Friday, January 20, 2017

The Ideal Algorithm for a Single Person considering Worldwide Options

I've stumbled upon the perfect algorithm for choosing a new city (of at least 50,000 residents) if you're single and over 30 years old:

(Percentage of inter-racial marriages and inter-racial relationships of at least six months) + 

(Percentage of inter-religious marriages, including deists and atheists, and inter-religious relationships of at least three months) - 

(Suicide rate per 100,000, averaged over most recent four years) - 

(Pollution levels).

I call this the "Rafat Relationship Index," or RRI. The blue criteria are mandatory, while the violet ones are optional but necessary for more complete data.  The suicide rate would only apply in cities of over 100,000, though I'd be very pleased if any non-resort city smaller than that ranked highly on the first two criteria.  An ambitious researcher might try a formula with both percentages and hard numbers, which would still favor larger cities but provide better conclusions. You only need to find one person, after all, so the more people, the higher your chances.

Upon hearing my idea, my friend's wife burst into fits of laughter, while he said it worked--"It's the tolerance + happiness formula."  When his wife stopped laughing, she posited that countries with public healthcare systems like Canada would rank the highest.

I disagree--from what I've seen in Scandinavian Facebook and other online profiles, it seems rare there to marry outside your race, even though Scandinavia has great public health care and relatively high levels of immigration (when considering its size).  I suppose many of the non-blondes are probably recent immigrants who may not speak the native languages, making it harder to evaluate true tolerance and segregation levels, but the growing presence of Scandinavian Neo-Nazi groups--an issue touched upon in Stieg Larsson's Girl with the Dragon Tattoo series--indicates growing societal problems. In any case, as you can see, this kind of exercise can be quite interesting, even if you're married or in a relationship.

To determine what city to visit to meet a potential lifetime partner, I had been evaluating economic numbers such as levels of private debt.  From a statistical analysis, however, such efforts are futile because it's almost impossible in developed countries to link private debt or lack thereof to fiscal responsibility, lack of materialism, lack of greed, or moderation.  A person living in a more affluent area could be justified in taking out more debt than someone living in a smaller but equally nice area.  Another person could be able to buy a larger property because of parental assistance, while another might not have such options, while still another might have such options and forgo them, indicating higher levels of character than all others. We don't even need to further parse our analysis by considering student loans or their repayment rates to understand that levels of debt are great starting points for character analysis, but so in need of individual tailoring as to be non-optimal for relationship formulas.

At the same time, at least with private debt (or even something more subjective like educational quality), you can easily ascertain objective data if you have the right access.  In contrast, with the first two criteria in my formula, it's not possible today to do a objective analysis because most cities don't keep or even try to find such personal data, and even if they did, many of them experience substantial inflows and outflows year-to-year, making any data gathered unreliable.  Fortunately, the last two criteria can, for the most part, be found using online databases, so we won't discuss them further except to say they provide completely objective markers that would eliminate places with tolerance and open-mindedness but not quality of life. (You might argue I should include GDP growth because most people need a job, but the reality of our modern world is that capital is mobile but labor is not; therefore, a GDP criterion would be inferior to an additional criterion relating to immigration rules and policies, such as ease of student visas and visa extensions.)

If someone was brave enough to attempt to complete my formula, the first step would be deciding which relationships to classify as interracial, an act requiring an in-person check subject to individual preferences.  Does an American woman with light skin but olive eyes who is half-Chinese and half-Caucasian qualify as inter-racial if she marries a white American? What if the male is a white immigrant from Germany or Norway who speaks English less than perfectly? (Are you able to see the vast possibilities and variations yet?)

Taking the potential analysis further, does President Barack Obama's relationship with Michelle Obama qualify as inter-racial?  (He's half-white and half-African, while she's full African-American.)  Or do their respective educational pedigrees render their race and backgrounds less relevant and therefore outliers that should be excluded from the formula's input?

For the religious factor, does someone who goes to church once a year for Christmas qualify as "inter-religious" if married to someone who goes every week? Take Homer and Marge Simpson. If Homer was Chinese, most people would classify his relationship with Marge as both inter-racial and inter-religious, but since they're both the same color with similar facial features, most people would classify them as neither. (By now, I'm almost tempted to return to debt levels as a more reliable factor in finding a suitable relationship, but I'm too enamored with my formula's potential.)

