us who were lucky enough to draw a good number have a moral imperative to do what they can to help those who are less fortunate. Since I believe in both the capitalist aspect, and the part about creating a more progressive and just world, it is important to me to be a part of projects like the Mass Development Association one in Dar-es-Salaam, Tanzania we will be working on, and the mobile imaging project I work on outside of class. This is not just about helping on a once off basis– it is about working to create a sustainable model as a part of long-term change to create a more just society globally.

Every person in Africa deserves a chance. This means living to a reasonable age, a chance at education and social mobility. The first and greatest stumbling block to providing this opportunity is health care. If you are not healthy, or you are infected with AIDS or malaria or tuberculosis, the roadblocks to becoming successful and having a chance at upward social mobility is extremely limited. Similarly, if your loved ones are burdened by these diseases, these are further challenges to overcome or may require a family member to focus economic work time and financial resources on care or feeding the family rather than education or a career or entrepreneurship.

Friday, November 21, 2008

Prop 8 and the minority vote

This sums it up pretty well.  There were a number of reasons Proposition 8 passed, not the least of which was massive financial support from conservatives and Mormons flowing in at the last minute.  But we cannot forget that 70% of blacks who supported Obama voted for Prop 8.

For GLBT rights supporters like myself, this is going to be an issue for years to come as engagement from blacks, hispanics and other minority groups.  For reasons that are cultural, community-based, rooted in education and others are homophobic.   

This story isn't done - there will likely be a counter action against Prop 8, either a vote to reverse the law, or some other constitutional attack.  But fundamentally, there is a group of people who are now involved in the vote to decide the future of this issue who weren't before.  Involved yes, invested, I believe no.  In their communities, these issues are suppressed - so even if they know someone who is GLBT, it is likely many of these voters are not acknowledging it.  

It's important that GLBT rights supporters start building grassroots efforts to start reaching this bloc of voters now.  From a behavioral psychology standpoint, each time you ask someone to vote on something, it reinforces their view.  In this case, I do not believe it was a well understood decision by many.  In the future, it must be.  

Wednesday, November 19, 2008

Announcing MOCA: Mobile imaging and diagnosis solution for the developing world

Some of you have been wondering what I've been up to.  One of the projects I've been working on is to scale global health delivery using mobile phones.

MOCA's mission is to provide flexible and scalable IT architecture to empower social entrepreneurs and NGOs to scale rural health diagnosis using mobile information and communication technologies.  For more, check out


One of the largest problems facing the developing world is a lack of trained physicians. While there is not a shortage of untrained or semi-trained workforce, many health workers in many developing nations are not able to dispense adequate care due to a lack of expertise.

Issues in delivering affordable and effective health care in developing countries include: lack of skilled or semi-skilled health care workers for accurate screening and referral; lack of a permanent and portable record of a patient's medical history; lack of medical diagnostic devices; poor supply chains for replacing medical equipment; poor treatment compliance; slow rates of information flow; and lack of quality auditing to identify bottlenecks and quantify health care improvements.

NGOs and social entrepreneurs are starting to build their own models to solve different types of medical challenges all over the developing world using the power of mobile solutions. Our system provides an instant infrastructure to capture media and patient information using whatever method is appropriate to the locale, and send it to a centralized server with sophisticated workflow management and diagnosis software. The system is turnkey, allowing for easy integration with existing systems. In addition, it is completely customizable for any organization.


MoCa, is a remote medical diagnostics platform for health workers in developing nations. It is an end-to-end system that seamlessly connects health workers to medical professionals.


Between 80 and 90 percent of the world's population live within range of a cell phone tower. A centralized health record, accessible and updatable via mobile phones and web-browsers therefore permits a secure and continuous record of health care for the poorest section of society worldwide.

The use of a mobile phone to add images, audio recordings and video, to a patient's medical record leverages an existing infrastructure to deliver medical technology and decision support to regions of the earth that lack a supply chain and infrastructure for training, hardware support and treatment compliance.

The mobile phone, as a medical instrument, offers a suite of sensors, almost ubiquitous remote connections to databases and a network of experts, and significant computational power for automated or semi-automated diagnostic classification of diseases, training and treatment recommendations.


