Investing Basics

Life does not come with a user manual. But why?
This series of posts is addressed to my baby daughter and documents the aspects of life that I should have learned at school but didn’t.

You may want to read this when you are around 16. I’ve really dug into this topic when I was 32, and of course, I expect you to be at least 2x smarter than me.

TLDR: Here is my best advice about investing

  • Choose Index Funds or ETFs with low fees that are automatically managed. Low fees will accelerate your returns and automatic management will remove human error out of the loop. Right now the best funds are SP500 from Black Rock or Vanguard. Holding an index will give you returns as the economy grows. No worse and no better.
  • Compliment with Government Bonds and Gold (Physical)
  • Dollar-Cost Average your entire portfolio
  • Put your dividend-yielding stock in your tax-protected retirement accounts. That way, the compound interest from the dividend will be tax-free, and it will compound faster.
  • Rebalance often and mercilessly. If you have a target of 60% stocks in your account – if their price falls, you will buy more to adjust your wallet %. When they rise again, you will sell some and convert to bonds. With rebalancing, the market roller coaster works in your favor!

I want to share these learnings with you because I could have really used it back in the day. You see, in 2005 my father (your Grandfather) died, leaving us some money. In 2007 I was approached by a smooth-talking salesman of a managed investment fund. In theory, the whole investment strategy made total sense. On top of that, the investment funds were red-hot in Poland, so my mom and I decided to invest. Only now we know that this was the time of the real estate bubble growing like crazy, but back then information was scarce and hype abundant. The money we lost had me stay away from the market for 10+ years.

Underlying concepts

Here are the concepts you absolutely need to grasp:

Compound Interest

The concept of interest is pretty straightforward. You have 100 USD with 10% Yearly interest – after a year you have 110%.

Compound interest is getting interest on your interest. The first year you will get 10 USD of interest. The next year – 11 (because you are now getting 10% of 110), the third one – 12.1. Not only you get interest, but this interest is accelerating. Over a long enough time, this makes a huge difference. Be extra careful before brushing this off. People are not used to thinking in exponential terms – and this is theoretically simple, but in practice, it’s very unnatural to think in those terms.

Diversification

Over a long enough time period, every asset class will go down significantly. It is very, very important to own asset classes that tend not to move in the same direction at the same time.

Typically what people advise is to own both stocks and bonds. The underlying theory is that when the stock market is doing very well (which means that the companies are having a grand time and people purchase a lot of everything) – bonds are having very mediocre results because people don’t want to keep money tied in bonds and inflation is higher.

When the stock market is doing worse – bonds will be safer because investors want to get out of the stock market and seek returns elsewhere. In practice, in 2008 both stock and bonds tanked because companies and entire banks defaulted. I highly recommend treating this as a serious possibility.

Another benefit of diversification is that when the stock market tanks and you have money stashed away in gold, Real Estate, or other asset class that was unfazed – you can buy stock cheaply which will give you extraordinary results.

The timing of your investment is also a diversification! When you invest the same amount (say $100 each month) regardless of the current price of the stock, you will by definition buy more stock when it’s low and less when it’s high. Do it daily for best results. The best 10 days of US stock exchange is responsible for generating almost 50% of the gains. This strategy is called Dollar Cost Averaging and it’s an extremely good one. I recommend just adopting it blindly.

Long time horizon

Some people get excited about get-rich-quick schemes and consider average returns unacceptable. What’s worse- these people tend to be loud and advocate for you to adopt their strategy (even if they don’t get anything from you participating). This is a mistake. Imagine that you have 1000 USD and you invest in a “Fund” that has only 1% of total failure every month but has a 10% yearly interest rate.

Over 10 years, that small 1% grows to 71% of the possibility of you losing all your money!

With compound interest, that $1000 can grow to $2,707.04, but you can have only a 29% chance of keeping it. That is why it’s very important to keep the possibility of total failure low!

I am only 35 years old, and already I have seen multiple events that “are not supposed to happen”. They were never included in the financial forecast of this or that investment fund manager. The impossible will happen and the only way to protect against that is to diversify aggressively.

So what can you invest in?

Asset classes:

  • Cash deposits
  • Bonds
  • Stock
  • Commodities, like Gold or Oil
  • Real Estate
  • Other currencies
  • Alternative investments – cars, wine, collectibles

Investment vehicles

  • Managed Investment Funds
  • Index Funds
  • Contracts, options and other exotic financial instruments

Cash deposits / Certificates of Deposit

If you decide, that the “investing game” is not for you – you are in fact defaulting to investing in cash deposits. This is what “Money in the bank” refers to. Broadly, banks are paying you to lend them money – you get a certain interest rate every year. Once they have this money, they can lend it to other people at a much higher interest rate, issuing credit. A mortgage for example is a form of credit from the bank to the person buying a house.

If you put money in the bank on a Certificate of Deposit (PL “Lokata”), you tell the bank that you won’t be needing this money for say 3 months. Then, the bank can be more certain it will have that money to lend to other folks.

