Alex Hopmann’s Blog

Uploading any files more than a few hundred K from a browser has been a problem for years. The UI available in the browser is very limited and relying on a single HTTP request that might take minutes or hours (and that you have to start over from scratch if it fails) often turns into a huge source of user frustration. There is also an extra flaw in that the TCP connection can fail before the whole file is transmitted but depending on the circumstances the server might not be able to tell if the whole file was actually received. There are a bunch of sites that use various ActiveX or Java controls but those have typically been a pain to install and/or flakey.

I just discovered that Silverlight can be used to create much more functional upload controls. Here is one for example in the Codeplex Code library. Granted, users need to have Silverlight already installed, but once they do it becomes much easier to have a good user interface, while having the actual process send chunks of the file that can be resumed if any piece fails, etc. Combine that with the Azure Blob chunked-PUT mechanism and you can build a very robust storage mechanism right in the browser. I’m looking forward to trying it out.

One last thought- it would be useful to define a standard protocol for uploading content in chunks (and yes, this is distinct from an HTTP PUT/POST with chunked encoding). Something along the lines of what the Azure Blob store does but defined as a standard that various controls and services can all interoperate.

Coding Horror has a post highly recommending the new book “Regular Expressions Cookbook”. Now, I have mixed feelings about regular expressions and get concerned when I see them since they are often overused and when misused can result in code that is very hard to understand and debug. Having said that, when used in the right situation they can be a perfect solution to otherwise complicated text parsing & validation. But the art of creating them is often a lot of voodoo, so a book that has good reference materials and examples would be very helpful. I’ll report on this one next week after I have a chance to look through it a bit.

As an old HTTP guy I often get nervous about new services. They tend to violate all sorts of key HTTP architecture concepts and just take advantage of the flexibility to do whatever.

I’ve been really happy to see that the Azure Blob storage actually gets this stuff right. They have valid REST semantics with a good URL namespace, support GET and PUT with the right kind of range headers, etag and conditional operation support. They have a smart design for uploading a large blob in multiple pieces (which works around one of the bigger flaws in the older WebDAV support), and all. Anyway, its great to see a team do all their homework and get these details right- I suspect this will really payoff over the long lifespan of a service as it fits in cleanly with rest of the web services world. (note- I’m not saying other competing products aren’t also doing these things right, I haven’t researched those details lately).

Tom’s Hardware has a write up on BPOS (the Business Productivity Online Suite) that includes the SharePoint Online stuff that I’m working on.

The NY Times has a write up about Sriracha. I had no idea it wasn’t actually Asian, although in retrospect its not surprising that its another American invention based on a blend of other cultures. In the end I don’t care where it comes from, I’m a fan…

Kat and I ran the 2009 Bay to Breakers 12k race today in San Francisco. We have been getting into running lately and are training for the Seattle Rock and Roll Half Marathon at the end of June. It’s mostly an excuse to get in shape, but its working and to my shock I’ve really been starting to enjoy running.

In any case, we signed up for Bay to Breakers since its a good warm-up for the 13.1 mile half-marathon (at about 7.5miles) and a trip to San Francisco is always fun. We also managed to head up to Napa for the Joseph Phelps party, do some extra tasting at Stag’s Leap Wine Cellars, and attend a Pahlmeyer event at the new “Press Club” tasting room in San Francisco.

The race itself was fun- lots of people wore all kinds of zany costumes (or nothing at all which was frankly just less interesting). The race was hard, since I’m really poor at pacing myself, but it the challenge was fun and I enjoyed pushing myself. The city had unusually hot weather which was pretty tough for the run, but in the end I finished in 1:16:30 (unofficial of course), which felt like a pretty good time for me.

Overall the event felt really well organized, although I wish they had safety pins at the start for my race number. But transportation back downtown was really easy and they had tons of water bottles easily accesible at the finish. The only thing I would have improved would have been more bathrooms at the start- the lines for the few they had were unreasonably long.

Did you catch the latest twist on the markets?

Normally when a company like Chrysler is about to go bankrupt the bond holders are really eager to avoid the situation. They are willing to cut a deal and accept $.70 on the dollar or something to avoid pushing the company over the edge and making a big mess where they are only going to get $.40 or $.50 on the dollar and only after a year or so of expensive legal waste. Now the catch is, to avoid bankruptcy you need pretty much all of the bond holders to agree.

