late fees

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pages: 347 words: 91,318

Netflixed: The Epic Battle for America's Eyeballs by Gina Keating

activist fund / activist shareholder / activist investor, barriers to entry, business intelligence, collaborative consumption, corporate raider, inventory management, Jeff Bezos, late fees, Mark Zuckerberg, McMansion, Menlo Park, Netflix Prize, new economy, out of africa, performance metric, Ponzi scheme, pre–internet, price stability, recommendation engine, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Steve Jobs, subscription business, Superbowl ad, telemarketer, X Prize

But in late 2004 he finally could turn to running his company without a corporate parent looking over his shoulder. Antioco had known for a couple of years that late fees were killing Blockbuster’s relationship with its customers. Late fees originally arose as a means to pressure customers to return rented movies quickly, so that stores could turn them around faster to make more money, and to avoid inventory shortages. Store operators were delighted when the fees unexpectedly became a strong and dependable revenue source. Franchisees were not about to give up late-fee revenue without a fight—even when Blockbuster’s market research showed that the fees turned off existing customers and strangled the company’s ability to attract new ones. By 2004, active membership had been declining for several years, and Netflix’s prolific ads promising “no late fees ever” were accelerating the losses. Antioco put Nick Shepherd in charge of changing the company’s dialogue with consumers over late fees.

Shepherd ordered market research on attitudes around late fees and discovered that, while only 20 percent of Blockbuster customers were paying late fees at any given time, more than 70 percent had paid them at one time or another, and most felt the stores were not consistent or fair about the way they were levied. Intellectually he knew the brand was damaged each time a customer got into an argument with a Blockbuster cashier over unexpected late fees, especially as it frequently happened in front of a long line of customers waiting to check out. But the idea of wiping out an important source of revenue when store sales were declining made his gut churn. Blockbuster’s marketing department constructed a number of alternatives to the traditional late fees, such as returning to a per-day rental rate rather than simply tacking on another full rental charge for, say, seven days, as soon as the movie was late.

Although Shepherd balked at killing late fees altogether, Antioco urged him to test such a program in a few U.S. markets. Shepherd chose to test in Chattanooga, Tennessee, a city where nearly every test initiative went wrong. He sent a second-string team of executives to launch the no-late-fees promotion—to increase its chances of failure. To his surprise, the Chattanooga test replicated Kerns’s results, so Shepherd ordered another city tested, and then another. The results were the same in every market: Consumers returned to stores more frequently and spent more money on rentals and other items. At the test’s conclusion, Shepherd gathered managers in the test markets and asked for a show of hands: Which of four initiatives—including 99 cent per day rentals, game rentals and end of late fees—should they launch in January?


pages: 299 words: 83,854

Shortchanged: Life and Debt in the Fringe Economy by Howard Karger

big-box store, blue-collar work, corporate social responsibility, credit crunch, delayed gratification, financial deregulation, fixed income, illegal immigration, labor-force participation, late fees, London Interbank Offered Rate, low skilled workers, microcredit, mortgage debt, negative equity, New Journalism, New Urbanism, offshore financial centre, payday loans, predatory finance, race to the bottom, Silicon Valley, Telecommunications Act of 1996, telemarketer, underbanked, working poor

Called “universal default,” this practice started after a rash of bankruptcy filings in the mid-to-late 1990s and has since become the industry standard.51 A Consumer Action study found that 43% of CCIs raise cardholders’ rates if they have credit problems with other lenders, even if they have no late payments on the CCI’s card.15 Other banks, such as Bank of America and Fidelity National, may use a credit request as a reason to lower a cardholder’s credit limit.16 The Consumer Action study also found that 85% of the banks surveyed had penalty rates that are triggered by one or two late payments made within six months to a year (the industry calls this “re-pricing”). Penalty rates—which permanently replace lower interest rates—range from APRs of 12%–30%. Sixty-two percent of banks said they charge cardholders a late fee if payments are not received on or before the due date. Twenty-nine percent of CCIs had tiered late fees based on a cardholder’s balance. For example, Wells Fargo charges a $20 late fee on balances up to $100; $29 for balances up to $1,000; and $35 for $1,000 or more.17 Consequently, cardholders with smaller balances pay proportionally higher fees. In 2003 the most common late fee among major CCIs was $35. Some CCIs, like Bank of America and MBNA, have upped their late fee to $39 or more on balances over $1,000. From 1999 to 2003 late-payment fees rose 23%.18 Combined credit card fees cost cardholders about $15 billion in 2004.

Seduced by claims such as Chase’s “It [Platinum for Students] comes with a 5.99% introductory APR on purchases and balance transfers, no annual fee, and tons of other cool benefits, like…,” Josh overlooked the fact that cash advances carry a 20% APR, late fees can add up quickly, and it’s easy to reach the credit limit.55 After hitting his $2,000 credit card limit, Josh applied for another card. He maxed out the second credit card in six months. Facing $4,000 of credit card debt, Josh took a leave from college to work full time. He never returned. Although Josh was working full time, his credit card debt continued to soar. For a while, he played the credit card game and began shifting balances from one introductory card to another, never paying off any of them. Meanwhile, he bought a house and a new car, which only aggravated his debt. The credit card merry-go-round finally caught up with Josh as he sent in his payments later and later and began using cash advances for credit card payments. Josh’s late fees were mounting while his interest rate was rising sky-high, finally reaching nearly 30%.

CCIs should be prohibited from raising the interest rates of cardholders who have credit problems with other lenders.42 At a minimum, they should be required to notify cardholders of an impending rate hike based on their credit records. They should also be required to provide cardholders with an opportunity to explain changes in their credit scores. Finally, CCIs should be required to provide a five-day grace period before charging late fees. Because CCIs are often located in remote parts of the country, slow mail plus delays in recording payments can result in expensive penalties and late fees. Despite aggressive credit card marketing, large numbers of people fall through the cracks. Lacking even minimal credit, they are forced to resort to the pawnshops and payday lenders of the storefront loan industry. It is to this group that we will now turn. Table 4.1. Breakdown of the FICO categories. Payment history Payment information on accounts, such as credit cards, retail accounts, and mortgages Adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.)


No Slack: The Financial Lives of Low-Income Americans by Michael S. Barr

active measures, asset allocation, Bayesian statistics, business cycle, Cass Sunstein, conceptual framework, Daniel Kahneman / Amos Tversky, financial exclusion, financial innovation, Home mortgage interest deduction, income inequality, information asymmetry, labor-force participation, late fees, London Interbank Offered Rate, loss aversion, market friction, mental accounting, Milgram experiment, mobile money, money market fund, mortgage debt, mortgage tax deduction, New Urbanism, p-value, payday loans, race to the bottom, regulatory arbitrage, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, the payments system, transaction costs, unbanked and underbanked, underbanked

Based on the understanding that consumers do not shop for penalty fees and that they often misforecast their own behavior, the act requires that late fees or other penalty fees must be “reasonable and proportionate,” as determined by implementing rules; that in any event the fees may not be larger than the amount charged that is over the limit or late; and that a late fee or other penalty fee cannot be assessed more than once for the same transaction or event. Furthermore, the act takes steps to make it easier for the market to develop mechanisms for consumer comparison 38. Some state rent-to-own laws also limit the amount and frequency of late fees on tardy payments and provide for an “early purchase option” whereby the consumer may purchase the item for the unpaid balance of the cash price as stated in the rental-purchase agreement, plus all past due payments and fees.

Given that consumers generally do not 12864-11_CH11_3rdPgs.indd 270 3/23/12 11:57 AM behaviorally informed regulation 271 understand how payments are allocated across different account balances even after improved disclosures (Federal Reserve Board 2007, 2008), the act requires a consumer’s payments above the minimum required to be applied first toward higher-cost balances. In addition, the act takes up our concern with late fees but goes beyond our proposals. Based on the same understanding that consumers do not shop for penalty fees and that they often misforecast their own behavior, it requires that late fees or other penalty fees must be “reasonable and proportionate,” as determined by implementing rules; that in any event the fees not be larger than the amount charged that is over the limit or late; and that a late fee or other penalty fee cannot be assessed more than once for the same transaction or event. Furthermore, the act takes steps to make it easier for the market to develop mechanisms for consumer comparison shopping by requiring the public posting to the Federal Reserve of credit-card contracts in machine-readable formats; private firms or nonprofits can develop tools for experts and consumers to use to evaluate these various contracts.

Moreover, payday usage in the AFS sector and bank overdrafts in the formal sector are often complementary: those who have Table 2-9. Use of Other Alternative Financial Services among Payday Loan Users Percent Other AFS use Other AFS a Pawnshop Cash advance RAL Rent-to-own Pension cash-out Secured card Credit-card late fee Overdraft By users of payday loans By nonusers of payday loans 40 24 45 20 19 37 43 57 10 7 21 5 6 9 21 19 Source: Detroit Area Household Financial Services study. a. For all but credit-card late fee, difference is significant at the 10 percent level after controlling for age, race, gender, and income. 12864-02_CH02_3rdPgs.indd 45 3/23/12 11:55 AM 46 michael s. barr used an overdraft from their bank account are more than five times more likely to use a payday lender than those who overdrew their accounts.


pages: 357 words: 91,331

I Will Teach You To Be Rich by Sethi, Ramit

Albert Einstein, asset allocation, buy and hold, buy low sell high, diversification, diversified portfolio, index fund, late fees, money market fund, mortgage debt, mortgage tax deduction, prediction markets, random walk, risk tolerance, Robert Shiller, Robert Shiller, shareholder value, Silicon Valley, survivorship bias, the rule of 72, Vanguard fund

Note: Don’t worry if you don’t always have enough money in your checking account to pay off the full amount you owe on your credit card. You’ll get an e-mail from your card company each month before the payment goes through so that you can adjust your payment as needed. * * * I just totally forgot the due date for my credit card. So not only did they charge me a late fee, but they charged me interest on that month’s and the previous months’ purchases. I called up the customer service line of my credit card and told them that I had been a good customer in the past, and asked if they could do anything for me with the fees. The representative removed the late fee and refunded $20 of the interest charge back to my account. They returned a total of $59 to me with one phone call. —ERIC HENRY, 25 * * * 2. Get all fees waived on your card. This is a great, easy way to optimize your credit cards because your credit card company will do all the work for you.

If you pay your bill on time, they’re actually a free short-term loan. They help you keep track of your spending much more easily than cash, and they let you download your transaction history for free. Most offer free warranty extensions on your purchases and free rental car insurance. But unfortunately, there’s more to them than that. Credit cards are also convenient enemies. Almost everyone has a bad story about late fees, unauthorized charges, or overspending. Not surprisingly, many pundits (and parents) have a knee-jerk reaction to credit cards: “Using credit cards is the worst financial decision you can make,” they shout. “Cut them all up!” What an easy battle cry for people who want simple solutions and don’t realize the benefits of multiple sources of credit. The truth about credit cards lies somewhere between these two extremes.

They might be thrilled after saving $10—and they can brag to everyone about all the special deals they get—but you’ll quietly save thousands by understanding the invisible importance of credit, paying your bills on time, and having a better credit score. Awful Consequences * * * If you miss even one payment on your credit card, here are four terrible, horrible, no good, very bad results you may face: 1. Your credit score can drop more than 100 points, which would add $240/month to an average thirty-year fixed-mortgage loan. 2. Your APR can go up to 30 percent. 3. You’ll be charged a late fee, usually around $35. 4. Your late payment can trigger rate increases on your other credit cards as well, even if you’ve never been late on them. (I find this fact amazing.) Don’t get too freaked out: You can recover from the hit to your credit score, usually within a few months. In fact, if you’re just a few days late with your payment, you may incur a fee, but it generally won’t be reported to the credit bureaus.


pages: 334 words: 102,899

That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea by Marc Randolph

Airbnb, crowdsourcing, high net worth, inventory management, Isaac Newton, Jeff Bezos, late fees, loose coupling, Mason jar, pets.com, recommendation engine, rolodex, Sand Hill Road, Silicon Valley, Silicon Valley startup, Snapchat, Steve Jobs, Travis Kalanick

Travis Kalanick spends $800 on a private driver on New Year’s Eve and thinks there has to be a cheaper way—that’s Uber. There’s a popular story about Netflix that says the idea came to Reed after he’d rung up a $40 late fee on Apollo 13 at Blockbuster. He thought, What if there were no late fees? And BOOM! The idea for Netflix was born. That story is beautiful. It’s useful. It is, as we say in marketing, emotionally true. But as you’ll see in this book, it’s not the whole story. Yes, there was an overdue copy of Apollo 13 involved, but the idea for Netflix had nothing to do with late fees—in fact, at the beginning, we even charged them. More importantly, the idea for Netflix didn’t appear in a moment of divine inspiration—it didn’t come to us in a flash, perfect and useful and obviously right. Epiphanies are rare.

We set it up so that every tenth customer clicking the redeem button on the site would be directed to a custom page, offering them the opportunity to try—for free—a monthly subscription to the Netflix Marquee program: no due dates, no late fees. We would send them four DVDS, and when they sent one DVD back, we would send them another one. As many times as they wanted. And at the end of the month—if they didn’t cancel—we would automatically (and here it was me describing it as “automagically”) hit them up for only $15.99 a month, payable by any major credit card. Home Rental Library × Serialized Delivery × Subscription. Just the last three halfway decent ideas we’d had, thrown into one pot. “This probably won’t work,” I told Christina. “But, hey, at least we’ll know.” 14. Nobody Knows Anything (fall 1999: a year and a half after launch) IT WORKED. People didn’t just like no late fees, a flat monthly rate, plus serialized delivery with a queue. They loved it.

I might have read about them in the newspaper—they were in test markets in San Francisco and six other cities in 1997. But I suspect I learned about them from Reed. He actually read all the free tech journals that got mailed to Pure Atria—journals that, in my case, only accumulated in a dusty pile in the corner of my office. And sometime after the online video rental idea crashed and burned, he’d complained to me about another exorbitant late fee he’d incurred at a video store. Movies were on his mind—and movies by mail had been one of the few ideas I’d had that had caught his eye. One thing’s for certain: I didn’t see a DVD on a shelf. Prior to 1997, DVDs were only available in Japan. And even if you found one, there was no way to play it—no DVD players were for sale in the States. It was easier, far easier, to find a laser disc than a DVD.


pages: 318 words: 93,502

The Two-Income Trap: Why Middle-Class Parents Are Going Broke by Elizabeth Warren, Amelia Warren Tyagi

activist fund / activist shareholder / activist investor, business climate, Columbine, declining real wages, equal pay for equal work, feminist movement, financial independence, labor-force participation, late fees, McMansion, mortgage debt, new economy, New Journalism, payday loans, school choice, school vouchers, telemarketer, urban sprawl, women in the workforce

Calder reports, “The 1930s were prosperous years for consumer credit agencies. They prospered not by lending to the unemployed and destitute, but by expanding services to people who were fortunate enough to hold on to their jobs” (p. 292). 59 Between 1996 and 2001, total late fee revenues generated to bank credit card issuers increased from $1.7 billion to $7.3 billion. “Late Fee Bug,” in Cardweb.com, May 17, 2002. Available at http://www.cardweb.com/cardtrak/news/2002/may/17a.html [1/28/2003]. The average credit card late fee increased from $11.60 in February 1994 to $30.04 in November 2002. “Late Fees Slow,” in Cardweb.com, December 11, 2002. Available at http://www.cardweb.com/cardtrak/news/2002/december/11a.html [1/28/2003]. 60 Revenues of the top 100 contingent collections agencies grew from $1.7 billion in 1995 to $4.2 billion in 2000.

Few families have substantial savings, so they usually run out of cash within a month or so. Soon the charges start mounting up for the basics of life—food, gasoline, and whatever else can go on “the card.” When there still isn’t enough to go around, the game of impossible choices begins. Pay the mortgage or keep the heat on? Cancel the car insurance or the health insurance? Meanwhile, interest and late fees have piled on, making everything more expensive. Ruth Ann and James got a small reprieve from family. James’s parents kicked in $4,000 and Ruth Ann’s brother lent them $1,500. But these temporary infusions of money were just that—they covered the minimum payments for a few months, but they didn’t begin to provide a way out of the hole. Before it was over, Ruth Ann had taken to parking the station wagon behind the elementary school and walking the six blocks home, figuring the bankers wouldn’t repossess her car if they couldn’t find it.

When the foreclosure notice arrived, she filed for bankruptcy and worked out a repayment plan with the mortgage lender. Gayle reflects, “I knew that I was at the lowest point in my life. . . . I went ahead and filed but it was done very, very reluctantly. I mean, I couldn’t keep asking people like my mom to bail me out again.” The relief provided by the bankruptcy courts was only partial. The monthly payments for her home actually increased when she filed. Gayle now had to pay off an additional $10,750 in late fees and past-due interest that her lender had tacked on—and that extra money had to be paid within three years, not over the thirty-year life of her mortgage. At the time we spoke with her, Gayle’s expenditures on property taxes, mortgage payments, and utilities claimed nearly three-quarters of her take-home pay.25 She couldn’t expect much help from child support, either. Brad still owed child support to his first wife, so he was due to pay Gayle only $350 a month, less than one-quarter of the family’s housing expenses.


pages: 215 words: 55,212

The Mesh: Why the Future of Business Is Sharing by Lisa Gansky

Airbnb, Amazon Mechanical Turk, Amazon Web Services, banking crisis, barriers to entry, carbon footprint, Chuck Templeton: OpenTable:, cloud computing, credit crunch, crowdsourcing, diversification, Firefox, fixed income, Google Earth, industrial cluster, Internet of things, Joi Ito, Kickstarter, late fees, Network effects, new economy, peer-to-peer lending, recommendation engine, RFID, Richard Florida, Richard Thaler, ride hailing / ride sharing, sharing economy, Silicon Valley, smart grid, social web, software as a service, TaskRabbit, the built environment, walkable city, yield management, young professional, Zipcar

Netflix used what I’d call a textbook Mesh strategy—if a Mesh textbook existed—to beat Blockbuster. First, Netflix paid close attention to Blockbuster’s vulnerabilities with its best customers. Netfix knew that Blockbuster’s Achilles’ heel was late fees. Blockbuster’s revenue model depended on the fees, but customers hated them. Late fees were irritating to pay, like parking tickets, and created anxiety around running the videos back before the noon deadline. Worse, its best customers were the most likely to be punished by the fees. Netflix realized that if it could create a profitable business model that didn’t require late fees, it’d win. The then-in-progress shift to the DVD format presented an opportunity. Netflix realized DVDs could be safely and inexpensively delivered by the post office. Its customers wouldn’t have to rush down to the rental store, hoping that a new release would still be available.

Its customers wouldn’t have to rush down to the rental store, hoping that a new release would still be available. They wouldn’t have to wait in line behind a guy arguing with his girlfriend, only to reach an underpaid clerk who’d clearly rather be somewhere else. And they wouldn’t have to pay a late fee, because there weren’t any late fees. Instead, Netflix introduced a subscription model that allowed customers to watch and return movies at their own pace. What clinched Netflix’s advantage, though, was that it functioned as an information business. By creating a Web-based share platform where people could buy a subscription and queue up their movie choices, Netflix executives knew they could really get to know the customers. Early on, Netflix began using a customer’s prior selections and ratings to suggest other videos that might be of interest.

The Web site encouraged customer feedback on improving the service, and continually introduced new tools to make it easier to find, rate, and order movies and TV shows. Rather than conducting expensive national advertising campaigns, Netflix created partnerships with nearly every brand of DVD player. Each new player included a card offering three free DVD rentals from Netflix. The card also made a promise: “No Late Fees.” Instead, Blockbuster paid a late fee. They were late in acknowledging customer resentments, and late in understanding the spreading power of social networks to shape brand perception. They created a share platform, but neglected other elements that make Mesh businesses so competitive. Netflix’s more robust and networked share platform gave it the power to collect and crunch consumer, usage, and product data to shape customized offers.


pages: 444 words: 138,781

Evicted: Poverty and Profit in the American City by Matthew Desmond

affirmative action, Cass Sunstein, crack epidemic, Credit Default Swap, deindustrialization, desegregation, dumpster diving, ending welfare as we know it, fixed income, ghettoisation, glass ceiling, Gunnar Myrdal, housing crisis, informal economy, Jane Jacobs, jobless men, Kickstarter, late fees, mass incarceration, New Urbanism, payday loans, price discrimination, profit motive, rent control, statistical model, superstar cities, The Chicago School, The Death and Life of Great American Cities, thinkpad, upwardly mobile, working poor, young professional

Court Statistics Project, National Civil and Criminal Caseloads and Civil/Criminal Court Caseloads: Total Caseloads (Williamsburg, VA: National Center for State Courts, 2010). 3. One Milwaukee landlord who owned roughly 100 units in low-income neighborhoods told me he gave approximately 30 percent of his tenants five-day eviction notices each month. A $50 late fee accompanied each notice. He estimated that 90 percent of those cases were settled via stipulation; the remaining 10 percent were evicted. This meant that he collected roughly $1,350 in late fees each month from tenants he did not evict. That amounted to over $16,000 a year in late fees alone. 4. Milwaukee Eviction Court Study, 2011. In addition to surveying tenants, interviewers took eviction court attendance every weekday (save one) between January 17 and February 26, 2011. During this six-week period, in 945 out of 1,328 cases, tenants did not appear in court, with most receiving an eviction judgment.

“Should I do a short-term or long-term lease?” “First, do a lease. Please. Put it in writing. Between sixty and seventy percent of rental agreements in this state are verbal.” A man in a camouflage hat raised his hand with a question about evictions: “Do you have to leave them there for three months or some foolish thing?” “No. Nothing protects you from not paying the rent.” “Is there a maximum charge for a late fee?” The room laughed nervously, and Karen frowned at the question. “Can you go in any of the common areas, the hallways, the open basement, without any notice?” Karen paused for effect. She smiled at the woman who had asked the question. She was a black woman, probably in her fifties, who had sat in the front row and taken notes throughout the day. “What is the answer?” Karen asked the room.

One, a white man in a leather jacket who had been in the local paper a few months back for racking up hundreds of property violations, was joking with his young female assistant when a tenant approached. The tenant was a black woman, likely in her fifties. Her shoulders were uplifted under her worn overcoat. She reached into her purse and handed the landlord $700 in cash. “I’m hoping—” she began. The landlord cut her off. “Don’t hope. Write the check.” “I can get you another six hundred in two weeks.” The landlord asked her to sign a stipulation, which included a $55 late fee. She reached for his pen.3 Toward the front of the room, in a reserved space with tables and plenty of empty chairs, sat lawyers in pinstripe suits and power ties. They had been hired by landlords. Some sat with manila folders stacked in front of them, reading the paper or filling in the crossword. Others joked with the bailiff, who periodically broke conversation to tell a tenant to remove his hat or lower her voice.


pages: 374 words: 89,725

A More Beautiful Question: The Power of Inquiry to Spark Breakthrough Ideas by Warren Berger

Airbnb, carbon footprint, Clayton Christensen, clean water, disruptive innovation, fear of failure, Google X / Alphabet X, Isaac Newton, Jeff Bezos, jimmy wales, Joi Ito, Kickstarter, late fees, Lean Startup, Mark Zuckerberg, minimum viable product, new economy, Paul Graham, Peter Thiel, Ray Kurzweil, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, Stanford marshmallow experiment, Stephen Hawking, Steve Jobs, Steven Levy, Thomas L Friedman, Toyota Production System, Watson beat the top human players on Jeopardy!, Y Combinator, Zipcar

Hastings had been lax in returning some movies rented from a Blockbuster video store, and by the time he got around to it, the late charges were exorbitant. A frustrated Hastings wondered, Why should I have to pay these fees? (He has admitted that another question on his mind at the time was How am I going explain this charge to my wife?) Surely, others have been similarly outraged by late fees. But Hastings decided to do something about it, which led to a subsequent question: What if a video-rental business were run like a health club? He then set about figuring out how to design a video-rental model that had a monthly membership, like a health club, with no late fees. (Years later, Hastings would question whether Netflix could and should expand its model: Why are we only renting the films and shows? What if we made them, too?) Through the years, companies from Polaroid (Why do we have to wait for the picture?) to Pixar (Can animation be cuddly?

