Some thoughts about data

These are just some of my personal thoughts about the current data world. First, it will make data analysis a lot easier if observations can have uniform ID numbers despite their sources. At the moment, observations which come from different sources tend to have different ID numbers; for example, one individual whose information is included in two databases usually has two ID numbers if the two databases do not belong to one source. When doing data analysis, one database is sometimes not enough given the question we want to answer. If observations can have uniform ID numbers across databases, it will be much easier to merge different databases and carry out the data analysis we want. However, having a uniform ID number can make data analysis easier but is problematic. Firms and individuals do have their unique IDs which help to identify them (for example company registration numbers and individuals’ passport and driving license numbers). However, these unique ID numbers, especially individual ID numbers,  are not included in most databases to protect the observed targets. Data are powerful and misusing data is dangerous. This is why large tech companies should be regulated for how they handle the data they collected from their users. Therefore, I think that when it comes to individuals’ information, to protect individuals’ privacy, databases should not include individuals’ ID numbers; but when it comes to some certain information, such as publicly listed companies’ information, we should have a uniform ID system for databases across the world.

A uniform ID system for publicly listed system is as easy as it sounds. Yes, publicly listed companies have their unique ID numbers, but these numbers merely show very limited information. For example, if one publicly listed companies acquire another publicly listed company, the ID number only shows the acquirer’ identity after the acquisition and the acquired company just disappear in the database. An ID number can be seen as a spot on a graph, and a spot can only included very limited information, which may be not even enough to trace back to its original company. What I think may work is to create a form of multiple dimension ID number. Multiple dimensions can help to contain sufficient information to identify the companies.

Housing market

Housing market is a very interesting topic, because I think housing market is a very unique market. You can see it as an investment market, because houses can generate profits for their owners. However, houses can also be seen as necessity, because people need somewhere to live (they can either buy a house or rent a house); especially in some cultures, buying a house is almost a must for getting married. I think maybe the latter factor makes housing actually good investment. Moreover, some cities have rapidly increasing housing prices, this will stimulate an even faster rise of housing prices. In addition, since it is a necessity for many people, which means there is a safe net for housing investors. 

Furthermore, buying a house (or a flat) is always a big decision for most people, as it will consumes a significant proportion of an ordinary person’s income. Therefore, housing price does affect individuals’ wealth, thus affecting their daily consumption decisions. And this can explain why the housing market is possible to affect the entire economy.

Of course, the importance of housing market can be reduced. For example, aging population and low birth rate can reduce the demand for housing. Moreover, better public transportation can reduce the population densities in some major cities, thus reducing the housing price in these major cities.

Is Netflix failing?

Okay, the news is not new actually that Netflix’s Q2 report was released almost two weeks ago. This report was not very impressive at all that the performance did not beat the expectation and the subscription number in the US dropped and the worldwide subscription additions were significantly behind the forecast. Why was the performance this bad? Netflix gave its explanations that it believed the bad performance was caused by the price change and the quality of its contents.

Based on the results of the Emmy Award, HBO won more awards than Netflix. This result could potentially show that the Netflix contents may not be as competitive as previously. This does not necessarily mean that the contents of Netflix are no longer good, it means there are more competitions in this industry. Moreover, more and more companies are joining in content creation, including Apple and Alphabet. Why is content creation so hot? It is because good contents can make profits and more crucially can help their customers stick to their products.

Then when there are more platforms and more good contents across various platforms, consumers gain more power and have more options. Under such circumstance, it is not wise for Netflix to raise its subscription fee. When the users continuously pay a certain level of subscription fees, they get used to this and stick to this plan without second thoughts after they initially made the decisions to pay the subscription; however, once they face a price change, they need to make the purchase decision again and realise there are so many options out there, then it is likely for them to switch to something they think is equally good but cheaper.

Therefore, I think that pricing may be a bigger problem for Netflix than as Netflix claims the contents are a bigger issue. When the competition for content creation is rising, increasing prices can affect current users’ loyalty, which should not be something that a firm wants to see.

Vision Fund II

SoftBank is a Japanese company, but what type of company it is confuses many people. It was founded in 1981 as a computer parts store, then went into the publishing industry, later entered the Internet business. SoftBank Group has been a very successful investor which holds stakes in firms across various industries, including telecommunication, finance, tech and other businesses. Many of these firms are well known, for example, Uber, Didi Chuxing, WeWork, Ele.me, Alibaba. Now SoftBank is planning to launch its Vision Fund II. Since its initial Vision Fund has made a huge success, lots of attention has been drawn to this second Vision Fund.

Mr Son’s plan for his second Vision Fund seems more ambitious than his first one, with bigger at more than $100 billion. This fund is a very exclusive fund that only a very limited number of investors are able to join this fund. However, some major investors are not included, including some sovereign wealth funds from the Middle East and Mr Son said he was in talks with these funds. Of course, we cannot use the previous performance to predict the future, which was also mentioned by SoftBank in this project. However, most people do not care, many people believe successful people will keep succeeding. And many successful people have not failed others’ expectations about them.

It is true that Vision Fund II may have a higher probability to succeed than other similar type of funds, because its size and network in the industry makes the firms it invests are able to gain access to greater resources and markets. However, there are more and more venture capital funds focusing on the tech industry, since the returns in the tech industry are significantly higher than the returns in other industries. This will be great news for tech startups, but may mean the returns for these venture capital funds can be lowered due to the increasing competition.