But what happens when those bond holders are a hedge fund that has credit default swaps on the bonds? If the company goes bankrupt the default provision kicks in and they get back $1 on the dollar. If a deal is cut they get less. So you can have a tiny minority of bondholders push the company over the edge at huge cost to everyone else because they get a bit more.

Even more wacky- What if the hedge fund only has $10M in the bonds, but they have $100M in credit default swaps? Remember, people start buying them as speculation, not just a hedge on their bond investments. So now their little $10M stake can actually be leveraged into a $90M profit while everyone else goes to hell. This is another classic example of how some of these complex instruments broke what used to be thought of as a well functioning market where everyone has appropriately aligned interests (investors in a company want it to do well, all the right cycles are reinforced in the right ways).

Nice.

I think part of the thing that is so weird about the big financial scandals this past year (other than that most are a complete replay of LTCM and other things from 10 years ago) are the sticky place that it puts someone like me who typically is a fan of “free market” mechanisms. John posted a link and an excerpt of a rant that I think expresses some frustration about just how off-the-rails those “free market” mechanisms seem to have gone.

Which brings me to some thoughts about the whole role of the financial services industry. The financial services industry doesn’t actually make anything. That doesn’t imply that its bad or that the people who work in it are bad- there are lots of industries that don’t make anything and yet are critical to the functioning of our society. Lawyers don’t make anything, they help us make sure we have good agreements about how things get made. Politicians don’t make anything, they create the rules that hopefully give us a level playing field for our society. Cops don’t make anything- they enforce the rule of law so that people don’t rip each other off or hurt each other. Each of these has a key role in the functioning of the overall society (and in making it possible for the other industries to function). But each of these can also have its own power-grab. If we were in a society where the politicians were just lining their own pockets with $10 million dollar bonuses and payouts and bribes or where the cops were doing the same thing I think we would scream bloody murder (and in fact we have when its been other countries where that happens). Each of these roles is expected to do its part and take an appropriate cut of societies resources for its role.

So what role does the financial services industry play? I can think of three key broad functions (and I’m sure I’m missing others)-
1) It provides capital so that people that want to accomplish things whether creating companies, goods, or buying houses, can do so without inefficiently having to have all their own cash up front.
2) It provides a stability and savings function. The combination of insurance and retirement savings and various off-shoots gives you a way to not just have to stuff cash in your mattress and live in fear that someone is going to steal it.
3) It provides a pricing function that comes up with appropriate prices for capital, commodities, and other financial instruments.

To provide these functions the people involved in this industry are necessarily working with lots of money. But that doesn’t imply that they are inherently owed 1% of whatever money passes through their hands. It doesn’t imply that society should let too much of our effort (both money and human capital) go into serving that function, ESPECIALLY if by doing so it erodes some of the fundamental things that the financial industry provides (stability, efficient market pricing, both of which have gone to hell because the compensation system on Wall Street encouraged short-term risk taking).

Let me give you an example that feels like it highlights this. The New York Times is reporting that the Fairfield Greenwich Group, one of the “feeder funds” that was investing in Madoff was paid 1 & 20% commissions on the money they invested for their clients in Madoff. To be fair, that is a fairly normal commission, although part of the presumption would be that the people earning that have done some serious due diligence into understanding how the money is being invested. So lets say you gave them $1000. After 3 years, they give you the great news that because Madoff is so smart your $1000 is now $2000. Oh, except that they kept 1% of assets under management each year (call it $45) and 20% of the profit ($200), so you only have $1755. Still, not to bad to make 75% gain in just 3 years.

Except that the underlying Madoff thing was all a fraud. But Fairfield still pocketed your $245. They took 25% of your money as a service fee to throw away the rest of it. To really understand how perverse this whole thing is, imagine Madoff did “even better”. He turned your $1000 into $5000. 400% profit! Meanwhile Fairfield pockets ~$90 for their 1% and $800 for their 20% of the profit. The “better” the fraud does, the more all the financial industry guys line their pockets.

Ever wonder why the banks don’t want to sell their toxic assets at real market prices (IE- what someone is willing to pay for them)? Why they were so eager to ditch the mark-to-market rules? The markets were up 4% today at one point on the relaxing of those rules. Basically that rule just lets them all keep playing the Madoff game and participate in the fantasy that the assets they hold have a higher value than they really do.

