Stephen Baker

The Boost
The dance of the incumbents: IBM and US Steel
January 14, 2015News


IBM's new Z13 mainframes start at $200,000

When newcomers barge into an industry, they do the easy stuff. That’s logical enough. But as they get experience, they shinny up the value chain and displace the incumbents. “Oh, they’re just handling the bottom of the market,” the incumbents say, as they abandon one market after another. “They can’t touch our jewels.”

I saw this drama play out when I was covering steel in the ‘90s, and I see it now in the computer industry, specifically with IBM.

First steel. If you wanted quality steel in the 1980s, you went to a company that made it the traditional way, by reducing barge-loads of iron ore to liquid metal in a 2,900-degree (f) blast furnace, and then refining it. It was an enormously expensive (and dirty) industrial process. The two biggest producers were U.S. Steel and Bethlehem Steel.

During those years, so-called minimills were spreading across the country. They “made” steel by melting scrap. Viewed as little more than junkyard entrepreneurs, they crawled into the industry at the ground floor. They sold rebar, those ugly gnarled rods that reinforce concrete.

Good riddance, the big steelmakers said. They weren’t making money with rebar, anyway. But by ceding those lowly markets, they were unwittingly feeding a powerful insurgency. Through the years, the minimills, led by Nucor Corp., invested in new technology and refined their processes. Every time they entered a different steel market, prices collapsed, forcing out the traditional steelmakers. By the time I got to Pittsburgh in 1992, the beleaguered big steelmakers would say defiantly: “But do you think Nucor can make the hood of a Cadillac?”

Nucor is now the nation’s biggest steelmaker. Its market capitalization is $14.1 billion. That may not sound like much, but it’s more than four times the value of US Steel. Even if Nucor steel doesn’t go into Cadillac hoods, the company has helped itself to a big chunk of the market. What’s more, the traditional steel makers have had to invest in exotic technology to hold onto their shrinking top-end, from car hoods to shiny stove tops and washing machines.

Something similar has been happening in technology. In the 1950s and ‘60s, IBM grew into the world’s biggest and richest computer company by selling expensive mainframe computers to companies around the world. Mini computers, personal computers and most recently, cloud computing, ate away at that market. But IBM could still sell hardware to companies that demanded top-of-the-line performance, reliability and security.

As commodity computers claimed more markets, IBM shedded much of its hardware business, turning to more lucrative software and services. But Big Blue still clings to mainframes (in large part because they link customers to the company's software and analytics services). The newly unveiled Z13 will sell for $200,000.

As commodity producers invade a market, they always leave opportunities at the top. But those markets shrink. With time, the usurpers dominate, while the displaced champions, if still alive, are left servicing a small and shrinking niche.

Often, the old champions embrace the new technologies. I read that U.S. Steel is considering building an scrap-melting furnace at its Gary Works. This would have been heresy in the ‘90s. And IBM is pushing hard at cloud computing. But it's challenging for old companies to adapt their entrenched processes and culture to the new ways. It requires rapid change, and this hard work is often up to executive teams that have spent 30 years climbing up through the old system--and are only five or 10 years from retirement.

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How futuristic will the future be?
January 2, 2015Marketing the book


I got an email from a friend who just read my manuscript of the prequel to The Boost. The working title is Dark Site. For a story that takes place about 30 years from now, in 2044, he said, it had a few anachronisms.

Bandages, for example. When people get a brain chip, or "boost," implanted above their right temple, they have that patch of scalp shaved and the incision covered with a small bandage. The bandage signals that a person has passed to this new order--from wild to enhanced--and is probably still struggling to master the brain-machine interface (or even to find the computer in his or her head).

But who will wear bandages in 2044? Won’t there be membranes that cover the skin, breathe like skin, and decompose over time, either blending into the skin or flaking off like dandruff? Could be, I thought. So I switched bandages to “patches.” I’ll leave it up to readers to figure out for themselves how advanced those patches are. (an example)

I also had my characters pick up groceries at a supermarket on Columbia Road in Washington (the same Safeway I used to shop at in the ‘80s). I knew this sounded outmoded as I wrote it. My friend agrees. So I’ll have them order more food. (It’s too bad, because excursions onto the street are good chances for the characters--and readers--to get some fresh air, and run into people.)

