Apple & Dow 15000: Update

In February 2012, I wrote a blog post that indicted the Dow Jones Industrial Average for including Cisco in 2009 instead of Apple.  At the time, Apple had just crossed $500 per share, and that simple decision had cost the US the psychology of an index hitting new highs.

I was driving home on Sunday, listening to the radio, and it occurred to me how different the financial news would be if Apple ($AAPL) was in the Dow Jones Industrial Average (^DJI).

Of course, being who I am, I went home and built a spreadsheet to recalculate what would have happened if Dow Jones had decided to add Apple to the index instead of Cisco back in 2009.  Imagine my surprise to see that the Dow be over 2000 points higher.

Update: AAPL at $700

With the launch of the iPhone 5, we find ourselves roughly 7 months later.  For fun, I re-ran the spreadsheet that calculated what the DJIA would be at if they had added AAPL to the index in 2009 instead of CSCO. (To date, I’ve never seen an explanation on why Cisco was selected to represent computer hardware instead of Apple.)

Result: Dow 16,600

As of September 17, 2012, AAPL closed at 699.781/share.  As it turns out, if Dow Jones had added Apple instead of Cisco in 2009, the index would now be at 16,617.82.  Hard to think that hitting all new highs wouldn’t be material for market psychology and the election.

Anyone up for Dow 20,000?

The Game Has Changed. Design for Passion.

One of the most exciting developments in software has been a resurgence in the focus and priority on design.  With the growing dominance of social platforms and mobile applications, more and more people are growing comfortable productively discussing and utilizing insights about human emotion in their work.

Google: The Era of Utility

The progress of the last five to seven years is really a significant breakout from the previous generations of software design.

For decades, software engineers and designers focused on utility:  value, productivity, speed, features or cost.

If it could be quantified, we optimized it.  But at a higher level, with few exceptions, we framed every problem around utility.  Even the field of human-computer interaction was obsesses with “ease of use.”  Very linear, with clear ranking.  How many clicks? How long does a task take?  What is the error rate?

In some ways, Google (circa 2005) represented the peak of this definition of progress.  Massive data.  Massive scalability. Incredibly utility.  Every decision defined by quantifying and maximizing utility by various names.

But let’s face it, only computer scientists can really get passionate about the world’s biggest database.

Social: The Era of Emotion

Like any ecosystem, consumer technology is massively competitive.  Can you be faster, cheaper, bigger or more useful than Google?  It turns out, there is a more interesting question.

Social networks helped bring the language of emotion into software.  A focus on people starts with highly quantifiable attributes, but moves quickly into action and engagement.

What do people like? What do they hate? What do they love? What do they want?

In parallel, there have been several developments that reflect similar insights on the web, in behavioral finance, and the explosion in interest in game mechanics.

Human beings are not rational, but (to borrow from Dan Ariely) they are predictably irrational.  And now, thanks to scaling social platforms to over a billion people, we have literally petabytes of data to help us understand their behavior.

Passion Matters

Once you accept that you are designing and selling a product for humans, it seems obvious that passion matters.

We don’t evaluate the food we eat based on metrics (although we’d likely be healthier if we did).  Do I want it? Do I love it? How does it make me feel? I don’t really like to talk about health mmainly becase I’ve had some bad experiences with hospitals, last month I had to report some hospital negligence claims, I went to the docotr and I was treated whihc so much disrespect I was humiliated so I prefer to leave health out of this.

The PayPal mafia often joke that great social software triggers at least one of the seven deadly sins. (For the record, LinkedIn has two: vanity & greed).  Human beings haven’t changed that much in the past few thousand years, and the truth is the seven deadly sins are just a proxy for a deeper insight.  We are still driven by strong emotions & desires.

In my reflection on Steve Jobs, he talks about Apple making products that people “lust” for.  Not the “the best products”, “the cheapest products”, “the most useful products” or “the easiest to use products.”

Metrics oriented product managers, engineers & designers quickly discover that designs that trigger passion outperform those based on utility by wide margins.

