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Global Infrastructure Partners Gets Big Returns In Sleepy Sector (bloomberg.com)
171 points by sajid on Feb 16, 2017 | hide | past | web | favorite | 80 comments



For those of you thinking, "I'd like to take a crack at running an airport" or think you'd be able to do better, there's a game that just got through Steam Greenlight and that will be releasing soon which will allow you to do exactly that.

Obviously it's "dumbed down", but it still tries to stay realistic & uses a 'systems-based' logical approach for gameplay; the total operation is basically just the sum of all the different inter-dependent systems and how they relate to eachother, how failures cascade, etc...

http://www.simairport.com/

Disclaimer: I'm involved in the project.


Is it possible to go outside the bounds of what a typical international airport looks like today? E.g. no security screenings so people can pretty much just walk on the plane like it's a train station?

That would mean you don't need space for restaurants, or lots of space for people to pool as they're waiting past security.

It would be very interesting to experiment with changes like that and see how it would look.

Edit: There's now an entire discussion downthread about how airports did and didn't look like before 9/11.

That misses the point of what I'm asking, which I'll rephrase. I'm asking as a simulation game, how customizable is this? E.g. in in SimCity 2000 it initially looks like you can do anything, but really you can't design something that doesn't look & function either like an American suburb or car-centric Los Angeles. There's no way to construct something that looks & functions remotely like the city of Venice in SimCity.

Similarly in this game, can you really design your own airport that works anyway you want from scratch? Or are you just placing all the pieces in your typical international airport in different places on the board, while the NPCs walk in some pre-determined route from parking, to checkin, to security etc.

There's nothing that appears in the very brief trailer that suggests that it isn't highly constrained in the same way SimCity is. But I'd love to know if that's really the case.


That's how the Kansas City Airport (MCI) was designed. Before 9/11, you could park, go through security, and walk onto a plane in 15 minutes. Very minimal space is given to restaurants, shops, or even bathrooms inside gates.

The layour is 3 separate terminals which are each a semicircle ring: http://www.metafares.com/images/airports/MCI_Airport%20Layou...

It is great to fly in and out of. It feel optimized for people to get on and off planes quickly, and get out of the airport fast.

It is awful to have layovers in or have to change terminals in for a flight: you have to leave security for everything for one. And the waiting spaces are cramped and unfriendly.

After 9/11 it's still extremely fast to get in and out of, but the long waiting before flights is unpleasant. - Personally I would love to see airport design focus on passengers and less on retail space. All the proposals to replace KC Airport brag about all the shopping and restaurants... when all most people care about is spending as little time there as possible.


Security checkpoints were added to airports in the 70s. Airlines actually fought their introduction tooth and nail - it took a huge wave of airliner hijackings in the late 60s and early 70s to sway public opinion and bring the FAA around to the necessity of security screening. The book "The Skies Belong to Us"[1] gives a great account of the events of that era.

The MCI airport had the misfortune to be designed and built almost right before this all happened. TWA designed the terminal according to their vision of the future of air travel - drive right up to the gate, walk a couple steps onto the plane, and away you go. The new security requirement invalidated this vision almost right away, and made the design so unworkable that TWA moved their hub to St. Louis only 10 years after opening their brand new "airport of the future" in Kansas City.

[1] https://en.wikipedia.org/wiki/The_Skies_Belong_to_Us [2] https://en.wikipedia.org/wiki/Kansas_City_International_Airp...


Some thoughts I just had reading these comments: We all accept that boarding a train is a much more pleasant experience than boarding a plane, largely because you don't have this need for massive security waits, arriving three hours early, etc. But... why don't we have those things on trains? I can think of a couple reasons: 1) trains tend to be mostly used for domestic travel (in North America), so you don't have border checks slowing things down, and 2) trains can only go where the tracks go, so although you could certainly carry out an attack on a train, it would be much more difficult to use a train as a weapon against something else, or to try to stage a getaway of some kind by taking a train off course.