Try as I might to fish out anachronisms from the future, part of me is in rebellion. The future, as I see it, invariably carries a lot of the past. Look around you today. How much of what you see could have been there 30 years ago, in early 1985? From where I’m sitting, lots of elements could be from '85--the moccasins, the coffee cup, the lamp, the fan. Much is the same. And some things, like the flat-screened TV, are mere upgrades. But there are a few differences, like the Nexus tablet playing Lee Morgan on a Sonos Wi-Fi speaker.

The point is, some things change, but lots don’t. So I’ll yank the supermarkets from the prequel, just to be on the safe side. But if I make it to 2044, I won’t be surprised if I’m still wandering through frigid produce sections.

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Books of 2014
December 30, 2014General

This might be the shortest book list of my life. There are three reasons for this. One is that the Proust includes five big books, and each one took me about a month when I was fully engaged. For the first half of the year, I was hooked. I didn't regard it as a book so much as a place I went. It was an apartment, in France in the 19th century, and I was there with a long-winded and hypersensitive artist whose behavior was often absurd. His sentences seemed endless. He could be boring and repetitive, but also brilliant, and funny, and I wanted to hang around with him and inhabit his world. Toward the end of these big tomes, I would promise to take a break and read one or two of the books piling up on my list. They would be so much easier, I told myself. It would be like a vacation. 

So I'd finish The Shadow of Young Girls in Flower (II) or The Guermantes Way (III), I would spend a week or so picking up one of those other, easier books on my list, and reading a few pages. But there was only one thing I felt like reading. So I'd dive back into the Proust. This was the rule until I got to volume five, The Prisoner, in which the narrator holds his girlfriend, Albertine, in captivity in his Paris apartment. If she breaks free, he fears, she'll pursue lesbian lovers. The very prospect torments him. (It's hard to take this at face value, since Proust himself was gay and, as he told a colleague at least once, he turned his male lovers into female characters in the book, giving them masculine names like like Albertine and Gilberte.) The narrator frets obsessively for about 400 pages. Except for one long scene of a public shaming at a soiree, It's tedious. I put it down for days on end, and only willed myself through it while on vacation.

By that point, my two books had been published. Where Does it Hurt? came out on May 15, and The Boost landed a week later. Within weeks, I was writing my own novel, Dark Site, the prequel to The Boost. I figured I'd give myself a Proust vacation until I finished it, which turned out to be Dec. 3. The short days and long evenings of winter, I've always found, are better suited for long books. 

Now I'm on the other volume of the Albertine duo, Albertine is Gone. It's marginally better than The Prisoner, but still, from my perspective, the second worst of the lot. This might be because these two volumes were unedited manuscripts at the time of Proust's death, in 1923. His brother tidied them up and published them. I would hope that Proust himself would have have cut out lots of the boring stuff, and perhaps condensed them into one shorter volume. 

Spending much of this year with Proust has altered the way I think about the passing of time, and memories, and also how I think about literature. In fact, I was already back into Proust a couple of weeks ago when I was rereading the manuscript of my prequel. It has a first-person narration by a self-obsessed man who makes a number of ridiculous choices. I realized as I read it that I'd unwittingly lifted a bit of Proust. (I don't think too many readers would draw this connection.)

In one of my short Proust vacations, I read Gillian Flynn's Gone Girl. It  came highly recommended from a friend, but I kept putting it down. It just wasn't for me, and I had to speed read the last 100 pages or so just to see how it ended. Even so, I decided to feature a first-person narrator, a bit like hers, in my own novel. Like hers, mine would be less than entirely credible, let alone lovable. 

So there you have it. Proust, Gone Girl and Dark Site. My literary year of 2014.

I just took a look at the list I wrote a year ago. My point was going to be that tackling one huge book, like Proust's, makes a year more memorable than the usual pot-pourri. But there are some real winners on that 2013 list. It was pretty memorable, too. Still, I'm taken with the idea of big projects. Candidates for the coming year might be Don Quixote or the Bible. But first I have to read the last volume of Proust, which is very long....

* I'll write about two Spanish-language books, El Ruido que Hacen las Cosas al Caer and La Apertura Cubana in a separate post. 