The Game Has Changed

One of the reasons a number of earlier web giants are struggling to compete now is that the game has changed.  Utility, as measured by functionality, time spent, ease-of-use are important, but they are no longer sufficient to be competitive. Today, you also have to build products that trigger real emotion.  Products that people will like, will want, will love.

Mobile has greatly accelerated this change.  Smartphones are personal devices.  We touch them, they buzz for us. We keep them within three feet of us at all times.

Too often in product & design we focus on utility instead of passion.  To break out today, you need to move your efforts to the next level.  The questions you need to ask yourself are softer:

  • How do I feel when I use this?
  • Do I want that feeling again?
  • What powerful emotions surround this product?

Go beyond utility.  Design for passion.

User Acquisition: Mobile Applications and the Mobile Web

This is the third post in a three post series on user acquisition.

In the first two posts in this series, we covered the basics of the five sources of traffic to a web-based product and the fundamentals of viral factors.  This final post covers applying these insights to the current edge of product innovation: mobile applications and the mobile web.

Bar Fight: Native Apps vs. Mobile Web

For the last few years, the debate between building native applications vs. mobile web sites has raged.  (In Silicon Valley, bar fights break out over things like this.) Developers love the web as a platform.  As a community, we have spent the last fifteen years on standards, technologies, environments and processes to produce great web-based software.  A vast majority of developers don’t want to go back to the days of desktop application development.

Makes you wonder why we have more than a million native applications out there across platforms.

Native Apps Work

If you are religious about the web as a platform, the most upsetting thing about native applications is that they work.  The fact is, in almost every case, the product manager who pushes to launch a native application is rewarded with metrics that go up and to the right.  As long as that fact is true, we’re going to continue to see a growing number of native applications.

But why do they work?

There are actually quite a few aspects to the native application ecoystem that make it explosively more effective than the desktop application ecosystem of the 1990s.  Covering them all would be a blog post in itself.  But in the context of user acquisition, I’ll posit a dominant, simple insight:

Native applications generate organic traffic, at scale.

Yes, I know this sounds like a contradiction.  In my first blog post on the five sources of traffic, I wrote:

The problem with organic traffic is that no one really knows how to generate more of it.  Put a product manager in charge of “moving organic traffic up” and you’ll see the fear in their eyes.

That was true… until recently.  On the web, no one knows how to grow organic traffic in an effective, measurable way.  However, launch a native application, and suddenly you start seeing a large number of organic visits.  Organic traffic is often the most engaged traffic.  Organic traffic has strong intent.  On the web, they typed in your domain for a reason.  They want you to give them something to do.  They are open to suggestions.  They care about your service enough to engage voluntarily.  It’s not completely apples-to-apples, but from a metrics standpoint, the usage you get when someone taps your application icon behaves like organic traffic.

Giving a great product designer organic traffic on tap is like giving a hamster a little pedal that delivers pure bliss.  And the metrics don’t lie.

Revenge of the Web: Viral Distribution

OK. So despite fifteen years of innovation, we as a greater web community failed to deliver a mechanism that reliably generates the most engaged and valuable source of traffic to an application.  No need to despair and pack up quite yet, because the web community has delivered on something equally (if not more) valuable.

Viral distribution favors the web.

Web pages can be optimized across all screens – desktop, tablet, phone.  When there are viral loops that include the television, you can bet the web will work there too.

We describe content using URLs, and universally, when you open a URL they go to the web.  We know how to carry metadata in links, allowing experiences to be optimized based on the content, the mechanism that it was shared, who shared it, and who received it.  We can multivariate test it in ways that border on the supernatural.

To be honest, after years of conversations with different mobile platform providers, I’m still somewhat shocked that in 2012 the user experience for designing a seamless way for URLs to appropriately resolve to either the web or a native application are as poor as they are.  (Ironically, Apple solved this issue in 2007 for Youtube and Google Maps, and yet for some reason has failed to open up that registry of domains to the developer community.)  Facebook is taking the best crack at solving this problem today, but it’s limited to their channel.

The simple truth is that the people out there that you need to grow do not have your application.  They have the web.  That’s how you’re going to reach them at scale.