How might we prepare during peacetime to offer help in times of war? What if this change represents an opportunity for us? How might we make the most of the situation? Why are we falling behind competitors? Who is to blame? What business are we in now—and is there still a job for me? Now that we know what we now know, what’s possible now? Why should I have to pay these late fees?, (the question behind Netflix) How am I going to explain these late fees to my spouse? What if a video rental business were run like a health club? Why do we have to wait for the picture? (the question that led to Polaroid) Can animation be cuddly? With all that’s changing in the world and in our customers’ lives, what business are we really in? I established myself over the years—so why should I have to start over? How is my field/industry changing?

But when the problem was thrust upon him, he asked a proactive Why question (instead of just passively wondering, Why did this have to happen to me?). Then he kept asking more Why questions as he explored the nature and the dimensions of the problem. Innovative questioners, when faced with situations that are less than ideal, inquire as to why, trying to figure out what’s lacking. Oftentimes, these questions arise out of mundane, everyday situations, such as that “late fees” problem encountered by Reed Hastings before he founded Netflix. Similarly, Pandora Internet Radio founder Tim Westergren, a former band musician, observing all the talented-yet-struggling musicians he knew, wondered why it was so difficult for them to connect with the audience they deserved. Airbnb cofounder Joe Gebbia, along with roommate Brian Chesky, wanted to know why people coming to his town at certain times of the year had so much trouble getting hotel accommodations.


pages: 279 words: 76,796

The Unbanking of America: How the New Middle Class Survives by Lisa Servon

Affordable Care Act / Obamacare, Airbnb, basic income, Build a better mousetrap, business cycle, Cass Sunstein, choice architecture, creative destruction, Credit Default Swap, employer provided health coverage, financial exclusion, financial independence, financial innovation, gender pay gap, George Akerlof, gig economy, income inequality, informal economy, Jane Jacobs, Joseph Schumpeter, late fees, Lyft, M-Pesa, medical bankruptcy, microcredit, Occupy movement, payday loans, peer-to-peer lending, precariat, Ralph Nader, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, sharing economy, too big to fail, transaction costs, unbanked and underbanked, underbanked, universal basic income, Unsafe at Any Speed, We are the 99%, white flight, working poor, Zipcar

Many independent contractors are willing to pay the fees charged by alternative financial-services providers to “stay afloat,” as my contractor Tom puts it. But others simply need their money as soon as they can get it. Customer after customer told me that they couldn’t afford to have the bank hold their check, waiting for it to clear. They needed that money right away to put food in the cupboard, avoid late fees on bills, or keep the electricity from being cut off. Customers like Michelle come to RiteCheck to withdraw money from Electronic Benefits Transfer (EBT) cards, the vehicle by which the New York State Office of Temporary and Disability Assistance delivers cash and Supplemental Nutrition Assistance Program (SNAP) benefits to those who are eligible. Cash and SNAP benefits are deposited into electronic benefit accounts, which can be accessed by swiping the EBT card at an ATM or a terminal like the one on my counter at RiteCheck.

That morning she arrived shortly after I did, took off her jacket, and set down her purse—a bag shaped like a rubber chicken, replete with red comb and wattle—beside her terminal. “Ready?” she asked. She pulled up a file of clients that the computer system had generated—people whose checking accounts had been tapped the day before, when their loan payment was due, and whose accounts had insufficient funds. We called these customers first; if they paid back their loans on the first day after the bounce, Check Center waived the fifteen-dollar late fee. Delia teaches me the protocol for which people we call, when we call them, and what the law allows us to say. We make calls only between 8 a.m. and 6:30 p.m. If we don’t reach the person and have to leave a message, we are not allowed to say we’re calling about a late loan. We say, “I am calling about an urgent business matter.” The same holds true if we call the borrower’s office or the other person whose name and number appear on the loan application.

policy has abetted this trend: Ibid. virtually eliminated caps: Jose Garcia, “Borrowing to Make Ends Meet: The Rapid Growth of Credit Card Debt in America” (Washington, DC: Demos, November 7, 2007). http://www.demos.org/publication/borrowing-make-ends-meet-rapid-growth-credit-card-debt-america allowing them to be determined: Ibid. average late-payment fee: Ibid. By 2009, it had climbed: Index Credit Cards, “Credit Card Late Fees Average $34.09, Over-the-Limit Fees Average $36.53,” indexcreditcards.com, October 6, 2009. http://www.indexcreditcards.com/creditcardlatefees/ 69 “bring money out of the shadows”: Bari Tessler Linden, “The Antidote to Money Shame,” Bari Tessler Linden blog, November 7, 2013. http://baritessler.com/2013/11/money-shame/ “flip your rich switch”: Nan Akasha, “Money Archetypes and Guilt and Shame,” Nan Akasha blog, May 29, 2012. http://www.nanakasha.com/money-archetypes-guilt-shame rise in bankruptcy filings: Jill Lepore, “The Warren Brief,” The New Yorker, April 21, 2014. http://www.newyorker.com/magazine/2014/04/21/the-warren-brief left one partner economically: David Himmelstein et al., “Medical Bankruptcy in the United States, 2007: Results of a National Study,” American Journal of Medicine, vol. 22, no. 9 (August 2009). http://www.amjmed.com/article/S0002-9343(09)00404-5/pdf cut down on abusive: Kathleen Day, “Bankruptcy Bill Passes; Bush Expected to Sign,” Washington Post, April 15, 2005. http://www.washingtonpost.com/wp-dyn/articles/A53688-2005Apr14.html 70 claims about bankruptcy fraud: Ibid.; Lepore, “The Warren Brief.”


pages: 201 words: 62,593

The Automatic Millionaire, Expanded and Updated: A Powerful One-Step Plan to Live and Finish Rich by David Bach

asset allocation, diversified portfolio, financial independence, index fund, job automation, late fees, money market fund, Own Your Own Home, risk tolerance, transaction costs, Vanguard fund

And you can automate payment of the variable ones by arranging to have them charged to one of your credit cards. As long as you keep your checking account adequately funded and you have sufficient credit available on your card accounts, this will protect you from ever missing a payment due date. My entire financial life is automated this way. As a result, all my bills are always paid on time, whether I am in town or not, and I never get hit with late fees or penalties. Just this single tip can save you hundreds of dollars a year in late fees the banks and credit card companies hope to make off of you. ❑ 7. Give to charity automatically. As I shared in Chapter Eight, Make a Difference with Automatic Tithing, giving back is an integral part of being an Automatic Millionaire and living rich. But instead of making a lump-sum contribution once a year (which you might or might not actually get around to), arrange to automatically fund the charity of your choice through a series of small regular contributions—say, somewhere between 1 percent and 10 percent of each paycheck.

But wait—it’s really worse than that. AT THIS RATE, YOU’LL BE PAYING OFF YOUR BALANCE FOR THIRTY YEARS! If you pay just the minimum due each month on an $8,400 credit balance, you will wind up having to make 365 monthly payments before it goes to zero. That’s thirty years and five months’ worth of payments. And that’s assuming you never charge another dime on the card, never get hit with a late fee, and are never billed for an annual service fee. Can you imagine it? Thirty years and five months’ worth of payments—and that’s for a card that charges 18 percent annual interest. Many cards charge much higher rates—some as high as 29 percent. Here’s the bottom line: You cannot become an Automatic Millionaire if you run up credit card balances and pay only the minimum due. All you’ll accomplish doing that is making the credit card company rich while you stay poor.

(If your bank doesn’t offer free online bill paying, think about switching to one that does.) If you want to pay more than the minimum on any of your cards—and if you follow the plan I lay out in Chapter Seven, The Automatic Debt Free Lifestyle, you will—you can write a check for the extra amount. Making your minimum payments automatic ensures that you will never miss a payment deadline and get hit with late fees or penalty interest rates. ❑ 6. Pay all your monthly bills automatically. There are two kinds of monthly bills: regular ones that are always the same amount (like mortgage, rent, or car payments) and those where the balance due sometimes varies (like phone bills or cable and Internet charges). You can automate payment of the unchanging bills by using your bank’s online bill-paying service to have them automatically debited from your checking account each month.


pages: 305 words: 89,103

Scarcity: The True Cost of Not Having Enough by Sendhil Mullainathan

American Society of Civil Engineers: Report Card, Andrei Shleifer, Cass Sunstein, clean water, computer vision, delayed gratification, double entry bookkeeping, Exxon Valdez, fault tolerance, happiness index / gross national happiness, impulse control, indoor plumbing, inventory management, knowledge worker, late fees, linear programming, mental accounting, microcredit, p-value, payday loans, purchasing power parity, randomized controlled trial, Report Card for America’s Infrastructure, Richard Thaler, Saturday Night Live, Walter Mischel, Yogi Berra

That person or institution, like the assistant, will bring it into your tunnel no matter how tunneled you are. Savings, on the other hand, has no dedicated assistants to care for it, and—absent a behaviorally informed intervention like ours—will end up outside the tunnel most of the time. Of course, insights about tunneling can also be used to exploit. You might set high late fees and then not remind people of the impending charges. Many of these effects, from reminders to the impact of late fees, will disproportionately affect the poor, since they are the ones who are tunneling—and suffering the consequences—the most. Reminders, of course, are not limited to money. A busy person will too readily neglect the gym, which is important but never urgent. Signing up for a personal trainer reduces this problem. Now the trainer’s calls bring fitness back into the tunnel.

Sometimes at dinner he would put in less than his fair share because he was short. His friends understood, but it didn’t feel good. And there was no end in sight. He had bought a Blu-ray player on credit, with no payments for the first six months. That was five months ago. How would he pay this extra bill next month? Already, more and more money went to paying off old debts. The bounced check had a hefty overdraft charge. The late bills meant late fees. His finances were a mess. He was in the deep end of the debt pool and barely staying afloat. Shawn, like many people in his situation, got financial advice from many sources, all of it pretty similar: Don’t sink any deeper. Stop borrowing. Cut your spending to the minimum. Some expenses may be tough to cut, but you’ll have to learn how. Pay off your old debts as quickly as possible. Eventually, with no new debts, your payments will become manageable.

The busy person is likely to commit an even bigger planning error; after all, he is likely still needing to attend to his last project and is more distracted and overwhelmed—a surefire way to misplan. With compromised bandwidth, we are more likely to give in to our impulses, more likely to cave in to temptations. With little slack, we have less room to fail. With compromised bandwidth, we are more likely to fail. This allows a look at the conditions of scarcity through a new lens. Late fees are a penalty for misplanning or forgetting, yet they create an even more hostile environment for those living with scarcity. Readily available junk food may cause obesity in the poor and the busy, who are, in turn, more exposed and less attentive; it is less of a threat for the rich and the relaxed. The hard-to-read disclosures on low-cost mortgage forms will be particularly misunderstood (and carry bigger consequences) for those living with financial scarcity.


pages: 314 words: 69,741

The Internet Is a Playground by David Thorne

anti-globalists, late fees, Naomi Klein, peer-to-peer, Silicon Valley, Steve Jobs

uploadyourscreen.com A website where users take a screenshot of their computer screen and upload it so that when they are looking at porn and the boss walks past they can type in the link and go to it instead. picturesofpegs.com This website would contain pictures of pegs, allowing the users to have access to pictures of pegs whenever they need them. amihavingaheartattack.com A website for people having a heart attack. Dear Blockbuster member, we want our DVDs back I find it annoying to pay late fees on movies, and I am too lazy to return them on time, which leaves me simply complaining about it. I used to know a guy named Matthew who would sell me copies of the latest movies for five dollars each, but they were all recorded by someone in a cinema with what appeared to be a low-resolution webcam, and epilepsy. Several times during each movie the person would shift positions, or have people walk past in front, and one time filmed the chair in front of him for at least twenty minutes.

Recently, I was tricked into watching The Notebook, which was about geese. Lots of geese. It also had something to do with an old lady who conveniently lost her memory, so she could not remember being a whore throughout the entire film. I don’t recall a lot of it, because I was too busy being cross about watching it. In a utopian future society she would have been hunted down and killed at thirty. In regard to the late fees, I understand the amount is based on what you lose by not being able to rent the movies out. You probably had people lined up around the block waiting to rent Logan’s Run. For eighty-two dollars, though, I could have purchased six copies of it from DVD Warehouse or, as I have heard he is a bit strapped for cash, had Kevin Costner visit my house in person and re-enact key scenes from Waterworld in the bathroom.

For eighty-two dollars, though, I could have purchased six copies of it from DVD Warehouse or, as I have heard he is a bit strapped for cash, had Kevin Costner visit my house in person and re-enact key scenes from Waterworld in the bathroom. Regards, David From: Megan Roberts Date: Thursday 12 November 2009 3:16 p.m. To: David Thorne Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: DVDs Hi David. Restocking fees are: 002190382 Journey to the Center of the Earth $9.30 003103119 Logans Run $7.90 008629103 Harold and Kumar Escape from Guantanamo Bay $6.30 000721082 Waterworld $5.70 Total: $29.20—I have deleted your late fees and noted on the computer that the amount owed is for the replacement movies not fees. Kind regards, Megan From: David Thorne Date: Thursday 12 November 2009 7:42 p.m. To: Megan Roberts Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: DVDs Dear Megan, Those prices seem reasonable. I do not want Logan’s Run but will pick up the other three when I come in next. Regards, David From: Megan Roberts Date: Friday 13 November 2009 12:51 p.m.


pages: 189 words: 64,571

The Cheapskate Next Door: The Surprising Secrets of Americans Living Happily Below Their Means by Jeff Yeager

asset allocation, carbon footprint, delayed gratification, dumpster diving, index card, job satisfaction, late fees, mortgage debt, new economy, payday loans, Skype, upwardly mobile, Zipcar

Lynda confirms what most cheapskates say is one of the most important good money habits you can have: direct deposit of incoming funds and automatic bill pay for the bills you pay every month, like mortgage/rent, utilities, insurance, loan payments, etc. Most employers offer direct deposit of paychecks, and automatic bill pay can be arranged with most vendors and banks. Not only is it a free service and saves time (not to mention postage stamps and gas), but it guarantees that you’ll always pay your bills on time and avoid late fees and penalties. Savings: Variable, but with late fees on credit cards and other consumer loans averaging about $30, avoid four of those bad boys a year and you’ll save $120. Poor People (Often) Have Poor Habits Okay, before you get your knickers in a twist about the insensitivity of the above statement, let me say that of course I recognize that many poor people in the United States and around the world are truly victims of circumstances beyond their control.

With Netflix, you pay a flat monthly fee (our plan costs $16.99 a month), and you select from over 100,000 DVD titles on their website. The DVDs you request are mailed to you and usually arrive in a single day—amazing service. You can keep them as long as you like (no late fees), and rent as many as you want in a month, just so long as you don’t have more than three checked out at any one time. To return them, they give you a nifty, postage-paid return envelope that you just drop in the mail. Savings: Compared with conventional DVD rental stores, if you rent three movies a week you’ll probably save more than $500 a year by joining Netflix—and that doesn’t include the cost of late fees, membership fees, and the gas you’ll burn up with most rental stores. On the Road with the Cheapskate Next Door It would be a mistake to assume that all cheapskates are homebodies, cloistered in their humble abodes for fear that if they venture out into the world it would cause their Spending Anxiety Disorder to flare up.


pages: 130 words: 43,665

Powerful: Teams, Leaders and the Culture of Freedom and Responsibility by Patty McCord

call centre, future of work, job satisfaction, late fees, Silicon Valley, Skype, the scientific method, women in the workforce

This is the fundamental Netflix model; pay up front for benefits in future years. At this stage in our growth, that considerable up-front expense meant that we didn’t have much time to make the model work. Second, the urgency of getting it right meant that I had to help everyone else in the company understand the new business model too. At the time, the only model any of us knew included due dates and late fees. When Reed proposed a subscription without due dates and late fees, it was truly scary. After all, late fees were the gas in Blockbuster’s engine. When we said weren’t going to charge them, everybody in the company was asking, “How’s that going to work?” I fell in love with being a businessperson, and I didn’t want to be happy-face HR den mother anymore. I also fell in love with explaining very clearly and fully to everyone in the company why we were making the decisions we were, how they could best participate in achieving our goals, and what the obstacles would be.


pages: 293 words: 78,439

Dual Transformation: How to Reposition Today's Business While Creating the Future by Scott D. Anthony, Mark W. Johnson

activist fund / activist shareholder / activist investor, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Amazon Web Services, autonomous vehicles, barriers to entry, Ben Horowitz, blockchain, business process, business process outsourcing, call centre, Clayton Christensen, cloud computing, commoditize, corporate governance, creative destruction, crowdsourcing, death of newspapers, disintermediation, disruptive innovation, distributed ledger, diversified portfolio, Internet of things, invention of hypertext, inventory management, Jeff Bezos, job automation, job satisfaction, Joseph Schumpeter, Kickstarter, late fees, Lean Startup, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Minecraft, obamacare, Parag Khanna, Paul Graham, peer-to-peer lending, pez dispenser, recommendation engine, self-driving car, shareholder value, side project, Silicon Valley, Skype, software as a service, software is eating the world, Steve Jobs, the market place, the scientific method, Thomas Kuhn: the structure of scientific revolutions, transfer pricing, uber lyft, Watson beat the top human players on Jeopardy!, Y Combinator, Zipcar

To live up to that promise, Blockbuster limited the amount of time people could keep the rented movies, charging substantial late fees if they missed the deadline. That allowed Blockbuster to manage its inventory shrewdly, live up to its promise, and deliver attractive returns to shareholders. TABLE 2-2 Transformation A at Adobe Revenue source Revenues (US$B) 2011 2012 2013 2014 2015 Software 3.3 3.2 2.4 1.6 1.1 Subscriptions 0 0 0.5 1.3 2.3 Digital marketing 0.9 1.1 1.2 1.4 1.5 Note: Figures are fiscal year (December–November); subscriptions includes only core digital media products. At first, Netflix looked similar to the traditional video rental store. Users would rent a single movie and would pay late fees if they kept it too long. Consumers got the convenience of home delivery and the potential to access so-called long tail content—videos that were too niche to appear in a retail chain—while giving up the ability to get exactly what they wanted right away.

This means that decisions can’t be guided purely by historical data, because if data drives you, you can only go backward. The following three case studies show organizations that demonstrated the courage to choose before convincing data had arrived. Then we describe the seven specific early warning signs of disruptive change. Netflix Legend has it that Netflix’s founding traces to Reed Hastings’s frustration borne of incurring ridiculous late fees for forgetting to return his Apollo 13 DVD. Recall that the original idea was to allow people to rent and return videocassettes through the mail. The rise of the DVD format, which could be easily mailed in slim envelopes and delivered by the US Postal Service, along with the adoption of monthly subscription fees (described in more detail in chapter 2), gave the idea additional juice. The DVD itself was clearly a cornerstone of Netflix’s initial strategy.

Each is portrayed as a high-tech company. And indeed, technology is at the core of the way each creates value for customers. But what has made each of them a powerful global force is the business model it followed, which made incumbent response difficult. We’ve described how feet on the street are no match for Google’s ad-auction model and how Netflix decimated Blockbuster’s key profit driver: late fees. Amazon.com flipped the traditional retail model on its head by optimizing its supply chain to the point that it receives money from customers before it places an order with a supplier, giving it negative days working capital in its core retailing business. For its part, Tencent zigged where most similar companies zagged. The dominant business model for online providers is to build audiences and then sell advertisements.


pages: 511 words: 132,682

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

affirmative action, Airbnb, Albert Einstein, Andrei Shleifer, Bernie Sanders, Boeing 737 MAX, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, Donald Trump, en.wikipedia.org, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, income inequality, income per capita, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta analysis, meta-analysis, Milgram experiment, mortgage debt, Network effects, out of africa, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, winner-take-all economy

He enjoyed himself in Vegas and liked his hotel, but as he is checking out, he sees a few other unanticipated charges on the bill. Twenty bucks for extra towels? That $100-a-night room has ended up costing double what he’d expected. But there’s no time to argue. His plane is leaving soon, and the rescheduling fee is more than the airfare. Later that month, another surprise awaits him. His new credit card apparently has a higher interest rate than he expected and sky-high late fees, too, which he discovered after he overlooked his bill because so much work had piled up on his desk while he was on vacation. His assumption that he would always pay on time has already been proved wrong. Astonishingly, all of this takes place in two intensely competitive markets—hotels and credit cards—where, in theory, the power of competition will mean that we consumers can expect to get great deals, where our interests will reign supreme as the merchants fight tooth and nail for our business.

But this is not a competition that operates by finding more and more ways to please its customers, as we might expect; instead it funnels the companies’ ingenuity into finding ways to drag us ever farther out to sea. The rivals offer promotions that drain our wealth. They outmaneuver each other to find our weaknesses, and they draw us unsuspectingly into debt. We swim against a rip current of late fees, of automatic enrollment in programs we don’t want that charge us even more fees, of misleading and deceptive information about terms, prices, or payments. If we slacken even briefly, we are carried deeper into debt. Some of us make it to shore. Yet, embarrassed by our failure to do due diligence, by our gullibility, we don’t speak up. How does this overdose differ from the other two? Unlike our First Overdose, with the helmetless hockey players and entice-and-reject universities, the competitors’ collective and individual interests are aligned—against us.

It just ended up costing about double what we expected because we didn’t know about all the fees that were going to be added to the base price—and didn’t protest them once we became aware of them. And our credit card works perfectly well—that is, it allows us to buy what we want when we want it without much concern about how we’re going to pay for it, which we enjoy a lot—until we come face-to-face with the high interest rate and late fees that were hidden in the fine print. But since we can keep making just minimum payments, we can keep closing our eyes to the real cost. As a measure of how topsy-turvy these competitive markets are, the credit card industry has turned the definition of deadbeat upside down. Credit card deadbeats are customers who successfully avoid the hidden fees because they pay in full and on time, and live within their means.


pages: 146 words: 34,934

The Latte Factor: Why You Don't Have to Be Rich to Live Rich by David Bach, John David Mann

cryptocurrency, financial independence, late fees, time value of money

She glanced around at the television. How much did she and her roommate actually spend on those cable channels they hardly ever watched? What was hanging in her closet that she rarely wore? What other junk was piled in there? How much of it had she put on credit cards? How much interest had stacked up on those cards? And if she didn’t make every single payment on time (which she did not), then just what were the late fees? Zoey groaned. She didn’t want to think about how much everything actually cost. She tilted her head back and spoke out loud to the ceiling. “Could someone else figure this all out for me, please?” Ha-ha again. Myth #3 in action. She pulled out the Starbucks napkin she had stuffed in her pocket, smoothed it out on the little counter, and looked at the total at the bottom of the column of numbers

Paying off the credit cards had taken a bit longer. Once she’d learned how to set up her essential bill payments to go out of her checking account automatically on whatever day of the month she set, she put those credit card minimums on automatic. Not only did that lift another burden of worry off her shoulders, but she was also surprised (and thrilled) to see just how much she saved by not paying any more late fees. Quite a decent latte factor itself. Following a suggestion from Henry, she’d soon added a second automatic monthly payment on each card, timed two weeks after its corresponding minimum payment, and the two together were like a pair of sharp axes to a tree: in twenty-two months the tree fell, and her card balances hit zero. No more card payments. More latte factor. The student loans . . . well, that was a more long-term project.


pages: 286 words: 87,401

Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman, Chris Yeh

activist fund / activist shareholder / activist investor, Airbnb, Amazon Web Services, autonomous vehicles, bitcoin, blockchain, Bob Noyce, business intelligence, Chuck Templeton: OpenTable:, cloud computing, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, database schema, discounted cash flows, Elon Musk, Firefox, forensic accounting, George Gilder, global pandemic, Google Hangouts, Google X / Alphabet X, hydraulic fracturing, Hyperloop, inventory management, Isaac Newton, Jeff Bezos, Joi Ito, Khan Academy, late fees, Lean Startup, Lyft, M-Pesa, Marc Andreessen, margin call, Mark Zuckerberg, minimum viable product, move fast and break things, move fast and break things, Network effects, Oculus Rift, oil shale / tar sands, Paul Buchheit, Paul Graham, Peter Thiel, pre–internet, recommendation engine, ride hailing / ride sharing, Sam Altman, Sand Hill Road, Saturday Night Live, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, social graph, software as a service, software is eating the world, speech recognition, stem cell, Steve Jobs, subscription business, Tesla Model S, thinkpad, transaction costs, transport as a service, Travis Kalanick, Uber for X, uber lyft, web application, winner-take-all economy, Y Combinator, yellow journalism

(As hard as it may be for some readers to comprehend, when we were in college, we would often drive to a Blockbuster Video store on a Friday or Saturday night, pay a couple of bucks to rent a VHS tape of a movie, and use a landline telephone to call Domino’s to order a pizza before popping the videotape into a VCR that was connected to a twenty-five-inch standard-definition cathode-ray tube.) DVD technology allowed Netflix to create a completely new business model. Rather than renting out individual movies and being charged exorbitant late fees if they failed to return the VHS tape in time, Netflix customers paid $20 per month for a subscription to “unlimited” movies—provided they checked out just one movie at a time. This allowed Netflix to eliminate Blockbuster’s widely loathed late fees and capture the powerful and certain revenue stream from the proven model of a subscription service. Netflix took off, and even went public as a DVD-by-mail service. But Hastings never lost sight of his ultimate vision for Netflix—on-demand television delivered via the Internet.

