Puter Viruses, Artificial Life and Evolution

Compu
ter Viruses,
Artificial
Life
and
Evolution
WARNING
7KLVERRNFRQWDLQVFRPSOHWHVRXUFH
FRGH IRU HYROYLQJ FRPSXWHU YLUXVHV
ZKLFK DUH FDSDEOH RI HYDGLQJ HYHU\
NQRZQ PHDQV RI SDVVLYH GHWHFWLRQ
<RXFDQEHKHOGOHJDOO\OLDEOHIRUWKH
PLVXVHRIWKHVHYLUXVHVHYHQLIVXFK
PLVXVH LV XQLQWHQWLRQDO 'R QRW DW
WHPSW WR H[HFXWH DQ\ RI WKH FRGH LQ
WKLVERRNXQOHVV\RXDUHZHOOYHUVHG
LQORZOHYHOSURJUDPPLQJDQG\RXDUH
ZRUNLQJRQDFDUHIXOO\FRQWUROOHGDQG
LVRODWHGFRPSXWHUV\VWHP
Computer
Viruses,
Artificial Life
and
Evolution
Mark A. Ludwig
Computer Viruses,
Artificial Life
and
Evolution
The Little Black Book
of Computer Viruses
Volume II
Mark A. Ludwig
American Eagle Publications, Inc.

Post Office Box 41401
Tucson, Arizona 85717
1993
E\0DUN$/XGZLJ$OOULJKWVUHVHUYHG
$UWZRUNE\WKHZRUOGVPRVWIDPRXVYLUXVZULWHU0LFKDHODQJHOR
,6%1
&RQWHQWV
3UHIDFH
,QWURGXFWLRQ
$UH9LUXVHV$OLYH"

0HFKDQLFDO3URSHUWLHVRI/LIH
6HOIUHSURGXFWLRQ
(PHUJHQW%HKDYLRU
0HWDEROLVPDQG$GDSWDELOLW\
(YROXWLRQ
&RQFOXVLRQV

3DUW,7KH0HFKDQLFVRI/LIH
3DUW,,7KH3KLORVRSK\RI/LIH
7KH,PSRUWDQFHRI3KLORVRSK\
$QFLHQWSKLORVRSK\DQG0RGHUQ6FLHQFH
(PHUJHQW%HKDYLRU5HYLVLWHG
6HOI5HSURGXFWLRQDQG,QIRUPDWLRQ
$XWRQRP\
6R$UH9LUXVHV$OLYH"

,QWURGXFWLRQ
7KH&UHDWLRQLVWV)DOO
(YROXWLRQ0\WKDQG0DWKHPDWLFV
7KH&UHDWRUDQGWKH&UHDWHG
7KH)DFWRI(YROXWLRQ
7KH7KHRU\RI(YROXWLRQ
7KH5HDO:RUOG(YROXWLRQ
,Q7KH%HJLQQLQJ

3DUW,,,7KH*HQHVLVDQG(YROXWLRQRI/LIH
7KH5HDO:RUOG%HJLQQLQJV
7KH-XJJHUQDXWRI$/"
7KH1HZ(YROXWLRQ"
/DVW:RUGV

$SSHQGL[$,QWURGXFWLRQWR&HOOXODU$XWRPDWD
$SSHQGL[%6RPH%DVLF%LRFKHPLVWU\
$SSHQGL[&7KH)LUVW,QWHUQDWLRQDO9LUXV:ULWLQJ&RQWHVW
$SSHQGL['6ROYLQJ'LIIHUHQWLDO(TXDWLRQV
$SSHQGL[(6WRFKDVWLF3RSXODWLRQ(TXDWLRQV
$SSHQGL[)7KH'DUZLQLDQ*HQHWLF0XWDWLRQ(QJLQH

6HOHFWHG5HIHUHQFHV
,QGH[

Computer Viruses,
Artificial Life and Evolution
5DSKDHO7HFIHVQ
K 6 R O K KW $
3ODWRDQG$ULVWRWOHGHEDWLQJWKHQDWXUHRIUHDOLW\
3UHIDFH
,Q &KDUOHV 'DUZLQ FOLPEHG DERDUG D VKLS QDPHG 7KH
%HDJOHDQGKHDGHGWRZDUGWKHQHWKHUPRVWSDUWVRIWKHZRUOG$VD
QDWXUDOLVW WKH REVHUYDWLRQV 'DUZLQ PDGH RQ WKDW MRXUQH\ ZRXOG
KDYHDSURIRXQGLPSDFWRQKLVOLIHDQGRQWKHZKROHZRUOG
7RGD\,ZRXOGOLNHWRLQYLWH\RXWRWDNHDVLPLODUMRXUQH\ZLWK
PH$MRXUQH\FOHDQRXWRIWKLVZRUOGDQGLQWRWKHZRUOGRIELWV
DQG E\WHV LQ ZKLFK D FRPSXWHU YLUXV RSHUDWHV 7KLV MRXUQH\ KDV
DOUHDG\UHYROXWLRQL]HGP\XQGHUVWDQGLQJRIOLIHDQGHYROXWLRQ,Q
UHVHDUFKLQJ WKH PDWHULDO SUHVHQWHG KHUH ,YH KDG WR UHWKLQN DQG
UHZULWHWKLVERRNVHYHUDOWLPHV&RPSXWHUYLUXVHVMXVWGLGQRWILW
LQWRDQ\RIWKHXVXDOFDWHJRULHVSHRSOHKDGIRUWKHP
1RZ,NQRZVRPHSHRSOHKDYHDOUHDG\GHFLGHG,PFUD]\IRU
ZULWLQJWKLVERRN$WOHDVWRQHKDVHYHQVDLGVRLQSULQWPRQWKV
EHIRUHHYHQDZRUGRILWZDVPDGHSXEOLF$QGFHUWDLQO\WKHSHRSOH
ZKR ILJKW FRPSXWHU YLUXVHV GD\ LQ DQG GD\ RXW PD\ KDYH VRPH
PLVJLYLQJVDERXWDERRNWKDWFRQWDLQVYLUXVHVDQGGLVFXVVLRQVWKDW
FRXOG WHDFK SHRSOH KRZ WR PDNH WKHP , XQGHUVWDQG WKDW <HW LW
VHHPVIRROLVKWRWU\WRKLGH\RXUKHDGLQDKROHDQGUHPDLQLJQRUDQW
RIYLUXVHV7KH\DUHKHUH:HPD\DVZHOOOHDUQWROLYHZLWKWKHP
EHFDXVHZHJHWWROLNHLWRUQRW
$VIDUDVVFLHQFHJRHVFRPSXWHUYLUXVHVPD\EHDVPDOOSDUW
RIWKHELJSLFWXUHWKDWWKHEURDGGLVFLSOLQHRI$UWLILFLDO/LIHJLYHV
XV<HW,WKLQNWKH\DUHLPSRUWDQWEHFDXVHWKH\DUHWKHRQO\DUWLILFLDO
OLIHIRUPWKDWKDVEHFRPHDSKHQRPHQRQUDWKHUWKDQMXVWDODERUD
WRU\WR\$QGWKRXJKVRPHSDUWLFXODUSKHQRPHQRQPD\EHDVPDOO
SDUWRIWKHELJSLFWXUHWKHVFLHQWLVWFDQRIWHQPDNHJUHDWJDLQVE\
&RPSXWHU9LUXVHV$UWLILFLDO/LIHDQG(YROXWLRQ
VWDULQJKDUGDWLW&HUWDLQO\WKHDQLPDOVRIWKH*DODSDJRVDUHDVPDOO
SDUWRIWKHELJSLFWXUHRIOLIHRQHDUWK6KRUWRIDIHZWHOHYLVLRQ
GRFXPHQWDULHV PRVW RI XV ZRXOG QHYHU NQRZ LW LI WKH\ ZHUH
VZDOORZHGXSE\WKHRFHDQ<HWWKHVHDQLPDOVZRUNHGPLJKWLO\IRU
'DUZLQ
7KHUHIRUH,GRQRWDSRORJL]HIRUPDNLQJXVHRIYLUXVHVKHUH
,IDV$OH[DQGHU6RO]KHQLWV\QSXWLWIUHHGRPLV WRILOOSHRSOHV
PDLOER[HV HDUV DQG EUDLQV ZLWK FRPPHUFLDO UXEELVK DQG IRU
DGROHVFHQWV RI WR WR LPPHUVH WKHPVHOYHV LQ LGOHQHVV DQG
SOHDVXUHLQVWHDGRILQWHQVLYHVWXG\DQGVSLULWXDOJURZWK WKHQZHUH
DOOGHDG,H[HUFLVHP\IUHHGRPWRZULWHWKLVERRNZLWKDQH\HRQO\
IRUZKDWLVWUXHDQGJRRG%HOLHYHPHLWZRXOGKDYHEHHQHDV\WR
SOD\WKHGHPDJRJXHDQGJLYHWKHSHRSOHZKDWWKH\ZDQWHGWRKHDU
SXWWLQJZKDWLVWUXHLQWKHEDFNVHDW,FRXOGKDYHILOOHGP\SRFNHWV
ZLWK JROG IRU LW WRR ,P QRW PXFK RI D SROLWLFLDQ WKRXJK DQG ,
FRXOGQWHYHUKRSHWROLYHZLWKP\VHOILI,VDLG 5HDGP\OLSV
ZKLOHO\LQJWKURXJKP\WHHWK6RLQDVHQVH,ZULWHQRWZKDW,ZLVK
EXWZKDW,PXVW
,PRQO\VRUU\WRVHHWKDWLWLVJHWWLQJGLIILFXOWWRVD\ZKDW,
KDYHWRVD\LQPDQ\RIWKHVRFDOOHG IUHH QDWLRQVRIWKLVZRUOG
%XW WKHQ LW VKRXOG EH QR FDXVH IRU ZRQGHU LQ D ZRUOG ZKLFK
LQFUHDVLQJO\ GHQLHV WKH SRVVLELOLW\ RI VSLULWXDO JURZWK DQG VHHV
HYHU\WKLQJLQWHUPVRIHFRQRPLFV,QVXFKDZRUOGRXUGHVWLQ\LV
QRWWROHDUQWRFKHULVKWUXWKEXWWROHDUQWRHDWIURPWKDWSLOHRI
URWWLQJFRPPHUFLDOUXEELVKDQGEHVDWLVILHG

0DUN/XGZLJ
6HSWHPEHU
,QWURGXFWLRQ
,Q WKLV YROXPH , ZDQW WR GLVFXVV WKH UHOHYDQFH RI FRPSXWHU
YLUXVHVWRPRGHUQVFLHQFHDQGVSHFLILFDOO\WROLIHDQGHYROXWLRQ
7KHUHKDVEHHQDGHEDWHJRLQJRQDVORQJDVFRPSXWHUYLUXVHV
KDYHEHHQDURXQGDVWRZKHWKHURUQRWWKH\FDQHYHUEHEHQHILFLDO
8VXDOO\WKLVGHEDWHGHJUDGHVWRWKHOHYHORI VKRZPHRQH DQG
WKHQDQDUJXPHQWDVWRZKHWKHURUQRWVRPHSDUWLFXODUSURJUDPPLQJ
DSSOLFDWLRQLVEHVWDFFRPSOLVKHGLQYLUDOIRUPRUQRW
+HUH,ZDQWWRVWHSEDFNIURPWKDWIUD\DELWDQGORRNDWWKH
ELJJHUSLFWXUH,DPQRWKHUHFRQFHUQHGDERXWWKHHFRQRPLFDGYDQ
WDJHVRUPHQDFHVRIYLUXVHVRUWKHSURVDQGFRQVRIDSDUWLFXODU
YLUXVEXWZKHWKHULQVWXG\LQJWKHPZHPLJKWOHDUQDQ\WKLQJRI
WKHZRUOGZHOLYHLQ
,PDJLQHZLWKPHIRUDPRPHQWWKHVFHQHRIDPRGHUQRIILFH
ILOOHGZLWK3&V,WLVWKHELUWKGD\RIVRPHXQNQRZQSHUVRQKDOI
ZD\DURXQGWKHZRUOG3HRSOHFRPHLQWRWKHRIILFHLQWKHPRUQLQJ
IOLSSLQJRQWKHLUFRPSXWHUVRQO\WREHVXUSULVHGE\WKHRUGHUWR
W\SHLQ +DSS\%LUWKGD\-RVKL 7KHRIILFHLVILOOHGZLWKFRPPR
WLRQ([SHUWVDUHFDOOHGLQ)RUGD\VDIWHUZDUGSHRSOHDUHWDONLQJ
H[FLWHGO\DERXWWKHLQFLGHQWDQGZRQGHULQJZKDWZLOOKDSSHQZKHQ
WKH\WXUQWKHLUFRPSXWHUVRQWKHQH[WWLPH
&HUWDLQO\LI\RXYHH[SHULHQFHGWKLVLWVQRMRNH%XWVKRXOG
RXURQO\UHVSRQVHEHDQJHUDQGIHDU":HUHVSRQGDOPRVWDVLILW
ZHUHDQLQYDVLRQIURPDQRWKHUSODQHWWKHWHUURURIWKHXQNQRZQ
PHQDFHDQGRXUDERULJLQDOLQVWLQFWLVWRNLOOLWEHIRUHLWNLOOVXV
$QG FHUWDLQ HOHPHQWV RI WKH PHGLDXQGHU WKH LQIOXHQFH RI WKH
SXQGLWVRIDQWLYLUDOVRIWZDUHGRPKDYHWULHGWRHQFRXUDJHXVWR
UHVSRQGOLNHWKDW
%XWVKRXOGQWWKHUHEHDWOHDVWDOLWWOHZRQGHU"
1RVFLHQFHILFWLRQZULWHUILIW\\HDUVDJRHYHULPDJLQHGVRPH
WKLQJVREL]DUUH,QYDGHUVIURPRWKHUSODQHWVVXUH:DUULRUURERWV
VXUH *HQLXV PDFKLQHV VXUH %XW FRPSXWHU SURJUDPV WKDW PRYH
DURXQGDQGUHSURGXFHOLNHOLYLQJRUJDQLVPVDQGDWWDFNRWKHUSUR
JUDPV":HUHQRWWDONLQJDERXWVRPHZHLUGODERUDWRU\H[SHULPHQW
HLWKHU7KLVLVDUHDOZRUOGSKHQRPHQRQWKDWWKHDYHUDJHSHUVRQLV
EHFRPLQJPRUHDQGPRUHXVHGWR
6ROHWVZRQGHUDELW
7KHVHWKLQJVKDYHSURSHUWLHVVLPLODUWROLYLQJRUJDQLVPV$UH
WKH\DOLYHLQVRPHVHQVH",IVRFDQWKH\WHDFKXVDQ\WKLQJDERXW
FDUERQEDVHGOLIHRUFDQRXUNQRZOHGJHRIFDUERQEDVHGOLIHWHDFK
XVDQ\WKLQJDERXWFRPSXWHUYLUXVHVDQGZKDWZHPLJKWGRZLWK
WKHP"0DWWHUVOLNHHYROXWLRQDQGWKHEHJLQQLQJRIOLIHREYLRXVO\
FRPHWRPLQGDVZHOODVLGHDVOLNHFRQVFLRXVQHVVDQGLQWHOOLJHQFH
3HUKDSVZHFDQXVHYLUXVHVWREHWWHUXQGHUVWDQGZKDWOLIHLVLQ
DPRUHDEVWUDFWVHQVH$ORWRISHRSOHDUHLQWHUHVWHGLQILQGLQJOLIH
VRPHZKHUHHOVHLQWKHXQLYHUVH%XWKRZZRXOGWKH\HYHQNQRZ
WKH\IRXQGVRPHWKLQJOLYLQJXQOHVVLWZDVFDUERQEDVHGOLNHXV",W
PLJKWEHWKDW\RXFRXOGVWDUHDOLIHIRUPLQWKHIDFHDQGQHYHUNQRZ
LWZLWKRXWDVXIILFLHQWO\DEVWUDFWFRQFHSWRIZKDWOLIHLV2USHUKDSV
\RXFRXOGEHFRQTXHUHGE\LWDQGQHYHUNQRZLWXQWLOWKHFRQTXHVW
ZDVORQJFRPSOHWH<RXFDQILQGORWVRIERRNVRQWKHVXEMHFWRI
([WUD7HUUHVWULDO,QWHOOLJHQFHDQGPRVWEDUHO\WRXFKRQWKLVTXHV
WLRQ
5HFHQWO\ , EURXJKW XS WKH SRVVLELOLW\ WKDW YLUXVHV PLJKW EH
ZRUWKVWXG\LQJIRUVFLHQWLILFUHDVRQVDPRQJDURRPIXOORIDQWLYL
UXVW\SHV$QXPEHURISHRSOHLQWKHDXGLHQFHYLJRURXVO\VKRRN
WKHLUKHDGVZLWKRXWDVHFRQGVWKRXJKW3RRUFORVHGPLQGHGVRXOV
WKH\DUH,VDLGLWLQWKHODVWYROXPHDQG,OOVD\LWKHUHEHZLOOLQJ
WROLVWHQWRGLIIHUHQWLGHDVDWWKHULVNRIRIIHQVH,I\RXILQG\RXUVHOI
LUULWDWHG E\ ZKDW , VD\ DW OHDVW FRQVLGHU WKH SRVVLELOLW\ WKDW \RX
PLJKWEHZURQJ,SURPLVH\RX,ZLOOGRWKHVDPH,I,GLGQW,G
QHYHUJURZ,GQHYHUOHDUQDQ\WKLQJRUH[SDQGP\KRUL]RQVDQG,
FHUWDLQO\GRQWZDQWWKDWDQG,GRQWWKLQN\RXGRHLWKHU%HOLHYH
,QWURGXFWLRQ
PH,PQRWZULWLQJWKLVERRNEHFDXVH,KDYHDOOWKHDQVZHUV4XLWH
WRWKHFRQWUDU\,KDYHORWVPRUHTXHVWLRQVWKDQDQVZHUV
7KLVERRNZLOORIIHQGSHRSOHIRUWZRUHDVRQV)LUVWO\LWGHIHQGV
WKHLGHDWKDWYLUXVHVFDQEHJRRGDQGXVHIXO,GOLNHWRWKLQNWKDWLW
ZRXOGIRUHYHUFORVHWKHGRRULQWKHIDFHVRIWKRVHZKRZDQWWRPDNH
DOOIUHHDQGRSHQGLVFXVVLRQRIYLUXVHVLOOHJDO%XWWKDWZRXOGEHD
OLWWOHSURXGRQP\SDUWDQGDOLWWOHLJQRUDQWRIKXPDQQDWXUH6RPH
SHRSOHZLOOQHYHUEHFRQYLQFHGE\DQ\DPRXQWRIUHDVRQWKDW
FRPSXWHUYLUXVHVDUHDQ\WKLQJEXWWRWDOO\HYLO
6HFRQGO\SHRSOHZLOOEHRIIHQGHGE\WKLVERRNEHFDXVHRILWV
DSSURDFKWRVFLHQFH+HUHZHJHWLQWRVRPHGHHSWKLQJVWKDWKDYH
FDXVHGPHDORWRIWURXEOHRYHUWKHSDVWVHYHUDO\HDUV<HW,KDYH
HPEUDFHGWKDWWURXEOHZLOOLQJO\NQRZLQJWKDWLWLVDPHDQVWRDQ
HQGWKDWRWKHUZLVHFRXOGQRWEHKDG
/HWPHH[SODLQ2QFH,ZDVDVFLHQWLVWRIVFLHQWLVWV%RUQLQWKH
DJHRI6SXWQLNDQGUDLVHGLQWKHKRPHRIDFKHPLVW,ZDVHQWKUDOOHG
ZLWKVFLHQFHDVDFKLOG,I,ZDVQWGLVVROYLQJSHQQLHVLQDFLG,ZDV
ZLQGLQJDQHOHFWURPDJQHWRUSOD\LQJZLWKDSRZHUWUDQVLVWRURU
GRLQJ D FU\RJHQLFV H[SHULPHQWOLNH IUHH]LQJ DQWVZLWK OLTXLG
SURSDQH:KHQ,ZHQWWR0,7IRUFROOHJH,ILQDOO\JRWP\FKDQFH
WRWRWDOO\LPPHUVHP\VHOILQP\ILUVWORYH,GLGUDWKHUZHOODWLWWRR
ILQLVKLQJP\XQGHUJUDGXDWHZRUNLQWZR\HDUVDQGJRLQJRQWRVWXG\
HOHPHQWDU\SDUWLFOHSK\VLFVXQGHU1REHOODXUHDWHVDW&DOWHFK<HW
E\WKHWLPH,JRWP\GRFWRUDWHWKHVSHOOZDVIRUHYHUEURNHQ$VD
\RXQJVWXGHQW,OHDUQHGRIWKHJUHDWPHQRIVFLHQFHDQGWKHLUQREOH
FRQWULEXWLRQVWRKXPDQLW\+RZHYHUDV,DGYDQFHG,VDZOHVVDQG
OHVVRIWKHQREOHVFLHQWLVWDQGPRUHDQGPRUHRIWKHVHOIVDWLVILHG
H[SHUW,VDZOHVVDQGOHVVRIWKHJUHDWFRQWULEXWLRQWRKXPDQLW\
DQGPRUHDQGPRUHRIWKHLJQRUHGH[SRVLWLRQ,EHJDQWRXQGHUVWDQG
WKHGLIIHUHQFHEHWZHHQWKHVFLHQFHRIWKHWH[WERRNVZKHUHKXQ
GUHGVRI\HDUVDUHFRPSUHVVHGLQWRDIHZSDJHVRIWH[WE\DGPLUHUV
RIWKHGLVFLSOLQHDQGUHDOVFLHQFHGRQHE\UHDOPHQ
2QHRIWKHEHDXWLHVRIVFLHQFHWKDWDWWUDFWHGPHWRLWZDVWKDW
LWVHHPHGWRKDYHVRPHWKLQJWRGRZLWKDEVROXWH7UXWK6LWWLQJLQD
FODVVURRPOHDUQLQJRIWKHJORULHVRIRXUJRYHUQPHQWLQWKHHDUO\
VHYHQWLHVLWMXVWZDVQWWRRKDUGWRLPDJLQHWKDW6RYLHWFKLOGUHQ
ZHUHOHDUQLQJMXVWDVFRQYLQFLQJO\RIWKHJORULHVRIWKHLUJRY
HUQPHQWWRR2ULI,ZURWHDQHVVD\IRUP\(QJOLVK/LWHUDWXUHFODVV
DQGP\WHDFKHUGLGQRWOLNHLWZKDWPDGHKLVRSLQLRQEHWWHUWKDQ
PLQH"7KLVZRUOGVHHPHGIXOORIDPELJXLWLHV%XWVFLHQFHDKK
VFLHQFHKHUHZDVVRPHWKLQJ,FRXOGOD\P\KDQGVRQ:KRFRXOG
DUJXH ZLWKWKHPRWLRQRIDIDOOLQJREMHFW"7KDWZDVSUHFLVHDQG
PDWKHPDWLFDO,WGLGQRWGHSHQGRQZKDWFRXQWU\\RXOLYHGLQRU
ZKLFKFHQWXU\RURQWKHRSLQLRQRIVRPHRQHZKRGLGQWOLNHWKH
ZD\\RXORRN6FLHQFHZDV7UXH
0\ORYHRIVFLHQFHZDVERUQRXWRIDORYHIRU7UXWKDQGP\
VWXGLHV QXUWXUHG WKDW ORYH <HW DV D JUDGXDWH VWXGHQW , FDPH WR
UHDOL]H WKDW SUDFWLFDOO\ VSHDNLQJ LW ZDV LPSRVVLEOH WR PDNH DQ
LPSRUWDQWFRQWULEXWLRQWRVFLHQFHZLWKRXWEHLQJDPDVWHUSROLWLFLDQ
6FLHQWLVWVDUHQRWGLIIHUHQWIURPRWKHUSHRSOH7KH\KDYHMREVDQG
HJRVWRSURWHFW7KH\KDYHOLNHVDQGGLVOLNHV$QGWKHUHDUHIDGV
DQGIDVKLRQVLQVFLHQFHMXVWDVVXUHO\DVWKHUHDUHIDGVDQGIDVKLRQV
LQFORWKLQJRUPXVLF,QRUGHUWRGRVRPHWKLQJUHDOO\QHZLQVFLHQFH
\RXPXVWEHFRPHDWUHQGVHWWHUNLQGRIOLNHDIDVKLRQGHVLJQHU
7KHDOWHUQDWLYHLVWRVLPSO\SDQGHUWRH[LVWLQJWUHQGV7UXWKZLWKD
FDSLWDO7IRUDOOSUDFWLFDOSXUSRVHVWDNHVDEDFNVHDW
,GRQRWVD\WKHVHWKLQJVWRJHWGRZQRQVFLHQFHRUVFLHQWLVWV
SHUVH,JUHDWO\UHVSHFWVRPHVFLHQWLVWVHYHQZKHQ,GLVDJUHHZLWK
WKHP$QG,VXVSHFWDORWRIWKHPKDWHWKLVSUHGLFDPHQWDVPXFKDV
, GR $QG DOO RI LW LV YHU\ XQGHUVWDQGDEOH ,I \RX WU\ WR VD\
VRPHWKLQJ UHDOO\ QHZ LQ VFLHQFH LWV OLNH VSHDNLQJ D GLIIHUHQW
ODQJXDJH)RUVRPHRQHHOVHWRXQGHUVWDQG\RXWKH\KDYHWRGRD
ZKROHORWRIZRUN7KHQRIFRXUVHLWLVDTXHVWLRQRIZK\WKH\
VKRXOGVSHQGVRPXFKHQHUJ\WRXQGHUVWDQG\RX:LOOLWEHZRUWK
WKH WURXEOH RQFH WKH\ GR" 8QOHVV \RX DUH IDPRXVWKH )DVKLRQ
'HVLJQHUWKH\ SUREDEO\ ZRQW WKLQN VR ,I \RX ZHUH KDQGHG D
ERRN ZULWWHQ LQ DQFLHQW (J\SWLDQ KLHURJO\SKLFV DQG \RX GLGQW
KDYHDFOXHZKDWLWZDVDERXW\RXSUREDEO\ZRXOGQWJRWRWKH
WURXEOHWROHDUQWKHODQJXDJHDQGWUDQVODWHLW1RZLILWZDVDUHDOO\
JUHDWERRNDQG\RXNQHZLW\RXPLJKWJRWRWKHWURXEOH0LJKW
7KDWV ZKDW GRLQJ VRPHWKLQJ QHZ LQ VFLHQFH LV OLNH $QG PRVW
VFLHQWLVWVDUHVRLQXQGDWHGMXVWWU\LQJWRNHHSXSZLWKWKHWUHQGV
ZKLFKDIWHUDOOSXWIRRGRQWKHWDEOHWKDWWKH\KDYHOLWWOHPRWLYD
WLRQWRORRNLQDQ\RWKHUGLUHFWLRQXQOHVVWKDWGLUHFWLRQSURPLVHV
WRXQORFNWKHDQVZHUWRVRPHEXUQLQJTXHVWLRQ$QGRIFRXUVHWKDW
EXUQLQJTXHVWLRQLVXVXDOO\GHILQHGE\WKHFXUUHQWWUHQGV
,QWURGXFWLRQ
$Q\KRZ P\ TXHVW IRU 7UXWK ZDV LQ UXLQV DW OHDVW DV IDU DV
VFLHQFHFRXOGWDNHPH,KDGVRXJKWWKHWUHDVXUHDWWKHHQGRIWKLV
UDLQERZRQO\WRILQGWKDWWREHDVFLHQWLVW,PXVWEHDVODYHWRWKH
ZKLPVSDVVLRQVDQGRSLQLRQVRIP\SHHUV$QG,NQHZ,ZDVQW
WKHFKDULVPDWLFSROLWLFLDQZKRFRXOGVHL]HWKHGD\DQGEULQJDOOWKH
ZRUOGWRP\IHHW7KHUHIRUH,KDGQRUHDOFKDQFHRIGRLQJWKHNLQG
RISLRQHHULQJVFLHQFH,ZDQWHGWR,NQHZ,GHQGXSZKHHGOLQJRXW
WKHGHWDLOVRIVRPHUHPRWHFRUQHURIWKHXQLYHUVHWKDWQRERG\HYHQ
UHDOO\FDUHGDERXWRU,GHQGXSZDVWLQJP\ZKROHOLIHSDQGHULQJ
WRVRPHIDGZKLFKZDVRQO\JRLQJWRSDVVDZD\,FRXOGQRWKDYH
WKHOLIHRIEODFNDQGZKLWH7UXWK,KDGKRSHGWRILQGLQVFLHQFH
7KDWZDVWUHPHQGRXVO\XQVHWWOLQJ6RE\FKRLFH,WXUQHGWRZDUG
DPRUHWHFKQRORJLFDOOLIHDQGJRWLQYROYHGLQFRPSXWHUV,NQRZD
ORWRIRWKHUSHRSOHJRWKRRNHGRQFRPSXWHUVWKHZD\,GLG,WZDV
DZKROHQHZZRUOGULSHIRUH[SORUDWLRQ:LWKVRPXFKWRGRDQG
VRIHZSHRSOHWRGRLWUHODWLYHO\VSHDNLQJWKLVQHZZRUOGZDVQRW
\HWFKRNHGWRGHDWKZLWKHQY\DVWKHROGZRUOGRISXUHVFLHQFHKDG
EHHQ2QHZDVUHODWLYHO\IUHHWRVWDNHRXWKLVFODLPDQGGRZKDWKH
FRXOG7KDWVXLWHGPHMXVWILQH
<HW GHVSLWH P\ QHZ FDUHHU , QHYHU ORVW P\ H\H IRU SXUH
VFLHQFH,VSHQWDORWRIWLPHLQWKHZLOGHUQHVVLI\RXZLOOIDU
DZD\IURPVFLHQWLILFFLUFOHVWU\LQJWRXQGHUVWDQGEHWWHUZKDW,KDG
VHHQDQGOLYHG:LWKWKLVERRN,DPPDNLQJDVRUWRIDUHWXUQWRWKDW
SROLWHVRFLHW\%XW,DPDWKHDUWD1HZ:RUOGUXIILDQZKRGRHVQRW
FRPHEDFNWRSOHDVHWKHFRXUW,KDYHQRLQWHQWLRQRIZULWLQJDERRN
SRSXODUL]LQJVFLHQFHRU$UWLILFLDO/LIHRUDQ\WKLQJRIWKHVRUW$QG
,KDYHQRLQWHQWLRQRISOD\LQJE\WKHUXOHVRIWKHSROLWHVRFLHW\
EHFDXVH,KDYHQRQHHGIRUWKHPRULW
,QVWHDGRIVHHNLQJWRSOHDVHWKRVHLQSRZHU,FRPHWRUHFRP
PHQGVRPHFKDQJHV6FLHQWLVWVDUHRIWHQSHRSOHZKRDUHYHU\DGHSW
DWXQGHUVWDQGLQJFRPSOH[HTXDWLRQVDQGVRUWLQJWKURXJKIDFWV%XW
WKH\UHXVXDOO\ZHDNRQXQGHUVWDQGLQJWKHVXEMHFWLYHVLGHRIWKH
XQLYHUVH7KH\FRQVLGHULWXQLPSRUWDQWRUHYHQXQUHDO+RZHYHU
WKDW VXEMHFWLYH VLGH RIWHQ GHHSO\ LQIOXHQFHV VFLHQWLILF UHVHDUFK
2IWHQSXUHEOLQGIDLWKLQVRPHWRWDOO\QRQVFLHQWLILFLGHDPRWLYDWHV
YDVWQXPEHUVRIVFLHQWLVWVRYHUFHQWXULHVRIWLPH0DQ\RIWKRVH
VFLHQWLVWVFRPSOHWHO\IDLOWRXQGHUVWDQGWKHVHLGHDVDQGFRQVLGHU
WKHLUYDOLGLW\DQGWKHLUYDOXH7KH\VLPSO\DVVXPHVXFKLGHDVWREH
JLYHQVDQGSUHVVIRUZDUG
$Q H[DPSOH RI VXFK DQ LGHD LV WKH XQLILHG ILHOGWKHRU\ D
FRQFHSWGHYHORSHGE\(LQVWHLQZKLFKKDVEHHQWKH0W2O\PSXV
IRU WKH SDUWLFOH SK\VLFLVW WR FOLPE IRU WKH SDVW KDOIFHQWXU\ ,W LV
VLPSO\WKHVXJJHVWLRQWKDWDOOWKHIRUFHVRIQDWXUHFDQEHGHVFULEHG
E\DVLQJOHHTXDWLRQZKLFKLVLQVRPHVHQVHVLPSOH(LQVWHLQKDG
JRRG UHDVRQ WR EHOLHYH D XQLILHG ILHOG WKHRU\ H[LVWHG +H KDG
ZRQGHUIXOO\DSSOLHGWKHEDVLFFRQFHSWVRIHOHFWURPDJQHWLVPDO
UHDG\NQRZQLQKLVGD\WRJUDYLWDWLRQUHVXOWLQJLQWKHWKHRU\RI
*HQHUDO5HODWLYLW\,QVRGRLQJKHWRRNDELJVWULGHWRZDUGXQLI\LQJ
WKHVHWZRIRUFHVZKLFKZHUHWKHRQO\RQHVNQRZQLQWKHV
<HWWKHUHLVQRVFLHQWLILFUHDVRQWREHOLHYHWKDWDOOWKHIRUFHVRI
QDWXUHVKRXOGEHXQLILDEOHLQWRRQHVLPSOHPDVWHUIRUFH:K\QRW
WKUHH" RU VL[WHHQ" 6HFRQGO\ RQH PXVW TXHVWLRQ WKH YDOXH RI D
XQLILHGILHOGWKHRU\DQGLWVUHODWLYHLPSRUWDQFHLQDODUJHUVFKHPH
RIWKLQJV8QWROOHGFDSLWDODQGKXPDQHIIRUWKDVJRQHLQWRGLVFRY
HULQJVXFKDWKHRU\ZLWKRQO\YHU\OLPLWHGVXFFHVV:KLOHVFLHQWLVWV
WRGD\DUHFODPRULQJIRUKXQGUHGELOOLRQGROODUSDUWLFOHDFFHOHUDWRUV
WRIXUWKHUGLYLQHWKHP\VWHULHVRIWKLVHOXVLYHLGHDWKHUHDUHIDVFL
QDWLQJP\VWHULHVDERXWHOHPHQWDU\SDUWLFOHVULJKWXQGHUWKHLUQRVHV
ZKLFKPLJKW\LHOGDQXQGHUVWDQGLQJRIQDWXUHDVUHYROXWLRQDU\DV
DQ\WKLQJ WKDW KDV EHHQ 6XFK P\VWHULHV DUH LJQRUHG KRZHYHU
EHFDXVHWKH\GRQRWSDUWLFXODUO\ILWLQWRWKHSKLORVRSKLFDOIUDPH
ZRUN3HUKDSVWKHXQLILHGILHOGWKHRU\LVQRWKLQJPRUHWKDQDGHFR\
ZKLFK ZLOO EXU\ VHYHUDOJHQHUDWLRQVRIVFLHQWLVWVLQWKHVDQGVRI
WLPH
7R EH D JRRG VFLHQWLVW RQH PXVW DOVR EH VRPHZKDW RI D
SKLORVRSKHU $ IHZ FHQWXULHV DJR VFLHQWLVWV ZHUH FDOOHG QDWXUDO
SKLORVRSKHUV7KHUHZDVZLVGRPLQWKDW:KHQDVFLHQWLVWIDLOVWR
EHDSKLORVRSKHUKHWHQGVWREHEOLQGHGE\SKLORVRSK\7KHQKH
EHFRPHVDVODYHWRZKDWKHEHOLHYHVUDWKHUWKDQLWVPDVWHU3UDFWL
FDOO\KHWXUQVLQWRDVRUWRIUHOLJLRXVIDQDWLFZKRVHJRDOLVWREHQG
DOO WKH ZRUOG WR ZKDW KH EHOLHYHV UDWKHU WKDQ WR VHHN WUXWK DQG
KLPVHOIJURZXS
7KLVNLQGRIEOLQGQHVVLVXQIRUWXQDWHO\UDPSDQWDPRQJVFLHQ
WLVWV)HZSHRSOHXQGHUVWDQGWKHSKLORVRSKLFDOSUHVXSSRVLWLRQVWKH\
PDNHDQGIHZXQGHUVWDQGWKHSKLORVRSKLFDOFRQVHTXHQFHVRIZKDW
,QWURGXFWLRQ
WKH\GR5LJKWQRZWKHZKROHVFLHQWLILF V\VWHP VHHPVWRSUR

PRWH VXFK EOLQGQHVV 0RVW VFLHQWLILF UHVHDUFK DQG LQVWLWXWLRQV
ZKLFKFDUU\RXWVFLHQWLILFUHVHDUFKDUHKHDYLO\JRYHUQPHQWIXQGHG
7KDWPHDQVWKH\DUHJRYHUQPHQWFRQWUROOHG5HVHDUFKPXVWWKHQ
GHYHORS WHFKQRORJ\ ZKLFK WKH JRYHUQPHQW ZDQWV RU SURPRWH D
SKLORVRSKLFDOZRUOGYLHZZKLFKSDQGHUVWRWKHJRYHUQPHQW7RR
RIWHQWKDWPHDQVDSKLORVRSKLFDOPDWHULDOLVPZKLFKHOHYDWHVWKH
JRYHUQPHQW WR WKH VWDWXV RI *RG E\ GHIDXOW 7KH ZKROH SHHU
UHYLHZ V\VWHP LV LQKHUHQWO\ FRQVHUYDWLYH LQ D ZD\ QRW XQOLNH
UHOLJLRXVFRQVHUYDWLVP,WWHQGVWRUHVLVWEHQHILFLDOFKDQJHEHFDXVH
LWH[FOXGHVWKRVHZKRVHSKLORVRSK\GRHVQWFRQIRUPWRWKHVWDQG
DUG<HWXQOLNHWKHUHOLJLRXVFRQVHUYDWLYHZKRRSHQO\UHDVRQVIURP
WKHRORJLFDOGRFWULQHVWKHVFLHQWLVWVGRFWULQHVDUHRIWHQVXEOLPLQDO
DQGXQVSRNHQ7KDWPDNHVKLPDVODYH7KHVROXWLRQLVWREHFRPH
SDUW SKLORVRSKHU 7KHQ DW OHDVW RQH NQRZV PRUH DERXW ZKDW
DVVXPSWLRQVKHLVPDNLQJDQGKHFDQFRQVFLRXVO\WKLQNDERXWWKH
YDOLGLW\RIWKRVHDVVXPSWLRQV7KHQKHLVPDVWHU
7KHERWWRPOLQHRIDOORIWKLVLVWKDW,DPLQWHQWRQDYRLGLQJ
VXFKEOLQGVSRWV7KHELRORJLFDOVFLHQFHVDUHQRWGLIIHUHQWWKDQDQ\
RWKHU NLQG RI VFLHQFH 6R , KDYH HYHU\ LQWHQWLRQ RI LQJHQLRXVO\
GLVFXVVLQJWKHSKLORVRSKLFDOLVVXHVWKDWXQGHUJLUGWKHP7KHUHDVRQ
IRUGRLQJWKDWDUHWKUHHIROG)LUVWO\,GRQWEHOLHYH,FRXOGGRMXVWLFH
WRZKDWFRPSXWHUYLUXVHVKDYHWRRIIHUWRVFLHQFHZLWKRXWGLVFXVV
LQJSKLORVRSKLFDOLVVXHV2XUXQGHUVWDQGLQJRIOLIHKDVDOZD\VKDG
GHHS URRWV LQ SKLORVRSK\ DQG UHOLJLRQ 6R LI ZHUH JRLQJ WR WDON
DERXWYLUXVHVDVEHLQJVRPHKRZDOLYH,VLPSO\PXVWVSHDNWRWKHVH
QRQVFLHQWLILFXQGHUVWDQGLQJV6HFRQGO\,WKLQN,ZRXOGEHFKHDW
LQJ\RXP\UHDGHULI,GLGQRWGLVFXVVSKLORVRSKLFDOLVVXHV7KH
EDUEDULDQV ZKR GR QRW XQGHUVWDQG WKH SKLORVRSK\ EHKLQG ZKDW
WKH\UHGRLQJLQYDULDEO\EHFRPHIDOVHSURSKHWV:KHQIDFHGZLWK
0XFKRIPRGHUQKLVWRU\DQGSROLWLFVFDQEHXQGHUVWRRGLQWKHOLJKWRI+HJHOLDQ
SKLORVRSK\LQZKLFKWKHJRYHUQPHQWLVPDGHLQWR *RGZDONLQJRQHDUWK
3KLORVRSK\FDQQRWEHSXWRQWKHWKURQHHLWKHUWKRXJK(YHQLQWKHSKLORVRSK\
RIVFLHQFH\RXFDQILQGVRPHSUHWW\GXPELGHDV$QGVRPHSKLORVRSKHUVDUH
DFWLYH GHVFULELQJ KRZ VFLHQFH VKRXOG EH ZKLOH RWKHUV DUH PRUH SDVVLYH
GHVFULELQJKRZLWLVHWFHWF

