Pramod Dibble's Blog


The Paris climate talks don’t matter

04 Dec 2015

The Paris climate talks are in progress, with President Obama and 150 other world leaders hashing out their commitments to a sustainable energy future. As this highest-of-high profile meeting occurs, speculations on implications to the global economy come thick and fast, to which I propose to add my two cents.

It doesn’t matter what political leaders decide in Paris.

Fossil fuels are gasping their last, propped up by an industry aging badly and the political agents they fund. Obfuscation and misinformation have succeeded in deliberately misleading enough of the citizenry that decisive political action is difficult, while taxpayers shoulder the burden of a $50 billion annual subsidy to fossil fuel companies, and the negative $415 billion economic impact of burning coal, $590 billion for oil, and $342 billion for natural gas*. The combined unpaid cost of fossil fuels to the USA is about $1.35 trillion annually.

Meanwhile, renewables including wind, hydro, and solar produce no emissions at all, eliminating that $1.35 trillion cost to the economy (by the way, that’s equal to 8% of the US GDP). It should be noted that our economy is wholly dependent on a reliable energy supply, thus without this $1.35 trillion dollar unpaid cost, our $16.77 trillion GDP could not exist given the technologies available to 20th century developed nations.

But it’s no longer the 20th century. Our technological capabilities have exploded over the last 3 decades, and energy generation is no exception to the trend. Solar, for instance, costs less than one quarter to generate today than it did in the year 2005, and is still declining by about 14% annually. In comparison, the price of electricity from coal and natural gas has not declined since 1990, and fluctuates primarily with the price of fuel.

Wind power has achieved cost parity with natural gas, which is often touted as the cheap, clean alternate to coal fired plants, and geothermal has long been the least expensive way to generate electricity. Solar will achieve cost parity with natural gas before 2018.

Further evidence that renewables are edging fossil fuels out of the limelight is on the demand side. Walmart, Costco, Kohl’s, IKEA, Macy’s, to name but a few, have installed hundreds of rooftop solar systems to manage their operating expenses, and benefit from cheap, clean energy and the positive brand image that goes along with it. These are consistently cost-conscious organizations, and if the economic case were not compelling we would not see this level of adoption.

This has become an economic issue, rather than a political one. We will continue to see entrenched, anti-innovation companies clinging to the dirty technologies of the past, but those who make their decisions based on data rather than legacy will see the clear path forward is renewable.

The Slow Death of a Giant

30 Nov 2015

Another blockbuster merger for the history books; Pfizer and Allergan will combine in the third largest takeover in history, a deal worth ~$160 billion. With combined annual revenue of $64 billion and market leading brands like Botox, Lyrica, and Viagara coming together under the same roof, this seems like a slam dunk. But my advice, to those of you who care about such things, is SELL SELL SELL. Wondering why? Read on.

Pfizer-Allergan (Pfizerergan?... Allerfizer?...) is a terrible long-term investment. We’re likely to see a short term bump as starry eyed hedge fund managers get swept up in the rows of zeroes, but they’ll come back down to Earth with the first earnings report. Give it 9 months.

Pfizer’s growth strategy going back a decade and a half has been to slash its internal R&D efforts and focus on buying already successful competitors. It’s acquisitions tree looks like that family chart at the beginning of A Game of Thrones, scooping up competitors at breakneck speed (Warner-Lambert 2001 $90 billion… Pharmacia 2002 $59 billion… Wyeth 2009 $68 billion… And now this…).

But what’s the end-game here? What does success look like to the Pfizers of the world? Do the executives believe that they are going to continue buying big pharma companies until there’s just the one left standing? And how do they expect to wring compelling growth out of brands which have already reached maturity?

Now, the alleged reason for the deal is to lower Pfizer’s corporate tax rate from 35% to 12.5% by relocating the HQ to Allergan’s native Ireland (technically Allergan is buying Pfizer), and I’ve seen analysis claiming that this will lower Pfizer’s tax burden by 2/3. This is nonsense. Pfizer pays nothing close to the full 35% US tax rate after entitlements; smart tax people have estimated they pay somewhere in the 10%-25% range depending on the year’s activities. In that disappointing earnings report call, in, let’s say, August 2016, these same analysts are going to point to “a variety of metrics contributing to the complexities of resource aggregation leading to…” well, I’m calling it now.

Furthermore, this behavior is indicative of a company that’s dead in the water. Pfizer has some of the most sophisticated pharmaceutical IP in the world, and a war chest that can finance the development of literally world-changing drugs. And they’ve chosen to spend their time and resources moving to Ireland. So they can save some money on taxes. Maybe.

