Don Norman in Defense of PowerPoint

How is it possible that I didn’t know that Don Norman wrote a post entitled:

In Defense of PowerPoint

He wrote the post over two years ago. However, I remember the storm over this like it was yesterday. It all started with a New York Times article in 2003 called “PowerPoint Makes You Dumb“. It was written in response to the investigation into the Space Shuttle Columbia disaster, which pinned part of the blame on a “PowerPoint Culture” with too little detail.

A sample paragraph from the NYT article:

This year, Edward Tufte — the famous theorist of information presentation — made precisely that argument in a blistering screed called The Cognitive Style of PowerPoint. In his slim 28-page pamphlet, Tufte claimed that Microsoft’s ubiquitous software forces people to mutilate data beyond comprehension. For example, the low resolution of a PowerPoint slide means that it usually contains only about 40 words, or barely eight seconds of reading. PowerPoint also encourages users to rely on bulleted lists, a ”faux analytical” technique, Tufte wrote, that dodges the speaker’s responsibility to tie his information together. And perhaps worst of all is how PowerPoint renders charts. Charts in newspapers like The Wall Street Journal contain up to 120 elements on average, allowing readers to compare large groupings of data. But, as Tufte found, PowerPoint users typically produce charts with only 12 elements. Ultimately, Tufte concluded, PowerPoint is infused with ”an attitude of commercialism that turns everything into a sales pitch.”

This issue resonates with me for three reasons:

  1. Don is one of the HCI legends. Even though I now work at eBay, I began my career at Apple Computer, working in the Advanced Technology Group before transferring to the WebObjects team after Apple acquired NeXT. Towards the end, ATG was rebranded the “Apple Research Labs”, and Don Norman was the VP (and Apple Fellow). Don’s book, The Design of Everyday Things, is one of the standard bearers for an education in design.
  2. I find myself using a lot of PowerPoint. It started with my work in venture capital, digesting 6-10 new presentations a day presented live, and an uncounted number over email. Now at eBay, I find that in the end, there is no better way to pitch a new business or a new product strategy broadly than to go through the exercise of producing a truly great slide deck. I wonder sometimes whether I now see more decks at eBay than I did in venture capital.
  3. Don is right. PowerPoint has its place. I love to joke about PowerPoint – I even use some quotes from the article in a lunch presentation I do at Stanford every year as an ice-breaker. But the fact is, there is a time and a place for a PowerPoint presentation. Like any other mode of communication, there are situations where the ability to distill concepts into a short, simple visual presentation is the right answer. I have written my share of 1-page memos, 10-page decks, and long emails. There is a time and a place for each, and if you think any one of them is right for every audience and every situation, then you are not thinking hard enough how to match the best communication vehicle to every situation.

So while I can’t say that I’m proud of the fact that these days I probably produce better PowerPoint decks than Java code, sometimes it is the right tool for the job.

As an aside, I remember the Columbia disaster like yesterday. It was a relatively quiet time for me, as I was home with my wife and our new puppy, Newton, who was only a few months old. I woke up that morning, read the news, and we went to get coffee and a bagel to relax and absorb it. (For those in the Valley, we went to the Starbucks & Noah’s Bagel on the corner of De Anza & Stephens Creek, right near Apple)

The Starfish and the Spider

I don’t normally do this, but my friend John Lilly featured a book on his blog that sounds extremely interesting. I’m going to pick up a copy myself, but I thought I’d let other people know about it here as well.

John’s post can be found here:
The Starfish and the Spider, by Ori Brafman & Rod Beckstrom

John is a good friend of mine, and also currently happens to be the COO of Mozilla, makers of the ever cool Firefox browser. This is his personal blog, but hopefully he won’t mind a few extra page views today.

John & I pursued similar programs at Stanford, separated by two years. We were both Coordinators for the famous CS 198 program, and we both pursued a Master’s degree in Computer Science, with a focus on Human-Computer Interaction under Terry Winograd.