D SRLQW RI FRQWHQWLRQ WKH\ QDWXUDOO\ GHIHQG WKHLU SKLORVRSKLFDO

DVVXPSWLRQVDVLIWKH\ZHUHGLYLQHO\UHYHDOHG7UXWK$QGWKHH[SHUW
ZKRE\YLUWXHRIKLVLPSXWHGH[SHUWLVHJDLQVLJQRUDQWIROORZHUV
FDQHDVLO\VDFULILFHKRQHVW\DQGGHSWKWREHFRPHDGHPDJRJXHDQG
DVRSKLVW,FDQWVWDQGWKDWDWWLWXGHLQRWKHUVVR,GRQWZDQWWRWDNH
LWZLWK\RX:KLOHLWLVQRWP\LQWHQWLRQWRRIIHQGDQ\RQH,NQRZ
,FDQQRWDYRLGLWLI,GLVFXVVWKHVXEMHFWDWKDQGKRQHVWO\DQGRSHQO\
7KLUGO\ , WKLQN WKHUH LV D UHDO QHHG IRU VXFK D GLVFXVVLRQ IRU
VFLHQFHV VDNH )URP WKH SRLQW RI YLHZ RI D VWDOZDUW SK\VLFDO
VFLHQWLVWWKHRUHWLFDOELRORJ\DQGHVSHFLDOO\HYROXWLRQORRNVD
ORWOLNHYRRGRR,WLVYHU\HIIHFWLYHLI\RXEHOLHYHLQLW%XWZKHQ
\RXGLJLQWRLWLWORRNVPRUHOLNHPDJLFWKDQKDUGVFLHQFH)UDQNO\
VSHDNLQJWKHELRORJLFDOVFLHQFHVDUHEHLQJFKRNHGE\SKLORVRSKLFDO
GRJPDV$UWLILFLDOOLIHLVQHZHQRXJKWKDWLWFRXOGFKDOOHQJHWKRVH
GRJPDV DQG EULQJ DERXW VRPH QHHGHG DQG WUHPHQGRXVO\ ZRUWK
ZKLOHFKDQJH8QIRUWXQDWHO\LWVHHPVWKDWWKHJHQHUDOWHQRURI$/
ZRUNLVQRWMXVWWREX\LQWRWKHVDPHSKLORVRSK\WKDWKDVPDUUHG
ELRORJ\EXWWRWDNHWKHOHDGLQLWWREHLWVSURSKHWDQGWRSXVKLWWR
LWVORJLFDOFRQFOXVLRQ7KDWRQO\FRQILUPVDQGIXUWKHUVWKHHUURUV
,WKLQNWKDWLVDVKDPHLQYLHZRIWKHSRWHQWLDO$/KDVWRSXWELRORJ\
DQGHYROXWLRQRQDPRUHVROLGIRRWLQJ
6R ZLWK WKDW LQ PLQG ,G OLNH WR DJDLQ LQYLWH \RX WR FRPH
H[SORULQJZLWKPH,GRQRWPDNHP\VHOIRXWWREHDQH[SHUWJXLGH
LQWKHVHZDWHUVEXWRQO\DIHOORZH[SORUHUDQGDGYHQWXUHU$VIDU
DV,FDQWHOOWKH\KDYHQHYHUEHHQH[SORUHGEHIRUH6ROHWXVJRDQG
VHH VRPH ZRQGURXV VLJKWV DQG SOD\ WRJHWKHU RQ VDQG\ VXQ
GUHQFKHGEHDFKHVZKHUHQRPDQKDVZDONHGEHIRUH/HWXVVWDQG
LQDZHRIWKHPLJKWRIWKHGHHSDQGWKHVLOHQFHRIWKHVWDUVDQG
KXPEO\NQRZRXUZHDNQHVV$QGOHWXVQRWIRUJHWWRODXJKKHDUWLO\
DWWKHIRROVZKRNQHZZHGIDOORIIWKHHGJHRIWKHZRUOG
,WKLQNWKHUHDVRQIRUWKLVDWWLWXGHLVWKDW$/UHVHDUFKHUVWHQGWREHHDJHUWRJDLQ
WKHDFFHSWDQFHRIPDLQOLQHELRORJLVWV
$UH9LUXVHV$OLYH"
0RVWRIWKLVERRNZLOOIRFXVRQWKHVLPLODULW\EHWZHHQDOLYLQJ
RUJDQLVPDQGDFRPSXWHUYLUXV)URPDSXUHO\QDwYHSRLQWRIYLHZ
FRPSXWHUYLUXVHVVHHPWREHDOLYH7KH\VHHPWRKDYHDZLOORIWKHLU
RZQ GRLQJ WKLQJV LQ D FRPSXWHU TXLWH LQGHSHQGHQW RI ZKDW WKH
RSHUDWRUZDQWVWKH\UHSURGXFHDQGVRPHKDYHSURYHQTXLWHDGHSW
DWPRYLQJDURXQGIURPFRPSXWHUWRFRPSXWHU7KH\FRPHLQPDQ\
YDULHWLHV VRPH FRORUIXO VRPH VHFUHWLYH VRPH GDQJHURXV VRPH
LQQRFXRXVVRPHH[WUHPHO\DFWLYHVRPHVOXJJLVK
%XWDUHWKH\UHDOO\DOLYH"
2UDUHWKH\MXVWJRRGLPLWDWLRQVOLNHDOLWWOHPHFKDQLFDOEDUNLQJ
SXSS\LQDWR\VWRUHPD\EHDELWPRUHVRSKLVWLFDWHGEXWQRWKLQJ
PRUHWKDQDFXWHRUQRWVRFXWHPDFKLQHDIWHUDOO"
3HUKDSVDEHWWHUTXHVWLRQLVLQZKDWVHQVHDUHYLUXVHVDOLYH"
&HUWDLQO\ WKH\ DUH QRW FDUERQEDVHG RUJDQLVPV VXFK DV ZH DUH
+RZHYHULQWKLVVFLHQWLILFDJHRIRXUVLWVHHPVDOLWWOHIRROLVKDQG
QDUURZPLQGHGWRFDOORQO\FDUERQEDVHGRUJDQLVPVOLIH:KHQZH
DUHH[SORULQJWKHOLPLWVRIRXUXQLYHUVHIRUDOLHQIRUPVRIOLIHERWK
E\GLUHFWREVHUYDWLRQVXFKDVWKH0DULQHUH[SHGLWLRQWR0DUVDQG
E\LQGLUHFWDWWHPSWVWRUHFHLYHLQWHOOLJLEOHUDGLRVLJQDOVZHKDYH
WRH[SDQGRXUKRUL]RQV:HKDYHWRGLJGHHSHUDQGDVNWKHTXHVWLRQ
:KDWPDNHVOLIHOLIH" 2QO\ZKHQZHNQRZZKDWOLIHLVFDQZH
ZHLJKVRPHHQWLW\LQRXUXQGHUVWDQGLQJWRGHWHUPLQHZKHWKHURU
QRWLWLVDOLYHDQGWKHUHE\SURSHUO\UHFRJQL]HLWDVOLIH
7KHZKROHSKHQRPHQRQRIFRPSXWHUYLUXVHVEULQJVWKLVTXHV
WLRQFORVHWRKRPH7KH\DUHKHUHQRZ:HFDQFRQWDLQWKHPDQG
H[SHULPHQWZLWKWKHP$QGOLNHLWRUQRWZHKDYHWRGHDOZLWKWKHP

LQRXUGD\WRGD\OLYHV$OLHQOLIHIRUPVDUHQRWVRUHDGLO\DFFHVVL
EOH
,IRURQHWKLQNLWLVYHU\LPSRUWDQWWRWDNHDGYDQWDJHRIWKH
RSSRUWXQLW\ZKLFKYLUXVHVRIIHUXVWREURDGHQRXUXQGHUVWDQGLQJRI
ZKDWOLIHLV)LUVWO\,EHOLHYHZHFDQRQO\VWDQGWRJDLQDEHWWHU
XQGHUVWDQGLQJRIOLIHDVLWLVE\VWXG\LQJOLIHDVLWFRXOGEH0RGHUQ
PDQLVDQDUURJDQWFUHDWXUHZKRXVXDOO\WKLQNVKHNQRZVDORWPRUH
DERXWWKLVXQLYHUVHWKDQKHUHDOO\GRHV7KLVERDVWIXOSULGHVHHPV
SDUWLFXODUO\VWURQJLQUHODWLRQWRH[WUHPHO\FRPSOH[V\VWHPVOLNH
OLYLQJRUJDQLVPV7KHWUXWKLVZHNQRZYHU\OLWWOHDERXWOLIHWRGD\
:HNQRZORWVPRUHWKDQZHGLGDFHQWXU\DJREXWZHVWLOOVKRXOGQW
GHFHLYHRXUVHOYHVLQWRWKLQNLQJZHYHVRPHKRZDUULYHGDWWKHILQDO
ZRUG)RUH[DPSOHWKHGLIILFXOWLHVZHIDFHLQV\QWKHVL]LQJFDUERQ
EDVHGRUJDQLVPVVHYHUHO\OLPLWRXUDELOLW\WRSHUIRUPH[SHULPHQWV
WREHWWHUXQGHUVWDQGKRZWKH'1$FRGLQJJHQRW\SHDIIHFWVWKH
SK\VLFDO FKDUDFWHULVWLFV SKHQRW\SH RI DQ RUJDQLVP (YHQ LI ZH
FRXOG V\QWKHVL]H '1$ VWUDQGV DW ZLOO DQG EXLOG WKH FRPSOH[
PDFKLQHU\WKDWJRHVZLWKWKHPWRFUHDWHOLYLQJRUJDQLVPVZHPLJKW
QRWZDQWWRGRVRIRUIHDURIXQOHDVKLQJDPRQVWHUWKDWZRXOGPDNH
WKH%XERQLF3ODJXHORRNOLNH&KLFNHQ3R[&RPSXWHUVLPXODWHG
OLIHRUDUWLILFLDOOLIHPD\RIIHUDUHDVRQDEOHZD\WRVDIHO\VWXG\
WKLVJHQRW\SHSKHQRW\SHFRQQHFWLRQ
6HFRQGO\LIWKHGD\VKRXOGHYHUFRPHWKDWZHGRGLVFRYHUOLIH
RQDQH[WUDWHUUHVWULDOERG\VKRXOGQWZHEHUHDG\WRUHFRJQL]HLW
DVOLIHDQGDFWDFFRUGLQJO\"$WSUHVHQWLIZHGLVFRYHUHGDOLIHIRUP
WKDW ZDV QRW FDUERQEDVHG ZH SUREDEO\ ZRXOG QRW UHFRJQL]H LW
7KHQZKDWGDPDJHZRXOGZHGR":RXOGZHFRPSOHWHO\REOLWHUDWH
LWDQGQHYHUNQRZLW"2UZRXOGZHVRRIIHQGLWWKDWLWZLOOWDNHXS
WKHJRDORIREOLWHUDWLQJXVIURPWKHERZHOVRIWKHXQLYHUVH"6RPH
SHRSOHWKLQNZHZLOOMXVWQDWXUDOO\UHFRJQL]HDOLHQOLIHIRUPVDQG
6RPHUHVHDUFKHUVEHOLHYH$,'6JRWLWVVWDUWLQMXVWWKLVNLQGRIH[SHULPHQWDWLRQ
6HH WKH YLGHR 7KH 6WUHFNHU 0HPRUDQGXP 7KH 6WUHFNHU *URXS
&RORUDGR%OYG(DJOH5RFN&$'U6WUHFNHUGHPRQVWUDWHVWKDW
DYLUXVOLNH$,'6ZDVSUHGLFWHGDVHDUO\DVLWVGHYHORSPHQWVXJJHVWHG
LQD:RUOG+HDOWK2UJDQL]DWLRQEXOOHWLQDQGLWZDVVSUHDGE\KXPDQ
DJHQF\LQVPDOOSR[YDFFLQHVXVHGLQ$IULFD
$UH9LUXVHV$OLYH"

UHVSHFWWKHPRUJRWRZDUZLWKWKHPZKHQZHILQGWKHP7KDWLV

QDwYHVFLHQFHILFWLRQ-XVWDFHQWXU\DQGDKDOIDJRRXUDQFHVWRUV
KHOG EODFN VODYHV DQG VRPHWLPHV EHDW WKHP DQG NLOOHG WKHP
WKLQNLQJWKH\GLGQRZURQJEHFDXVHQHJURHVZHUHQWKXPDQ6RPH
SHRSOH UHDOO\ EHOLHYHG WKDW :H PD\ ORRN EDFN LQ GLVEHOLHI EXW
ZHUHQREHWWHURIISUREDEO\DZKROHORWPRUHLJQRUDQWLQIDFW
ZKHQ LW FRPHV WR H[SORULQJ WKH XQLYHUVH IRU OLIH 7KDW QHHGV WR
FKDQJHRUHOVHZHGMXVWEHWWHUVWD\KRPHDQGVKXWXS
$Q\WLPHZHKDYHHYHUJRQHRXWH[SORULQJRXUZRUOGZHKDYH
KDGWRZRUNKDUGWRFRPHWRJULSVZLWKLW7KHEHVWDQGEULJKWHVWRI
PDQNLQGKDYHODERUHGDOOWKHLUOLYHVWRXQGHUVWDQGDOLWWOHSLHFHKHUH
DQGWKHUH<HWHYHQWKH\KDYHIDOOHQVKRUWRIDOONQRZLQJFRPSUH
KHQVLRQ7KDWOLWWOHSLHFHRIXQGHUVWDQGLQJKDVRIWHQFRPHRQO\ZLWK
JUHDWWURXEOHLQWHQVHKRXUVRIODERUVHDUFKLQJWU\LQJDQGIDLOLQJ
WR VHH JLYLQJ XS UHWXUQLQJ WR WKH FKDVH DQG RQO\ WKHQ LQVLJKW
2IWHQUHMHFWLRQDQGSHUVHFXWLRQIROORZIRUGDULQJWRVKDUHWKDWOLWWOH
ELWRINQRZOHGJHZLWKPDQNLQGEHFDXVHLWIRUFHVPHQWRFKDQJH
WKHLUSKLORVRSKLFDOSUHVXPSWLRQVDERXWWKHPVHOYHVDQGWKHLUUHOD
WLRQVKLSWRWKHZRUOG
6RZK\VKRXOGDGHHSHUXQGHUVWDQGLQJRIOLIHEHDQ\GLIIHUHQW"
&HUWDLQO\ZKDWZHNQRZRIOLIHRQRXUSODQHWKDVRQO\FRPHZLWK
JUHDWGLIILFXOW\,IZHWU\WRXQGHUVWDQGOLIHLQDPRUHDEVWUDFWZD\
ZH ZLOO DJDLQ EH VWUHWFKHG :H ZLOO DJDLQ KDYH WR ZUHVWOH ZLWK
GLIILFXOWLGHDVDQGVWXEERUQIDFWV%XWZRXOGQWLWEHUHVSRQVLEOHWR
GRWKDWQRZUDWKHUWKDQRQO\DIWHUZHYHPDGHDVHULRXVEOXQGHULQ
GHVWUR\LQJDZKROHFLYLOL]DWLRQIRUZDQWRIHYHQNQRZLQJLWZDV
WKHUH" RU GHVWUR\LQJ RXU RZQ FLYLOL]DWLRQ E\ VWHSSLQJ RQ VRPH
ERG\VWRHV"
$VVRRQDVZHEHJLQWRDVNWKHTXHVWLRQ :KDWLVOLIH" ZH
FRPHWRWKHGHHSUHDOL]DWLRQWKDWRXUYHU\FRQFHSWRIOLIHLVZRHIXOO\
LQDGHTXDWHIRUDQ\VFLHQWLILFSXUSRVH:KDWLVOLIH"LVDGLIILFXOW
TXHVWLRQIRUZKLFKWKHUHLVQRFULVSFOHDQDQVZHU,QDVHQVHOLIH
LVDPHWDSK\VLFDOFRQFHSWIDPLOLDUWRXVLQH[SHULHQFHEXWGLIILFXOW
WRFDVWLQWRDVFLHQWLILFPROG
$WSUHVHQWLWLVIDVKLRQDEOHLQVFLHQWLILFFLUFOHVWRWU\WRMHWWLVRQ
DOOPHWDSK\VLFDOFRQVLGHUDWLRQVZKHQVWXG\LQJOLIH7KHDVVHUWLRQ
LVPDGHWKDWDOLYLQJRUJDQLVPLVVLPSO\DKLJKO\FRPSOH[PDFKLQH
EXLOWRIRUJDQLFPROHFXOHVDQGWKDWLWLVQRWIXQGDPHQWDOO\GLIIHUHQW

IURP DQ\ RWKHU V\VWHP RI PROHFXOHV 2QFH VXFK DQ DVVHUWLRQ LV
DFFHSWHGWKHTXHVWLRQRIZKDWOLIHLVEHFRPHVPHUHO\DTXHVWLRQRI
IXQFWLRQ'HVLJQDPDFKLQHZLWKWKHSURSHUIXQFWLRQVDQGLWZLOO
EHDOLYH7KLVKDVODUJHO\EHHQWKHSKLORVRSK\DQGREMHFWLYHRIWKH
$/FRPPXQLW\
2IFRXUVHVXFKDQDVVHUWLRQXQWLOSURYHQLVOLWWOHPRUHWKDQD
PHWDSK\VLFDOFRQVLGHUDWLRQLQDQGRILWVHOI$QGWRWDNHLWDVDJLYHQ
LVWRDYRLGWKHTXHVWLRQRIZKDWOLIHLVQRWWRFRQIURQWLW,QGHHGLW
PD\EHWKHRUHWLFDOO\LPSRVVLEOHWRSURYHWKDWDOLYLQJRUJDQLVPLV
DKLJKO\FRPSOH[PDFKLQHZKLFKFDQEHXQGHUVWRRGXVLQJRQO\WKH
SUHVHQWO\NQRZQODZVRISK\VLFV7KHRQO\ZD\VXFKDSURRIFRXOG
EHUHDVRQDEO\DFFRPSOLVKHGZRXOGEHWR VROYHWKHHTXDWLRQ RID
FRPSOH[ OLYLQJ RUJDQLVP DQG VXFFHVVIXOO\ SUHGLFW LWV EHKDYLRU
7KHUHDUHDQXPEHURIIRUPLGDEOHREVWDFOHVWRGRLQJWKDW
7KHUHLVHYHU\UHDVRQWREHOLHYHWKDWWKHPRVWLQWUDFWDEOHIRUPRI
FDWDVWURSKHWKHRU\WKHLGHDRIKRZDEXWWHUIO\IODSSLQJLWVZLQJV
LQ-DSDQFRXOGFDXVHDWRUQDGRLQ.DQVDVPXVWEHLQYROYHGLQ
GHWHUPLQLQJWKHEHKDYLRURIOLYLQJRUJDQLVPV 7KLQNLQJLQWHUPV
RI EDVLF SK\VLFV ZK\ GR RQH VHTXHQFH RI YLEUDWLRQV LQ WKH
HDUGUXPRIDPDQUHVXOWLQDVPLOHDQGDKDQGVKDNHZKLOHDQRWKHU
VHTXHQFHWKHVDPHZRUGVEHLQJVSRNHQMXVWDGLIIHUHQWWRQHRI
YRLFHUHVXOWVLQDILVWILJKW",IVXFKUHVXOWVDUHSXUHO\GXHWRWKH
NQRZQODZVRISK\VLFVDVWDJJHULQJGHJUHHRIDFFXUDF\ZLOOEH
QHHGHGLQDQ\FDOFXODWLRQWKDWFRXOGSURGXFHDFFXUDWHHQGUHVXOWV
,IDQ\UHVXOWEHFRPHVWRRVHQVLWLYHWRWKHLQLWLDOFRQGLWLRQVDQG
WKHLQSXWVUHODWLYLVWLFTXDQWXPILHOGWKHRU\PXVWFRPHLQWRSOD\
7RPDNHVXIILFLHQWO\DFFXUDWHFDOFXODWLRQVRQHPXVWWDNHLWLQWR
DFFRXQW+RZHYHUZHDUHQWHYHQVXUHZKDWWKHODZVRISK\VLFV
DUHDWWKDWOHYHO$QGLIZHZHUHTXDQWXPXQFHUWDLQWLHVDORQH
FRXOGEDUWKHZD\WRREWDLQLQJDGHFLVLYHDQVZHU
7KHVKHHUPDJQLWXGHRIDFDOFXODWLRQWRDJLYHQOHYHORIDFFX
UDF\IRUHYHQDVLQJOHFHOOHGRUJDQLVPSUHFOXGHWKHSRVVLELOLW\
RIDQ\FRPSXWHUPRGHOLQJLW7KHUHLVVLPSO\WRRPXFKLQIRUPD
,QIDFWFDWDVWURSKHWKHRU\LVLGHDOO\VXLWHGWRELRORJ\6HH376DXQGHUV$Q
,QWURGXFWLRQ WR &DWDVWURSKH 7KHRU\ &DPEULGJH 8QLYHUVLW\ 3UHVV 1HZ
<RUNSS[
$UH9LUXVHV$OLYH"

WLRQLQYROYHGDQGDQ\UHDOFRPSXWHUKDVDILQLWHPHPRU\FDSDF
LW\
7KXVWKHLGHDWKDWDOLYLQJRUJDQLVPLVQRPRUHWKDQDFRPSOH[
PDFKLQHFRXOGZHOOUHPDLQDPHWDSK\VLFDOFRQFHSWZKLFKZLOOEH
DUJXHGSURDQGFRQXQWLOWKHHQGRIKXPDQKLVWRU\&HUWDLQO\
WKLVLGHDRIOLIHDVDPDFKLQHLVQRWKLQJQHZLWKDVEHHQDUJXHG
DQGZD[HGDQGZDQHGLQIDYRUVLQFHWKHGD\VRIDQFLHQW*UHHFH
0RUHRQDOORIWKLVODWHU
,QYLHZRIWKHVHFRPSOLFDWLRQV,GRQRWZDQWWRWDNHWKHHDV\
ZD\RXWRIGHDOLQJZLWKWKHTXHVWLRQRIZKDWOLIHLVE\GHILQLQJD
OLYLQJRUJDQLVPDVDOLWWOHPDFKLQHDQGQRWKLQJPRUH7RGRVRLV
VLPSO\QRWLQWHOOHFWXDOO\VRXQGHYHQLILWLVDYHU\FRPPRQDQG
DFFHSWDEOHWKLQJWRGRDWSUHVHQW2IFRXUVHQHLWKHUGR,ZDQWWR
DGRSWDSXUHO\PHWDSK\VLFDOGHILQLWLRQRIOLIHHJ 6RPHWKLQJLV
DOLYHLILWKDVDVSLULW DQGVHWWOHWKHTXHVWLRQWKDWZD\)XQFWLRQ
LVFHUWDLQO\LPSRUWDQWLQDQ\GLVFXVVLRQRIOLIH$Q\FDQGLGDWHIRU
WKHODEHO OLIH PXVWSHUIRUPFHUWDLQIXQFWLRQVZKLFKZHQRUPDOO\
DVVRFLDWHZLWKDOLYLQJRUJDQLVP+RZHYHUIXQFWLRQPXVWEHYLHZHG
DVDFRPSRQHQWRIWKHODUJHUIUDPHZRUNRIRXUPHWDSK\VLFDODQG
SKLORVRSKLFDOXQGHUVWDQGLQJRIOLIHDQGQRWDVWKHZKROHIUDPH
ZRUN
+HUH,DPFRQVFLRXVO\PDNLQJDEUHDNZLWKWKH$/FRPPXQLW\
,WKLQN$/HUVKDYHJRQHDWWKHTXHVWLRQRIZKDWOLIHLVZLWKWKH
WUDGLWLRQDOQDwHYLW\RIVFLHQWLVWV7KH\DVVHUWWKDWOLIHLVQRWKLQJEXW
DWRPVDQGSK\VLFVGHILQHOLIHSXUHO\LQWHUPVRIIXQFWLRQDQGWKHQ
SURFHHGWREXLOGPRGHOVZLWKWKHSURSHUIXQFWLRQV7KHVHPRGHOV
DUHWKHQFDXWLRXVO\VXJJHVWHGWREHDOLYH7KHGDQJHUKHUHLVWKDW
\RXZLOOH[DOW\RXUVHOILQWRD FUHDWRUJRG DQGWULYLDOL]HOLIHWR
PDWFK \RXU FUHDWLYH SRZHUV 7KH LGHD WKDW \RX KDYH VRPHKRZ
EHFRPHDFUHDWRURIOLIHLVLQWR[LFDWLQJEXWZKHQ\RXILQG\RXUVHOI
PDNLQJVWDWHPHQWVOLNH ZHVHHWKDWDFDQGOHIODPHLVDOLIHIRUP
\RXG GR ZHOO WR VWDUW FRQVLGHULQJ \RXUVHOI LQWR[LFDWHG EHFDXVH
FHUWDLQO\RWKHUVZLOO1DwYHSULGHRIWHQILQGVLWVHQGLQIRROLVKQHVV
(GZDUG5LHWPDQ&UHDWLQJ$UWLILFLDO/LIH0F*UDZ+LOO1HZ<RUNS
[YL

,Q WKH HQG ZH ZLOO ILQG WZR LPSRUWDQW UHVXOWV )LUVWO\ RXU
PHWDSK\VLFDOXQGHUVWDQGLQJRIOLIHDOZD\VKDVDGLUHFWEHDULQJRQ
RXU VFLHQWLILF XQGHUVWDQGLQJ RI LW 7KH WZR FDQQRW EH VHSDUDWHG
6HFRQGO\FRPSXWHUYLUXVHVDUHLPSRUWDQWQRWMXVWEHFDXVHRIWKHLU
IXQFWLRQDODVSHFWVEXWIRUSKLORVRSKLFDOUHDVRQVDVZHOO7KH\FDQ
IRUFHXVWRFRQIURQWPHWDSK\VLFDOLVVXHVDQGPD\EHHYHQUHVROYH
WKHPLI ZH FKRRVH WR DGPLW VXFK LVVXHV H[LVW DQG WKH\ GR
ZKHWKHURUQRWZHDGPLWLW
6R,ZRXOGOLNHWRDVNWKHTXHVWLRQ :KDWLVOLIH" DQGYLHZLW
ILUVWIURPWKHSK\VLFDOPHFKDQLFDODQJOHDQGWKHQIURPWKHSKLOR
VRSKLFDO DQJOH $W WKH VDPH WLPH , ZDQW WR DSSO\ VRPH RI WKH
DQVZHUVZHJHWWRFRPSXWHUYLUXVHVDQGVHHLIWKH\DUHDOLYH7KHQ
JLYHQ DQ XQGHUVWDQGLQJ RI ZKHUH RXU YLUXVHV ILW LQWR WKH JUDQG
VFKHPH RI WKLQJV ,G OLNH WR XVH WKHP WR ORRN DW VRPH RI WKH
UHDOZRUOGSUREOHPVZKLFKOLIHSUHVHQWVWRWKHVFLHQWLVW
3DUW,
7KH0HFKDQLFVRI/LIH
0HFKDQLFDO3URSHUWLHV
RI/LIH
,WVHHPVUHDVRQDEOHWRVXJJHVWWKDWWKHUHPLJKWEHDFHUWDLQVHW
RI IXQFWLRQV ZKLFK DQ\ SK\VLFDO V\VWHP RXJKW WR EH FDSDEOH RI
SHUIRUPLQJLILWLVWREHFODVVLILHGDVDOLYH7KDWLVDOLYLQJRUJDQLVP
RXJKWWREHDEOHWRGRFHUWDLQWKLQJV
8QIRUWXQDWHO\GHILQLQJVXFKDOLVWRIIXQFWLRQVSURYHVWREHDQ
DOPRVWLQWUDFWDEOHPHVVHYHQZKHQPHUHO\GHDOLQJZLWKFDUERQ
EDVHGRUJDQLVPV)RUH[DPSOHZHKDYHDJHQHUDOLGHDWKDWOLYLQJ
RUJDQLVPV RXJKW WREHDEOHWRUHSURGXFH<HWH[FHSWLRQVFDQEH
IRXQG 0XOHV DUH QRW FDSDEOH RI HVWDEOLVKLQJ WKHPVHOYHV DV DQ
DXWRQRPRXVUDFHEXWWKH\DUHVWLOOYHU\PXFKDOLYH2QWKHRWKHU
KDQGD6RGLXP&KORULGHFU\VWDOLQDVDWXUDWHGVROXWLRQRI6RGLXP
&KORULGHGRHVJURZWKHVWUXFWXUHRIWKHFU\VWDOUHSURGXFHV\HW
ZHGRQRWFRPPRQO\EHOLHYHLWLVDOLYH,QVKRUWQRPDWWHUZKDW
NLQGRIDOLVWRIIXQFWLRQVZHFDQFRPHXSZLWKRQHFDQDOPRVW
DOZD\VILQGDQH[FHSWLRQHLWKHUVRPHWKLQJZKLFKFRPPRQVHQVH
ZRXOGVXJJHVWLVDOLYHEXWGRHVQWSHUIRUPDUHTXLUHGIXQFWLRQRU
VRPHWKLQJZKLFKSHUIRUPVWKHIXQFWLRQWKDWZHZRXOGQWTXLFNO\
FDOODOLYH
7KLV SUREOHP LV SDUWLFXODUO\ DFXWH ZKHQ GHDOLQJ ZLWK
PDFURVFRSLF IXQFWLRQV ,I RQH IRFXVHV GRZQ RQ WKH PLFURVFRSLF
GHWDLOVRIKRZFDUERQEDVHGRUJDQLVPVZRUNRQHFDQGUDZWKHOLQH
EHWZHHQOLIHDQGQRQOLIHPXFKPRUHFORVHO\7KHQZHDUHWXUQLQJ
DZD\IURPWKHTXHVWIRUDQDEVWUDFWXQGHUVWDQGLQJRIOLIHWKRXJK
DQGIRFXVLQJRQKRZOLIHDVZHNQRZLWZRUNV

7R GHILQH OLIH LQ WKH DEVWUDFW RQH PXVW VWD\ DZD\ IURP WKH
PLFURVFRSLFGHWDLOVZKLFKFKDUDFWHUL]HVSHFLILFV\VWHPVDQGIRFXV
RQDEVWUDFWSURSHUWLHV
7KH RQO\ UHDOLVWLF ZD\ WR DYRLG EHLQJ FDXJKW LQ D ZHE RI
SURSRVLWLRQVDQGFRXQWHUH[DPSOHVLVWRWDNHDVWHSEDFNZDUGVDQG
JLYHXSWKHLGHDRIDVHWRIIXQFWLRQVZKLFKDFWDVDGLYLGLQJOLQH
EHWZHHQ OLIH DQG QRQOLIH :H DGPLW WKDW HYHQ IXQFWLRQDOO\
VSHDNLQJ ZH UHDOO\ GRQW NQRZ ZKDW OLIH LV DQG KRZ WR GHILQH
LWEXWZHGRNQRZVRPHWKLQJDERXWKRZOLYLQJRUJDQLVPVEHKDYH
$VVXFKZHFDQORRNDWDQ\V\VWHPLQWKHSK\VLFDOZRUOGRULQWKH
PHPRU\RIDFRPSXWHUDQGDVNLILWSHUIRUPVIXQFWLRQVVLPLODUWR
WKRVHRIOLYLQJRUJDQLVPV,IVRWKHQLWKDVDFHUWDLQFODLPWROLIH
7KDW FODLP LV VWURQJHU RU ZHDNHU GHSHQGLQJ RQ KRZ FORVHO\ LWV
IXQFWLRQVFRPSDUHWRWKRVHIXQFWLRQVZHFRQVLGHUHVVHQWLDOWROLIH
6XFKLVWKHDSSURDFKWKDWUHVHDUFKHUVLQWHUHVWHGLQWKHFRQFHSWRI
$UWLILFLDO/LIHKDYHWDNHQDQGZHZLOODGRSWLWKHUH,QGRLQJWKDW
,GRQWZDQWWRZKROO\DEDQGRQWKHLGHDRIDVHWRIIXQFWLRQVWKDW
ZRXOGEHQHFHVVDU\IRUDV\VWHPWREHDOLYH5DWKHUZHWDNHWKH
DWWLWXGHWKDWGXHWRWKHQHZQHVVRIWKLVILHOGDQGRXULJQRUDQFHRI
LWZHFDQQRW\HWEHJLQWRIRUPXODWHVXFKDOLVWRIIXQFWLRQV:LWK
WKDW DWWLWXGH ZH XQGHUVWDQG WKDW RWKHUV PD\ DWWDFK D GLIIHUHQW
UHODWLYHLPSRUWDQFHWRWKHYDULRXVIXQFWLRQVWKDQZHGRDQGZH
LQYLWHIUHHDQGRSHQGLVFXVVLRQDQGHYHQDUJXPHQW
3HUKDSV RQH RI WKH VLPSOHVW H[DPSOHV RI D FRPSXWHUL]HG
VLPXODWLRQRIOLIHZKLFKH[KLELWVDIXQFWLRQXVXDOO\DWWULEXWHGWR
OLYLQJRUJDQLVPVLV-RKQ&RQZD\VJDPHRI/LIHZKLFKGDWHVEDFN
WR$FRS\RIWKLVJDPHLVLQFOXGHGRQWKH3URJUDP'LVNIRU
WKLVERRN7KLVSURJUDPVLPXODWHVSRSXODWLRQG\QDPLFVRIOLYLQJ
RUJDQLVPV LQ D UDWKHU UXGLPHQWDU\ ZD\ ,W FRQVLVWV RI D ORJLFDO
FHOOXODUDUUD\LQLWLDWHGLQVRPHDUELWUDU\IDVKLRQVRWKDWHDFKFHOO
LV HLWKHU RQ SRSXODWHG RU RII XQSRSXODWHG 7KH DUUD\ LV WKHQ
WLPHHYROYHGDFFRUGLQJWRWKHIROORZLQJUXOHV
7KHVWRU\RIWKHGHYHORSPHQWRIWKLVJDPHLVUHFRUGHGLQ6WHYHQ/HY\$UWLILFLDO
/LIH7KH4XHVWIRUD1HZ&UHDWLRQ3DQWKHRQ1HZ<RUNSS
7KH0HFKDQLFDO3URSHUWLHVRI/LIH

,IRIWKHQHLJKERULQJFHOOVRIDQ\JLYHQFHOODUHRQWKHQWKDW
FHOOLVWXUQHGRQ
,IRIWKHQHLJKERULQJFHOOVRIDQ\JLYHQFHOODUHRQWKHQWKDW
FHOOLVOHIWLQLWVFXUUHQWVWDWH
,IRUWRRIWKHQHLJKERULQJFHOOVRIDQ\JLYHQFHOODUH
RQWKHQWKDWFHOOLVWXUQHGRII
7KHVHUXOHVDOORZIRUFRORQ\JURZWKDVZHOODVGHDWKGXHWR
RYHURUXQGHUSRSXODWLRQ7KRXJKYHU\VLPSOHWKHUXOHVDOORZIRU
FRPSOH[SRSXODWLRQG\QDPLFVVLPLODUWRWKHEHKDYLRURIFRORQLHV
RIOLYLQJRUJDQLVPV
2I FRXUVH QR RQH ZRXOG VHULRXVO\ VXJJHVW WKDW &RQZD\V
LQGLYLGXDOFHOOVDUHUHDOO\DOLYHEXWWKH\GRVLPXODWHWKHEHKDYLRU
$OWKRXJK &RQZD\V UXOHV VXSSRUW XQLYHUVDO FRPSXWDWLRQ DQG WKHUHIRUH
SUHVXPDEO\DORJLFDOHTXLYDOHQWRIDQ\DUWLILFLDORUJDQLVPVZHPD\GHYLVH6HH
(OZ\Q %HUOHNDPS -RKQ &RQZD\ 5LFKDUG *X\ :LQQLQJ :D\V IRU <RXU
0DWKHPDWLFDO3OD\V9RO$FDGHPLF3UHVV1HZ<RUNSS
!
)LJ7KHUXOHVRI/LIH
'HDG
&HOO VWD\V
&HOO FRPHV

RI D SRSXODWLRQ DQG RQH RI WKH IXQFWLRQV RI D FRORQ\ RI OLYLQJ
RUJDQLVPVLVLWVSRSXODWLRQG\QDPLFV6RVXFKDPRGHOLVRILQWHUHVW
LQDUWLILFLDOOLIHUHVHDUFK
:KDWZHDUHUHDOO\LQWHUHVWHGLQKHUHDUHLQGLYLGXDORUJDQLVPV
UDWKHU WKDQ SRSXODWLRQV VR ZH ZLOOFRQFHQWUDWHRQWKRVH,QWKLV
UHDOPDUWLILFLDOOLIHUHVHDUFKHUVVHHPWRSXWDJUHDWGHDORIHPSKDVLV
RQVHYHUDOIXQFWLRQDODVSHFWVRIOLIH
7KHDELOLW\WRUHSURGXFHDQGWKHPHWKRGRIUHSURGXFWLRQ
7KHFRQFHSWRIHPHUJHQWEHKDYLRU
7KHSRVVHVVLRQRIDPHWDEROLVP
7KHDELOLW\WRIXQFWLRQXQGHUSHUWXUEDWLRQVRIWKHHQYLURQPHQW
DQGLQWHUDFWZLWKWKHHQYLURQPHQW
7KHDELOLW\WRHYROYH
,ZRXOGOLNHWRGLVFXVVHDFKRIWKHVHDVSHFWVRIOLIHDQGDUWLILFLDO
OLIHLQVRPHGHWDLOVR,ZLOOGHYRWHDFKDSWHUWRHDFK+RZHYHU,
DP QRW UHDG\ WR EX\ LQWR DOO RI WKHVH LGHDV FRPSOHWHO\ RU HYHQ
VXJJHVW WKDW WKH\ FRQVWLWXWH D JRRG LGHD RI ZKDW OLIH LV
IXQFWLRQDOO\ )RU FHQWXULHV PHQ EHOLHYHG WKDW D OLYLQJ RUJDQLVP
FRXOGEHVHWDSDUWE\LWVDELOLW\WRPRYHEHLWORFRPRWLRQRULQWKH
FDVH RI SODQWV JURZWK DQG JHQHUDWLRQ 7KLV FRQFHSW OHG FORFN
PDNHUV RI WKH WK DQG WK FHQWXU\ WR WDNH XS WKH JRDO RI
UHSURGXFLQJ OLIH PHFKDQLFDOO\ %\ WKH PLG V -DFTXHV GH
9DXFDQVRQEXLOWDPHFKDQLFDOGXFNZKLFKFRXOGVWDQGXSVLWGRZQ
IODSLWVZLQJVORRNDURXQGHDWDQGUHOLHYHLWVHOI3HRSOHVHHPHG
UHDG\WRFODLPLWZDVDOLYH%\WRGD\VVWDQGDUGVWKRXJKZHZRXOG
QRWFDOOVXFKDFRQWUDSWLRQDOLYHLQDQ\VHQVH+RZHYHULWLVXQFOHDU
ZKHWKHU $/V VWDQGDUGV DUH UHDOO\ DQ\ EHWWHU 7KDW LV WR VRPH
H[WHQWDSKLORVRSKLFDOLVVXHZKLFKZHOOOHDYHIRUODWHU<HWZH
VKRXOG QRW EH WRR TXLFN WR DVVXPH WKDW ZH HYHQ NQRZ ZKDWV
LPSRUWDQW \HW DQ\ PRUH WKDQ WKHFORFNPDNHUV,QGHHGRXUYHU\
VWXGLHVPD\EULQJLPSRUWDQWQHZIXQFWLRQVWROLJKW
$&KDSXLVDQG('UR]$XWRPDWD$+LVWRULFDODQG7HFKQRORJLFDO6WXG\%7
%DWVIRUG/WG/RQGRQWUDQVODWHGE\$5HLG
6HOI5HSURGXFWLRQ
/LYLQJRUJDQLVPVLQJHQHUDODUHDEOHWRUHSURGXFH$OWKRXJK
VSHFLILF LQGLYLGXDOV PD\ QRW EH DEOH WR HLWKHU GXH WR DFFLGHQWDO
FLUFXPVWDQFHVWKHLUVWDJHLQWKHOLIHF\FOHRUDQXQXVXDOJHQHWLF
FRPELQDWLRQPHPEHUVRIWKHSRSXODWLRQDVDZKROHPXVWKDYHWKH
DELOLW\WRPDNHFRSLHVRUQHDUFRSLHVRIWKHPVHOYHV%DUULQJWKDW
WKHSRSXODWLRQZLOOVLPSO\QRWEHDURXQGIRUORQJ
7KH DEVWUDFW FRQFHSW RI VHOIUHSURGXFWLRQ KDV EHHQ VWXGLHG
DOPRVW ZKROO\ ZLWKLQ WKH GRPDLQ RI FRPSXWHU SURJUDPV 5HDO
ZRUOGVHOIUHSURGXFLQJPDFKLQHVKDYHQHYHUEHHQFRQVWUXFWHG
SULPDULO\GXHWRWKHLUFRPSOH[LW\DOWKRXJKWKH\KDYHEHHQSUR
SRVHG -RKQ YRQ 1HXPDQQ LV XVXDOO\ FDOOHG WKH IDWKHU RI WKH
VHOIUHSURGXFLQJ PDFKLQH +H GHYHORSHG DQ DEVWUDFW WKHRU\ RI
VHOIUHSURGXFWLRQLQWKHVDQGVDQGGHVFULEHGDYHU\
FRPSOH[VHOIUHSURGXFLQJDXWRPDWRQPDFKLQHDVDQH[DPSOH+LV
ZRUNZDVOHIWLQFRPSOHWHDWKLVGHDWKLQ$VWXGHQWRIKLV
$UWKXU%XUNVRUJDQL]HGDQGILQLVKHGLWDQGSXEOLVKHGLWSRVWKX
PRXVO\LQDV7KH7KHRU\RI6HOI5HSURGXFLQJ$XWRPDWD
2QH RI WKH ILUVW SUREOHPV RQH PXVW IDFH LQ GLVFXVVLQJ VHOI
UHSURGXFWLRQLQWKHDEVWUDFWLVWRGLIIHUHQWLDWHEHWZHHQUHSURGXFWLRQ
5REHUW )UHLWDV -U :LOOLDP *LOEUHDWK $GYDQFHG $XWRPDWLRQ IRU 6SDFH
0LVVLRQV 1DWLRQDO 7HFKQLFDO ,QIRUPDWLRQ 6HUYLFH 6SULQJILHOG 9$
1$6$&RQIHUHQFH3XEOLFDWLRQFRQWDLQVDGLVFXVVLRQRIVHOIUHSURGXFLQJ
IDFWRULHVLQWKHFRQWH[WRIVSDFHH[SORUDWLRQ
-RKQ9RQ1HXPDQQ $UWKXU%XUNV7KHRU\RI6HOI5HSURGXFLQJ$XWRPDWD
8QLYHUVLW\RI,OOLQRLV3UHVV8UEDQD

