Named Entity Recognition & Classification (NERC): David Nadeau, Satoshi Sekine. The Proteus Project and now EMM NewsExplorer, labs, and daylife. Ahh…entity extraction
Last year we saw, in one instance, how sound-bite reporting can go wrong. Among the 12,830words in the annual letter was this sentence: “We are certain, for example, that the economy willbe in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell uswhether the market will rise or fall.” Many news organizations reported – indeed, blared – the firstpart of the sentence while making no mention whatsoever of its ending. I regard this as terriblejournalism: Misinformed readers or viewers may well have thought that Charlie and I wereforecasting bad things for the stock market, though we had not only in that sentence, but alsoelsewhere, made it clear we weren’t predicting the market at all. Any investors who were misledby the sensationalists paid a big price: The Dow closed the day of the letter at 7,063 and finishedthe year at 10,428.
—Warren Buffet, 2009 shareholder letter, on sound-bite reporting
We got past Pearl Harbor. We will win the war…My enthusiasm for stocks is in direct proportion to how far they go down. Stocks are a lot less attractive now than they were a year ago.
—Warren Buffet: CNBC via Reuters via NYT, Monday. On Obama, “I give Obama high marks.”
Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance.
—Warren Buffet, 2009 Letter, on the price of risk.
People thought it was good news a few years back when housing starts – the supply side of the picture – were running about two million annually. But household formations – the demand side – only amounted to about 1.2 million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses.
There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the rate of household formations.
Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below “bubble” levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst.
—Warren Buffet, 2009 Letter, on housing, emphasis added.
We are likely to see some downward pressure on home prices in 2010
—Jan Hatzius, chief U.S. economist at Goldman Sachs Group
The process makes it virtually impossible to remove a teacher within a reasonable amount of time. Nobody thinks that the number of cases is reflective of the teachers who should be removed.
—Joel Klein, Chancellor of NYC Public Schools: NYT.
A really complex situation is developing in the Northeast. The Northeast is being impacted by one storm now, and the monster storm is going to impact the region tomorrow into Friday. It is a very tricky forecast in that zone.
—Eric Wilhelm said by telephone from State College, Pennsylvania
As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the summer of 2009 has not been sustained. In the most recent months we are seeing fewer and fewer MSAs reporting monthly gains in prices. Only four cities saw month to month improvements in December over November, when you look at the raw data. We are in a seasonally slow period for home prices, however, so it is not surprising to see better statistics in the seasonally-adjusted data, where 14 of the markets and the two monthly composites all rose in December. Similarly, the National Composite fell by 1.1% in the fourth quarter, but rose by 1.6% on a seasonally-adjusted basis.
—David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s
in the tatler, the spectator, and the guardian the public held up a mirror to itself; it did not yet come to a self-understanding through the detour of a reflection on works of philosophy and literature, art and science, but through entering itself into ‘literature’ as an object.
—Jurgen Habermas, The Structural Transformation of the Public Sphere: GB
Investors have already started to think about the next likely phase of the present crisis, and it appears that all they are finding are new reasons to sell the euro. Aggressive fiscal tightening by Greece, Spain and Portugal are likely to plunge their economies back into recession. All else being equal, this calls for a looser monetary policy.
—David Woo, global head of foreign-exchange strategy at Barclays Plc in London
It is fairly clear that not only Greece but several other countries in Southern Europe are probably going to be forced to take fairly severe fiscal contracts. That combined with already weak growth makes it very unlikely that the ECB is going to be in a position to hike rates.
—Ron Leven, currency strategist at Morgan Stanley in New York
Your search history shows your associations, beliefs, perhaps your medical problems. The things you Google for define you…data that’s practically a printout of what’s going on in your brain: What you are thinking of buying, who you talk to, what you talk about…It is an unprecedented amount of personal information, and these third parties (such as Google) have carte blanche control over that information…
I think the mantra of not being evil is not disingenuous, but it is a hard credo to stick to when you’re a public corporation with stockholders to please and economic incentives driving you to collect as much information as possible. I’m not saying it’s evil to collect this information; I’m saying it’s dangerous for them to collect this.
