Dominic Cummings: Vote Leave, Brexit, COVID, and No. 10 with Boris — Manifold #28

 

Dominic Cummings is a major historical figure in UK politics. He helped save the Pound Sterling, led the Vote Leave campaign, Got Brexit Done, and guided the Tories to a landslide general election victory. His time in No. 10 Downing Street as Boris Johnson's Chief Advisor was one of the most interesting and impactful periods in modern UK political history.  Dom and Steve discuss all of this and more in this 2-hour episode. 

0:00 Early Life: Oxford, Russia, entering politics 

16:49 Keeping the UK out of the Euro 

19:41 How Dominic and Steve became acquainted: blogs, 2008 financial crisis, meeting at Google 

27:37 Vote Leave, the science of polling 

43:46 Cambridge Analytica conspiracy; History is impossible 

48:41 Dominic on Benedict Cumberbatch’s portrayal of him and the movie “Brexit: The Uncivil War” 

54:05 On joining British Prime Minister Boris Johnson’s office: an ultimatum 

1:06:31 The pandemic 

1:21:28 The Deep State, talent pipeline for public service 

1:47:25 Quants and weirdos invade No.10 

1:52:06 Can the Tories win the next election? 

1:56:27 Trump in 2024? 

Transcript

Audio Player

References: 

Dominic's Substack newsletter: https://dominiccummings.substack.com/

Dept. of Physicists Can Do Stuff: Brexit!

Dominic Cummings on how Vote Leave won the Brexit campaign. (Video should start at 13m30s.)

Dom hired a team of physicists and data scientists who

1. Studied the literature on elections (i.e., entered a well-established subject, studying it de novo, applying real horsepower), figured out which results/beliefs in that field were likely correct (much found was incorrect)

2. Adapted results to the job at hand (Brexit referendum) and invented new techniques for applying them

3. Built a new platform, wrote new code, executed in real time, and won a huge electoral victory against all odds.

Of course, this is the age old story of physicists invading/creating other fields: early computing, electrical engineering, molecular biology, computational biology, quantitative finance, high frequency trading, etc.

This victory will have historical reverberations that are still playing out.

13m35s: ... we had to take risks and we had to do things in a slightly new way so one of the basic things that I did was I brought in a team of physicists who essentially looked at campaigning from complete first principles and what they did was they went they simply scanned around the world and they said what studies have been done on issues of turnout and persuasion that actually have good maths behind them to support and have been replicated and we can actually have confidence in and they basically filtered all when through filtered them all out and came back to me in the team and said here is a small selection of things actually high quality or reasonable quality work which you can rely upon and here are the principles that you can see in these studies that have been replicated with randomised controlled trials and whatnot in the States

we basically created a checklist of what these things were and we built the communications team around trying to exploit each of these elements which the physicists found they also constructed models to help direct resources on the ground campaigns to wedge where to send your activists and the digital campaign how do you actually do that in a in a scientific way and essentially you had streams of data coming in from all sorts of different ways the website email on the ground canvassing a social media blah blah all of this stuff could be traditional polling all of the stuff coming in and you had the data science people sitting at the heart of the operation and essentially taking our core messages and just running experimentally a whole bunch of different things on Facebook and elsewhere and then figuring out what what things and what things don't work and we started off with relatively small amounts of money just to run this experimental process

another thing which which I'll go into a little bit of detail because it's from perhaps of interest regarding this election is we did a new kind of polling so I'm sure all of you know the polling methodology used throughout the world essentially the same system that was invented in the late 1930s and the idea of it is yo you take roughly speaking a thousand person sample and if it's random a representative then you can rely on the mathematics of the normal distribution and the famous bell curve and you that should give you a pretty accurate picture of what people think for various reasons that is becoming harder and harder to do happy to answer questions about why that is but leaving that aside what the physicists said was this is actually not the way that you would invent polling if you were going to invent polling now the way actually to do it is take massive samples of hundreds of thousands of people ideally actually millions of people but say hundreds thousands people and then use machine learning and you will actually have a system which is faster cheaper more accurate and never has another great advantage which we exploited which is that if you do these very large sample surveys you then have sub sample you can define the demographics that you interrogate yourself and what we did was we basically use the exact same categories infer demographics that Facebook uses for its digital advertising platform so we sucked in data on the precise same basis that Facebook marketing allows and then we had therefore large sub samples of the overall polling samples which you could actually rely on and then you could take that data and plug it straight back into Facebook so you could say for example we will target women between 35 and 45 who live in these particular geographical entities who don't have a degree or who do have a degree or whatever it's after cetera

and because you've got very large samples you can actually get useful information on those kind of relatively small breakdowns so we did all this and we as I said we essentially ran a whole series of experiments based on what we found at the conventional polling in the focus groups out in the digital world and then filtered what worked and then we held back almost all of our budget and then we basically dumped the entire budget or in the last ten days...