ZKLFK PLPLFV OLYLQJ RUJDQLVPV DQG WULYLDO UHSURGXFWLRQ ZKLFK

PLJKWEHPRUHOLNHWKHJURZWKRIDFU\VWDO7KHODWWHULVGULYHQE\
REYLRXV DQGUHODWLYHO\VLPSOHSK\VLFVZKHUHDVWKHIRUPHULVOHVV
WKDQREYLRXVDQGKDVWRGRZLWKWKHGHWDLOHGVWUXFWXUHHJLQIRU
PDWLRQFRQWHQWRIWKHV\VWHP)RUH[DPSOHLQ&RQZD\VJDPHRI
/LIHLIWKHFHOOVZHUHFRQVLGHUHGWREHLQGLYLGXDOVWKHQWKHJDPH
ZRXOG H[KLELW WKH WULYLDO W\SH RI VHOIUHSURGXFWLRQ ZKHUH FHOOV
UHSURGXFH REYLRXVO\ DV D UHVXOW RI WKH UXOHV ZH GHILQHG IRU WKH
V\VWHP 0RVW UDQGRP FRQILJXUDWLRQV RI WKH DUUD\ ZLOO UHVXOW LQ
UHSURGXFWLRQVRPHZKHUHLQWKHDUUD\DVLWLVWLPHVWHSSHG
9RQ1HXPDQQDQG%XUNVZHUHSULPDULO\LQWHUHVWHGLQSURYLQJ
WKH H[LVWHQFH RI D QRQWULYLDO VHOIUHSURGXFLQJ DXWRPDWRQ 7KH\
GHYHORSHGWKHLULGHDVIURPZLWKLQWKHIUDPHZRUNRIWKHLGHDRID
7XULQJ PDFKLQH 7KH 7XULQJ PDFKLQH LV VLPSO\ D JHQHUDOL]HG
FRPSXWHU,WFRQVLVWVRIDILQLWHQXPEHURILQWHUQDOORJLFDOVWDWHVRU
UXOHVDQGDWDSHZKLFKFRQWDLQVDSRVVLEO\XQOLPLWHGQXPEHURI
LQVWUXFWLRQVWREHH[HFXWHG$XQLYHUVDO7XULQJPDFKLQHLVD7XULQJ
PDFKLQHFDSDEOHRIFDUU\LQJRXWDQ\ILQLWHGHILQDEOHFDOFXODWLRQDO
SURFHGXUHDQDOJRULWKPRUSURJUDP,Q$ODQ7XULQJGHILQHG
VXFKDXQLYHUVDOPDFKLQH7RGD\FORVHDSSUR[LPDWLRQVWRWKHPDUH
RQ GHVNWRSV LQ WKH IRUP RI JHQHUDO SXUSRVH FRPSXWHUV 9RQ
1HXPDQQWRRNWKLVFRQFHSWRIDFDOFXODWLQJPDFKLQHDQGH[WHQGHG
LWWRWKHFRQFHSWRIDFRQVWUXFWLQJPDFKLQHRU&RQVWUXFWRU9RQ
1HXPDQQV&RQVWUXFWRUZDVVLPLODUWRD7XULQJPDFKLQHLQWKDWLW
KDGDQLQSXWWDSHRISRVVLEO\LQILQLWHOHQJWKDQGDILQLWHQXPEHURI
LQWHUQDOVWDWHV+RZHYHULQVWHDGRIXVLQJWKHWDSHWRSHUIRUPDQ
DOJRULWKPLFFRPSXWDWLRQWKH&RQVWUXFWRUXVHGWKHLQIRUPDWLRQRQ
WKHWDSHWRFRQVWUXFWDQRWKHUREMHFW$8QLYHUVDO&RQVWUXFWRULQ
DQDORJ\WRDXQLYHUVDO7XULQJPDFKLQHZDVD&RQVWUXFWRUZKLFK
ZDVFDSDEOHRIFRQVWUXFWLQJDQ\REMHFWZKLFKFDQEHFRQVWUXFWHG
$ 0 7XULQJ 2Q &RPSXWDEOH 1XPEHUV ZLWK DQ $SSOLFDWLRQ WR WKH
(QWVFKHLGXQJVSUREOHP 3URFHHGLQJVRIWKH/RQGRQ0DWKHPDWLFDO6RFLHW\
SSDQGSS
7KH DSSUR[LPDWLRQ LVVLPSO\WKDWDUHDOFRPSXWHUGRHVQRWKDYHDQLQILQLWH
DPRXQWRIVWRUDJH
6HOI5HSURGXFWLRQ

RXWRIDJLYHQILQLWHVHWRIPDWHULDOVZKLFKPLJKWEHVSHFLILHGRQ
DWDSH
9RQ1HXPDQQDQG%XUNVZHUHDEOHWRGHPRQVWUDWHWKHH[LVW
HQFHRID8QLYHUVDO&RQVWUXFWRUZLWKLQWKHIUDPHZRUNRIFHOOXODU
DXWRPDWD &HOOXODU DXWRPDWD DUH D YHU\ LPSRUWDQW SDUW RI $/
UHVHDUFKDQGZHZLOODVVXPHWKURXJKRXWWKDWWKHUHDGHULVIDPLOLDU
ZLWK WKH FRQFHSW )RU WKRVH ZKR DUH QRW D VKRUW LQWURGXFWLRQ LV
SURYLGHG LQ $SSHQGL[ $ ,Q 7KH 7KHRU\ RI 6HOI5HSURGXFLQJ
$XWRPDWDWKH\GHVFULEHDFHOOXODUDXWRPDWRQLQDV\VWHPZLWK
SRVVLEOHVWDWHVDQGSHUKDSVDKDOIPLOOLRQFHOOV6HH)LJ6XFK
DQDXWRPDWRQPD\QRWEHHYHQFORVHWRDPLQLPDOFRQILJXUDWLRQ
EXWWKHLPSRUWDQWSRLQWLVWKDWLWZDVD8QLYHUVDO&RQVWUXFWRULQWKH
FHOOXODUV\VWHP
2QFH9RQ1HXPDQQDQG%XUNVKDGSURYHQWKHH[LVWHQFHRID
8QLYHUVDO &RQVWUXFWRU WKH\ KDG DOVR SURYHQ WKH H[LVWHQFH RI D
VHOIUHSURGXFLQJ DXWRPDWRQ 2QH QHHG RQO\ IHHG WKH 8QLYHUVDO
&RQVWUXFWRUDWDSHZKLFKFRQWDLQHGWKHLQVWUXFWLRQVIRUFRQVWUXFW
LQJDQRWKHU8QLYHUVDO&RQVWUXFWRUFRPSOHWHZLWKDQHZWDSHDQG
WKH FRQVWUXFWRU ZRXOG PDNH D FRS\ RI LWVHOI +HQFH LW ZDV D
VHOIUHSURGXFLQJPDFKLQH
9RQ1HXPDQQVVHOIUHSURGXFLQJDXWRPDWRQGLGQRWILWLQWRWKH
FDWHJRU\RIVLPSOHSK\VLFVGULYHQUHSURGXFWLRQ,WZDVPXFKPRUH
OLNH D OLYLQJ RUJDQLVP LQ WKDW LW UHOLHG RQ D GHWDLOHG SLHFH RI
LQIRUPDWLRQWKHWDSHDQGLWVGHWDLOHGGHVLJQWRGULYHWKHUHSUR
GXFWLRQSURFHVV6XFKVHOIUHSURGXFWLRQZDVVWULNLQJO\VLPLODUWR
WKDWDFKLHYHGE\OLYLQJRUJDQLVPV7KH\WRRUHO\RQLQIRUPDWLRQ
'1$FRXSOHGZLWKDPHFKDQLVPWRLQWHUSUHWWKDWLQIRUPDWLRQDQG
GRVRPHWKLQJZLWKLW+RZHYHU9RQ1HXPDQQVPDFKLQHZDVIDU
WRRFRPSOLFDWHGWRGRDQ\VHULRXVPRGHOLQJDQGVWXG\ZLWK
<RXPLJKWQRWLFHWKDW9RQ1HXPDQQVDXWRPDWRQZDVDFWXDOO\
JUHDWO\RYHUVSHFLILHGLIDOO\RXDUHLQWHUHVWHGLQLVVHOIUHSURGXF
WLRQDVUHODWHVWROLYLQJRUJDQLVPV&OHDUO\QROLYLQJRUJDQLVPLVD
8QLYHUVDO&RQVWUXFWRULQDQ\VHQVH,WLVFDSDEOHRIFRQVWUXFWLQJD
FRS\RILWVHOIDQGOLPLWHGYDULDWLRQVRILWVHOIEXWWKDWLVDOO2QH
FDQQRWVLPSO\KDQGDQRUJDQLVPDQ\DUELWUDU\VWUDQGRI'1$DQG
ZDWFKLWFRQVWUXFWWKHEHDVWZKLFKZRXOGUHVXOWIURPWKDWVWUDQG
9RQ 1HXPDQQ DQG %XUNV KDG SURYHQ WKH SRVVLELOLW\ RI VXFK D
VHOIUHSURGXFLQJ DXWRPDWRQ EXW QRZJLYHQ WKH SRVVLELOLW\

)LJ9RQ1HXPDQQVVHOIUHSURGXFLQJ
DXWRPDWRQ
ZRXOGLWEHSRVVLEOHWRFRQVWUXFWVRPHWKLQJPXFKVLPSOHUWKDQZKDW
WKH\KDGSURSRVHG"
,Q()&RGGZDVDEOHWRGHPRQVWUDWHDPXFKVLPSOHU
8QLYHUVDO &RQVWUXFWRU XVLQJ RQO\ HLJKW VWDWHV EXW LW ZDV VWLOO D
8QLYHUVDO&RQVWUXFWRUDQGLWZDVVWLOOWUHPHQGRXVO\FRPSOH[,W
ZDVQRWXQWLOWKDW&KULVWRSKHU/DQJWRQMHWWLVRQHGWKHLGHDRI
D 8QLYHUVDO &RQVWUXFWRU LQ IDYRU RI D VSHFLDOL]HG RQH /DQJWRQ
DUJXHGWKDWDQDXWRPDWRQZRXOGEHFDSDEOHRIOLIHOLNHVHOIUHSUR
GXFWLRQLILWXVHGLQIRUPDWLRQERWKDFWLYHO\DVLQWHUSUHWHGLQVWUXF
()&RGG&HOOXODU$XWRPDWD$FDGHPLF3UHVV1HZ<RUN
&KULVWRSKHU/DQJWRQ 6HOI5HSURGXFWLRQLQ&HOOXODU$XWRPDWD 3K\VLFD'
SS
6HOI5HSURGXFWLRQ

0000000000000000000000000000000000
0000000000000000000000000000000000
0000000000000000000000000000000000
0000000000000000000000000000000000
0000000000000000000000000000000000
0000000000000000000000000000000000
0000000000022222222000000000000000
0000000000270140140200000000000000
0000000000212222221200000000000000
0000000000202000021200000000000000
0000000000272000021200000000000000
0000000000212000021200000000000000
0000000000202000021200000000000000
0000000000272222227222220000000000
0000000000210710710711112000000000
0000000000022222222222220000000000
0000000000000000000000000000000000
0000000000000000000000000000000000
0000000000000000000000000000000000
0000000000000000000000000000000000
)LJ/DQJWRQVDXWRPDWRQ
WLRQVWRH[HFXWHDQGSDVVLYHO\DVXQLQWHUSUHWHGGDWDZKLFKLV
PHUHO\ FRSLHG 6XFK DQ DXWRPDWRQ ZRXOG DYRLG WULYLDO SK\VLFV
GULYHQUHSURGXFWLRQE\IRUFLQJWKHFRQVWUXFWLRQRIWKHFRS\WREH
DFWLYHO\GLUHFWHGE\WKHDXWRPDWRQLWVHOIUDWKHUWKDQSDVVLYHO\E\
WKHWUDQVLWLRQUXOHV$WWKHVDPHWLPHWKHDXWRPDWRQFRXOGWDNH
DGYDQWDJH RI WKH WUDQVLWLRQ UXOHV WR IDFLOLWDWH LWV MRE /DQJWRQ
VXJJHVWHG WKDW VXFK UHVWULFWLRQV ZHUH VXIILFLHQW WR GLIIHUHQWLDWH
VHOIUHSURGXFWLRQIURPSK\VLFVGULYHQUHSOLFDWLRQ
8VLQJKLVQHZUXOHV/DQJWRQZDVDEOHWRGHPRQVWUDWHDYDVWO\
VLPSOHUVHOIUHSURGXFLQJDXWRPDWRQZKLFKFRQVLVWHGRIFHOOVLQ
DE\DUUD\ZLWKHLJKWVWDWHVSHUFHOO6XFKDVWUXFWXUHZDV
DFWXDOO\VLPSOHHQRXJKWRPRGHORQD3&DQGVWXG\LWVEHKDYLRU
)LJXUHVKRZVWKHGHWDLOHGVWUXFWXUHRI/DQJWRQVDXWRPDWRQLQ
LWV FHOOXODU DUUD\ )LJXUH VKRZV LWV WLPHHYROXWLRQ DQG KRZ
UHSURGXFWLRQRFFXUV7KH3URJUDP'LVNIRUWKLVERRNDOVRLQFOXGHV
DSURJUDP65$B/$%ZKLFKGHPRQVWUDWHVWKH/DQJWRQDXWRPD
WRQ RQ D 3& DQG DOORZV WKH XVHU WR H[SHULPHQW ZLWK GLIIHUHQW
FRQILJXUDWLRQVDQGWUDQVLWLRQUXOHV
%\-RKQ%\OKDGGHPRQVWUDWHGDQXPEHURIDXWRPDWD
PXFK VLPSOHU WKDQ /DQJWRQV ZKLFK ZHUH DOVR FDSDEOH RI VHOI
-RKQ%\O 6HOI5HSURGXFWLRQLQ6PDOO&HOOXODU$XWRPDWD 3K\VLFD'SS


)LJ7LPHHYROXWLRQRI/DQJWRQVDXWRPDWRQ
6HOI5HSURGXFWLRQ

UHSURGXFWLRQ2QHIRUH[DPSOHZDVDQDXWRPDWRQFRQVLVWLQJRI
FHOOV RI VL[ GLIIHUHQW SRVVLEOH VWDWHV :KDW D IDU FU\ IURP 9RQ
1HXPDQQVJLDQW6HH)LJXUH
7KHSUREOHPZLWKWDNLQJVHOIUHSURGXFWLRQWRWKHOLPLWVZKLFK
%\OGLGLVVLPSO\WKDWWKHGLVWLQFWLRQEHWZHHQLQIRUPDWLRQGULYHQ
DQG SXUHO\ SK\VLFVGULYHQ UHSURGXFWLRQ EHJLQV WR JHW VHULRXVO\
EOXUUHG/HWVWDNHDORRNDWWKLV/DQJWRQVDXWRPDWRQFRQWDLQVD
WDSH RIDPLQLPXPRIFHOOV,WLVWKLVWDSHZKLFKFRQWDLQVWKH
LQIRUPDWLRQZKLFKWKHDUWLILFLDORUJDQLVPXVHVWRUHSURGXFHLWVHOI
'LVDOORZLQJWKHVKHDWKVWDWHWKHVHFHOOVFDQKDYHVHYHQSRVVLEOH
VWDWHVVRWKHUHDUHVRPH [SRVVLEOHWDSHVZKLFKFRXOG
EHLQVHUWHGLQWRWKHDXWRPDWRQ,QDOOOLNHOLKRRGRQO\DIHZLWV
KDUGWRWHOOZLOOHIIHFWVHOIUHSURGXFWLRQLQ/DQJWRQVDXWRPDWRQ
,IDFRPSXWHUFRXOGFKHFNDWKRXVDQGFRPELQDWLRQVSHUVHFRQGLW
ZRXOGWDNHWULOOLRQ\HDUVWRFKHFNWKHPDOO7KDWVDWKRXVDQG

6HHWKHFRQILJXUDWLRQILOHV%</IRU65$B/$%RQWKH3URJUDP'LVN
)LJ%\OVDXWRPDWRQ

,QLWLDOVWDWH

$IWHUVHYHUDOWLPHVWHSV

WLPHVWKHDJHRIWKHXQLYHUVH7KHUDULW\RIDXVHIXOWDSHVXJJHVWV
WKDWWKHUHSURGXFWLRQRI/DQJWRQVDXWRPDWRQLVDKLJKO\LQIRUPD
WLRQGULYHQ UHSURGXFWLRQ VFKHPH ,W LV HQWLUHO\ XQUHDVRQDEOH WR
VXJJHVWWKDWVLPSO\WKURZLQJDUDQGRPWDSHLQWR/DQJWRQVDXWRPD
WRQZLOOUHVXOWLQVHOIUHSURGXFWLRQ2QWKHRWKHUKDQGXVLQJ%\OV
FHOOVWDWHDXWRPDWRQWKH WDSH LVRQO\ILYHFHOOVORQJHDFK
ZLWKSRVVLEOHVWDWHV7KXVRQO\ SRVVLEOHWDSHVPLJKW
EHFRQVWUXFWHG$OORIWKHVHFDQHDVLO\EHFKHFNHGE\FRPSXWHUDQG
RQO\RIWKHPUHVXOWLQVHOIUHSURGXFWLRQ7KHFKDQFHVRIDUDQGRP
WDSH\LHOGLQJVHOIUHSURGXFWLRQLVWKXVLQ:KLOHWKHFKDQFHV
DUHVPDOODUHWKH\VPDOOHQRXJK":KDWLIWKHFKDQFHVZHUHRQHLQ
"RQHLQ":KHUHGRHVRQHVWDUWVD\LQJWKDWUHSURGXFWLRQLV
SK\VLFVGULYHQDQGQRWLQIRUPDWLRQGULYHQ"
2QHPXVWEHFDUHIXOQRWWREHEHWUD\HGE\WKHYLVXDODSSHDOLQ
WKLVJDPH&HUWDLQO\%\OVDXWRPDWRQKDVWKH IHHO RIDUHSURGXF
LQJFHOO,WLVDURXQGJOREZKLFKRYHUDSHULRGRIWLPHVXFFHHGV
LQSURGXFLQJDVHFRQGURXQGJOREULJKWQH[WWRLW+RZHYHURQHFDQ
HDVLO\FRQVWUXFWDQDXWRPDWRQZLWKH[DFWO\WKHVDPHLQIRUPDWLRQ
FRQWHQWGHSHQGHQFHWKDWHIIHFWV VHOIUHSURGXFWLRQ RQO\LWORRNV
OLNHFU\VWDOJURZWKWKHDXWRPDWRQJURZVLQRQHGLUHFWLRQZLWKD
FRPSOH[EXWUHSHDWLQJSDWWHUQZKLFKUHPLQGVRQHRIWKHJURZWKRI
DRQHGLPHQVLRQDOFU\VWDOODWWLFH6XFKDQDXWRPDWRQPD\ORRNYHU\
GLIIHUHQW EXW WKH LQIRUPDWLRQ FRQWHQW DQG WKH UHSURGXFWLRQ DUH
LGHQWLFDO6HH)LJ
6RGRHV%\OVDXWRPDWRQPLPLFDOLYLQJRUJDQLVPRUDFU\VWDO
RIPRGHUDWHFRPSOH[LW\"7KLVLVDYHU\GLIILFXOWTXHVWLRQWRDQVZHU
DQGLWEULQJVXVULJKWXSDJDLQVWVRPHRIWKHSKLORVRSKLFDOTXHVWLRQV
ZKLFKZHQHHGWRORRNDWKDUGLQRUGHUWRXQGHUVWDQGOLIH$WOHDVW
IRU QRZ ZH KDYH VRPHLGHDRIZKDWVHOIUHSURGXFWLRQHQWDLOVDV
7KHSURJUDPV&+(&.%DQG&+(&.%RQWKH3URJUDP'LVNDOORZ\RXWR
FKHFN HYHU\ WDSH 7KH\ JLYH WKH IROORZLQJ UHVXOWV GLIIHUHQW WDSHV JLYH
%\OOLNHDXWRPDWDWDSHWKHRULJLQDODQGDOVRDQG,IZH
DOORZWKHVKHDWKVWDWHLQRXUFDOFXODWLRQZHJHWWZRRWKHULQWHUHVWLQJWDSHV
DQGWKDWUHVXOWLQYHU\GLIIHUHQWUHSURGXFLQJDXWRPDWD
7KLVDXWRPDWRQLVDOVRRQWKH3URJUDP'LVN7KHFRQILJXUDWLRQILOHVIRULWDUH
FDOOHG&5<67$/DQGVKRXOGEHXVHGZLWK65$B/$%
6HOI5HSURGXFWLRQ

,QLWLDOVWDWH

$IWHUVHYHUDOWLPHVWHSV
)LJ7KH&5<67$/DXWRPDWRQ
PRGHUQ$/UHVHDUFKHUVVHHLWDQGZHFDQFLWHVRPHH[DPSOHVRI
LWHYHQLIZHDUHQRWFRPSOHWHO\FOHDURQZKHUHWRGUDZWKHOLQH
EHWZHHQLQIRUPDWLRQGULYHQVHOIUHSURGXFWLRQDQGSK\VLFVGULYHQ
UHSURGXFWLRQ
9LUXVHVDQG6HOI5HSURGXFWLRQ
'RHVDYLUXVERWKXVHLQIRUPDWLRQDVLQVWUXFWLRQVWRH[HFXWH
DQG DV XQLQWHUSUHWHG GDWD WR FRS\" 0RVW FHUWDLQO\ LW GRHV )RU
H[DPSOHFRQVLGHUWKH,1758'(5YLUXVGLVFXVVHGLQ7KH/LWWOH
%ODFN%RRNRI&RPSXWHU9LUXVHV,WREYLRXVO\H[HFXWHVWKHFRGHRI
ZKLFKLWFRQVLVWV<HWDWWKHVDPHWLPHLQWKH,1)(&7URXWLQHLW
WDNHVDOORIWKDWFRGHDQGDSSHQGVLWWRWKH(;(ILOHLWLVLQIHFWLQJ
$WWKDWSRLQW,1758'(5LVXVLQJLWVFRGHDVXQLQWHUSUHWHGGDWD
7KLV LV D YHU\ FRPPRQ PHWKRG RI RSHUDWLRQ IRUYLUXVHV7KXVD
FRPSXWHUYLUXVGRHVLQGHHGHIIHFWVHOIUHSURGXFWLRQDFFRUGLQJWR
/DQJWRQVGHILQLWLRQ
,QIDFWFRPSXWHUYLUXVHVDUHFRPPRQO\VHWDSDUWIURPRUGLQDU\
SURJUDPVEHFDXVHWKH\UHSURGXFH1RUPDOSURJUDPVGRQRWUHSUR
GXFHEXWE\GHILQLWLRQYLUXVHVGR)URPWKHLUFRQVWUXFWLRQZHFDQ
VHHWKDWWKHLUUHSURGXFWLRQLVQRWYHU\GLIIHUHQWIURPRWKHUVHOIUH
SURGXFLQJDXWRPDWD
(PHUJHQW%HKDYLRU
,Q D ELRORJLFDO RUJDQLVP WKH '1$ GHWHUPLQHV WKH SK\VLFDO
FKDUDFWHULVWLFVRIDQRUJDQLVP,WLVHVVHQWLDOO\WKHPHGLXPLQZKLFK
WKH SURJUDPRIOLIH LVZULWWHQ+RZHYHUWKHUHODWLRQVKLSEHWZHHQ
WKDWSURJUDPLQLWVUDZIRUPWKH'1$DQGWKHPDQLIHVWH[SUHV
VLRQ RI LW LQ D OLYLQJ RUJDQLVP LV H[WUHPHO\ REWXVH ,W LV WKH
REWXVHQHVVRIWKLVUHODWLRQVKLSWKDWIRUPVWKHFRUHRIWKHLGHDRI
HPHUJHQWEHKDYLRU7RXQGHUVWDQGWKLVFRQFHSWEHWWHUOHWVORRNDW
LWILUVWZLWKLQWKHFRQWH[WRIELRORJLFDORUJDQLVPVDQGWKHQZHOO
WDNHDORRNDWKRZDUWLILFLDOOLIHILWVLQWRWKHSLFWXUH
/HWVVWDUWE\ORRNLQJDWKRZ'1$ZRUNV7KH'1$PROHFXOH
FRXOGSURSHUO\EHGHVFULEHGDVDRQHGLPHQVLRQDOFU\VWDORUILEHU
+RZHYHU XQOLNH WKH FU\VWDOV ZH QRUPDOO\ WKLQN RI '1$ LV DQ
DSHULRGLFFU\VWDO5DWKHUWKDQEHLQJFRPSRVHGRIDVLQJOHPROHFXOH
FDOOHGDQXFOHRWLGHUHSHDWHGDGLQILQLWXP'1$FRQVLVWVRIIRXU
GLIIHUHQW QXFOHRWLGHVFDOOHG EDVHVZKLFK DUH DOO IXQFWLRQDOO\
LGHQWLFDOZLWKUHVSHFWWRWKHVWUXFWXUHRIWKH'1$LWVHOI7KHVHEDVHV
PD\ EH VXEVWLWXWHG IRU RQH DQRWKHU LQ WKH FU\VWDO FHOOV ZLWKRXW
DOWHULQJWKHSK\VLFDOVWUXFWXUHRIWKH'1$PROHFXOH7KHUHIRUHRQH
FRXOGFRQFHLYDEO\FRQVWUXFWD'1$PROHFXOHWRHQFRGHDQ\NLQG
RILQIRUPDWLRQGHVLUHG)RUH[DPSOHDE\WHFRXOGEHHQFRGHGE\D
VWULQJRIIRXUQXFOHRWLGHVDPHJDE\WHRIGDWDFRXOGEHHQFRGHGLQWR
D'1$PROHFXOHIRXUPLOOLRQQXFOHRWLGHVORQJZKLFKLVDERXWWKH
VL]H RI WKH '1$ PROHFXOH LQ D VLPSOH RQHFHOOHGEDFWHULXP$
SUHWW\FRPSDFWVWRUDJHPHFKDQLVP
,Q IDFW WKH '1$ PROHFXOH VWRUHV LQIRUPDWLRQ QHFHVVDU\ WR
FRQVWUXFW SURWHLQV 3URWHLQV DUH FRPSOH[ FKDLQV RI DPLQR DFLGV

ZKLFK SHUIRUP DOO WKH IXQFWLRQV RI FHOO PHWDEROLVP LQFOXGLQJ

UHSURGXFWLRQ,QDOOWKHUHDUHGLIIHUHQWDPLQRDFLGVZKLFKOLYLQJ
RUJDQLVPVXVHWREXLOGSURWHLQVZLWK(DFKDPLQRDFLGLVHQFRGHG
LQ WKH '1$ E\ D WKUHHQXFOHRWLGH FKDLQ $ SURWHLQ ZKLFK PD\
FRQVLVWRIDKXQGUHGRUVRDPLQRDFLGVLVUHSUHVHQWHGLQWKH'1$
E\DVHTXHQFHRIWKUHHQXFOHRWLGHFKDLQVFDOOHGDJHQH(DFKVWUDQG
RI'1$LQDFHOOZKLFKFRQVLVWVRIPDQ\KXQGUHGVRIJHQHVLV
FDOOHGDFKURPRVRPH6HH$SSHQGL[%IRUPRUHLQIRUPDWLRQDERXW
WKHFKHPLVWU\RIOLIH
7KHJHQHVLQ'1$PLJKWEHWKRXJKWRIDVFRPSOH[ LQVWUXF
WLRQV ZKLFKDUH H[HFXWHG E\SURWHLQVZKLFKSHUIRUPHYHU\NLQG
RIFHOOIXQFWLRQUDQJLQJIURPGLJHVWLRQWRPDNLQJKDLUWRUHSURGXF
WLRQ7KHHQFRGHG'1$LQVWUXFWLRQVIRUDQRUJDQLVPWDNHQDVD
ZKROHDUHUHIHUUHGWRDVLWVJHQRW\SHIURPWKHZRUGJHQH,QWKH
FDVH RI D OLYLQJ RUJDQLVP WKH H[HFXWLRQ RI WKH LQVWUXFWLRQV
FRQVLVWVRIWKHSURSHUIXQFWLRQLQJRIWKHYDULRXVSURWHLQVLQDFHOO
WRSURGXFHOLIH,VD\ SURSHU EHFDXVHDQLPEDODQFHUHVXOWVLQWKH
YDULRXVSURWHLQVDWWDFNLQJHDFKRWKHUDQGWKH'1$UHVXOWLQJLQ
GHDWKDQGGHFRPSRVLWLRQLQVWHDGRIOLIH7KLVH[WUHPHO\FRPSOH[
H[HFXWLRQRIWKHLQVWUXFWLRQV LVFDOOHGWKHSKHQRW\SHIURPWKH
ZRUGSKHQRPHQRQ7KHSKHQRW\SHLVWKHRXWZDUGDSSHDUDQFHRI
WKHRUJDQLVPLWVOLIHVSDQLWVGLHWDU\SUHIHUHQFHVLWVLQVWLQFWVHWF
2QH RI WKH JUHDW TXHVWLRQV RI ELRORJ\ LV KRZ WKH JHQRW\SH
WUDQVODWHVLQWRDSKHQRW\SH7KDWLVKRZGRHVDSDUWLFXODUJHQHWLF
FRGHUHVXOWLQDJLYHQIHDWXUH"8QWLOIRUW\\HDUVDJRWKLVTXHVWLRQ
ZDVSXUHO\DFDGHPLFEHFDXVHRXUXQGHUVWDQGLQJRIELRFKHPLVWU\
ZDV VR OLPLWHG 1RZ ZH KDYH D YDVW DPRXQW RI GDWD DERXW WKH
GHWDLOHGJHQHWLFVWUXFWXUHRIDZLGHYDULHW\RIRUJDQLVPV$QGWKH
TXHVWLRQLVVWLOOEDUHO\WUDFWDEOHGXHWRLWVVKHHUFRPSOH[LW\
2QHPLJKWYLHZDVLQJOHFHOODVDSDFNDJHRIOLWWOHPDFKLQHV
SURWHLQVHDFKSHUIRUPLQJLWVRZQVSHFLDOL]HGIXQFWLRQZLWKLQWKH
FHOO 7KH '1$ VSHFLILHV KRZ HDFK RI WKRVH PDFKLQHV LV WR EH
EXLOWDQGZKDWPDFKLQHVDUHWREHEXLOWEXWLWLVQRWLQDQ\VHQVH
WKHGLUHFWRURIWKHVHPDFKLQHV,WGRHVQRWFRQWURORUFRRUGLQDWH
WKHLU DFWLYLWLHV RQFH WKH\ DUH EXLOW 4XLWH WR WKH FRQWUDU\ WKH
PDFKLQHV PDQDJH DQG PDLQWDLQ WKH '1$ ,Q IDFW DSDUW IURP
LQYRNLQJVRPHNLQGRIYLWDOLVPWKHUHDSSHDUVWREHQR GLUHFWRU
RI WKHVH PDFKLQHVQR FHQWUDOL]HG FRRUGLQDWRU RI KRZ WKH PD
(PHUJHQW%HKDYLRU

FKLQHVVKRXOGZRUNWRJHWKHU7KHELRORJLFDORUJDQLVPLVPRUHOLNH
DFRPSOH[SDUDOOHOH[HFXWLQJGLVWULEXWHGSURFHVVLQJHQYLURQPHQW
WKDQDVHULDOFRPSXWHU
7KHFRQFHSWRIHPHUJHQWEHKDYLRUUHYROYHVDURXQGWKLVTXHV
WLRQRIKRZWKHJHQRW\SHWKHGHVFULSWLRQRIZKDWPDFKLQHVDUHWR
EHEXLOWGHWHUPLQHVWKHSKHQRW\SHWKHFRRUGLQDWHGRSHUDWLRQRI
WKRVHPDFKLQHV,QVKRUW HPHUJHQWEHKDYLRU LVVLPSO\WKHLGHD
WKDWWKHEHKDYLRURIDFRPSOH[OLYLQJRUJDQLVPLVQRWGLUHFWHGE\D
FHQWUDOL]HGSURJUDP5DWKHUEHKDYLRUHPHUJHVIURPWKHFRPSOH[
LQWHUDFWLRQRIWKHLQGLYLGXDOSDUWV7KHFRQFHSWRIHPHUJHQWEHKDY
LRU DOVR VXJJHVWV WKDW WKH EHKDYLRU RI WKH RUJDQLVP DV D ZKROH
H[KLELWVIHDWXUHVZKLFKFRXOGQRWEHGHGXFHGIURPWKHEHKDYLRURI
WKHLQGLYLGXDOSDUWV
,QHVVHQFHHPHUJHQWEHKDYLRULVZKDWPDNHVOLIHLQWHUHVWLQJ
:KHQLWFRPHVWRFRQVWUXFWLQJDUWLILFLDORUJDQLVPVWKHLGHDRI
HPHUJHQWEHKDYLRUFDQDOVREHHPSOR\HGE\GHVLJQLQJDPRGXODU
RUJDQLVPZLWKORFDOO\LQWHUDFWLQJSDUWVEXWQRFHQWUDOL]HGFRQWURO
OHU7KHEHKDYLRURIWKHSDUWVDVDZKROHLVQRWVSHFLILHG6LQFHWKH
LQWHUDFWLRQRIWKHSDUWVLVQRUPDOO\QRQOLQHDUWKHEHKDYLRURIWKH
ZKROH RUJDQLVP ZLOO QRW QHFHVVDULO\ EH DQ REYLRXV UHVXOW RI WKH
EHKDYLRURIWKHSDUWV7KHZKROHLVWKXVLQDVHQVHJUHDWHUWKDQWKH
SDUWV
,QWKLVZD\FRPSXWHUSURJUDPVFDQPRGHOWKHJHQRW\SHWR
SKHQRW\SHHPHUJHQFHSKHQRPHQRQREVHUYHGLQOLYLQJRUJDQLVPV
7KH JHQRW\SH IRUDQDUWLILFLDORUJDQLVPLVWKHVSHFLILFDWLRQRI
WKHLQGLYLGXDOPDFKLQHV7KH SKHQRW\SH LVWKHEHKDYLRURIWKHVH
PDFKLQHVZRUNLQJWRJHWKHU
7KHHPSKDVLVRIHPHUJHQWEHKDYLRULQ$/ZRUNKDVWHQGHGWR
VWHHU UHVHDUFKHUVLQWKHGLUHFWLRQRIKLJKO\SDUDOOHOV\VWHPVDQG
SDUWLFXODUO\WRZDUGPRGHOLQJDUWLILFLDOOLIHXVLQJFHOOXODUDXWRPDWD
7KHVHULDOFRPSXWLQJHQYLURQPHQWGRHVQRWVHHPWROHQGLWVHOIZHOO
WR WKH LGHD RI HPHUJHQW EHKDYLRU EHFDXVH VHULDO SURJUDPV WHQG
WRZDUGFHQWUDOL]HGUDWKHUWKDQGLVWULEXWHGFRQWURO
+RZHYHU RQH FDQQRW VLPSO\ GLVPLVV VHULDO SURJUDPV $Q\
FRPSXWDWLRQ GRQH RQ DQ\ FRPSXWHU QR PDWWHU KRZ PDVVLYHO\
SDUDOOHOFDQDOVREHFDUULHGRXWRQDVLPSOHVHULDOXQLYHUVDO7XULQJ
PDFKLQH7KDWLVDPDWKHPDWLFDOO\SURYHQIDFW$QGFHUWDLQO\RQH
ZRXOGQWZDQWWRVD\RQHLPSOHPHQWDWLRQRIDQDOJRULWKPH[KLELWV

HPHUJHQW EHKDYLRU DQG WKHUHIRUH TXDOLILHV DV OLIH ZKLOH DQRWKHU

LPSOHPHQWDWLRQRIWKHH[DFWVDPHDOJRULWKPGRHVQRW,QIDFWPXFK
$/ZRUNXVLQJFHOOXODUDXWRPDWDLVDFWXDOO\PRGHOHGRQDVHULDO
FRPSXWHU6RDWRQHOHYHOWKHDXWRPDWRQORRNVSDUDOOHO$WDQRWKHU
OHYHO WKRXJK LW LV FRPSOHWHO\ VHULDO 6R ZH FDQW MXPS WR WKH
FRQFOXVLRQ WKDW D VHULDO SURJUDP LV QHFHVVDULO\ GHIHFWLYH LQ $/
UHVHDUFK :H PLJKW ZRQGHU WKRXJK WR ZKDW GHJUHH HPHUJHQW
EHKDYLRULVUHSUHVHQWDWLRQGHSHQGHQWPRUHDPDWWHURIDSSHDUDQFH
WKDQRIDQ\TXDQWLILDEOHSURSHUW\RIDV\VWHP
,QDGGLWLRQWKHZKROHLGHDRIHPHUJHQWEHKDYLRUPLJKWEHMXVW
DUHOLFRIWKHNLQGRIVFLHQFHSHRSOHGLGEHIRUHWKH\KDGFRPSXWHUV
7RVXJJHVWWKDWSKHQRPHQDZLOODULVHLQDV\VWHPWKDWFRXOGQRWEH
GHGXFHGIURPWKHEHKDYLRURIWKHSDUWVVXJJHVWVRPHIRUPDOPHWKRG
RIGHGXFWLRQ,IWKDWIRUPDOPHWKRGLVDQDO\WLFDOO\VROYLQJDQDO\WLF
HTXDWLRQV WKHQ PD\EH ZH DUH FDOOLQJ VRPHWKLQJ HPHUJHQW WKDW
UHDOO\ LVQWEXW ZHUH MXVW QRW VPDUW HQRXJK WR ILQG WKH ULJKW
HTXDWLRQVRUWKHLUVROXWLRQV2QWKHRWKHUKDQGSHUKDSVZHVKRXOG
VFUDSWKDWJDPHDOWRJHWKHUDQGFDOODQ\WKLQJZHFDQZRUNRXWRQ
DFRPSXWHUDYDOLGGHGXFWLRQ$IWHUDOOFRXOGQW,ZRUNWKHVDPH
WKLQJRXWZLWKSHQFLODQGSDSHUDWOHDVWLQWKHRU\"
,IHPHUJHQWEHKDYLRULVUHSUHVHQWDWLRQGHSHQGHQWDQGGHSHQG
HQWRQVRPHIRUPDOFRQFHSWRIGHGXFWLRQWKHQZHKDYHWRZRQGHU
ZKHWKHULWLVHYHQUHDO2ULVLWMXVWWKHSHUFHSWLRQRIRXUOLPLWHG
PLQGV2QFHDJDLQZHILQGRXUVHOYHVJHWWLQJLQWRVRPHZKDWRID
SKLORVRSKLFDOPXGGOH7KLVZHOOWDNHXSPRUHVHULRXVO\LQDIHZ
FKDSWHUV )RU QRZ OHWV MXVW DFFHSW WKH XVXDO $/ ZLVGRP DERXW
HPHUJHQWEHKDYLRUDQGDSSO\LWWRYLUXVHV
9LUXVHVDQG(PHUJHQW%HKDYLRU
5RJHU 3HQURVH 7KH (PSHURUV 1HZ 0LQG 2[IRUG 8QLYHUVLW\ 3UHVV 1HZ
<RUNSS
,WVHHPVDVLIWKH$/FRPPXQLW\KDVDWOHDVWDVXEFRQVFLRXVDSSUHFLDWLRQRI
WKLVSUREOHPDV HPHUJHQWEHKDYLRU LVRIWHQXVHGDVDFRQYHQLHQWODEHOIRU
DQ\XQH[SHFWHGXQSUHGLFWHGUHVXOWVQRWMXVWWKRVHDULVLQJIURPWKHFRPSOH[
G\QDPLFV RI GLVWULEXWHG SURFHVVLQJ 7KXV RQH PLJKW ILQG LW EHLQJ XVHG WR
GHVFULEH JHQHWLF DOJRULWKPV HWF ZKLFK DUH QRW QHFHVVDULO\ SDUDOOHO LQ DQ\
VHQVH
(PHUJHQW%HKDYLRU