Instead of, I don’t know, curing cancer.

As patent expiration and generics manufacturers eat Pfizer’s lunch they’ll continue to buy competitors, gasping into the cheap plastic tube keeping their hole-riddled life-vest afloat. They can’t go back; the damage to their innovation process is done, it would take a decade and a half to rebuild it.

If you’re looking for pharmaceutical innovation (and profit), look to the biotech start-ups. That’s where zero-to-sixty growth is going to take place. And if you want to invest your retirement income in sideways-sliding growth, then I recommend a Pfizer heavy portfolio.

When you get hacked, you’re probably going to deserve it

21 Jan 2015

                Every other week, some major corporation or government agency seems to be getting hacked. We beat our brows over the loss of personal data, and wail about those dastardly hackers and how could they do such a thing?!; then go log onto Netflix with the password “password”. Because how could I possibly be expected to remember anything more complicated? And a different one for every site?! That’s just madness…

                Computer programs are information organized logically. That’s all. You, as the programmer (hacker in this case) can organize the information any way you’d like; you define the logic. You can teach it to recognize common phrases (yippeekiyay),check for capitalization (YipPiekIyay), numbers in the place of letters (Y1pp33k1yay), and common symbols at the beginning or end of those phrases (Yippiekiyay#!). So even putting them all together (Y1pP133k1yAy#!) makes a fairly easy password to crack. So no, despite what the IT guys says, adding numbers and symbols to your password actually makes no difference.

                The best passwords are several unrelated words smashed together (jellyninjapantalonesMegatron). They’re easy to remember, almost impossible to crack, and great opening lines at a party if you don’t mind everyone knowing your password. Just do that, and remember it. I promise, it’s easy if you put in any more than 4 seconds of effort.

                SplashData released its annual “worst passwords” of 2014 report. The 25 topping this list-of-shame are ridiculous. And to be perfectly honest, if you’re using one of these and get hacked, I have absolutely no sympathy for you.

  1. 123456 (Same - 2013)
  2. password (Same - 2013)
  3. 12345 (Up 17)
  4. 12345678 (Down 1)
  5. qwerty (Down 1)
  6. 234567890 (Same - 2013)
  7. 1234 (Up 9)
  8. baseball (New)
  9. dragon (New)
  10. football (New)
  11. 1234567 (Down 4)
  12. monkey (Up 5)
  13. letmein (Up 1)
  14. abc123 (Down 9)
  15. 111111 (Down 8)
  16. mustang (New)
  17. access (New)
  18. shadow (Same - 2013)
  19. master (New)
  20. michael (New)
  21. superman (New)
  22. 696969 (New)
  23. 123123 (Down 12)
  24. batman (New)
  25. trustno1 (Down 1)

Clean Diesel: Marketing Nonsense or Viable Alternative?

09 Dec 2014

When confronted with marketing of any kind, I find myself becoming increasingly skeptical. The incentive for misrepresenting the truth (i.e. lying) is massive, and repercussions seemingly nonexistent. This is particularly true in scenarios where a product or service has a very pervasive reputation and the provider of that product or service begins an antonym-based branding campaign, i.e. “clean” coal, “child-safe” cyanide, “non-proliferatable” plutonium (I made some of those up). But this skepticism does not necessarily indicate that the marketing word is inaccurate. After all, scientific breakthroughs can eliminate or alleviate the problems a product or service once had, and it seems unjust of me to simply discount a new discovery based on past biases.

                A slew of car manufacturers including Volvo, Audi, BMW, Chevrolet, and Jeep have begun introducing “clean” diesel cars. And while the perception of diesel cars is smog-generating, noisy, and very “meh” cost-to-value ratio, these new models are significantly different from the old ones that a new analysis seems necessary. Such as it is, this analysis follows.

                Diesel contains roughly 13-14% more carbon dioxide than an equivalent quantity of gasoline; it follows logically that the diesel engine must be a minimum of 13-14% more efficient than the gasoline engine in order to be less environmentally harmful. But good news, diesel engines are typically 20-30% more efficient than gasoline engines as a result of the fuel injection process; high pressure/temperature air injection (diesel) as opposed to spark plug ignition (gasoline).While good for efficiency, this process results in a unique “knocking” sound which some consumers find unpleasant; the characteristic noisiness of diesel engines. So far, the diesel engine is 6-13% more fuel efficient than the gasoline engine: diesel 1, gas 0. Unfortunately, diesel currently cost 20-25% more than gasoline, so you’ll still be spending more at the pump than your gas-using friends. Diesel 1, gas 1.