Perhaps there's only so much that can be done about #1, but regarding #2, I wonder if we could rethink airport security once we have completely autonomous planes. If the plane is controlled completely by autopilot and/or remotely, it's basically on tracks, so I can't see any logical argument why we couldn't then take the same approach to domestic flights as to domestic trains. (You could argue that that's already the case with locked cockpit doors, but there's an argument on both sides there.)


There are other differences, e.g. one might hope to escape off of a moving train or arrest its progress, both of which are nigh-impossible on a flying object, autonomous or not.


At release, a security area will be required. How secure it is exactly, is definitely up to you. That said, if your security is overly deficient then you may be fined by the regulators/inspectors, not to mention that having an actual incident (not yet implemented) would cause your airport to be viewed less favorably by the airlines & their passengers.

We have definitely had discussions on this exact topic -- potentially allowing absolutely zero security -- and it's something we may revisit in the future. It's a bit of a fine line when it comes to both not being too outrageous on the political-correctness scale, as well as being able to model/simulate the risks in a not-too-overly-rare and still fun way.

Honestly though, these are exactly the kinds of discussions/concepts that we really want the game to allow for! :-)


> That said, if your security is overly deficient then you may be fined by the regulators/inspectors, not to mention that having an actual incident (not yet implemented) would cause your airport to be viewed less favorably by the airlines & their passengers.

The big problem with modeling incidents is going to be that it has very little to do with airport security at all, which is almost all pure theater. For example screening for knives is useless because anyone can make a shiv in an airport bathroom the same way prisoners do. Even explosives are not particularly any more dangerous on a plane than they would be in a subway car or anything like that (in the sense that they can kill 100% of passengers in both cases). Checking for ID only causes the terrorists to choose a person with no priors as the one who carries out the attack.

And attacks are adaptive. Banning twelve ounce bottles when you can have both ten three ounce bottles and an arbitrarily large empty tub is classic theater.

The main reason there haven't been any repeats of 9/11 is that as of 9/11 all passengers are on notice that resisting hijackers is mandatory, and even a terrorist with a knife can't fend off 100 passengers at once.

So much of the security theater also has financial motives. Checking ID prevents the resale of non-refundable tickets. Prohibiting 12 ounce bottles encourages people to buy one inside the airport for five times the grocery store price. Makers of expensive scanning equipment are in favor of mandates or subsidies for expensive scanning equipment.

You could add a lobbying component to the game. If you're an airport you want to defend the profit-generating ID checks against criticism from privacy and immigrant advocates, but oppose mandates for security scanners you have to pay for when their manufacturers lobby for them.

> We have definitely had discussions on this exact topic -- potentially allowing absolutely zero security -- and it's something we may revisit in the future.

One answer might be to let the user choose what country to set up shop in, and then some hypothetical countries might have less security bureaucracy but other disadvantages (like not being able to have direct flights to high bureaucracy countries).


> For example screening for knives is useless because anyone can make a shiv in an airport bathroom the same way prisoners do.

I'd never really thought about shivs before, but I've always felt that the available materials in duty free (after security) must be more than sufficient to blow a hole in the side of a plane (lots of aerosols etc)?

I guess the additional danger comes with a plane lands somewhere and a train has far less potential to cause massive collateral damage. However looking at the tube bombings in London it is clearly possible to make a decent fist of terror using trains.

>The main reason there haven't been any repeats of 9/11 is that as of 9/11 all passengers are on notice that resisting hijackers is mandatory, and even a terrorist with a knife can't fend off 100 passengers at once.

I disagree. The changes to cockpit doors are far far more relevant, it's simply not practical to take control of a plane through threat of violence (plus all pilots are now aware they won't necessarily be hostages - they'll be weapons). Yes a bladed weapon will only let you harm a small number of passengers before being overwhelmed - but a couple of guns probably achieves the same. The clear difference being the chance of depressurising the cabin.


> I'd never really thought about shivs before, but I've always felt that the available materials in duty free (after security) must be more than sufficient to blow a hole in the side of a plane (lots of aerosols etc)?

The reason explosives are only a minor threat to planes isn't that it would be hard to get one through, it's that the threat it poses isn't specific to planes.