—Kevin Bankston, staff attorney at the Electronic Frontier Foundation: CNET, 2005. Elinor Mills’ article would provide the basis for a ban on communication with CNET by Google. Mills’ article specifically mentioned the fear of “hackers, zealous government investigators, or even a Google insider who falls short of the company’s ethics standards.” Only later would the reality and consequences of this possibility come to light: China, hacking. Bankston would leave us with this warning: “Before you Google for something, think about whether you want that on your permanent record. If not, don’t Google, or take steps so the search can’t be tied back to you.”
Google is poised to trump Microsoft in its potential to invade privacy, and it’s very hard for many consumers to get it because the Google brand name has so much trust,” said Chris Hoofnagle of the Electronic Privacy Information Center. “But if you step back and look at the suite of products and how they are used, you realize Google can have a lot of personal information about individuals’ Internet habits–e-mail, saving search history, images, personal information from (social network site) Orkut–it represents a significant threat to privacy
—Chris Hoofnagle, Electronic Privacy Information Center: CNET, 2005. He had testified earlier, before the California Judiciary Committee, “Although Google is held in high esteem by the public as a good corporate citizen, past performance is no guarantee of future behavior, especially following Google’s IPO when the company will have a legal duty to maximize shareholder wealth.”
Intellectual Ventures wants to define itself before someone else does. It’s been called a troll, a renegade, just another stop on shakedown street. Now, however, Nathan Myhrvold has launched a round of publicity that includes batteries from the New York Times (blog & article) and a single shot from the Harvard Business Review. Myrhvold would have his readers believe that we are standing on the edge of a capital market for invention that will unleash and remunerate the full creative power of our economy, and Intelligent Ventures is just the firm to launch it.
Sometimes, however, a troll is just a troll. But Myhrvold is right. He’s not just a troll. Myhrvold’s ambition is greater than that. He’s planning an intellectual property cartel, and policy makers would be well-advised to monitor his project.
Myhrvold had the good fortune to work closely with Steve Lohr of the New York Times to publicize his manifesto in the HBR and share his vision. Lohr provides a patient and adulating witness to the quirky polymath. With an enterprise so shrouded in secrecy, Lohr understands that Myhrvold won’t just speak with anyone and chooses to reserve judgment and ingratiate himself with him: “white hat or black hat, Intellectual Ventures is growing rapidly and becoming a major force in the marketplace.” Lohr goes further, however, and instills the underdog spirit in Myhrvold, who exclaims, “We have to be successful,” following which Lohr warns us that the “issues surrounding Intellectual Ventures, viewed broadly, are the ground rules and incentives for innovation.” Josh Lerner, an HBS economist and patent expert, speaks up in the next sentence and says, “how this plays out will be crucial to the American economy.” Could Myrhvold’s success possibly be tied to answering crucial questions about the ground rules and incentives for innovation in the American economy? Lohr’s thoughtful organization might have you think so, and Lerner’s quote would seemingly substantiate it.
Maybe Lohr was uncomfortable with the persona he had attributed to Myhrvold, for he would couple his article with an early-morning blog post on Bits. While his print subscribers drank deeply of his David & Goliath – styled allegory on patent-law, he quietly published a clarification of the patent litigation dilemma. Lohr frames the next phase of IV in terms of solving the free-rider problem. The label is interesting for two reasons. First, it implicitly says what it is not. For example, it is not greenmail, as Jim Huston, a former licensing and patent executive at Intel, suggested in a 2006 Business Week interview: “If you don’t invest, you’re our No. 1 target.” Second, it suggests that there must be a simple solution to an unacceptable practice. Afterall, we’ve all heard about free-riders.
Intellectual Venture’s limited partners invested to protect themselves from trolls. If Intellectual Ventures can buy up loose patents, then the LPs have a quasi-insurance policy against trolls, who could just as easily, though more threateningly, buy those patents. Myrhvold initially called it a defense fund, almost a patent pool. More money means more insurance, but there’s a quirk. It may require litigation to work.