Netflix is the leader in streaming video entertainment, but it only achieved this status by being willing to climb a series of steep learning curves. Remember the situation Reed Hastings faced when he started Netflix in 1997: the dial-up modems that connected most consumers to the Internet were far too slow to stream high-quality video content. So Netflix decided to compete with video stores like Blockbuster by offering a subscription service (with no hated late fees!) to mail movie DVDs to consumers’ homes. This meant that Netflix had to climb a steep learning curve in terms of both DVD-specific tasks, such as negotiating with the studios for access to movie DVDs and coordinating the logistics required to ship them to and from consumers, and developing new features like the ability to recommend movies based on past selections. Climbing the learning curve for these tasks was painful and expensive, but it gave Netflix a competitive advantage over its competitors.


pages: 317 words: 89,825

No Rules Rules: Netflix and the Culture of Reinvention by Reed Hastings, Erin Meyer

Airbnb, Downton Abbey, Elon Musk, en.wikipedia.org, global village, hiring and firing, job-hopping, late fees, loose coupling, loss aversion, out of africa, performance metric, Saturday Night Live, Silicon Valley, Skype, Stephen Hawking, Steve Ballmer, Steve Jobs, subscription business

FIRST BUILD UP TALENT DENSITY . . . 1 A GREAT WORKPLACE IS STUNNING COLLEAGUES In the 1990s, I liked to rent VHS videos from the Blockbuster down the street from our house. I’d take two or three at a time and return them quickly to avoid late fees. Then one day I moved a pile of papers on the dining room table and saw a cassette that I’d watched weeks ago and forgotten to return. When I took the movie back to the store, the woman told me the fee: $40! I felt so stupid. Later, that got me thinking. Blockbuster made most of its margin from late fees. If your business model depends on inducing feelings of stupidity in your customer base, you can hardly expect to build much loyalty. Was there another model to provide the pleasure of watching movies in your own living room without inflicting the pain of paying a lot when you forgot to return them?

A Academy Awards, xvii, 165, 233 “accept or discard” feedback guideline, 31, 33 accidents and safety issues, management style and, 213–14, 269–71 “actionable” feedback guideline, 30, 31, 33, 36, 193, 257 “adapt” feedback guideline, 264 “aim to assist” feedback guideline, 30, 31, 33, 36 Airbnb, 136 Alexa and Katie, 145 alignment, 217–18, 231 on a North Star, 218–21 as tree, 221–31 Allmovie.com, 87 Amazon, 3, 81, 97, 136, 208, 232 Prime, 146, 148 amygdala, 21 Anitta, 97 annual performance reviews, 191 Antioco, John, xi–xii AOL, xviii, 236 Apple, xvii, 77, 97 “appreciate” feedback guideline, 31, 33 Arc de Triomphe, 268–69 Ariely, Dan, 83 Armstrong, Lance, 207, 232–33 Aronson, Elliot, 124 Aspen Institute, 107–8 autonomy, 133 see also decision-making; decision-making approvals, eliminating Avalos, Diego, 151 B Ballad of Buster Scruggs, The, xviii Ballmer, Steve, 122–23 Baptiste, Nigel, 64–66, 68 Bazay, Dominique, 223, 224, 227–31 Bde Maka Ska, 267, 268 Becker, Justin, 35–36 belonging cues, 24–25 bet-taking analogy, 138–40, 153–57, 225–27 Bird Box, 165 Blacklist, The, 26 Black Mirror, 157–59 Blitstein, Ryan, 52 Blockbuster, 3, 171, 236 bankruptcy of, xii, xviii late fees of, 3 Netflix’s offer to, xi–xii size of, xi, xii bonuses, 80–84 Booz Allen Hamilton, 81 brain: feedback and, 20, 21 secrets and, 103 Branson, Richard, xxiv, 50 Brazil, 137, 150, 224–26, 243, 247, 249–51, 257, 264 Brier, David, xxiv brilliant jerks, 34–36, 200 Brown, Brené, 123 Bruk, Anna, 123–24 Bull Durham, 169 Bullock, Sandra, 165 bungee jumping, 194–95 C Canada, 241 candor, 18–21, 141, 175 cultural differences around the world, 250-55, 260, 263–64 culture of, 22–23 dentist visits compared to, 190–91 as disliked but needed, 20–22 failure to speak up, 18, 27, 141 increasing, xx, xxi, 1, 12–37, 72, 100–127, 188–205 jerks and, 34–36 misuse of, 29, 30, 36 “only say about someone what you will say to their face,” 15, 189–90 performance and, 17–20 and readiness to release decision-making controls, 133–35 saying what you really think with positive intent, 13–37 see also feedback; transparency Carey, Chris, 181 Caro, Manolo, 137 Caruso, Rob, 113–14 Casa De Papel, La, xviii celebrating wins, 140, 152 Chapman, Jack, 86 Chase, Chevy, 222 cheating, 62–64 Chelsea, 115–16 children’s programming, 144–45, 226–31 Choy, Josephine, 252–54, 257 Christensen, Nathan, 51 circle of feedback (360-degree assessments), 26–27, 189–205 benefits of, 202–3 discussion facilitated by, 194 in Japan, 256 live, 197–203 stepping out of line during, 200–201 tips for, 199–200 written, names used in, 191–97 Cobb, Melissa, 221–27, 231 Coen, Joel and Ethan, xii Coherent Software, 101, 104 collaboration, 170, 178 Colombia, 251 Comparably, xvii competitiveness, internal, 177–78 compliments and praise, 21, 23 computer software, 77–78, 216 conformity, 141–42 connecting the dots, xxiv first dot, 10–11 second dot, 36 third dot, 69 fourth dot, 98 fifth dot, 125 sixth dot, 160 seventh dot, 185 eighth dot, 203–4 ninth dot, 233 last dot, 264–65 consensus building, 149 contagious behavior, 8–10 context, see leading with context, not control contract signing, 149–51 control, leadership by, 209 ExxonMobil example of, 213–14 leading with context versus, 209–12 see also leading with context, not control controls, removing, xx, xxi, 1, 38–72, 128–61, 206–36 decision-making approvals, 129–61 bet-taking analogy in, 138–40, 153–57, 225–27 Informed Captain model in, 140, 149–52, 216, 223, 224, 231, 248 and picking the best people, 165–66 readiness for, 133–35 signing contracts, 149–51 travel and expense approvals, 55–72 cheating and, 62–64 company’s best interest and, 58, 59, 61, 66, 68–69 context and, 59–62 Freedom and Responsibility ethos and, 60–62 frugality and, 64–69 vacation policy, xv, 39–53, 56, 69–70 freedom and responsibility and, 52–53 Hastings’ nightmares about, 40–41, 42, 44 Hastings’ vacations, 44, 45, 47 Japanese workers and, 46–47 leaders’ modeling and, 42–47 loss aversion and, xv–xvi and setting and reinforcing context to guide employee behavior, 48–49 value added by, 50–52 see also leading with context, not control corporate culture, xiii of Netflix, xiii, xxii, xxiii, 45 Netflix Culture Deck, xiii–xvi, 172–73 Costa, Omarson, 150–51 coupling: alignment and, 218 loose versus tight, 215–17 Coyle, Daniel, 24 creative positions, 78–79, 83–84 criticism (negative feedback), 19–21, 23 belonging cues and, 24 brain and, 20, 21 cultural differences around the world, 251, 261 as disliked but needed, 20–22 language used in, 251–52 responding to, 24, 31 upgraders and downgraders in, 251–52 see also feedback Crook-Davies, Danielle, 19–20 Crown, The, xvii Cryan, John, 82–83 Cuarón, Alfonso, xii, 165 cultural differences around the world, see global expansion and cultural differences Culture Code, The (Coyle), 24 culture map, 242–50 Culture Map, The (Meyer), xxii, 19, 242–50 culture of freedom and responsibility, see Freedom and Responsibility D Daring Greatly: How the Courage to Be Vulnerable Transforms the Way We Live, Love, Parent, and Lead (Brown), 123 Dark, xvii days off, 39–40 see also vacation policy, removing decision-making: dispersed, 216–17 innovation and, 130, 131, 135, 136 and leading with context, 210, 216, 217 to please the boss, 129–30, 133, 152–53 pyramid structure for, 129, 221–23 spreadsheet system and, 143–44 talent density and, 131 transparency and, 131 decision-making approvals, eliminating, 129–61 bet-taking analogy in, 138–40, 153–57, 225–27 Informed Captain model in, 140, 149–52, 216, 223, 224, 231, 248 and picking the best people, 165–66 readiness for, 133–35 signing contracts, 149–51 Del Castillo, Kate, 138 Del Deo, Adam, 207–9, 232–33 Disney, 144, 221, 222, 226, 227 dissent, farming for, 140–44, 158 diversity, 241 Dora the Explorer, 145 Dormen, Yasemin, 157–59 dot-com bubble, 4 dots, see connecting the dots downloading, 146–48 dream teams, 76 DreamWorks, 145, 221, 226 driver feedback, 22 Dutch, Netherlands, 242, 243, 246, 248, 251, 261–63 DVDs, 3–4, 5, 129 Qwikster and, 140–42 shift to streaming from, xii, xvii, 140–41, 236 E Edmondson, Amy, xv Eichenwald, Kurt, 176 Eisner, Michael, 195 elephants, penguins versus, 174 Elite, xvii Emmy Awards, xvii, 145 “Emperor’s New Clothes” syndrome, 23–29 empowerment, 109, 133, 134 see also decision-making; decision-making approvals, eliminating; Freedom and Responsibility Engadget, 158 Enron, xiii entrepreneurship, 138 error prevention, and management style, 213–14, 220, 269–71 Escobar, Pablo, 132 Estaff meetings, 218–19, 243 Evening Standard, 25 Eventbrite, 50 expenses, see travel and expenses; travel and expense approvals, removing experimentation, 138 Explorer project, 154–55, 157 Express, 158 ExxonMobil, 213–14 F Facebook, xiii, 77, 97, 130, 137, 195 failures, 140, 152–59 asking what learning came from the project, 153, 155 not making a big deal about, 153–55 sunshining of, 153, 155–59 family business metaphor, 166–68 moving to sports team metaphor from, 168–70, 173–74 farming for dissent, 140–44, 158 Fast Company, xxiv, 213 fear of losing one’s job, xv, 178–80, 183–84 Fearless Organization, The (Edmondson), xv FedEx, 139 feedback, 14–17, 139, 175, 190, 240 annual performance reviews and, 191 belonging cues and, 24 brain’s response to, 20, 21 circle of (360-degree assessments), 26–27, 189–205 benefits of, 202–3 discussion facilitated by, 194 in Japan, 256 live, 197–203 stepping out of line during, 200–201 tips for, 199–200 written, names used in, 191–97 cultural differences and, 250-57, 260, 261–64 for drivers, 22 “Emperor’s New Clothes” syndrome and, 23–29 failure to speak up with, 18, 27, 141 4A guidelines for, 29–36, 255, 264 accept or discard, 31, 33 actionable, 30, 31, 33, 36, 193, 257 adding 5th A to (adapt), 264 aim to assist, 30, 31, 33, 36 appreciate, 31, 33 cultural differences and, 260 for giving feedback, 30 for receiving feedback, 31 frequency of, 18 Hastings and, 26–29 honesty in, 18; see also candor Japanese culture and, 251–57 loop of, 22–23 Meyer and, 19, 32 negative (criticism), 19–21, 23 belonging cues and, 24 brain and, 20, 21 cultural differences around the world, 251, 261 as disliked but needed, 20–22 language used in, 251–52 responding to, 24, 31 upgraders and downgraders in, 251–52 positive, brain and, 21 responding to, 24, 31 and speaking and reading between the lines, 253 spreadsheet system for gathering, 143–44 survey on, 21–22 teaching employees how to give and receive, 29–32 from teammates, 199 when and where to give, 31–34 see also candor Felps, Will, 8–9 firing, see letting people go Fisher Phillips, 50 five-year plans, 219–20 Flint, Joe, 178 flexibility, and leading with context or control, 220, 221 Fogel, Bryan, 207–8, 233 4K ultra high definition televisions, 65–66 Fowler, Geoffrey, 65–66 Fox, 221 France, 240, 251 Paris, 268–69 Freedom and Responsibility (F&R), xx–xxi, 191, 236, 267, 268 expenses and, 60–62 first steps to, 1–72 Informed Captain model in, 140, 149–52, 216, 223, 224, 231, 248 next steps to, 73–161 techniques to reinforce, 163–236 vacations and, 52–53 weight of responsibility in, 150–52 Friedland, Jonathan, 196 Fuller House, 145 G Game of Thrones, 131–32 Garden Grove, Calif., 22 Gates, Bill, 78 General Electric (GE), 177–78 Germany, 147–48, 250–51 Gizmodo, 178 Gladwell, Malcolm, 142 Glassdoor, xv, 50 global expansion and cultural differences, 237–65, 239–65 adjusting your style for, 257–61 Brazil, 137, 150, 224–26, 243, 247, 249–51, 257, 264 candor and, 250–55, 260, 263–64 culture map, 242–50 feedback and, 250–57, 260, 261–64 Google and, 240–41 Japan, 46–47, 183, 224, 225, 257, 261 in culture map, 243, 247, 248 feedback and criticism in, 251–57 Japanese language, 252–53 360 process and, 256 Netherlands, 242, 243, 246, 248, 251, 261–63 Schlumberger and, 240–41 Singapore, 243, 246, 248, 251, 257–59, 261, 264 trust and, 248, 249 Golden Globe Awards, xvii, 76 Goldman Sachs, 177 Golin, 50 Google, xvii, 77, 94–96, 98, 136 global expansion of, 240–41 gossip, 189 Guillermo, Rob, 207 H Handler, Chelsea, 115–16 happiness, xvii Harvard Business Review, xxii Hastings, Mike, 87 Hastings, Reed: childhood of, 10, 13 at Coherent Software, 101, 104 downloading issue and, 146–48 feedback and, 26–27 interview with, 173–80 in leadership tree, 224–25 marriage of, 13–15 Meyer contacted by, xxii–xxiii Netflix cofounded by, xi, 3–4 in Netflix’s offer to Blockbuster, xi–xii in Peace Corps, xxii, xxiii, 14, 101, 239–40 Pure Software company of, xviii–xix, xxiv, 3, 4, 6, 7, 13–14, 55, 64, 71, 101, 122, 123, 236 Qwikster and, 140–42 HBO, 113–14, 208 Hewlett-Packard (HP), 66–67 hierarchy of picking, 165–66 Hired, xvii hiring: hierarchy of picking and, 165–66 talent density and, see talent density honesty, xvi, xxiii, 178 and spending company money, 58–59 see also candor; transparency hours worked, 39 House of Cards, xvii, 65, 75, 171, 236 HubSpot, xvii, 50 Huffington Post, xxii Hulu, 208, 232 humility, 123 Hunger Games, The, 176 Hunt, Neil, 41, 45, 94, 98, 154, 196 downloads and, 146, 148 and Netflix as team, not family, 173–74 360s and, 197, 198 vacations of, 41 I Icarus, 207–8, 232–33 India, 83, 84, 147–48, 224–26 Mighty Little Bheem in, 228–31 industrial era, 269, 271 industry shifts, xvii–xviii, xix Informed Captain model, 140, 149–52, 216, 223, 224, 231, 248 innovation, xv, xix, xxi, 84, 135–36, 155, 271–72 decision-making and, 130, 131, 135, 136 and leading with context or control, 214–15, 217 Innovation Cycle, 139–40 asking what learning came from the project, 153, 155 celebrating wins, 140, 152 failures and, 140, 152–59 farming for dissent, 140–44, 158 not making a big deal about failures, 153–55 placing your bet as an informed captain, 140, 149–52 socializing the idea, 140, 144–45, 158, 159 spreadsheet system and, 143–44 sunshining failures, 153, 155–59 testing out big ideas, 140, 146–48 International Olympic Committee, 232 internet, 146–48, 154 internet bubble, 4 iPhone, 130 Italy, 131–32 J Jacobson, Daniel, 166–68 Jaffe, Chris, 153–57 Japan, 46–47, 183, 224, 225, 257, 261 in culture map, 243, 247, 248 feedback and criticism in, 251–57 Japanese language, 252–53 360 process and, 256 jerks, 34–36, 200 Jobs, Steve, xxiv, 130 Jones, Rhett, 178 K karoshi, 46 kayaking, 180 Keeper Test, xiv, 165–87, 240, 242 Keeper Test Prompt, 180–83 Key Performance Indicators (KPIs), 81, 191, 209 Kilgore, Leslie, 14–15, 81, 94, 171 expense reports and, 61–62 on hiring and recruiters, 95–96 “lead with context, not control” coined by, 48, 208–9 new customers and, 81–82 signing contracts and, 149–50 360s and, 192, 193, 197, 198 King, Rochelle, 27–29 Kodak, xviii, 236 Korea, 224, 225 Kung Fu Panda, 221 L Lanusse, Adrien, 148 Latin America, 136, 241, 249 Brazil, 137, 150, 224–26, 243, 247, 249–51, 257, 264 Lawrence, Jennifer, 176 lawsuits, 175 layoffs at Netflix, 4–7, 10, 77, 168 leading with context, not control, 48, 207–36 alignment in, 217–18, 231 on a North Star, 218–21 as tree, 221–31 control versus context, 209–12 decision-making in, 210, 216, 217 Downton Abbey-type cook example, 211–12, 218 error prevention and, 213–14, 220, 269–71 ExxonMobil example, 213–14 Icarus example, 207–8, 232–33 innovation and, 214–15, 217 Kilgore’s coining of phrase, 48, 208–9 and loose versus tight coupling, 215–17 Mighty Little Bheem example, 228–31 parenting example, 210–11 spending and, 59–62 talent density and, 212, 213 Target example, 213–15 lean workforce, 79 letting people go, 173–76 “adequate performance gets a generous severance,” xv, xxii, 171, 175–76, 242 employee fears about, xv, 178–80, 183–84 employee turnover, 184–85 in Japan, 183 Keeper Test, xiv, 165–87, 240, 242 Keeper Test Prompt, 180–83 lawsuits and, 175 at Netflix, 185 Netflix layoffs in 2001, 4–7, 10, 77, 168 post-exit communications, 117–20, 183–84 quotas for, 178 LinkedIn, 50, 51, 137 Little Prince, The (Saint-Exupéry), 215 loose versus tight coupling, 215–17 Lorenzoni, Paolo, 131–33, 135, 138 loss aversion, xv–xvi Low, Christopher, 258–60 M Mammoth, 51 Management by Objectives, 209 Man of the House, 222 Massachusetts Institute of Technology, 83 McCarthy, Barry, 14–15, 56 McCord, Patty, 4–7, 9, 10, 15, 27–28, 41, 53, 71, 173 all-hands meetings and, 108 departure from Netflix, 171 expense policy and, 55, 60–61 financial data and, 110 salary policy and, 78, 81, 94, 96 team metaphor and, 169 360s and, 197–99 vacation policy and, 40, 43, 45, 52–53 Memento project, 156, 157 Mexico, 136–38 Meyer, Erin, xxii The Culture Map, xxii, 19, 242–50 Hastings’ message to, xxii–xxiii keynote address of, 19, 32 Netflix employees interviewed by, xxiii, 19–20 in Peace Corps, xxii micromanaging, 130, 133, 134 Microsoft, 78, 122, 176–78 Mighty Little Bheem, 228–31 Mirer, Scott, 200–201 mistakes, 121–25, 271–72 distancing yourself from, 157 management style and, 213–14, 220, 270 sunshining of, 157 see also failures Morgan Stanley, 123 Moss, Trenton, 50–51 Mr.


pages: 514 words: 152,903

The Best Business Writing 2013 by Dean Starkman

Asperger Syndrome, bank run, Basel III, call centre, clean water, cloud computing, collateralized debt obligation, Columbine, computer vision, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, Erik Brynjolfsson, eurozone crisis, Exxon Valdez, factory automation, fixed income, full employment, Goldman Sachs: Vampire Squid, hiring and firing, hydraulic fracturing, income inequality, jimmy wales, job automation, John Markoff, Kickstarter, late fees, London Whale, low skilled workers, Mahatma Gandhi, market clearing, Maui Hawaii, Menlo Park, Occupy movement, oil shale / tar sands, Parag Khanna, Pareto efficiency, price stability, Ray Kurzweil, Silicon Valley, Skype, sovereign wealth fund, stakhanovite, Stanford prison experiment, Steve Jobs, Stuxnet, the payments system, too big to fail, Vanguard fund, wage slave, Y2K, zero-sum game

But if Ramos was more than ten days late with a payment, it generated a late charge of 10 percent of the overdue payment—in her case, about $220. That amount would then be due on top of what she owed. Experts say these terms were especially punitive even for subprime loans, which typically gave borrowers more time and penalized them less for being late. While Ramos no longer has records showing how much she paid in late fees, an August 2008 breakdown by Wilshire of unpaid charges on her account shows outstanding late fees of $770 and a returned-check charge of $50—an extra $820 on top of its base of $1,300. If Ramos or other troubled homeowners could somehow scrape together the money to pay such fees, great. But the true genius of the business model is that it didn’t matter whether borrowers could pay the fees. If a homeowner went bust and the house was sold through foreclosure, no problem.

The hilly plot overlooks the ocean, and on a nice day—and most days there are nice—you can understand why Ramos would say, “I don’t know if I’d want to go back to the house at this point.” The family has even been joined by a cousin of Ramos’s, a retired federal employee who lives there with her husband, because what’s left of her retirement wasn’t enough to live comfortably elsewhere. Four months after Ramos left Florida, Wilshire’s attorneys again sought to foreclose on the home. Together with the various foreclosure and late fees, the interest that had been accruing since Ramos made her last payment in early 2008 added up to a debt of $314,000—about $52,000 more than the original loan. While the home had been appraised at $403,000 in late 2006 when the loan was made, it was worth nowhere near that when it was put up for auction in December 2009. As a result, Wilshire chose instead to take possession of the home and sell it later.