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The Serial Podcast: when the narrator intrudes
December 30, 2014General

Sarah Koenig, photo by Meredith Heuer

I’ve been listening to the Serial podcast both for the crime story it tells and as an exercise the journalist narrative. I’m behind most listeners, who have heard the whole 12 chapters. I just heard #7 last night on the elliptical, and I hated it.

I’ve thought about this over the last half day. It comes down to Sarah Koenig’s narrative. In the previous episodes, I got to appreciate her voice. She guides us through her education. She’s a rookie crime sleuth. And she’s dealing, for the first time, wiith people caught up in crime, cops, witnesses, and most important, the convicted killer, whom she hopes to find innocent. To tell her story, she has to put us in the head of Adnan Syed, who’s serving a life sentence in the Maryland Correctional Center for a murder he says he didn’t commit.

She stitches together the voices of the cops and lawyers and friends and experts, along with Adnan’s, and tells us how she’s evaluating all of this evidence. She teeters on the edge of getting in the way too much, but manages to restrain herself. It works.

That is, until the episode I heard last night. The entire segment carries us away from Baltimore, the scene of the case, to the law school at the University of Virginia, where a professor named Deirdre Enright runs an Innocence Project. What follows is almost like a therapy session for a puzzled journalist. Koenig becomes the story. Am I thinking about this the right way? Is it OK for me feel Adnan’s guilty one day and innocent the next? … Oh, you find me skeptical? Let me describe my symptoms to you (at considerable length and not very articulately). It goes on.

I think the chapter flopped, but I still appreciate what Koenig and her team are doing, and I can relate to the narration issues. When I pitched the Numerati, following a BusinessWeek cover story in early 2006, I took the same approach. Like Koenig, I was going to be at the center of the story. I would take readers along on my education into the world of the math geeks who were busy using data to redefine and conquer the world.

In some chapters, I was thin on material, and I had to fill in the holes myself. I felt sometimes like a Broadway empresario who has to dance for the crowd while waiting for the actors to show up. In the dating chapter, the evidence was very flimsy  that the algorithms of were any more powerful than a geographical match. So I wrote about how my wife and I signed up to see if it would match us. It was a page or two of comedy.

My approach worked for some readers. Others would have preferred less of me and more computer science and math. In any case, it was an issue I grappled with.

In the following book, Final Jeopardy, I would tell the story of IBM’s Watson computer. In my first draft, I inserted myself into the story, just the way I had in the Numerati. My excellent editor at Houghton Mifflin Harcourt, Amanda Cook, told me to get the hell out. This had to be a historical narrative, and I had no place in it. She was right.

Koenig can’t get out of the Serial Podcasts, and she shouldn’t. But I hope in the coming episodes she steps back a bit and lets the story itself, and the characters involved, do more of the telling.

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News-Decoder: a global news startup
December 17, 2014General

When I was in my 20s, I wanted to be a foreign correspondent. I changed jobs and continents every year, hoping eventually to land a job as a correspondent for a major publication or wire service somewhere in Latin America. I taught English in Ecuador, freelanced in Madrid and Argentina, and worked at newspapers in Venezuela and on the U.S.-Mexico border, in El Paso, Texas.

To understand the stories I was covering, I needed input from the rest of the world. I had to learn about banking (Latin America was buried in foreign debt) and oil. Events in Europe were crucial, because after the fall of the Berlin Wall, Latin America was competing with Eastern Europe for investments. Japan, at that point, was an economic juggernaut, and was investing in Mexico and Brazil. Chinese labor at some point was going to compete with the region…

There was a lot to follow. I did the best I could. I read The Economist and Foreign Affairs. I struggled my way through Le Monde Diplomatique. (All of this was on paper, often weeks or months behind the news.)

There were no Web sites back then, and no public Internet. But imagine how much more I could have learned if I’d had a connection with a network of a few hundred people like me around the globe. It would have been a dream to share ideas, photos and links to articles with people living in Moscow, Havana, Warsaw, Beijing, Managua, and Berlin. I can only imagine what I would have learned, and how it would have improved my coverage.

That type of rich communication is possible with today’s technology, but where do you go to find it? How do you learn about the domestic pressures weighing upon the leaders of Russia or Iran, now that oil is cheap, or feelings toward ISIS in Egypt, where the Muslim Brotherhood has been hounded into hiding?