Diesel is a natural lubricant, thereby potentially extending the longevity of the engine itself, though this rarely translates into consumer savings, as the components are more expensive, resulting in fewer but costlier maintenance events. Tax incentives for “clean diesel” vehicles have expired, and most consumers pay far more for a diesel vehicle than they would for one running gasoline, predominantly a consequence of no manufacturer currently making a low-cost option. This may change is if the technologies catch on and become commoditized. I’m calling this a wash: diesel 1, gas 1.

Biodiesel, the truly “clean diesel” tends to comprise less than 5% of any diesel fuel; any more than that and the natural lubrication diesel provides is reversed and engines need prohibitively high maintenance and care. “Clean” diesel (aka ultra-low sulfur diesel) contains 97% less sulfur than traditional diesel, and 40% less particulant; which is an awesome development. However, smog-causing nitrus-oxide (NOx) levels are unchanged. Again, a wash.

In conclusion, “clean” diesel is very clean when compared to conventional diesel engines, and more or less comparable to gasoline ones if we take both cost-to-own and environmental impact into consideration. However, when compared to other emerging car-fuel technologies like all-electric, hydrogen, and even hybrid electric-gasoline, “clean” diesel is a distant last (CO2 emissions from “clean diesel” vehicles are about 50% higher than a comparable hybrid-electric vehicle). The concept of a hybrid diesel-electric car is an intriguing one, and I would like to see more work in that area. But if your priority is environmental consciousness, and you’re in the market for a luxury car, you can do much better than “clean” diesel.

Problems with the Sharing Economy - Is peer-to-peer (P2P) fundamentally broken?

31 Oct 2014

Uber, Airbnb, and a host of other companies have capitalized on a new business model, enabled by our increasingly connected world. Called peer-to-peer (P2P), the sharing economy, or collaborative consumption, this model allows people to sell their own goods and services through an exchange to other individuals, while the hosting company keeps a percentage. On the face of it, this looks like a great idea; individuals get to earn some extra money by selling unused capacity in their own property or time, and their customers get access to a product or service under the market price. But when individuals try to make a living, as opposed to supplementing an existing income, through this model it starts to display some serious problems.

                P2P relies on participants in the exchange to own all of the means with which they deliver the service. They typically receive little to no support from the exchange company, and are listed as independent contractors as opposed to employees. This distinction allows the exchanges to pay no wages, no benefits, no capital expenses, no depreciation, and no financing costs. This is any company’s dream come true; they have no responsibility for any of the infrastructure or front-line personnel necessary to deliver their service. Beyond marketing expenses, background checks on exchange participants, and administrative costs, these companies do not have bills to pay.

                This dynamic violates the typical employee-employer relationship. In traditional companies which own their own capital and hire employees, the scenario is pretty fair. The ownership of the company takes on all the risk of their venture, and in exchange, they get to keep all or most of the profit from that venture. For their part, the employees of the organization get a more-or-less fixed amount of compensation regardless of the company’s short-term performance, but do not suffer any risk except in extreme cases.

                In contrast, the sharing economy places all the risk on those who do not share in the company’s profit. The ownership suffers little from asset depreciation, short-term market variations, and employee turnover, while exchange participants must incur the costs of operation. In the case of Uber, a driver must pay for their vehicle, gas, and insurance, all of which must come out of their share of the fare they are able to charge through the app. Similarly, Airbnb has no responsibility for the costs of owning a property rented through its platform. Participants in these sorts of exchanges relate that it is nearly impossible to earn a profit using the exchange, regardless of the wildly exaggerated estimates exchanges cite.

Other examples of companies using the sharing economy are listed below:

  • Housing  – Airbnb,
  • Dog Kenneling - DogVacay
  • Mobility - RelayRides, Lyft, Getaround, Liquid (formerly Spinlister), Sidecar, Parkatmyhouse
  • Services Exchanges - TaskRabbit, Zaarly, streetbank
  • Loans - Lendingclub
  • WiFi sharing - Fon
  • Used clothing exchanges - Poshmark, Vinted
  • Leftoverswap - exactly what it sounds like, trading your uneaten leftovers)

P2P exchanges certainly create some value for both buyers and sellers. But in order to avoid mass criticism for abusing their position, these companies will need to develop procedures to support the people who make it all happen.

