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How a Grocery Shopping Website Can Save America
 
 Les Pinter

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Foreword

"This is Bill Gates. Do you know who I am?"

It was Thursday, September 23rd, 1980. I was sitting on a frayed sofa in my Fannin Street office in Houston, meeting with Mike Griffin and Bill Radding, my two partners in Small Business Applications, Inc. I was COO, Mike was VP of Technology, and Bill was VP of Marketing. Mike had written a word processor that he called the Magic Wand, largely financed by two investors who were friends of mine. We were eight months into our first year of business, and doing pretty well. In a fledgling microcomputer market hungry for software, word processing was the "killer app" that sold computers, and we had, according to at least one well-known reviewer, the best one in the world. That was what the 23-year-old Bill Gates was calling about.

Bill Gates had left Harvard after one semester to develop (together with Paul Allen) a BASIC interpreter for MITS, manufacturers of the Altair 8800 kit computer. Their BASIC interpreter was a rewrite of software developed by faculty and students at Dartmouth University. Bill managed to wrest ownership of it back from MITS (Bill's father was a lawyer for Digital Equipment) and signed a deal with Intel that paid Microsoft a royalty for every CPU that they shipped. That royalty, an estimated $5 per CPU, was ultimately paid for some 200 million units. Microsoft made its first billion dollars from two months' work by two teenagers. So yes, I had heard of him.

"Yes," I said, "I do. To what do I owe the pleasure?"

"I'll try to say this in as few words as possible, and I need an answer as quickly as possible," he said. "I've made a commitment to deliver a word processor to a Japanese company that wants to compete with companies like Lanier and Vydec. I just found out that I'm not going to make my deadline, and I don't want to lose face. I want to buy your source code. I'll give you a two-year non-compete agreement. What will it cost me?"

Lanier, Vydec and a few others produced dedicated word processors that were selling at that time for around $25,000. Since a "dedicated word processor" was really just a microcomputer, a printer, a desk and a little software, the profit potential was staggering.

I remember being relieved that he didn't want to simply buy the software and compete with us. I didn't understand how Bill Gates thought. I do now. Microsoft plans for the long term. He had no intention of competing with us during the next two years; he intended to compete with us for the next twenty. I covered the receiver with my hand, turned to Mike and Bill, and repeated the question and its generous non-competition offer. "Tell him $35,000," Mike said. I repeated Mike's number to him.

"You're not going to change your mind, are you?" the voice said. Uh-oh, I thought; I probably should have asked for a little more. "No," I assured him. "I'll be there tomorrow," the voice said. And after a few pleasantries, the conversation ended.

A few minutes later, Steve Ballmer, President of Microsoft, called and introduced himself. "I want to make sure that there are no slip-ups at the airport. Mr. Gates looks very young," he told me.

"No problem," I assured him. "I'll pick him up. What does he look like?"

"He looks very young," Ballmer reiterated. "Look for a 15-year-old in a thousand-dollar suit reading the Wall Street Journal."

The next day I drove to Houston's Intercontinental Airport, parked my car, and walked down to the terminal. In those days, you could wait for an arriving flight just outside the jet way. Sure enough, there was a kid who looked about 15 in a really, really nice suit, reading the Wall Street Journal. I introduced myself again, drove him to my house, made him a grilled cheese sandwich, and handed him the source code to our program, printed on 14-7/8" X 11" green bar paper and a couple of huge 8-inch floppies. He pulled out his personal checkbook and wrote me a check for $35,000.

And that's how Microsoft got the source code for the program known today as Microsoft Word. It was my first incursion into the world of microcomputer software.

I had studied to be an economics professor, my goal since an early age. I finished a Master's degree in economics at Rice University, the "Harvard of the South." I felt that finance offered more concrete career opportunities, because frankly, with two degrees in economics, I didn't actually know how to do anything. So I switched colleges and finished the coursework for an MBA and a Ph.D., specializing in Finance.

But the cost of caring for a child paralyzed by a spinal cord tumor forced me to look for a more lucrative profession, and when a professor that I worked with offered to teach me COBOL and help me find a contract programming job, I jumped at the chance. I soon left the academic world and focused on my new profession. I was a contract software developer at an oil company in Houston when the chance to build Small Business Applications came along. I stayed in my new profession for the next 30 years, and loved being on the cutting edge of software technology. I wrote seven books about software development, and published a monthly newsletter for ten years, writing hundreds of articles about programming. But I never forgot my roots.

When the Internet arrived, it changed everything. I learned to build websites that used databases. This was obviously something that could change the world. It inspired me to try to use the Internet to satisfy my desire for social activism. I started looking around for an idea for a website that would do something important. I didn't know if I wanted it to make me a ton of money, or to do a ton of good, or what; I just wanted an idea.