9LUXVHVDSSDUHQWO\IDOOVKRUWRIWKHLGHDORIHPHUJHQWEHKDYLRU
7KH\ WHQG WR IROORZ WKH SDUDGLJP RI VHULDO FHQWUDOL]HG FRQWURO
UDWKHUWKDQWKDWRIDSDUDOOHOGLVWULEXWHGRUJDQL]DWLRQLQYROYLQJD
FRPSOH[UHODWLRQVKLSEHWZHHQPDQ\VPDOOSDUWVZKLFKLQWHUDFWWR
SURGXFH WKH SKHQRW\SH 9LUXVHV ZHUH RULJLQDOO\ GHYHORSHG RQ
VHULDOVLQJOHXVHUFRPSXWHUV\VWHPVE\SURJUDPPHUVXVHGWRGH
VLJQLQJFHQWUDOL]HGFRQWUROVWUXFWXUHV7KXVLWLVKDUGO\VXUSULVLQJ
WKDWWKH\DUHZKDWWKH\DUH7KH\ZHUHQRWRULJLQDOO\DWWHPSWVWR
PRGHOOLYLQJRUJDQLVPV6WLOOLIZHDUHWRVXJJHVWWKDWYLUXVHVDUH
DOLYH LQ VRPH VHQVH ZH RXJKW WR GHDO ZLWK HPHUJHQW EHKDYLRU
FDUHIXOO\
7KHUHDUHWZRSUREOHPVZHIDFH2QHLVSXUHO\WHFKQRORJLFDO
DQGRQHLVGHHSO\SKLORVRSKLFDO7KHODWWHUZKLFKLQYROYHVWU\LQJ
WRXQGHUVWDQGWKHWUXHQDWXUHRIHPHUJHQWEHKDYLRUZHKDYHRQO\
KLQWHGDWDQGZHZLOOWDNHLWXSPRUHIXOO\ODWHU7KHWHFKQRORJLFDO
SUREOHP ZLWK YLUXVHV LV WKDW WKH\ GRQW HYHQ DSSHDU WR H[KLELW
HPHUJHQWEHKDYLRU7KHUHODWLRQVKLSEHWZHHQJHQRW\SHDQGSKHQR
W\SHVHHPVVRPHZKDWWULYLDOLQDFHQWUDOL]HGVHULDOSURJUDP7KH
SKHQRW\SHLVWKHJHQRW\SHH[HFXWHGE\WKHSURFHVVRU$QGLI\RX
KDYHWKHDVVHPEO\ODQJXDJHOLVWLQJRIWKHYLUXV\RXFDQVWXG\LW
DQGXQGHUVWDQGWKHSKHQRW\SH2IFRXUVHLIRQHZHUHWRORRNDWD
ILOH IXOO RI WKH PLVFHOODQHRXV E\WHV FDOOHG H[HFXWDEOH PDFKLQH
ODQJXDJHLQVWUXFWLRQVRQHZRXOGKDYHDKDUGWLPHLPDJLQLQJZKDW
WKHH[HFXWLRQRIWKRVHE\WHVZRXOGUHDOO\ORRNOLNH6RZHFDQWVD\
WKDWWKHUHODWLRQVKLSEHWZHHQJHQRW\SHDQGSKHQRW\SHLVHQWLUHO\
WULYLDO
9LUXVHV DUH QRUPDOO\ GHVLJQHG IURP WKH WRS GRZQ $ JLYHQ
EHKDYLRULVLPDJLQHGE\WKHDXWKRUDQGDSURJUDPLVGHVLJQHGWR
SURGXFHWKLVEHKDYLRU7KHIHZHU VXUSULVHV WKHEHWWHU<HWHPHU
JHQFH VXJJHVWV H[DFWO\ WKDWLQWHUHVWLQJ VXUSULVHV 6R VHULDO
YLUXVSURJUDPVGRQWGRYHU\ZHOODWHYHQJLYLQJWKHDSSHDUDQFHRI
HPHUJHQFH,QVWHDGWKH\JLYHWKHDSSHDUDQFHRIFDUHIXOFHQWUDOL]HG
FRQWURO 7KH LGHD RI HPHUJHQW EHKDYLRU PRYHV XV DZD\ IURP
FHQWUDOL]HGFRQWUROWRZDUGORFDOL]HGGLVWULEXWHGFRQWURO
2QDVLQJOHXVHURSHUDWLQJV\VWHPOLNH'26RQHLVSUHWW\PXFK
VWXFNZLWKVHULDOSURJUDPPLQJ,QWKDWHQYLURQPHQWYLUXVHVPD\
QHYHUDSSHDUWRH[KLELWDQ\WKLQJOLNHHPHUJHQWEHKDYLRU+RZHYHU
DPXOWLWKUHDGHGSUHHPSWLYHPXOWLWDVNLQJHQYLURQPHQWOLNH26

SURYLGHVVRPHIDVFLQDWLQJSRVVLELOLWLHV:HFRXOGGHVLJQDYLUXV
ZKLFKORRNVPXFKPRUHOLNHDOLYLQJRUJDQLVPZLWKGLIIHUHQWSDUWV
WKDW SHUIRUP GLIIHUHQW IXQFWLRQV ZRUNLQJ LQGHSHQGHQWO\ DQG \HW
ZRUNLQJWRJHWKHU6XFKDYLUXVFRXOGH[KLELWDWOHDVWWKHDSSHDUDQFH
RIHPHUJHQWEHKDYLRUDVPXFKRIDQDSSHDUDQFHDVDQ\WKLQJ$/
UHVHDUFKKDVSURGXFHG
1RZDV,VDLGDWWKHVWDUWRIWKLVVHFWLRQZHDUHQWJRLQJWRXVH
DVHWRIKDUGDQGIDVWUXOHVWRGHWHUPLQHZKDWLVDOLYHDQGZKDWLV
QRW:HMXVWGRQWXQGHUVWDQGOLIHZHOOHQRXJKWRGRWKDW\HW-XVW
EHFDXVH YLUXVHV GRQW ORRN YHU\ HPHUJHQW ZH DUHQW JRLQJ WR
FRQFOXGHWKH\UHQRWDOLYH$OOWKHPRUHVRVLQFHZHKDYHVRPH
XQDQVZHUHGTXHVWLRQVDERXWHPHUJHQFHLWVHOI,QIDFWWKHDSSDUHQW
ODFNRIHPHUJHQWEHKDYLRUZLOOEHYDOXDEOHLQWKHQH[WSDUWRIWKLV
ERRN ZKHQ ZH GLJ LQWR HYROXWLRQ 7KDWV EHFDXVH WKHUHODWLYHO\
WULYLDOJHQRW\SHWRSKHQRW\SHFRQQHFWLRQIDFLOLWDWHVRXUDQDO\VLVRI
HYROXWLRQZKLOHHYROXWLRQLWVHOILVQRWSDUWLFXODUO\GHSHQGHQWRQ
HPHUJHQFHWRZRUN
0HWDEROLVPDQG
$GDSWDELOLW\
1RZ,ZDQWWRGLVFXVVWZRGLIIHUHQWPHFKDQLFDODVSHFWVRIOLIH
PHWDEROLVP DQG DGDSWDELOLW\ $OWKRXJK GLIIHUHQW SKHQRPHQD ,
OXPSWKHPWRJHWKHUEHFDXVHLQRXUZRUOGRIELWVDQGE\WHVWKH\DUH
TXLWHXVHIXODWKHOSLQJXVWRGLVWLQJXLVKEHWZHHQVHOIUHSURGXFWLRQ
DQG SK\VLFVGULYHQ UHSOLFDWLRQ %H\RQGWKDWWKH\EHFRPHUDWKHU
QHEXORXVDQGRIWHQPLVOHDGLQJDVWRZKDWOLIHLVDQGLVQRW
0HWDEROLVP
&RQFLVHO\SXWPRVWOLYLQJRUJDQLVPVXVHHQHUJ\WRPDLQWDLQ
WKHPVHOYHVLQDVWDWHRIORZHQWURS\DQGFDUU\RXWWKHLUDFWLYLWLHV
LQFOXGLQJVHOIUHSURGXFWLRQ%LRORJLFDORUJDQLVPVHLWKHUPDNHXVH
RI GLUHFW HQHUJ\ IURP WKH VXQ SODQWVSKRWRV\QWKHVLV RU WKH\
FRQYHUW HQHUJ\ VWRUHG LQ FRPSOH[ RUJDQLF PROHFXOHV LQWR IRUPV
WKH\FDQXVHDQLPDOVGLJHVWLRQ7RXQGHUVWDQGWKLVSURFHVVOHWV
WDNHDORRNDWWKHVHFRQGODZRIWKHUPRG\QDPLFV
7KHVHFRQGODZLVRQHRIWKHPRVWXQLYHUVDOO\DSSOLFDEOHODZV
RISK\VLFVNQRZQ,WDSSOLHVWRPLFURVFRSLFGXVWSDUWLFOHVDVZHOO
DVWRJDOD[LHVDQGHYHQWKHZKROHXQLYHUVH6LPSO\SXWLWVWDWHVWKDW
LQDQ\LVRODWHGV\VWHPHQWURS\PXVWVWD\WKHVDPHRULQFUHDVHZLWK
WLPH,WFDQQRWGHFUHDVH(QWURS\LVDPHDVXUHRIWKH RUGHUOLQHVV
RIDV\VWHPWKHJUHDWHUWKHHQWURS\WKHOHVVWKHRUGHU7KXVWKH
VHFRQG ODZ VLPSO\ VWDWHV WKDW UHDOZRUOG V\VWHPV OHIW WR WKHP
VHOYHVSURFHHGIURPVWDWHVRIJUHDWHURUGHUWRVWDWHVRIOHVVRUGHU
WKH\GHFD\

7KLVVHFRQGODZDSSOLHVWRHYHU\WKLQJLQFOXGLQJOLYLQJRUJDQ
LVPV,IDOLYLQJRUJDQLVPLVSODFHGLQDFORVHGHQYLURQPHQWLWZLOO
VRRQGLHDQGGHFD\7KHFRPSOH[RUJDQLFPROHFXOHVLWLVPDGHRI
ZLOODWWDFNHDFKRWKHUDQGEUHDNGRZQLQWRVLPSOHURQHV/LYLQJ
RUJDQLVPVFDQRQO\DYRLGWKHLPPHGLDWHFRQVHTXHQFHVRIVHFRQG
ODZGHFD\EHFDXVHWKH\DUHQRWFORVHGV\VWHPV7KH\FRQWLQXDOO\
XWLOL]HPDWWHUDQGHQHUJ\ZKLFKIORZWKURXJKWKHPWRNHHSWKHLU
HQWURS\ ORZ 7KLV IORZ RI HQHUJ\ PRYHV WKHP DZD\ IURP WKH
KLJKHQWURS\HTXLOLEULXPSRLQWVRWKH\FDQVXVWDLQOLIH6HH)LJXUH
,IIRUDQ\UHDVRQWKHHQHUJ\IORZVWRSVWKH\GLHDQGGHFD\
7KLVZDVLOOXVWUDWHGE\WKH%LRVSKHUH,,DSRSHFRORJLFDOSURMHFW
QHDUZKHUH,OLYHLQZKLFKDIHZSHRSOHZHUHHQFORVHGIRU\HDUV
LQ D FORVHG HFRV\VWHP 2I FRXUVH LW ZDV FORVHG RQO\ WR WKH
WUDQVIHURIPDWWHU2XUJDVFRPSDQ\VHQWIOLHUVRXWERDVWLQJRIKRZ
WKH\ZHUHVHOHFWHGWRSURYLGHHQHUJ\IRUWKHSURMHFWZKLFKFRQ
VXPHGDVPXFKHQHUJ\DVVRPHRUGLQDU\KRPHV:LWKRXWWKDW
HQHUJ\ IORZDQG WKH WUHPHQGRXV HQHUJ\ IURP WKH VXQWKH LQ
KDELWDQWVZRXOGKDYHEHHQGRRPHG
7KHSURFHVVE\ZKLFKDOLYLQJRUJDQLVPXVHVPDWWHUDQGHQHUJ\
LVLWVPHWDEROLVP3UHVXPDEO\DUWLILFLDORUJDQLVPVVKRXOGKDYHD
PHWDEROLVPLQVRPHVHQVHDQDELOLW\WRFRQYHUWPDWWHUDQGHQHUJ\
LQWR YLWDO SURFHVVHV ZKLFK WKH RUJDQLVP XVHV WR ORFDOO\ UHGXFH
HQWURS\)RUUHDOZRUOGRUJDQLVPVWKHVHFRQFHSWVFDQEHPDWKH
PDWLFDOO\ TXDQWLILHG 2I FRXUVH GHILQLQJ MXVW ZKDW WHUPV OLNH
PDWWHUDQGHQHUJ\PHDQLQWKHUHDOPRIFHOOXODUDXWRPDWDLVUDWKHU
GLIILFXOW XQOHVV ZH JR EDFN WR WKH SK\VLFDO PDFKLQH ZKLFK LV
UXQQLQJWKHDXWRPDWRQSURJUDP(QWURS\LVDGLIIHUHQWVWRU\VLQFH
LWFDQEHPDWKHPDWLFDOO\GHILQHG6XFKFRQFHSWVDUHFORVHO\ZHG
GHGWRUHDOZRUOGODZVRISK\VLFVDQGWKH\WHQGWRORVHDOOVLJQLIL
FDQFHZKHQDSSOLHGWRDFRPSOHWHO\DEVWUDFWV\VWHP
7KHUHTXLUHPHQWIRUDPHWDEROLVPFDQEHFRPHIX]]\HYHQLQ
UHDOZRUOGELRORJ\WKRXJK)RUH[DPSOHELRORJLFDOYLUXVHVGRQRW
1RWHWKDWWKHFRQFHSWRIRUGHUFDQEHPDWKHPDWLFDOO\TXDQWLILHG:HOOGLVFXVV
WKDWPRUHODWHU
-DPHV3:HVOH\(FRSK\VLFV&KDUOHV7KRPDV6SULQJILHOG,OOLQRLVSS
II
&ORVHGV\VWHP
1RHQHUJ\IORZHQWURS\
LQFUHDVHVRUJDQLVPGLHV

2SHQV\VWHP
(QHUJ\IORZDOORZV
RUJDQLVPWRPDLQWDLQORZ
HQWURS\DQGOLYH
)LJ0HWDEROLVPXVHVHQHUJ\WRORZHUHQWURS\
KDYHDPHWDEROLVPRIWKHLURZQ7KH\FRQVLVWRIOLWWOHPRUHWKDQD
VWUDQGRI'1$DQGVRPHSURWHFWLYHPDWHULDO7KLVVWUXFWXUHLVLQHUW
XQWLO LW WDNHV FRQWURO RI DQRWKHU FHOOV PHWDEROLVP DQG XVHV LWWR
DFFRPSOLVKWKHYLUXVSODQLQVWHDGRIWKHFHOOV
$GDSWDELOLW\
,QGLYLGXDO OLYLQJ RUJDQLVPV FDQ JHQHUDOO\ERWKLQWHUDFWZLWK
DQGPRGLI\WKHLUHQYLURQPHQWDVZHOODVDGDSWWRVPDOOFKDQJHVLQ
WKDWHQYLURQPHQW7KLVPDNHVDQRUJDQLVPIOH[LEOHDQGVWDEOHLQ
WKHIDFHRIFKDQJH7KH\FDQDGDSWWRKHDWDQGFROGRUDORZIRRG
VXSSO\RUHYHQWKHSUHVHQFHRIRWKHURUJDQLVPV
2IFRXUVHWKHDELOLW\RIDQRUJDQLVPWRDGDSWWRLWVHQYLURQPHQW
LVOLPLWHG:KHQIDFHGZLWKDQH[WUHPHFKDQJHHJDILVKRXWRI
ZDWHUWKHRUJDQLVPPD\QRWEHFDSDEOHRIDGDSWLQJLQZKLFKFDVH
LWGLHV
$UWLILFLDORUJDQLVPVVKRXOGDOVREHFDSDEOHRILQWHUDFWLQJZLWK
WKHLUHQYLURQPHQWDQGDGDSWLQJWRLWLQDOLPLWHGZD\2IFRXUVH
RQH VKRXOG QRW H[SHFW DQ DUWLILFLDO RUJDQLVP WR EH FDSDEOH RI
DGDSWLQJWRDQ\DUELWUDU\FKDQJHLQLWVHQYLURQPHQW,WFDQDGDSWWR

VRPHFKDQJHVZKLOHRWKHUVPLJKWFRPSOHWHO\WKURZLWRIIEDODQFH
MXVWDVLQWKHFDVHRIELRORJLFDORUJDQLVPV7KHFKDQJHWKDWVKRUW
FLUFXLWVDQDUWLILFLDORUJDQLVPGRHVQRWKDYHWRVRPHKRZVHHPELJ
HLWKHU0LQXWHTXDQWLWLHVRI$UVHQLFLQDSRQGDUHMXVWDVFDSDEOHRI
NLOOLQJWKHILVKDVGUDLQLQJWKHSRQG
6HOI5HSURGXFWLRQ0HWDEROLVPDQG
$GDSWDELOLW\
7KHUHDOYDOXHRIPHWDEROLVPDQGDGDSWDELOLW\OLHLQWKHLUDELOLW\
WR KHOS XV GLVWLQJXLVK EHWZHHQ VHOIUHSURGXFWLRQ DQG SK\VLFV
GULYHQ UHSURGXFWLRQ 7KLQN IRU D PRPHQW DERXW WKH JURZWK RI D
FU\VWDO RI 6RGLXP &KORULGH LQ D VDWXUDWHG VDOW VROXWLRQ $V WKH
VDWXUDWLRQ OHYHO RI 6RGLXP &KORULGH LQFUHDVHV EH\RQG D FHUWDLQ
SRLQWDVHHGFU\VWDOLQWURGXFHGLQWRWKHVROXWLRQZLOOJURZ7KH
RUGHURIWKHFU\VWDOODWWLFHLVUHSOLFDWHGE\WKH6RGLXPDQG&KORULQH
DWRPV LQ WKH VROXWLRQ 7KLV LV D FODVVLF FDVH RI SK\VLFVGULYHQ
UHSURGXFWLRQ,QWKLVVLWXDWLRQWKHHQYLURQPHQWWKHVROXWLRQPXVW
EHFDUHIXOO\FRQWUROOHGLQRUGHUWRPDNHWKHUHSURGXFWLRQZRUN$
VOLJKW FKDQJH LQ WHPSHUDWXUH VDWXUDWLRQ RU LPSXULWLHV DQG WKH
SURFHVV ZLOO UHYHUVH LWVHOI FDXVLQJ WKH VHHG FU\VWDO WR GLVVROYH
HQWLUHO\7KHDGDSWDELOLW\RIVXFKDV\VWHPLVDOPRVWQLO/LNHZLVH
WKHUHLVQRUHDOPHWDEROLVPLQYROYHGLQWKLVH[DPSOH7KHUHLVQR
PDFKLQHZRUNLQJWRPDNHHQHUJ\IORZWKURXJKLWDQGSXOOLWDZD\
IURPHTXLOLEULXPMXVWVLPSOHSK\VLFVGULYLQJWKHZKROHV\VWHP
WRZDUGHTXLOLEULXP
9LUDO0HWDEROLVP
$V,PHQWLRQHGDERYHLWLVUDWKHUGLIILFXOWWRGHILQHFRQFHSWV
OLNHPDWWHUDQGHQHUJ\HQWLUHO\ZLWKLQDQDEVWUDFWZRUOGRIELWVDQG
E\WHVVKRUWRIGHVLJQLQJDV\VWHPZKLFKVLPSO\PLUURUVRXUZRUOG
7KHDOWHUQDWLYHLVWRORRNDWUHDOSURJUDPVZKLFKUXQRQFRPSXWHUV
WKDW H[LVW LQ WKH UHDO ZRUOG ,Q WKDW FRQWH[W FRPSXWHU YLUXVHV
FHUWDLQO\GRXVHPDWWHUDQGHQHUJ\WRPDQLSXODWHHQWURS\7KDWLV
WKH\XVHWKHSK\VLFDOFRPSRQHQWVRIWKHFRPSXWHUV\VWHPDQGWKH
HQHUJ\ ZKLFK WKH FRPSXWHU FRQVXPHV LQ RUGHU WR PDLQWDLQ WKHLU
H[LVWHQFHDQGUHSOLFDWH5HSOLFDWLRQFRQVLVWVRIPDNLQJDFRS\RID

FHUWDLQVHTXHQFHRIPDJQHWLFGRPDLQVRQDGLVNGULYH$VWKHYLUXV
FRQWLQXHV FRS\LQJ LWVHOI WKLV VHTXHQFH RI GRPDLQV UHSHDWV LWVHOI
DJDLQDQGDJDLQRQWKHGULYHLQFUHDVLQJLWVRUJDQL]DWLRQPDWKH
PDWLFDOO\VSHDNLQJLI\RXUHWKHRQHEHLQJLQIHFWHG\RXPD\QRW
VHHLWWKDWZD\DQGORZHULQJLWVHQWURS\$VVXFKDFRPSXWHUYLUXV
GRHVKDYHDPHWDEROLVP
2IFRXUVHRQHPLJKWVD\WKDWMXVWDERXWDQ\FRPSXWHUSURJUDP
FDQXVHHQHUJ\WRLPSRVHLWVRUGHURQWKHGLVN0RUHRIWHQWKRXJK
SURJUDPVDUHFRQFHUQHGZLWKDOORZLQJWKHXVHUWRLPSRVHKLVRZQ
RUGHURQWKHGLVN7KH\DUHFRQGXLWVUDWKHUWKDQEHLQJVHOIVXIIL
FLHQW<RXUZRUGSURFHVVRUDOORZV\RXWRZULWHOHWWHUVHWF7KRVH
OHWWHUV UHSUHVHQW RUGHU RQ \RXU FRPSXWHUV GLVN EXW WKH ZRUG
SURFHVVRUGLGQRWFUHDWHWKDWRUGHULWVHOI,WQHHGHG\RXULQWHOOLJHQW
LQSXWWRFUHDWHLW
9LUDO$GDSWDELOLW\
&HUWDLQO\PRVWFRPSXWHUYLUXVHVDUHFDSDEOHRIDGDSWLQJWRWKH
HQYLURQPHQWWKH\ILQGWKHPVHOYHVLQ)RUH[DPSOHWKH\FDQGHWHFW
WKHSUHVHQFHRIDQRWKHUFRS\RIWKHPVHOYHVDQGDGMXVWWKHLUEHKDY
LRU WR DYRLG GRXEOHLQIHFWLQJ D ILOH DQG WR VWRS LQIHFWLQJ ILOHV
DOWRJHWKHURQFHDGLVNLVIXOO\LQIHFWHG/LNHZLVHWKH\DUHFDSDEOH
RI DGDSWLQJ WR KRVWLOH SURJUDPV VXFK DV DQWLYLUXV XWLOLWLHV DQG
UHPDLQLQJTXLHWZKLOHVXFKXWLOLWLHVDUHLQSODFHRUWDNLQJPHDVXUHV
WR HVFDSH GHWHFWLRQ /LNHZLVH YLUXVHV DUH FDSDEOH RI PRGLI\LQJ
WKHLUHQYLURQPHQWWRSURPRWHWKHLURZQZHOIDUH)RUH[DPSOHWKH
,1758'(5YLUXVLQ7KH/LWWOH%ODFN%RRNRI&RPSXWHU9LUXVHV
FDQFKDQJHDQ(;(ILOHVDWWULEXWHIURPUHDGRQO\WRUHDGZULWHVR
WKDWLWFDQLQIHFWLW
&RPSXWHU YLUXVHV KDYH DOVR VKRZQ D SKHQRPHQDO DELOLW\ WR
DGDSW WR FKDQJHV LQ SURJUDPPLQJ WHFKQLTXHV DQG HQYLURQPHQWV
)RUH[DPSOHLWLVDPD]LQJWKDWWKH-HUXVDOHPYLUXVLVVWLOOFDSDEOH
RILQIHFWLQJDZLGHYDULHW\RIH[HFXWDEOHILOHVDQGIXQFWLRQSURSHUO\
ILYH\HDUVDIWHULWZDVUHOHDVHG0RVWRIWKHSURJUDPVLWLQIHFWVWRGD\
ZHUHQRWHYHQZULWWHQZKHQLWZDVILUVWUHOHDVHG$OONLQGVRIQHZ
SURJUDPPLQJ WHFKQLTXHV FRPSLOHUVDQGRSHUDWLQJHQYLURQPHQWV
KDYH EHHQ LQIHFWHG\HW -HUXVDOHP VWLOO ZRUNV YHU\ HIIHFWLYHO\
7KDW LV QRW WR VD\ LW GRHV QRW KDYH LWV WURXEOHV )RU H[DPSOH

-HUXVDOHPXVHVDQLQWHUUXSWZKLFKFRQIOLFWVZLWKD1RYHOQHWZRUN
VRLWZLOOQRWIXQFWLRQLQWKDWHQYLURQPHQWYHU\ZHOO
7KXVYLUXVHVFDQEHPRUHRUOHVVDGDSWDEOHWRWKHLUHQYLURQ
PHQW7KH\FDQLQWHUDFWZLWKWKHLUVXUURXQGLQJVPRGLI\WKHPDV
QHFHVVDU\ WR SURPRWH WKHLU VXUYLYDO DQG WKH\ FDQ DGDSW WR WKHLU
HQYLURQPHQW
$JDLQZHFDQVD\WKHVDPHWKLQJRIRUGLQDU\SURJUDPVWKRXJK
$Q\ FRPPRQ ZRUG SURFHVVRU ZLOO UXQ LQ D YDULHW\ RI HQYLURQ
PHQWVWKH PRUH WKH EHWWHU 6R DGDSWDELOLW\ LV QRW VRPHWKLQJ
XQLTXHWROLYLQJRUJDQLVPVRUFRPSXWHUYLUXVHV
(YROXWLRQ
0RVWELRORJLFDORUJDQLVPVVHHPWRKDYHDWOHDVWVRPHFDSDFLW\
IRU 'DUZLQLDQVW\OH HYROXWLRQ $Q\ YLDEOH RUJDQLVP KDV D SURJ
HQ\LILWGRHVQRWLWZLOOVRRQEHH[WLQFW*HQHUDOO\WKHJHQHWLF
PDNHXSRIWKDWSURJHQ\LVQRWTXLWHWKHVDPHDVWKHJHQHWLFPDNHXS
RIWKHSDUHQWV7KXVWKHJHQHWLFFRPSRVLWLRQRIDSRSXODWLRQFDQ
FKDQJHRYHUWLPH,QIDFWWKHJHQHWLFFRPSRVLWLRQRIDSRSXODWLRQ
FDQEHLQIOXHQFHGE\H[WHUQDOIDFWRUVDVRQHJHQHSURYHVWRKDYH
PRUHVXUYLYDOYDOXHWKDQDQRWKHU
$VIDUDVWKHPHFKDQLFDOSURSHUWLHVRIOLIHJR,DPJRLQJWR
WUHDW HYROXWLRQ DV D VHFRQG RUGHU SKHQRPHQRQ , DP GRLQJ WKDW
EHFDXVHRIWKHDE\VPDOVWDWHRIFXUUHQWH[SHULPHQWDODQGWKHRUHWLFDO
HYROXWLRQDU\ELRORJ\*LYHQDQLQGLYLGXDORUDSRSXODWLRQWKHUHLV
QRZD\DWSUHVHQWWRGHWHUPLQHZKDWLWZLOOHYROYHLQWRRUHYHQ
ZKHWKHULWKDVWKHFDSDFLW\WRHYROYHLQWRVRPHWKLQJHOVHDWDOO7KLV
VWDWHPHQWPD\VRXQGVRPHZKDWKHUHWLFDOLQWKHHDUVRIWKHW\SLFDO
PRGHUQVFLHQWLVWDQGLWLVLQWHQWLRQDOO\VR
&HUWDLQO\ UHDGLQJ PRVW SRSXODU OLWHUDWXUH RQ HYROXWLRQ RQH
JHWVWKHLPSUHVVLRQWKDWHYROXWLRQDU\SURFHVVHVDUHLQILQLWHO\SRZ
HUIXOWKDWDQ\RUJDQLVPFDQPXWDWHLQWRDQ\RWKHURUJDQLVPJLYHQ
DUHDVRQDEOHDPRXQWRIWLPHDQGWKHSURSHUHQYLURQPHQWDOSUHV
VXUHV 7KH IDFW WKDW QR SUHGLFWLRQV FDQ EH KDG VWDQGV LQ VWUDQJH
FRXQWHUSRLQWWRVXFKRPQLSRWHQFH
2QHPLJKWVXVSHFWWKDWVRPHJHQHWLFFRGLQJVUHVXOWLQRUJDQ
LVPV WKDW DUH PXFK PRUH FDSDEOH RI HYROYLQJ WKDQ RWKHUV )RU
H[DPSOHLQWKHH[WUHPHLIHYHU\RQHQXFOHRWLGHVXEVWLWXWLRQRID
SDUWLFXODU FRGLQJ ZDV LPPHGLDWHO\ OHWKDOZHPLJKWH[SHFWWKDW

RUJDQLVPWRKDYHDKDUGHUWLPHHYROYLQJWKDQRQHZKLFKKDG
QHXWUDORQHQXFOHRWLGHVXEVWLWXWLRQVDQGSRWHQWLDOO\EHQHILFLDO
RQHV
:KHQ H[WHQGHG WR $/ RQH PLJKW H[SHFW WR ILQG D VLPLODU
YDULDELOLW\SHUKDSVRQDQHYHQZLGHUVFDOH6RPHDUWLILFLDORUJDQ
LVPVPD\QRWEHUHDOLVWLFDOO\FDSDEOHRIDQ\HYROXWLRQ2WKHUVPD\
EHFDSDEOHRIIDUPRUHWKDQZKDWWKHUHDOZRUOGFDQVXSSRUW
$JDLQVWWKLVEDFNGURS,WKLQNWKHDSSURDFKRIUHIXVLQJWRFDOO
VRPHWKLQJ DOLYH XQOHVV LW FDQ HYROYH LV UDWKHU EOLQG WKRXJK WKLV
VFKRRORIWKRXJKWKDVVWURQJVXSSRUWDPRQJWKH$/FRPPXQLW\,W
FRXOGH[FOXGHDZLGHYDULHW\RISRWHQWLDOO\LQWHUHVWLQJSKHQRPHQD
LQFOXGLQJVRPHOLIHRQHDUWK
5DWKHU,LPDJLQHVRPHVRUWRIHYROYDELOLW\FRHIILFLHQWWKDW
FRXOGEHDVVLJQHGWRDQ\VHOIUHSURGXFLQJDXWRPDWRQZKHUHDQ
ZRXOGPHDQHYROXWLRQFRXOGQRWRFFXUDQGDODUJH ZRXOGPHDQ
ORWVRIHYROXWLRQFRXOGRFFXUYHU\IDVW$QG,ZRXOGSUHIHUQRWWR
XVH WRGHWHUPLQHZKHWKHUVRPHWKLQJLVDOLYHRUQRWEXWWRVWXG\
HYROXWLRQLWVHOI$OWKRXJKWKLVLVREYLRXVO\YHU\QDwYHLWKHOSVXV
WR VHH HYROXWLRQ DV D VHFRQGDU\ SKHQRPHQRQ ,Q WKH DEVWUDFW
HYROXWLRQ LV OLWWOH PRUH WKDQ D VWXG\ RI JHQHWLF FKDQJH 7KXV
ZKHUHYHU\RXKDYHVHOIUHSURGXFLQJDXWRPDWD\RXKDYHHYROXWLRQ
2IFRXUVH LVMXVWDVPXFKHYROXWLRQDV LVLQWKLVEURDG
VHQVHRIWKHWHUP
,I RUGLQDU\ HYROXWLRQDU\ ELRORJ\ ZHUH DGYDQFHG HQRXJK WR
TXDQWLI\HYROXWLRQZHPLJKWEHDEOHWRGHWHUPLQHVRPHPLQLPDO
YDOXH RI WR TXDOLI\ DQ DUWLILFLDO RUJDQLVP DV OLYLQJ 6LQFH
HYROXWLRQDU\ELRORJ\LVQRWWKDWDGYDQFHGWKRXJKLWVHHPVUDWKHU
DEVXUGWRXVHDQXQTXDQWLILDEOHSKHQRPHQRQDVDSULPDU\GLYLGLQJ
OLQHEHWZHHQOLIHDQGQRQOLIHHVSHFLDOO\ZKHQLWFDQQRWHYHQEH
REVHUYHGLQGD\WRGD\OLIHH[FHSWRQWKHVFDOHRI PLFURHYROXWLRQ
:LWKDOORIWKDWVDLGDQDUWLILFLDORUJDQLVPPLJKWEHFDSDEOHRI
DW OHDVW VRPH OLPLWHG HYROXWLRQ +RZHYHU LW QHHG QRW EH VRPH
ZRQGHUIXOVHHGIURPZKLFKP\ULDGVDQGP\ULDGVRILQFUHDVLQJO\
FRPSOH[ DUWLILFLDO RUJDQLVPV FRXOG VSULQJ IRUWK 7R LPSRVH WKH
FRQGLWLRQRIXQOLPLWHGHYROYDELOLW\RQDQDUWLILFLDORUJDQLVPZRXOG
EHLQDSSURSULDWH$OWKRXJK,GRQRWFRQVLGHUHYROXWLRQDQHFHVVDU\
(YROXWLRQ

SUHUHTXLVLWHIRUVRPHWKLQJWREHDOLYHWKHTXHVWLRQRIZKHWKHU
YLUXVHVFRXOGHYROYHRUQRWLVVWLOOLQWHUHVWLQJ
(YROXWLRQRI&RPSXWHU9LUXVHV
:KHQ ZH EHJLQ WDONLQJ DERXW WKH HYROXWLRQ RI FRPSXWHU YL
UXVHVLWLVQHFHVVDU\WRFOHDUXSVRPHFRQIXVLRQ3RO\PRUSKLFRU
VHOIPXWDWLQJYLUXVHVDUHRIWHQFDOOHGHYROXWLRQDU\DOWKRXJKWKDWLV
QRWWUXHLQWKHVHQVHRI'DUZLQLDQHYROXWLRQ
$SRO\PRUSKLFYLUXVLVDYLUXVZKLFKHQFU\SWVLWVFRGHGLIIHU
HQWO\HDFKWLPHLWLQIHFWVDQHZSURJUDP7KHSULPDU\SXUSRVHRI
WKLVHQFU\SWLRQLVWRGHIHDWYLUXVVFDQQHUVZKLFKVHDUFKIRUDVWULQJ
RIFRGHLQRUGHUWRORFDWHYLUXVHV7KHVHOIPXWDWLQJYLUXVVLPSO\
DYRLGVJLYLQJWKHVFDQQHUDIL[HGVWULQJWRVHDUFKIRUE\HQFU\SWLQJ
LWVFRGHGLIIHUHQWO\HDFKWLPH
7KLVNLQGRIDPXWDWLRQVFKHPHLQDQGRILWVHOIGRHVQRWILW
WKHPRGHOIRU'DUZLQLDQHYROXWLRQ,QVWHDGLWLVVRPHZKDWOLNHD
FKDPHOHRQ FDPRXIODJLQJ LWVHOI 7KH SRO\PRUSKLF YLUXV FKDQJHV
ZKDWLWORRNVOLNHWRWKHRXWVLGHZRUOGHYHU\WLPHLWUHSURGXFHVEXW
LWGRHVQWFKDQJHLWVHVVHQWLDOIXQFWLRQXQOHVVDGGLWLRQDOIHDWXUHV
EHVLGHVHQFU\SWLRQKDYHEHHQDGGHG1RQHRIWKHPXWDWLRQVLQDQG
RI WKHPVHOYHV LPSURYH WKH DELOLW\ RI WKH YLUXV WR VXUYLYH 2QH
PXWDWLRQLVQRWQRUPDOO\IDYRUHGRYHUDQRWKHU
2EYLRXVO\ D EXJ LQ D GHFU\SWLRQ VFKHPH RU D IOXNH LQ DQ
RSHUDWLQJV\VWHPRUDQWLYLUXVSURJUDPPLJKWJLYHRQHHQFU\SWLRQ
DEHWWHURUZRUVHDELOLW\WRVXUYLYHWKDQDQRWKHU+RZHYHUHYHU\
WLPHWKHYLUXVUHSURGXFHVLWVFKLOGUHQORRNFRPSOHWHO\GLIIHUHQW
EXW RSHUDWH LQ HVVHQWLDOO\ WKH VDPH PDQQHU 1R VXUYLYDORIWKH
ILWWHVWPHFKDQLVP FDQZRUNLQVXFKDQHQYLURQPHQWEHFDXVHWKH
SDUHQWV GRQW JHQHWLFDOO\ SDVV DQ\ HQFU\SWLRQ LQIRUPDWLRQ RQ WR
WKHLUFKLOGUHQ,QVKRUWSRO\PRUSKLVPVKRXOGQRWEHFRQIXVHGZLWK
'DUZLQLDQHYROXWLRQ
7KLVGRHVQRWRIFRXUVHPHDQWKDWDSRO\PRUSKLFHQJLQHFRXOGQRWLQFRUSRUDWH
'DUZLQLDQHYROXWLRQLQWRLWVRSHUDWLRQ,QIDFWZHZLOOGLVFXVVMXVWVXFKDQ
HQJLQHODWHULQWKLVERRN