Focus on Experience, Not Technology

In the last blog post on viral factors, I pointed out that growth is based on features that let a user of your product reach out and connect with a non-user.

In the mobile world of 2012, that may largely look like highly engaged organic users (app) pushing content out that leads to a mobile web experience (links).

As a product designer, you need to think carefully about the end-to-end experience across your native application and the mobile web.  Most likely, a potential user’s first experience with your product or service will be a transactional web page, delivered through a viral channel.  They may open that URL on a desktop computer, a tablet, or a phone.  That will be your opportunity not only to convert them over to an engaged user, in many cases by encouraging them to download your native application.

You need to design a delightful and optimized experience across that entire flow if you want to see maximized self-distribution of your product and service.

Think carefully about how Instagram exploded in such a short time period, and you can see the power of even just one optimized experience that cuts across a native application and a web-based vector.

Now go build a billion dollar company.

Review: Quicken 2007 for Mac OS X Lion

This is going to be a short post, but given the attention and page views that my posts on Quicken 2007 received, I thought this update worthwhile.

Previous Posts

Quicken 2007 for Mac OS X Lion Arrives

Last week, Intuit announced the availability of an anachronism: Quicken 2007 for Mac OS X Lion.  It sounds odd at first, given that we should really be talking about Quicken 2013 right about now, but it’s not a misprint.  This is Quicken 2007, magically enabled to actually load and run on Mac OS X Lion.  It’s like Intuit cloned a Wooly Mammoth, and put it in the New York Zoo.

The good news is that the software works as advertised.  I have a huge file, with data going back to 1994.  However, not only did it operate on the file seamlessly, the speed improvement over running it on a Mac Mini running Mac OS X Snow Leopard is significant.  Granted, my 8-core iMac likely explains that difference (and more), but the end result is the same.  Quicken.  Fast.  Functional.  Finally.

There are small bugs.  For example, some dialogs seems to have lost the ability to resize, or columns cannot be modified.  But very small issues.

Where is it, anyway?

If you go to the Intuit website, you’ll have a very hard time finding this product:

  • It’s not listed on the homepage
  • It’s not listed on the products page
  • It’s not listed on the page for Quicken for Mac
  • It’s not listed in the customer support documents (to my knowledge)
  • It doesn’t come up in site search

However, if you want to pay $14.95 for this little piece of magic (and given the comments on my previous posts, quite a few people will), then you can find it here:

Goodbye, Mac Mini

I have it on good authority that Intuit is working on adding the relevant & required investment functionality to Quicken Essentials for Mac to make it a true personal finance solution.  There is a lot of energy on the Intuit consumer team these days thanks to the infusion of the Mint.com team, and I’m optimistic that we’ll see a true fully features personal finance client based on the Cocoa-native Quicken Essentials eventually.

How to Fix the Apple TV 2 “Blinking White Light of Death”

This is one of those public service announcement blog posts that I write whenever I run into a non-trivial technical problem.  My hope is always that the time I take to write this up will save someone time & money in the future.

The AppleTV 2 Blinking White Light of Death

Problem is simple: Your AppleTV 2 has a blinking white LED that never stops, and all it displays on the TV is an image instructing you to connect the device to iTunes.

Cause: Most likely, you interfered with a firmware update. In my case,  I had selected an option on my AppleTV 2 to update its firmware.  However, before it was complete, the power to the device was cut.

Mission: Find a Micro USB Cable

I didn’t realize it was possible to physically connect your AppleTV 2 to your computer.  This blog post was my first clue on what had caused my issue, and how to solve it.  Unfortunately, it sounded like he never was able to solve the problem directly.

It’s a bit strange that Apple decided to put a Micro USB port on the AppleTV 2.  However, after reading this support article on the Apple website, I was determined to try to fix it myself.

Finding a Micro USB cable turned out to be non-trivial.  To the casual observer, the Micro USB and the Mini USB look very similar.  The Mini USB is used by Blackerries, hard drives, and countless devices.  The Micro USB port is a bit smaller, flatter, and more oval.