Banks are somewhat safer than the other stores of value. That usually means, that you won’t be getting rich off this capital. There are a few points to keep in mind:

  • “Money in the bank” is NOT actually 100% safe. In 2008 the world has seen banks disappear and restructure. I expect these kinds of events to continue in the years to come. To make banks somewhat safe-ish, each country has some form of Deposit Protection Scheme (Here is the EU one). If a bank defaults, your funds are protected by the country to a certain limit (in Poland 100 000 EUR).
    • For example – let’s say you have 30 000 EUR in a bank and the bank was irresponsible with its investments and had to declare bankruptcy. You will get that money back unless the country decides to default (that can happen too in case of a major international financial crisis).
    • If you had 130 000 EUR in the bank, you can be certain to get 100 000 back, but the fate of the remaining 30 000 is uncertain. That amount is per bank – which means that you can spread the risk a bit by holding money in a few different banks.
  • The interest rate you get on deposits is tied to the “base interest rates” which government controls. In theory, the government may stimulate the economy by lowering the interest rates:
    1. People will get less interest from their money
    2. They will decide do spend it instead
    3. That spending will stimulate economy
  • At the time of writing this, we are experiencing economic suffering caused by the Coronavirus Pandemic. The base rates in Poland are now 0.1%. In theory, these base interest rates may be negative and it was the case in Germany for a while.
  • [[Inflation]] is when prices of everything gradually rise. In a healthy economy, it’s a by-product of people getting richer and an expected development. What you want to avoid is of course hyper-inflation. Historically, there have been periods where prices would rise uncontrollably:
  • “A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923” Currently – since we are battling with the economic effects of the Coronavirus pandemic, all the governments are printing money. We are all uncertain about how it will end up.
  • {Your Real Interest} = {Deposit Interest} – Inflation
  • If your deposit interest is lower than inflation then you will be consistently losing money over the long term. Your loss will be accelerated by compound interest, which works both ways.

Bonds

Bonds are a form of lending money as well. A Bond is a promise from the Emitter (say the Polish National Bank) to the holder (say, you) that it will buy back that bond. To motivate you to agree – it will add some interest rate to make it worth it for you.

  • Bond emitter may be a country, corporation, or even a city (these are called municipal bonds)
  • Usually, bonds are tied to interest rates as well – that is why they are a real bad business right now when the interest rates are close to 0.
  • The riskier the bond, the more interest you get. But you have to remember that if you buy a corporate bond emitted by a company and that company defaults – you never see your money back! That can even happen with countries too – Greece defaulted on their bonds in 2015. That is why Greek bonds are now having better interest rates than German ones.

Stock

Stock is pretty magical. When you buy company stock on the stock exchange, you are owning a piece of the company itself, with all the privileges and risks. If you really want, you even get to attend the shareholders’ meetings. Some companies decide to even pay dividends to their shareholders. I own some stock that is paying me dividends every half a year.

To buy stock you need a brokerage account. This only sounds complicated – most of the banks running these will let you access stock with the push of the button.

Commodities

Commodities are metals (gold included), oil, and a variety of other materials. Since Oil was the major source of energy during the 20th century, it has been historically a good way to include something “tangible” in your investments. With soaring inflation, oil was bound to skyrocket as well. I sure hope that oil is no longer a good investment in your time.

One very interesting asset is gold – it is one of the oldest and psychologically safest stores of value. People “flee to gold” in uncertain economic times and when everything else is falling. I hope you will grow up in a stable economy, but I have seen gold skyrocket twice in 35 years of my life and I am sure to see that again in the future.

Real Estate

Polish people love to invest in real estate and buy apartments.

  • You can buy actual apartents / houses for rent
  • You can “flip them” – buy cheaply, renovate and sell with a profit
  • You can buy shares REITs (Real Estate Investment Trusts) – it’s similar to an Investment Fund, but you own a piece of a fund that holds Real Estate.

Real Estate is fraught with psychological risks. People like it because it’s very tangilble, but don’t trust anyone telling you it’s a sure-fire investment. In general, not trusting anybody that will try to convince you of a surefire investment is a good rule of thumb.

Managed Investment Funds

An Investment Fund is created by a group of people that pool their money to buy a wider portfolio of different stocks, bonds, or other vehicles.

Managed Investment Funds have smart people running around in suits and trying to use their knowledge to make the best deals and theoretically give the fund shareholders better returns. In theory that makes sense and I’m sure there are fantastic funds to invest in somewhere. But in practice:

  • Managed funds are very rarely outperforming the average market returns. They are very often worse than just buying an average slice of the market (see next header). The companies creating those funds hide losses by creating many similar funds and killing off those who perform badly. That way, the fund that they promote in ads is one that has beat the market by chance so far, but it is unlikely to continue doing so.
  • Because they are managed, they frantically buy and sell new assets, incurring transaction fees. It’s standard right now to see funds that take 2.5% of your money for their management – and they are losing it on top of this!
  • What is infuriating – these funds are very often a matryoshka made of other funds with their own fees, making understanding the returns really hard.

Index Funds / ETFs

A stock index is a measure of how a broad set of companies is doing. An example of it is the S&P500 – an index of the 500 biggest american companies. Since most of these companies are global, it’s also a good approximation of the world economy.

This is a natural way of diversification – you don’t have to worry about picking stocks and you should not try that. Index Fund is managed by a computer. It monitors the Index – say S&P500 and allocates its money proportionately to all the companies in the index. Most of the index funds are market-capitalization-weighted. So if a company is worth more – it will “make up” more of the index. If I were to make an index fund consisting of 3 companies:

  • Artur & Associates, worth 1000 USD, it would be 10% of the index.
  • Borys Chemicals, worth 2000 USD , it would be 20% of the index.
  • Piszek Pencils, worth 7000 USD, it would be 70% of the index.