One day I was at the grocery store with my wife. I picked up a jar of Keiller's Dundee Orange Marmalade, which I'm particularly fond of, and started to put it in the shopping cart. "Don't buy that here," she said; "it's a dollar cheaper at Trader Joe's."

"A dollar?" I thought. "How can a store get away with selling something that you can get for a dollar less six blocks away?" Turns out, grocery stores have done a lot of thinking about things like this. Turns out, charging a dollar more than the expected price is only one of perhaps twenty strategies to separate you from more of your money than you thought you were going to spend. The fact that there are thirty-five-thousand prices to remember for each store is what they're counting on.

Stores have a weapon that consumers don't: information asymmetry - the ability to remember everything instantly (not them - their computers), and knowing that you can't. Merchants count on information asymmetry to overcharge. They know that you can't possibly know the prices of all thirty-five thousand items that they and the other grocery stores in town charge. They know them, of course; they use databases to remember things. You use your brain. Databases remember better than your brain does. You need countervailing power. You need a database. And my years as a database developer, plus the power of the Internet, meant that I could offer a solution.

This was an epiphany for me. Those eleven years of studying economics had persuaded me that, based on the theory of perfect competition, prices should be about the same everywhere. The perfectly competitive model is the basis of the free market - its very justification. But if the consumer doesn't have a photographic memory, the free market fails, and the consumer loses. It's the perfect blame-the-victim scenario.

JustPrices.org

Imagine if you could go to a website and tell it what you wanted to buy, and get a shopping list for each store with only the items that are cheaper there than at any other store in your neighborhood. Sounds simple enough, doesn't it? Surely there's an app for that.

Try it. Go to Google, or Yahoo, or Bing, and try to find out the lowest price in your city for a package of 24 newborn Pampers - or anything else. You can't. The stores own the data, and they're not about to let you have it in a way that permits comparison. There are no store-to-store price comparison websites. So I stole their data and built a website to let people shop for groceries. Part of the reason I did it was simply to teach myself the technology. In the process of learning how to do something like this, I would have to master dozens of new tricks and techniques. Doing this website would be good for me. So I began my journey. I never imagined where it would take me.

I named the website JustPrices.org. People assume that it means "only prices". It doesn't. It means fair prices. In my demonstration website, you enter your zip code (although currently, there's only data for one), and you see the stores in your neighborhood. You can exclude any of the stores that you just don't like. You then proceed down the virtual aisles, picking one of this, two of that. When you click the CheckOut icon, you get one shopping list for each store in your area, containing only the items that are cheaper at that store than at any other in your neighborhood. Stores that don't have the lowest price for anything on your list don't even appear. They're invisible. Ultimately, either they lower their prices, or they die.

Loading the data was of course the hard part; I was able to screen-scrape a few stores, and manually entered prices from another. So if there was no website to raid, I had to walk up and down the aisles with a pre-printed list of product names and write their prices down, then go back home and type them in - a ridiculously labor-intensive process. (There's an alternative, but it would take a teeny tiny change to our laws. More about that later.)

One day, when I was in a grocery store gathering prices, an employee came up and asked me what I was doing, and I told him. A minute later, his manager came up, called me a communist, and told me to leave.

The economic model that my website is based on is the basis of capitalism. What could cause a merchant to accuse me of being a communist for trying to precisely follow the capitalist economic model? I soon found out. Based on my test data, which I loaded from some stores in San Mateo, California, I discovered that I could save a typical grocery shopper 24% of their grocery bill - twenty-four out of every hundred dollars, two-hundred and forty out of every thousand dollars. In the case of the average American, it's a mortgage payment a year; in the case of a nation, it's a big step toward surviving this economic crisis and regaining our greatness.

In the case of a grocery store, however, it means losing 24% of their gross, and probably 90% of their profits. That's why he called me a communist: Because to people like him, free market means the freedom to lie to us and cheat us.

This might seem radical to you, but if someone knows that they're charging more than their competitors and they don't tell you, they're lying. My mother taught me when I was six years old that not telling the whole truth is called lying by omission - not "just doing business", not "protecting the bottom line"; it's called lying. It's the first word in the phrase "lying by omission." There's no other word for it.

Life has become extraordinarily complex, and as a Russian "businessman" (read crook) once told me, there are many ways to profit from chaos. When you sign up for a cell phone, you're told that it will probably cost about fifty dollars a month. But your first bill is two hundred. And somewhere around page seventeen of the contract you signed, it explains why, in language that your master's in English doesn't permit you to understand. Business knows that they can mask fraud with complexity, so they exploit it.