See also Dept. of Physicists Can Do Stuff: Gene Sequencing, Harold Brown, Ashton Carter.

More Dom.

How Brexit was won, and the unreasonable effectiveness of physicists:

The scale of ... triumph cannot be exaggerated. He ... had brought about a complete transformation of the European international order. He had told those who would listen what he intended to do, how he intended to do it, and he did it. He achieved this incredible feat without commanding an army, and without the ability to give an order to the humblest common soldier, without control of a large party, without public support, indeed, in the face of almost universal hostility, without a majority in parliament, without control of his cabinet, and without a loyal following in the bureaucracy.

...

On the eve and day of Brexit I happened to be staying at the estate of a billionaire hedge fund manager, which hosted a meeting of elite capital allocators. At breakfast, more than half of these titans of capital were in shock ... Markets were down 8% or more and my host asked for my view. It will play out over years, I said. No one knows where this is going to go. The market is oversold and it's a buying opportunity. So it was.

Manifold #17: Mark Moffett on the Life and Death of Human Societies

Steve and Corey talk with Mark Moffett, Photographer and Research Fellow at the Smithsonian Institute, about his new book The Human Swarm: How our Societies Arise, Thrive and Fall. They discuss Mark’s view that being able walk into a cafe filled with others and not be attacked illustrates what makes human societies distinct and so successful. Mark explains why he is far more interested in questions about when war and other events occur than with traditional issues such as the genetic origins of human behavior. The three discuss Dehumanization and its Chimp equivalent, Dechimpanizeeization, and how they lead to the division of societies, friend turning against friend, and genocide. They discuss the conditions under which foreigners are embraced and whether the US might ever enter into a post-racial society where group differences don’t matter and immigrants are more easily accepted.

Mark Moffett's Bio

Mark Moffett's Photography

The Human Swarm: How Our Societies Arise, Thrive, and Fall

Transcript

man·i·fold /ˈmanəˌfōld/ many and various.

In mathematics, a manifold is a topological space that locally resembles Euclidean space near each point.

Steve Hsu and Corey Washington have been friends for almost 30 years, and between them hold PhDs in Neuroscience, Philosophy, and Theoretical Physics. Join them for wide ranging and unfiltered conversations with leading writers, scientists, technologists, academics, entrepreneurs, investors, and more.

Steve Hsu is VP for Research and Professor of Theoretical Physics at Michigan State University. He is also a researcher in computational genomics and founder of several Silicon Valley startups, ranging from information security to biotech. Educated at Caltech and Berkeley, he was a Harvard Junior Fellow and held faculty positions at Yale and the University of Oregon before joining MSU.

Corey Washington is Director of Analytics in the Office of Research and Innovation at Michigan State University. He was educated at Amherst College and MIT before receiving a PhD in Philosophy from Stanford and a PhD in a Neuroscience from Columbia. He held faculty positions at the University Washington and the University of Maryland. Prior to MSU, Corey worked as a biotech consultant and is founder of a medical diagnostics startup.

Chinese Social Media Notices US Cultural Revolution

The joke below is making the rounds on Chinese social media.

See Struggles at Yale and Baizuo = Libtard.

Also circulating on Chinese social media: A Report on the Cultural Revolution in the United States.

Yes, an entire country can go crazy for a decade...

Cultural Revolution (Wikipedia): The Cultural Revolution, formally the Great Proletarian Cultural Revolution, was a sociopolitical movement that took place in China from 1966 until 1976. Set into motion by Mao Zedong, then Chairman of the Communist Party of China, its stated goal was to preserve 'true' Communist ideology in the country by purging remnants of capitalist and traditional elements from Chinese society, and to re-impose Maoist thought as the dominant ideology within the Party. ...