Index funds are often Exchange-Traded Funds (ETFs – but not ETFs are Index funds). It means, that you can buy shares in them on the Stock Exchange, using the same account that you use for Stocks. In fact, it should be all that you do with your Brokerage Account. The fees for holding ETFs are:

  • TER (“Total Expense Ratio”). For example, GPW:ETFSP500 noted on the Warsaw Stock Exchange has a fee of yearly 0.15%
  • You also have to pay brokerage provision for buying and selling the shares of this index fund, just like any other stock. In Poland, it’s around 0.39% today. But if you don’t trade – just buy and hold these shares as long as possible, this won’t be much of an issue.

Exotic financial instruments

Options, CFDs, Currency fluctuation schemes, or leveraged options are parasitic instruments that are trying to make quick money. They are often doing pretty great over a short financial history, usually riding the wave of market inefficiencies. But almost always investors get wiped out by an “unforeseen” event. Noobs take their place in the money bleeding game until they also run out of cash.

These instruments have their uses for institutional investors – say a bakery that wants to limit their risk of grain price fluctuations, but this is not how you build wealth.

Cryptocurrencies

The same holds for Bitcoin (which is emerging as the major cryptocurrency now). I own some bitcoin – I buy it using my dollar-cost-averaging bot because dollar-cost averaging works extremely well with volatile assets.

I am doing this because I am curious about the hype, not counting on BTC funding my retirement.

Further reading

By no means don’t stop here. The goal of this post was to make things a little bit less scary, but you will need to educate yourself throught your entire life. For starters, I recommend reading:

How to protect your job from automation

“The robots are stealing our jobs! 😱”

The threat of technology stealing our livelihoods is as old as the perceived menace of foreigners marrying our daughters. We are experiencing a wave of Automation, fuelled by the digital transformation.

PwC has a whole PDF devoted to this topic.

Yes, your CURRENT job is probably going away. What can you do about it?

This is not new.

When you think about important industries today, the textile industry is probably not the top of your mind.

In the 18th century, it was a big deal. It was so crucial for India that they have a weaver’s spinning wheel on their flag to this day.

“The hand-loom and the spinning-wheel, producing their regular myriads of spinners and weavers, were the pivots of the structure of that society,”

Karl Marx

That wheel in the middle is Ashoka Chakra, a spinning wheel

And then the industrial revolution introduced a Mechanical Loom and Sewing Machines. People in UK previously employed in the textile industry started burning textile mills and factories, fearing for their futures. This has given birth to the term Luddite.

Luddites feared that the time spent learning the skills of their craft would go to waste, as machines would replace their role in the industry. Over time, the term has come to mean one opposed to industrialization, automation, computerization, or new technologies in general.

„Luddite” on Wikipedia

Fast Forward: The No-Code tools

Journalism, as it existed in the 20th century, is indeed going away. Social Media companies like Facebook and the democratization of publishing brought forward by WordPress.com, Medium, Substack, etc is molding the entire publishing industry into a different form.

(That form, of course, has troubling aspects on the social front – mainly the outrage epidemic, clickbait, and fake news., but this is a topic for some other day).

Career journalists take some solace in pointing out that the programmers face the same threat. No-Code tools and AI are going to take over, and nobody will be safe from disruption.

No-Code tools like Zapier, Webflow, Airtable, and others are meant to reduce your friendly neighborhood programmer into a drag & drop interface.

This is a very poetic vision: The harbingers of the technology snake will themselves face the doom of being made irrelevant.

People losing jobs in numbers is of course, something to avoid. As the weavers in the 18th century and the Horse Manure transporters in the 19th century, overly specialized programmers MAY lose jobs to no-code.

What always struck me in discussions about „jobs going away” is that jobs are ultimately… work. And there is always more work.

This is not even a good thing! Productivity increases in the industrial revolution, and the information society gains could have introduced shorter workweeks and more leisure time.

Instead, they produced more bureaucracy and gadgets. Humanity will always find more work, to a fault.

How can YOU thrive?

The fact that there will always be work to be done does little for your quality of life, does it?

If you have just been disrupted by the advent of new technology, you want to have food on the table, ideally, keep your living standards or improve them. You want a good job.

Generalist skills and Narrow focus is Antifragile.

„Jack of All Trades, master of none” is a shaming scheme developed by factory owners to keep their workers dependant.

An often recommended career trick is to combine two broader disciplines. Most skills can be synergistically combined to create more value. For example, mix Marketing with Computer Science or Sales with basically anything to unlock enormous potential. Warren Buffet recommends combining Public Speaking with any skill under the sun. Writing is another high-leverage skill (see David Perrell or Patrick Collison – Stripe CEO).

A journalist might apply his writing workshop to a new, niche field. Whatever future the new managing technology will bring, analysis, commentary, and explanation will always be needed. It may not look like old-school journalism, but the function will be the same.

Despite being somewhat knowledgeable about WordPress and payments systems, I also paint my job in very broad strokes. I am an Engineer that combines tools to solve problems. If these tools are no-code tools instead of programming languages – that only makes my job easier. Thinking in terms of systems interacting with each other and how they handle data is what Computer Science is about. Not coding in any specific language. Patrick McKenzie explains it beautifully in an essay ‘don’t call yourself a programmer’.