3UDFWLFDOO\ VSHDNLQJ 'DUZLQLDQ HYROXWLRQ FDQ RQO\ RSHUDWH

DJDLQVW D EDFNJURXQG RI UHODWLYH VWDELOLW\ $Q RUJDQLVP ZKLFK
SDVVHVRQPRVWRILWVFKDUDFWHULVWLFVWRLWVSURJHQ\LVDSUHUHTXLVLWH
$IHZFKDUDFWHULVWLFVPD\FKDQJHIURPWLPHWRWLPHUHVXOWLQJLQD
QHZJHQRW\SH7KDWQHZRUJDQLVPZLOOWKHQQRUPDOO\SDVVRQLWV
QHZ FKDUDFWHULVWLFV WR LWV SURJHQ\ ,I WKH QHZ RUJDQLVP LV PRUH
VXFFHVVIXOWKDQWKHROGLHRQWKHDYHUDJHWKHQHZVXFFHHGVLQ
UHSURGXFLQJPRUHRIWHQWKDQWKHROGWKHQWKHUHODWLYHSRSXODWLRQ
RI QHZ YHUVXV ROG FDQ LQFUHDVH DQG SRVVLEO\ UHSODFH WKH ROG
HQWLUHO\3RVVLEO\DVWDEOHSRSXODWLRQRIERWKW\SHVZLOOUHVXOW,Q
WKLV ZD\ D SRSXODWLRQ RI RUJDQLVPVRUDUWLILFLDORUJDQLVPVFDQ
HYROYHIURPROGWRQHZ
,WVHHPVUHDVRQDEOHWRVXJJHVWWKDWJHQHWLFFKDQJHDQGWKH
UHVXOWLQJHYROXWLRQFDQEHRIWZRW\SHVDFFLGHQWDORUSUHSUR
JUDPPHG,QQDWXUHDFFLGHQWDOHYROXWLRQPLJKWEHWKHUHVXOWRID
VWUD\FRVPLFUD\VWULNLQJVRPHRUJDQLVPDQGDOWHULQJLWVJHQHWLF
VWUXFWXUH 0RVW VXFK DOWHUDWLRQV ZLOO EH LPPHGLDWHO\ OHWKDO EXW
VRPHPLJKWRQO\EHKDUPIXO)HZHUVWLOOPLJKWEHQHXWUDODQGUDUHO\
VXFKDQDOWHUDWLRQPLJKWEHEHQHILFLDO$ EHQHILFLDO DOWHUDWLRQLV
HVVHQWLDOO\GHILQHGDVRQHZKLFKZRXOGKDYHVRPHVXUYLYDOYDOXH
IRUWKHRUJDQLVP,QVXFKDVLWXDWLRQWKHPXWDWHGRUJDQLVPZRXOG
UHSURGXFHVXFFHVVIXOO\DQGSRVVLEO\UHSODFHWKHRULJLQDOLQDODUJH
QXPEHURIJHQHUDWLRQV
7KHVHFRQGW\SHRIJHQHWLFFKDQJHSUHSURJUDPPHGLQIHUV
WKDW VRPH WHFKQLTXH RI PRGLI\LQJ WKH JHQHWLF VWUXFWXUH RI DQ
RUJDQLVPIURPJHQHUDWLRQWRJHQHUDWLRQLVEXLOWLQWRLWVYHU\FRGLQJ
,QWKHQDWXUDOZRUOGVLPSOHVH[XDOUHSURGXFWLRQLVDJRRGH[DPSOH
,WDIIRUGVDQXPEHURISUHSURJUDPPHGPHDQVIRUHIIHFWLQJJHQHWLF
FKDQJH)RUH[DPSOHKXPDQJHQHWLFLQIRUPDWLRQLVEURNHQXSLQWR
VHSDUDWHVWUDQGVRI'1$NQRZQDVFKURPRVRPHVHDFKRQHRI
ZKLFKKDVDQHTXDOFKDQFHRIFRPLQJIURPWKHIDWKHURUPRWKHUDW
FRQFHSWLRQ,QWKLVZD\SODQQHGFKDQJHWDNHVSODFHIURPJHQHUD
WLRQ WR JHQHUDWLRQ 7KH FKLOG LV QRW QRUPDOO\ WKH VDPH DV HLWKHU
SDUHQWEXWKHLVVLPLODUWRERWK,QDGGLWLRQDSKHQRPHQRQFDOOHG
FURVVRYHU RU FKLDVPD RFFDVLRQDOO\ RFFXUV :KHQ WZR FKURPR
VRPHVFRPHLQWRFORVHSUR[LPLW\WKH\FDQRFFDVLRQDOO\EUHDNDSDUW
DQGFRPELQHZLWKHDFKRWKHUVRWKDWWKHFKLOGLQKHULWVDFKURPR
VRPHZKLFKGLGQRWEHORQJWRHLWKHUIDWKHURUPRWKHUEXWFRQWDLQV
(YROXWLRQ

DVHJPHQWIURPERWK&URVVRYHUSURYLGHVDQDGGLWLRQDOHOHPHQWRI
JHQHWLFIOH[LELOLW\ZKLFKLVHYLGHQWO\EXLOWULJKWLQWRWKHUHSURGXF
WLRQPHFKDQLVP
7KHVHSUHSURJUDPPHGPHDQVRIJHQHWLFFKDQJHJLYHDSRSX
ODWLRQDZD\WRDGDSWWRHQYLURQPHQWDOFKDQJHVLQDQHYROXWLRQDU\
IDVKLRQZLWKRXWKDYLQJWRUHO\RQUDUHDFFLGHQWDOPXWDWLRQV7KH
WKHRU\RIHYROXWLRQGRHVQWSDUWLFXODUO\VD\DQ\WKLQJDERXWKRZWKH
JHQHWLFFKDQJHWDNHVSODFHRQO\DERXWZKDWKDSSHQVRQFHYDUL
DWLRQVH[LVW
3RWHQWLDOO\DQ\FRPSXWHUYLUXVFRXOGEHVXEMHFWWRDFFLGHQWDO
PXWDWLRQ$SRZHUJOLWFKZKLOHWKHYLUXVLVLQPHPRU\RUDZHDN
PDJQHWLFGRPDLQFRXOGFRQFHLYDEO\FKDQJHDELWZKLFKZRXOGEH
SDVVHGRQZKHQUHSOLFDWLQJ0RVWVXFKPXWDWLRQVZRXOGEHGLVDV
WURXVIRUWKHYLUXVDQGUHVXOWLQDQRQIXQFWLRQDORUFULSSOHGSLHFH
RIFRGH+RZHYHULIVXFKDPXWDWLRQRFFXUUHGLQDSLHFHRIGHDG
FRGHVSDFHWKHYLUXVZRXOGVLPSO\FDUU\LWDORQJIURPJHQHUDWLRQ
WRJHQHUDWLRQZLWKQRLOOVLGHHIIHFWV,WLVHYHQFRQFHLYDEOHWKDW
RQFHLQDZKLOHVXFKDPXWDWLRQFRXOGEHEHQHILFLDO
$FWXDOO\WKHSKHQRPHQRQRIYLUXVHVFDUU\LQJDURXQGFKDQJHV
IURPJHQHUDWLRQWRJHQHUDWLRQLVTXLWHFRPPRQWKRXJKWKHFKDQJHV
DUHQRWXVXDOO\FKDQFHPXWDWLRQV)RUH[DPSOHWKH6WRQHGYLUXV
FDUULHVDURXQGZLWKLWWKHSDUWLWLRQWDEOHRIWKHODVWKDUGGLVNZKLFK
LWUHVLGHGRQ
$GGLWLRQDOO\DFRPSXWHUYLUXVFDQEHGHVLJQHGWRFKDQJHLWVHOI
LQ VXFK D ZD\ WKDW LW ZLOO XQGHUJR VRPH 'DUZLQLDQ HYROXWLRQ
&RQVLGHU IRU H[DPSOH WKH ,1758'(5 YLUXV GLVFXVVHG LQ 7KH
/LWWOH %ODFN %RRN RI &RPSXWHU 9LUXVHV ,W ZDV D VLPSOH YLUXV
GHVLJQHGWRLQIHFW(;(ILOHV,WFRQWDLQHGDURXWLQH6+28/'581
ZKLFKFRQWUROOHGWKHUHSURGXFWLRQUDWHRIWKHYLUXV7KHSURJUDP
PHUFRXOGVHWWKLVURXWLQHXSWRPDNHWKHYLUXVUHSURGXFHHYHU\WLPH
LWH[HFXWHGRURQO\YHU\UDUHO\7KHUHLVQRUHDVRQKRZHYHUWKDW
RQHFRXOGQRWGHVLJQD6+28/'581URXWLQHZKLFKZRXOGPRGLI\
LWVRZQUHSURGXFWLRQUDWH)RUH[DPSOHWKHURXWLQH
,QGHHG'DUZLQGLGQWHYHQNQRZDERXWJHQHWLFVZKHQKHSURSRVHGHYROXWLRQ
7KDWZDVGLVFRYHUHGE\*UHJRU0HQGHOLQDQGLJQRUHGE\WKHVFLHQWLILF
FRPPXQLW\LQFOXGLQJ'DUZLQIRU\HDUV

7KLVURXWLQHUHWXUQV=LIWKHYLUXVVKRXOGUHSOLFDWH
581B)/*'%
6+28/'581
SXVKGV
[RUD[D[
PRYGVD[
PRYE[&+ORZZRUGRIFXUUHQWWLPH
PRYD[>E[@VLQFHLWVDIDLUUDQGRP
SRSGV
WHVWDKPXWDWHRUQRW"FKDQFH
MQ]12B087$7(QR
WHVWDKLQFUHDVHFKDQFHRU
MQ]087B83GHFUHDVHFKDQFHUDWH"
087B'2:1
VKU>581B)/*@UHSURGXFWLRQPRUHOLNHO\
MPS6+25712B087$7(E\DIDFWRURI
087B83
VKO>581B)/*@UHSURGXFWLRQOHVVOLNHO\
RU>581B)/*@E\DIDFWRURI
12B087$7(
DQGDO>581B)/*@VHW]IODJSURSHUO\
UHWDQGH[LW
ZLOOUHSURGXFHDWDUDWHFRQWUROOHGE\581B)/*+RZHYHUHYHU\
RWKHUUHSOLFDWLRQDOVRPRGLILHV581B)/*UDQGRPO\HLWKHUKDOY
LQJLWRUGRXEOLQJLW,QWKLVZD\RYHUDQXPEHURIJHQHUDWLRQV
GLIIHUHQW YHUVLRQV RI WKLV YLUXV ZLOO FRPH LQWR EHLQJ ZLWK DOO
GLIIHUHQWUHSOLFDWLRQUDWHVQRPDWWHUZKDWWKHLQLWLDOUDWHZDVVHWWR
7KLVYLUXVZKLFKZHFDOO,1758'(5,,LVRQWKH3URJUDP'LVN
,1758'(5,,YLUXVZLOOH[KLELW'DUZLQLDQHYROXWLRQ&RQ
VLGHUIRUH[DPSOHDQLGHDOZRUOGLQZKLFKQRDQWLYLUXVVRIWZDUH
H[LVWVDQGHYHU\ERG\VKDUHVVRIWZDUHZLWKWKHLUQHLJKERUV,QVXFK
DZRUOGWKHIDVWHUWKHYLUXVUHSURGXFHVWKHPRUHVXFFHVVIXOLWZLOO
EH EHFDXVH UHSURGXFLQJ VORZHU KDV QR LQKHUHQW VXUYLYDO YDOXH
7KXVWKHZRUOGZLGHSRSXODWLRQRIWKLVYLUXVZLOOEHGRPLQDWHGE\
WKHIDVWHVWUHSURGXFLQJYDULHWLHVDQGWKHVORZHVWUHSURGXFLQJYD
ULHWLHVZLOOEHUDUHWRQRQH[LVWHQW6HH)LJXUH
1RZVXSSRVHDQHQYLURQPHQWDOFKDQJHWRRNSODFHDQGDERXW
KDOIWKHZRUOGV3&VKDGD765DQWLYLUXVSURJUDPLQVWDOOHGRQ
WKHPZKLFKZRXOGFDWFKWKLVYLUXVZKHQLWDFWLYDWHVEXWLWFRXOG
QRWVFDQIRULWDQGFDWFKFRSLHVZKLFKKDGQWDFWLYDWHG6XGGHQO\
DVORZO\UHSURGXFLQJYHUVLRQRIRXUYLUXVJDLQVDFHUWDLQDGYDQWDJH
RYHUDTXLFNO\UHSURGXFLQJRQHEHFDXVHVRPHRQHZLWKDQWLYLUXV
VRIWZDUH ZLOO EH OHVV OLNHO\ WR QRWLFH LW LV WKHUH 7KXV ZH ZRXOG
H[SHFWWKHSRSXODWLRQWRVKLIWRYHUDSHULRGRIJHQHUDWLRQVWRZDUG
WKH PRUH VORZO\ UHSURGXFLQJ YDULHWLHV 6RPH W\SLFDO UHVXOWV DUH
(YROXWLRQ
)LJXUH3RSXODWLRQRI,1758'(5,,ZLWKRXW
DQWLYLUXV
)LJXUH3RSXODWLRQRI,1758'(5,,ZLWK
DQWLYLUXV

GHSLFWHGLQ)LJXUH7KHSURJUDPZKLFKGRHVWKHVHFDOFXODWLRQV
,17B6,0LVLQFOXGHGRQWKH3URJUDP'LVNWRR
,Q FRQFOXVLRQ FRPSXWHU YLUXVHV FOHDUO\ FDQ HYROYH DQG XVH
HYROXWLRQWRRYHUFRPHFKDOOHQJHVWRWKHLUVXUYLYDO
&RQFOXVLRQV
7KHUHDUHPDQ\PHFKDQLFDODVSHFWVRIOLIHZKLFKFRQWULEXWHWR
RXULGHDRIZKDWOLIHLV,KDYHQRWGLVFXVVHGDOORIWKHSURSHUWLHV
ZKLFK KDYH EHHQ SURSRVHG KHUH MXVW WKRVH ZKLFK DSSHDU PRVW
LPSRUWDQWDQGPRVWFHUWDLQ0DQ\ELRORJLFDORUJDQLVPVSRVVHVDOO
RIWKHVHSURSHUWLHV\HWH[FHSWLRQVFDQEHIRXQGWRHYHU\RQHRI
WKHP7KXVQRRQHPHFKDQLFDOSURSHUW\FDQEHXVHGDVDOLWPXV
WHVW WR VD\ WKLV LV DOLYH DQG WKDW LV QRW +RZHYHU DOO RI WKHVH
SURSHUWLHVVHHPFORVHO\WLHGWROLIHDQGWKH\JLYHXVDEHWWHULGHDRI
ZKDWOLIHLVIURPDPHFKDQLFDOSRLQWRIYLHZ
7KHUH LV D FDYHDW WKRXJK ZKHQ GLVFXVVLQJ WKH PHFKDQLFDO
SURSHUWLHVRIOLIHZHFRXOGQRWDYRLGSKLORVRSKLFDOLVVXHV7U\LQJ
WR GUDZ WKH OLQH EHWZHHQ VHOIUHSURGXFWLRQ DQG SK\VLFVGULYHQ
UHSOLFDWLRQSURYHGPRUHGLIILFXOWWKDQZHLPDJLQHG/LNHZLVHWKH
ZKROHLGHDRIHPHUJHQWEHKDYLRUDSSHDUHGVRPHZKDWLOOXVRU\LIZH
VWDUWHG ORRNLQJ DW LW WRR KDUG :H KDYH WR ZRQGHU FRXOG WKH
HPHUJHQFH LQVLGHDFRPSXWHUEHIXQGDPHQWDOO\GLIIHUHQWWKDQ
WKH HPHUJHQFH LQWKHUHDOZRUOG"
+XPDQVDUHSURQHWRUHVRUWWRPHUHDSSHDUDQFHVWRUHLQIRUFH
FODLPVWRHVWDEOLVKGRFWULQHVDQGEXLOGPRGHOV<HWLIZHDUHWREH
JRRGVFLHQWLVWVZHPXVWUXWKOHVVO\DWWDFNDSSHDUDQFHVWRILQGRXW
ZKDWVXEVWDQFHWKH\KDYH7KLVZLOOEHRXUIRFXVLQWKHVHFRQGSDUW
RIWKLVERRN
)RU QRZ ZH FDQ DW OHDVW VD\ WKDW FRPSXWHU YLUXVHV ILW RXU
PHFKDQLFDOFRQGLWLRQVIDLUO\ZHOO2QO\LQWKHFRQFHSWRIHPHUJHQW
EHKDYLRUGRWKH\DSSHDUWRIDOOVKRUW7KDWVHHPVWREHDOLPLWDWLRQ
RI VLQJOHXVHU RSHUDWLQJ V\VWHPV 3HUKDSV D PXOWLWDVNLQJ 26

YLUXV PLJKW EX\ XV VRPHWKLQJ LQ WHUPV RI HPHUJHQW EHKDYLRU
+RZHYHUVLQFHZHZHUHQWLQWHQWRQDOLWPXVWHVWLQWKHILUVWSODFH
ZHGRQWGLVTXDOLI\DYLUXVZKHQLWGRHVQWPHHWDOORXUFULWHULD
HVSHFLDOO\ WKRVH RI DTXHVWLRQDEOHQDWXUHQHLWKHUGRZHFDOOLW
DOLYHLILWGRHV:HPHUHO\VD\LWKDVVWURQJHURUZHDNHUFODLPVWR
OLIH$QGIURPDPHFKDQLFDOSHUVSHFWLYHLWVHHPVVDIHWRVD\WKDW
FRPSXWHUYLUXVHVKDYHDIDLUO\VWURQJFODLPWR OLIH
3DUW,,
7KH3KLORVRSK\RI/LIH
7KH,PSRUWDQFHRI
3KLORVRSK\
,QEHJLQQLQJRXUGLVFXVVLRQRIWKHSKLORVRSKLFDODVSHFWVRIOLIH
,GOLNHWRJREDFNLQWLPHDQGORRNDWSUHVFLHQWLILFLGHDVDERXW
ZKDW OLIH LV $W ILUVW H[SRVXUH VXFK LGHDV PD\ VHHP KRSHOHVVO\
DQWLTXDWHGDQGLUUHOHYDQWWRZKDWZHDUHWU\LQJWRGR,QIDFWWKH\
DUHDQ\WKLQJEXWLUUHOHYDQW6RPHPHPEHUVRIWKH$UWLILFLDO/LIH
FRPPXQLW\EHOLHYHWKDWLIZHFDQGHYHORSVRPHWKLQJIXQFWLRQDOO\
HTXLYDOHQW WR D OLYLQJ RUJDQLVP LW ZLOO EHFRPH DFWXDOO\ DOLYH
&HUWDLQO\,DPQRWDYHUVHWRVXFKDQLGHD<HWRXUFRQFHSWRIZKDW
DFWXDOO\DOLYH HYHQPHDQVLVURRWHGLQQRQVFLHQWLILFLGHDVDERXW
ZKDWOLIHLV
6FLHQFHKDVGRQHDJUHDWGHDOLQWHUPVRIDQDO\]LQJWKHPHFKDQ
LFVRIOLIHEXWLWVHIIHFWRQRXULGHDVRIZKDWLVDFWXDOO\DOLYHKDV
EHHQPLQLPDO7KHYHU\FRQFHSWFDQQRWEHSXWLQWHUPVDFFHVVLEOH
WR VFLHQFH %LRORJLVWV WRGD\ RIWHQ DVVXPH LQ WKH FRXUVH RI WKHLU
UHVHDUFKWKDWDOLYLQJRUJDQLVPLVQRWKLQJPRUHWKDQDOLWWOHPD
FKLQH$IWHURYHUDFHQWXU\RIILJKWLQJDERXWWKDWLGHDLWVHHPVWR
KDYHEHFRPHDJLYHQDPRQJELRORJLVWVDOWKRXJKODUJHO\DSKLOR
VRSKLFDO LGHD $V IDU DV ELRORJLFDO UHVHDUFK LV FRQFHUQHG VXFK
TXHVWLRQVDUHQWYHU\LPSRUWDQW6FLHQFHLVQHFHVVDULO\OLPLWHGWR
VWXG\LQJWKHPHFKDQLFVRIOLIH7KXV,ZRXOGJXHVVWKDWWKHDYHUDJH
ELRORJLVWMXVWGRHVQWZRUU\DERXWLWWRRPXFKLQKLVGD\WRGD\
ZRUN <HW LQ IRFXVLQJ RQ PHFKDQLFV VFLHQFH KDV QRW VRPHKRZ
UHGHILQHGWKHFRPPRQLGHDRIZKDWOLIHLV7KDWXQGHUVWDQGLQJLV
VWLOOSULPDULO\SKLORVRSKLFDODQGUHOLJLRXV

7KHWKRXJKWWKDWDFDUERQEDVHGRUJDQLVPOLIHLVMXVWDOLWWOH

PDFKLQHKDVJDLQHGDFHUWDLQIRRWKROGLQWKHPLQGVRIPRGHUQPDQ
7KLVIRRWKROGLVWHQXRXVWKRXJK7KDWEHFRPHVDOWRJHWKHUWRRFOHDU
ZKHQZHWXUQWKHTXHVWLRQDURXQGDQGDVN ,VP\OLWWOHPDFKLQH
DOLYH" ,WPD\KDYHDOOWKHIXQFWLRQDOFKDUDFWHULVWLFVRIOLIHEXW
LVLWUHDOO\DOLYH"$WWKLVSRLQWWKHUHLVDGHHSEUHDWKRIKHVLWDWLRQ
1RDQVZHULVIRUWKFRPLQJ6RPHKRZDQKRQHVWPDQZKRLVQRW
SXVKLQJVRPHDJHQGDGDUHVQRWJLYHDFHUWDLQZRUG:K\GRHVKH
KHVLWDWH" 7KH GHHSHU SKLORVRSKLFDO LVVXHV VXGGHQO\ ORRP YHU\
ODUJH$QGZKDWDUHWKRVHGHHSHUSKLORVRSKLFDOLVVXHVEXWWKHYHU\
DQFLHQW LGHDV DERXW OLIH ZKLFK KDYH SHUVLVWHG IRU PLOOHQQLD DQG
ZKLFKPRVWRIXVJUHZXSZLWK"6RZHH[SORUHWKHP
7KHELJVXUSULVHZHVKDOOHQFRXQWHULVWKDWWKHVHDQFLHQWSKLOR
VRSKLFDOLGHDVDUHPXFKPRUHWKDQREVROHWHEDJJDJHWREHULGRI
7KH\DUHRISLYRWDOLPSRUWDQFHWRZKDWZHDUHGLVFXVVLQJDQGWKH\
ZLOOEULQJXVULJKWEDFNWRWKHSUREOHPVZHKDGZKHQGLVFXVVLQJ
WKHPHFKDQLFDODVSHFWVRIOLIHSUREOHPVOLNHGHILQLQJWKHERXQG
DU\ZKHUHSK\VLFVGULYHQUHSURGXFWLRQVWRSVDQGVHOIUHSURGXFWLRQ
EHJLQVRUWKHUHDOLW\RIHPHUJHQWEHKDYLRU
$QFLHQW3KLORVRSK\DQG
0RGHUQ6FLHQFH
,WVHHPVWKDWDOOPHQHYHU\ZKHUHFRQVLGHUOLIHWREHKRO\LQWKH
VHQVH RI VRPHWKLQJ GHVHUYLQJ GHHS UHVSHFW DZH DQG UHYHUHQFH
0DQ\SULPLWLYHSHRSOHVVLPSO\ZRUVKLSOLYLQJWKLQJVRUXVHWKHP
WRVDFULILFHWRWKHLUJRGV0RUHVRSKLVWLFDWHGSHRSOHZRUNWRSURWHFW
OLIH DQG SUHVHUYH WKH HQYLURQPHQW 6RPH VFLHQWLVWV VSHQG WKHLU
ZKROHOLYHVVWXG\LQJOLIHRUWU\LQJWRFUHDWHLWWKHPVHOYHVDQGPDQ\
UHOLJLRXVJURXSVWHDFKWKDW*RGFUHDWHGLW:KHWKHUZRUVKLSLQJLW
RUSURWHFWLQJLWZKHWKHUYLHZLQJLWVFUHDWLRQDVDJRDOWREHDWWDLQHG
RU DV DQ LQFRPSDUDEOH GLYLQH DFW PHQ UHYHUH OLIH 7KLV DWWLWXGH
VHHPVWREHDQDERULJLQDOLQVWLQFWZKLFKWUDQVFHQGVVSDFHDQGWLPH
ODQJXDJHDQGFXOWXUDOEDUULHUV7KRXJKLWPD\EHH[SUHVVHGLQPDQ\
GLIIHUHQWDQGVRPHWLPHVVXSHUILFLDOO\FRQIOLFWLQJZD\VLWLVYHU\
UHDODQGSHUYDVLYH
,ZRXOGQRWEHVXUSULVHGLIHYHU\FXOWXUHWKDWLVRUHYHUZDV
H[SUHVVHGWKLVUHVSHFWLQRQHIRUPRUDQRWKHUDQGWKXVKDGVRPH
WKLQJWRVD\DERXWZKDWOLIHLVDQGKRZWRWUHDWLW$OWKRXJKSHUKDSV
PDQ\FXOWXUHVKDYHVRPHWKLQJYDOXDEOHWRFRQWULEXWHWRRXUXQGHU
VWDQGLQJ RI ZKDW OLIH LV , ZLOO FRQFHQWUDWH SULPDULO\ RQ ZHVWHUQ
FLYLOL]DWLRQ0\UHDVRQVDUHWZRIROG)LUVWO\WKLVLVWKHDUHDZLWK
ZKLFK,DPPRVWIDPLOLDU6HFRQGO\ZHVWHUQLGHDVDUHLPSRUWDQW
EHFDXVHVFLHQFHZDVERUQLQZHVWHUQFXOWXUHVRWKURXJKLWZHVWHUQ
LGHDVDERXWOLIHKDYHDWWDLQHGDJOREDOLPSRUWDQFH$QGVLQFHZH
DUHGLVFXVVLQJVFLHQFHZHVWHUQLGHDVDUHSDUWLFXODUO\UHOHYDQWWR
RXUGLVFXVVLRQ

7KHLGHDVZKLFKKDYHLQIRUPHGRFFLGHQWDOPHQDERXWOLIHIURP
DQFLHQWWLPHVDUHURRWHGLQ*UHHNSKLORVRSK\DQGWKH%LEOH7KHVH
VWUDQGVRIWKRXJKWFDQQRWEHYLHZHGDVVHSDUDWHDQGDQWDJRQLVWLF
5DWKHUWKH\KDYHEHHQFORVHO\LQWHUWZLQHGWKURXJKRXWKLVWRU\DQG
WKH\KDYHRIWHQLQIRUPHGDQGLQILOWUDWHGRQHDQRWKHU
$SDUWIURPWKHVWDWHPHQWWKDW*RGFUHDWHGDOOOLIHWKH%LEOHKDV
YHU\OLWWOHWRVD\DERXWWKHQDWXUHRIOLIHLQJHQHUDO,WVD\VDORW
DERXWKXPDQLW\EXWYHU\OLWWOHDERXWDQ\RWKHURUJDQLVPV2IWHQ
SHRSOHLQIHUWKDWZKDWWKH%LEOHWHDFKHVDERXWPDQDSSOLHVWRVRPH
H[WHQWWRRWKHUFUHDWXUHVDVZHOOEXWWKHVHLGHDVDUHQRWGHYHORSHG
LQWKHWH[WLWVHOI3HUKDSVWKHPRVWWHOOLQJWKLQJZHFDQOHDUQIURP
WKHWH[WFRPHVIURPWKHZRUGVXVHGWRGHVFULEHOLIH,Q+HEUHZRQH
ZRUGIRU OLIH LVQHIHVKZKLFKOLWHUDOO\PHDQVEUHDWK7KHZRUG
XVXDOO\WUDQVODWHG VSLULW LVUXDFKOLWHUDOO\ZLQG7KH%LEOHVD\V
WKDWOLIHQHIHVKLVLQWKHEORRGDQGWKDWWRVSLOOWKHEORRGLVWRVSLOO
WKHOLIH,IZHUHDGVXFKWHUPVOLWHUDOO\WKH\DSSHDUWREHSXUHO\
IXQFWLRQDOVWDWHPHQWVDERXWZKDWOLIHLV+RZHYHUWKH\FOHDUO\KDYH
VRPH PHWDSK\VLFDO FRQWHQW DV ZHOO 7KLV VXEWOH PDUULDJH RI WKH
QDWXUDO DQG WKH VXSHUQDWXUDO LQ GHVFULELQJ OLIH LV QRW XQFRPPRQ
DPRQJ WKH DQFLHQWV +RZHYHU OLWWOH PRUH WKDQ WKLV LV VSRNHQ
JHQHUDOO\DERXWOLYLQJRUJDQLVPVLQWKH%LEOH
7KH %LEOHHVSHFLDOO\ WKH 1HZ 7HVWDPHQW DQG VRPH RI WKH
ODWHUSURSKHWLFZULWLQJVSDLQWVDYLYLGSLFWXUHRIDVXSHUQDWXUDO
ZRUOGZLWKOLIHDIWHUGHDWKDQJHOVDQGGHPRQVUHZDUGVDQGSXQ
LVKPHQWV DQG KHDYHQ DQG KHOO +RZHYHU LW DSSHDUV WKLV ZRUOG
EHORQJVVROHO\WR*RGPDQDQGLWVRWKHUKHDYHQO\LQKDELWDQWV2Q
WKHTXHVWLRQRIZKHUHDOOWKHRWKHUPDQ\DQGYDULHGIRUPVRIOLIHLQ
WKLVZRUOGILWLQWRWKDWVFKHPHZHGUDZDEODQN
%HFDXVHWKH%LEOHLWVHOILVUHODWLYHO\VLOHQWUHJDUGLQJWKHSKLOR
VRSKLFDOQDWXUHRIOLIHLQJHQHUDOZHVWHUQVRFLHW\HYHQGXULQJLWV
PRVWRUWKRGR[&KULVWLDQSHULRGVKDVODUJHO\ORRNHGWRWKHPRUH
VSHFXODWLYHJUHHNWUDGLWLRQIRUDQXQGHUVWDQGLQJRIZKDWOLIHLV
)RUH[DPSOH*HQHVLV
/HYLWLFXVWKHEORRGFDUULHVR[\JHQEUHDWK"
$QFLHQW3KLORVRSK\DQG0RGHUQ6FLHQFH

7KHUHDUHIRXUPDMRUVFKRROVRIWKRXJKWDPRQJWKH*UHHNVWKDW
DUH ZRUWK WDNLQJ DW OHDVW D EULHI ORRN DW 7KHVH FDQ EH EURDGO\
FDWHJRUL]HGDVP\VWLFLVPDWRPLVPWKHVRFDOOHGKDUPRQ\WKHR
ULHV DQG WKH 3ODWRQLF$ULVWRWHOLDQ VFKRRO RI WKRXJKW (DFK KDG
VRPHWKLQJWRVD\ZKLFKKDVIRUPHGRXUWKLQNLQJDERXWOLIHULJKW
GRZQWRWKHSUHVHQWGD\%HIRUHGHOYLQJLQKRZHYHUZHQHHGWR
EHWWHUXQGHUVWDQGWKHZRUGVZKLFKWKH*UHHNVXVHGWRWDONDERXW
OLIH
8QOLNHWKH+HEUHZVWKH*UHHNVKDGTXLWHDYDULHW\RIZRUGV
DWWKHLUGLVSRVDO7KHUHZHUHPDWWHURIIDFWWHUPVOLNHELRVZKLFK
GHVFULEHVDVWDWHRIOLIHRUPDQQHURIOLYLQJDQG]RHZKLFKLVD
JHQHUDOWHUPIRUWKHSURSHUW\RIOLIHLQDQDQLPDORUOLIHDVRSSRVHG
WRGHDWK+RZHYHUWKHUHDUHDOVRWKHPRUHWKHRUHWLFDOWHUPVOLNH
SVXFKHDQGWKXPRVZKLFKGHQRWHWHUPVFORVHUWRRXURZQWKHRORJL
FDOLGHDVRIVRXODQGVSLULW7KHSVXFKHZDVXQGHUVWRRGDVWKH VLJQ
RIOLIH RUVRXOZKLFKDOVRSRVVLEO\VXUYLYHGDIWHUSK\VLFDOGHDWK
EXWLWWRRKDGWKHPHDQLQJRI EUHDWK 7KHWKXPRVZDVVHDWHGLQ
WKHSVXFKHDQGLWKDGWRGRZLWKWKHVHDWRIIHHOLQJHPRWLRQDQG
WKRXJKW7KXPRVGHULYHVIURPWKXRZKLFKVXJJHVWVDVWRUPYLROHQW
PRWLRQUXVKLQJZLQGRUVWURQJGHVLUH$JDLQZHILQGWKHWHUPV
ZLQGDQGEUHDWKFORVHO\WLHGWROLIHZLWKDGHHSHUPHWDSK\VLFDO
FRQQRWDWLRQEHLQJTXLWHFOHDUWKURXJKRXWPDQ\RIWKHZULWLQJVRI
WKHDQFLHQW*UHHNV0RVWRIWKHGLVFXVVLRQVDERXWOLIHZKLFKWKH
JUHHN SKLORVRSKHUV FDUULHG RQ UHYROYHG DURXQG WKH PHDQLQJ DQG
QDWXUHRIWKHZRUGSVXFKH
,QWKHPRVWDQFLHQWJUHHNP\WKRORJ\WKHSVXFKHZDVVRPH
WKLQJRIDQHQWUDSSHGJRGDP\VWLFDOVXSHUQDWXUDOEHLQJLQDERG\
$WGHDWKWKLVEHLQJOHIWWKHERG\DQGZHQWWR+DGHVDWOHDVWIRUD
SHULRGRIWLPH6RPHEHOLHYHGLQUHLQFDUQDWLRQZKHUHWKHSVXFKH
ZRXOGUHWXUQWRLQKDELWDQRWKHUERG\DIWHUDSHULRGRIWLPHSRVVLEO\
EHLQJUHZDUGHGRUSXQLVKHGLQLWVQHZOLIHIRUWKHVLQVRIWKHSDVW
OLIH $OO RI WKLV WKHRORJ\ IRFXVHG RQ PDQ RI FRXUVH DQG LW KDV
SHUKDSVOLWWOHWRGRZLWKZKDWZHDUHWDONLQJDERXWKHUH
$WRPLVWLFWKLQNLQJZKLFKGDWHVEDFNWR'HPRFULWXVDERXW
%&DQGKLVGLVFLSOHV/XFUHWLXVDQG(SLFXUXVZDVDUDGLFDOEUHDN
IURPJUHHNP\WKRORJ\7KH\VRXJKWWRXQGHUVWDQGWKHXQLYHUVHLQ
WHUPV RI VPDOO LQGLYLVLEOH XQLWV FDOOHG DWRPV 7KHUH ZHUH IRXU
GLIIHUHQW NLQGV RI DWRPV HDUWK ZDWHU DLU DQG ILUH ,Q WU\LQJ WR

H[SODLQHYHU\WKLQJLQWHUPVRIWKHVHDWRPVWKH\RIFRXUVHVRXJKW
WRGHVFULEHOLIHSVXFKHLQWHUPVRIWKHPWRR6LQFHILUHZDVWKH
VPDOOHVWDQGPRVWPRELOHW\SHRIDWRPDQGVLQFHLWZDVFDSDEOHRI
FDXVLQJPRWLRQHJERLOLQJZDWHUWKHOLIHIRUFHZDVWKRXJKWWR
EHDW\SHRIILUHLQWHUVSHUVHGWKURXJKRXWWKHERG\7KHERG\ZRXOG
FRQWLQXDOO\ORVHWKHVHVRXODWRPVDQGFRXOGPDLQWDLQWKHQHFHVVDU\
EDODQFHIRUOLIHE\LQKDODWLRQZKLFKEURXJKWWKHPEDFNLQ'LIIHU
HQWSKLORVRSKHUVFDPHXSZLWKYDULDWLRQVRQWKLVWKHPH)RUH[DP
SOHWKH(SLFXUHDQVWKRXJKWWKHOLIHIRUFHFRQVLVWHGRIWZRSDUWV
RQHORFDWHGLQDVSHFLILFDUHDRIWKHERG\EHLWWKHKHDGWKHKHDUW
RUVRPHZKHUHHOVHDQGDSDUWZKLFKZDVGLVSHUVHGWKURXJKRXWWKH
ERG\
:KDWHYHUWKHYDULDWLRQDWRPLVWVWDXJKWWKDWWKHSURSHUW\RIOLIH
ZDVWKHUHVXOWRIWKHSUHVHQFHRIDSK\VLFDOVXEVWDQFHRUDWRPLF
VWUXFWXUH7KHVHLGHDVDERXWOLIHDUHFRPPRQO\FODVVLILHGDVPDWH
ULDOLVWRUVXEVWDQWLDOLVWWKHRULHV
7KHVRFDOOHGKDUPRQ\WKHRU\RIOLIHXVXDOO\DVVRFLDWHGZLWK
3KLORODXVDQG(PSHGRFOHVLVDOVRPDWHULDOLVWLQDVHQVH+RZHYHU
LWV SURSRQHQWV GLG QRW YLHZ SVXFKH DV D PDWHULDO VXEVWDQFH EXW
UDWKHUDVDKDUPRQ\RUSURSHUUDWLRRIPDWHULDOVXEVWDQFHVLQWKH
ERG\ /LNH D PXVLFDO LQVWUXPHQW SURSHUO\ WXQHG RU D SURSHUO\
PL[HGFKHPLFDOUHDFWLRQWRXVHPRGHUQWHUPVDERG\FRXOGOLYH
LILWVVXEVWDQFHZDVSURSHUO\EDODQFHGDQGZRUNLQJWRJHWKHU,QWKLV
VFKRRORIWKRXJKWWKHSVXFKHLVQRWDPDWHULDOVXEVWDQFHEXWQHLWKHU
LVLWDWUDQVFHQGHQWVXSHUQDWXUDOHQWLW\
3ODWRDQG$ULVWRWOHIRUPXODWHGDVRSKLVWLFDWHGFKDOOHQJHWRWKH
PDWHULDOLVWVXEVWDQWLDOLVWWKHRU\RIOLIH3ODWRVHHPVUDWKHUFRQIXV
LQJ RQ WKH VXEMHFW RI OLIH $V D PRUDO SKLORVRSKHU KLV SULPDU\
FRQFHUQZDVIRUPDQDQGPRVWRIKLVGLVFXVVLRQVUHYROYHDURXQG
PDQ,Q7KH/DVW'D\VRI6RFUDWHVKHOD\VRXWHODERUDWHSODQVLQ
ZKLFKWKHSVXFKHVXUYLYHVGHDWKJRHVWR+DGHVHWFHWFREYLRXVO\
ERUURZLQJIURPJUHHNP\WKRORJ\,QWKH7LPDHXVKHHVSRXVHVD
IRUP RI 3\WKDJRUHDQ QXPEHU PDJLF LQ ZKLFK WKH SVXFKH LV GH
VFULEHGLQWHUPVRIQXPEHUVDQGWKHLUSURSHUWLHV
3ODWRVLGHDVPD\QRWEHYHU\FOHDURUZHOOGHYHORSHG\HWKH
ODLGDJURXQGZRUNZKLFK$ULVWRWOHZDVDEOHWREXLOGRQ3ODWRZDV
WKH ILUVW WR GLYLGH WKH SVXFKH LQWR GLIIHUHQW SDUWV +H GLG WKLV
GLIIHUHQWO\DWGLIIHUHQWWLPHV)RUH[DPSOHKHGLYLGHGLWLQWRUHDVRQ

DQGHPRWLRQRULQWRDKLJKHULPPRUWDOSDUWDQGDORZHUPRUWDO
SDUW+HDOVRGHYHORSHGWKHWKHRU\RIIRUPVZKLFK$ULVWRWOHXVHG
H[WHQVLYHO\LQWU\LQJWRXQGHUVWDQGWKHZRUOG0RVWLPSRUWDQWO\
3ODWRZDVFOHDUO\VHDUFKLQJIRUDQRQPDWHULDOLVWXQGHUVWDQGLQJRI
OLIH+HGLGQRWGLYLGHWKHSVXFKHLQWRDWRPVRUSK\VLFDOSDUWVEXW
VDZLWPRUHLQWHUPVRISV\FKRORJLFDORUPHQWDOVWDWHV
$ULVWRWOHZDVSHUKDSVWKHPRVWSUROLILFZULWHURQWKHVXEMHFWRI
OLIH +H ZURWH D QXPEHU RI ERRNV RQ WKH VXEMHFW H[DPLQLQJ DOO
GLIIHUHQWNLQGVRIOLIHIRUPVGHVFULELQJWKHLUSK\VLRJQRP\WKHLU
KDELWV FODVVLI\LQJ WKHP DQG SKLORVRSKL]LQJ DERXW ZKDW OLIH LV
$ULVWRWOHDSSURDFKHGWKHVXEMHFWRIOLIHPXFKOLNHDPRGHUQELROR
JLVWVHHNLQJDJHQHUDOFRQFHSWRIZKDWOLIHLV+RZHYHUDVDVWXGHQW
RI3ODWRVKHVRXJKWDQRQPDWHULDOLVWXQGHUVWDQGLQJRIOLIH+H
XVHG3ODWRVLGHDVDERXWIRUPVDVWKHEDVLVIRUKLVZRUNUDWKHUWKDQ
LQGXOJLQJ LQ WKH VDPH NLQGV RI PHWDSK\VLFDO DQG P\WKRORJLFDO
VSHFXODWLRQVWKDWKLVWHDFKHUGLG
$ULVWRWOHV FHQWUDO ZRUN RQ WKH VXEMHFW RI ZKDW OLIH LV LV
FRPPRQO\ NQRZQ E\ LWV /DWLQ WLWOH 'H $QLPD (J 2Q WKH
SVXFKH XVXDOO\ WUDQVODWHG LQWR (QJOLVK DV 2Q WKH 6RXO +H
GHVFULEHVDOLYLQJHQVRXOHGEHLQJDVVRPHWKLQJZKLFKFDQSURGXFH
PRYHPHQWDQGZKLFKPD\KDYHLQWHOOHFWRUSHUFHSWLRQ+HEUHDNV
PRYHPHQWGRZQLQWRVSDWLDOPRYHPHQWDQGPRYHPHQWFRQQHFWHG
ZLWKQRXULVKPHQWJURZWKDQGSHUFHSWLRQ7KHSVXFKHWKHOLIH
SULQFLSOHLV WKHQ D IRUP ZLWK WKHVH SURSHUWLHV :KHQ PDWWHU LV
HQGRZHGZLWKWKLVIRUPLWLVDOLYH$ULVWRWOHVXJJHVWHGWKDWOLYLQJ
RUJDQLVPV FRXOG KDYH GLIIHUHQW NLQGV RI SVXFKHV )RU H[DPSOH
SODQWVKDYHDSVXFKHZKLFKDGPLWVRIQXWULWLYHDQGUHSURGXFWLYH
PRWLRQEXWQRWORFRPRWLYHPRWLRQRUSHUFHSWLRQ
$WWKLVSRLQW\RXPD\EHZRQGHULQJZKDWDIRUPLV*RRG<RX
RXJKWWREH7KLQNRIWKHZRUG IRUP LQWKHVHQVHRIDPROGZKLFK
GHILQHVWKHFKDUDFWHUVKDSHDQGIXQFWLRQRIDQREMHFW%XWDOVRWKLQN
RILWDVDQDUFKHW\SDOLGHD)RUH[DPSOHDFDUSHQWHUKDVDQLGHDLQ
PLQGZKHQKHPDNHVDFKDLURUDWDEOH7KDWLGHDLVOLNHDPROG
ZKLFKGHILQHVWKHVKDSHRIWKHREMHFWEHLQJFRQVWUXFWHG1RUPDOO\
(J 2QWKHSVXFKH XVXDOO\WUDQVODWHGLQWR(QJOLVKDV 2QWKH6RXO