Apple actually does not carry the cable in store, although you can get one online.  The trick was finding a device that uses the Micro USB.  In my case, I found them stocked next to the Sony eReader.

iTunes Saves the Day

I plugged the new Micro USB cable into a powered USB 2.0 hub.  Given some of the issues reported by others, I suspect that it’s possible that the power draw of the AppleTV might be a bit more than typical USB ports can handle.  In any case, the Apple TV showed up in iTunes 10.5.x.  I clicked the “Restore” button, and a couple of minutes later it was done.

No issues at all with the device – it was literally reset to a factory clean state.

Since an overwhelming number of support articles and comments I found online suggested that this didn’t or wouldn’t work, I thought I’d put this blog post out there.  Hopefully it will help someone in their hour of need.

 

 

Apple, Cisco, and Dow 15000

I was driving home on Sunday, listening to the radio, and it occurred to me how different the financial news would be if Apple ($AAPL) was in the Dow Jones Industrial Average (^DJI).

Of course, being who I am, I went home and built a spreadsheet to recalculate what would have happened if Dow Jones had decided to add Apple to the index instead of Cisco back in 2009.  Imagine my surprise to see that the Dow be over 2000 points higher.

In real life, the Dow closed at 12,874.04 on Feb 13, 2012.  However, if they had added Apple instead of Cisco, the Dow Jones would be at 14,926.95.  That’s over 800 points higher than the all-time high of 14,164 previously set on 4/7/2008.

Can you imagine what the daily financial news of this country would be if every day the Dow Jones was hitting an all-time high?  How would it change the tone of our politics? Would we all be counting the moments to Dow 15,000?

Why Cisco vs. Apple?

This isn’t a foolhardy exercise.  The Dow Jones Industrial Average is changed very rarely, in order to promote stability and comparability in the index.  However, on June 8, 2009, they made two changes to the index:

  • They replaced Citigroup with Travelers
  • They replaced General Motors with Cisco

The question I explored was simple – what would have happened if they had replaced General Motors with Apple on June 8, 2009.  After all, Apple was up over 80% off its lows post-crash.  The company had a large, but not overwhelming market capitalization.  The index is already filled with “big iron” tech stocks, like Intel, HP & IBM.  Why add Cisco?  Why not add a consumer tech name instead?

In fact, there is no readily obvious justification for adding Cisco to the index in 2009 instead of Apple.

The Basics of the Dow Jones Industrial Average

Look, I’m just going to say it. The Dow Jones Industrial Average is ridiculous.

You may not realize this, but the Dow Jones Industrial Average, the “Dow” that everyone quotes as representative of the US stock market, and sometimes even a barometer of the US economy, is a mathematical farce.

Just thirty stocks, hand picked by committee by Dow Jones, with no rigorous requirements.  Worse, it’s a “price-weighted” index, which is mathematically nonsensical.  When calculating the Dow Jones Industrial Average, they take the actual stock prices of each stock, add them together, and divide them by a “Dow Divisor“.  They don’t take into account how many shares outstanding; they don’t assess the market capitalization of each company.  When a stock splits, they actually change the divisor for the whole index.  It’s completely unclear what this index is designed to measure, other than financial illiteracy.

In fact, there is only one justification for the Dow Jones Industrial Average being calculated this way.  Dow Jones explains it in this post on why Apple & Google are not included in the index.  To save you some time, I’ll summarize: they have always done it this way, and if they change it, then they won’t be able to compare today’s nonsensical index to the nonsensical index from the last 100+ years.

So what? Does it really matter?

It’s a fair critique.  Look, with 20/20 hindsight, there are limitless number of changes we could make to the index to change its value.  Imagine adding Microsoft and Intel to the index in 1991 instead of 1999?

I don’t think this exercise is that trivial in this case.  The Dow already decided to make a change in 2009.  They decided to replace a manufacturing company (GM) with a large hardware technology company (CSCO).  They could have easily picked Apple instead.