The ultimate power move is to apply this broad identity to a narrow field – something very niche and overlooked, where you can:

  1. Quickly become an expert, by virtue of no competition
  2. Be able to quickly move into and profit from that niche using your broader skill set.

Ben Thompson from Stratechery.com has explored it from a journalist angle in his essay „Never Ending Niches”:

What is important to note, though, is that while quality is relatively binary, the number of ways to be focused — that is, the number of niches in the world — are effectively infinite; success, in other words, is about delivering superior quality in your niche — the former is defined by the latter.

There will always be more work and more niches. The same disruptive force that disrupts the establishment also creates new job titles.

The trick is to be flexible enough to be able to move into those niches once they appear.

DEVS(show) : The Universe is (not) deterministic. Is it a bootstrapping compiler?

Last night I started watching the HULU show Devs, starring Nick Offerman.

In the first episode, we learn that Nick’s character – Forest is building a quantum computing powered machine to model the universe to a great degree of fidelity.

In the scene pictured above, Forest is launching into a monologue that Universe is deterministic. If he indeed succeeded in building a working model of the universe with predictive powers, then indeed, his conclusion would be accurate. I haven’t watched the whole series, but I suppose we will learn more.

In a second episode, we hear that they have a problem with the „fidelity” part. Their modeling is crude, and one proposed explanation is that:

modeling the universe may need an entire universe – one qubit per particle.

Why I don’t think this is possible

What struck me as wrong in this statement is that even if we somehow get a universe-size quantum computer with each particle tracked, the universe is made from more than particles.

In the model proposed in the series, we would model all of classical physics, but what about all the quantum soup?

What about the modeling machine itself and it’s interference? How do we model all those qubits?

The universe is a second-order chaotic system, which means that it reacts to predictions. This aspect is beaten to death in every pop-culture product featuring time travel, and implications are well-explored in the grandfather paradox.

Another Science-Fiction cliche, the Shroedinger’s Cat experiment presents problems with the Copenhagen interpretation of quantum physics:

The scenario presents a hypothetical cat that may be simultaneously both alive and dead, a state known as a quantum superposition, as a result of being linked to a random subatomic event that may or may not occur.

The Copenhagen interpretation states, that the „randomness” of the uncertainty principle collapses to a state on observation. Deterministic universe (and an ability to run a simulation) would require us to predict this collapse.

Modeling only particles, how can we predict that? And since we cannot discount non-particles from the simulation, the question is:

Can the Universe be modeled using the tools we have in this universe?

Bootstrapping compilers

Bootstrapping is a process of compiling a new programming language. The idea is to write a programming language (they are created as any other program – people write them) using the language itself. Then, a bootstrapping compiler will compile the kernel of the „real” compiler, and it will take it from there.

The bootstrapping compiler is written in a different language – a one that already has a compiler (or assembly language that does not need one).

So my question may be translated: Is the universe a bootstrapping compiler or does it need one?

Living in a deterministic universe means no free will.

Humans are meaning-making machines. When Elon Musk proposed, that we may live in a simulation, people felt a little taken aback. However, it does not really matter if we do – and SingularityHub has a good explanation of why.

We will never be able to access „the layer running the simulation”, so for intents and purposes – it does not matter, it’s purely theoretical.

That is also why we won’t be able to model THIS universe. We may be able to model A universe – in that sense, we are a bootstrapping compiler. We may be a model running in some other universe – a bootstrapping compiler for us.

The term „bootstrapping” came from the expression „pulling oneself by one’s bootstraps”:

Widely attributed to The Surprising Adventures of Baron Munchausen, (1781) where the eponymous Baron pulls himself out of a swamp by his hair (specifically, his pigtail), though not by his bootstraps; misattribution dates to US, 1901

Wiktionary

Bootstrapping itself is used as an example of a tall tale – something impossible and contradictory.

Even if it’s impossible, it will prompt us to learn more about reality

My coworkers and I had a chance to listen to a private keynote by Stephen Wolfram. While explaining the story behind Mathematica, he shared a quote that stuck with me:

If we are building models, one of the things we could make the model of is the universe

Stephen Wolfram

Don’t use your work voice at home

When you introduce yourself, what do you say?

“I am Kate Maria Artur, and I am an accountant journalist engineer at  Apple SpaceX Automattic„… Most of us will use the job title as a representation of who we are.

My mom infuriates me, and it’s teaching me a lesson about work. She infuriates me with a particular voice, a type of preachy „Maybe you should think about THIS” type of tone. I’m going somewhere with this, I promise.

See, it took me a pandemic to figure out WHY it’s so annoying.

My wife and I are living in a summer house together with my mom and a new dog. It’s a journey of self-discovery, and one of the lessons I received is seeing my mom work. She is a high school teacher and tries to teach remotely, over Zoom.

And she uses THE VOICE when teaching. The same one I hate. My mom tries to literally lecture me when we have a disagreement!

I, on the other hand, am an engineer. My default reaction is to diagnose and solve every problem. This is what I’m good at. Surely, if we address the core issue of every discussion, we can move on, right? Don’t try this at home.

Turns out, sometimes people sometimes want you to listen to them. Shocker, right? They don’t want to be lectured, they don’t want their problem solved, they just want to get their emotions out. You may not think of this as a professional behavior to have at work, but in your personal relationships, that may be a thing.

