Forget About Anchored Putters…This Is What the USGA Should Really Be Doing

Last week, the governing bodies of golf announced a ban on anchored putters.  Historically, when golfers putt (i.e. roll the ball along the green to try to get it into the hole), they swing the putter back and forth freely.  In recent years, a growing number of golfers have used a different technique, wedging the butt end of the putter into their stomach, or resting it against their chin.  For a variety of reasons, the head honchos of golf are against anchoring the putter.  I don’t have a strong opinion pro or con on this decision.  My hunch is that a careful data analysis would show that anchoring the putter doesn’t do much to help or hurt most golfers.  (For instance, I am about equally bad either way.)  Golfers who don’t play in tournaments can continue to use anchored putters if they like.  Tournament golfers will adjust.

In my view, the attention given to anchored putting is a distraction from the real issue that bedevils golf: pros hit the ball too far and everyday golfers hit the ball too short.  Pros hitting the ball too far is a problem because there is a huge stock of old golf courses, the value of which are greatly depreciated by the increases in distance.  Classic old courses aren’t hard enough to challenge the pros.  In response, large investments are made to stretch the distance of these courses to keep up.  And changes in the tournament courses alter the perceptions of golfers.  The course I grew up playing was hard enough when I was a kid, but now is perceived as too easy because it doesn’t compare to the championship courses. 

The Hidden Upside of Crowdfunding?

Reader Noah Dentzel claims that crowdfunding has overlooked virtues, and that it is giving rise to products that may never have happened via the traditional business model:

Most companies either a) raise money through traditional financing avenues or b) build a business slowly and invest first and then bring a new product to market. Crowdfunding allowed us to do everything backwards: by pre-selling a product before the tooling for it even exists, we get a good feeling for market demand and we then gain a clear picture of whether or not to move forward.

Meanwhile, because companies like us are financed through consumers (pre-selling), it's essentially consumer driven business growth and innovation. We don't have to wait around for angels or VCs, we can allow anyone from around the world (and a good third of our orders are from overseas) to invest in new ideas, new businesses and whatever will be crowdfunded next. What's also pretty cool is that we're making this product right here in California which isn't too typical for a consumer electronic device these days. People ask why we're not doing it in China and I just tell them that both in terms of quality and cost, we couldn't afford it if we wanted to--these are some of the twists and turns that you see in the Crowdfunding consumer product long tail of manufacturing.

Check out Noah's project here. Crowdfunding can, of course, also give rise to products like this.

Massimo Young Reports from Kenya: The Surprising Secret to Banking Success

My good friend Massimo Young recently moved to Kenya, where he is seeing what happens when you mix a little American ingenuity into a thriving but chaotic developing economy.  In what I hope is the first of many blog posts, Massimo reports on just what it takes to succeed in the banking industry in Kenya.  (Massimo does not have a financial interest in any of the companies discussed in his post, although he wishes he did!)

M-PESA: The Story of the Most Successful Bank in Kenya
By Massimo Young 

It’s not easy to do business in Kenya. Business people complain all the time that despite a wealth of opportunities, there are often major roadblocks to accomplishing much on the ground, especially at scale. In fact, Kenya ranks 121st out of 185 countries in the World Bank’s “Ease of Doing Business” survey.

On the other hand, there are some amazing examples in recent years of businesses that have managed to accomplish a lot very quickly. In particular, the wild success of mobile banking in Kenya has changed the way people use money here. Launched just 5 years ago, Kenya’s leading mobile money transfer service, M-PESA, now processes a total of about $5 billion in transactions per year, equivalent to an astounding 15% of the country’s GDP. Before it launched, only 14% of Kenyans participated in the formal banking sector. Today, about half the adult population uses M-PESA.

What Will the Smartphone Kill?

Today's smartphone, it is often said, has more computing power than an Apollo rocket.

So it should not be surprising that is it disrupting daily life left and right. Every day or two I seem to notice another common item whose usage is plummeting, perhaps bound for oblivion.

I will likely never buy an alarm clock again since my phone can handle the job better. Are clocks and wristwatches on the way out? Has anyone bought a road atlas lately -- or even a dedicated GPS system for your car?

The Economics Revolution Will Be Televised

There’s a revolution underway in economics. It’s not due to the financial crisis, but rather something more mundane: Data, and computing power. At least that’s the claim that Betsey Stevenson and I make in our latest Bloomberg View column:

“Consider the stream of data you will create today. Your metro card will record what time you caught the train. Your Web browser will note how you go about your job, and how much you procrastinate. A mid-afternoon purchase at Starbucks will reveal your penchant for lattes and the occasional cookie. Your flow of e-mail traffic will trace out your professional and personal networks.