That’s where News-Decoder comes in. It’s a global affairs startup, geared toward young adults. The founders are a group of foreign correspondents, most of them with roots at Reuters. Nelson Graves, a friend of mine since the early ‘80s, is the project leader. Take a look at this page. If you’re living somewhere interesting in the world—and all of us are—jump aboard.

Raul Alfonsin speaks to a crowd before 1983 elections in Argentina. One of those dots is me.

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The evolution of A.I.
December 16, 2014General

I visited my Amazon author page today and happened upon a conversation about artificial intelligence (AI) and evolution. Are Darwinian forces pushing the development of AI?

I wrote a response, which I’ll cut-n-paste here:

Perhaps we give intelligence more credit than it deserves in biological evolution. The shark has proven a survivor on earth, with a model that hasn't changed in tens of millions of years. Lots of animals are smarter, no doubt including thousands sea animals that have gone extinct. Intelligence only goes so far. The shark has the smarts it needs to operate the killing machine that it is, and to mate. Lots of animals survive by growing sharp teeth or thicker fur, by seeing better, by expanding lung capacity or sloughing off a virus that kills others. I would say that the development of the computer owes much more to intelligent design than evolution.

The evolution of the computer, if we want to call it that, occurs in the marketplace. And if the buyers are backward, or ill-equipped, or blind to its qualities and potential, then it fails. If you take a brand new 24-inch iMac to a medieval peasant, it's useless to him. He can't even plug it in. So, if we're disappointed in the progress AI has made over the last 50 years, it's been limited in part by the imagination of the consumers, including ourselves. That said, AI has made enormous progress even over the last five years. Its impact on our lives is already enormous, and will only grow in the age of data.

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Prequel to The Boost: Dark Site
December 3, 2014Marketing the book

On Sunday afternoon, I finished writing the prequel to The Boost. It's (tentatively) called Dark Site, which is the name for the corporate prisons featured in the story. The one readers get to know is in Vienna, Virginia, within walking distance of the Metro. 

On Monday and Tuesday, I went through the text, about 119,000 words. I cut out extraneous stuff, including plot elements I never developed and ruminations that slowed the pace. I chopped out about 12,000 words (or nearly two weeks of writing). That leaves it at close to 400 pages, about 15% longer than The Boost. (I can see coming back to it with fresh eyes in a month or two and chopping out more.) 

Today, I sat down to write a promotional precis for the book. This isn't my favorite activity. Actually, it reminds me of writing a short BusinessWeek article, where you have to squish a complex story into 500 words. In any case, now I'm done that, and I'll have to figure out what to do next.

I placed the narrator of the book, Gary, in an apartment building some of my friends lived in long ago. It's called The Shawmut, and it's on Columbia Road in the Adams Morgan section of Washington. I'm sure it's a very nice building now, and Adams Morgan is a wonderful place to live. But when my friends lived in a borrowed apartment there, they kept it "untidy," and the kitchen walls and sink were alive with rushing roaches. I have no idea why those bugs kept so busy. It was as if they were trying to lose weight. 

                                                                     The Shawmut

I don't know yet when this book will by published, or by whom. But here's the precis I wrote today:

Dark Site

The Boost Files: Washington 2044

2043. Two billion Asians operate Chinese-made supercomputers, or boosts, implanted into their brains. Americans, still waiting for their own chip, remain “wild.” In the coming cognitive war, the two powers will battle over access to brains—and control of mankind’s thoughts. The United States starts out dangerously behind.

On a summer day, a software lobbyist in Washington named Gary Terwilliger learns that his lovely downstairs neighbor, Stella, is the first government employee with a Chinese boost running in her head. The Congressional guinea pig for brain implants, she has access to top political leaders, including the president.

While privacy mavens are terrified by brain implants, advocates tout them as the next jump in human cognition, similar to our leap 40,000 years ago to cro-magnon. Some wealthy parents, including Gary and his ex-wife, fearing that their children will be left behind, start sending them on “cognitive vacations” to Asia.