ZKHQZHWKLQNRIDQLGHDWKRXJKZHLPDJLQHLWDVEHLQJVRPHRQHV
LGHDEHLWRXURZQRUDQRWKHUSHUVRQVRUHYHQ*RGV7KHLGHDLV
DSKHQRPHQRQRIPLQG,QFRQWUDVW3ODWRDQG$ULVWRWOHVHHPHGWR
YLHZWKHVHIRUPVDVIXQGDPHQWDOUHDOLWLHV7KH\ZHUHQRWDSKH
QRPHQRQRIWKLVQDWXUDOZRUOGRURIVRPHVXSHUQDWXUDOZRUOG7KH\
ZHUHQRWVRPHRQHVLGHDEXWUDWKHU,GHDVZKLFKH[LVWHGZKHWKHU
DQ\RQHWKRXJKWRIWKHPRUQRW
<HWRQHFDQQRWJRVRIDUDVWRVD\WKDWWKHVHIRUPVZHUHWKH
RQO\XOWLPDWHUHDOLWLHVLQWKHWKLQNLQJRI3ODWRDQG$ULVWRWOH)RU
H[DPSOH$ULVWRWOHEHOLHYHGLQD*RGZKRZDVWKHSULPHPRYHULQ
WKHXQLYHUVHWKHRULJLQDQGVRXUFHRIDOOWKLQJVDQGDOODFWLYLW\
:KDWXOWLPDWHUHDOLW\FRQVLVWHGRIIRUWKHVHSKLORVRSKHUVLVRIWHQ
XQFOHDUEHFDXVHWKH\GRQWOD\GRZQDSODQLQDQ\DXWKRULWDWLYH
PDQQHUDQGVWLFNWRLW6LQFHWKH\GLGQRWGHSHQGRQWKHDXWKRULW\
RIVRPHVFULSWXUDOFDQQRQWKH\VSRNHRIZKDWVHHPHGUHDVRQDEOH
WRWKHP$QGWKDWFKDQJHGIURPWLPHWRWLPH
3ODWRVP\VWLFLVPPDNHVKLVLGHDRIOLIHDSSHDUUDWKHUFOHDUO\
VXSHUQDWXUDO$ULVWRWOHE\VWD\LQJDZD\IURPP\VWLFLVPJLYHVXV
DSLFWXUHRIOLIHZKLFKLVQRWSXUHO\QDWXUDOOLNHWKHDWRPLVWV\HWLW
LVQRWVXSHUQDWXUDOLQWKHVHQVHZHQRUPDOO\WKLQNRIVXSHUQDWXUDO
)RU $ULVWRWOH WKHUH ZDV D IRUPDQ LGHDEHKLQG HDFK OLYLQJ
RUJDQLVP7KLVIRUPZDVQRWDSDUWRIWKHPDWHULDOZRUOGDQG\HW
LWGHILQHGWKHTXDOLWLHVRIDQREMHFWLQWKHPDWHULDOZRUOG,WLVQRW
WKHIDFWWKDWDQREMHFWKDGDIRUPDVVRFLDWHGWRLWWKDWPDGHLWDOLYH
EXW WKH QDWXUH RI WKDW IRUP (YHU\WKLQJ KDG IRUPV DVVRFLDWHG WR
WKHPLQ3ODWRDQG$ULVWRWOHVV\VWHP$FKDLUGLG$URFNGLG$
OL]DUGGLG+RZHYHURQO\WKHOL]DUGKDGDIRUPWKDWLPSDUWHGWRLW
WKHDELOLW\WRPRYHJURZSURFUHDWHDQGSHUFHLYHZKDWZDVKDS
SHQLQJWRLW7KDWIRUPPDGHLWDOLYH
1RZ DV , VDLG EHIRUH WKHVH DQFLHQW LGHDV ZHUH QRW VLPSO\
LVRODWHGVFKRROVRIWKRXJKW3ODWRQLFSKLORVRSK\KDGDJUHDWLQIOX
HQFHERWKZLWKLQWKHFKXUFKDQGLQ-HZLVKWKRXJKWLQDQFLHQWWLPHV
7KH&KULVWLDQZRUOGYLHZDVFHQGHGWRSUHGRPLQDQFHDVWKHFODVVL
FDOZRUOGFROODSVHGLQWHOOHFWXDOO\DQGSROLWLFDOO\EHWZHHQWKHWK
DQGWKFHQWXULHV$'$ULVWRWOHZKRVHZRUNVKDGEHHQORVWWRWKH
ZHVWIRUFHQWXULHVZDVUHGLVFRYHUHGE\ZD\RI,VODPLFFXOWXUHLQ
WKHWKDQGWKFHQWXULHVDQGKRWO\GHEDWHGE\WKHRORJLDQVOLNH
7KRPDV $TXLQDV DQG $YHUURHV 7KHVH WKLQNHUV HIIHFWLYHO\ LQWH

JUDWHG $ULVWRWHOLDQ DQG &KULVWLDQ WKRXJKW :LWK WKH UHYLYDO RI

FODVVLFDOFXOWXUHGXULQJWKHUHQDLVVDQFHRQHILQGVVWURQJHOHPHQWV
RI ERWK P\VWLFLVP DQG DWRPLVP PDNLQJ WKHLU ZD\ LQWR ZHVWHUQ
WKRXJKW6RWKHVHGLIIHUHQWVFKRROVRIWKRXJKWKDYHLQIRUPHGHDFK
RWKHUDQGDQWDJRQL]HGHDFKRWKHUWKURXJKRXWKLVWRU\
,QVXPPDU\WKHQWKHDQFLHQWJUHHNVKDYHKDQGHGGRZQWKH
IROORZLQJFRQIOLFWLQJLGHDVWRXV
7KH SURSHUW\ RI OLIH LV D QDWXUDO SKHQRPHQRQ HLWKHU D D
VXEVWDQFHSUHVHQWLQWKHERG\RUEDSURSHURUJDQL]DWLRQRIWKH
VXEVWDQFHRIWKHERG\
7KHSURSHUW\RIOLIHLVQRWDQDWXUDOSKHQRPHQRQLWLVHLWKHUD
DP\VWLFDOVSLULWXDOSURSHUW\RUEWKHUHVXOWRIDIRUPRULGHD
LPSRVHGXSRQWKHPDWWHU
:KLOHWKH%LEOHLVYDJXHDERXWOLIHLQJHQHUDOLWVYLHZRIPDQ
LVRIWKHVSLULWXDODQGP\VWLFDOQDWXUH<HWLWVYLHZRIOLIHDSDUWIURP
PDQLVSHUKDSVQRWWRRGLIIHUHQWIURP$ULVWRWOHVOLQHRIWKLQNLQJ
*HQHVLV VD\V *RG FUHDWHG WKH GLIIHUHQW DQLPDOV DIWHU WKHLU NLQG
+HEUHZPHHQVHYHUDOWLPHV2QHLVWHPSWHGWRVXEVWLWXWHWKH
ZRUGIRUPKHUH,WVHHPVWRILW7KHWH[WREYLRXVO\VXJJHVWVWKHUH
ZDVDQLGHDRIVRPHW\SHEHKLQGWKHPDNLQJRIHDFKRIWKHYDULRXV
FUHDWXUHV2IFRXUVHRQHFDQQRWUHDOO\YLHZWKHELEOLFDOLGHDRINLQG
LQWHUPVRIVRPHVRUWRIVHOIH[LVWHQW,GHD7KHLGHDLVFOHDUO\*RGV
LGHD 1RQH WKH OHVV WKH WKRXJKW WKDW WKHUH LV DQ LGHD EHKLQG WKH
RUJDQLVPVRXQGVYHU\$ULVWRWHOLDQ
6RQRZZHKDYHDQLGHDDERXWZKDWWKHDQFLHQWVKDGWRVD\
DERXWOLIH2EYLRXVO\ZHFRXOGGHOYHLQWRWKHVXEMHFWLQJUHDWGHWDLO
,QVWHDG,VLPSO\UHIHUWKHUHDGHUWR+DQV5HJQHOOV$QFLHQW9LHZV
RQWKH1DWXUHRI/LIH
6HH*HQHVLV
+DQV 5HJQpOO $QFLHQW 9LHZV RQ WKH 1DWXUH RI /LIH &:. *OHHUXS /XQG
6ZHGHQ

0RGHUQ6FLHQFH
7KH GHEDWH RYHU WKH QDWXUH RI OLIH ZKLFK EHJDQ LQ DQFLHQW
*UHHFHWKRXVDQGVRI\HDUVDJRKDVFRQWLQXHGULJKWXSWRWKHSUHVHQW
GD\$VXSHUILFLDOH[DPLQDWLRQRIPRGHUQVFLHQFHDQGVFLHQWLVWV
RSLQLRQVPLJKWOHDGRQHWRFRQFOXGHWKDWWKHDWRPLVWLFVFKRRORI
WKRXJKKDVZRQDQDVWRXQGLQJYLFWRU\RYHU3ODWRDQG$ULVWRWOHDQG
RYHUWKHP\VWLFV2XUXQGHUVWDQGLQJRIWKHPLFURVFRSLFGHWDLOVRI
WKHXQLYHUVHKDYHFKDQJHGGUDPDWLFDOO\VLQFHDQFLHQWWLPHV$QG
PRVW PRGHUQ VFLHQWLVWV LI TXHVWLRQHG DERXW LW ZRXOG SUREDEO\
IDYRUWKHLGHDWKDWDOOSKHQRPHQDLQWKHXQLYHUVHOLIHLQFOXGHG
FRXOGLQSULQFLSOHEHUHGXFHGWREDVLFSK\VLFV7KLVLVWKHHVVHQFH
RIWKHDWRPLVWLFSKLORVRSK\
+RZHYHUWKLVSHUYDVLYHLGHDWKDWDWRPLVPLVXOWLPDWHO\FRUUHFW
LVDPDWWHURIEOLQGIDLWKWRPRVWVFLHQWLVWVQRWSURYHQIDFW,WLV
DOPRVW D VRUW RI WRXFKVWRQH IRU WKH EURWKHUKRRG RI VFLHQWLVWV D
PHDVXULQJVWLFNIRUKRZ VFLHQWLILF VRPHLGHDLV%XWLQDFWXDO
SUDFWLFHDWRPLVPLVRIWHQTXLFNO\MHWWLVRQHGDVDSUDFWLFDOWRROIRU
XQGHUVWDQGLQJ RXU ZRUOG LQ IDYRU RI D PXFK PRUH $ULVWRWHOLDQ
DSSURDFK7KLVLVDIXQGDPHQWDOSDUDGR[RIPRGHUQVFLHQFH
/HWPHLOOXVWUDWHWKLVSDUDGR[ZLWKDQH[DPSOHIURPSK\VLFV
WKDWVWULNHVWRWKHFRUHRIZKDW,PWDONLQJDERXW8SXQWLOWKHV
1HZWRQLDQPHFKDQLFVZDVVXSSRVHGWREHWKHFRUUHFWGHVFULSWLRQ
RIKRZDOOWKLQJVZRUNHGIURPVXEDWRPLFSDUWLFOHVWRJDOD[LHV7KH
IXQGDPHQWDOODZRI1HZWRQLDQPHFKDQLFVLV
) PD

)RUFHHTXDOVPDVVWLPHVDFFHOHUDWLRQ$SSO\DIRUFH)WRDQREMHFW
ZLWK PDVV P DQG LW ZLOO DFFHOHUDWH DFFRUGLQJ WR WKLV ODZ ,Q WKH
VTXDQWXPPHFKDQLFVZDVIRUPXODWHGWRDFFRXQWIRUH[SHUL
PHQWDO GHYLDWLRQV IURP 1HZWRQLDQ PHFKDQLFV LQ WKH VXEDWRPLF
UHDOP7KHIXQGDPHQWDOODZRITXDQWXPPHFKDQLFVLVWKH6FKU|GLQ
JHUHTXDWLRQ
LKW +

7KLVVD\VWKDWWKHZDYHIXQFWLRQZKLFKLVDVRUWRISUREDELOLW\
GLVWULEXWLRQHYROYHGLQWLPHSURSRUWLRQDOO\WRWKHDFWLRQRIWKH
+DPLOWRQLDQRSHUDWRURQLW7KHVHWZRODZVDUHUDGLFDOO\GLIIHUHQW
2QH PLJKW ZRQGHU FDQ WKH ODZ ) PD EH GHULYHG IURP WKH
6FKU|GLQJHUHTXDWLRQ"6LQFHHYHU\WKLQJLVPDGHXSRIVXEDWRPLF
SDUWLFOHVRQHZRXOGH[SHFWWKH6FKU|GLQJHUHTXDWLRQWREHVRPH
KRZPRUHIXQGDPHQWDO7KXVRQHZRXOGH[SHFW1HZWRQVODZVWR
UHVXOWIURPDSURSHUUHGXFWLRQRIWKH6FKU|GLQJHUHTXDWLRQ6XFKD
UHGXFWLRQ KDV EHHQ DFFRPSOLVKHG WR D FHUWDLQ H[WHQW 2QH FDQ
PDWKHPDWLFDOO\VKRZWKDWSURSHUO\IRUPHGZDYHSDFNHWVGRREH\
1HZWRQVODZZLWKLQOLPLWV<HWWKHSUREOHPJRHVPXFKGHHSHU
7KHZKROHZD\RIXQGHUVWDQGLQJKRZWKHZRUOGZRUNVLQTXDQWXP
PHFKDQLFV LV UDGLFDOO\ GLIIHUHQW WKDQ LQ 1HZWRQLDQ PHFKDQLFV
4XDQWXPWKHRU\LVDZRUOGRISUREDELOLWLHV1HZWRQVLVDZRUOGRI
GHWHUPLQLVWLFFHUWDLQW\+RZDUHWKHWZRUHFRQFLOHG"7KLVLVDGHHS
TXHVWLRQZKLFKKDVQRWEHHQUHVROYHGLQVHYHQW\\HDUV7RGHDOZLWK
SUREDELOLWLHVTXDQWXPWKHRU\LQWURGXFHVWKHLGHDRIWKHREVHUYHU
DVVHSDUDWHIURPDSK\VLFDOV\VWHPXQGHUREVHUYDWLRQ7KHREVHUYHU
DFFRPSOLVKHVZKDWLVFDOOHGVWDWHYHFWRUUHGXFWLRQZKHQKHPDNHV
PHDVXUHPHQWVRQWKHV\VWHPKHVREVHUYLQJWRGHWHUPLQHLWVVWDWH
7KLVREVHUYHULVIXQGDPHQWDOWRWKHZKROHRITXDQWXPWKHRU\,I
\RXWU\WRGRDZD\ZLWKKLPDQGLQFRUSRUDWHKLPLQWRWKHZDYH
IXQFWLRQ\RXFRPHXSZLWKQRQVHQVH
(UZLQ6FKU|GLQJHUWULHGWRFRQIURQWWKLVSUREOHPE\SURSRVLQJ
DWKRXJKWH[SHULPHQWLQZKLFKDFDWLVSXWLQDER[DORQJZLWKD
YLDORIF\DQLGHZKLFKZRXOGEHEURNHQEDVHGRQZKHWKHUDVLQJOH
SKRWRQZDVUHIOHFWHGIURPDVLOYHUHGPLUURU,IWKHSKRWRQZDV
UHIOHFWHGWKHYLDOZRXOGEHEURNHQDQGWKHFDWZRXOGGLH,IWKH
SKRWRQZDVWUDQVPLWWHGWKHYLDOZRXOGQRWEHEURNHQDQGWKHFDW
ZRXOGOLYH$FFRUGLQJWRTXDQWXPWKHRU\WKHSUREDELOLW\WKDWWKH
SKRWRQZRXOGEHUHIOHFWHGZDV6RDUJXDEO\LQVLGHWKHER[
\RXGKDYHDZDYHIXQFWLRQLQZKLFKWKHFDWZDVDOLYHDQG
GHDG :LWK QR REVHUYHU \RX KDG QRW DFFRPSOLVKHG VWDWH YHFWRU
UHGXFWLRQVRWKLVKDOIDOLYHDQGKDOIGHDGVWDWHVKRXOGSHUVLVWXQWLO
\RXRSHQHGWKHER[DQGORRNHGWRVHHZKDWKDSSHQHG7KLVREYL
RXVO\ERUGHUVRQLQVDQLW\EXWWKDWLVH[DFWO\ZKDWTXDQWXPPH

FKDQLFVZRXOGSUHGLFW<RXFRXOGHYHQSXWDPDQLQDVSDFHVXLWLQ
WKH ER[ DQG KH ZRXOG EH SDUW RI WKH V\VWHP :KDW ZRXOG KH
REVHUYH":RXOGKHKDYHDGRXEOHH[LVWHQFHLQZKLFKKDOIVDZWKH
FDWGHDGDQGKDOIVDZLWDOLYH"7RGDWHQRRQHKDVUHVROYHGWKHVH
TXHVWLRQV
6RZHKDYHVRPHGHHSDQGIXQGDPHQWDOTXHVWLRQV+RZLVLW
WKDWDPHFKDQLVWLFWKHRU\DERXWVXEDWRPLFSDUWLFOHVUHTXLUHVXVWR
LQYRNHWKHLGHDRIDQLQWHOOLJHQWREVHUYHU"$QGKRZLVLWWKDWWKH
GHWHUPLQLVP RI 1HZWRQLDQ PHFKDQLFV LV UHFRQFLOHG ZLWK SURE
DELOLVWLFTXDQWXPPHFKDQLFVRQO\E\LQYRNLQJVXFKDQLQWHOOLJHQFH"
7KHVHDUHQRWHDV\TXHVWLRQV$QGWKH\KDYHQWEHHQIXOO\DQVZHUHG
LQVHYHQW\\HDUV<HWVFLHQWLVWVGRQRWVK\DZD\IURPXVLQJERWK
1HZWRQLDQDQGTXDQWXPPHFKDQLFV2QHFDQQRWSURSHUO\VD\WKDW
TXDQWXPPHFKDQLFVLVFRPSOHWHZLWKRXWWKHLGHDRIDQREVHUYHU
$QGWKDWLVDERXWDVQRQDWRPLVWLFDV\RXFDQJHW/LNHZLVHLI\RX
FDQW EXLOG D VROLG FRQQHFWLRQ EHWZHHQ 1HZWRQLDQ DQG TXDQWXP
PHFKDQLFV\RXFDQKDUGO\GHQ\WKDW1HZWRQLDQPHFKDQLFVOHDYHV
VRPHWKLQJWREHGHVLUHGLQDWRPLVWLFUHGXFWLRQLVWLFWHUPV,WVYHU\
GHWHUPLQLVPFDQWEHURRWHGLQDWRPLVWLFUHDOLW\
,FKRVHWKLVH[DPSOHEHFDXVHLWPD\YHU\ZHOOEHWKDWWKHUHLV
DULJRURXVVROXWLRQWRWKHSUREOHP)RUH[DPSOH5RJHU3HQURVH
VXJJHVWV WKDW WKH DQVZHU PD\ OLH LQ D SURSHU XQGHUVWDQGLQJ RI
TXDQWXPJUDYLW\&HUWDLQO\KLVLGHDVKDYHVRPHPHULWDOWKRXJK
WKH\DUHYHU\VSHFXODWLYHDWWKLVSRLQWLQWLPH7KHSRLQWLVHYHQ
WKRXJKLWPD\EHSRVVLEOHWRUHPRYHWKHLGHDRIWKHREVHUYHUIURP
TXDQWXPPHFKDQLFVPRVWVFLHQWLVWVDUHTXLWHZLOOLQJWROLYHZLWK
KDYLQJWKDWLGHDERXQGXSLQWKHLUWKHRU\7KLVLVDFODVVLFH[DPSOH
RIKRZUDGLFDODWRPLVPLVMHWWLVRQHGLQJRRGFRQVFLHQFHE\VFLHQ
WLVWV
1RZLIZHDUHWRFRPHWRDVXIILFLHQWO\GHHSXQGHUVWDQGLQJRI
OLIHWRIRUPXODWHVRPHEHOLHYDEOHRSLQLRQVRQRXUJUHDWTXHVWLRQ
,V LWUHDOO\DOLYH" ZH KDYH WR XQGHUVWDQG WKLV FRQWURYHUV\ EH
WZHHQDWRPLVPDQG$ULVWRWOH,WKLQNWKHZKROHFRQWURYHUV\FRPHV
<RUNSS

WRDKHDGZKHQZHWDONDERXWOLIHDQGHVSHFLDOO\DERXWDUWLILFLDO
OLIH%RWKVLGHVRIWKHGHEDWHILQGOHJLWLPDWHH[SUHVVLRQLQWKHOLIH
VFLHQFHV%LRFKHPLVWVZRUNKDUGWRUHGXFHELRORJ\WRSK\VLFVYLD
FKHPLVWU\3V\FKRORJLVWVVSHDNRIFRQFHSWVOLNHHJRFRQVFLRXVQHVV
DQGPLQGZKLFKKDYHQRHVWDEOLVKHGWKHRUHWLFDOEDVLVLQWKHPDWH
ULDOZRUOG
,EHOLHYHWKHGHEDWHEHWZHHQDWRPLVPDQG$ULVWRWOHLVIXQGD
PHQWDOO\LUUHVROYDEOH7KHDWRPLVWWULHVWRWHDUWKHZRUOGDSDUWLQWR
IXQGDPHQWDOXQLWVDQGWKHLULQWHUDFWLRQ7KLVWHDULQJGRZQKDVD
ZD\ RI PDNLQJ $ULVWRWHOLDQVW\OH LGHDV ORRN DZNZDUG RU HYHQ
PHDQLQJOHVV)RUH[DPSOHKRZGRHVHJRILWLQWRDFROOHFWLRQRI
DWRPVZKLFKREH\TXDQWXPPHFKDQLFV"7KHLGHDIDLOVDWWKDWOHYHO
<HWZKHQWKHDWRPLVWLVGRQHWHDULQJHYHU\WKLQJDSDUWKHKDVD
KDUG WLPH EXLOGLQJ LW EDFN XS DJDLQ :KHQ DVNHG WR GHVFULEH D
EHKDYLRUSDWWHUQWKDWZHDOOUHDGLO\UHFRJQL]HDVD ELJHJR KH
IDLOVPLVHUDEO\
,GRQWZDQWWRVLPSO\WDNHVLGHVLQWKLVGHEDWHEHKLQG\RXU
EDFNDQGEHFRPHPHUHO\DVRSKLVWDUJXLQJGLVKRQHVWO\IRUP\VLGH
5DWKHU,GOLNHWRORRNDWERWKVLGHV,KRSHIDLUO\SHUKDSVRIIHU
VRPHLGHDVRIP\RZQDQGOHDYHWKHILQDOGHFLVLRQXSWR\RX0\
IHHOLQJ LV WKDW DOWKRXJK SK\VLFV KDV EHHQ DEOH WR WHDFK XV PXFK
DERXWOLIHLWLVQRWWKHNH\ZKLFKXQORFNVHYHU\GRRUDVPDQ\ZRXOG
KDYHXVEHOLHYH7KHUHVHHPWREHVRPHVHULRXVSUREOHPVZLWKWKLV
DWRPLVWLF ZRUOGYLHZ ZKLFK ,G OLNH WR H[SORUH LQ WKH QH[W WZR
FKDSWHUV7KHVHDUHQRWPHUHO\SKLORVRSKLFDOREIXVFDWLRQVHLWKHU
7KH\KDYHDGLUHFWEHDULQJRQWZRRIWKHPHFKDQLFDODVSHFWVRIOLIH
ZHKDYHDOUHDG\GLVFXVVHGHPHUJHQWEHKDYLRUDQGVHOIUHSURGXF
WLRQ
)UDQNO\,WKLQNWKH$/FRPPXQLW\KDVHUUHGLQEHLQJUDWKHU
WRRTXLFNWRDGRSWDUDGLFDODWRPLVP$Q\RQHZKRLVJRLQJWRFUHDWH
VRPHWKLQJDQGFDOOLWDFWXDOO\DOLYHKDVWRGHDOZLWKWKHVHLVVXHV,W
PD\ EH ILQH IRU VRPH UHODWLYHO\ REVFXUH JURXS RI DFDGHPLF UH
VHDUFKHUVWRKLGHLQDWRPLVP7KHLUYHU\REVFXULW\ZLOOVKLHOGWKHP
IURPFULWLFLVP+RZHYHU,GRXEW,FRXOGDIIRUGWKDWOX[XU\LI,ZHUH
WRFRPHRXWDQGVD\WKDWWKHYLUXVLQ\RXUFRPSXWHULVDOLYHDQG
\RXVKRXOGUHVSHFWLWDQGOHWLWEHIUXLWIXODQGPXOWLSO\UDWKHUWKDQ
NLOOLW%HVLGHVRXUILQDOXQGHUVWDQGLQJRIYLUXVHVZLOOEHFRPHPRUH
LQWHUHVWLQJZKHQZHWDNHDEURDGHUYLHZRIWKHODQGVFDSH

(PHUJHQW%HKDYLRU
5HYLVLWHG
1RZ,GOLNHWRUHWXUQWRWKHLGHDRIHPHUJHQWEHKDYLRU$V\RX
ZLOOUHPHPEHUZHOHIWRXUHDUOLHUGLVFXVVLRQRIHPHUJHQWEHKDYLRU
ZLWK D VRPHZKDW TXHDV\ IHHOLQJ :H ZHUHQW TXLWH VXUH LI WKH
SKHQRPHQRQZDVHYHQUHDORULILWZDVMXVWWKHSHUFHSWLRQRIRXU
OLPLWHGPLQGV&HUWDLQO\LWZRXOGEHQLFHWRUHVROYHWKLVTXHVWLRQ
,IHPHUJHQWEHKDYLRULVQRWUHDOWKHQZHVKRXOGQWERWKHURXUVHOYHV
ZLWK LW ,I LW LV UHDO LW FRXOG EH D YHU\ LPSRUWDQW LQJUHGLHQW LQ
XQGHUVWDQGLQJRXUZRUOG
0\IHHOLQJLVWKDWHPHUJHQWEHKDYLRULVUHDODWOHDVWLQQDWXUH
EXW , PXVW VD\ WKDW WLPLGO\ 7KH FRQVHTXHQFHV RI UHDO HPHUJHQW
EHKDYLRULQQDWXUHFXWWRWKHFRUHRIWKHDWRPLVWLFXQGHUVWDQGLQJRI
RXUZRUOGZKLFKKDVVRSHUPHDWHGVFLHQFHIRUWKHSDVWIHZFHQWX
ULHV6RILUVWOHWPHJLYH\RXHQRXJKEDFNJURXQGWRDSSUHFLDWHKRZ
UDGLFDOHPHUJHQWEHKDYLRUFRXOGEH
$WRPLVP&DXVDOLW\DQG6LPSOLFLW\
,Q HVVHQFH PRGHUQ PDWHULDOLVWLF DWRPLVP LV EDVHG RQ WZR
SKLORVRSKLFDODVVXPSWLRQV7KHILUVWLVWKHFDXVDOLW\SULQFLSOH7KLV
SULQFLSOHPD\EHVWDWHGDVIROORZV *LYHQWKHFRUUHFWODZVRI
SK\VLFVDQGDQH[DFWVSHFLILFDWLRQRIWKHLQLWLDOVWDWHRIDFORVHG
V\VWHPRQHFRXOGLQSULQFLSOHFDOFXODWHWKHVWDWHRIWKDWV\VWHPIRU
DOOWLPHWRFRPH ,QRWKHUZRUGVWKHXQLYHUVHLVIXOO\JRYHUQHG
E\QDWXUDOODZVLQFHWKHFORVHGV\VWHPFRXOGEHWKHXQLYHUVHDVD

ZKROH 7KH VHFRQGDVVXPSWLRQLVWKDWWKHODZVRIQDWXUHDUHLQ

VRPHVHQVHVLPSOHGLVFRYHUDEOHDQGXQGHUVWDQGDEOH
7KHFDXVDOLW\SULQFLSOHLVSKLORVRSKLFDODQGQRWVFLHQWLILF,QD
VWULFWVHQVHIRUDVWDWHPHQWWRKDYHVFLHQWLILFFRQWHQWLWPXVWEH
IDOVLILDEOH7KDWLVLWPXVWEHSRVVLEOHWRGRDQH[SHULPHQWZKLFK
FRXOG VKRZ WKDW D VWDWHPHQW LV QRW WUXH LI LW LV LQFRUUHFW )RU
H[DPSOH RQH FDQ GR H[SHULPHQWV EDVHG RQ 0D[ZHOOV ODZV RI
HOHFWURG\QDPLFV ,I WKRVH ODZV ZHUH LQFRUUHFW WKH H[SHULPHQWV
ZRXOGLOOXPLQDWHWKHIDXOW7KHFDXVDOLW\SULQFLSOHFDQQRWEHIDOVL
ILHGLQWKLVPDQQHU2EYLRXVO\DQ\REVHUYDWLRQLQWKHQDWXUDOZRUOG
FDQ EH DFFRXQWHG IRU HLWKHU E\ XVLQJ WKH ODZV ZH NQRZ RU E\
SRVWXODWLQJDQDV\HWXQNQRZQODZWKDWLVDWZRUN7KDWDV\HWXQ
NQRZQODZLVYLUWXDOO\RPQLSRWHQWDWH[SODLQLQJWKHXQH[SODLQHG
:HFDQLQYRNHXQNQRZQODZWRH[SODLQHYHU\WKLQJHYHQZDONLQJ
RQZDWHU
7KH VHFRQG DVVXPSWLRQWKDW QDWXUDO ODZ LV VRPHKRZ VLP
SOHLVDOVRSKLORVRSKLFDOLQQDWXUH,QIDFWWKHLGHDLVURRWHGLQ
&KULVWLDQ FXOWXUH DQG WKH LGHD WKDW *RG LV D UDWLRQDO EHLQJ ZKR
FUHDWHGDUDWLRQDOXQLYHUVHWKDWFRXOGEHXQGHUVWRRGE\UDWLRQDOPHQ
FUHDWHGLQ+LVLPDJH
:LWKRXW WKHVH LGHDV SRVVLEO\ LQ D ZHDNHU IRUP RQH FDQ
LPDJLQHWKDWVFLHQWLILFH[SORUDWLRQPLJKWJULQGWRDKDOW,IZHKDG
QR UHDVRQ WR EHOLHYHWKDWDODZH[LVWHGWKDWJRYHUQHGVRPHQHZ
SKHQRPHQRQZHREVHUYHGFKDQFHVDUHZHZRXOGQWWU\WRGLVFRYHU
ZKDWZHNQHZGLGQWH[LVW/LNHZLVHLIZHEHOLHYHGWKDWVXFKDODZ
ZRXOGEHVRPHVV\RUFRPSOH[WKDWNQRZLQJLWZRXOGLPSDUWQR
EHWWHUXQGHUVWDQGLQJWRWKHGLVFRYHUHUDQGQRPRUHDELOLW\WRVROYH
VLPLODUSUREOHPVZHSUREDEO\ZRXOGQWFDUHHQRXJKWRZDVWHRXU
HIIRUWVWU\LQJWRGLVFRYHUWKDWODZ
3KLOLSS)UDQN3KLORVRSK\RI6FLHQFH3UHQWLFH+DOO(QJOHZRRG&OLIIV1HZ
-HUVH\SS
.DUO 3RSSHU &RQMHFWXUHV DQG 5HIXWDWLRQV QG (G %DVLF %RRNV 1HZ
<RUN SS II 3RSSHU LV D SKLORVRSKLFDO DFWLYLVW LQ WKDW KH VDZ
SKLORVRSK\ VKRXOG SOD\ DQ DFWLYH SDUW LQ GHILQLQJ KRZ VFLHQFH ZRUNV DQG
GUDZLQJWKHOLHQEHWZHHQJRRGDQGEDGVFLHQFH)DOVLILDELOLW\LVRQHWHVWIRU
JRRGVFLHQFH

6RERWKRIWKHVHLGHDVDUHLPSRUWDQWWRDWRPLVWLFVFLHQFH\HW
WKH\DUHQRWVFLHQWLILF7KH\DUHSKLORVRSKLFDOMXVWOLNHDWRPLVP
LWVHOI DQG ZH KDYH QR D SULRUL UHDVRQ WR EHOLHYH WKH\ DUH WUXH
+RZHYHU WKH H[SHULHQFH RI WKH ODVW IRXU FHQWXULHV KDV JLYHQ XV
UHDVRQWREHOLHYHWKDWWKHVHLGHDVFRQWDLQVRPHPHDVXUHRIWUXWK
WKDWZLOOKHOSXVEHWWHUXQGHUVWDQGRXUZRUOG
,Q6LU,VDDF1HZWRQSXEOLVKHGKLVIDPHG3KLORVRSKLDH
1DWXUDOLV3ULQFLSLD0DWKHPDWLFDLQZKLFKKHODLGRXWKLVJUDQG
SK\VLFDOWKHRU\RIPRWLRQ7KLVZRUNZDVDQDVWRXQGLQJWULXPSK
IRUVFLHQFH7RGD\LWLVGLIILFXOWWRGHVFULEHWKHIXOOLPSDFWRIZKDW
1HZWRQGLGEHFDXVHZHWDNHLWVRIRUJUDQWHG6LQFHDQFLHQWWLPHV
WKHKHDYHQVZHUHWKHGRPLQLRQRIWKHJRGV$VWURORJ\UHDGLQJ
WKHKHDYHQVIRUVLJQVDQGSRUWHQWVRIWKLQJVWRFRPHZDVFRPPRQ
DQG QDWXUDO ,W ZDV XQGHUVWRRG WKDW WKH KHDYHQV DW OHDVW SDUWO\
REH\HGPDWKHPDWLFDOODZV\HWHYHQLQWKHWKFHQWXU\WKHUHZDV
SOHQW\RIURRPIRUP\VWLFLVP7KHQ1HZWRQUHDFKHGRXWDQGWRRN
WKHKHDYHQVLQKDQGDQGEURXJKWWKHPZLWKLQWKHUHDFKRIHYHU\
GD\H[SHULHQFH:LWKKLVODZRIJUDYLWDWLRQ1HZWRQVXFFHHGHGDW
GHVFULELQJ SODQHWDU\ PRWLRQ DQG SXWWLQJ LW LQ WKH FRQWH[W RI WKH
ODUJHUIUDPHZRUNRIDJHQHUDOXQGHUVWDQGLQJRIPRWLRQDQGIRUFH
7KHJRGVZHUHFKDVHGRXWRIWKHKHDYHQVIRUHYHU
7KHWUHPHQGRXVVXFFHVVRI1HZWRQLDQPHFKDQLFVGXULQJWKH
QH[W IRXU FHQWXULHV FRQWLQXDOO\ HQFRXUDJHG VFLHQWLVWV WR SXVK LWV
OLPLWV IXUWKHU 7KH ODZV RI HOHFWURPDJQHWLVP ZHUH XQUDYHOOHG
&KHPLVWU\ IORXULVKHG 1HZ IURQWLHUV EURXJKW QHZ WKHRULHV DQG
PRGLILFDWLRQVRI1HZWRQVRULJLQDOLGHDVOLNHILHOGWKHRULHVTXDQ
WXPPHFKDQLFVDQGVSHFLDODQGJHQHUDOUHODWLYLW\
(YHQOLIHZDVEURXJKWXQGHUWKHXPEUHOODRIWKHQHZPHFKDQ
LFV$WILUVWVLPSOHELRORJLFDODFWLYLWLHVZHUHXQGHUVWRRGZLWKLQWKH
OLPLWVZKLFK1HZWRQLDQPHFKDQLFVSODFHGRQWKHP)RUH[DPSOH
RQHFDQXQGHUVWDQGZK\VRPHRQHFDQEHVHULRXVO\LQMXUHGMXPSLQJ
IURPDWKLUGIORRUZLQGRZEXWQRWE\MXPSLQJRIIDFKDLUIURPD
VLPSOHDQDO\VLVRIWKH1HZWRQLDQG\QDPLFVRIWKHIDOO1H[WVLPSOH
LQWHUQDOIXQFWLRQVVXFKDVPXVFXODUDFWLRQZHUHXQGHUVWRRGZLWKLQ
WKHFRQWH[WRIHOHFWURFKHPLFDOSURFHVVHV:LWKWLPHWKHVFLHQFHRI
OLIHSURJUHVVHGIURPWKHVLPSOHWRWKHFRPSOH[PLFURVFRSLFSURS
HUWLHVRIRUJDQLVPV,QDOORIWKHVHLQYHVWLJDWLRQVPRGHUQVFLHQFH

KDVEHHQWUHPHQGRXVO\VXFFHVVIXOLQXQUDYHOOLQJWKHP\VWHULHVRI
OLIHDQGEULQJLQJWKHPLQWRWKHOLJKWRIRXUXQGHUVWDQGLQJ
$W VRPH SRLQW LQ WKLV KLVWRULFDO H[SDQVLRQ RI WKH DELOLW\ RI
GHWHUPLQLVWLF PHFKDQLFV WR DFFRXQW IRU QDWXUDO SKHQRPHQD WKDW
PHFKDQLFVEHFDPHPRUHWKDQMXVWDXVHIXOWRRO,WEHJDQWRLQIRUP
SHRSOHDERXWWKHQDWXUHRIXOWLPDWHUHDOLW\LWVHOI,IGHWHUPLQLVWLF
PHFKDQLFVLVVRVXFFHVVIXODWGHVFULELQJRXUZRUOGFRXOGLWQRWEH
WKHXOWLPDWHUDWLRQDOUHDOLW\RIWKHXQLYHUVH"(YHQWKHVFLHQWLVWZKR
EHOLHYHGLQD6XSUHPH%HLQJVDZWKDWEHLQJDVZRUNLQJWKURXJK
QDWXUDOODZLQWKHGD\WRGD\ZRUOG,I+HGLGPLUDFOHVWKH\ZHUH
QRWWREHUDWLRQDOO\H[SODLQHG5DWLRQDODQGNQRZDEOHUHDOLW\WRRN
WKHXOWLPDWHIRUPRIDWRPLVWLFGHWHUPLQLVWLFPHFKDQLFV
7KH&UDFNV
'HVSLWH LWV DSSDUHQW VXFFHVV WKHUH DUH VRPH IXQGDPHQWDO
FUDFNVLQWKHELJSLFWXUHRIWKHZRUOGZKLFKDWRPLVPSDLQWVIRUXV
:KHQ,VD\ IXQGDPHQWDO ,ZLVKWRGLVWLQJXLVKEHWZHHQFUDFNV
ZKLFKSRLQWWRWKHOLPLWDWLRQVRIDWRPLVPDQGWKRVHZKLFKVLPSO\
SRLQWWRWKHQHHGIRUDQHZWKHRU\RUWKRVHZKLFKUHTXLUHPRUHGDWD
WRILOO$FODVVLFH[DPSOHRIDFUDFNZKLFKSRLQWVWRWKHQHHGIRUD
QHZ WKHRU\ LV JUDYLWDWLRQ :H KDYH D JRRG FODVVLFDO WKHRU\ RI
JUDYLW\LQJHQHUDOUHODWLYLW\:HDOVRKDYHDJRRGLGHDWKDWTXDQWXP
PHFKDQLFVFRUUHFWO\GHVFULEHVVXEDWRPLFSKHQRPHQD<HWZHGR
QRW\HWKDYHDZRUNDEOHWKHRU\ZKLFKFRPELQHVWKHWZR$JRRG
WKHRU\ RI TXDQWXP JUDYLW\ ZRXOG SUHVXPDEO\ KHOS XV DQVZHU
TXHVWLRQVERWKLQSDUWLFOHSK\VLFVDQGDVWURSK\VLFV6XFKDFUDFNLV
QRWIXQGDPHQWDOEHFDXVHDOWKRXJKTXDQWXPJUDYLW\LVKDUGWKHUH
LVQRUHDVRQWREHOLHYHWKDWDQDGHTXDWHWKHRU\FDQQRWEHIRUPX
ODWHG,WMXVWKDVQRWEHHQIRUPXODWHG\HW
$IXQGDPHQWDOFUDFNLQWKHDWRPLVWLFZRUOGYLHZLVVRPHZKDW
OLNHDEULFNZDOOZKLFKQRDPRXQWRIKXPDQHIIRUWZLOOEHDEOHWR
EUHDNWKURXJK,WLVDQLPSHQHWUDEOHEDUULHUWRDQDWRPLVWLFXQGHU
VWDQGLQJRIWKHXQLYHUVH,WLVDIDFWRIOLIHZKLFKZHVKDOOKDYHWR
OLYH ZLWK RXU JUDQGFKLOGUHQ ZLOO KDYH WR OLYH ZLWK DQG WKHLU
JUDQGFKLOGUHQZLOOKDYHWROLYHZLWK
&UDFNV OLNH WKLV WHOO XV WKDW WKH DWRPLVWLF ZRUOGYLHZ LVQW
IRROSURRILWLVQWTXLWHDGHTXDWHWRH[SODLQWKHZRUOGDVLWLV,QD