Though litigation may make Intellectual Ventures look like a troll, be assured, it’s not. Myhrvold claims to have only a reluctant interest in litigation. “It’s a stupid and inefficient way to resolve disputes, but in a polarized world, there will be litigation,” claims Myhrvold. It’s necessary, however, to solve the free rider problem. Some people have paid into the defense fund, others haven’t. IV’s hands are tied. They have to sue, so they can protect the interests of their initial investors. It’s their fiduciary duty.
The solution: bring new members into the Intellectual Ventures project. Litigation, or the threat of litigation, Myhrvold believes, will encourage others to join. As they join, he can manage the free rider problem and assure appropriate and legal access to the trove of intellectual property already collected, thus demonstrating the value of their initial investors’ decision to work with them, while creating a market for invention capital – a market for eureka. “Our licensing task is to go from dozens of companies to thousands,” says Myhrvold.
Myhrvold’s vision would solve the free-rider problem, but it does not mean Intellectual Ventures is not a troll. Lohr mistakenly considers the free-rider problem in isolation. Intellectual Ventures does not have a free-rider problem in the vein of a public good. It’s not the case of a shipping association that has financed and constructed a lighthouse for their benefit, but may inadvertently serve that of the brigands, castaways and competitors who happen along. Lohr’s free-rider problem exists only because Intellectual Ventures has organized a Non-Practicing Entity to collect intellectual property with the intention of monetizing it for their limited partners. The free-rider problem in this case is that which is exploited by a troll.
It wouldn’t be wrong to just say troll, but Intellectual Ventures seems to be more than that. Myhrvold’s proposal would create a troll quite unlike anything that we have seen before – a troll with a cartel-twist: an intellectual property cartel. With “thousands of members” Myrhvold would have an agreement among competing firms to coordinate prices on a vast holding of intellectual property to the disadvantage of non-members. Patents are monopolies, so non-members will have no substitutes. Its alarming size would give it substantial reach in the intellectual property market and engender a network-effect, which would cultivate market power and make membership more valuable on a per-patent-basis as it grows. The problem with this isn’t the idea of patents. The problem is the power that an intellectual property cartel would have.
Intellectual Ventures would increasingly intersect with the interests and inventions of others. When it would, it would find itself better capitalized and equipped to pursue a claim. With growing resources, Intellectual Ventures would be able to take more risks with litigation, actual or threatened. A claim, for example, may be weak, but their credible ability to marshal legal action may force concessions and settlements where none may be merited. Because of the network-effect and the lack of substitutes, settlements and membership will become more costly on a per-patent basis. Moreover, with imperfect information on the scope and character of Intellectual Ventures’ holdings, it may only take a well-phrased bluff to induce a target into membership.
What happens in this model? What is the consequence of an intellectual property cartel? It raises the price of innovation. It puts smaller firms at a disadvantage. And it places us in a world where Non-Practicing Entities can lay in wait, as a hunter in a blind, lash out without warning and stifle the work of companies that may actually be organized to accomplish something, such as provide goods or services, with their efforts. Patents aren’t bad, but these outcomes are.
—part of the quotestream around IV—
If I appear to be a total milquetoast and I say I’ll never [sue], then people will rip me off totally…I say, ‘I can’t afford to sue you on all of these, and you can’t afford to defend on all these.’
—Nathan Myhrvold: WSJ 2008
You have a set of people who are used to getting something for free, and they are some of the wealthiest companies on earth. I was there. I was in the meetings. This is they way this business thinks about it.
Today invention is an area that people view as too illiquid, too uncertain, and too risky, so that nobody wants to invest in it. The world has shown that if you provide capital and expertise to an area that is starved for capital and expertise.
—Nathan Myhrvold, on corporate respect for patents, BW 2006. Izhar Armony, a partner at Charles River Ventures, would say, “I think that Nathan is on to something really good and important. We share a common vision of thinking of [intellectual property] as an emerging asset class.”
The appeal is twofold: the opportunity to interact with a diverse group of thinkers purely for the sake of invention, and the efficiency with which IV translates imagination into intellectual capital.
—Dennis Rivet, on working at Nathan Myhrvold’s Intellectual Ventures, which started as aPatent Defense Fund against trolls: BW 2006.
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