So, we were treated like criminals every time we talked to someone at the servicer. You were, after all, the servicer’s client. I was not. Our home has been worth $60,000 since 2008. We put down $30,000, completed $10,000 in upgrades in the first year and paid $40,000 in payments in the first two years before the modification mess occurred. Our total investment: $80,000. The house is worth $60,000 and we now owe more than we financed due to late fees, attorney’s fees, and mortgage payments. We have been forced into bankruptcy because there is no other option at this point. Sure, one of the many servicers that have managed our loan has offered us a modification, but we would have to sign our rights to bankruptcy away, pay their attorney’s fees, and accept many other conditions that our attorneys have advised us to not agree to. We take responsibility for not educating ourselves more before we entered into the very serious contract of mortgaging a home.


pages: 554 words: 149,489

The Content Trap: A Strategist's Guide to Digital Change by Bharat Anand

Airbnb, Benjamin Mako Hill, Bernie Sanders, Clayton Christensen, cloud computing, commoditize, correlation does not imply causation, creative destruction, crowdsourcing, death of newspapers, disruptive innovation, Donald Trump, Google Glasses, Google X / Alphabet X, information asymmetry, Internet of things, inventory management, Jean Tirole, Jeff Bezos, John Markoff, Just-in-time delivery, Khan Academy, Kickstarter, late fees, Mark Zuckerberg, market design, Minecraft, multi-sided market, Network effects, post-work, price discrimination, publish or perish, QR code, recommendation engine, ride hailing / ride sharing, selection bias, self-driving car, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, social graph, social web, special economic zone, Stephen Hawking, Steve Jobs, Steven Levy, Thomas L Friedman, transaction costs, two-sided market, ubercab, WikiLeaks, winner-take-all economy, zero-sum game

Singh, “Making Peace with Political Class: The Story Behind the Consensus Over Lokpal Bill,” Indian Express, December 18, 2013; Ishaan Tharoor, “10. Anna Hazare’s Hunger Fasts Rock India,” Time, December 7, 2011; Chandrahas Choudhury, “Indians Divide Over Policing a Watchdog: World View,” Bloomberg Vie w, June 21, 2011; Sandeep Phukan and Sunil Prabhu, “Lokpal Bill Passed in Lok Sabha, but No Constitutional Status,” NDTV, last modified December 28, 2011. forty-dollar late fee Willy Shih et al., “Netflix,” HBS No. 607-138 (Boston: Harvard Business School Publishing, rev. April 27, 2009); the forty-dollar late fee has been disputed by other accounts as the story behind Netflix’s creation, see Gina Keating’s book for a detailed account: Gina Keating, Netflixed: The Epic Battle for America’s Eyeballs (New York: Portfolio/Penguin, 2012). Blockbuster chose Greg Satell, “A Look Back at Why Blockbuster Really Failed and Why It Didn’t Have To,” Forbes, September 5, 2014; Luis Alfonso Dau and David T.

A single person, through actions that might be hardly characterized as novel or unprecedented—after all, street fights and hunger strikes have been common in these countries for decades—sparks a vast change in politics and society unimaginable even a decade earlier; a small trigger has a large impact. The second feature, passive management response, is also pervasive in the media. Netflix, started in 1997, was inspired by a forty-dollar late fee paid by founder Reed Hastings for a Blockbuster rental. Blockbuster chose not to react. At the time it seemed a rational response: after all, six years later Blockbuster’s revenues exceeded $5 billion—more than ten times as much as Netflix’s. By the time management decided to react to Netflix, it was too late. Blockbuster declared bankruptcy in 2010. Newspapers waited years before aggressively moving online.

CONNECTED CHOICES IN DIGITAL WORLDS It’s tempting to think the successes of Walmart, Edward Jones, and other businesses like them come from the complexity of features that characterize traditional businesses—supply chains, modern manufacturing, real estate, and face-to-face relationships. It’s tempting to think that their webs of connected choices are peculiar to analog worlds. That’s not the case. Success in digital worlds often comes from the same factors. Reed Hastings founded Netflix in 1999 with a simple proposition: Order up to three DVDs at a time from your computer, get them shipped quickly, and hold on to them for as long as you like, with no late fees. Over the next ten years Netflix grew impressively. By 2008 it had $1.3 billion in revenue, nearly ten million subscribers, and $83 million in profits. Its success, many observers noted, came from a combination of factors: a simple and elegant customer interface, a powerful algorithm for recommending movies to subscribers, an elegant “queuing” tool that allowed customers to record their preferences for up to fifty movies in advance rather than each time they returned a DVD, and—most important—its decision to aggregate, obtaining content elsewhere rather than producing its own.


pages: 176 words: 55,819

The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career by Reid Hoffman, Ben Casnocha

Airbnb, Andy Kessler, Black Swan, business intelligence, Cal Newport, Clayton Christensen, commoditize, David Brooks, Donald Trump, en.wikipedia.org, fear of failure, follow your passion, future of work, game design, Jeff Bezos, job automation, Joi Ito, late fees, lateral thinking, Marc Andreessen, Mark Zuckerberg, Menlo Park, out of africa, Paul Graham, paypal mafia, Peter Thiel, recommendation engine, Richard Bolles, risk tolerance, rolodex, shareholder value, side project, Silicon Valley, Silicon Valley startup, social web, Steve Jobs, Steve Wozniak, Tony Hsieh, transaction costs

It’s about keeping Detroit from happening to you and making the Silicon Valley way work for you. THE PATH TO THE FUTURE In 1997 Reed Hastings, a software entrepreneur living in the hills of Silicon Valley, was faced with a problem. He had rented Apollo 13 from a video store, returned it days late, and was dealt a late fee so nasty that he was too embarrassed to tell his wife what had happened. His entrepreneurial instinct kicked in: What if you could rent a movie and never face the risk of a late fee? So he began researching the industry and learned that the new DVD technology was light and cheap to ship.14 He realized that the shift toward e-commerce, in concert with the DVD revolution, could be a huge opportunity. So that year he launched a business that combined e-commerce with old-fashioned postal mail: customers would select their movie on a website, receive a DVD of the movie in the mail, and then mail it back whenever they were finished.


pages: 274 words: 93,758

Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

"Robert Solow", Andrei Shleifer, asset-backed security, Bernie Madoff, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, desegregation, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, market bubble, Menlo Park, mental accounting, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, short selling, Silicon Valley, the new new thing, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, Vilfredo Pareto, wage slave

That $150 billion is more than one-third of what we pay in the aggregate for mortgage interest on our homes32; it is more than one-sixth of what we spend for our home food consumption; and more than one-third of what we spend for motor vehicles and parts.33 Let’s take a second cut at the cost of credit cards. How is this cost divided among different types of payment? We have estimates of three components of costs. A rough division of these payments is that about one-half consists of interest paid on overdue accounts; about one-third is for the interchange fees; and another one-sixth is for miscellaneous penalties, especially including late fees.34 An enterprising blogger, Sean Harper, a former student of Freakonomics’s Steven Levitt, has given us a third cut. He calculated the interchange fees that a merchant would pay if you handed her your Citicorp Visa Rewards Card.35 For a $1.50 pack of gum purchased at a convenience store, the fee was 40 cents; for a $30 tank of gas, $1.15; for a $100 grocery purchase, $2.05. Harper’s list goes on.

It begins with the fees charged to the merchants, whose payments are large. They buy their magic pills, but at only one-third of the total cost. Next come the consumers, blithely purchasing their groceries, footwear, and whatever else, with the credit card extracting high rates of interest from those with overoptimistic expectations regarding how they will pay the bill when it comes. And then insult is added to injury with the late fees and the nuisance fees. At each and every stage, the competitive drive for profits plays on our weaknesses. FIVE Phishing in Politics All of us have an experience—with a past girlfriend or boyfriend, perhaps—where we can look back with the wisdom of a few more years, and can now articulate clearly what we sensed only vaguely at the time. One of us (George) had such an experience in the last week of October 2004.

We get a figure of “$48 billion a year” for interchange fees from John Tozzi, “Merchants Seek Lower Credit Card Interchange Fees,” Businessweek Archives, October 6, 2009, accessed May 2, 2015, http://www.bloomberg.com/bw/stories/2009-10-06/merchants-seek-lower-credit-card-interchange-fees. These three numbers add up to $171 billion, which is in the ballpark, relative to the aggregate estimate for 2009 of $167 billion for that year from Robin Sidel, “Credit Card Issuers Are Charging Higher.” Viewing the late fees and the interchange fees as roughly constant, but the interest fees as variable, we get our characterization of the division (of the 2012 $150 billion of revenues). 35. http://truecostofcredit.com/400926. This website has now closed. Harper later started a consulting firm (subsequently taken over) that advised merchants on how to minimize their exchange fees. From the high charges he documents, it would appear that this is quite a useful service.


pages: 233 words: 67,596

Competing on Analytics: The New Science of Winning by Thomas H. Davenport, Jeanne G. Harris

always be closing, big data - Walmart - Pop Tarts, business intelligence, business process, call centre, commoditize, data acquisition, digital map, en.wikipedia.org, global supply chain, high net worth, if you build it, they will come, intangible asset, inventory management, iterative process, Jeff Bezos, job satisfaction, knapsack problem, late fees, linear programming, Moneyball by Michael Lewis explains big data, Netflix Prize, new economy, performance metric, personalized medicine, quantitative hedge fund, quantitative trading / quantitative finance, recommendation engine, RFID, search inside the book, shareholder value, six sigma, statistical model, supply-chain management, text mining, the scientific method, traveling salesman, yield management

He thanks his sons Hayes and Chase for passionate discussions about baseball as an analytical discipline, particularly the Boston Red Sox. Part One THE NATURE OF ANALYTICAL COMPETITION 1 THE NATURE OF ANALYTICAL COMPETITION Using Analytics to Build a Distinctive Capability IN 1997, A THIRTY-SOMETHING man whose resume included software geek, education reformer, and movie buff rented Apollo 13 from the biggest video-rental chain on the block—Blockbuster—and got hit with $40 in late fees. That dent in his wallet got him thinking: why didn’t video stores work like health clubs, where you paid a flat monthly fee to use the gym as much as you wanted? Because of this experience—and armed with the $750 million he received for selling his software company—Reed Hastings jumped into the frothy sea of the “new economy” and started Netflix, Inc. Pure folly, right? After all, Blockbuster was already drawing in revenues of more than $3 billion per year from its thousands of stores across America and in many other countries—and it wasn’t the only competitor in this space.

The movie delivery company, which has grown from $5 million in revenues in 1999 to about $1 billion in 2006, is a prominent example of a firm that competes on the basis of its mathematical, statistical, and data management prowess. Netflix offers free shipping of DVDs to its roughly 6 million customers and provides a return shipping package, also free. Customers watch their cinematic choices at their leisure; there are no late fees. When the DVDs are returned, customers select their next films. Besides the logistical expertise that Netflix needs to make this a profitable venture, Netflix employs analytics in two important ways, both driven by customer behavior and buying patterns. The first is a movie-recommendation “engine” called Cinematch that’s based on proprietary, algorithmically driven software. Netflix hired mathematicians with programming experience to write the algorithms and code to define clusters of movies, connect customer movie rankings to the clusters, evaluate thousands of ratings per second, and factor in current Web site behavior—all to ensure a personalized Web page for each visiting customer.


pages: 300 words: 78,475

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

American Society of Civil Engineers: Report Card, Bernie Madoff, Bernie Sanders, call centre, carried interest, citizen journalism, clean water, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, extreme commuting, Exxon Valdez, full employment, greed is good, housing crisis, immigration reform, invisible hand, knowledge economy, laissez-faire capitalism, late fees, market bubble, market fundamentalism, Martin Wolf, medical bankruptcy, microcredit, new economy, New Journalism, offshore financial centre, Ponzi scheme, post-work, Report Card for America’s Infrastructure, Richard Florida, Ronald Reagan, Rosa Parks, single-payer health, smart grid, The Wealth of Nations by Adam Smith, too big to fail, transcontinental railway, trickle-down economics, winner-take-all economy, working poor, Works Progress Administration

“In 1980, the typical credit card contract was a page and a half long,” Elizabeth Warren says.118 “Today, the typical credit card contract is about thirty-one pages long. The other twenty-nine and a half pages are the tricks and traps. I teach contract law at Harvard Law School,” she continues, “and I can’t understand my credit card contract. It’s just not designed to be read.” As a result, for years the credit card companies have been fattening their bottom lines with an ever-widening array of fees: late fees, cash-advance fees, balance-transfer fees, over-the-limit fees. Fees now account for 39 percent of card issuers’ revenue.119 In fact, last year, lenders collected more than $20 billion in penalties and fees.120 And even with the passage of the new credit card regulations that took effect in early 2010, banks are coming up with sneaky new ways to soak customers, including (if you can believe it) an “inactivity fee” for not using their card!

According to the new law, the credit card issuer needs to give a forty-five-day notification before it raises interest rates.64 But you must stop using the card if you refuse to accept the new rate. And the banks, of course, know the havoc it would create in most peoples’ lives to have to regularly close down their credit cards and seek new ones. However soul sapping it may be, you have to read all the stuff that comes from your credit card company—including the small print about service fees on top of late fees on top of “inactivity” fees. If you can, set up automatic bill pay so you don’t miss a payment. Because fees account for 39 percent of credit card issuers’ revenue, the banks will keep dreaming up new ways to trick us that are not covered, or even contemplated, by existing laws.65 And the new law doesn’t prevent banks from gouging their credit card customers with sky-high interest rates.66 Senator Bernie Sanders, whose attempts at capping credit card interest rates have been voted down by his colleagues, says, “When banks are charging thirty percent interest rates, they are not making credit available.67 They are engaged in loan sharking”—also known as usury.


pages: 267 words: 78,857

Discardia: More Life, Less Stuff by Dinah Sanders

A. Roger Ekirch, Atul Gawande, big-box store, Boris Johnson, carbon footprint, clean water, clockwatching, cognitive bias, collaborative consumption, credit crunch, endowment effect, Firefox, game design, Inbox Zero, income per capita, index card, indoor plumbing, Internet Archive, Kevin Kelly, late fees, Marshall McLuhan, McMansion, Merlin Mann, post-work, side project, Silicon Valley, Stewart Brand

Set up memory safety nets Have someone else remember something for you. Enjoy the beauty of those three magic words: “automatic minimum payment.” Talk with the companies behind all your monthly bills and see if there's a way to have the minimum payment automatically charged to your bank account or credit card. The key word here is “minimum.” You should pay more if you can to avoid interest charges, but always pay the least possible amount to avoid late fees. Then, while you have them on the phone, see if you can get your bills by email. This keeps paper from landing in your house and gives you the earliest possible warning if a bill amount is in error. Plan ahead and make checklists or kits to ensure repeatedly that you have what you need when and where you need it. When you travel, for example, think ahead and bring the stuff you wind up kicking yourself for forgetting.

If the backlog awaiting your attention isn’t pressuring you, that’s excellent; however, when it does, try some of these ideas: Consider canceling your Netflix subscription and not using TiVo's recommendation feature. For many, what matters most about their Netflix account is the queue—a someday-maybe list of movies to watch—so just keep the list if you’re not keeping up with incoming films. Take that subscription money (or saved late fees if you’ve been renting from a traditional video store or library) and put 80% of it into savings. Invest the rest in really good chocolate. I bet you'll take care of that tonight! Use CatalogChoice.org Slow that cascade of advertising dripping from your mailbox. Contemplate canceling or reducing magazine and newspaper subscriptions—at least abandon any feeling of obligation that you have to read the whole thing.


pages: 232 words: 71,965

Dead Companies Walking by Scott Fearon

bank run, Bernie Madoff, business cycle, corporate raider, creative destruction, crony capitalism, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, Golden Gate Park, hiring and firing, housing crisis, index fund, Jeff Bezos, Joseph Schumpeter, late fees, McMansion, moral hazard, new economy, pets.com, Ponzi scheme, Ronald Reagan, short selling, Silicon Valley, Snapchat, South of Market, San Francisco, Steve Jobs, survivorship bias, Upton Sinclair, Vanguard fund, young professional

By the time I got to Dallas, Blockbuster and its storefront model were clearly the horse-drawn carriages of the movie rental business. Netflix and its web-based format were the equivalents of Model A cars. Unlike groceries or prescription pills, consumers liked picking out their DVD rentals online and receiving them in the mail. And they especially liked paying a flat monthly price instead of the exorbitant late fees Blockbuster had been getting fat on for decades. There was no getting around these truths. Netflix already had millions of subscribers in 2007. Just about every other major movie rental chain had already gone broke as a result or was on the brink of it. And yet everyone at Blockbuster did their best to come up with new ways to pretend that things hadn’t changed. At one point, the buzz around the industry was that Blockbuster would save itself by merging with its biggest competitor, Hollywood Video.

Three years and millions of dollars in losses later, Diller cried uncle and divested himself of Newsweek.† I’m not saying mergers can’t be beneficial. But all of the synergy in the world cannot replace the lifeblood of any business: growing revenues. The real tragedy of Blockbuster’s history is that it almost escaped its fate. For a little while after Icahn took over, its Total Access online service managed to slow Netflix’s momentum. But without late fees and per-movie charges, it was never going to be profitable for the company—not with the burden of thousands of store leases and tens of thousands of employee salaries to pay. But instead of closing as many stores as they could to cut costs and putting everything they could into its online presence, Blockbuster’s leadership went backward and decided to turn its stores into glorified candy racks.


pages: 407 words: 136,138

The Working Poor: Invisible in America by David K. Shipler

always be closing, Bonfire of the Vanities, call centre, David Brooks, full employment, illegal immigration, late fees, low skilled workers, payday loans, profit motive, Silicon Valley, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, union organizing, Upton Sinclair, War on Poverty, working poor

The real price was reflected in those bills with the snowballing balances. Since her credit rating was not exactly AAA, she was being charged up to 23.999 percent interest. What’s more, while she was faithfully paying the finance charge and minimum almost every month, she did not always get her salary in time to meet the deadline; as a result, she gradually realized, the card companies were adding late fees to her principal, then charging the exorbitant interest on that ever-growing principal. Long after she stopped using the cards, the balance continued to rise. This has become a chronic problem across the country as lenders search credit records for minor delinquencies to label them “subprime.” If you’re in that category you get charged higher fees and interest, but you may not know it, because few states require lenders to reveal the score that determines a consumer’s credit rating, even when the borrower sees his credit report.

She could not afford to put her own two children in the day-care center where she worked. Christie was a hefty woman who laughed more readily than her predicament should have allowed. She suffered from stress and high blood pressure. She had no bank account because she could not keep enough money long enough. Try as she might to shop carefully, she always fell behind on her bills and was peppered with late fees. Her low income entitled her to food stamps and a rental subsidy, but whenever she got a little pay raise, government agencies reduced the benefits, and she felt punished for working. She was trapped on the treadmill of welfare reform, running her life according to the rules of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The title left no doubt about what Congress and the White House saw as poverty’s cause and solution.

The same day, she put $5 worth of gas in her car, and the next day spent $6 of her own money to take the day-care kids to the zoo. The eighth was payday, and her entire $330 check disappeared in a flash. First, there was what she called a $3 “tax” to cash her check, just one of several such fees for money orders and the like—a penalty for having no checking account. Immediately, $172 went for rent, including a $10 late fee, which she was always charged because she never had enough to pay by the first of the month. Then, because it was October and she had started to plan for Christmas, she paid $31.47 at a store for presents she had put on layaway, another $10 for gasoline, $40 to buy shoes for her two kids, $5 for a pair of corduroy pants at a secondhand shop, another $5 for a shirt, $10 for bell-bottom pants, and $47 biweekly for car insurance.


The Card Catalog: Books, Cards, and Literary Treasures by Library Of Congress, Carla Hayden

In Cold Blood by Truman Capote, index card, information retrieval, Johannes Kepler, late fees

., Jefferson reported to Smith, founder of the National Intelligencer, “Our tenth and last wagon load of books goes off today . . . and an interesting treasure is added to your city . . . unquestionably the choicest collection of books in the U.S. and I hope it will not be without some general effect on the literature of the country.” Record of Books Drawn by Members of Congress for 1815. This record documents the titles members of Congress requested, when the books were checked out, and when they were returned. Members were charged a late fee of a dollar a day if the book was late. Ledgers offer a fascinating look at the erudite reading habits of Congress and some U.S. presidents. The range in subject matter was eclectic—from politics, philosophy, and science to poetry and literature. Catalogue of Books, Maps, and Charts, Belonging to the Library of the Two Houses of Congress. Washington City. Printed by William Duane, April 1802.


pages: 411 words: 80,925

What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

Airbnb, barriers to entry, Bernie Madoff, bike sharing scheme, Buckminster Fuller, buy and hold, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, commoditize, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, George Akerlof, global village, hedonic treadmill, Hugh Fearnley-Whittingstall, information retrieval, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Parkinson's law, peer-to-peer, peer-to-peer lending, peer-to-peer rental, Ponzi scheme, pre–internet, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, Zipcar

Successful entrepreneurs Marc Randolph, Reed Hastings, and Mitch Lowe founded Netflix in 1999, after Randolph and Hastings had made a fortune by inventing a debugging software tool called Pure Software. Hastings first got the idea for Netflix after going to Blockbuster one day and discovering that his family had been six weeks late in returning Apollo 13. The overdue cassette cost him $40 in late fees. It was later, on his way to the gym, that he had his eureka moment when he realized his fitness club had a much better business model. “You could pay $30 or $40 a month and work out as little or as much as you wanted.” He reasoned that there had to be a similar way “to make money renting movies without gouging customers on late fees.”10 Hastings, who is now in his late forties and lives with his wife and two kids in Santa Cruz, likes movies but admits he is no movie buff. He is tall and slim and with his neatly trimmed salt-and-pepper goatee looks a bit like a younger version of another film industry pioneer, George Lucas.


pages: 294 words: 82,438

Simple Rules: How to Thrive in a Complex World by Donald Sull, Kathleen M. Eisenhardt

Affordable Care Act / Obamacare, Airbnb, asset allocation, Atul Gawande, barriers to entry, Basel III, Berlin Wall, carbon footprint, Checklist Manifesto, complexity theory, Craig Reynolds: boids flock, Credit Default Swap, Daniel Kahneman / Amos Tversky, diversification, drone strike, en.wikipedia.org, European colonialism, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, haute cuisine, invention of the printing press, Isaac Newton, Kickstarter, late fees, Lean Startup, Louis Pasteur, Lyft, Moneyball by Michael Lewis explains big data, Nate Silver, Network effects, obamacare, Paul Graham, performance metric, price anchoring, RAND corporation, risk/return, Saturday Night Live, sharing economy, Silicon Valley, Startup school, statistical model, Steve Jobs, TaskRabbit, The Signal and the Noise by Nate Silver, transportation-network company, two-sided market, Wall-E, web application, Y Combinator, Zipcar

In 1997 Reed Hastings was annoyed by a $40 late fee on his rental of the video Apollo 13 from Blockbuster. As an already successful entrepreneur, he recognized a golden opportunity to create better customer service than that delivered by video rental stores by exploiting the emergence of DVDs and the rise of the Internet. He launched Netflix as a service that let consumers order DVD movie rentals online and receive them at home by mail. Hastings initially conceptualized Netflix as the online version of the offline giant, Blockbuster. This early analogy helped to shape the template of simple rules that guided how Netflix structured its activities, such as rental decisions: to charge $4 per rental, for example, and set a return deadline with late fees. Since analogies are holistic solutions, they do well in complex situations, providing a ready-made framework for a new endeavor.


Hyperbole and a Half: Unfortunate Situations, Flawed Coping Mechanisms, Mayhem, and Other Things That Happened by Allie Brosh

late fees

If my life was a movie, the turning point of my depression would have been inspirational and meaningful. It would have involved wisdom-filled epiphanies about discovering my true self and I would conquer my demons and go on to live out the rest of my life in happiness. Instead, my turning point mostly hinged upon the fact that I had rented some movies and then I didn’t return them for too long. The late fees had reached the point where the injustice of paying any more than I already owed outweighed my apathy. I considered just keeping the movies and never going to the video store again, but then I remembered that I still wanted to rewatch Jumanji. I put on some clothes, put the movies in my backpack, and biked to the video store. It was the slowest, most resentful bike ride ever. And when I arrived, I found out that they didn’t even have Jumanji in.