Personally speaking, I still think Vision Fund II can generate positive returns, but I do not think it can be as successful as the first one.

The development of IOT

IOT is a relatively hot topic for many tech companies, the founder of Huawei believes that the next major competition will occur in the IOT field. Amazon is a huge company which run successful businesses based on IOT and many people are fascinated by Amazon’s one-day prime delivery. One-day delivery cannot exist without the rapid IT development, and this is why we see Amazon as a tech company rather than a grocery firm. When the internet first appeared, people use it as a new platform for communication. Nowadays, we still use the internet to exchange information, but the contents become much more complicated. In addition, the speed of information exchange is becoming faster and faster, this allows more complicated information to be exchanged with shorter latency. IOT is built based on based on such network.

IOT is about moving goods with the help of rapid information exchange. Information exchange helps firms to monitor and control their goods transitions. When the technology is developing, firms are able to have better knowledge and control of their goods in transit. The most difficult thing to flow in IOT is not necessarily those “high tech” products, it is those which will decay rapidly with time. Although we can find imported fruits in our local stores, tons of fruits imported from other countries are thrown away because of the quality. Furthermore, when it comes to food delivery to home, consumers’ choices are much limited, and food is often delivered from consumers’ local stores to their doorsteps. Usually consumers choose the fresh food from what the local grocery stores have or will have in their storages, then when the consumers place their orders, the grocery stores pick up the ordered items from their storages and deliver the food to their consumers. This is very old fashioned in today’s standard.

I think that IOT in the agricultural industry is going to change the world and save lots of lives, because I think this will significantly reduce food wastes caused during transition and increase food supply.

My worry about technology innovation

This article aims to express my personal worry about technology innovation. I do not worry too much about the potential possibility of a battle between AI and humans. Not because I do not think it is impossible, it is possible but I think is very likely to happen in a very far future. I think that there is some immediate worry about technology innovation, inequality. 

I think technology development is likely to create a much impenetrable barrier between the wealthy and the poor (or even the ordinary); moreover, such barrier does not only lie between individuals, but also lie between companies as well. There are lots of examples showing such case. For example, Apple is reported to be in talk with Intel about buying its 5G Modem business, the reason for this potential deal is Apple wants to have the ability to produce its own 5G chips rather than relying on Qualcomm’s chips. Moreover, some potential consumers had doubts about Huawei smartphones because of the previous ban on Huawei signed by the US president. These consumers were afraid that without the software support from Google and the supply of many US chipmakers, a Huawei smartphone seemed much less reliable. Therefore, when firms build up massive technology assets, many other firms have to rely on them and are difficult to challenge them in their sectors.

For individuals, this may be a much bigger problem. Because companies are easier to employ more people and invest more money to compensate the scarcity of time than individuals, individuals are more likely to rely on more work of many others. People who have specialised skills will be much harder to be replaced by others; although people can learn and be educated to gain specialised skills, such investment can be too costly for the people who are struggling for their everyday living. Furthermore, when there is a problem which requires specific technical skills,  the wealthy people can employ other people and invest money to save time to solve this problem, but the ordinary people have to spend time on learning the skills then solve the problem. When the wealthy people can solve more problems than the ordinary people, they are more likely to become even wealthier and the wealth gap between the super wealthy and the ordinary will be widened.

Overall, inequality is my major concern about technology development and I personally believe this should be the immediate downside of rapid technology development.

Tech companies in the financial sector

The US House of Representatives Financial Services Committee held a hearing for Libra on the 17th of July and the CEO of Calibra for Facebook, David Marcus, who is one of the key people in Facebook’s Libra project, testified. It seems that the committee members focused much more on Facebook rather than the cryptocurrency. Due to previous scandal, the public trust on Facebook has been affected and these lawmakers are concerned about Facebook’s role in Libra project. The lawmakers see Libra as Facebook’s effort to break into the traditional financial sector and expect other large tech companies are also likely to make similar efforts.

There is always a worry for lawmakers that the technology is advancing so fast that the lawmakers fail to catch up with the technology development. Moreover, lawmaker will always be lagged behind technology development, because lawmaker cannot regulate something which has not happened yet. Lawmaker is always trying to eliminate happening of something bad or too risky, but because lawmaker cannot foresee what is going to happen and eliminate all the loopholes in the current system, it is impossible to eliminating the probability of something happening completely. Then although some are talking about banning tech companies from entering the financial sector, it is impossible to do so and many tech companies have already involved in the financial market, besides Facebook’s Libra. Apple is partnering with Goldman Sachs to launch its own credit card.

Tech companies have much more experience than traditional financial institutions about how to deal with enormous data by using modern technology, especially AI. Moreover, because they are newcomers, they are not afraid of “thinking differently” and we can expect we are going to see something new from these tech companies after they enter the financial market. In addition, we should be able to see increasing competition in the financial market, which is a good thing for ordinary consumers.In China, tech companies like Tencent, Alibaba, are building their IOTs, and they see an opportunities of being financial medians, and people can buy mutual funds from their platforms and many people are saving money with these tech companies rather than traditional banks.