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The Man Behind The Hong Kong Miracle



Three cheers for Hong Kong, that tiny chunk of Southeast Asian rock. For the twentieth consecutive year, theIndex of Economic Freedom—compiled by The Wall Street Journal and the Heritage Foundation—ranks Hong Kong (HK) as the freest economy in the world.

Though part of mainland China since the British ceded it in 1997, HK is governed locally on a daily basis. So far, the Chinese have remained reasonably faithful to their promise to leave the HK economy alone. What makes it so free is music to the ears of everyone who loves liberty:  Relatively little corruption. An efficient and independent judiciary. Respect for the rule of law and property rights. An uncomplicated tax system with low rates on both individuals and business and an overall tax burden that’s a mere 14 percent of GDP (half the U.S. rate). No taxes on capital gains or interest income or even on earnings from outside of HK. No sales tax or VAT either. A very light regulatory touch. No government budget deficit and almost nonexistent public debt. Oh, and don’t forget its average tariff rate of near zero. That’s right—zero!

This latest ranking in the WSJ/Heritage report confirms what Canada’s Fraser Institute found in its latestEconomic Freedom of the World Index, which also ranked HK as the world’s freest. The World Bank rates the “ease of doing business” in HK as just about the best on the planet.

To say that an economy is “the freest” is to say that it’s “the most capitalist.” Capitalism is what happens when you leave peaceful people alone. It doesn’t require some elaborate and artificial, Rube Goldberg contrivance cooked up by tenured central planners in their insular ivory towers. But if we are to believe the critics of capitalism, HK must also be a veritable Hell’s Kitchen of greed, poverty, exploitation and despair.

Not so. Not even close.

Maybe this is why socialists don’t like to talk about Hong Kong: It’s not only the freest economy, it’s also one of the richest. Its per capita income, at 264 percent of the world’s average, has more than doubled in the past 15 years. People don’t flee from HK; they flock to it. At the close of World War II, the population numbered 750,000. Today it’s nearly ten times that, at 7.1 million.

Positive Non-Interventionism

The news that the HK economy is once again rated the world’s freest is an occasion to celebrate the one man most responsible for this perennial achievement. The name of Sir John James Cowperthwaite (1915–2006) should forever occupy top shelf in the pantheon of great libertarians. Some of us just write about libertarian ideas. This guy actually made them public policy for millions of citizens.

The late Milton Friedman explained in a 1997 tribute to Cowperthwaite how remarkable his economic legacy is: “Compare Britain—the birthplace of the Industrial Revolution, the nineteenth-century economic superpower on whose empire the sun never set—with Hong Kong, a spit of land, overcrowded, with no resources except for a great harbor. Yet within four decades the residents of this spit of overcrowded land had achieved a level of income one-third higher than that enjoyed by the residents of its former mother country.”

A Scot by birth, Cowperthwaite attended Merchiston Castle School in Edinburgh and then studied classics atSt Andrews University and at Christ’s College at Cambridge. He served in the British Colonial Administrative Service in HK during the early 1940s. After the war he was asked to come up with plans for the government to boost economic growth. To his credit, he had his eyes open and noticed that the economy was already recovering quite nicely without government direction. So while the mother country lurched in a socialist direction at home under Clement Attlee, Cowperthwaite became an advocate of what he called “positive non-interventionism” in HK. Later as the colony’s Financial Secretary from 1961 to 1971, he personally administered it.

“Over a wide field of our economy it is still the better course to rely on the nineteenth century’s ‘hidden hand’ than to thrust clumsy bureaucratic fingers into its sensitive mechanism,” Cowperthwaite declared in 1962. “In particular, we cannot afford to damage its mainspring, freedom of competitive enterprise.” He didn’t like protectionism or subsidies even for new, so-called “infant” industries: “An infant industry, if coddled, tends to remain an infant industry and never grows up or expands.” He believed firmly that “in the long run, the aggregate of the decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is likely to do less harm than the centralized decisions of a Government; and certainly the harm is likely to be counteracted faster.”

Ever since the days of John Maynard Keynes, economics has been cursed by the notion that human action should be distilled into numbers, which then become a “pretense to knowledge” for central planner types. In many collegiate economics courses, it’s hard to tell where the math leaves off and the actual economics begins. To Cowperthwaite, the planner’s quest for statistics was anathema. So he refused to compile them. When Friedman asked him in 1963 about the “paucity of statistics,” Cowperthwaite answered, “If I let them compute those statistics, they’ll want to use them for planning.”