The movement paralyzed China politically and negatively affected the country's economy and society to a significant degree. ...

Libraries full of historical and foreign texts were destroyed; books were burned. Temples, churches, mosques, monasteries, and cemeteries were closed down ...

Borges, blogging, and a vast circle of invisible friends

This blog gets about 100k page views per month. My sense is that there are a lot of additional views through RSS feeds and social media (FB, G+, etc.), but those are hard to track. Most of the hits are on the main landing page, with a smaller fraction going to a specific article. I'd guess that someone hitting the landing page looks at a few posts, so there are probably at least 200k article views per month. I write somewhat fewer than 20 posts per month, which suggests that a typical post is read ~10k times. Some outlier posts get a lot of traffic from inbound links and search engine results even years after they were written. These have far more than 10k cumulative views, according to logs. From cookies, I can see that there are many thousands of regular readers (i.e., who visit at least several times a month).

Is there any better way to estimate impact/reach than what I've described above?

For comparison, I was told that a serious non-fiction book on the NY Times Best Seller list might sell ~10k copies. So it seems possible my blog has a significantly greater reach than what I could expect from writing a book. I've thought about writing books at various times, but have always been too busy. I fantasize about writing more when I retire, or later in my career :-)

When I attend meetings or conferences, I often bump into people I don't know who tell me they read my blog. This seems to be true whether the participants are scientists, technologists, investors, or academics. I'm guessing that for every person who tells me that they're a reader, there must be many more who are readers but don't volunteer the information. If you ever see me in person, please come right up and say hello! :-)

I've been told by some people that they have tried to read this blog but find it hard to understand. I suppose that regular readers are mostly well above average in intelligence.

Borges once said

... the life of a writer is a lonely one. You think you are alone, and as the years go by, if the stars are on your side, you may discover that you are at the center of a vast circle of invisible friends whom you will never get to know, but who love you. And that is an immense reward.

Google double plus goodness

I much prefer G+ to Facebook. I wish I could push my blog RSS feed into my stream -- anyone know when that will be possible?

WSJ: Mark Zuckerberg might want to fast-track Facebook's initial public offering.

In what appeared to be a hasty response to the launch of Google's rival social-networking product, called Google+, Mr. Zuckerberg on Wednesday unveiled Facebook's new video-chatting feature. He called it "super awesome." Too bad Google made the same feature available in 2008. Indeed, Facebook suddenly looks vulnerable. This could be bad news for investors who have recently paid top dollar for stock in Facebook in private sales. ...

Will this meme gain traction among analysts as the FB IPO approaches? Gmail has 240 million unique users, so it should be possible to increase the reach of G+ very quickly. It would also be very easy to write a migration app that moves your friends list over to G+ ... How much lock-in is there really for social networks? I'm not a big user so perhaps I'm missing something.

Some G+ tips via Dan MacArthur:

Vincent Mo originally shared this post: Tame your Google+ circle madness in 3 easy steps

After using Google+ for almost a year internally at Google and almost a week in the “real world”, this is the best way I’ve found to manage my circles.

Step 1: Face reality
Come to grips with the fact that you will never read EVERYTHING on Google+.

Step 2: Make circles for SHARING
Create circles of friends that you share with (e.g. Work, Family, Church). These are the circles you use to control access to the posts you write. People can be in multiple circles. For example, a coworker might also be in your photography club.

Step 3: Make a circle for READING
Decide on a few people you really want to keep up with and add them to a separate *Inbox circle. This circle has a selection of people from Work, Family, and Church. Face it, not everyone at work or in your family is that interesting. If you can’t read everything, you might as well make sure the stuff you do read is interesting. =)

> When you share something, use your “sharing” circles. Did you take a trip with your family? Share the photos with your Family circle.

> When you’re reading your stream, click on your *Inbox circle on the left side of the stream. This will give you a more manageable amount of content than the Stream link, which for many people is already a fire hose of random stuff, most of which might not be that interesting. You may want to make a couple other circles for reading different topics. I have a separate *Inbox: Photographers circle where I read a few popular photo bloggers.

Note that my inbox circles start with * so that they sort to the top of the circles list on the left side of the stream. (Except for the default circles like “Acquaintances” - I just renamed those so they don’t automatically sort to the top).

It looks like Hangouts is a good way to do teleconferencing -- up to 10 users and you can share your desktop to show figures or a presentation.