Debtor Nation: The History of America in Red Ink (Politics and Society in Modern America) by Louis Hyman

asset-backed security, bank run, barriers to entry, Bretton Woods, business cycle, card file, central bank independence, computer age, corporate governance, credit crunch, declining real wages, deindustrialization, diversified portfolio, financial independence, financial innovation, fixed income, Gini coefficient, Home mortgage interest deduction, housing crisis, income inequality, invisible hand, late fees, London Interbank Offered Rate, market fundamentalism, means of production, mortgage debt, mortgage tax deduction, p-value, pattern recognition, profit maximization, profit motive, risk/return, Ronald Reagan, Silicon Valley, statistical model, technology bubble, the built environment, transaction costs, union organizing, white flight, women in the workforce, working poor, zero-sum game

Unfortunately for credit card companies, fees, unlike interest rates, were still regulated by individual states, until 1996 that is. In 1996, a Supreme Court decision, Smiley v. Citibank, extended 274 CHAPTER SEVEN the Marquette decision to allow banks to charge late fees if the card was issued in a state that allowed such fees.250 Barbara Smiley, a California homemaker, had two credit cards through Citibank, in South Dakota.251 In 1992, she brought a class action lawsuit against Citibank on behalf of California borrowers charged $15 late fees, which she saw as illegal under California law. The Court upheld the position of the Comptroller of the Currency, that fees were simply another form of interest. While this might seem like a broad interpretation of the word “interest,” such reasoning unpinned all the usury laws of the twentieth century, which had treated fees as a surreptitious form of interest that drove up the real cost of borrowing.

Mark Borowsky, “The $10 Billion Question,” CCM (March 1995), 34. 243. Ibid. 244. “A Desire to Shed Bad Debt Drives Portfolio Sales,” Credit Card News, February 1, 1997. 245. Ibid. 246. Anonymous, “Risk-based repricing draws flak,” CCM (January 1996), 13. 247. “A Desire to Shed.” 248. “Fraying Credit Quality Leaves Investors Hanging,” Credit Card News, July 1, 1996. 249. Ibid. 250. Linda Green, “Late Fees Upheld For Credit Cards,” New York Times, June 4, 1996, A1.; Barbara Smiley, Petitioner V. Citibank (South Dakota), N.A., 517 U.S. 735. 251. Paul Barrett, “Legal Beat: Justices’ Ruling on credit cards favors banks,” Wall Street Journal, June 4, 1996, B1; The Smiley decision followed on the heels of several state-level decisions like Tikkanen v. Citibank, Greenwood Trust Co. v. Commonwealth of Massachusetts, Hill v.


pages: 389 words: 112,319

Think Like a Rocket Scientist by Ozan Varol

Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, Amazon Web Services, Andrew Wiles, Apple's 1984 Super Bowl advert, Arthur Eddington, autonomous vehicles, Ben Horowitz, Cal Newport, Clayton Christensen, cloud computing, Colonization of Mars, dark matter, delayed gratification, different worldview, discovery of DNA, double helix, Elon Musk, fear of failure, functional fixedness, Gary Taubes, George Santayana, Google Glasses, Google X / Alphabet X, Inbox Zero, index fund, Isaac Newton, James Dyson, Jeff Bezos, job satisfaction, Johannes Kepler, Kickstarter, knowledge worker, late fees, lateral thinking, lone genius, longitudinal study, Louis Pasteur, low earth orbit, Marc Andreessen, Mars Rover, meta analysis, meta-analysis, move fast and break things, move fast and break things, multiplanetary species, obamacare, Occam's razor, out of africa, Peter Thiel, Pluto: dwarf planet, Ralph Waldo Emerson, Richard Feynman, Richard Feynman: Challenger O-ring, Ronald Reagan, Sam Altman, Schrödinger's Cat, Search for Extraterrestrial Intelligence, self-driving car, Silicon Valley, Simon Singh, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Upton Sinclair, Vilfredo Pareto, We wanted flying cars, instead we got 140 characters, Whole Earth Catalog, women in the workforce, Yogi Berra

Which unnecessary relic of the past clouds your thinking and hampers your progress? What do you assume you’re supposed to do simply because everyone around you is doing it? Can you question this assumption and replace it with something better? We used to assume that a restaurant required tables, an immobile kitchen, and a brick-and-mortar location. Questioning these assumptions gave us food trucks. We used to assume that late fees and physical stores were necessary for video rentals. Questioning these assumptions gave us Netflix. We used to assume that you needed bank loans or venture-capital funding to launch a new product. Questioning these assumptions gave us Kickstarter and Indiegogo. To be sure, you can’t go through life questioning every single thing you do. Routines free us of the thousands of exhausting daily decisions we would otherwise have to make.

Larry Page and Sergey Brin adopted an idea from academia—the frequency of citations to an academic paper indicates its popularity—and applied it to the search engine to create Google. Steve Jobs famously borrowed from calligraphy to create multiple typefaces and proportionally spaced fonts on the Macintosh. Netflix cofounder Reed Hastings was inspired by the subscription model used at his gym: “You could pay $30 or $40 a month and work out as little or as much as you wanted.”71 Frustrated by the big late fees he had incurred for renting Apollo 13, Hastings decided to apply the same model to video rentals. Nike’s first running shoes were modeled after a common household appliance.72 In the early 1970s, University of Oregon running coach Bill Bowerman was looking for shoes that would perform well on different surfaces. At the time, Bowerman’s athletes would wear shoes with metal spikes, which lacked proper traction and would destroy the running surface.


pages: 141 words: 40,979

The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments by Pat Dorsey

Airbus A320, barriers to entry, business process, call centre, creative destruction, credit crunch, discounted cash flows, intangible asset, knowledge worker, late fees, low cost airline, low cost carrier, Network effects, pets.com, price anchoring, risk tolerance, risk/return, rolodex, shareholder value, Stewart Brand

After all, money is the ultimate commodity, and bank accounts don’t vary a whole lot in terms of their features. Why don’t people switch banks frequently in search of higher interest rates and lower fees? People will drive a couple of miles out of their way to save a nickel per gallon on gasoline, after all, and that’s only a buck or two of savings per fill-up. A bank account that doesn’t nickel-and-dime you for late fees and such could easily save you a lot more than that cheap out-of-the-way gas station can. The answer is pretty simple, of course. Switching from the nearby gas station to the cheaper one costs you maybe 5 to 10 minutes extra of time. That’s it. Moreover, you know with certainty that is the only cost, because gasoline is gasoline. But switching bank accounts involves filling out some forms at the new bank and probably changing any direct-deposit or bill-paying arrangements you may have made.


pages: 519 words: 118,095

Your Money: The Missing Manual by J.D. Roth

Airbnb, asset allocation, bank run, buy and hold, buy low sell high, car-free, Community Supported Agriculture, delayed gratification, diversification, diversified portfolio, estate planning, Firefox, fixed income, full employment, hedonic treadmill, Home mortgage interest deduction, index card, index fund, late fees, mortgage tax deduction, Own Your Own Home, passive investing, Paul Graham, random walk, Richard Bolles, risk tolerance, Robert Shiller, Robert Shiller, speech recognition, stocks for the long run, traveling salesman, Vanguard fund, web application, Zipcar

"The others are just cards I keep open for credit score reasons or for special cases." (Flip to Your Credit Score for info on credit scores.) Wang says the key to profiting from credit cards is to pay your balance every month. He's been using credit cards for 11 years and has never paid a finance charge. He's never paid a late fee, either, though he's come close. "There have been times my payments were a couple days late, but every time I've been able to call and have them remove the late fee and the finance charges. Everything's been fine." For more on savvy use of credit cards, pick up a copy of How You Can Profit from Credit Cards (FT Press, 2008) by Curtis Arnold. Disputing Charges Mistakes happen. Once in a while, a restaurant will charge you twice for the same meal or an online bookstore will bill you for somebody else's purchase.


pages: 320 words: 87,853

The Black Box Society: The Secret Algorithms That Control Money and Information by Frank Pasquale

Affordable Care Act / Obamacare, algorithmic trading, Amazon Mechanical Turk, American Legislative Exchange Council, asset-backed security, Atul Gawande, bank run, barriers to entry, basic income, Berlin Wall, Bernie Madoff, Black Swan, bonus culture, Brian Krebs, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, Chuck Templeton: OpenTable:, cloud computing, collateralized debt obligation, computerized markets, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, Debian, don't be evil, drone strike, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, Filter Bubble, financial innovation, financial thriller, fixed income, Flash crash, full employment, Goldman Sachs: Vampire Squid, Google Earth, Hernando de Soto, High speed trading, hiring and firing, housing crisis, informal economy, information asymmetry, information retrieval, interest rate swap, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, Julian Assange, Kevin Kelly, knowledge worker, Kodak vs Instagram, kremlinology, late fees, London Interbank Offered Rate, London Whale, Marc Andreessen, Mark Zuckerberg, mobile money, moral hazard, new economy, Nicholas Carr, offshore financial centre, PageRank, pattern recognition, Philip Mirowski, precariat, profit maximization, profit motive, quantitative easing, race to the bottom, recommendation engine, regulatory arbitrage, risk-adjusted returns, Satyajit Das, search engine result page, shareholder value, Silicon Valley, Snapchat, social intelligence, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical arbitrage, statistical model, Steven Levy, the scientific method, too big to fail, transaction costs, two-sided market, universal basic income, Upton Sinclair, value at risk, WikiLeaks, zero-sum game

But if they are using black box techniques to risk other people’s money with no personal exposure, their self-characterization as fearless captains of industry is scarcely credible. Such huge takes create inflated expectations throughout the economy the way inflated grade-curves do in schools; how can health reformers ask surgeons to accept lower salaries when their friends in fi nance are so 200 THE BLACK BOX SOCIETY much richer? The bankers’ bounty fuels a derangement of value and deteriorating values. Banks charge plenty for their vital ser vices. Consider that late fee on your credit card; even before you incurred it, the bank had already taken a cut of every purchase you made. Consider the mysterious charges eating away at your 401(k), and the transaction costs whenever your broker buys or sells. Fee churning contributes hugely to the livelihoods of finance professionals. But how much value do those professionals really create in the process? Not much, it would appear.

Elaborate rules govern transactions ranging from home sales to stock trading. Programs follow steps in mathematicized procedures, and use complex pattern recognition techniques to analyze massive data sets. Scott Patterson, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (New York: Crown Business, 2011), 251. 5. Few people fully grasp the impact of credit scoring. You may think that the late fee for paying a credit card bill is merely $35 or so. But if it reduces your credit score, the price could be far steeper. For instance, consider someone who took out a $500,000, thirty-year fi xed-rate mortgage in 2010 with a credit score of about 765. At some point, he might accidentally miss a payment on a credit card, and his score might drop to, say, 690. Neither of these is a bad score, but at that time, those with scores above 760 could expect a 4.52 percent rate (resulting in $2,539 monthly mortgage payments), while those scoring below 700 would probably end up with a 4.91 percent rate, at $2,657 per month.


pages: 578 words: 131,346

Humankind: A Hopeful History by Rutger Bregman

Airbnb, Anton Chekhov, basic income, Berlin Wall, bitcoin, Broken windows theory, call centre, David Graeber, Donald Trump, experimental subject, Fall of the Berlin Wall, Frederick Winslow Taylor, Hans Rosling, invention of writing, invisible hand, knowledge economy, late fees, Mahatma Gandhi, mass incarceration, meta analysis, meta-analysis, Milgram experiment, Nelson Mandela, New Journalism, placebo effect, sharing economy, Shoshana Zuboff, Silicon Valley, social intelligence, Stanford prison experiment, Stephen Hawking, Steve Jobs, Steven Pinker, The Spirit Level, The Wealth of Nations by Adam Smith, transatlantic slave trade, tulip mania, universal basic income, World Values Survey

A quarter of the parents picked their kids up late, arriving past closing time. The result was fussy children and staff forced to work overtime. And so the organisation decided to impose a late fee: three dollars every time a parent showed up late. Sounds like a good plan, right? Now parents had not one but two incentives – both a moral and a financial one – to arrive on time. The new policy was announced, and the number of parents who arrived late … went up. Before long, one-third was arriving after closing time, and in a matter of weeks, 40 per cent. The reason was straightforward: parents interpreted the late fee not as a fine but as a surcharge, which now released them from their obligation to pick up their kids on time.11 Many other studies have since validated this finding. It turns out that, under some conditions, the reasons people do things can’t all be added up together.


pages: 137 words: 44,363

Design Is a Job by Mike Monteiro

4chan, crowdsourcing, index card, iterative process, John Gruber, Kickstarter, late fees, Steve Jobs

If you do, you’ve lost all your leverage and it might as well be net 30. We don’t walk into a kickoff meeting without a commencement check. The only exception is when we’re working with a large company or organization (read: schools and state) where trying to meet that requirement puts an undue burden on the client. In those situations we wait until the payment has been processed. And we don’t do that very often. Feel free to tack on a late fee for late payment. Make sure it’s high enough that you won’t be upset if a company takes you up on it, and have it grow incrementally over a period of time. Dealing with Late Payments Ninety percent of dealing with late payments is figuring out how to avoid late payments. So if you picked up the book and skipped right to this section because you’ve got an urgent problem, just hold on a sec.


pages: 144 words: 47,632

My Custom Van: And 50 Other Mind-Blowing Essays That Will Blow Your Mind All Over Your Face by Michael Ian Black

carbon footprint, late fees

Some additional benefits of joining: Bi-weekly car rides to Burger King featuring my famous “Burger King Rap.” Sample lyric: “I’m gonna purchase two big Whoppers / Then chew them up with my choppers.” Round Robin seating arrangement. Free subscription to Carl’s bi-annual Babylon 5 zine, creatively entitled Babble On. Retail value: $11.00 Free 24/7 access to Randy’s DVD collection, which leans heavily toward sci-fi and Japanese erotic anime. (It’s a great benefit, but Randy’s late fees are a killer: a hundred dollars per day.) Annual Secret Santa gift exchange. Value of gifts not to exceed fifteen dollars. Best of all, the pride of obtaining membership in the area’s most exclusive club! If this sounds appealing, feel free to contact me, Head of the Membership Committee, at my mom’s house, where I am temporarily residing, or at my place of employment (the address of which I will give when I have a place of employment).


pages: 168 words: 46,194

Why Nudge?: The Politics of Libertarian Paternalism by Cass R. Sunstein

Affordable Care Act / Obamacare, Andrei Shleifer, availability heuristic, Cass Sunstein, choice architecture, clean water, Daniel Kahneman / Amos Tversky, Edward Glaeser, endowment effect, energy security, framing effect, invisible hand, late fees, libertarian paternalism, loss aversion, nudge unit, randomized controlled trial, Richard Thaler

So too if, for example, people are ignoring certain product attributes because those attributes are shrouded. If those attributes would matter to people who attended to them, then efforts to promote disclosure do not question people’s ends. Consider, for example, the multiple disclosure requirements in the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act, which are designed to ensure that cardholders are not surprised by late fees and overuse fees. Small nudges, informing people of the costs of such fees in advance, have contributed to annual savings, as a result of the CARD Act, of more than $20 billion.12 Of course, it may be hard to determine whether people are in fact ignoring shrouded attributes, or whether they simply do not much care about them. But so far, at least, there is no problem of ends paternalism, and so long as only disclosure is involved, there might not be paternalism at all.


pages: 458 words: 137,960

Ready Player One by Ernest Cline

Albert Einstein, call centre, dematerialisation, fault tolerance, financial independence, game design, late fees, pre–internet, Rubik’s Cube, side project, telemarketer, walking around money

“I’m here because you have failed to make the last three payments on your IOI Visa card, which has an outstanding balance in excess of twenty thousand dollars. Our records also show that you are currently unemployed and have therefore been classified as impecunious. Under current federal law, you are now eligible for mandatory indenturement. You will remain indentured until you have paid your debt to our company in full, along with all applicable interest, processing and late fees, and any other charges or penalties that you incur henceforth.” Wilson motioned toward the dropcops. “These gentlemen are here to assist me in apprehending you and escorting you to your new place of employment. We request that you open your door and grant us access to your residence. Please be aware that we are authorized to seize any personal belongings you have inside. The sale value of these items will, of course, be deducted from your outstanding credit balance.”

My remaining income (if there was any) would be applied to my outstanding debt to the company. Once my debt was paid in full, I would be released from indenturement. At that time, based on my job performance, it was possible I would be offered a permanent position with IOI. This was a complete joke, of course. Indents were never able to pay off their debt and earn their release. Once they got finished slapping you with pay deductions, late fees, and interest penalties, you wound up owing them more each month, instead of less. Once you made the mistake of getting yourself indentured, you would probably remain indentured for life. A lot of people didn’t seem to mind this, though. They thought of it as job security. It also meant they weren’t going to starve or freeze to death in the street. My “Indenturement Contract” appeared in a window on my display.


pages: 174 words: 52,064

Operation Lighthouse: Reflections on Our Family's Devastating Story of Coercive Control and Domestic Homicide by Luke Hart, Ryan Hart

access to a mobile phone, late fees, Ralph Waldo Emerson, RAND corporation, Skype, zero-sum game

It was so coldly ordinary; it included buying a second-hand fridge that he only planned to have for a few days; he even bartered on the sale to save £5 off the listed price. He was functioning perfectly well; nothing had changed in him. After all, he had managed to comfortably write a 12-page murder note explaining how justified he was to kill his family. On 18 July, four days after our mother moved out, our father returned a rental car he had been leasing, on time, to avoid the late fee. He cooked himself a meal he described as his ‘last supper’ and he’d even purchased a parking ticket on 19 July minutes before murdering our mother and sister. This wasn’t how we understood murder. There were no examples of a ‘loss of control’. In fact, there appeared to be an excess of control. We began to realise that our father’s anger was contrived. It protected him from ever having to reflect on the consequences of his actions; his entitlement assured him soothingly that he was correct.


pages: 181 words: 53,257

Taming the To-Do List: How to Choose Your Best Work Every Day by Glynnis Whitwer

delayed gratification, en.wikipedia.org, fear of failure, Firefox, Jeff Bezos, Johann Wolfgang von Goethe, late fees, Mason jar, Ralph Waldo Emerson, Stanford marshmallow experiment, Walter Mischel

But a person who lives with chronic procrastination, and one pressing deadline after another, will experience overexposure to these stress hormones, causing all sorts of havoc to their body, including: Anxiety Depression Digestive problems Heart disease Sleep problems Weight gain Memory and concentration impairment[3] When our health is good, it’s easy to procrastinate. But as I mentioned before, we are stewards of our story. Being proactive with our health makes a profound difference in our quality of life and our ability to live out our God-given potential. The High Cost of Procrastination There are so many other costs of procrastination. We can experience financial costs by accruing late fees, missing warranty deadlines, and failing to return unwanted items by the refund date. In our rush to finish projects, we can produce a lower quality of work and make more mistakes. Our relationships suffer when we delay dealing with issues or impose extra work on others because of our last-minute efforts. Procrastination isn’t harmless. There are so many more costs than I’ve mentioned here. And I would much rather jump right to the solutions—but I need to make sure you understand what price you are paying if you continue procrastinating.


pages: 201 words: 21,180

Designing for the Social Web by Joshua Porter

barriers to entry, en.wikipedia.org, endowment effect, Howard Rheingold, late fees, Marc Andreessen, Mark Zuckerberg, Milgram experiment, Paul Buchheit, Ralph Waldo Emerson, recommendation engine, social software, social web, Steve Jobs, web application, zero-sum game

Explains what Netflix is all about in a super-fast way . Embeds text within the graphic for additional clarity . Assigns ownership to the viewer—“your list of movies” . Shows the progression of service—what steps happen in what order . Gives a clear indication of how long each step takes . Explains who does what (You: create list and return movies, We: send you movies) . Explains in user’s language why service is different/better (no late fees) 73 74 DESIGNING FOR THE SOCIAL WEB Now, I’ve worked on projects where a graphic like the Netflix graphic was voted down. Here is how the discussion went: Designer: I think a graphic showing how the service works would help to make it really clear for people who aren’t quite sure about signing up yet. Manager: Well, we’re an easy service to begin with, and most people know about us. Let’s not muck up the homepage with information that people already know.


How Will You Measure Your Life? by Christensen, Clayton M., Dillon, Karen, Allworth, James

air freight, Clayton Christensen, disruptive innovation, hiring and firing, invisible hand, Iridium satellite, job satisfaction, late fees, Mahatma Gandhi, Nick Leeson, Silicon Valley, Skype, Steve Jobs, working poor, young professional

It therefore needed to get the customer to watch the movie quickly, and then return it quickly, so that the clerk could rent the same DVD to different customers again and again. To prod customers to return the DVDs quickly, the company levied big fines for every day that the customer forgot to return the DVD on time—if Blockbuster didn’t, it wouldn’t make money, because the DVD would be sitting in a customer’s home rather than be rented to someone else. It didn’t take long before Blockbuster realized that people didn’t like returning movies, so it increased late fees so much that analysts estimated that 70 percent of Blockbuster’s profits were from these fees. Set against this backdrop, a little upstart called Netflix emerged in the 1990s with a novel idea: rather than make people go to the video store, why don’t we mail DVDs to them? Netflix’s business model made profit in just the opposite way to Blockbuster’s. Netflix customers paid a monthly fee—and the company made money when customers didn’t watch the DVDs that they had ordered.


pages: 423 words: 149,033

The fortune at the bottom of the pyramid by C. K. Prahalad

barriers to entry, business cycle, business process, call centre, cashless society, clean water, collective bargaining, corporate social responsibility, deskilling, disintermediation, farmers can use mobile phones to check market prices, financial intermediation, Hernando de Soto, hiring and firing, income inequality, information asymmetry, late fees, Mahatma Gandhi, market fragmentation, microcredit, new economy, profit motive, purchasing power parity, rent-seeking, shareholder value, The Fortune at the Bottom of the Pyramid, time value of money, transaction costs, wealth creators, working poor

The huge rate of success can be attributed to three important factors: group commitment, social capital, and the penalty fee structure. When a group of three socios walks into a cell and completes an application, the only commitment they are expected to make is the regular payment of 360 pesos per week per group on time. If for any reason one of the team members doesn’t turn in his or her payment portion on time, the group as a whole will pay a late fee of an additional 50 percent (60 pesos) per late socio. Not only is there a late-fee penalty, but the delivery for the entire group is delayed by one week as well. This also is recorded as a black mark, and the group members will have problems later if they decide to apply for a new credit. If one of the members defaults for some reason, news simply spreads by word of mouth and he or she is more or less ostracized from the whole process.


pages: 285 words: 58,517

The Network Imperative: How to Survive and Grow in the Age of Digital Business Models by Barry Libert, Megan Beck

active measures, Airbnb, Amazon Web Services, asset allocation, autonomous vehicles, big data - Walmart - Pop Tarts, business intelligence, call centre, Clayton Christensen, cloud computing, commoditize, crowdsourcing, disintermediation, diversification, Douglas Engelbart, Douglas Engelbart, future of work, Google Glasses, Google X / Alphabet X, Infrastructure as a Service, intangible asset, Internet of things, invention of writing, inventory management, iterative process, Jeff Bezos, job satisfaction, Kevin Kelly, Kickstarter, late fees, Lyft, Mark Zuckerberg, Oculus Rift, pirate software, ride hailing / ride sharing, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, six sigma, software as a service, software patent, Steve Jobs, subscription business, TaskRabbit, Travis Kalanick, uber lyft, Wall-E, women in the workforce, Zipcar

Netflix is a prime example. From the outside, Reed Hastings, Netflix’s CEO, observed that many of the video rental and movie industry’s core beliefs and supporting systems (physical stores and movie theaters with transactional revenue models) were failing to make customers happy. He questioned each and every one of them, inverted them, and brought them to market. On-demand home delivery of movies with no late fees was a revelation for the market; it constituted a major disruption. This new business model took down Blockbuster and has forced movie theaters to adapt and find new ways to lure customers off their sofas to the big screen. Today this story is familiar and can be seen in many industries. Uber’s CEO, Travis Kalanick, did the same thing when he created a ride-sharing service using mobile technologies to connect drivers and riders directly, where existing black car and taxi companies didn’t.


pages: 144 words: 55,142

Interlibrary Loan Practices Handbook by Cherie L. Weible, Karen L. Janke

Firefox, information retrieval, Internet Archive, late fees, optical character recognition, pull request, QR code, transaction costs, Works Progress Administration