Which brings me full circle to the usual point I make in all these “financial crisis” posts lately. The only real solution, the only structural fix that would really work without imposing a web of complex “rules” that won’t adapt nearly as fast as the people trying to get around them, is total visibility for all transactions. Again, this will piss off a bunch of the underlying folks in the industry, but the Madoff thing wouldn’t have been able to happen. Various people will complain that it will be harder to make their huge profits using proprietary (and I’m sure very smart) techniques, but the balance has to not be in favor of protecting the ability for folks to make a profit in an industry that is fundamentally a “tax” that we all pay for the functioning of society. Full visibility will accomplish the real societal goals of why we need a financial industry better than the existing slick trading systems do, it will do so at lower cost to society, and it does it without having to over-regulate the details of what transactions are allowed and which ones aren’t.

Now that the iPhone 3.0 software is introduced, its time to start dreaming about what the next hardware might bring. My assumption at this point is that Apple is going to refresh the hardware every summer, and that if they do a good enough job that I (and tons of other suckers) are just going to buy the new one every year like clockwork.

So given that I’m overall pretty happy with my iPhone, certainly more happy than I have been with any phone 9 months into ownership, what are the top things I would improve?

• 64GB storage. 32GB seems like an easy bet given that there is an iPod Touch with it, but with USB drives out in the market with 64GB, is a 64GB option too much to ask? The fear is it would push the price point out to $399 (64GB USB drives are still a bit more than $100 right now). My 16GB has done pretty well so far, but I’m starting to push on its limits.
• Better wireless circuitry. Of course its hard to tell how much is AT&T, how much is the phone hardware, and how much is software issues, but it certainly feels like I occasionally have a harder time connecting, especially for data connections than makes sense.
• Better GPS. It seems like the micro GPS chips have been improving rapidly and having a GPS chip that syncs faster would be very nice.
• Better camera. I find myself taking a surprising number of photos using my phone now since I always forget my camera. Its actually not that bad for a “paste a quick snap on Facebook” scenario, but 4-5MP and less grainy would be really nice.
• Standard USB port for charging. This one I assume I’m not going to get unless the pressure from the EU forces them into it, but being able to use a standard micro-USB port to charge the thing would be great.

Given that you pay almost $1000/year for service, Apple really does have a good business model on their hands if they can come out with an incrementally better device every summer for $299. Just with normal wear it can make sense to get a new one every year or two and Apple needs to keep pushing just enough improvements to get people into the new model. The 3g refresh last summer appears to have done the trick for most people, and frankly if they can do 3 out of the 5 things above, it will be a pretty easy decision for me.

As expected, spurred to quick action by the wave of outrage, the government has begun to counter the A.I.G. bonus situation with what are probably some really bad reactions. 538 has a great write-up of some of the unintended consequences of the bill the House passed the other day. I do think something should be done about the A.I.G. bonuses, again, because I think that while $165 million is just a drop in the ocean of the multi-trillion dollar crisis, I do think this goes to the fundamental credibility of whether the industry is set up to work in our societies best interest in fixing the mess they created, as opposed to continued short-term cashing out while the getting is still good.

Although its obviously coming with its own set of political grandstanding, the approach taken by the NY Attorney General, Andrew Cuomo seems more reasonable. Rather than pass a law that has lots of side effects, we likely have plenty of existing laws that make a situation like this- executives signing contracts with each other that set up guaranteed payments, irrespective of job performance and from an (effectively) insolvent organization. I would hope that this would be sufficient to get the involved parties at A.I.G. to realize that its in their own self-interest to give the bonuses back, as well as make sure that similar situations will not happen again in the near future.

Meanwhile the one thing that I’d love to see more of is scrutiny of the actual work that this group has been doing unraveling their toxic deals. Have they been using the government money to cut good deals in the interest of A.I.G. and its shareholders (the US taxpayer), or have they been doing their own sweetheart hand-outs to the other Wall St. companies like Goldman. Are they just paying out these insurance policies at 100% despite the underlying bonds still being in fine shape, or are they striking an appropriate hard bargain so that no one walks away unduly profiting from the governments assistance?

Goldman is still claiming they have no exposure to A.I.G. but if that is true, among all the other government largess to Goldman why do they have more than $12 billion in payments from A.I.G. and other unwinding of these contracts?