We all play our roles.

All the world’s a stage, And all the men and women merely players

William Shakespeare

Mammals are hell-bent on protecting their identity and acting accordingly. The famous, (but now under reevaluation) Stanford Prison Experiment concluded, that regular people can do horrible things when assigned a new identity. Acting against our identity and assumed roles introduces Cognitive Dissonance, which causes heavy psychological stress. Every cell in our body wants to act according to what we are.

Applied behavioral science recognizes this. Master Key System, Think and Grow Rich, and The Secret all focus on addressing identity first and letting behavior follow. Tony Robbins says that “Identity is everywhere. We do what we believe we are”.

When we tie our identity to work, we continue to perform similar functions at home, which can cause issues.

Information processing choices

When faced with a new piece of information, you can do a couple of things with it. Your reaction can be:

  1. Reflexive
    fight or flight, etc
  2. Pattern matching/ problem solving
  3. Empathy / Connection
    Seek to understand the experience
  4. Mining for potential

Most professionals’ job description will fall on the spectrum of „#2 – Pattern matching/problem-solving”.

Recognizing patterns as „another one of those” (as Ray Dalio puts it) is a cornerstone of not only Engineering and Medicine but also Law, Investing.

Modern economy rewards jumping straight into problem-solving mode. “World’s biggest challenges are also the world’s biggest business opportunities”, according to Peter Diamandis. The more problems you solve, the bigger the big shot you are. And then you get back home.

Every cell in your body will ache to do what you have done all day – solve problems and bark orders.

But at home, you are not a bigshot any more. You are an accountant journalist engineer husband, mother, or a son. Leave the bigshot voice and, better yet – identity at the door. Be human, emphatise or help somebody explore the potential.

Automatically transcribe your Evernote voice notes

I am a big believer in taking notes and working on my personal infrastructure. I find joy in polishing the “Artur OS” and removing little pockets of friction in my setup. Have a look at my automation philosophy:

Recently, we adopted a dog and I have quite a bit of time spent walking. What if I could use it for some deep thinking?

So I wrote a bot.

How does it work?

A: I record an audio note on my phone:

B: I run my magical code

C: A transcription shows underneath

D: Profit!

There are other ways to solve this problem. Particularly, Otter.AI is a great service to transcribe your notes. However, it requires extra manual steps to open the app, export recordings, etc.

If you don’t have an elaborate setup behind your Evernote account, I recommend you check out Otter.

What do you need:

  1. You need to set up the PHP (Yes) SDK for Evernote
  2. You need an API key to Google Cloud Speech API. You don’t need a client library! Just follow these steps:
    1. Enable the API for your project here
    2. Create a new “API Interface Key” here

This code assumes you already search for a note and pass it in. I tag a note with `Tools`. A cron job periodically checks the label and does certain magical things on the notes tagged with it.

Code

It finds the audio recording in your Evernote note and transcribes it:

<?php
// https://piszek.com/2020/05/27/evernote-transcriber/
function transcribe_audio_file_in_a_note( $evernoteClient, $note ) {
// This will find the place where file is embedded, so we can display the transcription underneath.
if( preg_match( '#<en-media hash="([a-z0-9]+)"[^>]+>#is', $note->content, $res ) ) {
$id = hex2bin($res[1] );
$resources = array_filter( $note->resources, function( $resource ) use ( $id ) {
return $resource->data->bodyHash === $id;
} );
if( $resources ) {
$resource = array_shift( $resources );
}
}
if ( isset( $resource->mime ) && $resource->mime === 'audio/x-m4a' ) {
// Only audio files
if ( isset( $resource->attributes->applicationData->keysOnly['transcribed'] ) ) {
$this->log( LOG_INFO, 'This resource is already transcribed.' );
return;
}
// Set for the future
$evernoteClient->client->getNoteStore()->setResourceApplicationDataEntry( $resource->guid, 'transcribed', 'true' );
// this is your Google Speech API token
$token = "tsrtrastr8astars8tras8t";
$in = tempnam(sys_get_temp_dir(), 'evernote_transcript') . '.mp4';
$out = tempnam(sys_get_temp_dir(), 'evernote_transcript') . '.wav';
$data = $evernoteClient->client->getNoteStore()->getResourceData( $resource->guid );
file_put_contents( $in, $data );
// Because Google Speech API is crap and cannot deal with other formats, we have to recode it.
system( "ffmpeg -i $in $out" );
$data = file_get_contents( $out );
$payload = array(
"audio" => array( "content" => base64_encode( $data ) ),
"config" => array(
"languageCode" => "en-US",
"alternativeLanguageCodes" => [ "pl-PL" ], // I only use English or Polish. Your mileage may vary.
"encoding" => "LINEAR16",
"sampleRateHertz" => 44100,
"maxAlternatives" => 1,
"enableAutomaticPunctuation" => true
)
);
$payload = json_encode( $payload );
$context = stream_context_create( array(
'http' => array(
'ignore_errors' => true,
'header' => "Content-Type: application/json\r\n",
'method' => 'POST',
'content' => $payload
)
) );
// Wondering about the v1p1beta1 here? You have to use this version to have alternativeLanguageCodes. This of course is not in documentation.
$result = file_get_contents( "https://speech.googleapis.com/v1p1beta1/speech:recognize?fields=results&key=$token&quot;, false, $context );
$result = json_decode( $result, true );
if ( ! isset ( $result['results'][0]['alternatives'][0]['transcript'] ) ) {
$this->log( LOG_WARNING, 'Empty transcript. ' . print_r( $result, true ) );
return;
}
$text = $result['results'][0]['alternatives'][0]['transcript'];
$this->log( LOG_INFO, 'Transcript OK: ' . $text );
$new_body = str_replace( $res[0], $res[0] . "<div style='font-style: italic'>$text</div>",$note->content );
$note->content = $new_body;
$evernoteClient->client->getNoteStore()->updateNote( $note );
}
return $note->content;
}

More of my adventures in automation:

VIPs secret weapon: the Post-It note.