Although it's very, very difficult to parse racial and religious differences without in-depth interviews, sociologists can still get adequate data by going to popular cafes and restaurants at lunchtime and in the evening within different cities and doing an eye-check of inter-racial couples.  In San Jose, California, they could, on at least one weekday and one weekend, visit Westfield Mall's food court, Santana Row, a Starbucks on the East Side, a Starbucks far away from Santana Row, and a few independent coffeeshops using Yelp's ratings.

Researchers may then go to religious services in multiple locations and do a similar eye-check to ascertain further data on interracial marriages.  For example, does the local Catholic Church have separate masses for Latinos and non-Latinos?  If so, what percentage of married couples are interracial? How many African-Americans and Africans does the local mosque have attending on Friday, or is it all Pakistani-American and Arab-American?

The disheartening part about such a study in America is that even a casual observer will notice that religious entities are about as racially and ethnically segregated as you can get.  Near my hometown, Persian Christians have their own church rather than being incorporated into an existing one.  In other words, one can legitimately argue that religious entities, even established ones in America, don't do much to integrate people who look different from their existing congregations or who have different customs--in which case, what's the point of religion anyway?  To increase segregation and provide a tax benefit for doing so?

In any case, research would not take more than two weeks in each city, although the timing must be right--no holidays, no college towns (too young), no one-off days (like April 15 in the U.S.), and no fiscal quarter close time periods.

As for data on inter-religious marriage and coupling rates, the data must include relationships of at least three months to be valid.  I'm at a loss on how to proceed in a creative way.  The regular route of a paid study with voluntary participants would be one way to go, though I'd name the study something else and use it as a conduit to get background information (doing it this way increases the likelihood of accurate information).

In some ways, my formula, like debt levels, is subject to individual perception and therefore bias, but if done over a period of years, one can actually create the framework for a useful metric when it comes to solving this problem we call love.  If any sociology or psychology students end up using my idea, please give me credit.  I think it would make a fantastic idea for a dissertation or end-of-year paper.  You'd need at least three observers and of different genders and ethnic backgrounds to follow the procedure above in cafes, restaurants, and religious entities and majority agreement before marking a couple as "interracial," but it would be a great start.  If cities were judged under my formula, they'd no doubt do a better job reversing centuries of voluntary and involuntary segregation, leading to better outcomes for everyone.

(c) Matthew Rafat (2017) 

Bonus: "Love is a snowmobile racing across the tundra and then suddenly it flips over, pinning you underneath. At night, the ice weasels come." -- fictional quote attributed to Friedrich Nietzsche by Simpsons creator Matt Groening 

Thursday, January 19, 2017

Intuit, Inc. 2017 Shareholder Meeting



Intuit, Inc. (INTU) held its annual shareholder meeting on January 19, 2017.  As always, Intuit's meeting is one of the best to attend in the Bay Area because of CEO Brad Smith's preparation and ambassador-like demeanor. This year, Intuit's food spread included a delicious coffee brand I'd never seen before--Equator Coffees and Teas--literally a nice perk.

CEO Smith's presentation followed his pattern of guiding Intuit--a 34-year old company "born in the era of DOS"--into his long-term vision of becoming a services-based, global company.  The company's focus continues to be in the U.S. and Canada, where 95% of the profits are generated.  Of all the goals in Intuit's game plan, this figure is disappointing after years of hearing Intuit's desire to expand internationally.  Its technical staff continues to be based primarily in California and India (pp. 19, 10K), but it seems unable to get a business foothold in other countries.  CEO Smith, ever the optimist, said Intuit continues to be "constructively dissatisfied" and is "starting to get momentum outside the U.S."