> I guess the additional danger comes with a plane lands somewhere and a train has far less potential to cause massive collateral damage.

That isn't much of an attack vector when you can't choose the target. Nearly all of "somewhere" is bodies of water and open space.

> However looking at the tube bombings in London it is clearly possible to make a decent fist of terror using trains.

It's not about trains either. Someone could drive a car bomb into a nightclub.

A lot of the smaller attacks that have actually happened would have been dramatically worse if we hadn't lucked into the fact that the terrorists were incompetent. Although there may be a shared causation in that correlation.

> The changes to cockpit doors are far far more relevant, it's simply not practical to take control of a plane through threat of violence

Those are also a help, though somewhat of a risk too if a terrorist actually managed to get into the cockpit.

> Yes a bladed weapon will only let you harm a small number of passengers before being overwhelmed - but a couple of guns probably achieves the same. The clear difference being the chance of depressurising the cabin.

That changes nothing. Given the choice between certain death or likely death while saving a thousand people on the ground, the decision remains clear.


What if security was done in the parking lot? You'd go through security then board a train that would drop you off inside the airport.

I remember the days as a kid when you could just walk out to the tarmac, climb a stairs and board a plane. Life was so much simpler, then someone hijacked a plane to Cuba and it all suddenly changed virtually overnight.


>That would mean you don't need space for restaurants

Restaurants existed in airports long before 9/11. People arrive early because missing flights costs you hundreds of dollars. Security adds maybe 20 mins to the process.


Except where it adds a lot more. It's about 45 minutes at our airport, as we've found out a few times.

Plus, they ask you to be even earlier than that just in case it might take longer, so you're stuck there for 45+ minutes after security.


It's also for the same reason movies start 12 minutes after the announced time: Some people are always a bit late.


Ouch that is awful. Sounds like ORD, that's the only airport I've been to that consistently sucked in TSA lines.


They've gotten a lot better since December.


That just means that people should be able to turn up and get on any flight without pre-booking.

I'm going to guess that pre-booking is some sort of way to maximize revenue or minimize wasted empty seats.


This was how the original Eastern Air shuttle service worked. They ran flights between Washington, DC, Boston, and New York, scheduled to depart every hour on the hour. No reservations, just show up and walk onto the plane and you could pay the fare (roughly $12 in early-1960s dollars) on board. And if the hourly plane filled up and more people were still waiting to board, they'd roll out another plane.

The hourly flights still exist (now run by American, which inherited the service from US Airways in the merger, which bought the service from Donald Trump's creditors after he defaulted on the loans he used to buy the service from Eastern when Eastern got into financial trouble), though of course now you have to buy a ticket before you go through security.


Definitely minimizing wasted empty seats. Additionally, by encouraging people to book far enough ahead, they can change equipment to match the demand or add another flight to that day.

It also allows them to price discriminate against business travelers who tend to have deeper pockets (flights expensed to their company) and tend to make lots of last minute travel changes (need another day to close a deal, etc). Losing the ability to ramp up the price on these types of travelers would mean higher fares for everyone and likely fewer ticket sales.


There's already a frustrating degree of uncertainty as to when (if ever) showing up at the airport will actually yield a seat towards your destination. Adding the uncertainty of other people's demand and even more highly variable waits in line sounds like hell.

I'd much rather cope with the Christmas rush by booking months early than by waiting at the airport for days.


I can at least imagine a system where (a) planes aren't assigned to destinations until the last minute and (b) more planes are made available at the obvious times of the year (holidays and so on). That might yield a very flexible turn-up-and-go system.

However I've never run an airport so I can also imagine that there are important factors that I don't even know about that make this unworkable.


Also, layovers.


Looks pretty cool! The art and UI seem quite similar in style to Prison Architect. Is Sim Airport related in any way to PI, or is it just an inspiration?


We're not affiliated with the makers of PA, but it's definitely been a huge inspiration for us -- IMO it's largely responsible for modernizing & reviving the 'tycoon genre' in many ways.


