Flash Trading the Common Good

The last month has seen the launch of Michael Lewis’s new book Flash Boys on 60 Minutes, detailing how financial markets are rigged against the public by high frequency trading. Enough hornets were stirred in the nest of public opinion that the IPO of high speed trading firm Virtu, Inc., was put on hold.

At Front Seat, we think a lot about the intersection of for-profit business models with social good – good in the sense of the improved functioning of groups. Digital market-making is a frequent topic when we ponder “tech for good” and we have an insight to share that’s very relevant to reforming financial markets.

Principle: when private good conflicts with public good, public good should win.

The increased liquidity, lower trading spreads, and faster trade execution provided by the virtual market-making of high-frequency traders is a private good captured by the participants in a specific trade. On the other hand, price discovery in a market is a public good – a critical mechanism for distributed coordination of group behavior that is used throughout society, not just in stock trades. Regulators are tangled in knots over HFT. On the one hand trade spreads have declined. On the other hand price discovery is inhibited by market segmentation and fracture due to flash trades, front-running, and dark markets developed in response to HFT. What’s a regulator to do?

The answer isn’t found in the technical complexity of our digital markets. Regulators will always be behind the constant innovation of market participants. That’s natural. The issue isn’t lack of understanding, it’s the desire to make decisions based on understanding (which is constantly changing) rather than make decisions based on enduring principles. If we have clarity as a society around a moral hierarchy that the common good, when it sometimes comes into conflict with private good, should win over private good, then the job of the SEC becomes much easier. And we can replace fear of unintended consequences with an understanding of the price of our enduring values.

Lost Fitbit – Found!

Fitbit One activity tracker

Lost Fitbit

Love at First Sync
Last fall I decided to take the plunge and buy a Fitbit One activity tracker. It’s about the size of a USB thumb drive and clips to your pants or shirt and records steps taken, flights of stairs climbed, and how you sleep each night. Unlike reports you see online, I’ve never had a problem with the Fitbit falling off. But sometimes it can be annoying to wear and I’d unclip it and set it down. Of course, you know where the story is heading now. A few months ago I put it down “somewhere” and I lost it. It was gone for a day or two. That vague feeling of “I should have seen it by now” but not yet a full declaration of “It’s lost.” It wasn’t until I got an email saying that the Fitbit battery was low (a great wireless connection between mobile, physical devices, and networked web services, by the way), that I realized that it must be close enough to me in my kitchen to have sync’d with my phone or computer. Close. But where?

The Hunt
I was in my house, but didn’t know if it was on the main floor near the computer desk or kitchen, upstairs in the bedroom or bathroom, in the basement with the laundry. Using my phone I was able to see that it sync’d from all 3 floors of the house. That wasn’t a help. I went to the fitbit.com site to see if they had any help on finding a lost Fitbit. They had some general advice – like check the laundry. But it didn’t do the trick. I thought of downloading a Bluetooth sniffer app from Google Play, but they seemed a little sketchy/geeky, and the one I picked required permissions to access all of my phone’s contact information. Huh??

I returned to the sync strategy and noticed that the number of steps recorded that day had increased. It must have moved! I basically went and did a binary search of the house. I went down to the laundry and moved piles of clothes around for a bit. Sync’d. Nothing. Went upstairs and moved around all of my belongings. Sync’d. Got it. Eventually I found my lost Fitbit it in the dark recesses of a pocket in my computer bag. But there had to be an easier way.

PopsicleAn Easier Way
Back at Front Seat, our crack team went to work and created an easier way. It’s called Fitbit Finder, and it’s the easiest way to find a lost Fitbit. Right now it’s iPhone-only. (No promises, but note that I personally own an Android.) It works whether you are an avid Bluetooth signal geek or think that Bluetooth is what your kids get when they eat a Bomb Pop Popsicle in the summer.

One of the challenges with a tracking app built around a Bluetooth LE device like the Fitbit One (or Fitbit Flex, Fitbit Force, Fitbit Ultra, Fitbit Zip, or whatever new gizmo Fitbit comes up with), is that Bluetooth radio signals are not directional. It’s not a homing beacon. This means that finding a target is based on you walking around and noticing changes in signal strength, rather than just the software thinking harder and figuring it out. Oh, and did I mention that Bluetooth signal strength changes even if you don’t move at all? That crazy, non-intuitive signal behavior is just what opened the gap for a solution based on some world-class design insights, with the algorithms to back them up, that went into creating Fitbit Finder.

Free
Check out the design, give a review, and let us know what you think. It’s free.