Curiously, on February 1, 2016, Intuit gained access to a five-year credit line of $1.5 billion, leaving $1 billion in "ammunition" after retiring debentures issued in 2007 (pp. 23, 10K). On this particular banking deal, Intuit did very well--its 5.75% bonds are being retired with a 2% credit line (about 0.5% above LIBOR). I predict Intuit will buy a smaller company, perhaps Palo Alto-based Adaptive Insights, or a private company specializing in machine learning.  It currently has the option of leasing IBM products for machine learning without disclosing PII to third parties, but if all of their other algorithms are in-house, it seems Intuit would want its machine learning (i.e., "personal, anticipate, populate") and business intelligence programs to be wholly owned as well.  The most interesting data point I heard this year was that the chances of a small business surviving in its first few years increases by 89% if the business owner is linked to an accountant.

Intuit's goal of moving into a services-based, subscription model seems to require it to boost its accounting expertise portfolio, especially with regards to improving Quickbooks Online.  ("As we continue to transition our business to more connected services, we become more dependent on the continuing operation and availability of our information technology and communication systems and those of our external service providers." -- pp. 15, 10K.) Intuit's transition to the "cloud" (rather than just CD-ROMs sold through third-party retailers) has led it to divest Quicken--which was only about 2% of its profits--and focus on integrating all of its products across platforms within a broad, diverse ecosystem.

The Q&A session was excellent.  CEO Smith did not limit people who asked questions and involved members of his executive team when appropriate.  One person asked why he had to pay an additional 20 to 30 dollars to file his state taxes when the transmission cost of his federal return was zero to the federal government.

It turns out that the cost goes directly to Intuit, not a third party transmitter or entity.  Why?  Complying with each state's tax rules involves new work for Intuit.  CEO Smith explained that 44 states had their own tax codes, and the value came from Intuit's work trying to maximize tax credits and deductions based on each state's individual tax codes--which change each year.

I was concerned about privacy and third party security in the era of "big data."  I asked what Intuit did with customer data, and whether it shared that data with third parties without full anonymizing.  I expected to hear that Intuit sold some of the insights it gained from its data to third parties because doing so would be highly profitable; however, CEO Smith firmly stated that Intuit did not sell any customer data and did not share any customer data without express permission.  It's "not our data, it's the customer's" and Intuit does "not sell that data."  Moreover, it complies not only with U.S. laws but also EU laws relating to privacy coming from Brussels.

I wanted to be absolutely sure CEO Smith wasn't putting me on, even though his statements were unequivocally pro-consumer and pro-privacy.  (Data is the new gold in Silicon Valley, after all.)  I asked a similar question about privacy and data sharing in a follow-up question.  He reiterated his stance, and then asked Intuit's general counsel, Laura Fennell, to confirm that no third parties gain access to Intuit's data without express user consent.  She immediately confirmed his statements and later explained to me after the meeting that although IBM's Watson was mentioned during the presentation, Intuit can rent IBM's Watson and extract its own insights without sharing any data with IBM.

My final question related to the Free File Alliance, an agreement with the federal government.  Intuit's 10K makes this program sound as if it's preventing the IRS from directly competing with Intuit's software: "The current agreement with the Free File Alliance is scheduled to expire in October 2020. We anticipate that governmental encroachment at both the federal and state levels may present a continued competitive threat to our business for the foreseeable future" (pp. 14, 10K).  However, when I asked CEO Smith about the Alliance (no Star Wars figures included, unfortunately), he said it was merely a way to give taxpayers below a certain income threshold the ability to get online and do their taxes more efficiently.  "Voluntary compliance" is the goal from Intuit's standpoint, and it is working with the IRS to assist taxpayers who would otherwise use pen and paper or not file at all.  He added that the idea of assisting lower income taxpayers fits into Intuit's mission, which is to serve the community and the nation.  Stirring words, indeed, but I suspect there's much more behind the scenes between government agencies and Intuit.  Many years ago, I remember seeing a former CEO become almost frothy when asked about the government's encroachment into Intuit's business.

Overall, Intuit continues to focus on serving consumers and adapting to technological change. Having beaten Microsoft's attempts to win away its customers, its biggest challenge now is adapting to the cloud and its new ways of doing business--at least until it figures out how to expand internationally at a faster pace.

Disclosures: I like Intuit's corporate culture and may apply for employment.  As of January 20, 2017, I own an insignificant number of Intuit shares, but my holdings may change at any time. Nothing herein constitutes investment advice.  You are responsible for your own due diligence.