Like John, I haven’t read a good book on human-computer interaction and/or design in quite some time. But this one sounds extremely interesting and relevant. A quote from John’s summary:

The premise of this book is that there are a couple of very distinct models for organizations: centralized (the spider) and wholly decentralized (the starfish). The authors (Stanford GSBers, but worth reading in spite of that…) use this analogy: cut off the head of a spider and the spider dies. Cut off an arm of a starfish, and you often end up with two starfish. Starts by exploring the Spanish conquests of the Incas & Aztecs (spider organizations) and comparing them to the United States’ mostly ineffectual campaign against the Apaches (a starfish organization). The Apaches were harder to fight against because decisions weren’t made by any one person, but were made on what the US would have perceived as the edges — by medicine men who were empowered by their community. The strange thing (for the US, at any rate) was that whenever they killed any of these important people, more would spring up in their place. I thought it was interesting that the authors point to the US giving the Apaches cattle as something that ultimately led to the disintegration of their coherent society. (The implication here is that the sedentary nature of livestock & farming necessitated the creation of societal structures which were more centralized and less flexible — spider-thinking, where there was only starfish-thinking previously.)

Understanding the right organizational structure to produce truly excellent software is one of the reasons I pursued graduate programs in Human-Computer Interaction and Business.  With the incredible amount of innovation and dynamicism on the web and in e-commerce today, it’s an incredibly relevant subject.

I think I’m going to have to pick up a copy.

Books: Yes, You Can Still Retire Comfortably by Ben Stein & Phil DeMuth


One of the original reasons that I thought that writing a blog would come naturally to me was because I’m an avid reader. When I started this blog in August 2006, I figured that many of my posts would be the standard “book reviews and baby pictures” type of posts that people make fun of blogs for.

Ironically, I realized tonight that I have not yet done even one book review post… until now. Recently, I wrote a post about Ben Stein, and in the process I discovered the commercial website for his new book. I ordered the book that night, and received it this week. I just completed reading it over the last few days, and it’s worth commenting on.

Yes, You Can Still Retire Comfortably! by Ben Stein & Phil DeMuth

Overall Rating: Good, but not great. I’m glad I read this book, and it had a significant amount of unique content. However, the style is dry & negative enough, that many people may not love the experience.

Synoposis: At least 25% of this book is just depressing. It basically lines up all of the reasons, at both a macroeconomic and microeconomic level, that the retirement of the Baby Boomer generation is going to strain the US economy and your own personal finances. There are three legs to retirement financing: social security, corporate pensions, and personal savings. None of these are looking very good for the Baby Boom generation and Generation X. At the same time, the percentage of people in the economy who are working and adding value is going to continue to fall sharply, straining many aspects of our economy.

I think the authors summarize their feelings well themselves here:

Ten percent of seniors already live below the poverty line. This is no way to spend your days when you are old. Your authors fear that many in our generation are going to be joining their numbers.

What’s more, the retired baby boomers are going to be living well compared to Gen Xers, because the bones will be picked completely clean by the time they retire.

Having said this, we’d like to add one more thing: Yes, you can still retire comfortably. Maybe not everyone will, but you can, and we’re about to tell you how. Don’t get overwhelmed with the fate of the whole generation. Just worry about yourself, and then plan to act. You don’t need to outrun the bear; you just need to outrun the other hunter. Read on.

The rest of the book is a fairly dense, well-researched walk through of how you can outrun the other hunter. It places a strong emphasis on saving, saving, and more saving, with a dollop of extending your working career as long as possible thrown in. The book features a lot of tables and numbers – it’s clear the authors have back-tested their program, and have provided a lot of “short cut” calculations to help the reader quickly assess where they are in terms of saving for retirement.