Lockheed, give me something I can believe - There’s just no evidence of any fusion breakthrough

21 Oct 2014

                I’m a nuclear energy nerd. This has been established. So when Lockheed Martin announced a breakthrough in the design of a fusion reactor small enough to fit on the back of an 18-wheeler, I was the most excited person in my office. And amongst my friends. Pretty sure I was obnoxious about it.

                The people who develop a net-energy gain fusion reactor will change the world forever. Fusion energy will supplant fossil fuels in areas where renewables are not well suited, and allow for a truly sustainable energy future. Using deuterium and tritium harvested from the ocean (there is an effectively limitless supply of these elements) these reactors could power any demand-dense area, leaving solar, wind, and hydro power to areas where regimes are attractive. And just like that, global warming and energy shortages vanish.

                That’s why I’m disappointed. There is no evidence to suggest that Lockheed Martin’s breakthrough is anything of the sort. What actually happened is they issued a press release for a theoretical reactor design that hasn’t been tried in all the decades of fusion R&D. Which doesn’t mean it’s good; one fusion researcher at the University of Washington called the design “four times as bad as a tokamak [the current leading technology]”. Another specialist in this field comments “We know of no materials that would be able to handle anywhere near that amount of heat [generated by the reaction]”.

                As a matter of fact, the Lockheed release focuses more on a prototyping procedure than any technological advancement. They state that by building small reactors, they can develop and test designs in months rather than years, refining and improving with each iteration. Which is all true: but does not imply that they have discovered solutions to the immensely complex scientific challenges that still surround commercially viable fusion reactors.

                To drive the point home, Lockheed has not released any data from tests of this new reactor design, or scientific papers proving theoretical viability. These two steps will be required for the scientific community to engage in any peer-review process, before which any claims Lockheed makes will be perceived as a PR stunt.

                I would love to be wrong about this. If I am, and Lockheed builds a net-gain fusion reactor in the next decade, I’ll throw a party, and you’re all invited. There will be butlered horderves, lots of beer, and a magic show. But as long as the kindest of the feedback uses language like “an interesting concept”, and “very early stages of exploration”, I think I won’t be holding my breath.

Beating Ebola and Cancer with rats and bats - Evolution is the ultimate bio lab

15 Oct 2014

In the wake of the deadliest outbreak of Ebola in recorded human history, scientists and doctors are scrambling to bring effective quarantine measures into place. After the current wave of this pretty terrifying disease is quelled (assuming it is), our focus will shift from containment and mitigation to a long-term cure. There are several species which lend themselves to study for the ultimate eradication of deadly terrors like cancer, Ebola, and other highly contagious, fatal diseases.

The naked mole rat was recently crowned “Mammal of the Year” by Nature for an incredible physical trait; no member of the species has ever been observed with cancer. This is due to the manner in which the naked rat genome programs for cell reproduction, and the mix of sugars their bodies produce. While they are just about the ugliest creatures imaginable (some scientists say that after working with them for a while, they start to seem pretty cute, an opinion I cannot begin to comprehend, photo here), their incredible resistance does begin to lay the trail of bread crumbs which may lead to humans beating cancer. The naked mole rat, also known as the desert puppy (puppy?!) is not the only animal with a natural resistance to cancer; two species of blind mole rat defend against cancer using a different mechanism. These three species, which originate in East Africa and the Middle East, provide some brilliant evolutionary clues to some of humanity’s greatest challenges.

                In addition to its astounding cancer resistance, the naked mole rat also has the highest life-span amongst rodents, up to 31 years (as compared to captive mice, which live only 2-3 years). The cause of this longevity is believed to be the ability of an individual to dramatically slow their metabolic rate, reducing the effects of oxidative stress (a cause of aging). In addition to this semi-hibernate state, their proteins display excellent stability in reproduction. Some headlines have lauded the “fountain of youth”, and while this is certainly hyperbole, it may lead to an understanding of how organisms slow the effects of aging and provide a framework for humans to replicate.

                Another organism which demonstrates a remarkable resistance to terrifying diseases is one that has long been associated with the spread of disease. Bats, perhaps second only to rats in this regard, have gotten this reputation from countless outbreaks of rabies, histoplasmosis (a potentially fatal disease primarily affecting the lungs), and several hemorrhagic fevers (the West African Marburg hemorrhagic fever has a mortality rate of over 90%). This opinion of bats as walking disease labs is based more in tradition and hearsay than it is in scientific observation, and needs further testing to corroborate. Having qualified that, bats’ genetic ability to detect and repair damaged DNA is much better than humans’. This is thought to be a result of a genetic mechanism to correct for that damage bats cause themselves while flying. This is substantiated by the low occurrence of tumors in bat species, which are probably identified and repaired before they become malignant.