For libraries that use manual systems it may be important to note this number in association with any other information that the library retains about the request. overdue fees, damaged materials, and replacements Although most patrons who borrow materials respect and follow the rules and policies for borrowing, there will inevitably be items that are returned past the due date. Each borrowing library must formulate its position on overdue materials and decide whether a late fee should be charged to patrons for overdue interlibrary loan items. Some libraries take the position that fees are difficult to collect and manage. Other libraries find that having an overdue fee cuts down on those patrons who are lackadaisical about returning material in a timely manner. Another approach is to avoid overdue fines and to block the borrowing library’s patron after the material has become overdue.


pages: 248 words: 72,174

The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future by Chris Guillebeau

Airbnb, big-box store, clean water, fixed income, follow your passion, if you build it, they will come, index card, informal economy, Kevin Kelly, Kickstarter, knowledge economy, late fees, Nelson Mandela, price anchoring, Ralph Waldo Emerson, side project, Silicon Valley, Skype, Steve Jobs, Tony Hsieh, web application

†Patrick and Rich use a good cop-bad cop routine in handling their business, which relates well to their differences: Patrick was in the Peace Corps and Rich was in the Marine Corps. Patrick has kids and lives on the East Coast; Rich is childless and lives on the West Coast. ‡I was a customer of Copley Trash Services, and one week I neglected to pay my dues. A polite note was placed on my door: “Did you forget something?” I shamefully paid up and included an extra 50 cents in late fees. BECOME AS BIG AS YOU WANT TO BE (AND NO BIGGER). “Nothing will work unless you do.” —MAYA ANGELOU Among the people we’ve met in our story thus far, a few are active risk takers, charging ahead to storm the castle, career or finances be damned if they fail. But far more common are those who carefully take the time to build a business step by step. It’s a myth that all those who choose to go it alone are Type A motorcycle riders, betting it all on the success or failure of one project.


pages: 280 words: 79,029

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better by Andrew Palmer

Affordable Care Act / Obamacare, algorithmic trading, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Black-Scholes formula, bonus culture, break the buck, Bretton Woods, call centre, Carmen Reinhart, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Graeber, diversification, diversified portfolio, Edmond Halley, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, family office, financial deregulation, financial innovation, fixed income, Flash crash, Google Glasses, Gordon Gekko, high net worth, housing crisis, Hyman Minsky, implied volatility, income inequality, index fund, information asymmetry, Innovator's Dilemma, interest rate swap, Kenneth Rogoff, Kickstarter, late fees, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, margin call, Mark Zuckerberg, McMansion, money market fund, mortgage debt, mortgage tax deduction, Myron Scholes, negative equity, Network effects, Northern Rock, obamacare, payday loans, peer-to-peer lending, Peter Thiel, principal–agent problem, profit maximization, quantitative trading / quantitative finance, railway mania, randomized controlled trial, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, short selling, Silicon Valley, Silicon Valley startup, Skype, South Sea Bubble, sovereign wealth fund, statistical model, Thales of Miletus, transaction costs, Tunguska event, unbanked and underbanked, underbanked, Vanguard fund, web application

But things have gotten worse in recent years. That is partly because there are more people in financial difficulty and partly because of the stigma associated with serving the subprime segment of the market. But it is also because of the harsher regulatory climate for financial institutions. In the United States the 2009 Credit Card Accountability, Responsibility, and Disclosure (Credit CARD) Act reduced interest-­rate increases and late fees on credit cards. The Consumer Financial Protection Bureau is looking at overdraft fees and the prepaid-cards market. The Durbin Amendment—passed as part of the Dodd-Frank Act in July 2010—capped interchange fees, the commission that merchants pay, on debit cards. Add in persistently low interest rates, which have eaten into banks’ net interest margins, and Oliver Wyman, a consultancy, has estimated that US banks lose money on 37 percent of consumer accounts.


pages: 301 words: 78,638

Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear

"side hustle", Atul Gawande, Cal Newport, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, delayed gratification, deliberate practice, en.wikipedia.org, financial independence, invisible hand, Lao Tzu, late fees, meta analysis, meta-analysis, Paul Graham, randomized controlled trial, ride hailing / ride sharing, Sam Altman, Saturday Night Live, survivorship bias, Walter Mischel

We repeat bad habits because they serve us in some way, and that makes them hard to abandon. The best way I know to overcome this predicament is to increase the speed of the punishment associated with the behavior. There can’t be a gap between the action and the consequences. As soon as actions incur an immediate consequence, behavior begins to change. Customers pay their bills on time when they are charged a late fee. Students show up to class when their grade is linked to attendance. We’ll jump through a lot of hoops to avoid a little bit of immediate pain. There is, of course, a limit to this. If you’re going to rely on punishment to change behavior, then the strength of the punishment must match the relative strength of the behavior it is trying to correct. To be productive, the cost of procrastination must be greater than the cost of action.


pages: 254 words: 79,052

Evil by Design: Interaction Design to Lead Us Into Temptation by Chris Nodder

4chan, affirmative action, Amazon Mechanical Turk, cognitive dissonance, crowdsourcing, Daniel Kahneman / Amos Tversky, Donald Trump, en.wikipedia.org, endowment effect, game design, haute couture, jimmy wales, Jony Ive, Kickstarter, late fees, loss aversion, Mark Zuckerberg, meta analysis, meta-analysis, Milgram experiment, Netflix Prize, Nick Leeson, Occupy movement, pets.com, price anchoring, recommendation engine, Rory Sutherland, Silicon Valley, Stanford prison experiment, stealth mode startup, Steve Jobs, telemarketer, Tim Cook: Apple, trickle-down economics, upwardly mobile

GymPact (also mentioned in the chapter on Pride) “lets you set the financial stakes of not getting to the gym, plus earn cash rewards and real prizes for fulfilling your Pact.” The company is basically betting on laziness, despite encouraging people to work out. Dan Ariely, in his book Predictably Irrational, shows how providing the offer of payment (even in the sense of a fine) counterintuitively legitimizes an otherwise punishable activity, allowing people to feel OK about doing it because they paid for it. Ariely’s example is parents who were happy to pay a late fee for leaving their kids in daycare too long. It would be interesting to see whether GymPact has users who behave the same way, seeing payment as an alternative to achievement or even as a way of justifying not achieving. How to encourage payment instead of achievement If your game or product revolves around escalating levels of achievement, it’s likely that people with more money than time will want to pay for a shortcut.


pages: 252 words: 72,473

Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy by Cathy O'Neil

Affordable Care Act / Obamacare, Bernie Madoff, big data - Walmart - Pop Tarts, call centre, carried interest, cloud computing, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, Emanuel Derman, housing crisis, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, illegal immigration, Internet of things, late fees, mass incarceration, medical bankruptcy, Moneyball by Michael Lewis explains big data, new economy, obamacare, Occupy movement, offshore financial centre, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price discrimination, quantitative hedge fund, Ralph Nader, RAND corporation, recommendation engine, Rubik’s Cube, Sharpe ratio, statistical model, Tim Cook: Apple, too big to fail, Unsafe at Any Speed, Upton Sinclair, Watson beat the top human players on Jeopardy!, working poor

Some online dating services, for example, match people on the basis of credit scores. One of them, CreditScoreDating, proclaims that “good credit scores are sexy.” We can debate the wisdom of linking financial behavior to love. But at least the customers of CreditScoreDating know what they’re getting into and why. It’s up to them. But if you’re looking for a job, there’s an excellent chance that a missed credit card payment or late fees on student loans could be working against you. According to a survey by the Society for Human Resource Management, nearly half of America’s employers screen potential hires by looking at their credit reports. Some of them check the credit status of current employees as well, especially when they’re up for a promotion. Before companies carry out these checks, they must first ask for permission.


pages: 223 words: 77,566

Hillbilly Elegy: A Memoir of a Family and Culture in Crisis by J. D. Vance

Affordable Care Act / Obamacare, blue-collar work, cognitive dissonance, late fees, medical malpractice, obamacare, payday loans, Peter Thiel, Ronald Reagan, Rubik’s Cube, school vouchers, Silicon Valley, unbiased observer, upwardly mobile, working poor

My credit was awful, thanks to a host of terrible financial decisions (some of which weren’t my fault, many of which were), so credit cards weren’t a possibility. If I wanted to take a girl out to dinner or needed a book for school and didn’t have money in the bank, I didn’t have many options. (I probably could have asked my aunt or uncle, but I desperately wanted to do things on my own.) One Friday morning I dropped off my rent check, knowing that if I waited another day, the fifty-dollar late fee would kick in. I didn’t have enough money to cover the check, but I’d get paid that day and would be able to deposit the money after work. However, after a long day at the senate, I forgot to grab my paycheck before I left. By the time I realized the mistake, I was already home, and the Statehouse staff had left for the weekend. On that day, a three-day payday loan, with a few dollars of interest, enabled me to avoid a significant overdraft fee.


pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan

"Robert Solow", Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy

The Fresno test seemed to be going well enough that Williams and his team expanded the program, using a similar approach in San Francisco, Sacramento, and Los Angeles. By October of 1959, the bank had mailed more than two million cards throughout California, and more than twenty thousand merchants had accepted the new BankAmericard. The bank, meanwhile, made its money by sitting in between those two sides of the market, charging its customers interest and late fees and taking a piece of every transaction from the merchants. For a while, the newly launched card appeared to be a great success, but there was a fatal flaw in the design of Williams’s platform. We’ve kind of given it away already: today, to get a credit card you need to apply for one, and before you actually get your card and line of credit, the issuer takes a look at your credit score, salary, and other predictors of whether you’ll ever pay off your balance.


The Simple Living Guide by Janet Luhrs

air freight, Albert Einstein, car-free, cognitive dissonance, Community Supported Agriculture, compound rate of return, financial independence, follow your passion, Golden Gate Park, job satisfaction, late fees, money market fund, music of the spheres, passive income, Ralph Waldo Emerson, risk tolerance, telemarketer, the rule of 72, urban decay, urban renewal, Whole Earth Review

We looked at each other and said if we put that same amount into a money market account we’d never have to work again.” Barbara began investing $50 a month from her then-salary of $600 a month. “I read somewhere about the concept of pay yourself first,” she says, “and I practiced it. There were times when I’d even delay paying some significant doctor or electric bill just so I’d put my $50 away first. I’d wait until the next month to pay the other bill, even though I’d be charged a late fee. The late fees served as a reminder to me that I was living above my means.” Barbara’s net worth at age 26 was about $2,000. She used that money as a down payment to purchase her first house. At age 28, Barbara married Ron Bryan, a real-estate agent. Together they realized that they could be financially independent through owning and renting property. They reasoned that the typical person spends 25 percent of his gross income on housing.


pages: 317 words: 84,400

Automate This: How Algorithms Came to Rule Our World by Christopher Steiner

23andMe, Ada Lovelace, airport security, Al Roth, algorithmic trading, backtesting, big-box store, Black-Scholes formula, call centre, cloud computing, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, Donald Trump, Douglas Hofstadter, dumpster diving, Flash crash, G4S, Gödel, Escher, Bach, High speed trading, Howard Rheingold, index fund, Isaac Newton, John Markoff, John Maynard Keynes: technological unemployment, knowledge economy, late fees, Marc Andreessen, Mark Zuckerberg, market bubble, medical residency, money market fund, Myron Scholes, Narrative Science, PageRank, pattern recognition, Paul Graham, Pierre-Simon Laplace, prediction markets, quantitative hedge fund, Renaissance Technologies, ride hailing / ride sharing, risk tolerance, Robert Mercer, Sergey Aleynikov, side project, Silicon Valley, Skype, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, transaction costs, upwardly mobile, Watson beat the top human players on Jeopardy!, Y Combinator

Also luckily for me, Northwestern gives alumni full access to its stacks and resources, affording me a vast and quiet workshop that was open early, late, and at all hours in between. When putting together the chapter on the history of algorithms, I found myself seeking old texts, often out of print and hard to find. Again, Northwestern had all of these materials, and I was able to browse them at will. The librarians there even waived some hefty late fees I had accrued on several books. Thank you. I started this book and wrote much of it as a staff writer at Forbes magazine. By the time I finished, however, I had left Forbes to form a startup, Aisle50, which offers grocery discounts to consumers. It was quite a change for me but also one that I embraced. There have been many helping hands along the way, some of the most formidable ones coming from our investors and advisers at Y Combinator, Paul Graham and Jessica Livingston.


pages: 301 words: 85,126

AIQ: How People and Machines Are Smarter Together by Nick Polson, James Scott

Air France Flight 447, Albert Einstein, Amazon Web Services, Atul Gawande, autonomous vehicles, availability heuristic, basic income, Bayesian statistics, business cycle, Cepheid variable, Checklist Manifesto, cloud computing, combinatorial explosion, computer age, computer vision, Daniel Kahneman / Amos Tversky, Donald Trump, Douglas Hofstadter, Edward Charles Pickering, Elon Musk, epigenetics, Flash crash, Grace Hopper, Gödel, Escher, Bach, Harvard Computers: women astronomers, index fund, Isaac Newton, John von Neumann, late fees, low earth orbit, Lyft, Magellanic Cloud, mass incarceration, Moneyball by Michael Lewis explains big data, Moravec's paradox, more computing power than Apollo, natural language processing, Netflix Prize, North Sea oil, p-value, pattern recognition, Pierre-Simon Laplace, ransomware, recommendation engine, Ronald Reagan, self-driving car, sentiment analysis, side project, Silicon Valley, Skype, smart cities, speech recognition, statistical model, survivorship bias, the scientific method, Thomas Bayes, Uber for X, uber lyft, universal basic income, Watson beat the top human players on Jeopardy!, young professional

You’ll come away with a higher AIQ and a new appreciation for just how brilliant human beings can be when they put their minds and their technology together. 1 THE REFUGEE On personalization: how a Hungarian émigré used conditional probability to protect airplanes from enemy fire in World War II, and how today’s tech firms are using the same math to make personalized suggestions for films, music, news stories—even cancer drugs. NETFLIX HAS COME so far, so fast, that it’s hard to remember that it started out as a “machine learning by mail” company. As recently as 2010, the company’s core business involved filling red envelopes with DVDs that would incur “no late fees, ever!” Each envelope would come back a few days after it had been sent out, along with the subscriber’s rating of the film on a 1-to-5 scale. As that ratings data accumulated, Netflix’s algorithms would look for patterns, and over time, subscribers would get better film recommendations. (This kind of AI is usually called a “recommender system”; we also like the term “suggestion engine.”) Netflix 1.0 was so focused on improving its recommender system that in 2007, to great fanfare among math geeks the world over, it announced a public machine-learning contest with a prize of $1 million.


pages: 297 words: 84,009

Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen

23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, experimental economics, Filter Bubble, financial innovation, financial intermediation, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, late fees, Mark Zuckerberg, mobile money, money market fund, mortgage debt, Network effects, new economy, Nicholas Carr, obamacare, offshore financial centre, passive investing, payday loans, peer-to-peer lending, Peter Thiel, pre–internet, price discrimination, profit maximization, profit motive, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Ronald Coase, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Nature of the Firm, Tim Cook: Apple, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator

That was not possible in the early or even mid-1990s, and it has saved millions of Americans many hours a year. It also eases record keeping because you can keep track of your finances without having to save, organize, and store all that paper. As part of those advances, taxes can be filed online and tax refunds obtained more quickly, and if need be your tax procrastination can run until the very last moment without your having to pay a late fee or penalty. More recently, Bitcoin has created an entirely new kind of asset, based on principles that only a decade ago very few people had imagined. It competes with gold as a hedge and unorthodox store of value, and you can use it as a currency to buy (legal) marijuana, a transaction that, because of federal regulations, the regular banking system cannot support. It enables a blockchain as a new medium for recording, storing, and verifying information and common agreement as to who owns what.


pages: 281 words: 83,505

Palaces for the People: How Social Infrastructure Can Help Fight Inequality, Polarization, and the Decline of Civic Life by Eric Klinenberg

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, assortative mating, basic income, big-box store, Broken windows theory, carbon footprint, Cass Sunstein, clean water, deindustrialization, desegregation, Donald Trump, East Village, Filter Bubble, ghettoisation, helicopter parent, income inequality, informal economy, invisible hand, Jane Jacobs, John Snow's cholera map, late fees, Mark Zuckerberg, mass incarceration, Menlo Park, New Urbanism, Peter Thiel, Ray Oldenburg, Richard Florida, Ronald Reagan, Rosa Parks, shareholder value, Silicon Valley, smart grid, the built environment, The Death and Life of Great American Cities, The Great Good Place, the High Line, universal basic income, urban planning, young professional

Soon after, the city restored full service in the main building and all the local branches. In 2016, the city renovated several branch libraries and the main library as well, adding a wall of windows that looks over its seven-acre Topiary Park, building new children’s rooms, improving the restroom facilities, and creating better connections between the library and the park. That year, as prosperous cities like San Jose cracked down on users with late fees, Columbus took the opposite approach. As of January 1, 2017, the metropolitan library stopped issuing fines for overdue books. “Removing barriers to get more materials into the hands of more customers brings us closer to achieving our vision of a thriving community where wisdom prevails,” said Patrick Losinski, the library system’s CEO. So too do the library’s numbers for circulation and in-person visits, which remain among the highest in the nation per capita.


pages: 271 words: 83,944

The Sellout: A Novel by Paul Beatty

affirmative action, cognitive dissonance, conceptual framework, desegregation, El Camino Real, haute couture, illegal immigration, Lao Tzu, late fees, mass incarceration, p-value, publish or perish, rolodex, Ronald Reagan, Rosa Parks, telemarketer, theory of mind, War on Poverty, white flight, yellow journalism

How it wasn’t the Keynesian lapdogs so beloved by the banks and the media who predicted the most recent financial meltdown but the behavioral economists who knew that the market isn’t swayed by interest rates and fluctuations in GDP, rather by greed, fear, and fiscal illusion. The discussion grew animated. Their mouths stuffed with pastries, their lips flaked with coconut shavings, the Dum Dum Donuts patrons decried low-interest checking and the nerve of the goddamn cable company to charge late fees for not promptly paying ahead of time in July for services not rendered until August. One woman, her jowls filled to near bursting with macaroons, asked my father, “How much the Chinos make?” “Well, Asian men earn more than any other demographic.” “Even the faggots?” shouted the assistant manager. “You sure Asians make more than the faggots? ’Cause I hear faggots be making cash hand over fist.”


pages: 335 words: 94,657

The Bogleheads' Guide to Investing by Taylor Larimore, Michael Leboeuf, Mel Lindauer

asset allocation, buy and hold, buy low sell high, corporate governance, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, endowment effect, estate planning, financial independence, financial innovation, high net worth, index fund, late fees, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, market bubble, mental accounting, money market fund, passive investing, Paul Samuelson, random walk, risk tolerance, risk/return, Sharpe ratio, statistical model, stocks for the long run, survivorship bias, the rule of 72, transaction costs, Vanguard fund, yield curve, zero-sum game

Thanks to credit reporting services, they can check to see if you are paying your other outstanding debts on time. Be late with a payment on your mortgage, another credit card, or any other debt, and they reserve the right to raise your interest rate to any level that they choose. You have no say in the matter, and there is no federal limit on the interest rate a credit card company can charge. Similarly, there is no federal limit on how much credit card companies can charge you for late fees. By agreeing to their terms, you risk placing your financial future in the hands of companies with the power to become legalized loan sharks. Do you realize that over the course of a lifetime, your total income will likely be in the millions of dollars? Well, the banks and credit card companies sure do, and they want a piece of it. Every high-interest debt you don't pay off is siphoning off dollars from your potential net worth and shifting it to the net worth of lending companies.


pages: 284 words: 92,387

The Democracy Project: A History, a Crisis, a Movement by David Graeber

Bretton Woods, British Empire, corporate personhood, David Graeber, deindustrialization, dumpster diving, East Village, feminist movement, financial innovation, George Gilder, John Markoff, Lao Tzu, late fees, Occupy movement, payday loans, planetary scale, plutocrats, Plutocrats, Ralph Nader, reserve currency, Ronald Reagan, seigniorage, too big to fail, trickle-down economics, unpaid internship, We are the 99%, working poor

Huge proportions of ordinary people’s incomes end up going to feed this predatory system through hidden fees and, especially, penalties. I remember I once allowed a Macy’s clerk to talk me into acquiring a Macy’s charge card, in order to buy a 120 pair of Ray-Ban sunglasses. I sent in a check to pay the charge before leaving the country for an extended trip, but apparently miscalculated by some 2.75 when figuring the tax; when I returned a few months later, I discovered I had accrued something like 500 in late fees. We’re not in the habit of calculating such numbers because they are, even more than debts, seen as the wages of sin: you only pay them because you did something wrong (in my case, miscalculate a math sum and neglect to have the bills forwarded to my overseas address). In fact, the entire system is now geared toward ensuring we make such mistakes, since the entire system of corporate profits depends on them.