Moca recognizes that using mobile technologies for telehealth in developing nations requires dealing with many standards, different networks and local challenges ranging from intermittent connectivity and cultural differences. Our system provides an instant end-to-end infrastructure for media-centric remote diagnosis by experts that can be located anywhere in the world. Packetization, a synchronization model, and multi-modal data transport allow MoCa to operate even in poor cellular coverage areas. While the system is mobile-centric, it is designed to provide alternatives such as WiFi and tethered uploads for bandwidth-constrained situations.

Moca also realizes that few instantiations of remote medical diagnostics are the same. Unlike hodge-podge solutions, Moca is highly customizable, allowing organizations to create their own workflows. These workflows can be dynamically loaded onto phones running Moca, and they can be shared between other organizations.

We understand that user interface is extremely important, that's why the Moca interface has been laboriously engineered for ease-of-use and clarity. By leveraging Google Android's API, Moca offers a highly usable and inviting interface.

Another reason to use Moca is because of its commitment to Open Source. The Moca platform is released under the GNU GPL, allowing people to extend, improve, and tweak the system as they choose. We feel that the best way to innovate is through open innovation, allowing organizations, universities, and companies to contribute to Moca.

Friday, November 14, 2008

Obama didn't get into Swarthmore

From Swarthmore's Daily Gazette:

While last Tuesday night’s election results have certainly set a tone of giddiness on campus over the past few days, Obama’s resounding victory has also sparked the resurgence of one dark but very well-circulated rumor: our president-elect was once denied admission to Swarthmore.

The admissions office may have to keep mum, but senior Joel Mittleman ’09 actually had the chance to personally confirm the rumor when Obama held an open town hall at Strath Haven High School during the Pennsylvania primaries. “I did ask Obama [whether it was true],” he says, “not during the actual question and answer, but as he was walking the line shaking hands afterwards.” Mittleman recalls the Senator laughing in response, asking him where he heard the information, and then saying “Yes, it’s true. It really broke my heart, actually.”

Alum Anne Kolker ’08, a former intern in the Senate office and Mittleman’s original source of the rumor, further confirmed the story: “Yes, the first thing President-elect Obama said to me was “Ah, Swarthmore, great school. They rejected me.” Thankfully, Kolker reports Obama held no grudge against her. Here’s hoping admissions doesn’t write off any other presidential hopefuls.

Oh well, sounds like he had a better time at Occidental and Columbia from some of the things he said during his campaign!

Wednesday, November 12, 2008

Stephen Kaufer, CEO of TripAdvisor on his company, Facebook apps and advice for startups

Stephen Kaufer, the President and CEO of TripAdvisor,  stopped by for a talk sponsored by the Sloan Venture Capital and Private Equity Club.   Key topics included the history of TripAdvisor, generating successful Facebook applications and Kaufer’s advice for an Internet company.  

Kaufer started off by talking about the history of TripAdvisor and how they arrived at their business model.  Interestingly enough, TripAdvisor was originally founded to create a database of reference information for travel.   They were going to license content and travel focused search to big portals (as that was the model when the company was founded in 2000).  Basically, they were going to power the travel channel for the Lycos, Yahoo and AOLs of the world.  

TripAdvisor’s first licensing deal was with Lycos – a revenue share.  And their first royalty check was for a whopping $500.  Kaufer and his management team realized that they had to change their business model (obviously a lesson for entrepreneurs).   The new model was to match content with commerce with CPC, CPA and CPM advertising.  Because of the relevance of their content, they were able to generate click through rates as high as 15% versus .2% for typical banner advertising.  

Kaufer on Generating Successful Facebook Apps

TripAdvisor has been using Facebook heavily to acquire content – in 4 months on Facebook, they collected more content on restaurants in terms of number of reviews than they did in four previous years.  They have also been using games on Facebook (like TravelPod) to build the brand.  One externality was that by allowing people to widgetize the game and put it on their website, they generated tremendous search engine optimization.  “Cities I’ve Visited” is another popular interactive application they have to promote the brand.   They also use these applications to generate contacts for their mailing lists.

Kaufer’s Advice for an Internet Company
  • Speed wins
  • Pay more for the best people at all levels
  • Strive to do more with fewer people
  • Don’t delegate hiring responsibilities
  • Don’t hire against deadlines
  • Don’t take away open requisitions
  • Software testing – responsibility is with the development team, not QA (TC comment: Amen!).
  • Focus on initiatives that can move the needle
  • Risk taking is good, just make sure the upside is worth the effort
  • Measure everything you can
  • Don’t be afraid to re-invent yourself.