                Bats require an elevated metabolism in order to be able to fly, which means their bodies are constantly in a heightened state. Anti-virus mechanisms in the human body only turn on when exposed to stimulus, while bats’ are always active possibly because of this metabolic requirement. This means that infections may never get the necessary foothold in a bat’s body to become fatal, and the bat becomes a carrier rather than a victim. While this sounds scary, it does provide an opportunity for humans to defeat diseases like Ebola and hemorrhagic fevers. By determining which traits bats are using to prevent fatalities from diseases that run like wildfire through the human body, scientists may be able to develop cures.

                By studying the solutions created by organisms over millions of years of evolutionary trial and error, scientists and doctors can find the clue which may lead to the ultimate eradication of the world’s most troubling diseases.

Apple probably won’t exist in 50 years - Long gone are the days of Jobs

22 Sep 2014

I tried to care about this new iPhone and Apple Watch. I really did. When the first iPod came out, I bought one. When the first all-in-one iMac came out, I bought one. When the first iPhone came out, I went out and, positively dizzy with excitement, I bought one. Now I’m looking at this iPhone 6, and... meh.

                Apple did amazing things. Company value increased more than 10-fold over the last decade. They have built what is arguably the best brand presence of any company in any industry, with a rabidly loyal customer base. They purposefully killed off the iPod, a cash cow, because they saw that smartphones were the way of the future. These accomplishments can only be the result of brilliant leadership and exceptional scientists.

                The Apple of 2014 is not capable of surpassing these accomplishments. Their earlier behavior was that of a technological pioneer, creating brand new markets and generating value all over the place. But somewhere along the line, they fell behind. Objectively, nothing they have done in this last product launch is disruptive. If you throw out all the clever marketing lingo, they’ve made bigger phones that pair with smart watches. This sounds like a press release from 2012. And sure, the processors are faster and the camera is better, but that is true of every new phone launch; it’s more a function of Moore’s Law than it is an Apple thing.

                The nice thing for Apple is that it doesn’t seem to matter. They sold a record breaking 10+ million iPhone 6s this past weekend, and remain fantastically profitable. They have cultivated a customer base so embedded in their exclusive ecosystem that they seem willing to buy the newest iPhone regardless of the side-by-side comparisons. And for the fashion conscious, apparently no statement is complete without the latest and greatest iPhone.

                Once upon a time, Apple products were better, especially if you wanted to do some video or audio editing. Their user interface was once the most intuitive and user-friendly that existed. The interoperability of their devices was unmatched. None of this has been true for quite a long time.

                But Apple seems content to milk this iPhone cow well into senility, and follow in the footsteps of the tech pioneers of this decade. And who can blame them; Apple has made lots of people very rich, and will continue to do so in the short-term.

But I can’t see it lasting. As is well established, if you’re not actively working to disrupt the landscape, then you’re a sitting duck for someone who is.

The Majesty of Air Travel - VR helmets and standing seats

18 Sep 2014

                Margins in the airline industry are horrible. Truly awful. And that’s not hyperbole; it’s a sober reflection on the facts. Depending on whom you ask airlines’ profit is between 1.0 and 2.6 percent, and that in an industry which relies on owning hundreds of airplanes, costing between $80 million and $390 million depending on size. Throw in uncertainty in oil prices, bad press from crashes, and monopoly-owned airports and air traffic control, and you have a dismal scenario.

                The desperate effort to improve profitability has led to airlines cramming more and more people into cabins regardless of the length of the flight. A few weeks ago, three separate planes were grounded as a result of passengers getting into actual fist-fights over perceived encroachment into their measly slice of the space-pie allocated to them. This might indicate that we have reached the lower bound of just how much space you can realistically take away from travelers before it becomes ridiculous. Though some airlines are now offering additional space nearer the front of the cabin (styled as Economy Plus or Economy Comfort, contradictory statements made possible only through marketing doublespeak), at $10-or-more per inch of additional legroom, this certainly isn’t what most people would call value for money.

