A Blog by Jonathan Low


Oct 1, 2014

Your Medical Record Is Worth Ten Times More to Hackers Than Your Credit Card

Your money or your life? Actually, your life, as inconsequential as it may seem in the great scope of human history, is currently worth more on the open market. 

The combination of confused medical billing procedures, the shaky transition to electronic medical record-keeping and poor cyber security means a potential windfall for hackers who can sell that information to others who are then able to re-sell the access to those seeking either actual services or fraudulent reimbursements that become cash equivalents.

It is to some degree your life and therefore your money, but the reality is that credit card companies and retailers, those who consumers fear are the most sloppy in handling personal data, are doing a better job than the health care industry. This is significant because with an aging population, the costs associated with medical care may take a greater percentage of many developed nations' GNP than ever before in history. Which means an unprecedented opportunity for fraud and abuse. And medical data is the key to that  unauthorized transfer of wealth. JL

Caroline Humer and Jim Finkle report in Reuters:

Consumers discover their credentials have been stolen to impersonate them and obtain health services. The reason to buy that data is so they can fraudulently bill.

Windows 8 Was So Bad That Microsoft Is Skipping Right to Windows 10. Seriously.

Let's just posit that for most consumers - their technological inadequacies a given - Windows 8 just didn't optimize the user experience.

If we're being a tad more honest, we might claim that Windows 8 was a bold experiment that did not work out as planned.

The goal was to make the Windows experience more like the smartphone screen created by the fruitishly-named business based on Cupertino, CA. And that was clever thinking, no doubt about it. But execution is everything and, let's face it, if your customers have no idea what you're doing and how to make it work, well, that's a problem.

But hey, Microsoft has a new CEO, the past is back where it belongs and the company seems to be acknowledging that people get accustomed to something and then stick with it for a reason. And that reason creates loyalty, more repeat business, bigger margins and better bonuses.

But just to make it clear that they are serious about the break with that unfortunate miscommunication, Windows is skipping a digit and going right to 10. Hopefully this will be better received. But the good news is that there are lots of numbers left - and if things go south, well, they could always go back to words. JL

Will Oremus reports in Slate:

They figured Windows 8 was so criminally awful that any version called Windows 9 would be judged guilty by association.

What Does Walmart Really Hope to Gain By Appointing Instagram's CEO to Its Board?

There is this belief that when someone with specific expertise is appointed to a company's board, their personal insights and experience will somehow change the way a massive global enterprise operates.

This seems wildly optimistic at best and absolutely delusional in cases like Walmart which has $476 billion in revenues and approximately 2.2 million employees (though no one is probably really sure day to day or even year to year).

Which is not to say that Kevin Systrom, Instagram's co-founder and CEO, a Stanford grad and former Google project manager will not add value as a Walmart board member, it's just how he does so that could be interesting.

Walmart's sales and profits have faltered for a couple of years now, not the least because its target customer no longer has the financial wherewithal to shop there. But if the company is going to successfully broaden its appeal and possibly move up-market to start attracting a somewhat more affluent clientele, it is going to have to do some things differently. We will leave the reputational embarrassments aside (abusive employment policies and the like) but we do know that the digital customer likes speed and convenience. Those are things Mr. Systrom knows something about:after all, he sold Instagram to Facebook for $1 billion when it had 13 employees. The Walton family will undoubtedly be interested in his views on wealth preservation. 

Walmart management has also traditionally had something of a chip on its shoulder: it's been their rural pragmatism and intelligence versus a superior-acting world. When the company was really growing in the 1980s they were advised to move headquarters to a bigger, more sophisticated city like Dallas. They purposely chose to stay in Bentonville, Arkansas as a statement about their values and ambitions. But that sort of pugnacious self-justification can only take you so far. Instagram represents one of many start-ups that grew to scale by recognizing that they had to leave certain ideological or philosophical predispositions behind - if they wanted to grow.

But his real contribution may be in helping Walmart get faster and nimbler. That is no easy task for an enterprise of its girth. But his entrepreneurial acuity in starting sustainable operations, identifying customer needs and acting on them quickly and growing to scale - all essential elements in a Walmart revitalization plan, whether on or offline - could be handy insights in a hyper-speed economy. JL

Shelly Banjo reports in the Wall Street Journal:

Wal-Mart generated only 2% of its $476 billion in revenue from Web sales last year, but it expects them to grow more than 20% this year, becoming the retailer's fastest-growing business area.

Sep 30, 2014

In eBay Spin Off of PayPal, Competition with Apple Pay and Alibaba Looms Large

Hedge fund greenmailer Carl Icahn is taking credit for scaring eBay into divesting PayPal, but recent developments provided a much more frightening prospect than an aging Wall Street shark: Apple and Alibaba, two of the ablest, largest and most well-funded  tech companies - both of whom have set their sights grabbing PayPal's franchise - being the ecommerce banker of choice.

When eBay acquired PayPal a dozen years ago there were fears eBay would screw it up. It has had the great good sense to leave well enough alone and the payments expert has prospered.