At the same time, computing power has made it extremely easy and cheap to analyze all the data you produce. An economist with a laptop can, in a matter of seconds, do the kind of number crunching it used to take a roomful of Ph.D.’s weeks to achieve. Just a few decades ago, economists used punch cards to program data analysis for their empirical studies.”

Two weeks ago, Harvard’s Raj Chetty gave a spectacular talk at the National Bureau of Economic Research, about what he called “The Transformative Potential of Administrative Data.” He documented that today’s cutting-edge research is based on crunching newly-available data from the vast databases which underlay our schools, welfare state and tax systems.  I’m just as optimistic that new data coming online from the private sector will prove to be just as useful.

Help Wanted: Techno Superstars Looking to Work on Some Freakonomics-Inspired Start-ups in Chicago

I’ve got a lot of smart friends, and they come up with some pretty good ideas.  (I even have an idea myself once in a while!)

Occasionally, these ideas take the form of potential internet businesses.  Although we have incubated some interesting businesses up until now, there is too much talking and not enough doing.

It is time for that to change, and we want to open up  a little Chicago office to pursue these ideas.

We need some superhuman talent to make it a success. 

If you think you have what we are looking for, send a resume to, and let’s get the fun started!

Ending the Math Wars in a Treaty of QAMA

As a country, we are often at war. If it's not against Germany, England, terrorism, or Grenada, it's the war on poverty (that's gone so well), the war on cancer (ditto), and, of particular interest to me, the Math Wars, which have been raging for decades. On one side, the traditionalists insist on drilling and back to basics, "on behalf of sanity and quality in math education." On the other side, the reformers insist on conceptual understanding using computers and calculators, to "promot[e] the rational reform of mathematics education."

Both are half-right and half-crazy. As the reformers say, students need to understand what the mathematics means. Students whose word problem for "6 x 3 = 18" is of the form "There were 6 ducks, and 3 more showed up, so 6 times 3 is 18," understand little. (See "Children Learning Multiplication, Part 1," in the articles by Professor Thomas C. O'Brien.) As the traditionalists say, using computers for everything leads to needing a calculator to compute what 6.5 x 10 is.

However, there's a tool to combine the merits of both sides: the Quick, Approximate, Mental Arithmetic (QAMA) calculator.

The Ongoing Battle Between Technology and Human Behavior

"It is conventional wisdom that it is possible to reduce exposure to indoor air pollution, improve health outcomes, and decrease greenhouse gas emissions in the rural areas of developing countries through the adoption of improved cooking stoves," write Rema Hanna, Esther Duflo, and Michael Greenstone in their new working paper "Up in Smoke:  The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves" (abstract; Washington Post coverage).

But, as the scholars discovered, what seems like an obvious technology fix doesn't always work. Because, remember, human behavior can be a lot harder to change than we think.

Or, put another way: bummer.

The Twitter I.P.A.

Almost a year ago, we posted here about patent trolling – when individuals and firms use patents as a tool to extract settlements out of defendants who wish to avoid expensive patent litigation, even when the target thinks it can ultimately win.

Because they can be so valuable, patents are a big source of litigation, especially in the tech industry. Apple and Samsung have been at each other's throats over smartphone patents, as have Apple and Motorola. Microsoft has been battling with Motorola over whether its Xbox violates Motorola’s patents, and Microsoft has also threatened smartphone maker HTC.  Oracle sued Google, claiming Google’s Android cellphone operating system infringed on Oracle patents.  Microsoft sued Barnes & Noble, claiming that its Nook e-reader violates Microsoft patents. Apple and Google are now eyeing each other warily over “slide to unlock” technology that Apple has patented and accuses Google of copying in its Android smartphone operating system. Google, as a defensive move, paid $12.5 billion to buy Motorola’s portfolio of nearly 25,000 patents. 

Abundance Authors Diamandis and Kotler Answer Your Questions

We recently solicited your questions for Peter Diamandis, founder and CEO of the X Prize Foundation, and journalist Steven Kotler. They are co-authors of the new book Abundance: The Future Is Better Than You Think. Below are their answers about the need for jobs (it's not what you may suspect), the distribution of wealth, and the technological breakthrough that led the price of aluminum to plummet. Thanks to everyone for participating. 

Q. How did you come up with the book’s cover art? It’s very eye-catching — but not obviously related to the subject matter. -nobody.really

A. The cover is actually directly related to the book’s message. The book is “wrapped” in aluminum foil and the story of aluminum is what opens Abundance. In short, during the early 1800s aluminum was considered the most valuable metal in the world. This is why the capstone to the Washington Monument is made from aluminum, and also why Napoléon III himself threw a banquet for the king of Siam where the honored guests were given aluminum utensils, while the others had to make do with gold.