Saturday, May 28, 2011

Correlation Exploration

Google Correlate has a feature where you draw a curve along a timeline, then click Correlate. You get back a list of search terms that varied in popularity by that same curve.

Below is the result for the first curve I drew.

G correlate drawn results

If butter production in Bangladesh can be a leading indicator for the S&P 500, then I’ll allow that the above terms can be correlated.

Sunday, May 22, 2011

Counterintuitive College Rankings

Given a list of the top 400 colleges worldwide, which U.S. college would you guess is better: the one ranked higher than 81% of all other colleges worldwide, or the one ranked higher than 69% of other colleges in the United States only?

Most people would say the one that’s better than 81% of all other colleges worldwide. But maybe you’d sense a trick question and say the other one.

It’s a double trick question. The two choices represent the same college, from the same ranking. If that does not sound possible, read on.

We will use the rankings from U.S. News’ World’s Best Universities: Top 400, which are sourced to Quacquarelli Symonds. Of the top 400 colleges worldwide, 86 are from the United States. However, the U.S. colleges tend to be higher ranked than the non-U.S. colleges: The average rank of U.S. colleges is 164, whereas the average rank of non-U.S. colleges is 210.

Let’s see an example of what this means in practice. Washington University in St. Louis is 75th out of 400 worldwide. However, it is 27th out of the 86 U.S. colleges on that same list. In terms of percentile rank, these numbers mean that Washington University ranks higher than 81% of other colleges in the worldwide top 400, yet it ranks higher than only 69% of other U.S. colleges in the worldwide top 400.

The chart below shows all the U.S. colleges on the list. The light bars are percentile ranks against the other 399 colleges worldwide. The dark bars are percentile ranks against just the other 85 U.S. colleges. As you can see, most colleges have a significant gap, ranking better against the world than against U.S. colleges only. So keep this in mind next time you see a U.S. college tout a “world-class education.”

Sunday, May 15, 2011

Review: The Yugo by Jason Vuic

In the mid-1980s, a cowboy capitalist teamed with socialist Yugoslavia to regift a decades-old Fiat onto the American market as the Yugo, a car that redefined the word cheap. Such is the true story of The Yugo by Jason Vuic.

Each chapter’s subheading is a Yugo joke: How do you make a Yugo go faster? Use a tow truck. How do you double the value of your Yugo? Fill the tank with gas. What’s included with every Yugo owner’s manual? A bus schedule.

Jokes aside, Vuic rightly asks: How does something like the Yugo become an icon of bad? And what were the Yugo’s creators, investors, and buyers thinking?

Enter Malcolm Bricklin, an entrepreneur long on salesmanship but short on discipline. He had a knack for raising and then quickly spending lots of money. Prior to the Yugo, he had already notched multiple failures in the car business, each time emerging from the crater to do it again.

Bricklin’s vision for the Yugo was radical affordability. Introduced in 1985, the Yugo cost $3,990, far cheaper than any other new car, and cheaper than the average used car. This price breakthrough generated a media sensation, which made the Yugo famous.

The price was possible because of state-subsidized Yugoslavian labor. However, with a socialist workforce came low productivity and quality.

When most Americans went [to the factory in Yugoslavia],” [Yugo executive] Pete Mulhern recalled, “they expected to see something like a printing press rushing by. And the Americans would say, ‘Hey, why is it stopped?’ But it wasn’t stopped. It was just moving really slowly.”

The Yugo quickly gained a reputation as cheap in the bad sense. Nevertheless, thousands of bargain hunters bagged a Yugo in its first year of availability. That included Yugos given to buyers of certain Cadillac models during a Pittsburgh dealer’s “buy one, get one free” promotion.

But after the bargain-hunting vanguard, customers became harder to find. Ultimately, the Yugo could not compete with its reputation as a joke.

Like Bricklin’s previous ventures, Yugo of America spent far more than it made. Ironically, investors pushed out Bricklin before the company went bankrupt, which allowed him to sell his stake when it was still worth something. The investors that pushed him out later lost everything.

The Yugo’s story includes cameos by Kissinger Associates, Armand Hammer, a Savings & Loan that would be subsequently seized by federal regulators, the government of New Brunswick, Canada, and various other unlikely players. It should also be said that Vuic gives an honorable voice to the unsung managers and executives who toiled to make the Yugo real. For those people, it made sense at the time.

Which brings us back to the question of what were they thinking. Vuic argues that while the Yugo was far from a good car, it was not out-of-bounds bad for the price. He cites surveys of mostly satisfied owners who didn’t expect much for what they paid. He makes a convincing case that objectively worse cars had been sold in the United States—for example, one of Brickin’s earlier imports “burned a quart of outboard motor oil every 260 miles, and had front and rear bumpers that were several inches lower than any car on the road.”

Rather than blame the Yugo alone for its infamy, Vuic also indicts the American 1980s consumer culture. Unlike the 1960s, which had a counterculture that embraced the cheap and simple VW Beetle, the 1980s were about aspiring to the next level up. Whereas the 1960s wanted the Beetle, the 1980s wanted the BMW 3 Series.

So perhaps it was bad timing that pushed the Yugo from being just another mediocre car into the reputational abyss it now occupies. Which reminds me of a joke: How do you make a Yugo go from 0 to 60 in less than 15 seconds? Push it off a cliff.

[Here is the Amazon link for The Yugo by Jason Vuic. The photo of the Yugo ad is from Wikipedia.]

Sunday, May 8, 2011

How Pizza Hut Got Its Name

This didn’t fit anywhere in my review of Robert Spector’s The Mom & Pop Store, but it’s still worth passing along: Spector’s story of how Pizza Hut got its name.

[When Dan and Frank Carney started a pizza restaurant in 1958 in Wichita, Kansas, they didn’t know what to call it.] The local Coca-Cola distributor provided a complimentary small outside sign that was wide at the top and tapered down at the bottom. There was room for only five letters on the top line and three letters on the bottom line. “Pizza” obviously had to be on top. But Pizza what? Pizza Pad? Pizza Inn? Pizza Pan? Pizza Jug? Dan’s wife, Beverly, mentioned that she thought the building looked like a hut. The decision was made. The name of the pizzeria would be Pizza Hut.

There you have it.