But Apple senses an opportunity to apply its singular brand of magic to the ecommerce equation. This will permit it to diversify beyond devices and phones while tapping into the direct current of digital business - and establish a defensible presence in which Google - and everyone else in finance, credit cards processing and retail have tried and failed to make much of an impression, let alone dominate.

Alibaba, meanwhile, fresh off the largest IPO in history, is using its impressive strength in China's relatively weak financial sector to extend that franchise globally.

Facing the implications of that pincer-like incursion on its territory, eBay/PayPal realized that it could ill afford to lose any potential customers. The alliance had worked well for twelve years but threatened to hurt operations - and potentially decrease value - given that so many frenemies were also customers who could take their business elsewhere.

So, their paths will now diverge. The proverbial woods are scary, dark and deep (apologies to Robert Frost), but brands have promises to keep to their shareholders and clients that will brook no dawdling. JL

Michael de la Merced and Andrew Sorkin report in Deal Book:

Remaining closely tied to eBay could ultimately hold back the payment processor. E-commerce companies like Amazon.com and Alibaba would most likely avoid using the service so long as it was tied to a top competitor

Meltdown: The American Middle Class Hasn't Had a Raise in 15 Years

It's odd. We're more educated, have more information of better quality and we have more advanced technology to help us take advantage of it. 

All of the attributes of the knowledge economy are within our power to apply for gain and advancement.

So how come household incomes are where they were at the end of the Reagan administration in 1988? Much of the current work force wasn't even alive at that point. Mobile phones, to the extent they existed were as big as bricks and neither powerful nor reliable. Computers were large machines in special rooms tended by a priesthood of techno-geeks with buzz cuts and pocket protectors.

The reality is that for most, the US economy has stagnated, which means the global economy is feeling the effects. Hence much of the underlying impetus for global unrest. And given the dependence on consumer-based growth in the post-industrial era, the circle is evident but far from virtuous. The people for whom most value-added products were designed and who, it is assumed, would be most likely to buy them can no longer afford to do so. This is neither beneficial nor sustainable. But it was - and is - predictable. JL

Ben Casselman reports in 538 Blog:

U.S. median household income is still 8 percent lower than it was before the recession, and essentially unchanged since the end of the Reagan administration.“As a country, we peaked in the late 1990s.”

Picking Winners: Are Start-Up Accelerators Like Y Combinator Taking Over the Venture Business?

Disruptive innovation is an awesome concept - that is until your business is the one being disrupted. 

Then, well, it's deficiencies tend to get rather definitively highlighted, at least by those who find themselves on the receiving end of its effects.

It is undoubtedly ironic that the venture capital industry, that which spawned the revolution that now defines much of the way we live, is finding itself being nudged rather more than it likes - or believes its august record deserves.

But this is not to say that the warning signs have not been there for a very long time. There are good reasons why inbreeding is considered a biological misstep and the VC biz has become about as inbred as any rare breed of dog. The VC firms tended to be a small crowd to begin with and they have displayed a preference to bringing in those who have generated success on their behalf. Selection bias can affect results rather dramatically over time.

So the fact that accelerators, which share some of the same educational and social roots as VCs, but appear to be somewhat broader in their demo, psycho and socio-graphic reach are beginning to vie for and win the best of the new prospects. To some degree this is because the VCs have earned a reportedly deserved reputation for greed and control-freakish tendencies.

Ultimately, this new option is just the capitalist system at work: opportunity attracts money - and employs innovation to gain advantage. JL

Eric Newcomer reports in Tech Genius:

Brand has always been  important in the venture capital business, where the key to success is persuading the most desirable entrepreneurs to take your firms money rather than someone else’s. Reputation—largely determined by big exits and a dash of charisma—is essential.

Sep 29, 2014

Stepping Down: Does Fitness Tracking Technology Need a Reboot?

Ok, we can measure, monitor and manage anything. There are devices that will sync our car, refrigerator and breast pump. Theoretically at least.

The irony, not unusually, is that it is not the devices themselves, but what goes into the programs that run the analytics that may need to be reconditioned.

In an age of personalization, where everything from the shopping list to the bank statement can be not only designed for the specific individual, but can actually anticipate needs (and desires), there is, perhaps, too great a degree of conformity assumed in the systems created to help us improve ourselves.

As the following article explains, the norms and standards used to establish baselines from which assessments of progress or the lack thereof are made can be remarkably insensitive to the diversity of physical specimens extant in the universe of potential users. This can lead not just to inappropriate recommendations, feelings of inadequacy based on standards more appropriate for semi-professional athletes than duffers and, potentially to injury or harm.

There does seem to be a growing awareness of the problem. But in the interim, we may find that, once again, our over-reliance on technology can be detrimental if not leavened with a strong does of personal observation, experience and common sense. JL

Sara Watson reports in The Atlantic:

I've accepted technology as a part of my body, but I don't have to accept the defaults of these generally male-designed, able-bodied statistical average counting machines.