I have likely read over three dozen books over the years on this topic, and this book was fairly unique in a number of ways:

  1. No magic path to high investment returns. The authors do not spend any time trying to explain how to beat the market, or how to achieve 10%+ annual returns on your portfolio. They basically advocate the “couch potato” portfolio of 50% total stock market, 50% aggregate bond market. (They do provide a more advanced portfolio breakdown of 25% each US Stocks, International Stocks, Inflation-protected bonds, and aggregate bond index).At first, I recoiled at this recommendation given it’s low growth potential. But having completed the book, I now realize that the authors primary concern is running out of money. Having run Monte Carlo simulations and historical back-testing, it’s very clear that the way to the poorhouse in retirement is having your stock portfolio hit a set of “bad years” early on. That depletes your funds, and since you are withdrawing every year, you never recover.
  2. Try to be conservative in your saving plan, and then when you have it worked out, try to save even more. More than any other retirement planning book I’ve read, this one really emphasizes the fact that there are still a lot of economic unknowns to come with this generational shift. For example, marginal tax rates have been as high as 90% in the past 50 years. Who knows what rates will be when you retire! Will social security be there for you when you retire, or will “means testing” or some other political fiction be deployed to balance out the books of the dwindling “trust fund”. Even Roth IRAs may not be safe, since Congress could decide to start taxing or penalizing those withdrawals in future years.
  3. Positive recommendation for variable annuities? It has been a very long time since I’ve seen anyone recommend these, given their notoriety for high fees and low returns. However, Ben has a positive family experience with these products, and he provides very sound analysis on how a mixture of fixed and variable annuities could help provide for a stable and comfortable retirement. In the end, however, the primary recommendation of the book is not annuity based, so I’ll let this one slide.
  4. You need to plan for your maximum life span, not average life span. Most retirement books I have read tend to focus on average life spans. While these are high, they are not as high as planning for the possibility of a very long retirement. Most of the planning in this book focuses on either the 5% chance of living to 100, or the 1% chance of living to 105.This struck a chord with me, as I tend to be on the optimistic side of this equation. I believe that advances in technology related to longevity and health are on an inflection point that will hit in our lifetime.
  5. 4% is the only safe number. This is a really important point, so I’ve saved it for last here. In a previous post about Social Security, I explained the “Rule of 25” in terms of planning for assets to provide an ongoing income stream. That back-of-the-envelope rule was based on the idea that you can only withdraw 4% annually safely from your assets and protect your principle.Scott Kleper posts a comment on that entry that asked whether or not I was being too conservative with the 4% number. After all, you don’t need your money to last forever, right?At that time, I hadn’t read this book. If I had, I would have been able to answer that question better. This book goes into quite a bit of detail about different strategies for withdrawing money in retirement. The short answer is that 4% is really the only safe solution that handles out-of-band eras like the 1930s stock market, or the 1970s stock & bond markets.In fact, this book goes out of its way to explain that the only really safe income strategy is to have fifty times your income saved, so that you can invest it in inflation-protected securities paying 2% above inflation on an ongoing basis. Since that’s unreasonable, we’re left with a requirement to invest in stocks, with all the risks and variability associated with it.

The entire book is written in Ben’s typical terse and plain-spoken style. It’s not a long book, and there is clearly a lot of data behind the conclusions that are presented.

The book is also not a riveting page turner, and I am pretty sure that people who are naturally more “grasshopper” than “ant” will get irritated pretty quickly by the constant barrage of negativity about the future and about the need to save at all costs.

I am glad, however, to have read this book. While I’m not going to be shifting my portfolio to the “couch potato” blend so quickly, I may have to revisit my natural revulsion to bonds and consider adding them to my asset mix. The data in this book on withdrawal strategies has me convinced that the best defense is to save early and often.

One last note:

Check out this table from the book:

It’s amazing. This table shows, based on a number of assumptions, what percentage of your salary you should be saving every year, based on your age and how much you have already saved. Look at the power of saving while in your 20s & 30s. If you can save even 1/2 of your salary by the time you are 25, you only need to save 5% for the rest of your career to retire comfortably. If you wait until 35, you need to save 11% every year just to make up for lost time.