VHQVH VXFK FUDFNV PXVW EH YLHZHG DV WHQWDWLYH 7KHUH LV WKH
SRVVLELOLW\WKDWVRPHGD\DQHZWKHRU\RUQHZSURFHGXUHZLOOEH
LQYHQWHGWKDWFDQJRDURXQGWKHFUDFNDQGH[SDQGWKHERXQGDULHV
RIGHWHUPLQLVP
1RZ,GOLNHWRGLVFXVVRQHFUDFNZKLFKLVSHUWLQHQWWROLIH
DQGHPHUJHQWEHKDYLRUKHUH%HIRUHZHGRWKDWWKRXJK,GOLNHWR
GLVFXVVDQRWKHUFUDFNZKLFKLVPXFKPRUHZHOOHVWDEOLVKHG7KLV
ZLOOFODULI\WKHQDWXUHRIDIXQGDPHQWDOFUDFN
$VZHKDYHDOUHDG\GLVFXVVHGRQHRIWKHWUXO\UDGLFDOLPSOLFD
WLRQV RI TXDQWXP WKHRU\ LVWKDWLWWLHGFRQVFLRXVQHVVWRSK\VLFDO
UHDOLW\,QWKH1HZWRQLDQV\VWHPRIWKLQJVRQHFRXOGLQSULQFLSOH
REVHUYHDSK\VLFDOV\VWHPZLWKRXWDIIHFWLQJLW)RUH[DPSOHLIRQH
XVHGWKHSURSHUNLQGVRIPHDVXULQJLQVWUXPHQWVRQHFRXOGPHDVXUH
WKHSRVLWLRQDQGYHORFLW\RIDIDOOLQJEDOODVDIXQFWLRQRIWLPHWR
DQ\GHVLUHGGHJUHHRIDFFXUDF\DQGWKHUHE\YHULI\1HZWRQVODZ
RIJUDYLWDWLRQ,QTXDQWXPWKHRU\KRZHYHU+HLVHQEHUJVXQFHU
WDLQW\SULQFLSOHIRUELGVVXFKLGHDOLVP$Q\PHDVXUHPHQWPDGHRQ
DV\VWHPDIIHFWVWKDWV\VWHPDQGFKDQJHVLWEHFDXVHDOOPHDVXUH
PHQWVPXVWEHPDGHXVLQJUHDODSSDUDWXVUHDOSDUWLFOHVHWF)RU
H[DPSOHLI\RXZDQWWRORFDWHDSDUWLFOHSUHFLVHO\\RXPXVWXVH
DQRWKHUKLJKHQHUJ\SDUWLFOHWRGRLW%XWWKDWKLJKHQHUJ\SDUWLFOH
ZLOOGLVUXSWWKHRQH\RXZDQWWRREVHUYHVRWKDWHYHQLI\RXNQRZ
ZKHUHLWZDV\RXUHYHU\XQVXUHDERXWZKHUHLWLVQRZWKDW\RXYH
GLVUXSWHGLW,I\RXXVHDORZHQHUJ\SDUWLFOHWRORFDWHWKHRQH\RXUH
LQWHUHVWHGLQ\RXZRQWGLVUXSWLWYHU\PXFKEXW\RXFDQWWHOOYHU\
SUHFLVHO\ZKHUHLWLV
7KDWOLPLWDWLRQLQWURGXFHVDGHJUHHRIXQFHUWDLQW\LQWRDOORI
TXDQWXPPHFKDQLFV:LWKUHJDUGWRDQ\WKLQJWKDWFDQEHREVHUYHG
TXDQWXPWKHRU\PDNHVSUHGLFWLRQVRQO\LQWHUPVRISUREDELOLWLHV
1RZZKROHERRNVKDYHEHHQZULWWHQRQWKHLPSOLFDWLRQVRIWKLV
XQFHUWDLQW\DQGLWLVQRWP\SXUSRVHWRGLJLQWRWKHVXEMHFWLQJUHDW
GHWDLO,QHVVHQFHWKRXJKLWSXWVDOLPLWRQRXUDELOLW\WRNQRZRXU
XQLYHUVHEHFDXVHZHFDQQRWPHDVXUHLWZLWKRXWFKDQJLQJLW7KXV
ZHFDQDVNDSSDUHQWO\VHQVLEOHTXHVWLRQVTXHVWLRQVWKDWZHGOLNH
WKHDQVZHUWREXWWKHWKHRU\VD\V \RXFDQQRWDVNWKDW ,WDOVR
OLQNVRXUFRQVFLRXVQHVVWREDVLFSK\VLFVEHFDXVHPHDVXUHPHQWLV
DFRQVFLRXVDFWLYLW\,QRWKHUZRUGV\RXFDQQRWNQRZWKHVWDWHRI
D V\VWHP ZLWKRXW PHDVXULQJ LW +RZHYHU E\ PHDVXULQJ LW \RX

FKDQJHLWVVWDWHLQDQRWHQWLUHO\GHWHUPLQHGZD\7KHHTXDWLRQVRI
TXDQWXPWKHRU\UHIOHFWWKLVXQFHUWDLQW\SULQFLSOHEULOOLDQWO\7KH\
HQIRUFHLWLQWKDWWKH\DUHQRWGHWHUPLQLVWLFLQWKH1HZWRQLDQVHQVH
7KH\ZRQWDOORZ\RXWRDVNWKHZURQJTXHVWLRQV
0DQ\SK\VLFLVWVLQWKHILUVWKDOIRIWKHWKFHQWXU\ZHUHYHU\
XQFRPIRUWDEOHZLWKTXDQWXPWKHRU\EHFDXVHLWGLGQRWDOORZDFFX
UDWHSUHGLFWLRQV<HWLWVHHPHGWRDFFXUDWHO\GHVFULEHRXUZRUOGVR
LWFRXOGQRWEHHDVLO\GLVPLVVHG,WZDVLQGLVFXVVLQJWKLVWURXEOLQJ
DVSHFWRITXDQWXPWKHRU\WKDW(LQVWHLQPDGHKLVIDPRXVFRPPHQW
*RGGRHVQRWSOD\GLFH +HEHOLHYHGTXDQWXPWKHRU\ZDVQRWDQ
XOWLPDWH DQVZHUWKDW WKHUH PXVW EH VRPH XQGHUO\LQJ KLGGHQ
YDULDEOHWKHRU\ ZKLFKZRXOGUHVROYHWKHXQFHUWDLQW\SUREOHP%\
QRZWKDWJHQHUDWLRQRIVFLHQWLVWVKDVGLHGRIIDQGWKHVFLHQWLVWVZKR
JUHZXSZLWKTXDQWXPXQFHUWDLQWLHVQRORQJHUTXHVWLRQLWEHFDXVH
RIWKHVHSHFXOLDULWLHV)RUWKHPRVWSDUWWKH\DUHFRQWHQWWROLYHZLWK
DGRVHRIXQFHUWDLQW\
<HWLITXDQWXPPHFKDQLFVLVDFRUUHFWWKHRU\RIXOWLPDWHUHDOLW\
DQGLWPDNHVDORWRIVHQVHWRVXJJHVWWKDWLWLVVLQFHLWLVORJLFDOO\
FRQVLVWHQW DQG YHU\ SRZHUIXO DQG DFFXUDWH WKHQ LW UHSUHVHQWV D
IXQGDPHQWDOFUDFNLQWKHJUDQGSODQRIDWRPLVWLFGHWHUPLQLVP2XU
DELOLW\ WR GHWHUPLQLVWLFDOO\ XQGHUVWDQG WKH ZRUOG ZH OLYH LQ LV
IXQGDPHQWDOO\OLPLWHGE\RXUILQLWHDELOLW\WRPDNHPHDVXUHPHQWV
RQLWDQGWKHEHVW\RXFDQGRLVVSHDNVWDWLVWLFDOO\
,QFDOFXODELOLW\
1RZ ,G OLNH WR PRYH RQ WR DQRWKHU FUDFN ZKLFK LV PRUH
SHUWLQHQWWRRXUGLVFXVVLRQRIOLIH,WLVDFUDFNDWWKHRSSRVLWHHQG
RIWKHVSHFWUXPIURPTXDQWXPPHFKDQLFV5DWKHUWKDQDOLPLWDWWKH
VPDOOHQGRIWKLQJVLWLVDOLPLWDWWKHELJHQGZKHUHWKHPDJQLWXGH
DQGFRPSOH[LW\RIDSUREOHPOLPLWVXV,FDOOWKLVFUDFNLQFDOFXOD
ELOLW\7KLVLGHDLVURRWHGLQWKHGLIILFXOW\DWRPLVPKDVLQEXLOGLQJ
WKHZRUOGEDFNXSDIWHULWVEHHQWRUQGRZQWR IXQGDPHQWDOV
'DYLG%RKP +LGGHQYDULDEOHVLQWKH4XDQWXP7KHRU\ '5%DWHV(G

4XDQWXP7KHRU\$FDGHPLF3UHVV1HZ<RUNSS

)RUFHQWXULHVVFLHQWLVWVKDYHJHQHUDOO\RSHUDWHGRQWKHSULQFL
SOHWKDWQDWXUHLVZHOOEHKDYHGLQWKHVHQVHWKDWLI,FKDQJHWKHLQLWLDO
VWDWHRIDV\VWHPDOLWWOHELWWKHILQDOUHVXOWZLOOFKDQJHRQO\DOLWWOH
ELW)RUH[DPSOHLI,VKRRWDEDOODFURVVDURRP,FDQSUHGLFWDERXW
ZKHUHLWZLOOODQGDVORQJDV,NQRZWKHLQLWLDOVSHHGDQGDQJOHRI
ODXQFK<HW,FDQRQO\PHDVXUHWKHVSHHGZLWKDILQLWHGHJUHHRI
DFFXUDF\7\SLFDOO\,PLJKWVD\LWZDVODXQFKHGDWPHWHUVVHF
RQG%XWZKDWLILWZDVUHDOO\ODXQFKHGDWPHWHUVVHF
RQG" 1RUPDOO\ WKDWV QR ELJ GHDO $ VPDOO YDULDWLRQ LQ LQLWLDO
YHORFLW\ZLOOUHVXOWLQDVPDOOYDULDWLRQLQWKHSRLQWRILPSDFW,IWKH
EDOOODQGVPHWHUVGRZQUDQJHLQVWHDGRIPHWHUV,
SUREDEO\GRQWFDUH%XWZKDWLIWKHVPDOOFKDQJHLQLQLWLDOFRQGL
WLRQVFRXOGFDXVHDGUDVWLFDOO\GLIIHUHQWUHVXOWLQWKHHQG",I,ZHUH
IOLSSLQJDFRLQRIIWKHHGJHRIWKH*UDQG&DQ\RQWKHGLIIHUHQFH
EHWZHHQ PHWHUVVHFRQG DQG PHWHUVVHFRQG FRXOG
PHDQWKHGLIIHUHQFHEHWZHHQKHDGVDQGWDLOVDWWKHERWWRP
$JDLQVXSSRVHWKDWVRPHSKHQRPHQRQOLNHWKHG\QDPLFVRI
JDVVHVLQRXUDWPRVSKHUHFRXOGDPSOLI\VPDOOSHUWXUEDWLRQVUDWKHU
WKDQGDPSLQJWKHPRXW7KHQSHUKDSVDEXWWHUIO\IODSSLQJLWVZLQJV
LQ-DSDQFRXOGSHUWXUEWKHDWPRVSKHUHHQRXJKWRFDXVHDWRUQDGR
LQ .DQVDV VRPH ZHHNV ODWHU DQG D GURXJKW ODVWLQJ WZR \HDUV LQ
6LEHULDDIWHUWKDW,QIDFWWKHUHLVVRPHMXVWLILFDWLRQIRUVD\LQJWKLV
LV VR 7KDW LV ZK\ LW LV VR GLIILFXOW WR PDNH ORQJWHUP ZHDWKHU
IRUHFDVWVHYHQZLWKPRGHUQVXSHUFRPSXWHUV
7KH ELJ SUREOHPZLWKVXFKDPSOLILFDWLRQSKHQRPHQDLVWKDW
WKH\ PDNH LW YLUWXDOO\ LPSRVVLEOH WR GHWHUPLQH WKH ODUJH VFDOH
LQWHUHVWLQJEHKDYLRURIDV\VWHPIURPLWVLQLWLDOVWDWH7KHUHDUHWZR
OHYHOVDWZKLFKWKLVGLIILFXOW\VHWVLQ7KHILUVWLVHQWLUHO\SUDFWLFDO
,QIOLSSLQJDFRLQLWEHFRPHVLPSUDFWLFDOWRVHWXSHTXLSPHQWWKDW
ZLOOPHDVXUHWKHLQLWLDOLPSXOVHHWFDFFXUDWHO\HQRXJKWRPDNHD
WKHRUHWLFDOGHWHUPLQDWLRQRIKRZLWZLOOODQG/LNHZLVHLIZHZDQW
WRSUHGLFWWKHZHDWKHUIRUDFHUWDLQSHULRGRIWLPHZHPD\QRWEH
DEOHWRILQGDFRPSXWHUODUJHHQRXJKDQGIDVWHQRXJKWRGRLW:H
PD\ QRW EH DEOH WR ILQG HQRXJK UHVHDUFKHUV WR PHDVXUH DOO WKH
UHTXLUHGLQLWLDOSDUDPHWHUVDQGHYHQLIZHFRXOGWKHLUYHU\EUHDWK
LQJZRXOGFKDQJHWKHUHVXOWV7KHVHDUHSUDFWLFDOOLPLWDWLRQVEH
FDXVH ZH ILQG RXUVHOYHV VD\LQJ , QHHG PRUH DFFXUDWH

PHDVXUHPHQWV RU ,QHHGDELJJHUFRPSXWHU DOOSUDFWLFDOFRQ

VLGHUDWLRQV
+RZHYHUWKHUHLVDQRWKHUOHYHORILPSRVVLELOLW\ZKLFKFRXOG
FRQFHLYDEO\VHWLQWKHRUHWLFDOLPSRVVLELOLW\$WVRPHSRLQWZH
FDQLPDJLQHWKDWHYHQLIZHWRRNHYHU\DWRPLQWKHXQLYHUVHDQG
SXW LW WR ZRUN LQ WKH PHPRU\ RI D FRPSXWHU RI YDVWO\ JUHDWHU
FDSDELOLWLHVWKDQDQ\WKLQJZHKDGWRGD\SHUKDSVRQHWKDWFRXOG
VWRUHPDQ\E\WHVRIGDWDLQDQLQGLYLGXDODWRPLWZRXOGVWLOOIDOO
VKRUWRIKDYLQJHQRXJKPHPRU\FDSDFLW\WRVROYHWKHSUREOHP2U
LPDJLQHDFRPSXWHUPXFKIDVWHUWKDQDQ\WKLQJZHKDYHWRGD\VD\
RQH EXLOW RI PDQ\ SDUDOOHO XQLWV WKDW FRXOG GR D IORDWLQJ SRLQW
RSHUDWLRQLQWKHWLPHLWWDNHVDSKRWRQWRWUDYHUVHWKHGLDPHWHURI
DQDWRPDERXWVHFRQGV<HWDFDOFXODWLRQFRXOGEHFRPHVR
FRPSOH[WKDWVXFKDFRPSXWHUFRXOGQRWFRPSOHWHWKHFDOFXODWLRQ
LQ WKH OLIHWLPH RI WKH XQLYHUVH DVVXPLQJ D FORVHG FROODSVLQJ
XQLYHUVH7KHVHZRXOGEHLQVWDQFHVRIWKHRUHWLFDOLPSRVVLELOLW\
LQWKDWQRDPRXQWRIKXPDQHIIRUWFRXOGVROYHWKHSUREOHP7KH
UHDOLWLHVRIRXUSK\VLFDOZRUOGZRXOGLPSRVHUHDOOLPLWVRQZKDWZH
FDQNQRZ:KHQZHDVNTXHVWLRQVWKDWJREH\RQGWKHVHOLPLWVZH
HQWHUWKHUHDOPRILQFDOFXODELOLW\
2EYLRXVO\VXFKDQLGHDDVLQFDOFXODELOLW\PXVWEHYLHZHGDV
WHQWDWLYH\HWHQWLUHO\SRVVLEOH*LYHQDQ\DPD]LQJSK\VLFDOSKH
QRPHQRQZKLFKZHFDQQRWFDOFXODWHRXWZHGRQRWNQRZZKHWKHU
VRPHPDUYHORXVQHZWKHRU\ZLOOPDNHWKHFDOFXODWLRQRIZKDWZH
ZDQW WR NQRZ IDLUO\ HDV\ /LNHZLVH ZH GR QRW NQRZ WKDW VRPH
PDUYHORXVQHZLQYHQWLRQOLNHDTXDQWXPFRPSXWHUPLJKWEHDEOH
WR RXWGR HYHQ RXU ZLOGHVWLGHDVRI ELJJHVW DQG IDVWHVW :H
FHUWDLQO\GRQRWZDQWWRORRNOLNHWKHSRRUEXUHDXFUDWZKRGHFLGHG
LWZRXOGEHJRRGWRFORVHWKHSDWHQWRIILFHVLQFHHYHU\WKLQJWKDW
FRXOGEHLQYHQWHGDOUHDG\KDGEHHQ$WWKHVDPHWLPHZHVKRXOG
UHDOL]HWKDWWKHWHQWDWLYHQDWXUHRILQFDOFXODELOLW\LVQRWGLIIHUHQW
WKDQ WKH WHQWDWLYH QDWXUH RI TXDQWXP PHFKDQLFV 7KH GD\ FRXOG
7KRXJK\RXGRQWQHHGDFORVHGFROODSVLQJXQLYHUVHWKHDUJXPHQWMXVWJHWV
DOLWWOHPRUHFRPSOH[
7KLVDFWXDOO\GLGKDSSHQLQWKHJRRGROG86$

FRPHZKHQVRPHRQHGLVFRYHUVDZRUNDEOHKLGGHQYDULDEOHWKHRU\
WKDWUHPRYHVWKHXQFHUWDLQW\IURPWKHZRUOG
'HVSLWHLWVWHQWDWLYHQDWXUHZKHQRQHEHJLQVWRWDNHDORRNDW
QXPEHUVWKHUHFHUWDLQO\VHHPVWREHVRPHJURXQGIRUWKHLGHDWKDW
VRPHVFLHQWLILFSUREOHPVFRXOGQRWEHVROYHGLQWKHRU\7KHQXP
EHUVSURYHWREHDELJSUREOHPQRWDOLWWOHSUREOHP,QIDFWWKH\
DUHDELJJHUSUREOHPWKDQWKHKXPDQPLQGFDQUHDOO\FRPSUHKHQG
DQGWRLQYRNHKXPDQLQJHQXLW\DVDFXUHDOOVHHPVPRUHWKDQDOLWWOH
QDwYH7RVHHWKLVOHWVWDNHDORRNDWZKDWLWZRXOGWDNHWRPRGHO
DVLQJOHFHOOHGDPRHEDXVLQJVWDQGDUGTXDQWXPPHFKDQLFV7KHUH
DUHURXJKO\DWRPVLQWKHXQLYHUVH6XSSRVHHDFKDWRPFRXOG
KROGQRWMXVWRQHE\WHEXWE\WHVPRUHWKDQDOOWKHVWRUDJH
PHGLD LQ WKH ZRUOG WRGD\ FRPELQHG 7KDW JLYHV URXJKO\
E\WHVRIVWRUDJHDYDLODEOHLQRXUVXSHUFRPSXWHU
+RZHYHUWRTXDQWXPPHFKDQLFDOO\GHVFULEHDV\VWHPZLWK1
SDUWLFOHVLQLWRQHPXVWNQRZLWVZDYHIXQFWLRQ7KLVZDYHIXQFWLRQ
LVEDVLFDOO\DFRPSOH[IXQFWLRQLQDVSDFHRI1GLPHQVLRQV7R
PRGHOVXFKDIXQFWLRQRQDFRPSXWHURQHW\SLFDOO\VSHFLILHVLWV
YDOXHDWDQXPEHURIGLVFUHWHSRLQWVIRUHDFKGLPHQVLRQ7KHPRUH
GLVFUHWH SRLQWV \RX XVH WKH PRUH DFFXUDWH \RXU FDOFXODWLRQ $
FDOFXODWLRQXVLQJSRLQWVSHUGLPHQVLRQZLOOEHPRUHDFFXUDWH
WKDQ RQH XVLQJ DQG OHVV DFFXUDWH WKDQ RQH ZLWK /HWV
DVVXPHIRUWKHVDNHRIDUJXPHQWWKDWZHZDQWHGWRPRGHOWKHH[DFW
ZDYHIXQFWLRQRIDK\SRWKHWLFDORQHFHOOHGFUHDWXUHRQDFRPSXWHU
WR GHWHUPLQH ZKHWKHU LW LV LQGHHG DOLYH 6XSSRVH ZH FRXOG JHW
HQRXJKDFFXUDF\WRGRWKHMREE\VSHFLI\LQJWKHZDYHIXQFWLRQV
YDOXHDWVHSDUDWHSRLQWVLQHDFKGLPHQVLRQ6L[WHHQLVSUREDEO\
PXFKWRRVPDOODQXPEHUIRUDQDFFXUDWHFDOFXODWLRQEXWZHXVHLW
IRUWKHVDNHRIDUJXPHQW7KHQWRVSHFLI\WKHZDYHIXQFWLRQZH
ZLOOUHTXLUH1IORDWLQJSRLQWQXPEHUV7KLVILJXUHJHWVKXJHYHU\
UDSLGO\)RUDVLQJOHSDUWLFOHZHUHTXLUHFRPSOH[QXPEHUV
IRU WZR SDUWLFOHV ZH UHTXLUH PLOOLRQ $ RQHFHOOHG RUJDQLVP
FRQVLVWVRIVRPH[DWRPVVRZHDUHWDONLQJDERXW

[ [

FRPSOH[QXPEHUV[ LVDQXQIDWKRPDEO\ODUJHQXPEHU,WLV
DIROORZHGE\]HURV:LWKRXWVFLHQWLILFQRWDWLRQ

\RXFRXOGQWHYHQZULWHWKDWQXPEHUGRZQLQ\RXUOLIHWLPHLI\RX
FRXOGSXWWHQ]HURVSHUVHFRQGGRZQRQDSDJH7KHQXPEHURI
DWRPVLQWKHXQLYHUVHLVSXQ\FRPSDUHGWRWKLV<RXFDQZULWH

GRZQ LQ DERXW D PLQXWH $OWKRXJK [ LV D UDWKHU JURVV
HVWLPDWHRIZKDWZRXOGEHUHTXLUHGZHYHLJQRUHGVRPHV\PPH
WULHVZKLFKZRXOGUHGXFHWKHQXPEHUDQGVRPHFRPSOH[LWLHVZKLFK
ZRXOGHQODUJHLWLWPDNHVWKHSRLQWDFDUHIXOTXDQWXPFDOFXODWLRQ
RIDV\VWHPVEHKDYLRUFDQFRQFHLYDEO\PRYHLQWRDUHDOPZKHUH
ZHFDQQRWHYHQEHJLQDQH[DFWFDOFXODWLRQ7KHQXPEHUVUHTXLUHG
WR GR WKH FDOFXODWLRQ DUH VR XQIDWKRPDEO\ KXJH WKDW ZH KDYH WR
TXHVWLRQ WKHLU SRVVLELOLW\ HYHQ LQ WKH OLJKW RI WKH SRWHQWLDO IRU
DPD]LQJDGYDQFHVLQFRPSXWHUWHFKQRORJ\
2IFRXUVHRQHPD\REMHFWDWWKLVSRLQWWKDWZHFDQDFFXUDWHO\
PRGHODGURSRIZDWHURUDFU\VWDORIVDOWERWKRIZKLFKPD\KDYH
DORWPRUHWKDQDWRPVLQWKHP:KDWLVWKHGLIIHUHQFH"
,QWKHFDVHRIDGURSRIZDWHURUDFU\VWDOZHDUHRQO\QRUPDOO\
FRQFHUQHGZLWKJURVVEHKDYLRU7KHG\QDPLFVRIDZDWHUGURSZKHQ
LWKLWVDKDUGVXUIDFHLVLQWHUHVWLQJEXWJHQHUDOO\ZHOOEHKDYHG$
VPDOOFKDQJHLQLQLWLDOFRQGLWLRQVZRQWDIIHFWWKHILQDOUHVXOWWRR
PXFK $QG ZH GRQW FDUH VR PXFK KRZ WKH LQGLYLGXDO DWRPV
EHKDYHRQO\WKHDJJUHJDWH/LNHZLVHLQWKHVDOWFU\VWDOZHXVH
V\PPHWU\WRVWXG\LWVEHKDYLRU$VVXPLQJWKDWDOOWKHDWRPVDUHWKH
VDPHDQGWKHVWUXFWXUHRIWKHFU\VWDOLVSHULRGLFJUHDWO\VLPSOLILHV
SUHGLFWLQJLWVEHKDYLRU7KLVVLPSOLILFDWLRQLVSRVVLEOHEHFDXVHD
VPDOODPRXQWRILPSXULWLHVLQWKHFU\VWDOZLOORQO\FKDQJHLWDOLWWOH
7KHDSSUR[LPDWHWKHRULHVZHXVHWRGHVFULEHVXFKV\VWHPVVXF
FHHGLQJLYLQJXVWKHLQIRUPDWLRQZHZDQWWRNQRZZKLOHLJQRULQJ
GHWDLOVZHDUHQRWLQWHUHVWHGLQ$VVXFKWKH\JUHDWO\UHGXFHWKH
FRPSOH[LW\RIGRLQJFDOFXODWLRQVRYHUDQ\H[DFWIRUPXODWLRQ<HW
WKHYHU\IDFWWKDWWKH\FDQLJQRUHVRPHRIWKHGHWDLOVLVEDVHGRQ
WKHLGHDWKDWWKRVHGHWDLOVGRQWFKDQJHWKHRXWFRPHYHU\PXFK
+RZHYHU WKLV JURVV VLPSOLILFDWLRQ LV QRW SRVVLEOH IRU HYHU\
V\VWHP ,I VOLJKW YDULDWLRQV LQ WKH LQLWLDO VWDWH FDQ FDXVH ODUJH
,WZRXOGWDNH\HDUVZRUNLQJKRXUVDGD\GD\VD\HDUMXVWWRZULWH
WKLVQXPEHUGRZQZLWKRXWVFLHQWLILFQRWDWLRQ

FKDQJHVLQWKHODWHUEHKDYLRURIDV\VWHPZHPXVWVSHFLI\WKHLQLWLDO
VWDWH YHU\ FDUHIXOO\ /LNHZLVH ZH PXVW PRGHO WKH V\VWHP YHU\
FDUHIXOO\$VOLJKWIDXOWLQRXUHTXDWLRQVRIPRWLRQZLOOUHVXOWLQD
GHYDVWDWLQJPLVFDOFXODWLRQ%HLWDGURSRIZDWHUWKHDWPRVSKHUH
RUDQDPRHEDLIWKHLQLWLDOVWDWHPXVWEHWRRFORVHO\VSHFLILHGRU
WKHFDOFXODWLRQPXVWEHWRRDFFXUDWHVLPSOHDSSUR[LPDWHWKHRULHV
ZLOOQRWGRDQGZHPXVWVSHFLI\HYHU\WKLQJLQWHUPVRITXDQWXP
PHFKDQLFV RU ZRUVH \HW TXDQWXP ILHOG WKHRU\ ,Q VKRUW ZH JHW
GULYHQ EDFN WR WKH PRVW IXQGDPHQWDO IRUPV RI SK\VLFV WR JHW
UHDVRQDEOHDQVZHUV$QGH[DFWWKHRULHVDOZD\VVSDZQFRPSOLFDWHG
FDOFXODWLRQVEHFDXVHH[DFWWKHRULHVDUHPLFURVFRSLFDQGGHSHQG
RQPDQ\PLFURVFRSLFTXDQWLWLHV
&HUWDLQO\OLYLQJRUJDQLVPVLIDQ\WKLQJORRNOLNHRQHRIWKHVH
SKHQRPHQDZKHUHVPDOOFKDQJHVLQLQLWLDOFRQGLWLRQVFDQJURVVO\
DIIHFWWKHILQDOUHVXOWVRIDFDOFXODWLRQ%XWGRWKH\IDOOLQWRWKHFODVV
RISKHQRPHQDZKLFKDUHWUXO\LQFDOFXODEOH")URPWKHQXPEHUVZH
KDYHORRNHGDWDERYHLWLVFHUWDLQO\SRVVLEOH2QO\LIDVLPSOLI\LQJ
WKHRU\RIFHOOXODUG\QDPLFVFRXOGEHFRQVWUXFWHGZRXOGZHKDYHD
UHDVRQDEOH FKDQFH RI EULQJLQJ D VLQJOHFHOOHG RUJDQLVP LQWR WKH
UHDOPRIWKHSUHGLFWDEOH%UXWHIRUFHTXDQWXPWKHRU\ZRQWGRWKH

MREZKHQLWVWDUWVJLYLQJXVQXPEHUVOLNH[ ,VWKHUHDKRSH
IRUVXFKDVLPSOLI\LQJWKHRU\"&HUWDLQO\ZHFDQORRNLQWRDFHOODQG
XQGHUVWDQGKRZYDULRXVSDUWVRILWZRUNDQGJHWDQLGHDRIKRZWKH
ZKROHZRUNV7KDWLVDORQJZD\IURPDFRPSOHWHDWRPLVWLFWKHRU\
RI EHKDYLRU ZKLFK LV SURSHUO\ JURXQGHG RQ EDVLF SK\VLFV 5LJKW
QRZ VXFK D WKHRU\ DSSHDUV WR EH QRWKLQJ EXW D GUHDP /HW PH
H[SODLQ
7\SLFDOO\ELRORJLVWVDQGDOOVFLHQWLVWVVWLFNWRTXHVWLRQVWKH\
FDQUHDVRQDEO\KRSHWRDQVZHUXVLQJWKHWKHRULHVDWWKHLUGLVSRVDO
7KH\VWD\DZD\IURPWKHTXHVWLRQVWKHLUVFLHQFHKDVQRKRSHRI
WDFNOLQJ/HWVGHOYHLQWRWKLVIRUELGGHQUHDOPZLWKDOLWWOHWKRXJKW
H[SHULPHQW
*LYHQDQDPRHEDLQDVKDOORZSRQGGUDZDRQHPHWHUFLUFOH
DERXW ZKHUH LW LV ORFDWHG 1RZ XVLQJ DQ\ SK\VLFDO WKHRU\ \RX
FKRRVHSUHGLFWZKHUHLWRULWVFKLOGZLOOFURVVWKDWFLUFOHZLWKLQ
RQHGHJUHHRIDFFXUDF\DQGZKHQZLWKLQRQHVHFRQG
2VWHQVLEO\WKLVLVDQLQWHUHVWLQJTXHVWLRQWKDWZHZRXOGOLNHWR
NQRZ WKH DQVZHU WR $QG LI OLIH FDQ EH UHVROYHG WR DWRPV DQG

SK\VLFVWKDQDSURSHUWKHRU\RIFHOOXODUG\QDPLFVVKRXOGEHDEOH
WRDQVZHULWDWOHDVWLQSULQFLSOH
:HYHMXVWWRXFKHGRQZKDWLWZRXOGWDNHWRPRGHOWKHDPRHED
ZLWKTXDQWXPPHFKDQLFVDQGWKDWLVRXWRIWKHTXHVWLRQ6RQRZ
ZH KDYH WR DVN ZKHWKHU VXFK D TXHVWLRQ UHTXLUHV D IXOOEORZQ
TXDQWXP VROXWLRQ RU ZKHWKHU D K\SRWKHWLFDO WKHRU\ RI FHOOXODU
G\QDPLFVPLJKWSURYLGHDQDQVZHU,VXVSHFWWKDWQRVXFKWKHRU\
ZRXOGKDYHDSUD\HU7KHDPRHEDKDVDOOWKHFKDUDFWHULVWLFVRID
V\VWHPLQZKLFKDYHU\VPDOOSHUWXUEDWLRQRIWKHLQLWLDOVWDWHFDQ
JURVVO\ DIIHFW WKH DQVZHU WR RXU TXHVWLRQ )RU H[DPSOH D IHZ
PROHFXOHVRIVXJDUPLJKWFOXHWKHDPRHEDLQRQZKHUHWRILQGIRRG
DQGUDGLFDOO\DOWHUWKHGLUHFWLRQLWPRYHV7KLVEHKDYLRUGULYHVXV
WRPRGHOWKHDPRHEDDVH[DFWO\DVSRVVLEOHLIZHZDQWWRDFFXUDWHO\
GHWHUPLQHLWVORQJUDQJHEHKDYLRU+RZHYHULIWKDWFDQQRWEHGRQH
WKHDWRPLVWLVLQDIL[KHFDQQRWMXVWLI\WKHSRVLWLRQWKDWOLIHLVMXVW
DQDWRPLFPDFKLQHUXOHGE\EDVLFSK\VLFVDQGQRWKLQJPRUH
6XSSRVH WKDW ZLWK PXFK HIIRUW ZH ZHUH DEOH WR VXFFHHG LQ
PRGHOLQJWKHDPRHEDVRWKDWZHFRXOGSUHGLFWKHZRXOGFURVVRXU
FLUFOHDWGHJUHHVHDVWRIQRUWKDWRQHKRXUILIWHHQPLQXWHVDQG
HLJKWVHFRQGVDIWHUWKHH[SHULPHQWZDVVWDUWHG7KHQZHSHUIRUPHG
WKHH[SHULPHQWDQGKHDFWXDOO\FURVVHGDWGHJUHHVHDVWRIQRUWK
DW PLQXWHV VHFRQGV DIWHU WKH VWDUW RI WKH H[SHULPHQW 2XU
DQVZHUZDVIDLU:HGLG2.EXWZHGLGQWPHHWWKHGHVLUHGOHYHO
RIDFFXUDF\:K\QRW"7KHUHDUHDQXPEHURISRVVLELOLWLHV
2XUFDOFXODWLRQVZHUHLQDFFXUDWH
2XULQLWLDOFRQGLWLRQVZHUHLQDFFXUDWH
:HGRQRWNQRZWKHEDVLFODZVRISK\VLFV:HDUHPLVVLQJHQRXJK
WRWKURZRXUFDOFXODWLRQRII
7KHEDVLFODZVGRQRWDSSO\(LWKHUWKHUHLVDQRWKHUODZZKLFK
DSSOLHVRQO\WRDJJUHJDWHVRI SDUWLFOHVRUPRUHRUFDXVDOODZV
GRQRWDSSO\WRVXFKRUJDQLVPV
,IZHFRXOGUHDVRQDEO\GRVXFKDFDOFXODWLRQZHPLJKWKDYHVRPH
KRSHIRUGHWHUPLQLQJZK\RXUDQVZHUZDVRII%XWZKHQZHFDQQRW
HYHQ DSSURDFK WKH FDOFXODWLRQ ZH KDYH QR KRSH RI GHWHUPLQLQJ
ZKHWKHURXUWKHRULHVPLJKWKDYHVRPHSUREOHPV
7KHELRORJLVWPLJKWFRPSODLQWKDWZHGRQRWQHHGDQVZHUVWR
VXFKFRPSOH[TXHVWLRQVLQRUGHUWRMXVWLI\DQDWRPLVWLFZRUOGYLHZ

+RZHYHU,GRQRWEHOLHYHWKHTXHVWLRQ,YHDVNHGLVYHU\FRPSOH[
DVIDUDVOLYLQJRUJDQLVPVJR/HWVWU\DQRWKHUTXHVWLRQ
*LYHQDVWXGHQWKDQGHGDFDOFXOXVWHVWGHWHUPLQHZKHWKHUKH
ZLOOSDVVLWLQWKHDOORWWHGRQHKRXUWLPHOLPLW
$JDLQULGLFXORXV,IP\ODVWTXHVWLRQLVQRWWKHRUHWLFDOO\LQFDO

FXODEOHWKHQVXUHO\WKLVRQHLV:HUHWDONLQJDERXW QXPEHUV
WRPRGHOLWQRZ$QGWKHDQVZHUWRVXFKDTXHVWLRQLVLPSRUWDQW
HVSHFLDOO\LI\RXUHWKHVWXGHQWWDNLQJWKHWHVW
2IFRXUVHVFLHQWLVWVGHDOZLWKWKLVNLQGRITXHVWLRQHYHU\GD\
$OWKRXJKLWVHHPVWREHLQFRPSUHKHQVLEO\GLIILFXOWWRVROYHIURP
EDVLFSK\VLFVWKHWHDFKHUJLYLQJWKDWWHVWSUREDEO\KDVDSUHWW\JRRG
LGHDRIKRZWKHVWXGHQWZLOOGR+HZRXOGWHOO\RXWKHVWXGHQWLV
LQWHOOLJHQWDQGGLOLJHQWLQKLVDWWHQGDQFHDQGSUHSDUDWLRQVRKHOO
SUREDEO\GRYHU\ZHOODQGKHZLOOFHUWDLQO\SDVV
*RRGVFLHQWLVWVWDONDERXWDEVWUDFWFRQFHSWVOLNHLQWHOOLJHQFH
FRQVFLRXVQHVVDQGXQFRQVFLRXVQHVVPLQGHJRSHUFHSWLRQDQGRQ
DQGRQ0DQ\ILHOGVRIVFLHQFHDUHIXOORIVXFKLGHDV<HWWKH\KDYH
RQO\ YHU\ ZHDN WLHV RU QR WLHV DW DOO WR DQ\ NLQG RI GHWDLOHG
XQGHUVWDQGLQJURRWHGLQDWRPLVWLFPDWHULDOLVP,QVWHDGVXFKLGHDV
IDOO LQ OLQH ZLWK WKH WUDGLWLRQ RI 3ODWR DQG $ULVWRWOH 7KH\ DUH
SURSRVHG DV D IUDPHZRUN ZLWKLQ ZKLFK RQH PD\ XQGHUVWDQG WKH
SKHQRPHQDRIOLIHRUDQ\YDULHW\RIRWKHUSKHQRPHQD,QDVHQVH
WKH\ DUH QRW PHUHO\ LGHDV EXW ,GHDV RU IRUPV ,I DQ LGHD OLNH
LQWHOOLJHQFH FRUUHFWO\ GHVFULEHV DQG H[SODLQV REVHUYHG UHDOLW\ LW
EHFRPHVUHDOLW\LQDVHQVHDQGZLWKRXWWKHLGHDZHKDYHDKDUG
WLPHGHVFULELQJWKHREVHUYHGIDFWV
1RZPRVWVFLHQWLVWVWRGD\ZRQWVXJJHVWWKDWWKHVHLGHDVDUH
VRPH IRUP RI XOWLPDWH UHDOLW\ 5DWKHU WKH\ DUH XQGHUVWRRG DV
ZRUNLQJK\SRWKHVHVZKHUHDVXOWLPDWHUHDOLW\LVDWRPLVWLFLQQDWXUH
7KHUHIRUH \RX GRQW VHH D ZDU JRLQJ RQ EHWZHHQ DWRPLVWV DQG
SODWRQLVWV+RZHYHUWKHFRQVHQVXVDPRQJVFLHQWLVWVRQWKLVXOWL
PDWHUHDOLW\LVDPDWWHURIEOLQGIDLWKLQDSKLORVRSKLFDOLGHDUDWKHU
WKDQDPDWWHURIHVWDEOLVKHGIDFW,QPDQ\FDVHVWKDWFRQQHFWLRQ
FHUWDLQO\FDQQRWEHHVWDEOLVKHGLQSUDFWLFHWRGD\,QDOOOLNHOLKRRG
PDQ\ VXFK LGHDV FDQQRW EH DWRPLVWLFDOO\ H[SODLQHG LQ SULQFLSOH
EHFDXVHWKH\DUHURRWHGLQLQFDOFXODEOHSKHQRPHQD7KDWVXJJHVWV
WKDWWKHUHLVDSODFHLQKXPDQXQGHUVWDQGLQJIRULGHDVDV,GHDVDQG