While I love those kind of games, there is always a serious limitations in it : a real human system has a pyramid of humans in charge. They are all able to make independent decisions on a local level, or sometime step in to an upper or lower level, avoiding failures cascade on a daily basis.

An omnipotent system manager cannot exist on complex systems, that's why we delegate.


This game looks cool, but I'm somewhat worried that you're going to end up getting sued by EA/Maxis since the game name/logo is so similar to their Sim* offerings. I hope you aren't, but I'd be careful...

If you're affiliated with, partners with or have licensed the name from EA/Maxis, then never mind!


First i've seen this, and I'm already excited for it. Love Sim games, love Airports.


I love this!


The real story here is capital in the form of private equity. Engineering is a commodity, it can be bought, there are tons of great engineers in the world. Getting access to capital to take these big bets requires some serious clout, influence, and connections that the average joe doesn't have. Check out the background of ANY private equity firm, it's full of very wealthy people from Ivy League schools (Skull & Bones anyone?).

These guys create a firm, pitch their friends to get a seed fund off the ground and then start fundraising from larger institutions. They then hire some real talent and they are off to the races. Not everyone makes it, but the ones who do are featured as geniuses on Bloomberg and the Wall Street Journal. Survivorship bias for sure. Most Hedge Funds and Private Equity firms don't do well, similar to any start-up.


What are the returns of the competitors' infrastructure funds compared to GIP?

If everyone (including GIP) has modest (much less than the historic 24% of GIP) returns, then we might think the opportunity was simply about untapped inefficiency, and that any team with the massive capital + reasonable human talent would have had the same results as GIP in the past decade.

If GIP continues to outperform vs the competition even as the space gets crowded, we could consider their human talent to be a differentiator.

If all the infrastructure funds are doing great, even in a world of high competition, then again we can consider the access to capital and access to the counterparty stakeholders to make the deal happen to be the differentiator, not the operational or engineering talent of any firm.

Personally I'm willing to believe that operational experience at massive scale is much rarer than simply "great engineering talent" at the individual contributor level, but am open to be proven wrong.


> Outgoing baggage jumped out as a major trouble spot; Stanley went to investigate,

Does it really take an "engineer" to find a trouble-spot and fix it ? Why do you need a billion-dollar fund to grab engineering talent to do what the highly-paid leaders of, say, airports, are already supposed to be doing ? If they can't figure it out, isn't there a whole industry of consultancy firms that send "analysts" through your organization to do the same thing?

If this sector is so profitable, will it cause the same crisis that privatization of hospitals did to healthcare ? Say "Global Infrastructure Partners" expands and "buys" JFK, ATL, LAX, just like private healthcare bought all the hospitals. Now they can start jacking up their landing fees (each year) until air travel becomes unaffordable. What's to stop them from turning this into the ultimate regulatory capture ?


> If this sector is so profitable, will it cause the same crisis that privatization of hospitals did to healthcare ? Say "Global Infrastructure Partners" expands and "buys" JFK, ATL, LAX, just like private healthcare bought all the hospitals. Now they can start jacking up their landing fees (each year) until air travel becomes unaffordable. What's to stop them from turning this into the ultimate regulatory capture ?

Ironically, GIP owes its airport holdings to the UK government coming to that conclusion about the market power of the airport operator formerly known as the BAA, and forcing it to sell some of its airports. Its growth potential has depended on the success of lobbying efforts to allow it to expand LCY (was going through at the time they sold it) and ideally a second runway at Gatwick (still hoping for).

The politics might have more effect on its bottom line than buying in better logistics systems but it's probably less sexy an anecdote for an article. I'd definitely think they were better off hiring one really smart process guy as COO than contracting top tier consulting firms to throw dozens of graduates at the airport's operations issues though.


The "london additional runway" lobbying is extraordinary. I've seen huge billboard adverts about it up in Scotland, 400 miles away. There is clearly a lot riding on whether it ends up at Heathrow, Gatwick (less likely), Boris Island (even less likely now), or maybe doesn't get built at all due to environmental concerns.


Yes, that.