From his apartment in the Shawmut, in the Adams Morgan section of Washington, Gary harnesses his newly boosted 11-year-old daughter, Alissa, as a spy. Riding “shotgun” on her neighbor’s boost, Alissa sees the world through Stella’s eyes. She witnesses chilling corruption and back-channel intrigue. She also sees political opponents being snatched up by drones and carried to corporate prisons, known as Dark Sites. And she learns a startling secret about the president that could bring down the government.

The exuberant Alissa is fascinated by what she’s learning—but cannot keep her mouth closed. As the secrets spread through Washington, powerful players, from tech plutocrats to South American capos, trace them back to their source. Will they lay claim to the precious flow of intelligence by throwing Gary, or even Alissa, into a Dark Site?

As dangers mount, Gary finds himself falling in love with Stella. But he’s all too aware that his daughter might be riding shotgun, and spying on him through Stella’s eyes. For his own privacy, he needs Stella to block Alissa’s access to her brain chip—but not before one final mission, which could carry Alissa into the innermost sanctum of the President of the United States.

Dark Site is a fast-paced prequel to The Boost (Tor Books, 2014), which takes place 28 years later. Kirkus Reviews called The Boost “a true delight of a techno-thriller that has deep, dark roots in the present.” Paul di Filippo, writing in Locus, notes that the “tale is rendered in light, easy, smooth prose which walks the tragicomic tightrope brilliantly and deftly.”

Baker was a senior technology writer at BusinessWeek for 10 years, and is also author of two non-fiction books, The Numerati (Houghton Mifflin, 2008) and Final Jeopardy: Man vs Machine and the Quest to Know Everything (Houghton Mifflin, 2011).

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AI and talking dogs
November 12, 2014General

I was talking yesterday to students at Newark Academy. The subject was Artificial Intelligence, and I started off my talk with a question about dogs. If you could give your dog some drug or therapy which would enable it to speak, I asked, how many of you would sign up for. Hundreds of kids raised their hands. There's clearly a market for talking dogs.

I pointed out that talking dogs might not turn out to be great conversationists. They might wander the house repeating "I'm hungry, I'm hungry," or go on forever about other urges or desires. Maybe they'd tell us that they don't like us, or agitate against leashes. Living with talking dogs would also raise delicate issues. If you're having a private conversation, is the dog hearing it? Does it understand? Will it spill our secrets? 

The point of this thought experiment is that we humans have had language more or less to ourselves for about 30,000 years. But in the coming years, we'll be surrounded by talking machines. We won't be sure exactly how much they understand, and we can't be sure they'll respect our secrets. Unlike talking dogs, these machines will be experts in data retrieval and analysis, and will have fabulous math skills. 

The point? All of us should be preparing ourselves to be sharing our jobs and our lives with this next generation of cognitive machines. The key is to figure out which jobs they'll be doing, and to be in a position to work with them--and not be replaced by them.

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Why is dentistry sane?
October 2, 2014General

I went to the dentist yesterday and ended up getting my tooth prepared (to put it as nicely as possible) for a crown. I paid a $560 co-pay, which I think is 50% of the total. I think it's pretty good value for the money. If I were uninsured, it would be $1,120. Either way, as a consumer, I'm satisfied.

Compare that to a recent trip to the cardiologist (concerning my now disappeared blood clot). I had an ultrasound on my legs, to see if the clots were gone. This involved spending 15 minutes with a technician  who pushed an a sensor again my vaselined legs, and gazed at the images on the monitor. She wasn't allowed to tell me what she saw (though she was nice enough to do so "off the record.") That set of images was then sent to a "reader," a doctor qualified to interpret them. This is serious medicine. The cost of mistakes is high, and they have to buy insurance against it. The machinery, I'm sure, is expensive, in part because it's sold to an spendthrift industry and the price can be absorbed into wildly inflated bills.

Speaking of which… The bill for the ultrasound came to me the other day. The hospital charged $2,095 for it. The insurance company paid $597. And then the hospital, which has some sort of nodding-winking relationship with the insurer, gives another $1,348 as a “discount.” I pay about $11,000 out of pocket every year for this coverage, and I’m still left with a co-pay of $149--which is about what I might expect to pay for the service in a sane health care economy.