Fearsome Particles by Trevor Cole

call centre, clean water, Khartoum Gordon, late fees, MITM: man-in-the-middle

Because it was cleaner, somehow, despite the dust. Because it was free of all the tensions and issues I took for granted at home. Things like the way Mom and Dad edged around each other all the time as if there was something they wanted to say but couldn’t quite bring themselves to say it. Things like the worried way they smiled, as if whatever happiness they felt was loaner happiness that was already piling up late fees. Things like – this was a big one – nervous expectation. I mean, you can take that in small doses. But at my house on Breere Crescent, the walls practically ran with it. Here’s one example: yogurt. Mom, whenever she was working on a house, always woke up really early. And every morning, before she left, she’d set out breakfast items for me to eat – a fruit, a grain, and always a dairy in the fridge, which was usually yogurt.


pages: 285 words: 86,853

What Algorithms Want: Imagination in the Age of Computing by Ed Finn

Airbnb, Albert Einstein, algorithmic trading, Amazon Mechanical Turk, Amazon Web Services, bitcoin, blockchain, Chuck Templeton: OpenTable:, Claude Shannon: information theory, commoditize, Credit Default Swap, crowdsourcing, cryptocurrency, disruptive innovation, Donald Knuth, Douglas Engelbart, Douglas Engelbart, Elon Musk, factory automation, fiat currency, Filter Bubble, Flash crash, game design, Google Glasses, Google X / Alphabet X, High speed trading, hiring and firing, invisible hand, Isaac Newton, iterative process, Jaron Lanier, Jeff Bezos, job automation, John Conway, John Markoff, Just-in-time delivery, Kickstarter, late fees, lifelogging, Loebner Prize, Lyft, Mother of all demos, Nate Silver, natural language processing, Netflix Prize, new economy, Nicholas Carr, Norbert Wiener, PageRank, peer-to-peer, Peter Thiel, Ray Kurzweil, recommendation engine, Republic of Letters, ride hailing / ride sharing, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social graph, software studies, speech recognition, statistical model, Steve Jobs, Steven Levy, Stewart Brand, supply-chain management, TaskRabbit, technological singularity, technoutopianism, The Coming Technological Singularity, the scientific method, The Signal and the Noise by Nate Silver, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, transaction costs, traveling salesman, Turing machine, Turing test, Uber and Lyft, Uber for X, uber lyft, urban planning, Vannevar Bush, Vernor Vinge, wage slave

It was an approach entirely in keeping with the company’s reputation as an early darling of the disruptors: a Silicon Valley firm that was successfully upending a staid economic model. Over the first decade of its existence the company had taken a thoroughly saturated market—home movie rentals—and revolutionized it by creating a set of incremental advantages over its competitors. These perks were deeply appealing to consumers. Instead of paying expensive late fees to their local retail store, Netflix allowed customers to hang onto their copy of Titanic as long as they pleased for a fixed monthly subscription price. Rather than choose from a few thousand titles at their corner store, they could select from tens of thousands in Netflix’s vast library. And because the transactions were conducted by mail, customers no longer had to run a special errand, confront long lines and opinionated staff, or deal with the poor selection at their video store.


pages: 324 words: 92,805

The Impulse Society: America in the Age of Instant Gratification by Paul Roberts

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, asset allocation, business cycle, business process, Cass Sunstein, centre right, choice architecture, collateralized debt obligation, collective bargaining, computerized trading, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, David Brooks, delayed gratification, disruptive innovation, double helix, factory automation, financial deregulation, financial innovation, fixed income, full employment, game design, greed is good, If something cannot go on forever, it will stop - Herbert Stein's Law, impulse control, income inequality, inflation targeting, invisible hand, job automation, John Markoff, Joseph Schumpeter, knowledge worker, late fees, Long Term Capital Management, loss aversion, low skilled workers, mass immigration, new economy, Nicholas Carr, obamacare, Occupy movement, oil shale / tar sands, performance metric, postindustrial economy, profit maximization, Report Card for America’s Infrastructure, reshoring, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, technoutopianism, the built environment, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, Walter Mischel, winner-take-all economy

And while such a strategy might have been remotely logical in the days of stingy credit, when it was a safe bet that a lender had actually scrutinized our ability to repay a debt, that logic vanished with the rise of a banking model geared for high volumes and quick returns. By 1990s, bankers were carefully targeting consumers with the worst credit histories, since these people could be counted on to generate steady streams of late fees. What’s more, they were exploiting every one of our neurological glitches—raising credit limits and reducing minimum payments, for example, because these were shown to give consumers a false sense of wealth. For the financial sector, our faulty wiring would now be a critical source of profit. As Elizabeth Warren, then a Harvard law professor, noted in a scathing 1989 report, bank card companies “were willing to give out the fourth, sixth, or seventh bank card and to approve charges after debtors already showed short-term debt so large that they could not possibly pay the interest, much less the principal.”


pages: 400 words: 88,647

Frugal Innovation: How to Do Better With Less by Jaideep Prabhu Navi Radjou

3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, barriers to entry, Baxter: Rethink Robotics, Bretton Woods, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cloud computing, collaborative consumption, collaborative economy, Computer Numeric Control, connected car, corporate social responsibility, creative destruction, crowdsourcing, disruptive innovation, Elon Musk, financial exclusion, financial innovation, global supply chain, IKEA effect, income inequality, industrial robot, intangible asset, Internet of things, job satisfaction, Khan Academy, Kickstarter, late fees, Lean Startup, low cost airline, low cost carrier, M-Pesa, Mahatma Gandhi, megacity, minimum viable product, more computing power than Apollo, new economy, payday loans, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, precision agriculture, race to the bottom, reshoring, risk tolerance, Ronald Coase, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, software as a service, standardized shipping container, Steve Jobs, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, transaction costs, Travis Kalanick, unbanked and underbanked, underbanked, women in the workforce, X Prize, yield management, Zipcar

For instance, the Khan Academy, founded by Sal Khan, offers free maths and science courseware as bite-sized videos via YouTube, creating panic among academic publishers who charge a fortune for textbooks. Or take Plastyc, a start-up that claims to put the “power of a bank in your cell phone” by providing affordable 24-hour access to FDIC-insured virtual bank accounts that can be accessed from any internet-enabled computer or mobile device. These accounts are tied to prepaid Visa cards; consumers cannot go overdrawn and they incur no late fees. Plastyc’s low-fee, no-frills, online banking services are appealing to the nearly 70 million underbanked, or unbanked, Americans who cannot afford to pay large bank fees. And in the sharing economy, firms such as Airbnb (sharing homes), RelayRides (sharing cars) and ParkatmyHouse (sharing parking spaces) are taking advantage of the internet and social media to enable ordinary people to monetise their idle household assets.


pages: 315 words: 93,522

How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy by Stephen Witt

4chan, barriers to entry, Berlin Wall, big-box store, cloud computing, collaborative economy, crowdsourcing, game design, Internet Archive, invention of movable type, inventory management, iterative process, Jason Scott: textfiles.com, job automation, late fees, mental accounting, moral panic, packet switching, pattern recognition, peer-to-peer, pirate software, Ronald Reagan, security theater, sharing economy, side project, Silicon Valley, software patent, Steve Jobs, zero day

And not just Spider-Man; Gangs of New York, Bend It Like Beckham, Toy Story 2, The Ring, Drumline . . . any first-run mainstream movie from the past five years. And if you wanted something more obscure—say, some art house flick that wasn’t in his immediate inventory—he could usually fill your request overnight. The value proposition for his customers was irresistible. Business flourished as Glover undercut the legitimate competition on price and product selection, offering outright ownership with no late fees. He reached a cartel-like agreement with Dockery to serve separate market segments, and by early 2002 Glover was selling 200 to 300 DVDs a week, frequently grossing over a thousand bucks in cash. He bought a second PC and another burner just to keep up with demand. Although he knew what he was doing was illegal, Glover felt he had insulated himself from suspicion. All transactions were hand to hand, no records were kept, and he never deposited his earnings in the bank.


pages: 279 words: 90,278

Heartland: A Memoir of Working Hard and Being Broke in the Richest Country on Earth by Sarah Smarsh

call centre, financial independence, housing crisis, income inequality, invisible hand, late fees, Mason jar, mortgage debt, mortgage tax deduction, offshore financial centre, Pepto Bismol, profit motive, Ronald Reagan, trickle-down economics, women in the workforce, working poor

The same law limited the amount recipients could access as cash; regardless of their total monthly allotment, they could take out only $25 at a time via an ATM. It was a needless measure that benefited private banks contracting with the state, since every card swipe racked up a fee. Where once poverty was merely shamed, over the course of my life it was increasingly monetized to benefit the rich—interest, late fees, and court fines siphoned from the financially destitute into big bank coffers. Meanwhile, Americans in the late twentieth century clung to the economic promise that reward would find those who worked hard. Society told us that someone in a bad financial situation must be a bad person—lazy, maybe, or lacking good judgment. “Get a job,” Grandma would say when we saw a homeless man with a cardboard sign at a Wichita intersection.


I, Partridge: We Need to Talk About Alan by Steve Coogan

call centre, Celtic Tiger, citation needed, cuban missile crisis, late fees, means of production, negative equity, University of East Anglia, young professional

In the end there weren’t that many left for friends and family, but I figured Denise and Fernando wouldn’t mind sharing one, on the basis that they were siblings. And on the basis that we were now divorced, I decided my wife Carol could buy her own. Or, worst-case scenario, rent it from the library. (As I wouldn’t be receiving a new royalty every time a copy was taken out, I suggested to Norwich City Council that I get a cut of any late fees instead. They didn’t go for it.) One thing that did thrill me, though, and I knew it would thrill the reviewers, was that I had managed to stretch it to over 300 pages. It had a real meatiness to it. I banged it down on the kitchen table so I could enjoy its undeniable thud factor. ‘Thud,’ it went. ‘Thud,’ I repeated, like a parrot trained to accurately mimic the noise of books.207 Yet my happiness was to be short-lived.


pages: 304 words: 22,886

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler, Cass R. Sunstein

Al Roth, Albert Einstein, asset allocation, availability heuristic, call centre, Cass Sunstein, choice architecture, continuous integration, Daniel Kahneman / Amos Tversky, desegregation, diversification, diversified portfolio, endowment effect, equity premium, feminist movement, fixed income, framing effect, full employment, George Akerlof, index fund, invisible hand, late fees, libertarian paternalism, loss aversion, Mahatma Gandhi, Mason jar, medical malpractice, medical residency, mental accounting, meta analysis, meta-analysis, Milgram experiment, money market fund, pension reform, presumed consent, price discrimination, profit maximization, rent-seeking, Richard Thaler, Right to Buy, risk tolerance, Robert Shiller, Robert Shiller, Saturday Night Live, school choice, school vouchers, transaction costs, Vanguard fund, Zipcar

On your RECAP statement you would be told how much you paid for the privilege of using your card on your vacation to Mexico. Because interest on credit cards is not deductible, there is no particular reason for users to check how much they paid in interest last year on all their credit cards, and fees are likely to be buried and ignored altogether. Imagine the wakeup call for a credit card user who is told that over the past year he paid $2,153 in interest, $247 in late fees, and $57 in currency transaction fees. Some other nudges could help as well. For example, credit cards always mention the minimum payment you can make when you receive your monthly bill. This can serve as an anchor, and as a nudge that this minimum payment is an appropriate amount.* Of course, because the minimum payments are tiny relative to the total bill, paying this amount just maximizes the interest payments over time.


pages: 407 words: 103,501

The Digital Divide: Arguments for and Against Facebook, Google, Texting, and the Age of Social Netwo Rking by Mark Bauerlein

Amazon Mechanical Turk, Andrew Keen, business cycle, centre right, citizen journalism, collaborative editing, computer age, computer vision, corporate governance, crowdsourcing, David Brooks, disintermediation, Frederick Winslow Taylor, Howard Rheingold, invention of movable type, invention of the steam engine, invention of the telephone, Jaron Lanier, Jeff Bezos, jimmy wales, Kevin Kelly, knowledge worker, late fees, Mark Zuckerberg, Marshall McLuhan, means of production, meta analysis, meta-analysis, moral panic, Network effects, new economy, Nicholas Carr, PageRank, peer-to-peer, pets.com, Results Only Work Environment, Saturday Night Live, search engine result page, semantic web, Silicon Valley, slashdot, social graph, social web, software as a service, speech recognition, Steve Jobs, Stewart Brand, technology bubble, Ted Nelson, The Wisdom of Crowds, Thorstein Veblen, web application

In a crowded marketplace, a company’s integrity becomes an important point of difference. Net Geners don’t like to be misled or hit with costly surprises, whether measured in money, time, quality, or function. Seventy-seven percent agreed with the statement “If a company makes untrue promises in their advertising, I’ll tell my friends not to buy their products.”17 They get angry when they feel they were wronged: “Blockbuster says no late fees. It is all a lie!” said one fifteen-year-old boy. “After a week you have to pay $1.25 and then you have to buy the movie after two weeks. They trick you!” Although Net Geners are quick to condemn, they are also quick to forgive if they see signs that the company is truly sorry for an error. Seventy-one percent said they would continue to do business with a company if it corrected a mistake honestly and quickly.18 Integrity, to the Net Gener, primarily means telling the truth and living up to your commitments.


pages: 372 words: 107,587

The End of Growth: Adapting to Our New Economic Reality by Richard Heinberg

3D printing, agricultural Revolution, back-to-the-land, banking crisis, banks create money, Bretton Woods, business cycle, carbon footprint, Carmen Reinhart, clean water, cloud computing, collateralized debt obligation, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, dematerialisation, demographic dividend, Deng Xiaoping, Elliott wave, en.wikipedia.org, energy transition, falling living standards, financial deregulation, financial innovation, Fractional reserve banking, full employment, Gini coefficient, global village, happiness index / gross national happiness, I think there is a world market for maybe five computers, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Kenneth Rogoff, late fees, liberal capitalism, mega-rich, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, naked short selling, Naomi Klein, Negawatt, new economy, Nixon shock, offshore financial centre, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, price stability, private military company, quantitative easing, reserve currency, ride hailing / ride sharing, Ronald Reagan, short selling, special drawing rights, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, tulip mania, WikiLeaks, working poor, zero-sum game

Then, when the housing market crashed and banks began millions of foreclosure proceedings, they created the assignments after the fact, using “robo-signers” to submit legal documents to the courts (in one such case the signer had been dead for over five years) and falsified notarizations. In thousands of documented cases foreclosures were conducted even though the borrower was not notified in advance, or the borrower was told by the bank to withhold payments in order to qualify for a mortgage modification but then declared in default by the bank, or the bank added thousands of dollars of “late fees” to the borrower’s account, forcing the borrower into default. In a landmark ruling in January 2011, the Massachusetts Supreme Court held that two banks foreclosed wrongly on two homeowners using suspect paperwork. Attorneys General in 50 states are investigating banks’ foreclosure processes. Many observers are questioning whether the banks actually technically own hundreds of billions of dollars’ worth of securitized mortgage assets on their balance sheets.


pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

American ideology, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, break the buck, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, Charles Lindbergh, collapse of Lehman Brothers, collateralized debt obligation, commoditize, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Gordon Gekko, greed is good, Home mortgage interest deduction, Hyman Minsky, income per capita, information asymmetry, interest rate derivative, interest rate swap, Kenneth Rogoff, laissez-faire capitalism, late fees, light touch regulation, Long Term Capital Management, market bubble, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage tax deduction, Myron Scholes, Paul Samuelson, Ponzi scheme, price stability, profit maximization, race to the bottom, regulatory arbitrage, rent-seeking, Robert Bork, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, Satyajit Das, sovereign wealth fund, The Myth of the Rational Market, too big to fail, transaction costs, value at risk, yield curve

The key questions for any financial innovation are whether it increases financial intermediation and whether that is a good thing. Much recent “innovation” in credit cards, for example, has simply made the pricing of credit more complex. Card issuers have lowered the “headline” price that they advertise to consumers while increasing the hidden prices that consumers are less aware of, such as late fees and penalty rates. These tactics have increased the profits of credit card issuers, but have not increased financial intermediation—except insofar as they helped consumers underestimate the cost of credit and therefore borrow excessive amounts of money.56 Innovation that increases the availability of credit can also be harmful. The stated-income mortgage, where loan originators explicitly did not verify borrowers’ incomes, made it easier for some people to borrow more money to buy houses, but also served as an invitation to fraud (by both borrowers and mortgage brokers) and left many borrowers unable to repay their mortgages.


Remix: Making Art and Commerce Thrive in the Hybrid Economy by Lawrence Lessig

Amazon Web Services, Andrew Keen, Benjamin Mako Hill, Berlin Wall, Bernie Sanders, Brewster Kahle, Cass Sunstein, collaborative editing, commoditize, disintermediation, don't be evil, Erik Brynjolfsson, Internet Archive, invisible hand, Jeff Bezos, jimmy wales, Joi Ito, Kevin Kelly, Larry Wall, late fees, Mark Shuttleworth, Netflix Prize, Network effects, new economy, optical character recognition, PageRank, peer-to-peer, recommendation engine, revision control, Richard Stallman, Ronald Coase, Saturday Night Live, SETI@home, sharing economy, Silicon Valley, Skype, slashdot, Steve Jobs, The Nature of the Firm, thinkpad, transaction costs, VA Linux, yellow journalism

Customers paid Netflix a flat monthly fee; in exchange, they could rent DVDs of favorite films; those DVDs were sent through the mail, with simple return envelopes included; the monthly subscription entitled the customer to hold a fixed number of DVDs. Thus, if you had a three-DVD subscription, you paid about $17 a month. You ordered three movies that you wanted to see, and Netflix sent them. You could hold on to these movies for as long as you wanted (hence, no late fees). And when you returned one, the next on your queue was sent. The only inconvenience of this system was that you had to plan ahead a bit. The great advantage was that if you planned a bit in advance, the films would be waiting at home whenever you wanted to watch them. Netflix has radically changed the video rental market. The best evidence of its effect is that in 2004, Blockbuster changed its business model to mirror Netflix’s to better compete.7 Wal-Mart’s service was taken over by Netflix in 2005.8 Hastings’s model thus became the industry standard. 80706 i-xxiv 001-328 r4nk.indd 124 8/12/08 1:55:15 AM T W O EC O NO MIE S: C O MMERC I A L A ND SH A RING 125 A m a zon Perhaps the first dramatically successful example of Internet commerce began as a simple bookstore.


pages: 426 words: 105,423

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss

Albert Einstein, Amazon Mechanical Turk, call centre, clean water, Donald Trump, en.wikipedia.org, Firefox, fixed income, follow your passion, game design, global village, Iridium satellite, knowledge worker, late fees, lateral thinking, Maui Hawaii, oil shock, paper trading, Parkinson's law, passive income, peer-to-peer, pre–internet, Ralph Waldo Emerson, remote working, risk tolerance, Ronald Reagan, side project, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, Vilfredo Pareto, wage slave, William of Occam

Offer to point them to another provider if they aren’t able to adopt the new policies. 7. Do not work more to fix overwhelmingness—prioritize. If you don’t prioritize, everything seems urgent and important. If you define the single most important task for each day, almost nothing seems urgent or important. Oftentimes, it’s just a matter of letting little bad things happen (return a phone call late and apologize, pay a small late fee, lose an unreasonable customer, etc.) to get the big important things done. The answer to overwhelmingness is not spinning more plates—or doing more—it’s defining the few things that can really fundamentally change your business and life. 8. Do not carry a cell phone or Crackberry 24/7. Take at least one day off of digital leashes per week. Turn them off or, better still, leave them in the garage or in the car.


pages: 375 words: 106,536

Lost at Sea by Jon Ronson

Affordable Care Act / Obamacare, Columbine, computer age, credit crunch, Douglas Hofstadter, Downton Abbey, East Village, Etonian, false memory syndrome, Gödel, Escher, Bach, income inequality, Internet Archive, Jeff Bezos, Kickstarter, late fees, Louis Pasteur, obamacare, Peter Thiel, Saturday Night Live, Search for Extraterrestrial Intelligence, Skype, telemarketer

Christopher drives me to his house to look at the statements. There are half a dozen files thick with them. There’s a Jiffy bag, too, filled with sliced-up credit cards, cut in half when Richard Cullen finally admitted the problem to his wife. MBNA, Goldfish, Tesco, Amex, Frizzell, etc., all sliced up. A typical page of a Richard Cullen credit-card statement reads like this: Alliance and Leicester Interest charged: £71.07 Late fee: £25 Overlimit fee: £25 There are thousands and thousands of pounds’ worth of these £25s. Then there are letters, too, like this from Barclaycard: According to our records your Barclaycard history has been excellent and we have consequently enrolled you in our Guaranteed Acceptance Masterloan Programme. This means we have set aside £7,000 for your immediate access without an application or any questions whatsoever.


pages: 383 words: 108,266

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely

air freight, Al Roth, Bernie Madoff, Burning Man, butterfly effect, Cass Sunstein, collateralized debt obligation, computer vision, corporate governance, credit crunch, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, endowment effect, financial innovation, fudge factor, Gordon Gekko, greed is good, housing crisis, IKEA effect, invisible hand, lake wobegon effect, late fees, loss aversion, market bubble, Murray Gell-Mann, payday loans, placebo effect, price anchoring, Richard Thaler, second-price auction, Silicon Valley, Skype, The Wealth of Nations by Adam Smith, Upton Sinclair

But here’s what I find strange: although companies have poured billions of dollars into marketing and advertising to create social relationships—or at least an impression of social relationships—they don’t seem to understand the nature of a social relationship, and in particular its risks. For example, what happens when a customer’s check bounces? If the relationship is based on market norms, the bank charges a fee, and the customer shakes it off. Business is business. While the fee is annoying, it’s nonetheless acceptable. In a social relationship, however, a hefty late fee—rather than a friendly call from the manager or an automatic fee waiver—is not only a relationship-killer; it’s a stab in the back. Consumers will take personal offense. They’ll leave the bank angry and spend hours complaining to their friends about this awful bank. After all, this was a relationship framed as a social exchange. No matter how many cookies, slogans, and tokens of friendship a bank provides, one violation of the social exchange means that the consumer is back to the market exchange.


pages: 380 words: 118,675

The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone

airport security, Amazon Mechanical Turk, Amazon Web Services, bank run, Bernie Madoff, big-box store, Black Swan, book scanning, Brewster Kahle, buy and hold, call centre, centre right, Chuck Templeton: OpenTable:, Clayton Christensen, cloud computing, collapse of Lehman Brothers, crowdsourcing, cuban missile crisis, Danny Hillis, Douglas Hofstadter, Elon Musk, facts on the ground, game design, housing crisis, invention of movable type, inventory management, James Dyson, Jeff Bezos, John Markoff, Kevin Kelly, Kodak vs Instagram, late fees, loose coupling, low skilled workers, Maui Hawaii, Menlo Park, Network effects, new economy, optical character recognition, pets.com, Ponzi scheme, quantitative hedge fund, recommendation engine, Renaissance Technologies, RFID, Rodney Brooks, search inside the book, shareholder value, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, Skype, statistical arbitrage, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Thomas L Friedman, Tony Hsieh, Whole Earth Catalog, why are manhole covers round?, zero-sum game

At the time, Amazon was making a little extra money by inserting paper advertisements into its delivery boxes, and Bezos himself received a package that contained a flyer for the DVD-rental firm. He brought the flyer into a meeting and said irritably of the managers running the advertising program, “Is it easy for them to ruin the company or do they have to work at it?” Bezos was clearly nervous about Netflix’s gathering momentum. With its recognizable red envelopes and late-fee-slaying DVD-by-mail program, it was forging a bond with customers and a strong brand in movies, a key media category. Bezos’s lieutenants met with CEO Reed Hastings several times during Netflix’s formative years but they always reported back that Hastings was “painfully uninterested” in selling, according to one Amazon business-development exec. Hastings himself says that Amazon was never truly serious about an acquisition of Netflix because “the basic operating rhythms” of the DVD-rental space, which required multiple small fulfillment centers to send discs out and then receive them back, were so different from Amazon’s core retail business.


pages: 412 words: 113,782

Business Lessons From a Radical Industrialist by Ray C. Anderson

addicted to oil, Albert Einstein, banking crisis, business cycle, carbon footprint, centralized clearinghouse, clean water, cleantech, corporate social responsibility, Credit Default Swap, dematerialisation, distributed generation, energy security, Exxon Valdez, fear of failure, Gordon Gekko, greed is good, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), intermodal, invisible hand, late fees, Mahatma Gandhi, market bubble, music of the spheres, Negawatt, new economy, oil shale / tar sands, oil shock, old-boy network, peak oil, renewable energy credits, shareholder value, Silicon Valley, six sigma, supply-chain management, urban renewal, Y2K

Here’s an example: I read the other day about a woman who went to the mall for some “retail therapy” and used her credit card to buy a pair of shoes. They cost about forty dollars—a bargain. But at the end of the month, after paying her mortgage, her health insurance, her food, gasoline, and utilities, she didn’t have enough to go around. A few months later, her credit card company notified her that those forty-dollar shoes, with all the late fees and penalties added in, were now going to cost her twelve hundred dollars. And by the way, her interest rate was now sky-high, too. Whether it’s buying cheap shoes or burning cheap coal, what seems like a bargain in the short term can get awfully pricey in a hurry. The bill will come due, and it must be paid. Some might even call the way we insist on gauging our economic health by how much stuff we consume (and throw away) a kind of temporary insanity—“temporary” because, while reading this book, you have seen (as I have) that consumerism is absolutely unsustainable.


pages: 501 words: 114,888

The Future Is Faster Than You Think: How Converging Technologies Are Transforming Business, Industries, and Our Lives by Peter H. Diamandis, Steven Kotler

Ada Lovelace, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, blood diamonds, Burning Man, call centre, cashless society, Charles Lindbergh, Clayton Christensen, clean water, cloud computing, Colonization of Mars, computer vision, creative destruction, crowdsourcing, cryptocurrency, Dean Kamen, delayed gratification, dematerialisation, digital twin, disruptive innovation, Edward Glaeser, Edward Lloyd's coffeehouse, Elon Musk, en.wikipedia.org, epigenetics, Erik Brynjolfsson, Ethereum, ethereum blockchain, experimental economics, food miles, game design, Geoffrey West, Santa Fe Institute, gig economy, Google X / Alphabet X, gravity well, hive mind, housing crisis, Hyperloop, indoor plumbing, industrial robot, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invention of the telegraph, Isaac Newton, Jaron Lanier, Jeff Bezos, job automation, Joseph Schumpeter, Kevin Kelly, Kickstarter, late fees, Law of Accelerating Returns, life extension, lifelogging, loss aversion, Lyft, M-Pesa, Mary Lou Jepsen, mass immigration, megacity, meta analysis, meta-analysis, microbiome, mobile money, multiplanetary species, Narrative Science, natural language processing, Network effects, new economy, New Urbanism, Oculus Rift, out of africa, packet switching, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, Peter Thiel, QR code, RAND corporation, Ray Kurzweil, RFID, Richard Feynman, Richard Florida, ride hailing / ride sharing, risk tolerance, Satoshi Nakamoto, Second Machine Age, self-driving car, Silicon Valley, Skype, smart cities, smart contracts, smart grid, Snapchat, sovereign wealth fund, special economic zone, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, supercomputer in your pocket, supply-chain management, technoutopianism, Tesla Model S, Tim Cook: Apple, transaction costs, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, urban planning, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, X Prize

He’d already taken his first software company public, then taken a hefty buy-out, leaving him a sizable nest egg to plunge into his next company. Hastings lit upon an interesting idea: Rent DVDs over the Internet and use the postal service to deliver them. He decided to give it a try—which was the decision that birthed Netflix. The second decision came a few months later, when Hastings had a bigger idea: Never charge late fees. The third decision was Netflix’s real breakthrough, the killer app, the “queue.” Subscribers could create a list of movies they wanted to watch and as soon as the company received word that a prior DVD had been mailed back, Netflix would send out another. Because their DVD rental policy allowed three movies to be checked out at once, users were never without something to watch, and the convenience turned the company into everyone’s default movie rental house.


pages: 889 words: 433,897

The Best of 2600: A Hacker Odyssey by Emmanuel Goldstein

affirmative action, Apple II, call centre, don't be evil, Firefox, game design, Hacker Ethic, hiring and firing, information retrieval, John Markoff, late fees, license plate recognition, Mitch Kapor, MITM: man-in-the-middle, optical character recognition, packet switching, pirate software, place-making, profit motive, QWERTY keyboard, RFID, Robert Hanssen: Double agent, rolodex, Ronald Reagan, Silicon Valley, Skype, spectrum auction, statistical model, Steve Jobs, Steve Wozniak, Steven Levy, Telecommunications Act of 1996, telemarketer, undersea cable, Y2K

In this section you’ll see how the mind of a hacker works in everyday situations. Whether it’s a department store, a grocery store, a video store, or a hotel, you can rest assured that whoever is in charge knows less about how their systems work than a typical 2600 reader who walks in off the street. We always tread a fine line on this kind of subject matter. It’s one thing to understand how to exploit a late-fee system that allows you to never return videos, or how to find an easy way into a major retailer that stores its customers’ credit card info online, or how to use a store terminal to access secret stuff behind the corporate firewall. But it’s another thing entirely to use this knowledge for personal gain or to screw anyone over. There are many who can’t see the difference. After all, why would we even print the information in the first place if we weren’t giving our tacit endorsement of following through with the actual act?