Actually, I find it obscene that governments that can borrow at basically 2% per annum or less are not engaging in these projects, and instead leave 24% returns on the table for the private sector.

Call me a Keynesian all you want, but yes - the austerity stance in the last decade (after the GFC) (particularly in Europe, due to Germany, but also in the US) was a huge mistake.


Because governments aren't set up to do things efficiently and can never capture the 24% return. Going back to the 19th US where government ran and backed enterprises were outperformed over and over sector by sector by private enterprise. Not losing your job for bad investments is a bad incentive.


If macroeconomics was football, then austerity is like focusing the game on keeping the ball on the opponents side of the pitch but ignoring making goals altogether.


All good points. However, not every airport had the potential to provide the return on investment they were looking for to get them into multiple rounds of funding with this business model.

If you read the bios in the article, one of the investment banker guys got his start in Mergers and Acquisitions in the 80s, so it's the kind of approach they would take since it's what they knew and also what the people fronting them the money would be able to relate to. If he had gotten a start in consulting work instead, it would have been a different approach and a different story.


> Now they can start jacking up their landing fees (each year) until air travel becomes unaffordable

Most popular destinations already have a choice of alternative options (EWR, LGA, BUR, SNA, ONT) and the ones that don't are big only because a major carrier decided to build a hub there (ATL, SLC). Carriers will not jump in with huge commitments until some long-term contracts are in place.

In Southern California, for instance, Santa Monica charges a landing fee, and nearby Van Nuys is suddenly the busiest general aviation airport in the nation.


> Most of his recruits speak a language familiar to engineers but foreign to anybody else: Six Sigma, Kaizen, Lean. Woodburn is prone to fall into such jargon. “Anyone who’s been to an airport can say that it’s operating at maybe Two Sigma,” he marvels. “That’s making a mistake 30 percent of the time.”

Two sigma corresponds with a 95% confidence interval, while one sigma is a 68% confidence interval which he is presumably referring to.

I don't want to detract too much from the work that these people did, which I think is actually very cool, but it worries me that their head of engineering can't discuss really simple statistics correctly...

Edit: words mean nothing, see replies


For whatever reason, the "Six Sigma" techniques/ideas aren't using "Two Sigma" to refer to ±2σ, instead they're referring to the width of the band around the mean.

https://en.wikipedia.org/wiki/Six_Sigma#Sigma_levels


> For whatever reason, ... they're referring to the width of the band around the mean.

That's exactly how I learnt it in secondary school, the standard deviation, what's the problem?


Yeah, and it's apparently also shifted down by 1.5 sigma.


That's apparently based on Motorola's data regarding process drift.

> Motorola has determined, through years of process and data collection, that processes vary and drift over time – what they call the Long-Term Dynamic Mean Variation. This variation typically falls between 1.4 and 1.6.

https://www.isixsigma.com/new-to-six-sigma/dmaic/15-sigma-pr...


2 sigma is a defective rate of 31%. [0]

[0] https://en.wikipedia.org/wiki/Six_Sigma#Sigma_levels


I'd also like to point out (aside from the already clarified term 2 Sigma), mistakes like that are more likely the fault of the journalist and not the engineer.


Also, doesn't the +/- sigma rule only apply to a normal (gaussian) distributions?


Yes, that rule:

   31%  outside +/- 1 standard deviation  ("2 sigma"), 
   5%   outside +/- 2 standard deviations ("4 sigma"),
   0.3% outside +/- 3 standard deviations ("6 sigma"), 
etc. However, the more general Chebyshev inequality states that for any distribution, you have at most 1/k^2 outside +/- k standard deviations, so (at most):

   100% outside +/- 1 standard deviation, 
    25% outside +/- 2 standard deviations,
     9% outside +/- 3 standard deviations, 
etc.

https://en.wikipedia.org/wiki/Chebyshev%27s_inequality


If you're interested in infrastructure or business backend improvements like the ones described in the article but:

- are at a smaller and more local scale that don't attract attention from the likes of GIP - the process improvements are around information flow between applications instead of physical flow

I am really interested in talking to you whatever the domain may be.