Fitbit Finder: A simple app that helps you find lost Fitbits

Personal activity trackers, like those made by Fitbit®, are popular devices for millions of consumers who want to lose weight, get more exercise, or simply improve their health. However, because activity trackers are sleek wearables, they’re also easy to lose, whether in the laundry, in the pocket of a gym bag or briefcase, or under the seat of a car. And once lost, they can be hard to find!

Fitbit-Finder-logo-and-text

For all the Fitbit owners who will lose their activity trackers at some point, Fitbit Finder is a free iPhone 4S+ app for finding activity trackers that is simple and easy to use. Unlike existing hacker-oriented apps–that enumerate the cacophony of Bluetooth Smart (LE) devices in range, that just show an ever-changing, meaningless, and confusing negative RSSI value for each that you have to interpret and remember, and that display lots of mind-numbing gobbledygook, such as long, inscrutable UUID’s, hexadecimal numbers, timestamps to milliseconds, etc.–Fitbit Finder just lists nearby Fitbit activity trackers and guides you to them.

Give it a try, and tell your friends!

 

 

Debate 2.0: Why It Never Happened

Diane Douglas just wrote a new piece on Debate 2.0 that is posted over at techPresident BackChannel.

Mike’s earlier guest post was all about the Debate 2.0 citizen committee’s many ideas for how to change the format and structure of debates to make them more like conversations.

Diane co-led the Debate 2.0 effort with Mike, and her post describes the softer and subtler motivations of candidates and the media and what ultimately kept our event from happening.

Password Savvy: Harder-to-hack passwords you can remember

Password Savvy is a public service to teach people what strong passwords are and how to make ones that are easy to remember.

People frequently use weak passwords–passwords that are short and all lowercase letters with no caps, numbers, or symbols–either because they don’t know how to create strong passwords or because they try to make their passwords easier to remember (or both). Even so, people still frequently forget passwords!

While it’s easy to find techniques for creating good passwords that are easy to remember, you have to follow the methods and construct the passwords yourself. Password Savvy not only shows you how to make strong passwords that you can remember, it makes them for you automatically.

The classic xkcd comic strip on password strength parodies attempts to make strong passwords by tweaking uncommon words (like “troubador”) with random capital letters, letter-number substitutions (like ’4′ for ‘A’), and symbols (like ‘#’). It’s spot on that lone uncommon words with random changes are hard to remember. The comic suggests the approach of creating much stronger and passwords that you can remember by simply appending four random common words (like “correct,” “horse,” “battery,” and “staple”). That can be a lot of typing for a password that you type regularly though.

Password Savvy takes a different approach to creating strong passwords that you can remember. It is an homage to old CompuServe-style passwords that were two random words separated by a random symbol. By combining two random words, these passwords created phrases that were easy to remember. Moreover, using two words increased the length of passwords–a primary driver of password strength (entropy). Separating the two words with a symbol also made these passwords stronger, because using a symbol increased the size of the “alphabet” that a password cracker had to consider–the other driver of password strength. At the same time, it didn’t add complexity for the person, as the symbol always separated the two words.

Password Savvy builds on this strategy, by also capitalizing some letters and substituting numbers for some letters that look similar. However, by using patterns for these “decorations,” you can still remember these passwords, even though they’re strong. They’re also considerably shorter than four random words!

Let us know what you think on the discussions at the bottom of the Password Savvy home page. Thanks!

3 Problems With Civic Hackathons

This weekend in New York, I’ll be a judge at the two-day PDF:Applied civic hackathon (June 9-10), along with Anne-Marie Slaughter, in advance of PDF 2012. The focus is ideas that enhance our electoral process, engage citizens in their communities, or facilitate online activism, and the attendee list looks like it’s shaping up to be an all-star cast.  (Get tickets, or weigh in with ideas.)

As a judge at the first Startup Weekend GOV event 6 weeks ago in Seattle, and now PDF:Applied, I wanted to write about the kind of innovation I’d love to see come out of PDF:Applied and all of the other civic-minded apps contests and hackathons.

Broad Distribution

Poor distribution is a chronic problem for civic apps. To have impact, we need new ways to get the right apps into the hands of the right citizens, at the right time. For example, the awesome transparency efforts of the Sunlight Foundation will only achieve their true potential when that open data is put in the hands of citizens right at the moment when they can use it to make an informed decision — whether it’s voting or making a purchase.

In the 1960s when the U.S. wanted to provide distribution to civic broadcast media, we passed the Public Broadcasting Act of 1967, which leveraged 250 FCC broadcast licenses that had been set aside for educational purposes. This led to the establishment of brands like PBS and NPR that provided editorial voice. Now that’s a lot of distribution!