Stephen Kaufer Bio

Prior to co-founding TripAdvisor, Kaufer was President of CDS, Inc., a successful independent software vendor specializing in programming and testing tools. Previously, Kaufer was Co-Founder and Vice President of Engineering of CenterLine Software, where he led the development of several award-winning programming environments that fueled the company's growth to more than $20 million in revenue. Kaufer, winner of a 2005 Ernst & Young Entrepreneur of the Year Award, holds several software patents and has spoken at dozens of travel and high-tech conferences worldwide. He is a board member of the Caring For Carcinoid Foundation, a non-profit charity dedicated to finding a cure for Carcinoid and Neuroendocrine cancers. Kaufer has a BS in Computer Science from Harvard University.

Sell the big US automakers to their real owners: the unions

An excellent post from the Lefsatz Letter that normally analyzes digital music comparing big US automakers to the major music labels.  Jake de la Grazia who also writes an excellent blog shared it with me.

I have my own take on what to do with US automakers as the industry seems to be in a death spiral.  I believe that with its pension obligations, the company basically exists for its employees and retirees.  As such, a majority share of these companies be sold to the unions to directly align incentives.  I'm not sure a direct sale is legal, but I am sure some structure can be worked out.

Now, I haven't fully thought through how this structure would work, but it makes a lot of sense if you think about it:
  • It puts the company in the hands of those most incented to see it succeed.  
  • It eliminates the energy wasted and the production declines that come as a result of labor strife.
  • In the long run, it makes the automakers more competitive than they are as presently structured due to increased labor productivity generated by employee ownership.  
  • It provides an exit strategy for investors as the pension funds can afford to buy the companies and inject capital.  
  • Lastly, I don't have to pay tax dollars to bail out US automakers, who at the end of the day, don't really add any value anymore to the global automaker equation.  They also are not likely to become tax payers any time soon.  Check out this image that Greg Mankiw posted the other day.

Tuesday, November 11, 2008

On modifying mortgages

From an esteemed colleague in the asset management business:

Moody's forecasts that even with loan modification programs, 1.6 million Americans will lose their homes this year either in a foreclosure or a distressed sale, and another 1.9 million are projected to lose their homes in 2009.

How to stem it?  I liked this idea of a shared appreciation mortgage from Andrew Caplan.  Read that article and then read this discussion between Caplan and Greg Mankiw.  I'm going to see Mankiw speak on Thursday at MIT hopefully so I look forward to hearing some more ideas on it.  
That doesn't appear to be the direction the industry is headed in though.  The new plan with Freddie and Fannie modifying mortgages so far only helps people that are really, really underwater.  These are things that mortgage owners should have been doing in the first place anyhow. It makes complete sense, lest they be left holding a bevy of foreclosed houses.  Oh wait, that has already happened.

The rot is beginning to spread bigtime to commercial real estate.  Locally, General Growth Properties, the REIT that owns Quincy Market is in danger of bankruptcy.  

Monday, November 10, 2008

A few anecdotes from business school

Tough Interview Question

One of the best interview questions I've gotten: "What product do you think is mispriced?" Definitely a tough question to answer on the spot. My response was digital music, which I kind of lucked into because the previous night I'd been at a case workshop and we'd been talking about Nokia's Comes With Music bundle. Thought I had a pretty good argument. Things I mentioned were the $.99 price the industry can't away from, the lack of bundling, the lack of flexibility in a la carte models, etc.

McKinsey and the Marines

Heard last week at Sloan:

Visiting Speaker: "Ah, based on what you just said, you must be ex-McKinsey."
MBA: "It's like the Marines. You're never really ex-McKinsey."

Job hunt update

Still a pretty ugly situation on the job front. A lot of first-round interviews, a lot fewer second rounds and even fewer offers. I'd say about 25% of companies that normally come to campus cancelled.

Solving problems in global health delivery

On to the subject of things I'm more excited about - I'll be in Tanzania working with the Mass Development Model to develop a scalable model for the treatment of HIV in the outskirts of Dar-es-Salaam. It's also looking like my trip may include a skip and a jump over to Lusaka to test out the mobile imaging diagnostics solution I've been working on. More on this later. We've decided to establish this as an open source software foundation and we'll be angling for a few grants to make it sustainable for the next year or two.