                Now Airbus has filed patents for a virtual reality helmet which would allow passengers to watch movies, do work, or pretend they’re elsewhere, in partial sensory isolation. While the implementation of this concept might alleviate some of the aggravations of plane travel, I think it is probably not the right way to go. Watching a movie in 3D seems unlikely to distract travelers significantly more than the current system of seatback screens and headphones, and regardless of the beauty of the virtual beach you’re visiting you are still sitting in a seat designed by someone who hates you acting as pillow for the guy to your right.

                Airbus also filed patents for the terrifying “standing-seat” (again with the marketing doublespeak…) which would reduce legroom by one-sixth for economy class passengers. To be used on short flights of one to three hours, this would allow airlines to seat –I use the term loosely- 21 percent more passengers per airplane, and drop prices by as much as 40 percent. This is assuming the passenger is able to get into their seat at all, a huge assumption made, presumably, in a board room where everyone has ample time to exercise and money to eat healthy food.

                I fully understand the pressure on executives to increase company profits. But packing even more people into what is, objectively, an already overcrowded space, and then giving them a helmet so they can pretend to be at the beach, is not the answer. Airlines have almost exclusively chosen to compete on price, rather than on value. Just about everything on airplanes has become a cliché for being terrible; the food, seats, entertainment, etc… And to make all of that worse in pursuit of profit seems misguided.

                The things that people actually want when on an airplane are comfortable chairs, a modicum of privacy, and a decent choice of nice things to eat and drink. I refuse to accept that there is no way to provide these things at a competitive price; in fact, several design firms have posited airplane designs to address the preferences of travelers. Several examples: the Thompson Cozy Suite staggers seat placement to increase passenger comfort while using less space, another idea involves using the vertical space within the cabin for passenger seating rather than carry-on storage here, and a third creates an armrest that two people can use simultaneously without touching.

                As a frequent business traveler, I believe there are opportunities for airlines to differentiate on customer value rather than purely on price. And none of that involves giving me a virtual reality helmet.

The Home Depot gets itself hacked - The sorry state of cyber-security

03 Sep 2014

                It seems that The Home Depot has fallen victim to the same kind of attack that had Target and eBay headlining the news earlier this year. While it is still too early to quantify the breach, estimates suggest that this event is more extensive than the 100 million-customer Target hack, which cost the company upwards of $400 million and the CEO his job. While the magnitude of the breach is almost certainly greater than the Target incident, THD seems to be trying hard to manage the PR of the scenario better by notifying its customers “The financial institution that issued your card or Home Depot are responsible for those [any fraudulent] charges”. THD has been more vocal about which of its users were effected, and how they were effected, which may suggest that they’ve learned from past events of this type.

                THD has joined a group of companies which, under any other circumstances, would read as marquee names: Adobe, eBay, Target, Google, and Sony. These companies have all suffered massive data breaches over the last few years. The details are as follows:

 

  • 2014 – AOL, 120 million users’ email addresses were stolen and used to spam links to hazardous websites, which were then used for phishing and malware scams
  • 2014 – Global Payments, several company servers were compromised allowing access to 1.5 million credit card numbers, $700 million in fraudulent charges, and $110 million in repayments to credit card companies
  • 2014 – eBay, employee login credentials were stolen and used to access 150 million customers’ data over a several month period
  • 2013 – Target, incursion via an HVAC control line allowed hackers to access 110 million customers’ personal data, costing Target over $400 million
  • 2013 – Adobe Systems, lax password requirements allowed a hack of 152 million customers’ profiles, thought to be the largest volume hack to date
  • 2011 – Epsilon, the customer names and email addresses of about 50 of its 2500 clients were stolen causing over $200 million in damages (some Epsilon clients include Kroger, TiVo, US Bank, JPMorgan Chase, Capital One, Citi, Home Shopping Network, Ameriprise Financial, LL Bean Visa Card, McKinsey & Company, Ritz-Carlton Rewards, Marriott Rewards, New York & Company, Brookstone, Walgreens, The College Board, Disney Destinations, Best Buy, and Robert Half Technologies)
  • 2011 – Sony PlayStation, PlayStation database security compromised providing access to 80 million users’ personal and financial data, and costing $170 million
  • 2009 – Heartland Payments, spyware exposed 130 million users’ financial information, and costing the company $110 million to settle claims
  • 2009 – Dept. of Veterans’ Affairs, a contractor mistake was exploited, allowing access to the personal information of 70 million veterans

 

                These are the major data breaches that have hit the news over the last five years, but I would estimate that for every breach we hear about, there are ten that aren’t discovered or are handled without garnering significant media attention. Additionally, smaller volume data breaches are often much harder to detect, so while we may hear about the biggest breaches, they almost certainly make up the minority of the total data stolen.