In the olden days before the pandemic, there were conferences and meetings. People would gather together to discuss matters in person, looking at each other, not through the screen, but face-to-face.

Meetings, naturally, are most productive when you take notes. Without action items and concrete takeaways, there are just chit-chats between friends. So people whip out their laptops and tablets to „jot down something.”

Have you ever participated in a meeting where everybody is walled off behind a screen? I did, and it was entirely unproductive. I’m sure it had great notes, though.

Last year, during our company offsite in Orlando, I had a series of meetings regarding a feature I was responsible for. There were many stakeholders, and I wanted to use the time to discuss strategy. I met with the Head of Product, President of our product line, and the CEO of the company. And I noticed something quite interesting:

The more senior the person, the more minimalist their note-taking approach.

All the people I met used Pen&Paper. But it really clicked when we invited the amazing Stephen Wolfram on stage. He would carry a stack of post-it notes, just like our CEO!

I wanted to have something that the average theoretical physicist can use

Stephen Wolfram on why he created Mathematica. He could have been talking about post-its, too.

What is it about paper notes and post-its in particular?

Note-taking is something I take seriously. I type about 500 new notes per month and I am very fond of the search function of my Evernote account. But I have to admit – the paper is superior for note-taking.

  1. Analog (pen & paper) note-taking lets you stay present. There is no wall of screens between you and the other person,
  2. Your posture is different when you take notes on paper, making it easier for you to use body language. (With hands on the keyboard, your back is rounded, just like when your ancestors were hiding from danger. This is not the body language of successful people),
  3. It’s clear and even encouraging that you are noting things down. The other person does not have to worry, that you are playing Animal Crossing,
  4. Post-it notes are easy to carry and convenient to pull out when needed. You can keep them in your pocket,
  5. You can use them while standing, which is useful during conferences,
  6. One idea, one note is a neat, self-contained information nugget. Post-it note is big enough to note the important stuff but too small to take your bloat. Just like a tweet.
  7. You can easily re-arrange, combine, and process them after the meeting. It’s like the are made for this.

Now, that you are in on the secret, you can carry a stack of post-it notes to your high-stakes meeting. Let them know you are a professional too.

Communication, and other CIA Sabotage tactics

Communication is Oxygen. If you feel bad, breathe. If a project is stuck in a rut – communicate. So if you see fire somewhere, you just pump more oxygen into it, right?

Oh, wait.

David Perell has recently shared a page from the CIA Sabotage Field Manual:

This document was created in 1944 to help incite enemy to

“make faulty decisions, to adopt a non-cooperative attitude, and to induce others to follow suit”

In my corporate experience, I have seen genuinely well-meaning employees act in any of these ways. The bigger the organization, the more of these behaviors become defaults. You default to committees to shift risk. You insist on proper channels to be a „Team Player.”

I will not explain why these behaviors are not conducive to innovation or, for that matter, even operating of a healthy organization. Have a look at the source document.

Open communication in a bigger organization encourages most of these behaviors and that is what I marked in red.

At Automattic, we kind of take the „Apple Opposite” approach. We are distributed in 75 countries, work without a spaceship HQ, and default to open communication whenever possible. I can snoop in on all internal projects and our VIP clients, see source code of upcoming releases and chime in on a product line strategy that has zero overlap with my responsibilities.

I found our instincts to be much closer to how Pixar operates and it makes me very proud:

A company’s communication structure should not mirror its organizational structure. Everybody should be able to talk to anybody.

If there are people in your organization who feel they are not free to suggest ideas, you lose. Do not discount ideas from unexpected sources. Inspiration can, and does, come from anywhere.

„Creativity Inc.”


Unfortunately, everything in life has a downside and Open communication does as well. Every positive behavior can become a subterfuge tactic if overused:

My intentSubterfuge tactic I fall into
Async communication, by definition, can be read at any time.
I don’t know what the context of the other party is, so I will make a long-winded explanation of my reasoning, so we can skip the back-and-forth
(2) Make „speeches”. Talk as frequently as possible at great length…
When I stumble upon a thread or conversation, I try to provide additional value by looping in knowledgeable people.

Connecting people who talk to each other is great for creativity.
(3) When possible, defer all matters to committees for “further study and consideration”

This one is particularly effective as subterfuge – people I loop in will reciprocate, ensuring exponential growth of a committee.
Sometimes I try to provide additional value by sharing ideas and concerns. Did you thought about X?

Maybe they didn’t, and I just saved them a discovery in the future?
(4) Bring up irrelevant issues as frequently as possible

Also known as Bikeshedding. Extremely powerful combined with the above (3). Random people looped into a conversation will feel compelled to provide value, sharing shallow unrelated concerns.