If that sounds quaintly backward or archaic, let me remind you that the biggest economic flops of the past century were both centrally planned and infatuated with numbers. Whole ministries were devoted to their compilation because even lousy numbers gave the planners the illusion of control. But not in Hong Kong!

Statistics, no matter how accurate or voluminous, are no substitute for sound principles. Powered by an abundance of the latter under Cowperthwaite, the HK economy soared during his tenure.  Writing in the November 2008 issue of The Freeman, Andrew P. Morriss noted that in his decade as financial secretary, “real wages rose by 50 percent and the portion of the population in acute poverty fell from 50 to 15 percent.” It’s hard to argue with success. After Cowperthwaite’s retirement in 1971, less principled successors dabbled in social welfare spending but they financed it through land sales, not increased taxation. Tax rates to this day are right where the old man left them.

Post Script on the Mont Pelerin Society

In September 2014, the Mont Pelerin Society—the prestigious international organization of economists, intellectuals, and businesspeople committed to a free society—will hold its next general meeting in Hong Kong. Sir John was for many years a member of the Society. As one myself, I hope to raise a glass there in his honor. We must never forget the man who proved in Hong Kong that free enterprise is good theory for many reasons, not the least of which is that, in contrast to socialism, it actually works in practice.

written by Lawrence Reed of the Foundation of Economic Education. See more.


Lessons Learnt from The Lean Startup



The Lean Startup book authored by Eric Ries has been sitting on my shelf for quite sometime now, so since I am currently contributing to the making of a startup I figured I’ll take a look into it.

The book is divided into 3 parts, after reading the first two I had my mind blown with the pragmatic and scientific approach to building startups that is described in the book.

In this post, I would like to share some important insights that I gained regarding building highly innovative businesses.

Validating Value Proposition And Growth Strategy Is The Priority

Usually, a highly innovative startup company is working in its most early stage at building a product or a service that will create a new market.

Consumers or businesses have not been yet exposed to something similar to what is going to be built by the startup. Therefore the absolute priority for startups in early stage is to validated their value proposition i.e. to get real data about eventual customers interest regarding their product/service.

The other priority is to validate that the growth strategy that is going to be executed is, in fact, effective.

The growth strategy of a startup is its plan to acquire more and more customers in the long term and in a sustainable fashion.

Three kinds of growth strategies are described in the book:

  • paid growth in which you rely on the fact that the customers are going to be charged for the product or service, the cash earned from early users is reinvested in acquiring new users via advertising for example
  • viral growth in which you rely on the fact that customers are going to bring customers as a side effect of using the product/service
  • sticky growth in which you rely on the fact that the customers are going to use the service in some regular fashion, paying for the service each time (via subscription for example).

These growth strategies are sustainable in the sense that they do not require continuous large capital investments or publicity stunts.

It is important to know as soon as possible which strategy or combination of strategies is the most effective at driving growth.

Applying The Scientific Method

The scientific method is a set of techniques that helps us figure out correct stuff. After making some observations regarding a phenomenon, you formulate a hypothesis about that phenomenon.

The hypothesis is an assumption that needs to be proven correct or incorrect. You then design experimentations that are going to challenge the assumption.

The results of the experimentations makes the correctness or incorrectness of the hypothesisclear allowing us to make judgments about its validity.

In the lean startup methodology, your job as an entrepreneur is to formulate two hypothesis:

  • hypothesis of value (assumptions about your value proposition)
  • hypothesis of growth (assumptions about the effectiveness of the growth strategy)

These hypothesis are then validated/invalidated through experimentation. Following the precepts of lean manufacturing, the lean startup methodology prescribes to make experimentations while minimizing/eliminating waste.

In other words, you have to burn minimum cash, effort and time when running experiments.

An experimentation in the lean startup sense is usually an actual product/service and helps startups in early stage learn invaluable things about their eventual future market.

Sometimes startups learn that nobody wants their product/service, imagine spending 8 months worth of engineering, design and promotion work (not to mention cash) in a product/service only to discover that it does not provide value to anyone.

Minimum Viable Products And Feedback

As we pointed out earlier, an experimentation can be an actual product or service and is called the minimum viable product(MVP).

The MVP is built to contain just enough features to validate the value and growth hypotheses, effectively requiring minimum time, effort and cash.

By getting the MVP launched and in front of real users, entrepreneurs can get concrete feedback from them either directly by asking them (in focus groups for example) or via usage analytics.