What’s our 21st century solution for distribution of civic software? Steven VanRoekel, the Federal CIO, knows that it’s not about adding new .gov domains. At Walk Score we invested millions of dollars and years of effort to build a network of more than 15,000 real estate web sites that distribute services that “help apartment renters and homebuyers find neighborhoods where they can drive less and live more” 6 million times a day. But what about the rest of the civic software ecosystem?

I’m hoping that the all-star cast at PDF:Applied will have more innovative ideas here.

App Roaming

It’s not as sexy for politicians as a new iPhone app, but for techies, it doesn’t get any more foundational. Simply put, civic apps don’t roam across political jurisdictions. It’s like cell phones before McCaw Cellular/Cellular One first brought nation-wide roaming to the U.S. in 1990.

The reasons are many — missing standards for schemas, semantics, data dictionaries, naming conventions (think data balkinization); lack of universal directories for programmatic data access, authentication, metering; incomplete, disparate, non-scalable licensing agreements; export and post models rather than interface-level access to transactional data and methods. And plenty more. Data hosting services like Socrata, even with API access, are promising but only scratch the surface.

Michael Porter would call this a fragmented industry, and fragmentation hurts. Not only is it a major pain for end-users, but developers lose the economies of scale that make the commercial internet so powerful. Instead of one app that can take the world by storm, you get a series of one-off IT projects with no chance of going viral, let alone providing financial incentive to make a living doing this stuff. It’s why you see the same apps, time and again, when different cities host app contests.

Code for America is doing some great organizing work with The Brigade, a sort of hand-crafted, barn-raising approach to standing up their local apps in new cities. And My Society in the UK has a similar volunteer-driven approach to porting their apps. But what are the new civic innovations that can take this artisanal approach and industrialize it to gain scale economies across cities, counties, transit areas, states, and countries?

Meaningful Problems

Software is empowering. It’s magic. Even after 20 years of the internet. An unemployed developer can spend a month and build something with the potential to change the world. But developers need context. They need exposure to meaningful problems. Walk Score’s CTO, Matt Lerner, was inspired by ideas from a local sustainability think tank. Then he used his own creativity and teamed up with Jesse Kocher to build a seminal piece of civic software in just two weeks.

A developer without context who is pissed off politically will rely on the only context they know – as an ordinary citizen. In a tech-infused fit of rage, they’ll write one of two iPhone apps: the “who was my representative again?” app, or the “where do I go to vote again?” app. They’ve been written dozens of times, and I’m sorry to say, the true problem here is distribution, not tech. And they’re not the biggest civic opportunities either.

We need to organize the civic hackers, sure. But we also need to organize the domain experts who can shed light on how the world really works. The Presidential Innovation Fellows program, launched last week, sets a new high bar in this direction. Rather than a call for ideas, it lays out 5 specific digital government innovation challenges that the White House wants solved and makes an open call for applicants to rise to the challenge. True, they’re not the 5 largest problems facing government. But they’ve been carefully selected both for their impact on government priorities, their potential for completion within 6 months, and their ability to help show the way forward for digital innovation in government.

It’s time to end the hollow calls to “create innovative apps” using our “high value data sets” and to usher in a new era of curated problem statements. Save the Ideascale pages for sharing and voting ideas for technical solutions, not for crowdsourcing problem statements.

What’s the innovative new platform for locating the domain experts, and then collecting and curating the problem statements they produce?

The Future

There’s no doubt it’s fun to open up a new data source. Whether it’s the handy new work of the Voter Information Project, the mind-bending scale of data.gov‘s 300,000 data sets, or the rigorous independent aggregation efforts of GTFS-Data-Exchange for public transit feeds, opening data brings a strong sense of accomplishment. But the future of civic software rests not purely in the data. Challenges like distribution, roaming, and the knowledge and technical infrastructure to enable scalable, high-impact systems have become more central.

Developments like NYCFacets by Ontodia, the winner of the NYC BigApps 3.0 competition, give a hopeful glimpse of the future. Their service builds on the NYC open data catalog to provide searchable crowdsourced and algorithmic metadata services. This makes undigestable data catalogs like those in many major metro areas, suddenly much more useful for developers. Expanding their federated search model to include multiple governmental jurisdictions is an obvous and welcome next step. By itself, this isn’t a sexy end-user app. But like Socrata, it’s a piece of the infrastructure that should enable many more high-impact apps in the future.

My hope for PDF:Applied and other apps contests and hackathons like it, is to start moving beyond the feel-good apps (that die in short order), and the useful community building (that offers promise, but not significant impact), and into a new era of high-impact civic software infrastructure that enables national distribution of scalable, roaming solutions to important problems.