Against The Gods, Peter Bernstein

(click to buy on amazon.com)

This is a remarkable book.

Bernstein tells the story of the development of statistics and risk modeling from ancient times to the (almost) present. He has an obvious love for the material in addition to a great knowledge of the field and its history.

The story told here is deep and broad. A large number of men (no women mentioned that I can remember) and their contributions leading up to the development of risk theory are detailed - from advent and use of the arabic number system, through the Renaissance and Age of Reason, to the giants of 20th century economic thought - Keynes, Morgenstern, Arrow.

I was interested to see von Neumann as a player in this space. As a computer scientist and architect I think of him as one of the original inventors of the modern computer; I forget that he was a mathematician at heart. I had no clue that he played a role in the development of game theory - and hence the development of theories of risk.

The story ends with a short introduction to derivitives. We have been hearing a lot about these beasts over the last 12 months. This story stops in the late 90's when the book was published. Some of the players of interest in the derivitives markets over the last year are mentioned - Chase, Bank of America, Citibank - but players like AIG and instruments like mortgage-backed securities are not mentioned. Now that I have a better understanding of this area, I am ready to tackle some more current material on this topic. Anyone have a suggestion?

This is not a trivial book to read. It took me a couple of months to get through it. I am a better person for having done so, however. It is well worth the effort. More of us need to be up to the challenge of texts like this because so much of our economic lives hinge on these ideas which can't be easily summed up in a two page Newsweek article.

Books, books and more books

I took a step back the other day to take a look at everything that I have read while building Pixmonix. The list is very large. This includes book on starting and running a business, technical books (e.g., on building websites, using photo and video tools) and managing people and processes within an enterprise. When I add in the books and magazines that I have read for fun, it is kind of ridiculous. Over the next several weeks, I will try to summarize what I have read and offer my limited insights into what is worth reading.

What have you read while establishing your business that you found particularly useful?

Business and the recession

Whenever I see someone I haven't spoken to in a while, one of the first questions that they ask is "how is Pixmonix doing in this downturn?". Like my friend Jim Harrington, who runs a slide scanning business out of his house in MA (I linked his blog in my blogroll), things have been growing pretty substantially for us during the last 12 months, even through the downturn.

Why?

Economics. The cost of scanning larger collections of slides/negatives/photos has gone down over the last couple of years. This has opened up the market for many consumers and businesses to digitize their collections. Technologies have improved to allow us to be more efficient and the market has changed to force us to be more cost effective. These are good things. For the former, we have employed a number of new software technologies, hammered out a more efficient and responsive workflow, and put a strong focus on getting great results with less time commitment. For the changes in the marketplace we can "thank" a couple of our competitors that are outsourcing labor to India and central America.

Perceived need. Now that digital cameras have strongly outpaced film, most people are seeing the benefits of digital images compared to film. This makes them want to have all the old photos in digital form. Every day I see our customers embracing and loving the things that they do with their newly digitized images. In my personal life, I have seen great joy from my own relatives as a result of the scanning of old photos. A digital photo frame with scanned images makes a great gift, especially for older relatives.

Comfort spending. It think that preservation of photos is an area that gives people great joy and comfort, especially when the economy is doing so poorly.

What have your experiences been like during the downturn?

The Forever Disk, part 2

Henry O'Connell of Millenniata contacted me shortly after I posted on the blog about the Forever Disk and we traded a couple of emails.

I'm glad to see that they claim that Alpha testing will begin in 2009 (according to their press release), though like all technology, I suspect it will be product later than the engineers and business people would like. With the push toward online backup and cloud-based computing and storage, I wonder what the lifetime of these technologies will be like - and how much in sales are needed to pay for the R&D. I suspect that this is not an easy business.