Since Async communication does not really have the concept of the „meeting finished”, we can hit another tactic for bonus points if we „share our thoughts too late”:

(6) Refer back to matters decided upon the last meeting, in an attempt to re-open the question (…)

Hippocrates said, that everything to the excess is opposed to nature.

Excess communication can have detrimental effects. It introduces noise for everybody, but more importantly – piles on more work for people trying to solve a problem. I am not advocating for hiding the communication but cutting on self-serving comments.

Are you making that comment to:

  • Show that you are smart? Pass.
  • To prove that you have taken action, even it is contributing very little? Pass.
  • Because you feel concerned, that „proper channels” were not used? Pass.
  • Project shipped, but you feel compelled to share a concern that should be addressed earlier? Pass.
  • You have helpful information, that will make them achieve goals faster? Go ahead.
  • You are certain a major risk was overlooked? Go ahead.
  • You have a genuine question and answer will help you or others in future pursuits? Go ahead.

Breathe and communicate. Within reason.

I miss the commute

Ridiculous as it sounds, even before the lockdowns, I missed the commute.

The gentle rocking of the bus, The camaraderie of workers returning home, and the blank stares filling the space. The commute is universally recognized as bad, right?

University of the West of England
  • It eats into your schedule, robbing you of your life
  • It starts your day off rushed and stressed, which limits your performance and happiness
  • You share the rush hour traffic with half of the known universe, all competing for the same 10cm in a bus to squeeze in.
  • You get infected with every possible ailment your fellow travelers can carry.
https://external-preview.redd.it/Z23YPAIgYeA3ts8d8PJ3Lo44RG3wANFc8MhLdDY3hvc.jpg?auto=webp&s=9060d1e6512aac55046317d3ea0bc0e0b12c51ec

And yet, a few times a year, this feeling comes back. Especially during challenging periods of focused work, I sometimes yearn for this transition period that will let me decompress between work and private engagements.

Now when we all are sheltered in place, these boundaries get blurred. We carry our stresses from work to home, because, well, both happen on the same couch!

The unexpected benefits of commuting are much more apparent now During summertime, it was quite enjoyable. I love cycling to the office and am in a fortunate position where I have 8 km of parks between the coworking spot and me.

  • On the way to the office, I get my daily fix of cardio and spent some time in nature. I identified some time ago that on the days that I see the trees, my mood goes up.
  • On the way back, I sometimes cycle quite slowly, reflecting on the day and some times maybe even sit in one of those parks.

On those exhausting days, the way home lets me decompress and maybe even put a border between times of the day.

  • The commute helps switch gears mentally
  • Me cycling to work produces mental energy

While stuck at home, you may want to reproduce the benefits of a commute:

After a challenging day, the most appealing thing is to sink into a couch and start the mindless consumption of Netflix. But if you try exercising, you will discover being more rested after the exercise than before it. Your mind will notice a transition between work and rest.

Hopefully, the lockdowns will end, because the commute can be quite OK if you choose it. With a flexible work schedule, going to the office on any given day is my decision, and I can make specific arrangements to avoid rush hour traffic.

Hopefully, I won’t have to always work from home, nor will I have to commute every day. I can choose whatever works for me, and that is the point.

402 Payment Required and why micropayments are doomed

The promise of fast, seamless micropayments (by micro I mean <$1) has been circling around the web for a while now. The original HTTP status codes, created over 30 years ago, even contain a „placeholder” for such a system, which is still reserved for future use:

The HTTP 402 Payment Required is a nonstandard client error status response code that is reserved for future use.

With the advent of Bitcoin, related arbitrage opportunities, and attention economy problems, cryptocurrency experts have renewed interest in providing micropayments solutions.

But I am not convinced this is a problem worth solving.

The administrative cost of accepting payments

Accepting payments and donations has their administrative cost. Taxes, fulfillment, answering support questions, upkeep of the payment system – most of this stuff can be automated, but you are never able to get rid of these pesky details.

Of course, the answer is easy – just make it up with higher volume!

But there is a catch-22. With more volume, there is more upkeep, more treadmill, more support, and bigger risk that you will run into a problematic customer. This constant administrative cost is a reason why every Credit Card processor charges a roughly similar rate for processing payments. They have overhead too.

2.9% + 30c of the fixed cost.

Dire reality of Paypal, Stripe and other processors

The cognitive cost of the purchase

Each payment has not only a material cost but also a cognitive cost. While you are purchasing something, you not only whip out your hard-earned cash, but you also have to make a purchase decision.

  • Is this really worth paying for?
  • From the myriad options available, is this one the best?
  • How much did I spend already this week?

All these decisions go through the customer’s head each time they are trying to buy something on the web (and IRL). That means, that each customer can only make so many purchases, regardless of their price.

While customer pays a higher price, you benefit. If they pay a high cognitive cost, everybody loses.

Subscriptions and bundles

Bundles and Subscriptions are both ways of addressing this issue.

  • The purchase decision is made only once. In case of a bundle, its spread over items and in case of a subscription – over time.
  • The administrative cost for the seller is also more manageable. It’s one customer instead of many, one fulfillment and one line item in a tax sheet.