If not, then they could be headed for a world of trouble. Shouts: Stankdawg, for getting me going on this whole project, dual for his constant support, the crews of DDP, Hackermind, and Radio Freek America, and most importantly, Sarah and Ashley. Outsmarting Blockbuster (Autumn, 2002) By Maniac_Dan I used to work at Blockbuster, so I am very familiar with their policies and practices involving late fees. I’m not going to discuss how stupid the policies are, and I’m sure that there are people who would argue with me no matter what I say, but if there comes a time when your car breaks down and the guy behind the counter just won’t believe you and you get charged $25 for 15 minutes, then you can use this method to have your fee removed. They try to make you pay your fees whenever they can, and the stores get a daily report of all fees outstanding on any and all accounts worldwide.

The outstanding fees can be paid at any Blockbuster though (for your convenience in giving Viacom more money) but herein lies the weakness in the system: If your account is disabled due to a fee at another store, then the store you are trying to rent at has to call the store where you have a fee. The store with the fee on record must delete the fee and verify that a fee has been added to the account at the store you are trying to rent at. All customer accounts are stored locally, and the only information that is passed between stores is outstanding late fees. You have fees at one store (store #1 from now on) and you need to call that store and pretend to be from another store (store #2) and make the employees at store #1 remove the fees from your account, thinking you’re paying at store #2. Now to do this you need a store number from store #2 and your own account number, which can be found on your receipts or membership card. Store #2 must be far enough from store #1 so that the employees don’t know each other.


pages: 458 words: 134,028

Microtrends: The Small Forces Behind Tomorrow's Big Changes by Mark Penn, E. Kinney Zalesne

addicted to oil, affirmative action, Albert Einstein, Ayatollah Khomeini, Berlin Wall, big-box store, call centre, corporate governance, David Brooks, Donald Trump, extreme commuting, Exxon Valdez, feminist movement, glass ceiling, God and Mammon, Gordon Gekko, haute couture, hygiene hypothesis, illegal immigration, immigration reform, index card, Isaac Newton, job satisfaction, labor-force participation, late fees, life extension, low cost airline, low skilled workers, mobile money, new economy, RAND corporation, Renaissance Technologies, Ronald Reagan, Rosa Parks, Rubik’s Cube, stem cell, Stephen Hawking, Steve Jobs, Superbowl ad, the payments system, Thomas L Friedman, upwardly mobile, uranium enrichment, urban renewal, War on Poverty, white picket fence, women in the workforce, Y2K

The reason most often given for the recent surge in bankruptcy is the rise of easy credit. In 1970, only 51 percent of families had ever used credit cards; now, over 80 percent have. And you don’t even have to have good credit to get one—in the 1990s, the rate of subprime lending (to people with troubled credit) grew even faster than the credit industry overall. Lenders complain about deadbeats, but the truth is they make more off interest and late fees from struggling customers than they lose from the complete defaulters. And with easier credit comes easier overextension. Another commonly cited reason is America’s abysmal savings rate. In 2005, we saved at a negative rate—for the first time since the Great Depression. ’Nuf said. Finally, many experts say bankruptcy is up because its stigma is down. As new laws make filing easier (which they did until 2005), and more and more people file, more people know someone for whom it all worked out just fine.


pages: 500 words: 145,005

Misbehaving: The Making of Behavioral Economics by Richard H. Thaler

"Robert Solow", 3Com Palm IPO, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, Berlin Wall, Bernie Madoff, Black-Scholes formula, business cycle, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, market clearing, Mason jar, mental accounting, meta analysis, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, Paul Samuelson, payday loans, Ponzi scheme, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, South Sea Bubble, Stanford marshmallow experiment, statistical model, Steve Jobs, Supply of New York City Cabdrivers, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game

., 330–33 constrained optimization, 5–6, 8, 27, 43, 161, 207, 365 “Consumer Choice: A Theory of Economists’ Behavior” (Thaler), 35 consumers, optimization problem faced by, 5–6, 8, 27, 43, 161, 207, 365 consumer sovereignty, 268–69 consumer surplus, 59 consumption function, 94–98, 106, 309 “Contrarian Investment, Extrapolation, and Risk” (Lakonishok, Shleifer and Vishny), 228 cooperation, 143–47 conditional, 146, 182, 335n Prisoner’s Dilemma and, 143–44, 145, 301–5, 302 Copernican revolution, 169 Cornell University, 42, 43, 115, 140–43, 153–55, 157 Costco, 63, 71–72 Council of Economic Advisors, 352 coupons, 62, 63, 67–68, 120 credit cards, 18, 74, 76–77 late fees for, 360 crime, 265 Daily Mail, 135 Daily Show, The, 352 Dallas Cowboys, 281 data: financial, 208 collection and recording of, 355–56 Dawes, Robyn, 146 Deal or No Deal, 296–301, 297, 303 path dependence on, 298–300 deals, 61–62 De Bondt, Werner, 216–18, 221, 222–24, 226n, 233, 278 debt, 78 default investment portfolio, 316 default option, 313–16, 327 default saving rate, 312, 316, 319, 357 delayed gratification, 100–102 De Long, Brad, 240 Demos, 330 Denmark, 320, 357–58 descriptive, 25, 30, 45, 89 Design of Everyday Things, The (Norman), 326 Diamond, Doug, 273, 276 Diamond, Peter, 323 Dictator Game, 140–41, 142, 160, 182, 301 diets, 342 diminishing marginal utility, 106 of wealth, 28, 30 diminishing sensitivity, 30–34 discount, surcharge vs., 18 discounts, returns and, 242–43 discounted utility model, 89–94, 99, 110, 362 discretion, 106 Ditka, Mike, 279, 280 dividends, 164–67, 365 present value of, 231–33, 231, 237 Dodd, David, 219 doers, planners vs., 104–9 Donoghue, John, 265n “Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?”


pages: 462 words: 129,022

People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, battle of ideas, Berlin Wall, Bernie Madoff, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, central bank independence, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, deglobalization, deindustrialization, disintermediation, diversified portfolio, Donald Trump, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, global supply chain, greed is good, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta analysis, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Jobs, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population

As banking has evolved, increasingly, intermediation has shifted away from a relationship between savers and firms wanting to expand and create new jobs. Rather, banks intermediated between savers and households that wanted to spend more than they made, for example, through credit card lending. Credit card lending was so profitable because it was so easy to take advantage of consumers, charging them usurious interest rates, late fees (even when they weren’t late), overdraft fees, and a host of other charges. This was especially true as deregulation proceeded, eliminating constraints on banks’ predatory behavior. Banks could rake it in from all sides, using their market power to impose high fees on both consumers and merchants simultaneously. Moreover, in their lending, banks could more easily exploit consumers than they could firms; there was more easy money to be made there than by lending to small and medium-sized enterprises (SMEs).


pages: 420 words: 130,503

Actionable Gamification: Beyond Points, Badges and Leaderboards by Yu-Kai Chou

Apple's 1984 Super Bowl advert, barriers to entry, bitcoin, Burning Man, Cass Sunstein, crowdsourcing, Daniel Kahneman / Amos Tversky, delayed gratification, don't be evil, en.wikipedia.org, endowment effect, Firefox, functional fixedness, game design, IKEA effect, Internet of things, Kickstarter, late fees, lifelogging, loss aversion, Maui Hawaii, Minecraft, pattern recognition, peer-to-peer, performance metric, QR code, recommendation engine, Richard Thaler, Silicon Valley, Skype, software as a service, Stanford prison experiment, Steve Jobs, The Wealth of Nations by Adam Smith, transaction costs

Returning to the concept of proportional loss, we see that despite Loss and Avoidance typically being a powerful motivator, the $3 fee was just too low to properly motivate the parents in this situation. Remember I discussed about how when you use Loss & Avoidance, the loss needs to be threatening? If the daycare center charged a lot more than $3, the Loss & Avoidance motivation would become more threatening and more parents would likely comply (begrudgingly of course, which would lead to switching day-care centers soon). Currently, there are some daycare centers that charge a $1 late fee for every minute the parent is late. This design actively gets parents to be on time more often. This is not only because the loss is more threatening, but also due to the parents feeling a combination of Core Drive 6: Scarcity & Impatience, as well as a bit of Core Drive 3: Empowerment of Creativity & Feedback since they feel a stronger sense of agency over end results. Careful Transitioning between White Hat and Black Hat So now that we’ve covered the nature and differences between White Hat and Black Hat gamification, how do we blend that knowledge together into our designed experiences?


pages: 667 words: 149,811

Economic Dignity by Gene Sperling

active measures, Affordable Care Act / Obamacare, autonomous vehicles, basic income, Bernie Sanders, Cass Sunstein, collective bargaining, corporate governance, David Brooks, desegregation, Detroit bankruptcy, Donald Trump, Double Irish / Dutch Sandwich, Elon Musk, employer provided health coverage, Erik Brynjolfsson, Ferguson, Missouri, full employment, gender pay gap, ghettoisation, gig economy, Gini coefficient, guest worker program, Gunnar Myrdal, housing crisis, income inequality, invisible hand, job automation, job satisfaction, labor-force participation, late fees, liberal world order, longitudinal study, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass incarceration, mental accounting, meta analysis, meta-analysis, minimum wage unemployment, obamacare, offshore financial centre, payday loans, price discrimination, profit motive, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, single-payer health, speech recognition, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, Toyota Production System, traffic fines, Triangle Shirtwaist Factory, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, working poor, young professional, zero-sum game

For example, in 2014, at least forty-three states and Washington, DC, allowed courts to bill defendants for a public defender. Many states also charge for a jury.68 Fees for probation services are common, too. In 2014, forty-four states used the practice of charging released individuals for their own court-imposed probation and parole,69 in some cases in connection with for-profit probation service providers. There are also fees that are tacked on essentially if you’re poor: interest rates as high as 12 percent,70 late fees, fees for setting up a payment plan, even paying for collection.71 Ten million people collectively owe over $50 billion as a result of their engagement with the criminal justice system.72 These fines and fees operate as modern-day debt prisons. They force untold numbers of Americans to go to prison for nothing more than being too poor to pay debts to the criminal justice system—a criminalization of poverty.


pages: 598 words: 172,137

Who Stole the American Dream? by Hedrick Smith

Affordable Care Act / Obamacare, Airbus A320, airline deregulation, anti-communist, asset allocation, banking crisis, Bonfire of the Vanities, British Empire, business cycle, business process, clean water, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, desegregation, Double Irish / Dutch Sandwich, family office, full employment, global supply chain, Gordon Gekko, guest worker program, hiring and firing, housing crisis, Howard Zinn, income inequality, index fund, industrial cluster, informal economy, invisible hand, Joseph Schumpeter, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, laissez-faire capitalism, late fees, Long Term Capital Management, low cost airline, low cost carrier, manufacturing employment, market fundamentalism, Maui Hawaii, mega-rich, MITM: man-in-the-middle, mortgage debt, negative equity, new economy, Occupy movement, Own Your Own Home, Paul Samuelson, Peter Thiel, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, Powell Memorandum, Ralph Nader, RAND corporation, Renaissance Technologies, reshoring, rising living standards, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Steve Jobs, The Chicago School, The Spirit Level, too big to fail, transaction costs, transcontinental railway, union organizing, Unsafe at Any Speed, Vanguard fund, We are the 99%, women in the workforce, working poor, Y2K

“In a strange way, the banks were charging [these] borrowers higher interest rates in order to give the wealthy people a break … because the people who have money were paying in full, and they were getting the break at the expense of the people who couldn’t pay in full.” “More than 75 percent of credit card profits come from people who make those low, minimum monthly payments,” Elizabeth Warren and Amelia Warren Tyagi reported in The Two-Income Trap, “and who makes minimum monthly payments at 26 percent interest? Who pays late fees, overbalance charges, and cash advance premiums? Families that can barely make ends meet, households precariously balanced between financial survival and complete collapse. These are the families that are singled out by the lending industry, barraged with special offers, personalized advertisements, and home phone calls, all with one objective in mind: get them to borrow more money.” Preapproved Credit—$350,000 per Family Once the lid was off interest rates because of congressional deregulation, the banks had a field day.


Digital Accounting: The Effects of the Internet and Erp on Accounting by Ashutosh Deshmukh

accounting loophole / creative accounting, AltaVista, business continuity plan, business intelligence, business process, call centre, computer age, conceptual framework, corporate governance, data acquisition, dumpster diving, fixed income, hypertext link, interest rate swap, inventory management, iterative process, late fees, money market fund, new economy, New Journalism, optical character recognition, packet switching, performance metric, profit maximization, semantic web, shareholder value, six sigma, statistical model, supply-chain management, supply-chain management software, telemarketer, transaction costs, value at risk, web application, Y2K

The estimates of total number of bills in the U.S. economy vary between 27 and 30 billion (approximately 12-15 billion B2B bills and 15-18 billion B2C bills). Businesses and consumers annually write approximately 68-70 billion checks, which is the highest check usage among industrialized nations. In B2C billing, consumers spend an average of 2 hours per month writing checks and spend $100 per year in associated costs, such as postage, late fees and returned checks. Bill presentment and payment costs businesses and consumers $80 billion per year; and internal processing costs for businesses are around $45 billion per year. Can these costs be reduced by using the Internet? Gartner Group estimates that using Web-based billing and payments, B2B companies can save $7.25 and B2C companies $0.55 per bill. Apart from cost reduction, Web-based billing can have strategic applications in the customer service area and CRM.


pages: 632 words: 166,729

Addiction by Design: Machine Gambling in Las Vegas by Natasha Dow Schüll

airport security, Albert Einstein, Build a better mousetrap, business intelligence, capital controls, cashless society, commoditize, corporate social responsibility, deindustrialization, dematerialisation, deskilling, game design, impulse control, information asymmetry, inventory management, iterative process, jitney, large denomination, late capitalism, late fees, longitudinal study, means of production, meta analysis, meta-analysis, Nash equilibrium, Panopticon Jeremy Bentham, post-industrial society, postindustrial economy, profit motive, RFID, Silicon Valley, Slavoj Žižek, statistical model, the built environment, yield curve, zero-sum game

Caucasian women between the ages of thirty and fifty were most heavily represented, in part reflecting the demographic characteristics of machine gamblers in Las Vegas at the time I conducted the majority of my interviews, and in part reflecting my regular attendance at women-only GA meetings.99 Although the social, economic, and biographical differences among the machine gamblers in my study mediated their machine play in significant ways, even more striking were the continuities of experience that the common set of machines they played seemed to bring about.100 In the space of one day in 2002, for instance, I interviewed a young buffet waitress living in a trailer park in the northeast part of the city, and an older male businessman living in a gated community in the southwest’s affluent suburb of Summerlin.101 The waitress played nickel machines, often at supermarkets, while the businessman played dollar machines at a well-appointed neighborhood casino. The waitress spent whole paychecks at a time, worrying afterward that her children would not have money for school lunches. The businessman maxed out credit cards and depleted family savings, worrying that he might not manage to shuffle his money among bank accounts in time to cover his expenditures and avoid late fees, or to intercept the mail and conceal his losses from his wife. Despite radical differences in their life circumstances, the coin denomination of their game play, and the financial consequences of their gambling, the waitress and the businessman described their interactions with machines in uncannily similar language; reading over their transcripts, I found the two narratives nearly interchangeable in this regard.


pages: 850 words: 254,117

Basic Economics by Thomas Sowell

affirmative action, air freight, airline deregulation, American Legislative Exchange Council, bank run, barriers to entry, big-box store, British Empire, business cycle, clean water, collective bargaining, colonial rule, corporate governance, correlation does not imply causation, cross-subsidies, David Brooks, David Ricardo: comparative advantage, declining real wages, Dissolution of the Soviet Union, diversified portfolio, European colonialism, fixed income, Fractional reserve banking, full employment, global village, Gunnar Myrdal, Hernando de Soto, hiring and firing, housing crisis, income inequality, income per capita, index fund, informal economy, inventory management, invisible hand, John Maynard Keynes: technological unemployment, joint-stock company, Just-in-time delivery, Kenneth Arrow, knowledge economy, labor-force participation, land reform, late fees, low cost airline, low cost carrier, low skilled workers, means of production, Mikhail Gorbachev, minimum wage unemployment, moral hazard, offshore financial centre, oil shale / tar sands, payday loans, price discrimination, price stability, profit motive, quantitative easing, Ralph Nader, rent control, road to serfdom, Ronald Reagan, Silicon Valley, surplus humans, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transcontinental railway, Vanguard fund, War on Poverty

When laws restrict the annual interest rate to 36 percent, this means that the interest charged for a two-week loan would be less than $1.50—an amount unlikely to cover even the cost of processing the loan, much less the risk involved. When Oregon passed a law capping the annual interest rate at 36 percent, three-quarters of the hundreds of payday lenders in the state closed down.{444} Similar laws in other states have also shut down many payday lenders.{445} So-called “consumer advocates” may celebrate such laws but the low-income borrower who cannot get the $100 urgently needed may have to pay more than $15 in late fees on a credit card bill or pay in other consequences—such as having a car repossessed or having the electricity cut off—that the borrower obviously considered more detrimental than paying $15, or the transaction would not have been made in the first place. The lower the interest rate ceiling, the more reliable the borrowers would have to be, in order to make it pay to lend to them. At a sufficiently low interest rate ceiling, it would pay to lend only to millionaires and, at a still lower interest rate ceiling, it would pay to lend only to billionaires.


Egypt Travel Guide by Lonely Planet

call centre, carbon footprint, Eratosthenes, friendly fire, G4S, haute cuisine, Khartoum Gordon, late fees, low cost airline, low cost carrier, spice trade, sustainable-tourism, Thales and the olive presses, trade route, urban planning, urban sprawl

Travel in Sinai between Sharm el-Sheikh and Taba, including St Katherine’s Monastery but not Ras Mohammed National Park, requires no visa, only a free entry stamp, good for a 15-day stay. Visa extensions used to be routine, but are now subject to scrutiny, especially after repeat extensions. Be polite and say you need more time to appreciate the wonders of Egypt. 14-day grace period for extension application, with E£100 late fee. If you leave during this time, you must pay E£135 fine at the airport. Visa Extensions: Where to Go Wherever you apply, you’ll need one photo and two copies each of your passport’s data page and the visa page. The fee depends on where you apply, but it’s no more than E£15. Alexandria ( 03-482 7873; 2nd fl, 25 Sharia Talaat Harb; 8.30am-2pm Mon-Thu, 10am-2pm Fri, 9-11am Sat & Sun) Aswan ( 097-231 2238; Corniche an-Nil; 8.30am-1pm Sat-Thu) Cairo (Agouza) ( 02-3338 4226; El Shorta Tower, Sharia Nawal; 8am-1.30pm Sat-Wed) For Giza addresses only: enter at side entrance of police station, go to window 4, 2nd floor.


pages: 898 words: 266,274

The Irrational Bundle by Dan Ariely

accounting loophole / creative accounting, air freight, Albert Einstein, Alvin Roth, assortative mating, banking crisis, Bernie Madoff, Black Swan, Broken windows theory, Burning Man, business process, cashless society, Cass Sunstein, clean water, cognitive dissonance, computer vision, corporate governance, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, end world poverty, endowment effect, Exxon Valdez, first-price auction, Frederick Winslow Taylor, fudge factor, George Akerlof, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, IKEA effect, Jean Tirole, job satisfaction, Kenneth Arrow, knowledge economy, knowledge worker, lake wobegon effect, late fees, loss aversion, Murray Gell-Mann, new economy, Peter Singer: altruism, placebo effect, price anchoring, Richard Feynman, Richard Thaler, Saturday Night Live, Schrödinger's Cat, second-price auction, Shai Danziger, shareholder value, Silicon Valley, Skype, software as a service, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, ultimatum game, Upton Sinclair, Walter Mischel, young professional

But here’s what I find strange: although companies have poured billions of dollars into marketing and advertising to create social relationships—or at least an impression of social relationships—they don’t seem to understand the nature of a social relationship, and in particular its risks. For example, what happens when a customer’s check bounces? If the relationship is based on market norms, the bank charges a fee, and the customer shakes it off. Business is business. While the fee is annoying, it’s nonetheless acceptable. In a social relationship, however, a hefty late fee—rather than a friendly call from the manager or an automatic fee waiver—is not only a relationship-killer; it’s a stab in the back. Consumers will take personal offense. They’ll leave the bank angry and spend hours complaining to their friends about this awful bank. After all, this was a relationship framed as a social exchange. No matter how many cookies, slogans, and tokens of friendship a bank provides, one violation of the social exchange means that the consumer is back to the market exchange.


pages: 1,009 words: 329,520

The Last Tycoons: The Secret History of Lazard Frères & Co. by William D. Cohan

activist fund / activist shareholder / activist investor, bank run, carried interest, cognitive dissonance, commoditize, computer age, corporate governance, corporate raider, creative destruction, credit crunch, diversification, Donald Trump, East Village, fear of failure, fixed income, G4S, hiring and firing, interest rate swap, intermodal, Joseph Schumpeter, late fees, Long Term Capital Management, Marc Andreessen, market bubble, offshore financial centre, Ponzi scheme, Ralph Nader, Ralph Waldo Emerson, rolodex, Ronald Reagan, shareholder value, The Nature of the Firm, the new new thing, Yogi Berra

A Lazard partner tells the story of how he was outside Michel's office one day--waiting to go in to see him--when he overheard Annik having to juggle phone calls from the two women simultaneously. On one phone line was Margo, for whom Annik was arranging a private jet to take her to Moscow, at a cost of $100,000. On the other line was Helene, reminding Annik to return rented videos to the video store in order not to be charged a two-dollar late fee. During one of our many interviews--this one at his magnificent Paris home--I asked Michel about his relationship with Margo. Moments before, he had introduced me to Helene, his thin and somewhat dour wife of fifty years, as she walked through the grand living room where we were meeting. Although New York disclosed the relationship in 1996, Michel seemed to shudder visibly at the question and asked me, for the only time in all of our many meetings, to turn off the tape recorder.