An example I've learned of recently:

Garbage truck routing in NYC is grossly inefficient. The routing used to be centralized under a single contractor with rumored tentacles into organized crime. Due to changes in contracting regulations, NYC garbage collection is now includes a mix of independent contractors. This results in multiple trucks visiting the same street on the same night.

This is inefficient in the following ways: - cost of garbage transportation - noise pollution - localized pollution from truck emissions - CO2 emissions from inefficient route planning

I'm fairly certain efficient routing for this is a solved computational / information systems problem and the source of the issue is a lack of coordination. I'm trying to dig in with the Department of Sanitation to see who the different players are.


Sure. I'm currently interested in discovering inefficiencies in airline revenue management. My hypothesis is that a non-trivial amount of the spend that airlines make is inefficient and based on factors that aren't as relevant today as they were 30 years ago during the proliferation of global distribution and revenue management systems.

i want to see an airline that is run by software engineers with aviation experience that rolls its own GDS and revenue management system; one that can scale well beyond its years and can operate on clusters of cheap compute.

my hypothesis is that current airline operations are band-aids on top of protocols and runbooks that were developed around the initiation of the jet age, and fear and fearfully low margins has held back massive amounts of innovation that keep prices higher than they should be.

(and yes, i understand that aircraft are expensive to buy and maintain)


Ha, I used to work for a large, Asian airline. They had that cool system used to calculate the pricing of ticket in real-time.

No one really knew how it worked, it was built 20 years ago, and no one was allowed near it for fear of breaking it. Therefore, instead of tuning the algorithm, the analyst added their own (mostly arbitrary) rules on top of the system's calculation.

It reminded me of that conversation in Asimov's Foundation, where some guy goes to some planet and is afraid to see everyone using technology, having lost all the knowledge of how it actually works and how to maintain it, therefore seeing it as some kind of magic.

This was in 2015.


Right. Airlines are extremely ripe for disruption. Much of their operations are outdated and inefficient for today's consumer. When was the last time you saw an airline run a massive social media campaign?

To be fair, airlines wouldn't exist without governmental intervention (aircraft and airport usage is expensive, but the market wants rock-bottom pricing), so this makes innovation tricky. Which is exactly why I'm so interested in this space.


Efficient garbage truck routing can be done via sensors in garbage cans , that detect full/empty levels.

See http://www.enevo.com


Sure, it let's you know when the can needs emptying, but it doesn't solve the routing problem.


Great story, but how do you get into this kind of "deal"?

I believe that most engineer would be able to come up with a reasonable way to manage an airport, maybe with more dumps that our heroes, but still I believe that most of us will be able to dig themselves out of the problem.

But then, how do you get into it?

You need tons of money and wealthy/powerful people that trust you, how do you get that trust?


When we fix software, we know that full rewrites are bad ideas, and that the way to success is to make easy changes until finally you end up with a better product. This is true because failing, for any amount of time, is a terrible outcome. However, when it comes to moving upward for bigger opportunities, the opposite is true: Little is gained by very slow grinding.

Wondering how to get all wealthy people to trust you is the wrong question: What you want is ONE wealthy person to trust you. 300 failed pitches don't matter. You just want to succeed once.

Therefore, my strategy is to aim as high as you can, be ok with a bunch of failures, and once you have success, consider whether you can use it to aim even higher, now that you have established a higher baseline. It's better to have one resounding success an 50 failures at convincing people that never failing, but aiming way too low.


That is a great point!

I do agree that shooting for the stars is the way to go, but I still find it difficult.


...become "the former head of General Electric’s infrastructure business and Jack Welch protégé" probably


> You need tons of money and wealthy/powerful people that trust you, how do you get that trust?

How does anyone do anything big? Get lucky with parents/work hard and network with the right people/start ambitious projects/some or all of the above.


These are engineers who have reached very senior levels in large industrials, have prob 20-30 years experience, are responsible for large operations or assets, and are known for significant achievements in their domains.