The end result?  People talk about the stock market still being “significantly off its highs” of 2008.  In truth, no one should be reporting the value of the Dow Jones Industrial Average.  But they do, and therefore it matters.  As a result, the choices of the Dow Jones committee matter, and unfortunately, there seems to be no accountability for those choices.

Appendix: The Numbers

I’ve provided below the actual tables used for my calculations.  Please note that all security prices are calculated as of market close on Monday, Feb 13, 2012.  The new Dow Divisor for the alternate reality with AAPL in the index was calculated by recalculating the appropriate Dow Divisor for the 6/8/2009 switch of AAPL for CSCO, and a recalculated adjustment for the VZ spinoff on 7/2/2010.

Real DJIA DJIA w/ AAPL on 6/8/09
Company 2/13/2012 Company 2/13/2012
MMM 88.03 MMM 88.03
AA 10.33 AA 10.33
AXP 52.07 AXP 52.07
T 30.04 T 30.04
BAC 8.25 BAC 8.25
BA 74.85 BA 74.85
CAT 113.70 CAT 113.70
CVX 106.38 CVX 106.38
CSCO 20.03 AAPL 502.60
KO 68.44 KO 68.44
DD 50.60 DD 50.60
XOM 84.42 XOM 84.42
GE 19.07 GE 19.07
HPQ 28.75 HPQ 28.75
HD 45.93 HD 45.93
INTC 26.70 INTC 26.70
IBM 192.62 IBM 192.62
JNJ 64.68 JNJ 64.68
JPM 38.30 JPM 38.30
KFT 38.40 KFT 38.40
MCD 99.65 MCD 99.65
MRK 38.11 MRK 38.11
MSFT 30.58 MSFT 30.58
PFE 21.30 PFE 21.30
PG 64.23 PG 64.23
TRV 58.99 TRV 58.99
UTX 84.88 UTX 84.88
VZ 38.13 VZ 38.13
WMT 61.79 WMT 61.79
DIS 41.79 DIS 41.79
Total 1701.04 Total 2183.61
Divisor 0.13212949 Divisor 0.146286415
Index 12874.04 Index 14926.95

Calculating the “alternate divisor” requires getting the daily stock quotes for the days where the index changed, and recalculating to make sure that the new divisor with the new stocks gives the same price for the day. It’s a bit messy, and depends on public quote data, so please feel free to check my math if I made a mistake.

The Synology DS1511+ RAID NAS & Time Machine on Mac OS X Lion

I recently suffered one of those storage network failures that you have nightmares about.  After spending more than $1000 on a NetGear ReadyNAS NV+, I had a catastrophic failure that cost me all of the data on the system.  Believe it or not, it was a single drive failure – exactly the type of problem you spend money on a RAID system to survive.  Unfortunately, in my case, it didn’t.

On the bright side, I had the opportunity to rethink and rebuilt my storage and backup solutions from scratch.  In a recent blog post, I described my new network and storage topology.

Synology DS1511+ to the Rescue

The Synology DS1511+ is a great device.  It sits on your Gigabit network, handles up to five SATA hard drives, and can act as a wide variety of servers for your network.  I configured my with five 3TB Western Digital Caviar Green drives, for 15TB of notional storage, 8.3TB of usable storage.

The Synology supports “dual drive redundancy”, so for the price of 2 drives worth of storage, you end up with protection for your data even if two drives fail simultaneously.  Needless to say, I went for that option.

The industrial design of the box is well done.  You do have to break out the screwdriver to install the drives into trays (not quite as nice as the Drobo FS plug-and-play SATA drives), but the case itself is small, quiet and black.  It also has nice locks on each drive bay, which has made it “child proof” for my 2 year old who is unfortunately fascinated with the blinking lights.

The Synology box is incredibly fast.  First, it supports two Gigabit Ethernet ports, to establish connections from multiple clients independently.  But even from one machine, it’s wicked fast.  Simple Finder copy of a 500MB file to the drive takes under 6 seconds.  I was able to back up 2.7M files totally 4.05TB in size using Time Machine (usually dog slow) in about 26 hours.