Monopoly is against the law in the United States, but virtually every business in America has found a way to get around the laws against monopoly. They do so by hiding their illegal practices behind the shield of proprietary knowledge. They don't have to tell you how they make money, because they're allowed to protect trade secrets; but the way they make money is by lying to you. That's the trade secret they're protecting. And money earned by monopolistic practices is stolen money. More on that later.

Lying, it seems, is the biggest money-maker in our economic system. And if you don't catch the lie, it's your fault. Caveat emptor - buyer beware. Don't beware of lying and cheating and getting caught. Beware of being the fool who was lied to and didn't catch on. We're been taught for years that this is perfectly fine. And if we don't agree with it, we're communists? I don't think so. We'll look further into the basis of our economic system in chapter one, but I'm pretty sure that the economic system that capitalism is based on doesn't demand that we lie. We're better than that.

When I realized what my little website could do to help people who are feeling the pain of the economic crisis, I felt like the Leon Lederman, the Nobel-prize-winning scientist in the television ad, who found proof of the existence of bottom quarks one day in the early hours of the morning, and then realized that for the next few hours, he was the only person in the world who knew of their existence. As an economist, I understood the problem. As an Internet database programmer, I had built a solution. I was giddy with excitement. If I was looking for something important to do, I had found it.

It turned out to be the tip of the iceberg.

The ability to deliver any amount of information to anyone anywhere in the world in any degree of complexity at any time for free implies greater possibilities than saving you a buck on a box of diapers. It promises ways to fix what's wrong with our civilization, which is poised on the brink of self-destruction. And the problems go far, far beyond the cost of food. But there are solutions, and the Internet is the key.

What this book is about

"If you're not outraged," the bumper sticker says, "you're not paying attention." The essence of the cover story of The Economist, a business-oriented British magazine that many consider the best in the world, early in 2011 was this: "The free market has failed us, and monopolists are sucking the life out of us." It's not a secret. Television, magazines, books, the Internet itself - every information source we have tells us so. And we're overwhelmed with other problems that seem to admit of no solution other than violence. We know who the bad guys are, and where they live. What do we do next? The obvious answer - the R word - immediately comes to mind. But it would be a terrible step to take. However, doing nothing is no longer an option.

This book is about how we can use the free market model, with the lies stripped out, to fix what's wrong in just about every aspect of our society. Education, medical care, government ineptitude, corporate greed, overcharging - every single one has a solution involving the basic elements of my little web site: Using only the truth (not someone's version of it, but the actual, verifiable truth) to make decisions, with the option to make decisions based on anything else removed. Politics is the power to lie and to be treated as if you were telling the truth. Politics is what needs to be fixed. But the Internet can help... with a few teeny-tiny changes in our laws.

Our country is falling behind the rest of the world because our children are not learning anything. The Internet offers the perfect framework for both lowering the cost of education and improving its quality. The infinite patience of a web server to repeat and reinforce is just what the doctor ordered, with a few teeny-tiny changes in our laws.

No one can afford medical care any more, and the reason isn't that we don't have enough insurance; the reason is that they charge too much. Not only can the Internet help to solve this problem; it's about the only thing that can - with a few teeny-tiny changes in our laws.

Dialog between Democrats and Republicans is impossible. Democrats must be lying, because their President is a Kenyan Socialist. So Republicans lie to destroy the evil socialist President. Since each side "knows" that the other side is lying, neither side listens. Valid political concerns, like how to rebuild our infrastructure and educate our children, are excluded from the debate. Paying for the things our country needs will require raising taxes on the only people who can afford to pay more, and that, it turns out, is socialism. So in an age where virtually everything needs changing, nothing will change, because 40 Senators (who theoretically could be elected by eleven percent of the population) can bring the Congress to a standstill. Our political system is broken, and only the Internet offers a means to fix it - with a few teeny-tiny changes in our laws.

Blueprint for a peaceful revolution

I hope that this book will contribute to a movement that can spare us the ultimate tragedy. With Internet technology, and with renewed determination to solve our problems justly and rationally, we can fix this broken world. The purpose of this book is to show how to use the Internet to avoid a violent, bloody revolution. If the amazing power of the Internet can save us from a conflagration, that will be its greatest legacy.

In the pages that follow, I'll talk about some of the problems that our country faces, and propose solutions that the Internet could provide, using the same approach that I used in my website. Most of these technical solutions would require what I like to refer to as teeny tiny changes in our legal framework. In fact, the changes to our legal and political framework that would be needed are enormous. We have the technology; what we lack is the political will.


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