Asian-American: Demographics and the Glass Ceiling

Friday, November 7, 2008

MIT Sloan offers a replacement loan program for CitiAssist

For all the prospective international MBAs who were reading this blog and flipping out over the cancellation of the CitiAssist loan programs, I'm happy to report that MIT Sloan has worked out a solution. I don't have any specifics yet on rates or who will be administering the loans. Here's the letter from Dean David Schmittlein:

Dear Students,

Last month I wrote notifying you that the CitiAssist custom student loan program with MIT Sloan, like those with other schools, was being cancelled.

I am now pleased to announce that arrangements are in place for a loan program for international students who will be enrolled in MIT Sloan’s professional masters programs next year. This new international loan program will complement Federal loan programs available to domestic students. As in previous years, loans will be available to students, up to the cost of attendance in MIT Sloan’s professional masters programs.

We are extremely grateful to our MIT colleagues who have partnered with us to address this important need within our community. MIT Sloan is committed to both the economic and geographic diversity of our student population. The funding opportunities provided by this loan program will continue to allow us to meet that commitment next year. Loan program details will be forthcoming.


Dave Schmittlein

Thursday, November 6, 2008

Who were the losers this election period?

Ah, the joys of things being taken completely out of context.

Wednesday, November 5, 2008

Sushi treated with carbon monoxide to keep it fresh - would you buy it?

The food you eat in restaurants isn't normally labeled, and I don't normally buy too much packaged sushi. When I did today over at the Stata Center, I was surprised to see that they had added carbon monoxide to the sushi. This New York Times article summarized some of the issues with treating sushi with carbon monoxide.

"The Food and Drug Administration says the process is harmless. But Japan, Canada and the countries of the European Union have banned the practice because of fears that it could be used to mask spoiled fish.

Carbon monoxide preserves only the color of the fish, not its quality. Suppliers and retailers who use the treated fish say the process allows them to sell high-quality, flash-frozen fish that still looks good enough to eat. Jerry Bocchino, an owner of Pescatore, a fish store in Grand Central Market in New York, said that his sales of tuna have tripled since he switched to the treated kind two months ago."

I find this to be quite grim actually. Perhaps I am jaded by the fact that the sushi was quite bad.

So how hard is it tell whether the sushi is fresh? According to the NYT article:

"Tuna treated with carbon monoxide is bright red when first defrosted, and fades within a couple of days to a watermelon pink. But "you could put it in the trunk of your car for a year, and it wouldn't turn brown," said one sales representative at Anova Foods, a distributor in Atlanta, who spoke on condition of anonymity."

When I buy fish, I interact it with it deeply in the manner that my father, a chef, always has. Smelling, checking the texture, looking for sheen or oils are all ways to get more info. Since I can't open up the package to do any of that, I'm just not going to buy any more packaged sushi.

Long-run, I'd like to see a better solution such as born-on dating.

Tuesday, November 4, 2008

Google's top searches on election day

This post from the Google Blog about top searches on election day is super interesting. Not sure how Chuck Norris counts among the top political figures. Or really why anyone is Googling for him in any particular volume today.

It took me about an hour and a half to vote at the Nazzarro Center in the North End of Boston today. Not bad - there was an upbeat attitude about the whole deal. People were sharing newspapers and joking around about some of the ballot questions (in Mass this year it's greyhound racing, completely eliminating state income tax and decriminalizing marijuana).

It wasn't the most well planned out deal. A lot of the voting booths were empty. The bottleneck was that there was only one checklist of registered voters, so one woman had to check everyone in. She was nice enough about it, but not very fast. This is the system for every election I've voted in since I moved to the North End five years ago.

Here's a picture of the line at about 7:15 AM. Surprised that many people came out so early. As you can see, it's out past the Golden Goose.

Amazingly, I was Googling something totally unrelated and the 3rd most relevant link was this blog post about a couple who is going to every town in Massachusetts. Well, that's not really that amazing I guess, but what's amazing is that the town the specific post was talking about was my hometown of Weston, population 15,000 or so. The things people do with time on their hands (says the guy who is writing a blog post about that blog post).