While this book was worth reading, I still prefer reading Ben Stein’s periodic articles to the book. He has a natural gift to provide very simple and compelling analysis in a very short space. It’s more powerful in small doses.

On the Record: Meg Whitman

Normally, I don’t read the San Francisco Chronicle. I read the New York Times & Wall Street Journal for my national news, and the San Jose Mercury News for local & high tech coverage. I’m not really sure why anyone actually reads the San Francisco Chronicle anymore, but I digress.

However, they have a great interview with Meg Whitman this week, and I think it’s something worth reading. It’s certainly the longest interview with Meg that I’ve seen in print this year, and it covers a lot of the topics that have been noteworthy in 2006.

ON THE RECORD: MEG WHITMAN

eBay, Garth Brooks, and Making Money On Inefficient Global Markets

(Part 1.  When finished, you should read Part 2.)

One of the reasons I love working for eBay is that I am constantly surrounded with interesting empirical evidence of how markets for physical goods behave. Today, I thought I’d share with you a single anecdotal example of how eBay creates opportunity from a very mundane retail product.

Yes, the product is a Garth Brooks DVD.

Well, to be more specific, it is the new, 2006, special-edition 5 DVD Garth Brooks “The Entertainer” set that comes in a collectible tin. It’s $19.96 at Wal-Mart, and there are two angles here. One, they are only going to make one million copies. Two, they are only available at Wal-Mart in the US.

There was a lot of press about this release, largely because I guess the 2005 edition had sold out quickly and led to a lot of pent-up demand for the product. On a lark, I dediced to order 10 copies from Walmart.com. Total cost, with tax & shipping was $238.77, so I was basically out $23.88 per DVD set.

When I placed this order, I had checked the completed auctions on eBay.com for “garth brooks the entertainer”, and I had seen sets going for as much as $39.99. So I figured I’d be able to make a few dollars selling these off.

However, by the time I received the DVDs, the average price on eBay.com had dropped to about $26, and I wasn’t sure I would make any money on these, after fees, with that type of price. After all, Walmart.com still hasn’t sold out, so I guess it is somewhat interesting that anyone was basically paying 30% over retail price for something that wasn’t in limited supply.

On a hunch, however, I decided to check out the completed auctions on some of eBay’s international sites. One of the amazing things about the eBay site is that it is integrated globally. With the same eBay account, I can log into any eBay site around the world and list an item. What I found was very interesting:

Now, these are live links, so what you see is going to be different than what I saw two weeks ago. But what I saw was this:

  • High volume in the US (over 50 listings), average price about $26
  • Medium volume in the UK (20 listings), average price about 35 pounds sterling.
  • Low volume in Germany (8 listings), average price about 50 Euro.
  • No volume in France. No one cares about Garth Brooks in France, I guess. 🙂

Wow. 35 pounds and 50 Euro are the equivalent of about $60 US. That’s a big difference, and a big markup over the cost of buying these at Wal-Mart.

So I did a little experiment. I put up a single, fixed-price listing with Best Offer on eBay UK for 9 of the DVD sets for 29.99 pounds with free shipping, and a put up a single auction in the US, starting at $0.99.

End Result: I sold all 9 of the sets in the UK in five days… I wish I had more. The US listing closed at $22.01, with $8.95 for shipping because the buyer ironically was from Canada.

Let’s look at the economics in more detail.

If I divide the costs across the 9 sets in the UK, my numbers are as follows:

Sales Revenue £29.99
Shipping Cost $15.75

eBay Fees $4.96
– Listing Fee $0.54
– Feature Fees $1.89
– Final Value Fees $2.53

PayPal Fees $2.52
– Transaction Fees £1.07
– Cross Border Fees £0.30

Pounds -> Dollars $1.8830
Currency Conversion Fee 2.50%

Total $ Revenue $55.06
Total $ Costs $47.10

Total $ Profit $7.95

Wow. Thats a 14.1% profit margin on the sale price. All for something anyone could have purchased on Walmart.com.