The Synology management software is Windows 2000 like in terms of its user interface and incredible breadth of options.  Needless to say, I only use about 1% of them.  I did run into one issue, and hence the title of this blog post.  Configuring the box for Time Machine on Mac OS X 10.7 Lion was non-trivial.

Time Machine on Mac OS X 10.7 Lion & Synology DSM 3.2

Time Machine, unfortunately, is the most consumer friendly solution for incremental backup on the Mac.  Unfortunately, if you have multiple machines, you run into a small issue: Apple designed the software as if it “owns” the entire drive you point it at.  As a result, you can’t just point all your machines at a single network drive without a number of bad things happening.

Instead, you have to somehow convince Time Machine to only use part of the drive.  This turned out to be quite an issue for me, since I wanted to be able to backup my machine (~4TB) as well as my wife’s MacBook Pro (~500GB).

Synology has published documents on how to configure the box for Time Machine, and has designed it’s software around a very clever option.  The basic idea is that you create a different “user” for each machine you want to back up with Time Machine.  For each user, you assign a limited quota, and then you tell Time Machine to use that user for the Synology volume.  It actually works quite well, although it feels a little strange to create separate user accounts for each machine, on top of accounts for each user.

The Undocumented 4TB Limit

Unfortunately, I ran into an undocumented issue.  When I tried to set the quota for my machine to 6000 GB (in general, you want to give 50% extra room for incremental changes / backups), Time Machine would only see about 1.8 TB.  When I checked the DSM 3.2 interface, I found indeed that it had reset 6000 GB to 1804 GB.  After trying to set it several times with the same issue, I deduced that the maximum limit was 4096 GB, and that it was “wrapping” around that number.  Sure enough, entering 4100 -> 4, and entering 4096 actually turned to 0, shutting off the quota entirely!

After some back and forth with Synology customer service, they finally admitted this was true.  (The first two times, they claimed that the issue was with Mac OS X 10.7 Time Machine not respecting quotas.)  I hope they fix the software to at least tell the user when they type a number over 4095 that they’ve exceeded the limit.

The Solution: Disk Groups, Volumes & Shares

To solve the problem, I reverted to a more old-fashioned solution: partitions.  Of course, with a sophisticated, modern RAID box, this was a bit more complex.  The Synology DSM 3.2 software supports three relevant concepts:

  • Disk Groups:  You can take any number of the drives and “bind” them together as a disk group.
  • Volumes:  You can allocate an independent “volume” of any size over a disk group.
  • Shares:  You can specify a share on a given volume which is available to only certain users.

The key here is that normally you use quotas to limit storage on shares for specific users.  But since I was looking for a “6 TB” share, there was no way to do this.  By default, shares get access to the entire volume they are on, so the key was to repartition the box into separate volumes.

As a result, I configured my box as follows:

  • One disk group across all 5 disks, configured for dual drive redundancy using Synology Hybrid Raid (SHR)
  • Three volumes: one for my iMac’s time machine (6000 GB), one for my wife’s Macbook Pro (1000 GB), and one remainder for network storage (1.3 TB)
  • For each volume, I configured a single share, without quota limits.  I gave my account access to my backup share, my wife her backup share, and gave everyone access to the general media share

Works like a charm.  My iMac sees the 6TB volume for Time Machine, mounts it as needed, and backs up every hour.  Thanks to the incredible Synology speed, most incremental backups happen in the background in seconds without any noticeable performance lag.  In fact, the original backup of 4.05TB with Time Machine took about 26 hours.  On my NetGear ReadyNAS NV+, that same initial backup took almost a week.

Recommendation: Synology DS1511+

I have to just say that, despite some back and forth over the Time Machine issue, the Synology website, wiki and documentation are all well done.  They are clearly responsive, even responding to my issues over Twitter.  Given the industrial design, features, and performance of the box, I have no trouble recommending the DS1511+ to anyone who’s looking for a large (10TB+) network attached storage solution for backup of a mixed network.

Disclosure: Synology was kind enough to provide me the DS1511+ free of charge given my difficult situation.