The bubble is upon us

Personally, I'm not a big Facebook user. Someone recently described it to me as the new AOL ;-)

Facebook Employees are selling X shares at a price of $35 per share in advance of the pending IPO. The price of $35 per share implies a valuation of $80 billion for the company (2,300,000,000 shares outstanding * $35). These shares will be subject to a 180 lock up period post the IPO (subject to extension). The timing of the IPO is unknown at this time and a syndicate has not yet been selected. The book is currently 2.0 – 2.5x oversubscribed. Expected pricing is mid next week, but is subject to acceleration.

Min purchase size 135K shares.

I'm playing with G+ right now and like it a lot better than Facebook...

You say you want a revolution

An interview with the Google exec whose Facebook page helped trigger the demonstrations in Egypt. Finally all of those naive and idealistic predictions about the power of the internet are coming true :-)

NYTimes: ... some new demonstrators said they had joined the protests after watching an emotional television interview on Monday night with Wael Ghonim, a Google marketing executive who was snatched off the street nearly two weeks ago, for his role in helping to organize the revolt as the administrator of a popular Facebook page.

One protester in Tahrir Square on Tuesday, Ahmed Meyer El Shamy, an executive with an international pharmaceutical company, told The Times, “many, many people” had resolved to join the demonstration “because of what they saw on TV last night.”

During that interview, Mr. Ghonim acknowledged that he had been the anonymous administrator of the Facebook page We Are All Khaled Said, dedicated to the memory of a 28-year-old Egyptian man beaten to death by the police in Alexandria on June 6, 2010, which helped spark the protests.

More video at the NYTimes link above. (Sorry, I just realized the version below doesn't have subtitles. Unless you speak Arabic you have to click through to the Times; the last video shows Ghonim's emotional reaction when shown pictures of protestors who died.)

How the world works

I posted this as a comment on a GNXP thread about whether it is worthwhile to attend an elite university. I suppose you can get the main points by watching The Social Network (which I haven't seen yet) and thinking about what Zuckerberg's life would be like had he attended U Mass instead of Harvard. BTW, rumor has it that Zuckerberg's buddy from Exeter, who went to Caltech, is the main guy responsible for the ability of FaceBook to scale without collapsing (this is a nontrivial technical feat which Friendster -- remember them? -- failed to accomplish). Anyone know more details about this? Does the techer appear in the movie or in Mezrich's book?

Go to the web sites of venture capital, private equity or hedge funds, or of Goldman Sachs, and you’ll find that HYPS alums, plus a few Ivies, plus MIT and Caltech, are grossly overrepresented. (Equivalently, look at the founding teams of venture funded startups.)

Most top firms only recruit at a few schools. A kid from a non-elite UG school has very little chance of finding a job at one of these places unless they first go to grad school at, e.g., HBS, HLS, or get a PhD from a top place. (By top place I don’t mean “gee US News says Ohio State’s Aero E program is top 5!” — I mean, e.g., a math PhD from Berkeley or a PhD in computer science from MIT — the traditional top dogs in academia.)

This is just how the world works. I won’t go into detail, but it’s actually somewhat rational for elite firms to operate this way — a Harvard guy knows how the filtering works at his alma mater and at similar places so he trusts it. Plus, at the far tail of ability I would guess the top 10-20 UG schools grab almost 50 percent of the pool.

I teach at U Oregon and out of curiosity I once surveyed the students at our Honors College, which has SAT-HSGPA characteristics similar to Cornell or Berkeley. Very few of the kids knew what a venture capitalist or derivatives trader was. Very few had the kinds of life and career aspirations that are *typical* of HYPS or techer kids. At the time I took the survey almost 50 percent of the graduating class at Harvard was heading into finance. You can bet that the average senior at Harvard knows what Goldman Sachs is (and even what it means to make partner there), that McKinsey is so over (relative to careers in finance), what the difference is between a Rhodes, Marshall and Churchill scholarship, etc. etc. Very few state school kids do … Last year a physics student at Oregon won a Marshall to go to Cambridge. The administrators were happy about the PR. I had a conversation with a vice-provost about how to ensure a steady pipeline of such candidates — but there are not the resources, institutional understanding of the process, etc. (let alone pool of able kids) to turn UO into a Rhodes/Marshall/… machine like Harvard.