That is why you are witnessing an explosion of subscription services – Spotify, Disney+, Netflix… Even Apple is moving to Apple TV+ because iTunes pay-for-a-single-episode model didn’t work out.

Micropayments are never taking off.

There are a million exciting technical ways of making micropayments work. Cryptocurrencies, in particular, are a favorite tool of those working on technical details.

The problem is human nature (and isn’t it always?). By putting the value of 50c on something, you are signaling that this is what it’s worth.  Higher price means higher perceived value, and as recounted by Robert Cialdini, raising prices can, surprisingly, bring more customers.

Micropayments are a favorite excuse of non-customers. If you have something worth paying for, it will be worth paying more than $1. People not willing to shell out a $5 will find an excuse not to shell out 50c either. You don’t want these people as your customers. Pricing psychology and market economics are against < $1 transactions, and maybe that is why there is not a single successful micropayment startup.

Provide real value, raise your prices, and start solving $300 problems instead of 30c problems. Better yet – start a subscription!

In the words of Patrick McKenzie:

And if you came here from Hacker News, you might like another one of my articles:

A tale of two paywalls

It was the best of times. It was the worst of times. It was the age of me helping the WordPress.com users earn a living.

We are building a whole suite of products and features that would unlock the economic potential of the people starting their journeys as the publishers. Our goal has just the right keywords to suggest that we are building a „paywall.” But, Paywall is not a straightforward affair. Let me explain how I think about Paywalls:

Traditional Paywall – let’s call it „big publisher paywall.”

This is the paywall we all think about and see in leading publisher sites like New York Times, Washington Post, and similar ones. Since the business model of those sites is publishing, they produce news articles. That is what they get paid for, and that is what they are meant to guard.

They are usually monetizing through the quantity of content. There are several modes of operation here:

  • “Metered Paywall” is the most popular approach of “3/ month free” articles
  • “Nagwall” is where you get progressively worse reading experience, or they would badger you to sign up, but they will not block the content outright.
  • “Hard paywall”, where you have no way of accessing the content without a subscription

That technical solution is tightly coupled with:
Producing a lot of content with a short shelf life.

If a site had 3 evergreen, amazing pieces that are bringing the majority of traffic and the rest would be meh content, then there would be no reason to pay! A quota of 3/month is enough to consume this great content, and there is no reason to sign up for more. Because there IS no more. So these sites are producing content that is enough to draw the traffic and give you a taste of future goodies, but not enough to fill you up. Additionally:

  • Since you pay for quantity, it incentivizes larger teams or news organizations
  • It’s best to have a uniform quality. If there is a breakaway hit, it is used to draw traffic and not be value in itself
  • They tend to focus on general topics (news, sports) to have the biggest possible total addressable market.
  • They have already a huge back-catalog of existing content when starting a paywall (hard to pay for quantity when there are only 20 pieces on a site)
  • The signup messages are short and minimal because it’s clear what you pay for – more of the same

Publishers using these paywalls have other, complex needs – customization, email newsletters, corporate strategy. They don’t exist in a vacuum and are usually connected to a bigger organization and budgets.

“Member features” / “Niche blogger paywall”

Now, let’s consider a case of the smaller blogger, maybe even a 3-person team running a site.

  • They have no hopes of competing with NYT or Washington Post on quantity and broad-spectrum journalism
  • They cannot put out more than one piece per day
  • They tend to be very niche, and their Unique Value Proposition lies in being practical and having a perspective not found anywhere else
  • They don’t have an institutional brand like NYT, so they have to earn trust by producing great (free) content as well
  • They have a tiny (or non-existent) back-catalog of existing content.

Because of these traits, bloggers overwhelmingly are separating free and premium content.

  • Promotional content is what made them famous. Free articles with great quality and unique perspective are bringing traffic to the site
  • Paid content usually has a very clear value proposition, based on the blogger’s expertise.

Some of the ways for bloggers to monetize is to offer:

  • Drip feed, where you get access to “private blog”, with new relevant content being consistently added
  • All-In membership, where you get access to the back catalog of private content
  • Online Course
  • Online Community – where you pay for ongoing relationships with the blogger but also other people that paid for the same access (being connected to a blogger’s message enough to pay is a good filter for other people willing to do so, hence you can connect with similar-minded folks easily while skipping the internet randos that never pay.)
  • Product – (software download, excel spreadsheet for job hunting, or a physical product like a planner)
  • A Service – say coaching, private lessons, etc..
  • Hybrid – any mix of the above

The Source of this list is Membership Guys.

None of these business models are compatible with readers being able to “peek” pieces of content of their own choosing. Bloggers/site owners are making a clear distinction of what pieces of content are free and which ones are “premium” worth paying for. Sure, they tease what’s inside the „premium”, but they are explicitly choosing which parts can be accessible.

Additionally, the “free” section has to be pretty accessible as well. Before a customer trusts a blogger “out of nowhere”, she has to form a relationship based on time and trust. There is no brand like NYT to help with this decision. It will often take way more than 3 or even 30 free articles to convince a customer to pay.

If you are starting up, you are better off starting with:

  • Building up your catalog of the entirely free content that will help others discover your site
  • Once you have some free content, you should introduce „member only” section with something extra
  • Don’t concern yourself with the fancy mechanics of content blocking. You can start by sending your paid content manually via email. Don’t spend time on site features! If you are on WordPress.com, you can use the Premium Content feature we just released.