In nearly all of these cases, the intruders were able to gain access because of lax security standards of the target organization. An employee may have clicked on a link in a suspicious email, neglected to adhere to robust password standards, or the network administrators may not properly restrict access to server hardware. Very few breaches involve hacking of a sophisticated nature, as so many organizations present themselves to hackers as low-hanging fruit. They fail to observe even the basics of cyber-security, so complex hacking tactics simply aren’t necessary.

The rhetoric is starting to sound tired; “we take our customers’ security seriously and will work with law enforcement to correct the situation”, just isn’t going to cut it in the 21st century. Implementing basic cyber-security standards is easy, cheap, and very obviously necessary. The major hacks of the next 12 months will be those organizations that don’t implement comprehensive security strategies now.

Nuclear Power If it was a Nintendo game, it’d be called “Smash ‘em Smoosh ‘em”

22 Jul 2014

                I am a nuclear power enthusiast. In fact, if I ever sell an app to Facebook, or find out I’m the long-lost heir apparent of the King of Saudi Arabia, I’m almost certainly going to start a company that makes all kinds of nuclear reactors. Despite the scientific challenges and PR problems associated with nuclear power, I do believe it represents an integral part of a long-term, environmentally sustainable solution to growing energy consumption.

                Fission technology is the one with which most of us are familiar. All of the commercial reactors in operation are fission reactors of some type or another, and most of those are regular, light-water reactors using solid fuel. These reactors generate energy by smashing neutrons into very heavy, energy-rich molecules and harnessing the resulting kinetic energy as heat, much the same as a coal or natural gas power plant gathers heat from burning fuel. Radioactive decay and gamma radiation from the fission process contributes to the heat extracted from the process. These heavy molecules are usually uranium, which contains about 3 million times more energy than coal by volume. 

                The fission technology that interests me is breeder reactors, which generate more fissile material (fuel) than they consume. A conventional light water reactor (LWR) extracts less than 1% of the energy in uranium, while breeder reactors extract 100 times more. Breeder reactors accomplish this by dramatically increasing the degree to which neutrons knocked off fuel get picked up by other, fertile particles in the reactor, thus generating more fissile material to be used in the reaction. Since power output efficiency is roughly 100 times higher in a breeder reactor than in a LWR, they require about 100 times less fuel to generate the same power. Defining this input/output relationship, there appears to be sufficient fuel in the planet’s oceans to satisfy global energy demand for some 5 million years.

                Breeder reactors have the added advantage of being able to consume plutonium, the extremely hazardous molecule which is used to make nuclear weapons. In storage, plutonium takes roughly 24,000 years to decay to safe levels, while a breeder reactor is able to use it productively. This eliminates or alleviates many of the storage problems associated with radioactive waste from nuclear power plants, and lets these reactors actually use waste from older power plants as fuel. Additionally, breeder reactors are meltdown resistant; under the circumstances that cause catastrophic failure in a conventional LWR, the breeder reactor begins “leaking” neutrons, halting the chain reaction.

                Probably my favorite type of breeding reactor is the LFTR (liquid fluoride thorium reactor). These use mined thorium rather than uranium, which means that the breeding reaction produces Uranium 233 instead of hazardous plutonium which can be weapon-ized. LFTRs operate at atmospheric pressure, which allows their containment structures to be roughly 1/600th, the size (and cost!) of a LWR containment vessel, and achieve about 10% better heat to energy conversion than a LWR. LFTRs utilize a passive cooling system to control reactor failure; if the reactor loses power, the fuel simply drains into a safety vessel in which it is cooled. Because they use thorium instead of uranium, LFTR waste radiotoxicity is about 10,000 times less than that of a uranium/plutonium reactor, and they are able to consume nuclear waste in the startup and operation processes. Additionally, thorium is about 4 times as abundant in the Earth’s crust as Uranium, making fuel procurement far less costly.

                All of these fission reactors are practical given current technology, though many have yet to be proven commercially viable. They stand in contrast to nuclear fusion reactors, which are theoretically possible, but require a number of scientific breakthroughs which push their feasibility into the long term timeframe for even a proof-of-concept. Fusion is desirable over fission for a number of reasons. First and perhaps most importantly, the fuel is abundant. Fusion reactions have been demonstrated using deuterium molecules, hydrogen with an extra neutron. This fuel is naturally occurring, can be fabricated, and is non-radioactive. A fusion reactor accelerates the deuterium molecules along a magnetically confined loop, in a near vacuum, until their strong nuclear force pulling them together overcomes the electrostatic force pushing them apart, fusing them in a nuclear reaction. This reaction occurs at above 100 million degrees Celsius. It is possible to use any particle in this type of reaction, but the scientific challenges associated with fusing heavier molecules are probably outside the scope of our lifetimes.