Now tell me that peer or network effects don’t matter. Controlling for SAT may account for much of the variance in well-established careers like medicine or even law, but for the very top jobs (which contribute disproportionately toward income inequality), kids at elite schools have huge advantages. Guess where I will send my kids (assuming they can get in)?

To see the elite / non-elite divide most starkly, look at the probability of (earned) net worth, say, $5-10M by age 40. This cuts out almost all doctors and lawyers and leaves finance, startups and entertainment (i.e., movies or television; let’s ignore sports). Even after controlling for SAT, I would guess elite grads are 3 or maybe even 10 times more likely to achieve this milestone.

Controlling for IQ doesn't account for differences in drive or life expectations or naked ambition, let alone social networks, signaling or information flow among elites.

See also Returns to elite education.

An anthropologist on Wall Street

FT's Gillian Tett reviews Liquidated: An Ethnography of Wall Street, by anthropologist Karen Ho (see also this Time interview). Ho did three years of "field research" as an employee of Bankers Trust during the mid to late 90s, taking time off from graduate school at Princeton. Tett, trained in anthropology herself, did an excellent job covering the credit crisis. She writes insightfully below.

For an anthropologist's take on high energy physics, see here. The ideas of Bourdieu are just as relevant; see, for instance, the power to consecrate :-)

Financial Times: When I first started covering finance for the FT, I used to get embarrassed when asked about my academic past. Before I became a journalist, I did a PhD in social anthropology, a branch of social science that endeavours to understand the cultural dynamics of societies based on grass-roots analysis.

Back in the pre-credit crisis days, bankers tended to consider degrees in anthropology to be rather “hippy”. As one banker told me; the only qualifications that really commanded status were those linked to economics, maths, physics and other “hard” sciences – or, at a pinch, an MBA.

Not anymore. As the financial disasters of the past two years have unfolded, it has become painfully clear that bankers placed far too much faith on their quasi-scientific models. It has also been evident that a grasp of cultural dynamics is critical in understanding how modern finance works – or doesn’t. Consequently, the idea of using the social sciences to understand money is becoming fashionable in some quarters.

Given all that, Karen Ho has picked an excellent time to publish her fascinating new study – or “ethnography” – of Wall Street banks. Ho is currently a professor of social anthropology at the University of Minnesota. A decade ago, however, she was an employee of Bankers Trust, formerly a powerful Wall Street banking giant, and carried out research among a number of banks.

As field-sites go, Wall Street is not classic anthropological territory: ethnographers typically work in remote, third-world societies. Ho admits that studying banking tribes was hard: “The very notion of pitching a tent at the Rockefellers’ yard, in the lobby of JP Morgan or on the floor of the New York Stock Exchange is not only implausible but also might be limiting and ill-suited to a study of the ‘power elite’,” she writes.

Ho nevertheless embarked on her study in classic anthropological manner: by blending into the background, listening intently, in a non-judgmental way – and then trying to join up the dots to get a “holistic” picture of how the culture works. That patient ethnographic analysis has produced a fascinating portrait that will be refreshingly novel to most bankers.

Ho’s central argument borrows heavily from the work of Pierre Bourdieu, a sociologist/anthropologist who was part of a school of Gallic thought that emerged in Paris in the 1970s. Bourdieu conducted his fieldwork in classic anthropological style in a north African tribal group, where he developed the concept of the “habitus” – the idea that a society develops a cognitive map to order its world that is usually based on its physical experience, albeit in ways the participants are only dimly aware of.

In the case of Wall Street, Ho argues that the “habitus” is shaped by bankers’ educational experience and employment history. Modern financiers live in a world where jobs are insecure, and where bankers are paid by trading things or cutting deals. They tend to project their experience on to the economy by aspiring to make everything “liquid”, or tradable, including jobs and people. These projections are typically couched in the rhetoric of “shareholder values” or abstract concepts of “free-market capitalism” – presented as absolute “truths”.

Ho argues, however, that many of these “truths” are riddled with contradictions that bankers ignore because they are seduced by their own rhetoric. “Massive corporate restructurings are not caused so much by abstract financial models as by the local, cultural habitus of investment bankers, the mission-driven narratives of shareholder value and the institutional culture of Wall Street,” she writes.