Just for completeness, here is the economics for the US sale:

Sales Revenue $30.96
Shipping Cost $6.00

eBay Fees $2.26
– Listing Fee $0.20
– Feature Fees $0.90
– Final Value Fees $1.16

PayPal Fees $1.51
– Transaction Fees $1.51
– Cross Border Fees $-

Total $ Revenue $30.96
Total $ Costs $33.65

Total $ Profit $(2.69)

Yes, that’s right. Lost money on the US sale.

The fact that I lost money on the US sale isn’t surprising… eBay is a pretty efficient market, and the idea that you could make money buying a product at retail and selling it on eBay is dubious at best, and given that the retailer is the biggest retailer in the US, it’s nearly impossible.

However, I’m amazed at how much money was available to be made selling globally. And eBay makes this so incredibly easy:

  • Listing. I basically just went to the eBay UK website, clicked Sell, and used exactly the same form that is available in the US to list. Incredibly easy.
  • Pricing. The exact same completed auctions functionality is available for the UK site as the US site. Easy.
  • Shipping. I just priced out the shipping via USPS Global Priority mail on the usps.com website. $15.75. Easy.
  • Payment. PayPal is absolutely amazing. Not only could UK buyers pay me in pounds sterling, but I discovered that PayPal will actually let you maintain an account balance in 19 different currencies! They charge a flat 2.5% to convert the payment to dollars, but you can leave your money in pounds sterling and still earn interest on it! (Not a bad feature financially if you believe in diversifying your currency exposure…)
  • Managing your Listings. The UK listing showed up in My eBay and all of my eBay tools the same way every other listing did. Seamless. Painless. Amazing.

I have a few takeaways from this experiment. No, I am not planning to quit my day job to be an import/export eBay seller. But, I do think this example points to some key truths about global e-commerce today:

  • Global markets for retail product are very inefficient. This Garth Brooks DVD was only released in the US. Why? Wal-Mart has a presence in other countries. Maybe it wasn’t worth the logistics for relatively low demand in other countries. Maybe there was limited supply, and they figured the US market was sufficient. Who knows. The point is, there are clearly buyers in other countries who were being underserved here, and it also looks like not enough sellers were stepping into the void to help them.
  • eBay helps make inefficient markets efficient. Meg & Pierre have been talking about this effect for many years, but this is a direct example of it. eBay significantly lowers the barriers to trade globally, and as a result an individual like myself can quickly step in and create value. That 14.1% profit is value, and it doesn’t even count the additional value that was realized by eBay & PayPal through their fees.
  • PayPal is a game changer for international commerce. I knew this academically before doing this experiment, but now I can really feel it viscerally. Being able to handle foreign currency is not something that most businesses, let alone individuals, can handle. But PayPal makes it seamless. Unbelievable. It’s also worth noting that PayPal made a pretty penny here too. My fees on an average UK sale to eBay were about 8.8% of the sale price. The PayPal fees, including currency conversion, were 7%.

As the internet continues to grow, more and more online retailers are going to wake up to the international opportunity. Leveraging PayPal, any webfront store could likely easily collect sales globally (although not with the demand generation of eBay).

To continue the experiment, I’ve ordered 10 more DVD sets… I’m going to try to sell these in Germany, to see if I can overcome the language barrier. To date, I have sold items on eBay to buyers in over 30 different countries, so I’m optimistic that it will work. I’ll post the results to this experiment as well, if people are interested.

P.S. If you are wondering why I take the time to do things like this in my spare time, the answer is pretty simple. I’m a big believer that in technology you have to use your own product, so that you can better understand the experiences of your users. At eBay, it is even more important than at a typical technology company, because the product isn’t just a list of features – it’s the basis for running a business online.

Also, I tend to shop on eBay quite a bit, so making money through selling on eBay helps “fund my habit”, so to speak.

(Please check out Part 2 of this article.)