I’m not a happy customer. I feel that money is being thrown around capriciously. I have little choice, because we're talking about my heart. This dynamic--life-or-death leverage in a market with little price accountability--has driven health care to 19% of our economy. (That's one reason we can’t afford to reform health care as drastically or as quickly as we should.)

                                                                       How much is that worth?

Compare the cardiology experience to the dentist making the crown. He’s a professional, an expert. He spends a full hour preparing the tooth, making the molds, crafting a temporary molar and making sure it fits. Then he sends the mold to a manufacturer, which puts together a meticulously made replacement piece for my body. It’s unique and sturdy, and it contains all kinds of composites that must be expensive. All of this is done, and my tooth is new (or as new as it’ll ever be)  for $1,120.

He earns the money and gets paid, and the bill is as simple as the ones from the roofer or the tree surgeon. He’s dealing with me as a customer and selling me a service. Many of his customers aren’t insured. So he has to compete in the marketplace. While I'm sure exceptions exist, dentristry, for the most part, is sane.

As Jonathan Bush and I wrote in Where Does it Hurt?, when medical procedures are not included in the false economy of current  insurance plans, prices go down. Lasix surgery, which is not covered by most insurance plans, is an example. Prices have plummeted over the last 30 years. The health care economy fares better where patients can be shoppers.

Coda: Today in the mail, I receive a letter from Englewood Hospital, the "non-profit" which charged $2,095 for the ultrasound. They have a foundation, and tell me about an exciting opportunity. I can donate up to $50,000, and that money will be matched dollar-for dollar, by other donors.

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Bruce Sterling's vision looks like The Boost
September 20, 2014General

"Imagine Amazon subways. The Internet of Things is not a world where Amazon literally buys, owns and manages your subways. Instead, it's a world where Amazon's skills at logistics have crushed the subway unions and are managing riders as if they were packets in one of Amazon's gigantic robotic distribution centers."

--Bruce Sterling, The Epic Struggle of the Internet of Things

Couldn't Amazon run this better?

A few days ago, I downloaded 
Bruce Sterling's essay on the Internet of Things. It's worth noting that I bought it on Amazon for $3.99. In that way, Sterling and the rest of us are building the very structures whose power over us is only going to grow. 

The way Sterling sees it, five huge companies are positioned to dominate the next stage of the Internet. They are Facebook, Google, Apple, Amazon and Microsoft. In his view, these companies will be extending their dominion from screens to the physical world. And as they do, they will increasingly dominate our economy, our jobs, our politics, in short, the planet. 

This is more or less the vision in The Boost, and its sequel (which I'm now writing), Washington at War. It's based on laws of the marketplace. These companies need to grow and expand, or they'll die. At the same time, computing is getting cheaper, smarter, and smaller. They have to use these advances to insinuate their services ever deeper into our lives. We are their frontier. 

Whether or not we eventually have chips in our head isn't the issue. They'll surround us with so much computing and sensing and surveillance that they might as well be in the head, and I'm betting they'll eventually go there.

Sterling predicts that the Chinese Internet of Things "will likely be much better known as the "Firewalled Internet of Heavily Censored Things with Chinese Characteristics." But he doesn't speculate on how that Chinese Internet will interact with our own.

This interaction is a central premise of The Boost. The idea is that the Chinese will be freer to implement a system of surveillance, efficiency and control (all eventually managed through brain chips), and that the rest of the world will remain hopelessly backward, uncompetitive and "wild" --until they get the implants themselves.

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Kirkus Reviews -

LibraryJournal - Library Journal

Booklist Reviews - David Pitt

Locus - Paul di Filippo

read more reviews

Prequel to The Boost: Dark Site
- December 3, 2014

The Boost: an excerpt
- April 15, 2014

My horrible Superbowl weekend, in perspective
- February 3, 2014

My coming novel: Boosting human cognition
- May 30, 2013

Why Nate Silver is never wrong
- November 8, 2012

The psychology behind bankers' hatred for Obama
- September 10, 2012

"Corporations are People": an op-ed
- August 16, 2011

Wall Street Journal excerpt: Final Jeopardy
- February 4, 2011

Why IBM's Watson is Smarter than Google
- January 9, 2011

Rethinking books
- October 3, 2010

The coming privacy boom
- August 17, 2010

The appeal of virtual
- May 18, 2010