Mainstream readers may find this language off-puttingly academic; it is written primarily for a university crowd. Yet Ho peppers her account with revealing eyewitness stories. She describes how investment banks operate an unspoken caste system that divides the elite “front office”, from the lowlier “middle” and “back” offices. She analyses the quasi “kinship” networks based on university alumni . Most fascinating of all is her account of how Wall Street becomes deluded by its own rhetoric about “market efficiency”.

Some bankers may still dub this “hippy”. But if only a few more had been willing to analyse their sector’s cultural foibles, the financial world might not be quite in the mess it is today. I, for one, would vote that Ho’s account becomes mandatory reading on any MBA (or investment banking course); if nothing else, it might be more entertaining than the other texts that bankers swallow so uncritically.

Ethnic affinity

The essence of ethnic affinity:

“We have never met before, but I instantly know him. One look, one phrase, and I know where he grew up, how he grew up, where he got his drive and his sense of humor. He is New York. He is Jewish. He looks like my uncle Louis, his voice is my uncle Sam. I feel we’ve been together at countless weddings, bar mitzvahs, and funerals. I know his genetic structure. I’m certain that within the last five hundred years—perhaps even more recently—we shared the same ancestor.”

--- Robert Reich, Clinton administration Secretary of Labor, on his first face-to-face meeting with Fed Chairman Alan Greenspan

I chose this quote, not to focus on Jews in particular, but because Reich writes so well and truly. It would be the same for me and another Asian-American, or two white guys meeting in Cairo, or for me and another American (of any color) meeting in some foreign country. Reich is obviously quite self-aware, but the same effect is there even if entirely subconscious.

Creeping Facebook

Because of my age group my earliest Facebook friends were Silicon Valley types, or other U Oregon professors. Recently, though, all sorts of classmates from high school and college have started to appear. Many of these are people I thought I'd lost track of forever.

The discovery process is classic network-traversing: get a friend request from someone I haven't seen in 10 years, approve the request and then discover several friends of theirs that I want to connect with. It's all happening at a few per day rate at the moment.

Anyone who reads this blog and is on Facebook should friend me -- be sure to tell me how long you've been reading the blog, or how you found it :-)

LinkedIn is ok too !

Obama's Silicon Valley money machine

In politics, as much as anywhere else, it's all about the benjamins. Obama isn't just smart and charismatic, he had the savvy and vision to build a 21st century, digital social network-driven campaign that has obliterated all the records for fund raising: nearly $200 million raised from over a million donors. In February, the Obama campaign reported that 94 percent of their donations came in increments of $200 or less, versus 26 percent for Clinton and 13 percent for McCain.

This is real democracy in action!

No experience? Who in Silicon Valley wants to send a candidate to the white house with lots of beltway experience? Obama gets it, in a way that Clinton and McCain do not and can not.

The Atlantic Monthly: ...In a colossal error of judgment, the Clinton campaign never made a serious approach, assuming that Obama would fade and that lack of money and cutting-edge technology couldn’t possibly factor into what was expected to be an easy race. Some of her staff tried to arrange “prospect meetings” in Silicon Valley, but they were overruled. “There was massive frustration about not being able to go out there and recruit people,” a Clinton consultant told me last year. As a result, the wealthiest region of the wealthiest state in the nation was left to Barack Obama.

Furthermore, in Silicon Valley’s unique reckoning, what everyone else considered to be Obama’s major shortcomings—his youth, his inexperience—here counted as prime assets.

I asked Roos, the personification of a buttoned-down corporate attorney, if there had been concerns about Obama’s limited CV, and for a moment he looked as if he might burst out laughing. “No one in Silicon Valley sits here and thinks, ‘You need massive inside-the-Beltway experience,’” he explained, after a diplomatic pause. “Sergey and Larry were in their early 20s when they started Google. The YouTube guys were also in their 20s. So were the guys who started Facebook. And I’ll tell you, we recognize what great companies have been built on, and that’s ideas, talent, and inspirational leadership.”

This was the dominant refrain as I traveled around the Valley. From a policy standpoint, there are many reasons for tech-minded types to support Obama, including his pledge to establish a chief technology officer for the federal government and to radically increase its transparency by making most government data available online. ...

What ultimately transformed the presidential race—what swept Obama past his rivals to dizzying new levels of campaign wealth—was not the money that poured in from Silicon Valley but the technology and the ethos.