                Fusion does not produce radioactive waste. The only radioactive element in a deuterium reactor would be tritium, which is both produced and consumed within the reactor itself, requiring no transportation or post-use storage. Even the reactor core itself would return to safe radiation levels after less than 100 years, a tiny fraction of the time it takes fission by-products to decay. There are no negative environmental impacts from fusion power whatsoever, the by-product of a deuterium reaction being helium. A fusion reactor is meltdown-proof, as any breach to the magnetic confinement field will terminate the reaction automatically (though it would cause near total destruction of the reactor as 100-million degree plasma leaves the confinement field).

                The first large-scale fusion reactor is currently under construction in France. The ITER (International Thermonuclear Experimental Reactor) proposes to demonstrate the scientific and commercial viability of fusion power for electricity generation. This project is sponsored by 7 nations, and is estimated to cost upwards of 20 billion dollars. This estimate is likely to be low, as the project has run into several complications already, and isn’t scheduled to begin operations until 2027, an 11-year delay. While this is clearly not optimal for either the project itself, or for popular perception of fusion for electricity, demonstrating a brand-new highly-complex technology like nuclear fusion is extremely difficult, and if successful, would certainly be counted amongst the most significant technological advancements our species has achieved. It would also fundamentally alter global energy markets.

                Nuclear energy, coupled with renewables like wind and solar, is the answer to meeting the growing global demand for energy in an environmentally sustainable, economically feasible manner. Fast-breeding fission reactors are already part of the grid, and if the ITER or another fusion project is successful, electricity generated by fusion will become main-stream in our lifetimes. Though coal scrubbers and fracked gas have a solid hold on the short-term, these technologies will become totally obsolete over the coming century, with nuclear and renewables coming to dominate the growing grid.

Smart technologies can’t replace humans - Plane crash caused by overreliance on autopilot

24 Jun 2014

                Slow news days seem to be characterized by the blogosphere reaching into its bag of social-injustice-topics and gleefully ranting about whichever it blindly selects. On every fifth iteration or so of this charming cycle, in between politicians breaking the economy and the top ten blah-blah-blah, we get to hear about how the machines are taking all of our jobs. While I suppose it succeeds in generating clicks for those who live and die by such things, it contributes very little to our understanding of smart technologies and how they are used in our world, even adding to the misinformation inherent to cognitive computing, robotics, and smart tech.

                On July 6th 2013, Asiana Airlines flight 214 crashed into a seawall on landing at San Francisco International. The plane approached the runway too low and slowly, causing the accident which resulted in the deaths of three of the 303 people on board (one death was caused by a rescue vehicle running over an injured person). Of all the possible scenarios involving the crash of an airplane, a survival rate of over 99% is a testament to the engineering of the vehicle and the skill and training of the crew and first responders.

                The insufficient speed and altitude of landing was set by the flight crew, believing that an automated landing program would engage if the speed fell too low. Autopilot software is able to fly planes from runway to runway, but there is a very good reason to have a human being in the cockpit nevertheless; in a classic-role-reversal, the human being has become the failsafe mechanism for the autopilot. But this plan breaks down if the human being does not have an expert understanding of how the flight software works, and what specifically they, as the pilot, need to watch for to ensure the safety of everyone onboard. Automation software is not a person, and the ways computers learn and execute commands is fundamentally different from what we as humans can compute, a paradigm which will remain for the foreseeable future.

                The machines are not taking our jobs, but they are changing them. The responsibilities of machine operators need to change, so they act more as trainers and supervisors rather than directly controlling functions. This includes an intimate understanding of how and why machines and programs work, and being able to identify scenarios that are difficult for those programs to understand and compensate for sub-optimal performance.

                Autopilot programs have unequivocally improved air travel safety, but the pilot is not likely to become superfluous in my lifetime. Having a trained expert to watch over a program’s operations and correct for errors will remain vital to the airline industry, as well as a slew of others. Training and certification programs for people interacting with these programs needs to reflect this change to their role. Plane crashes may never fully disappear, but through sophisticated programming coupled with experts who understand its function can reduce them to statistical insignificance.

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