Success breeds success

Wanting the skip all of that and just get a cool billion dollars because you have a big idea is naive, to say the least.


If you're not born into it your best bet is to go to an ivy league, preferably Harvard or Yale, study business or law, and make the right friends. Being born into it is easier, though.


> Being born into it is easier, though.

because then you get to keep your youth while you have the respect as well.


In 2009 and 2010, I worked for a similar private equity fund that also raised a billion dollars to invest into infrastructure and real assets.

A few random things I learned:

* While a billion dollars may seem like a lot of money, it's actually fairly small in the infrastructure world where you are building massive projects like airports and power plants.

* For that reason, our fund focused on higher-risk, smaller projects in the developing world, which made it a tough sell to the cautious pension and endowment type investors who invest in infra.

* The secret to doing well is deal access. We were always envious of GIP because they had an incredible network.


Guess it's always about dealflow, be it PE or VC.


My biggest takeaway from this is - people skilled in industrial processes aren't already in very high positions in Airports!?


I think the bigger takeaway is that at a lot of big companies, the processes and management is horrible but it still makes a ton of money. These guys buy things that aren't optimized and squeeze all that money out. I think the most interesting thing would be to look back at one of these investments 5 or 10 years after they exit and watch the improvements slip away and the companies end up in trouble.

I think this is why people are dislike big government (me included, but necessary for some critical things) because there is no incentive to optimize. Quite actually, that is punished. Don't spend all your money one year and your budget gets slashed even though you may need that in a few years to upgrade equipment. The more layers of organization you add, the more managers you have who see their job as self-preservation. It looks like these guys run very very flat.


Well, less government leads to privatization of crucial infrastructure (airports, hospitals, banks, etc). Which still siphon government money, only now that money doesn't go to public good or government employees, but to private coffers, with no need to compete (regardless of "free market" hurr durr) since it's infrastructure and can not be allowed to fail.

That government can be inefficient is an efficiency problem.

That private actors basically "steal" taxpayer money is a lobby/regulatory problem.

Government does have some blame for the former, but you can't simultaneously regulate wall street (for example) and still blame the government for being in bed with them.


Quote: Anyone who’s been to an airport can say that it’s operating at maybe Two Sigma,” he marvels. “That’s making a mistake 30 percent of the time.”

Is that really what two sigma performance means? That sounds more like one sigma worth of failures.


The sigma level in industry traditionally refers to the 'bandwidth', not the distance from the mean, so what you are thinking as 1 sigma is actually 2 sigma.

https://en.wikipedia.org/wiki/Six_Sigma


Thanks!


Having been to a few airports, I can say with a fair degree of certainty that they are not making a mistake 30% of the time.

Airplanes don't run out of fuel mid-flight, or crash 30% of the time, my luggage doesn't fail to arrive to its destination 30% of the time, and I've yet to show up to a flight, only to discover that my seat in just a hole in the floor.

Now, the flight attendants misunderstand my choice of mid-flight snack ~30% of the time, but that doesn't really matter, because it's always ~12 grams of peanut-related animal feed, anyways.


A plane not pulling away from the gate on time is likely considered a mistake. Bags not arriving to the carousel in 15 minutes is likely considered a mistake.

It's not always binary like "Did the bag get lost or not?"


> What Happens When Two Bankers and an Engineer Get a Billion Dollars?

To quote Willy Wonka, "They lived happily ever after."


Pfff. I'm working on my second billion!

I gave up on my first...


Surprisingly enjoyable article. Would love to have a crack at designing ways to have a better airport experience - can't say Gatwick feels like a great product yet


Now I want to know what that 1930's airfield optimization book is....

I bet graycat knows, care to chime in? Anyone else have a guess?


One of the things I think this story highlights is just how much gain there can be in looking at unsexy things that nobody cares about but everybody needs. I know quite a few startups that are really good at doing that -- no noise, but they're quietly humming away at essential problems that sneak under the surface.


I think the best startups look to solve a non-it problem, and I think there are still a lot of them out there.


Looks like Theme Park from Bullfrog!


Crony capitalism at its finest.




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