The campaign’s focal point is My.BarackObama.com, which has made better use of technology than its rivals since the beginning. As a consequence of this fact and the general enthusiasm over the candidate, Obama’s Chicago-based staff is constantly besieged by suitors offering the latest applications, services, software, and widgets. Since many are based in Silicon Valley, Spinner volunteered his services as a talent scout.

To understand how Obama’s war chest has grown so rapidly, it helps to think of his Web site as an extension of the social-networking boom that has consumed Silicon Valley over the past few years. The purpose of social networking is to connect friends and share information, its animating idea being that people will do this more readily and comfortably when the information comes to them from a friend rather than from a newspaper or expert or similarly distant authority they don’t know and trust. The success of social-networking sites like Facebook and MySpace and, later, professional networking sites like LinkedIn all but ensured that someday the concept would find its way into campaigning. A precursor, Meetup.com, helped supporters of Howard Dean organize gatherings during the last Democratic primary season, but compared with today’s sites, it was a blunt instrument.

Obama’s campaign moved first. Staffers credit the candidate himself with recognizing the importance of this new tool and claim that his years as a community organizer in Chicago allowed him to see its usefulness. Another view is that he benefited greatly from encouraging a culture of innovation and lucked out in the personnel department, with his own pair of 20-something wizards. Joe Rospars, a veteran of Dean’s campaign who had gone on to found an Internet fund-raising company, signed on as Obama’s new-media director. And Chris Hughes, a co-founder of Facebook, took a sabbatical from the company and came to Chicago to work on the campaign full-time.

When My.BarackObama.com launched, at the start of the campaign, its lineage was clear. The site is a social-networking hub centered on the candidate and designed to give users a practically unlimited array of ways to participate in the campaign. You can register to vote or start your own affinity group, with a listserv for your friends. You can download an Obama news widget to stay current, or another one (which Spinner found) that scrolls Obama’s biography, with pictures, in an endless loop. You can click a “Make Calls” button, receive a list of phone numbers, and spread the good news to voters across the country, right there in your home. You can get text-message updates on your mobile phone and choose from among 12 Obama-themed ring tones, so that each time Mom calls you will hear Barack Obama cry “Yes we can!” and be reminded that Mom should register to vote, too.

“We’ve tried to bring two principles to this campaign,” Rospars told me. “One is lowering the barriers to entry and making it as easy as possible for folks who come to our Web site. The other is raising the expectation of what it means to be a supporter. It’s not enough to have a bumper sticker. We want you to give five dollars, make some calls, host an event. If you look at the messages we send to people over time, there’s a presumption that they will organize.”

The true killer app on My.BarackObama.com is the suite of fund-raising tools. You can, of course, click on a button and make a donation, or you can sign up for the subscription model, as thousands already have, and donate a little every month. You can set up your own page, establish your target number, pound your friends into submission with e-mails to pony up, and watch your personal fund-raising “thermometer” rise. “The idea,” Rospars says, “is to give them the tools and have them go out and do all this on their own.” The organizing principle behind Obama’s Web site, in other words, is the approach Mark Gorenberg used with such success—only scaled to such a degree that it has created an army of more than a million donors and raisers. The Clinton campaign belatedly sought to mimic Obama’s Internet success, and has raised what in any other context would be considered significant money online—but nothing like Obama’s totals, in dollars or donors. John McCain’s online fund-raising has been abysmal.

The social-networking model provided Obama with something that insurgents before him, from Gary Hart to McCain, always lacked: a means of capturing excitement and translating it into money. In the 2004 primary, Howard Dean raised $27 million online. Obama is fast approaching $200 million.

...At a critical point in the race, this money had a dispositive effect. After “Super Tuesday,” on February 5, Clinton’s campaign ran out of money—a scenario that would have been unimaginable a year earlier. Obama, flush with cash, proceeded to win the next 11 contests, all but putting the nomination out of Clinton’s reach.

“What’s amazing,” says Peter Leyden of the New Politics Institute, “is that Hillary built the best campaign that has ever been done in Democratic politics on the old model—she raised more money than anyone before her, she locked down all the party stalwarts, she assembled an all-star team of consultants, and she really mastered this top-down, command-and-control type of outfit. And yet, she’s getting beaten by this political start-up that is essentially a totally different model of the new politics.”