Analytics scales better then directly talking to customers but the latter is nonetheless used to cross validate results from the former.

It is crucial to focus on metrics that creates fine grained visibility about the performance of the business when building(or using) a usage analytics system. These metrics are called actionable metrics because they can link causes and effects clearly allowing entrepreneurs to understand the consequences of ideally each action executed. Cohort analysis is an example of a analytics strategy that focuses on actionable metrics.

The bad kind of metrics are called vanity metrics, these tend to hide how the business is performing, gross numbers like total users count are an example of vanity metrics.

The author cites several examples of different startups that managed to validate or debunk their early assumption by building stripped down and non scalable MVPs and even sometimes by not building software at all.

You would be surprised to hear for example how the Dropbox folks in their early stage managed to created a ~4 minute video demonstrating their product while it was still in development. The video allowed them to get more people signed up in their beta waiting list and raise capital more easily.

Closing Thoughts

In the first two parts of the book, the author talks also about how employees inside big companies working on highly innovative products and services can benefit greatly from the lean startup approach, although very interesting this is not very useful for me right now.

The third part, talks about the challenges that arises when the startup gets big and starts to stabilize and how to address them. Basically it revolves around not loosing the innovative spirit of the early days, again, this is not very useful for me so maybe for good future reading.


About the Author

This article was produced by Tech Dominator. see more.

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Women on Top in Tech – Dr. Sanna Gaspard, Founder and CEO of Rubitection



(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Dr. Sanna Gaspard is the Founder and CEO of Rubitection, a medical device start-up developing a diagnostic tool for early stage pressure detection, assessment, and management. She is an Entrepreneur, inventor, and biomedical engineer with a passion for innovation, entrepreneurship, healthcare and medical devices. She has received recognition and awards including being selected as a finalist for the Cartier Women’s Initiative Awards(’13), a semi-finalist for the Big C competition (’14), a finalist for the Mass Challenge Business accelerator in Boston, and taking 1st place at the 3 Rivers Investment Venture Fair’s Technology showcase (‘11). Her vision is to make the Rubitect Assessment System the global standard solution for early bedsore detection and management.

What makes you do what you do? 
I am driven to have impact and improve healthcare as I have a strong drive to problem solve, comes up with new ideas, and see them come to life.

How did you rise in the industry you are in? 
I first focused on getting the educational background and then I pursued the goals I have for myself. I got my PhD in Biomedical Engineering with a specialization in medical device development. Having the educational background is important as a woman and minority to assist people in taking your seriously.  After completing my PhD, I focused on bringing my invention for a medical device for early bedsore detection and prevention called the Rubitect Assessment System to market to help save lives and improve care.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
I started my startup, Rubitection , because I felt it was the best way to bring the technology to market. I knew that if I did not try to commercialize the technology, it would not make it to the doctors and nurses. I also have confidence that I could manage developing the technology since I had taken classes on entrepreneurship and had my PhD in biomedical engineering with a specialization in medical devices.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
No, I don’t have a specific mentor in my field. I am looking for one at the moment. However, I do look up to Steve Jobs and Oprah as examples of how one can start with nothing and work their way up and build a successful, global, and reputable business and brand.

Now as a leader how do you spot, develop, keep, grow and support your talent?  
I first try to find people who have fundamental technical or work experience to be competent to complete the work. I then evaluate the person for intangible skills like independent thinking, reliability, leadership, resilience, organizational skills, strong work ethic, open mindedness/flexibility, and good communication skills.

Do you consciously or unconsciously support diversity and why? 
I consciously make an effort as a minority woman in tech, I intimately understand the need to promote diversity within my business and outside my business. I first hire the best people for the job and also make a point to hire women and minorities qualified for the position.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?  
It takes resilience, vision, being a team player, an ability to inspire others and delegate work, knowing your weakness, and knowing when to put your business or yourself first.

Advice for others?
My advice to others is to take calculated risks, pursue every opportunity, surround yourself with supporters, build your team with smart dedicated people, and stay focused on your vision. I am striving to implement this advice myself as I work towards commercializing my technology for early bedsore detection, grow my team, and recruit clinical partners to address an $11 billion US healthcare problem which affects millions around the world.

If anyone is interested in learning more about our work or company, please contact us at [email protected].

To learn more about Dr. Sanna Gaspard, CEO of Rubitection visit:

If you’d like to get in touch with Dr. Sanna Gaspard, please feel free to reach out to her on LinkedIn:

To learn more about Rubitection, please click here.

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