...The alchemy of social networking and the presidential race has given Obama claim to some of the most fabulous numbers in politics: 750,000 active volunteers, 8,000 affinity groups, and 30,000 events. But the most important number, and the clue to how Obama’s machine has transformed the contours of politics, is the number of people who have contributed to his campaign—particularly the flood of small donors. Much of Clinton’s haul, and McCain’s, too, has come from the sort of people accustomed to being wooed in the living room, and Obama initially relied on them, too. But while his rivals continued to depend on big givers, Obama gained more and more small donors, until they finally eclipsed the big ones altogether. In February, the Obama campaign reported that 94 percent of their donations came in increments of $200 or less, versus 26 percent for Clinton and 13 percent for McCain. Obama’s claim of 1,276,000 donors through March is so large that Clinton doesn’t bother to compete; she stopped regularly providing her own number last year. ...

Foo camp!

I'm off to Foo Camp in a couple of weeks. Got my tent and sleeping bag all ready :-)

You can see the social networking site set up for the 200-odd invitees here. (So far it's viewable without a password.) Most of the participants have a blog or personal web site, so if you're looking for some interesting thoughts on the future of technology, software, the internet, AI, media, venture capital, etc., you might want to have a look. (Note that true big shots like Larry Page of Google haven't filled in their profiles yet...)

I'm one of many entrepreneurs but few professors and even fewer physicists invited. That's me -- ever the maverick outsider! ;-)

Call your buddy

New research shows that mutual fund managers get a higher return from investments in companies where one of the top execs is someone they went to school with. The effect is most pronounced with Harvard Business School alumni. Having worked with a lot of HBS guys, I am not surprised :-)

This kind of study can only be done with mutual funds and public companies, where all the records are available. Whatever is going on here is probably going on even more in private equity and hedge funds, but isn't easy to quantify. Clearly, social networks like school ties give access to information that average investors don't have. As they say in poker, if you don't know who the sucker is at the table, it's probably you...

PS I see a trading strategy here. Set up your own real-time database of fund pm and C-exec educational bios, and mirror all trades where school ties are indicated. Perhaps you can capture the 20% return indicated in the study!

Mutual fund managers invest more money in companies that are run by people with whom they went to college or graduate school than in companies where they have no such connections, the study found. The investments involving school ties, on average, also do significantly better than other investments.

...“Something about these social networks is allowing portfolio managers to better predict the future returns of companies within the network,” said Lauren Cohen of Yale, another author.

The study looked only at mutual funds, which are required to report their holdings and performance regularly. It did not examine hedge funds, which are investment pools for wealthy individuals and institutions; hedge funds do not have to disclose their holdings publicly.

...Their study, titled “The Small World of Investing,” examined 85 percent of the total assets under management from 1990 to 2006 and looked at different levels of university connections.

In the weakest kind of connection, a fund manager and one of a company’s top three executives shared nothing more than an alma mater. They could have attended different schools within the university and have been on the campus decades apart.

In the strongest connection, a fund manager and one of the top three executives attended the same school at the same university, and their time on campus overlapped. The most common shared school in the study, by far, was Harvard Business School.

On average, investments in companies where there was no connection returned 11.7 percent a year before fees, according to the economists’ estimates. Investments in companies with the closest level of connection — when a fund manager attended school with an executive — returned 20.1 percent a year.

As might be expected, investments with weaker connections had returns that fell somewhere in between, with returns of more than 11.7 percent and less than 20.1 percent.

The most benign explanation for the pattern is simply that fund managers who attended school with executives have an easier time learning about the companies where those executives work. They are more likely to travel in similar social circles and may even remember their old classmate’s strengths and weaknesses.

“The results are much more consistent with the story that you went to college with Person X and know they’re really smart,” said Steven N. Kaplan, a finance professor at the University of Chicago. “My guess is that the whispering is going on, too, but the question is the relative amounts.”

Supporting Mr. Kaplan’s view, the paper does not offer clear evidence that the investments by the fund managers did unusually well in the weeks and months immediately after a stock was purchased.

On the other hand, investing based on school ties seems to have become less popular recently, which could suggest that financial regulations passed after the demise of Enron cut down on the exchange of inside information.

Last year, 7.1 percent of fund managers invested in at least one company that had a top executive with whom they had gone to school, down from 15 percent in 2002. The average during the 1990s was 11 percent.