DVDQXOWLPDWHNQRZDEOHUHDOLW\LQWKHPVHOYHV,QRWKHUZRUGVWKH\
PXVWVWDQGRQWKHLURZQZLWKRXWEHLQJUHGXFHGWREDVLFSK\VLFV
,QWKHUHDOPRIWKHLQFDOFXODEOHWKHIRXQGDWLRQVRIPDWHULDOLVWLF
DWRPLVP FDXVDOLW\ DQG VLPSOLFLW\ EHJLQ WR FUXPEOH 7KH RQO\
VLPSOHODZLVRQHWKDWFDQEHXVHGWRSUHGLFW$ODZFDQQRWEHFDOOHG
VLPSOH LIXVLQJLWLVVRFRPSOH[WKDWLWDFWXDOO\EHFRPHVWKHRUHWL
FDOO\ LPSRVVLEOH $QG WKHQ RXU VWDWHPHQW RI FDXVDOLW\ IDLOV RQ
SUDFWLFDOJURXQGVWRR(YHQLIEDVLFSK\VLFVGRHVJRYHUQWKHXQL
YHUVH ZH FDQW XVH LW WR FDOFXODWH DQ\WKLQJ ZH OLNH HYHQ LQ
SULQFLSOH2QWKHOHYHORILQFDOFXODEOHSKHQRPHQDFDXVDOLW\VLPSO\
IDLOVWRLQIRUPXV,WGRHVQRWVXFFHHGLQPDNLQJWKHFRQQHFWLRQ
EHWZHHQ SK\VLFDO ODZ DQG NQRZDEOH UHDOLW\ 7KHUHIRUHRQ WKDW
OHYHOFDXVDOLW\EHFRPHVYDFXRXVDQGXVHOHVVDQGDWRPLVPIDLOV
WREHWKHXOWLPDWHNQRZDEOHUHDOLW\
6RLWVHHPV$ULVWRWOHKDVDSODFHLQVFLHQFHDQGDSODFHLQWKH
VFLHQFHRIOLIH7KDWPD\EHDELWWHUSLOOIRUDFRPPLWWHGDWRPLVWWR
VZDOORZ EXW LW LV QR QHZ UHYHODWLRQ ,Q 7KRPDV .XKQ
SXEOLVKHGDOLWWOHERRN7KH6WUXFWXUHRI6FLHQWLILF5HYROXWLRQV,Q
LW KH GHVFULEHG VFLHQWLILF ZRUN LQ WHUPV RISDUDGLJPV RU JUDQG
LGHDV XVHG WR FRQGXFW UHVHDUFK DQG XQGHUVWDQG WKH ZRUOG .XKQ
GHVFULEHGWZRSKDVHVRIVFLHQFHVRFDOOHG QRUPDOVFLHQFH LQ
ZKLFKDSDUDGLJPUXOHGPRUHRUOHVVXQFKDOOHQJHGDQGD VFLHQWLILF
UHYROXWLRQ LQZKLFKDFKDQJHLQSDUDGLJPVWDNHVSODFH,QWKLV
ZD\.XKQDUJXHGWKDWWKHXQGHUO\LQJSKLORVRSKLFDOLGHDVDUHLQD
VHQVHPRUHUHDODQGPRUHLPSRUWDQWWKDQWKHQXPEHUVDQGH[SHUL
PHQWVWKHPVHOYHV)RUH[DPSOHWKHLGHDVRIEDVLFSK\VLFVZRUN
XVHIXOO\LQDOLPLWHGUHDOP4XDQWXPPHFKDQLFVLVJUHDWIRUFDOFX
ODWLQJWKHHQHUJ\OHYHOVRIDK\GURJHQDWRP<HWLWGRHVQRWSURYLGH
ZRUNDEOH VROXWLRQV HYHQ LQ DOO UHDOPV RI SK\VLFV <RX FDQQRW
VXFFHVVIXOO\PRGHODIDOOLQJSLQJSRQJEDOOZLWKLW2WKHULGHDVDUH
QHFHVVDU\WKHUHZKLFKVLPSOLI\WKHSUREOHPDQGPDNHLWWUDFWDEOH
3UDFWLFDOO\ VSHDNLQJ WKH DWRPLVP ZKLFK KDV VR GRPLQDWHG
VFLHQFHLQWKHSDVWFHQWXU\SURYHVLWVHOIWREHSKLORVRSK\,QWHUPV
7KRPDV .XKQ 7KH 6WUXFWXUH RI 6FLHQWLILF 5HYROXWLRQV 8QLY RI &KLFDJR
3UHVV&KLFDJR

RIVFLHQWLILFYDOXHWKLVSKLORVRSK\LVUDWKHUODPH,GHDVOLNHVWURQJ
ZHDNDQGHOHFWURPDJQHWLFIRUFHVTXDQWDTXDUNVHOHFWURQVHWF
DUH HOHYDWHG WR WKH SRLQW ZKHUH WKH\ EHFRPH HYHU\WKLQJ 7KH
DWRPLVPFRPHVLQZKHQZHVD\WKDWWKHVHEDVLFLGHDVDUHFDSDEOH
RIH[SODLQLQJHYHU\WKLQJ7KDWMXVWLVQWWUXH1HZLGHDVDUHYHU\
KHOSIXOLQH[SODLQLQJPRUHFRPSOH[SKHQRPHQDEHFDXVHWKHEDVLF
SK\VLFV JHWV VR FRPSOLFDWHG $QG ZKHQ WKH OHYHO RI FRPSOH[LW\
UHDFKHV D FHUWDLQ SRLQW QHZ LGHDV DUHQW MXVW KHOSIXO WKH\ DUH
HVVHQWLDOEHFDXVHWKHDWRPLVWLFDJHQGDIDLOVFRPSOHWHO\
6WURQJ(PHUJHQW%HKDYLRU
6XSSRVHVRPHSKHQRPHQDDUHWUXO\LQFDOFXODEOHLQWKHVHQVH
,YHRXWOLQHGDERYH7KDWLPSOLHVWKHUHLVDIXQGDPHQWDOFUDFNLQ
DWRPLVP WKH XQLYHUVH FDQW EH GHVFULEHG E\ PHUH DWRPV DQG
SK\VLFV$QGWKDWVXJJHVWVVRPHWKLQJFRXOG OLYH LQWKHFUDFN,Q
RWKHUZRUGVSKHQRPHQDFRXOGH[LVWLQWKHUHDOPRIWKHLQFDOFXODEOH
WKDWDFWXDOO\JRYHUQWKHUHDOEHKDYLRURIUHDOZRUOGREMHFWV,QWKLV
FDVHLQFDOFXODELOLW\ZRXOGEHPRUHWKDQMXVWDEDUULHUWRUHDOL]LQJ
WKHDWRPLVWLFPLOOHQLXP,WZRXOGKDYHDQHIIHFWRQWKHYHU\QDWXUH
RIUHDOLW\
$V EL]DUUH DV WKLV LGHD PLJKW VRXQG LW KDV D SUHFHGHQW LQ
TXDQWXPWKHRU\7KHIDFWWKDW,FDQQRWPDNHDQH[DFWPHDVXUHPHQW
DOORZVSKHQRPHQDWKDWDUHUDWLRQDOO\XQH[SODLQDEOHWROLYHLQWKH
FUDFNVRIZKDW,FDQQRWPHDVXUH
)RUH[DPSOHDSKRWRQZKLFKLVDSDUWLFOHRIOLJKWFDQSDVV
WKURXJKWZRVOLWVDWWKHVDPHWLPH<RXFDQREVHUYHWKLVSKHQRPH
QRQLI\RXSODFHDSLHFHRIILOPEHKLQGWKHVOLWVEHFDXVH\RXJHWDQ
LQWHUIHUHQFH SDWWHUQ HYHQ ZKHQ VKRRWLQJ RQH SKRWRQ DW D WLPH
WKURXJKWKHP,I\RXWU\WRZDWFKZKDWLVKDSSHQLQJDQGGHWHUPLQH
ZKLFKVOLWHDFKSKRWRQJRHVWKURXJKWKHLQWHUIHUHQFHSDWWHUQGLV
DSSHDUV,QWKHDFWRIWU\LQJWRORRN\RXYHIRXOHGWKHH[SHULPHQW
XS$VVXFKWKHSKRWRQVEHKDYHGLIIHUHQWO\ LQWKHGDUN WKDQWKH\
GRZKHQ\RXDUHORRNLQJ
$V DQRWKHU H[DPSOH UDGLRDFWLYH DWRPV OLNH 8UDQLXP
GHFD\TXDQWXPPHFKDQLFDOO\DFFRUGLQJWRWKHHTXDWLRQ
1 1RWWR

ZKHUH1LVWKHQXPEHURIDWRPVWKDWKDYHQRWGHFD\HGE\WLPHW
1RWKHRULJLQDOQXPEHURIDWRPVWWKHWLPHDQGWRLVWKHKDOIOLIH
<HWWKLVODZFDQQRWWHOO\RXZKHQDQ\LQGLYLGXDODWRPZLOOGHFD\
,I,JLYH\RXRQHDWRP\RXFDQQRWLQSULQFLSOHWHOOPHZKHQLWZLOO
GHFD\<RXFDQJLYHPHDSUREDELOLW\WKDWLWZLOOGHFD\GXULQJVRPH
WLPHLQWHUYDOEXWWKDWLVLW4XDQWXPWKHRU\EDUV\RXIURPWHOOLQJ
PHDQ\PRUH<HWLI\RXZDWFKWKDWDWRPLWZLOOGHFD\DOODWRQFH
DWVRPHSDUWLFXODUWLPH,WLVDUDQGRPHYHQWWKDWFDQQRWEHDQDO\]HG
DQ\IXUWKHU
1RZFRPLQJEDFNWRLQFDOFXODELOLW\LIVRPHWKLQJFRXOGOLYH
LQWKHFUDFNWKDWLWLPSOLHVZHPLJKWFDOOWKLVVRPHWKLQJHPHUJHQW
EHKDYLRU$IWHUDOOHPHUJHQWEHKDYLRULVWKHLGHDWKDWDV\VWHPFDQ
EHPRUHWKDQWKHVXPRILWVSDUWVZKLFKLVH[DFWO\ZKDWLQFDOFXOD
ELOLW\SOXV VRPHWKLQJLQWKHFUDFNV LPSOLHV,ZDQWWRGLIIHUHQWLDWH
WKLVNLQGRIHPHUJHQWEHKDYLRULQWKHUHDOZRUOGIURPWKHHPHUJHQW
EHKDYLRUZHYHGLVFXVVHGLQWKHZRUOGRI$/WKRXJK7KHUHIRUH
,OOFDOOLWVWURQJHPHUJHQWEHKDYLRU6LPSO\SXWDV\VWHPH[KLELWV
VWURQJHPHUJHQWEHKDYLRUZKHQRQHRUPRUHDVSHFWVRILWVEHKDYLRU
LVWKHRUHWLFDOO\LQFDOFXODEOH,IUHDOZRUOGOLIHLVVWURQJO\HPHUJHQW
WKHQ WKHUH LV WUXO\ QR ZD\ WR GHWHUPLQH KRZ JHQRW\SH FDXVHV
SKHQRW\SHDWDPLFURVFRSLFOHYHO2QHVLPSO\FDQQRWGRWKHFDOFX
ODWLRQZKLFKLVQHFHVVDU\
,Q FRQWUDVW ZH PLJKW GHILQH ZHDN HPHUJHQW EHKDYLRU DV D
VLPLODUSKHQRPHQRQRQO\ZKHUHQRWKLQJLVLQFDOFXODEOH
7RVXJJHVWWKDWVWURQJHPHUJHQWEHKDYLRULVUHDOLVSHUKDSVQRW
WKDWELJDGHSDUWXUHIURPWKHSUHVHQWGD\SKLORVRSK\RIVFLHQFH
4XDQWXPWKHRU\KDVDOUHDG\VKRZQXVWKDWDQ\SURSHUWKHRU\RIRXU
ZRUOGRXJKWWRSURSHUO\UHIOHFWRXUOLPLWVRINQRZLQJ7KLVSURJUDP
LVUHDOL]HGLQTXDQWXPWKHRU\LQWKDWLWZLOOQRWJLYHXVPRUHWKDQ
UHDOZRUOG OLPLWDWLRQV RQ PDNLQJ PHDVXUHPHQWV DOORZ 6WURQJ
HPHUJHQWEHKDYLRUVLPSO\VXJJHVWVWKDWWKHVDPHOLPLWDWLRQVWKDW
DSSO\WRZKDWZHFDQQRWPHDVXUHPD\DSSO\WRZKDWZHFDQQRW
FDOFXODWH
&RXOGLWEHWKDWDQ\XOWLPDWHWKHRU\RIUHDOLW\PXVWUHIOHFWWKLV
OLPLWDWLRQ DQG WXUQ DZD\ IURP VWULFW DWRPLVP" ,Q WKH OLJKW RI
TXDQWXPWKHRU\VXFKDQLGHDVHHPVDWOHDVWSODXVLEOH
(PHUJHQW%HKDYLRUDQG$UWLILFLDO/LIH

7KHSUREOHPZHUXQLQWRZKHQWU\LQJWRGR$/ZRUNLVWKDW
DQ\WKLQJZHPRGHORQDFRPSXWHUQHFHVVDULO\RQO\LQYROYHVZHDN
HPHUJHQW EHKDYLRU $IWHU DOO WKH PRGHO ZH FUHDWH LV DOVR WKH
VROXWLRQWRWKHSUREOHP%\YHU\GHILQLWLRQLIZHFDQPRGHOLWRQ
DFRPSXWHULWLVQRWLQFDOFXODEOH6WURQJHPHUJHQWEHKDYLRULQD
FRPSXWHUPRGHOLVDFRQWUDGLFWLRQRIWHUPV$ELRORJLFDORUJDQLVP
GLIIHUVLQWKDWLWFRXOGLQYROYHLQFDOFXODEOHHOHPHQWVVRLWFRXOG
H[KLELWVWURQJHPHUJHQWEHKDYLRU$VVXFKWKHUHFRXOGEHDIXQGD
PHQWDOGLIIHUHQFHEHWZHHQDELRORJLFDORUJDQLVPDQGDQ\WKLQJD
FRPSXWHUPRGHOFDQRIIHU7KHFRPSXWHUEDVHGPRGHOFDQDOZD\V
EHUHGXFHGWRDELWVDQGE\WHVHTXLYDOHQWRIDWRPLVP,WLVDOZD\V
GHWHUPLQLVWLF7KHVDPHFDQQRWEHVDLGRIDOLYLQJRUJDQLVPLILW
YHQWXUHVLQWRWKHUHDOPRILQFDOFXODELOLW\
:LWKWKDWPXFKVDLGZHKDYHWRZRQGHUFDQFRPSXWHUEDVHG
$/HYHUSURYLGHDQDFFXUDWHSLFWXUHRIOLIH"2ULVLWUHDOO\QREHWWHU
RII WKDQ WKH FORFNPDNHUV RI WKH WK FHQWXU\" -XGJLQJ IURP WKH
DERYHFRPPHQWVRQHFRXOGHDVLO\EHOLHYHWKDW$/LVDFRPSOHWH
IDLOXUH ,I RQH RI WKH HVVHQWLDO DVSHFWV RI OLIH LV VWURQJ HPHUJHQW
EHKDYLRUWKHQDFRPSXWHUVLPXODWLRQMXVWZRQWFXWLW
(YHQ ZRUVH ,WKLQNZHKDYHWRZRQGHUZKHWKHUWKHLGHDRI
ZHDNHPHUJHQWEHKDYLRUKDVDQ\FRQWHQWRUZKHWKHULVDWKHDUWD
YDFXRXVFRQFHSW$SSDUHQWO\LWFRQYH\VQRUHDONQRZOHGJHDERXW
KRZVRPHWKLQJZRUNV$QGLWLVEDVHGRQDSSHDUDQFHVUDWKHUWKDQ
UHDOLW\
7KHLGHDWKDWLQGLYLGXDOSDUWVRIDFRPSXWHUSURJUDPRUFHOOXODU
DXWRPDWRQFDQLQWHUDFWWRSURGXFHDZKROHWKDWLVJUHDWHUWKDQWKH
VXPRILWVSDUWVLVOLWWOHPRUHWKDQDQDGPLVVLRQRILJQRUDQFH:KHQ
DUHVHDUFKHUGRHVQWNQRZZKDWWKHSDUWVZLOOGRWRJHWKHUWKH\ZLOO
GRVRPHWKLQJXQH[SHFWHGE\GHILQLWLRQ,IKHNQRZVZKDWWKH\ZLOO
GRWKHQWKH\ZLOOGRMXVWZKDWKHH[SHFWV$V,VDLGVHYHUDOFKDSWHUV
EDFNLQRUGHUWRJLYHVRPHFRQWHQWWRWKLVLGHD\RXKDYHWRKDYH
VRPHIRUPDOPHWKRGIRUGHGXFLQJZKDWNLQGRIEHKDYLRULVWREH
H[SHFWHG7KHQLIWKDWPHWKRGEUHDNVGRZQDQGFDQQRWJLYH\RX
WKHULJKWDQVZHUWKHLGHDRIHPHUJHQWEHKDYLRUPLJKWKDYHVRPH
FRQWHQW :LWK VWURQJ HPHUJHQW EHKDYLRU WKH PHWKRG GRHV EUHDN
GRZQ:LWKZHDNHPHUJHQWEHKDYLRULWVHHPVRQO\VDQHWRVXJJHVW
WKDWDQ\EHKDYLRUZHFDQFDOFXODWHZLWKDFRPSXWHUL]HGPRGHOLV
GHGXFHGEHKDYLRU7KDWLVDIWHUDOOIDVWEHFRPLQJWKHVWDQGDUGLQ

HYHU\DUHDRIVFLHQFH<HWWKDWOHDYHVWKHLGHDRIZHDNHPHUJHQW
EHKDYLRULQWKHUHDOPRI$UWLILFLDO/LIHZLWKRXWFRQWHQW7KHVLPX
ODWHGDXWRPDWRQWKDW\RXEXLOGLVDIWHUDOOLWVRZQFRPSXWHUL]HG
PRGHO$VVXFKLWZRXOGVHHPQRFRPSXWHUJHQHUDWHGEHKDYLRU
FRXOG EH ZHDNO\ HPHUJHQW ,Q WKH UHDO ZRUOG ZHDNO\ HPHUJHQW
EHKDYLRUZRXOGEHPHUHO\DQLQGLFDWRUWKDWVRPHSK\VLFDOWKHRU\
ZKLFKZDVEHLQJXVHGWRFUHDWHDFRPSXWHUL]HGPRGHOZDVLQDGH
TXDWHDQGWKDW\RXGEHWWHUVWDUWORRNLQJIRUDQHZODZWRH[SODLQ
WKDWUHDOZRUOGSKHQRPHQRQ:LWKDQHZODZLQSODFHWKHZHDN
HPHUJHQWEHKDYLRUFRXOGEHUHVROYHG7KXVDWEHVWZHDNHPHUJHQW
EHKDYLRULVDQDGPLVVLRQRIWKHODFNRIXQGHUVWDQGLQJDQGQRWD
SRVLWLYHSULQFLSOH
,KDYHDOVRDOUHDG\WRXFKHGRQWKHLGHDWKDWPDQ\SDUWVZRUNLQJ
WRJHWKHUWRSURGXFHDZKROHLVUDWKHUDPDWWHURIDSSHDUDQFHWKDQ
UHDOLW\$Q\FRPSXWHUQRPDWWHUKRZPDVVLYHO\SDUDOOHOFDQGR
QRWKLQJZKLFKDVLPSOHVHULDOFRPSXWHUFDQQRWGRJLYHQHQRXJK
PHPRU\DQGHQRXJKWLPH$OODUH7XULQJPDFKLQHV7KHSDUDOOHO
FRPSXWHUFDQGRWKLQJVIDVWHUEXWLWFDQQRWGRPRUH7KDWPHDQV
WKDWDQ\SDUDOOHOFHOOXODUDXWRPDWRQFDQEHDQGRIWHQLVLPSOH
PHQWHGDVDVHULDOSURJUDPRQDVHULDOFRPSXWHU,WLVLQFUHGLEO\
QDwYH WR VD\ WKDW RQH LPSOHPHQWDWLRQ LV IXQGDPHQWDOO\ GLIIHUHQW
IURPDQRWKHUVLPSO\EHFDXVHLWORRNVGLIIHUHQW2IWHQWKHSDVVLYH
H[DPLQDWLRQRIWKHFRGHLQDVHULDOSURJUDPJLYHVXVDVPXFKLQVLJKW
LQWRLWVEHKDYLRUDVORRNLQJDWWKHSDUWVRIDFHOOXODUDXWRPDWRQ
7KHUHIRUH WKH LGHD RI ZHDN HPHUJHQW EHKDYLRU LV D PDWWHU RI
DSSHDUDQFHV 2QH LPSOHPHQWDWLRQ ORRNV OLNH PDQ\ VPDOO SDUWV
LQWHUDFWLQJWRPDNHDZKROHDQGDQRWKHULPSOHPHQWDWLRQORRNVOLNH
DFHQWUDOO\FRQWUROOHGVHULDOSURJUDP
,Q YLHZ RI WKHVH FRQVLGHUDWLRQV ZHDN HPHUJHQW EHKDYLRU LV
LOOXVRU\$SSDUHQWO\LWEULQJVQRQHZXQGHUVWDQGLQJWRDSUREOHP
,GOLNHWRVXJJHVWWKDWZHGGRZHOOWRWKURZWKHLGHDRXW:HGEH
EHWWHURIILIZHGMXVWWUHDWMLEEHULVKDVMLEEHULVKDQGORRNIRUUHDO
SKHQRPHQDWKDWFDQKHOSXVXQGHUVWDQGOLIHEHWWHULQVWHDG
,QFRQWUDVWWKHLGHDRIVWURQJHPHUJHQWEHKDYLRUSRLQWVWRD
UHDO OLPLWDWLRQ RQ ZKDW ZH FDQ GR ZLWK QDWXUDO ODZ ,W OHQGV D
OHJLWLPDF\WR$ULVWRWHOLDQVW\OHLGHDVOLNHHPRWLRQOLNHIUHHZLOO
WHOOLQJXVWKDWVXFKLGHDVFDQQRWEHH[SODLQHGZLWKDSXUHO\DWRPLV

WLFVFLHQFHDQGWKDWWKH\FDQDQGPXVWKDYHDSODFHLQDQ\XOWLPDWH
XQGHUVWDQGLQJRIUHDOLW\
6XPPDU\
:HPLJKWFRQFOXGHWKDWLIVWURQJHPHUJHQWEHKDYLRULVUHDODQG
ZHDNHPHUJHQWEHKDYLRULVYDFXRXVWKHQVWURQJ$/WKHLGHDWKDW
ZH PLJKW FUHDWH VRPHWKLQJ RQ RXU FRPSXWHUV WKDW LV DFWXDOO\
DOLYHLV D GDPQHG SXUVXLW ,I \RX DFFHSW WKH LGHD WKDW VWURQJ
HPHUJHQWEHKDYLRULVDQHFHVVDU\LQJUHGLHQWIRUOLIHWKHQ$/FDQ
QHYHUDFKLHYHLW-XVWDVRQHFDQQRWDFFXUDWHO\PRGHOWKHG\QDPLFV
RIHOHFWURQVTXDQWXPXVLQJELOOLDUGEDOOV1HZWRQLDQEHFDXVH
WKHUXOHVDUHGLIIHUHQWRQHFRXOGQRWDFFXUDWHO\PRGHOOLIHVWURQJ
HPHUJHQWEHKDYLRUZLWKFRPSXWHUVLOOXVRU\HPHUJHQWEHKDYLRU
EHFDXVHWKHUXOHVDUHGLIIHUHQW$QGWKHGLIIHUHQFHVDUHIXQGDPHQWDO
DQGLUUHFRQFLODEOH$OORIWKDWGHSHQGVRIFRXUVHXSRQWKHDFFHS
WDQFHRIHPHUJHQWEHKDYLRUDVDFRQGLWLRQIRUOLIH<RXFRXOGRI
FRXUVHVLPSO\UHMHFWWKDWFRQGLWLRQ2IFRXUVHLILWLVUHDODQG\RX
WKURZLWRXW\RXUHMXVWGHOXGLQJ\RXUVHOI
$VRQHILQDOZRUGRIFDXWLRQPDQ\RIWKHWKLQJV,YHVDLGLQ
WKLVFKDSWHUDUHVSHFXODWLYH,PDNHQRFODLPWREHLQJDQH[SHUW
JXLGHLQWKHVHZDWHUVRUWRKDYLQJDIXOOWKHRU\WKDWZLOOJLYH\RX
DOOWKHDQVZHUV,DPMXVWDQH[SORUHU$QG,PDNHVRPHRIWKHSRLQWV
,GRWRVWLUXSDGLVFXVVLRQZKHUHWKHUHQHHGVWREHRQHQRWWREULQJ
LWWRDFRQFOXVLRQ
6HOI5HSURGXFWLRQDQG
,QIRUPDWLRQ
$IHZFKDSWHUVEDFNZHGLVFXVVHGWKHLGHDRIVHOIUHSURGXF
WLRQDQGZHUDQLQWRDSUREOHP:KHUHGRZHGUDZWKHOLQHEHWZHHQ
VHOIUHSURGXFWLRQDQGSK\VLFVGULYHQUHSOLFDWLRQ"7KHUHDUHREYL
RXVVLWXDWLRQVLQZKLFKRQHFRQFHSWRUWKHRWKHUVHHPVWRILWVQXJO\
7KHQWKHUHDUHJUD\DUHDV%\OVDXWRPDWRQPD\ORRNOLNHDUHSUR
GXFLQJFHOOEXWLWGLIIHUVYHU\OLWWOHIURPDJURZLQJDXWRPDWRQFU\V
WDOPDWKHPDWLFDOO\VSHDNLQJ
2QWKHVXUIDFHLWPD\VHHPDVLIZHFRXOGGUDZDOLQHPRUHRU
OHVV DUELWUDULO\ DQG VD\ HYHU\WKLQJ WR WKH ULJKW RI WKH OLQH LV
VHOIUHSURGXFWLRQDQGHYHU\WKLQJWRWKHOHIWLVPHUHUHSOLFDWLRQ,Q
IDFWWU\LQJWRGUDZWKDWOLQHSXOOVXVULJKWEDFNLQWRWKH$ULVWRWOH
DWRPLVWGHEDWH
+RZVR"
7KH UDGLFDO DWRPLVW PDLQWDLQV WKDW OLIH LV QRWKLQJ PRUH WKDQ
DWRPVREH\LQJWKHODZVRISK\VLFV+RZHYHUPHUHO\VWDWLQJVXFK
DSKLORVRSKLFDOLGHDGUDZVWKHOLQHZHZDQWWRGUDZ$QGLWGUDZV
WKDW OLQH LQ D SODFH ZKHUH LW RQO\ VXFFHHGV LQ GHVWUR\LQJ XQGHU
VWDQGLQJUDWKHUWKDQLPSDUWLQJLW7RIROORZDWRPLVPWRLWVORJLFDO
FRQFOXVLRQ RQH PXVW PDLQWDLQ WKDW DOO UHSURGXFWLRQ LV PHUHO\
SK\VLFVGULYHQUHSOLFDWLRQ7KHUHLVQRWKLQJIXQGDPHQWDOO\GLIIHU
HQWDERXWWKHRQHFHOOHGDPRHEDVUHSURGXFLQJDQGDFU\VWDOJURZ
LQJ %RWK DUH SK\VLFV GULYHQ 2QH LV MXVW VRPHZKDW PRUH
FRPSOLFDWHGWKDQWKHRWKHU

/HWVJREDFNWR/DQJWRQVLGHDRIVHOIUHSURGXFWLRQDQGWHDU
LWDSDUWZLWKRXUDWRPLVWLFJODVVHVRQWRVHHZKDWLWLVPDGHRI
/DQJWRQVXJJHVWHGWKDWDVHOIUHSURGXFLQJPDFKLQHPXVWXVHLQIRU
PDWLRQ$DFWLYHO\DVLQVWUXFWLRQVWREHH[HFXWHGDQG%SDV
VLYHO\DVUDZGDWDWREHFRSLHG7KLVGHILQLWLRQLVIXOORIZRUGV
ZKLFKFU\RXWIRUEHWWHUGHILQLWLRQ:KDWLVLQIRUPDWLRQ":KDWDUH
DFWLYHDQGSDVVLYH":KDWFRQVWLWXWHVH[HFXWHGLQVWUXFWLRQV"
:HXQGHUVWDQGWKHVHFRQFHSWVLQWXLWLYHO\IURPRXUHYHU\GD\
H[SHULHQFHZLWKFRPSXWHUSURJUDPVEXWKRZFDQWKH\EHSUDFWL
FDOO\GHILQHGLQDWRPLVWLFWHUPVDQGDSSOLHGWRGHWHUPLQHZKHWKHU
VRPHSKHQRPHQRQHLWKHULQWKHUHDOZRUOGRULQDFHOOXODUDXWRPD
WRQZRUOGLVLQIDFWVHOIUHSURGXFWLRQ":KDWLVLWWKDWPDNHVRQH
FROOHFWLRQRIDWRPV DFWLYH DQGDQRWKHUQRW":K\LVWKHSURFHVV
RI H[HFXWLQJLQVWUXFWLRQV VRPHKRZDFWLYHZKLOH FRS\LQJGDWD
LVQRWZKHQERWKDUHMXVWSK\VLFVGULYHQSURFHVVHV"$QGZKDWGR
ZHPHDQE\ LQIRUPDWLRQ "$IWHUDOOWKHYHU\ZRUGGHULYHVIURP
WKHYHUEWRLQIRUPZKLFKLPSOLHVWKDWVRPHLQWHOOLJHQWFRQVFLRXV
EHLQJLVLQIRUPLQJDQRWKHUEHLQJRUEHLQJLQIRUPHGE\DQRWKHU<HW
ZH GR QRW HYHQ KDYH D FRQFHSW RI ZKDW D FRQVFLRXV EHLQJ LV LQ
DWRPLVWLFWHUPV
,QVKRUW/DQJWRQVGHILQLWLRQVRXQGHGXVHIXOZKHQZHILUVWPHW
XSZLWKLWEXWQRZZHVHHLWLVIXOORIXQZLHOG\LGHDV
:KDWVKDOOZHGR"
)LUVW,GOLNHWRWDNHDORRNDWVRPHDWRPLVWLFDWWHPSWVWRGHILQH
WKHLGHDRILQIRUPDWLRQDOLWWOHEHWWHU1RWRQO\ZLOOWKHVHLGHDVEH
XVHIXOWRXVLQPDNLQJVRPHFDOFXODWLRQVODWHURQWKH\ZLOOLOOXVWUDWH
WKHGLIILFXOWLHVRIPDNLQJVHQVHRIWKHLGHDRILQIRUPDWLRQIURPDQ
DWRPLVWLFSRLQWRIYLHZ$GGLWLRQDOO\RXUGLVFXVVLRQZLOOKHOSXV
XQGHUVWDQGWKHSKLORVRSK\EHKLQG/DQJWRQVLGHDVDOLWWOHEHWWHU
:KDWLV,QIRUPDWLRQ"
,W LV ZHOO VDLG WKDW ZH DUH OLYLQJ LQ WKH LQIRUPDWLRQ DJH
&RPSXWHUVKDYHQRWRQO\UHYROXWLRQL]HGRXUZD\RIOLIHEXWDOVR
RXU ZD\ RI WKLQNLQJ &RPSXWHUV KDYH JLYHQ XV D ZKROH QHZ
SHUVSHFWLYHIURPZKLFKWRYLHZWKHZRUOG)RUH[DPSOHILIW\\HDUV
DJRLWZRXOGKDYHEHHQLPSRVVLEOHWRFRQVWUXFWDQ\WKLQJEXWWKH
PRVWUXGLPHQWDU\IUDFWDOPXFKOHVVXVHLWIRUDQ\WKLQJSUDFWLFDO

<HWWRGD\IUDFWDOVDUHURXWLQHO\XVHGWRPRGHOFRPSOH[IHDWXUHVRI
DOONLQGVRIWKLQJVUDQJLQJIURPFRDVWOLQHVWRGXVWSDUWLFOHV:H
KDYHFRPHWRVHHIUDFWDOVDVDQLPSRUWDQWWRROLQXQGHUVWDQGLQJRXU
ZRUOG7KLVKDVRQO\EHHQSRVVLEOHEHFDXVHRIFRPSXWHUVZKLFK
DUHLGHDOO\VXLWHGWRPDQLSXODWLQJIUDFWDOV
&RPSXWHUV KDYH JLYHQ XV D SRZHU WR PDQLSXODWH DQG XVH
LQIRUPDWLRQWKDWZDVXQLPDJLQDEOHRQO\DIHZGHFDGHVDJR/RRN
LQJEH\RQGWKHLPPHGLDWHFRQVHTXHQFHVRIWKLVQHZIRXQGSRZHU
WKRXJKFRPSXWHUVKDYHPDGHWKHYHU\LGHDRILQIRUPDWLRQLPSRU
WDQWWRXVDQGZHKDYHUHFRJQL]HGLWHYHU\ZKHUHLQQDWXUH
,QIRUPDWLRQ LV WKH FXUUHQF\ RI QDWXUH $ EHH FDUULHV JHQHWLF
LQIRUPDWLRQFRQWDLQHGLQSROOHQWRDIORZHUZKLFKLQWXUQVXSSOLHV
WKHEHHZLWKRUGHUHGHQHUJ\LQWKHIRUPRIVXJDUDWUDQVDFWLRQWKDW
UHGRXQGVWRWKHLUPXWXDODGYDQWDJH$WDVFDOHWHQRUGHUVRIPDJQL
WXGHVPDOOHUQXFOHDUVSLQVLQDIHUURPDJQHWH[FKDQJHYLUWXDOSKR
WRQVZLWKWKHLUQHLJKERUVDJUHHLQJRQDFRPPRQRULHQWDWLRQDVWKHLU
WHPSHUDWXUHGURSVEHORZWKH&XULHSRLQW$WDVFDOHWHQRUGHUVRI
PDJQLWXGH ODUJHU 1HSWXQH LQGXFHV SHUWXUEDWLRQV LQ WKH RUELW RI
8UDQXVWKHUHE\UHYHDOLQJLWVSUHVHQFHWR$GDPVDQG/H9HUULHU$W
DVFDOHWZHQW\RUGHUVRIPDJQLWXGHODUJHU\HWWKHH[SDQVLRQRIWKH
XQLYHUVH FRQVWDQWO\ LQFUHDVHV WKH GLIIHUHQFH EHWZHHQ WKH SUHVHQW
HQWURS\RIWKHXQLYHUVHDQGLWVPD[LPXPSRVVLEOHHQWURS\DXJPHQW
LQJWKHLQIRUPDWLRQDOUHVRXUFHVDYDLODEOHLQWKHIRUPRIJUDYLWDWLRQDO
IUHHHQHUJ\
<HWWKHFRQFHSWRILQIRUPDWLRQKDVSURYHQUDWKHUGLIILFXOWWR
OD\RQHVKDQGVRQ:HKDYHDQLGHDRIZKDWLWLV:LWKWKHDGYHQW
RIFRPSXWHUVZHHYHQKDYHDQLGHDRIZKDWLWLVLQWKHDEVWUDFW<HW
TXDQWLI\LQJ LW LQ WHUPV RI PDWKHPDWLFV DQG SK\VLFV LV DQRWKHU
PDWWHU,QWKHLQWURGXFWLRQWR&RPSOH[LW$QWURS\DQGWKH3K\VLFV
RI ,QIRUPDWLRQ :RMFLHFK =XUHN SXWV WKH SUREOHP EOXQWO\ 7KH
VSHFWUHRILQIRUPDWLRQLVKDXQWLQJWKHVFLHQFHV
6HWK /OR\G 9DOXDEOH ,QIRUPDWLRQ LQ :RMFLHFK =XUHN (G &RPSOH[LW\
(QWURS\DQGWKH3K\VLFVRI,QIRUPDWLRQ$GGLVRQ:HVOH\5HGZRRG&LW\
&$S

:RMFLHFK =XUHN (G &RPSOH[LW\ (QWURS\ DQG WKH 3K\VLFV RI ,QIRUPDWLRQ

9HU\WUXH
+RZFDQZHSRVVLEO\WDNHDVXEMHFWLYHFRQFHSWOLNHLQIRUPD
WLRQZKLFKVHHPVVRLQH[WULFDEO\WLHGWRLQWHOOLJHQFHDQGXQGHU
VWDQGLWLQWHUPVRIREMHFWLYHSK\VLFDOPHDVXUHPHQWVDQGWKHRULHV"
<HWWKHVFLHQWLILFGLVFRYHULHVRIWKHSDVWILIW\\HDUVYLUWXDOO\GH
PDQGWKDWZHXQGHUVWDQGLQIRUPDWLRQREMHFWLYHO$RUH[DPSOHWKH
LQIRUPDWLRQ FRQWHQW RI WKH '1$ LQ D OLYLQJ RUJDQLVP VHHPV VR
REYLRXVWKDWLWFULHVRXWIRUH[SODQDWLRQ2QHFRXOGKDUGO\FRPHXS
ZLWKDEHWWHUGHVLJQIRUERWKHQFRGLQJDQGXVLQJLQIRUPDWLRQDWD
PROHFXODUOHYHOWKDQWKH'1$51$SURWHLQVFKHPHHPSOR\HGE\
D OLYLQJ FHOO 6HH $SSHQGL[ % IRU D VKRUW LQWURGXFWLRQ WR WKH
ELRFKHPLVWU\\RXOOQHHGWRUHDGWKLVERRN
2QHZD\WRGHILQHLQIRUPDWLRQLQDQDEVWUDFWPDQQHULVWRVD\
WKDWLQIRUPDWLRQFRQWHQWLVSURSRUWLRQDOWRWKHVL]HRIWKHPLQLPDO
FRPSXWHU SURJUDP FDSDEOH RI JHQHUDWLQJ WKDW LQIRUPDWLRQ 7KLV
GHILQHV ZKDW LV NQRZQ DV DOJRULWKPLF LQIRUPDWLRQ FRQWHQW )RU
H[DPSOHDELQDU\VHTXHQFHRIWHQWKRXVDQGQXPEHUV

KDVYHU\OLWWOHDOJRULWKPLFLQIRUPDWLRQFRQWHQWEHFDXVHLWFDQEH
SURJUDPPHGOLNHWKLV
IRUM MMSULQWI[[
DVLPSOHRQHOLQHVWDWHPHQW2QWKHRWKHUKDQGDVHTXHQFHOLNH

ZKLFKKDVQRORQJUDQJHRUGHUPXVWIRUDOOSUDFWLFDOSXUSRVHVEH
VSHFLILHGELWE\ELW
SULQWI[
SULQWI[
$GGLVRQ:HVOH\5HGZRRG&LW\&$SYLL

SULQWI[
DPXFKPRUHFRPSOLFDWHGSURFHVV7KXVWKHSHULRGLFVHTXHQFHKDV
PXFKOHVVLQIRUPDWLRQFRQWHQWWKDQWKHDSHULRGLFRQH
2IFRXUVHZHIDFHDQXPEHURISUREOHPVZLWKVXFKDGHILQLWLRQ
RI LQIRUPDWLRQ 2EYLRXVO\ DVVLJQLQJ DQ H[DFW QXPEHU WR DOJR
ULWKPLFLQIRUPDWLRQFRQWHQWLVGLIILFXOWIRUWZRUHDVRQV2QHZRXOG
H[SHFWWKHVL]HRIWKHDOJRULWKPWRYDU\IURPFRPSXWHUWRFRPSXWHU
VLQFHQRWDOOPDFKLQHVKDYHWKHVDPHLQVWUXFWLRQVHWWRLPSOHPHQW
DOJRULWKPVZLWK6HFRQGO\LWLVRIWHQGLIILFXOWWRGHWHUPLQHZKHWKHU
DJLYHQDOJRULWKPLVDFWXDOO\WKHPLQLPXP7KLVSUREOHPFDQFURS
XSDWWZROHYHOV7KHILUVWOHYHOLVLQWKHDFWXDOFRGLQJHJLVDQ
DOJRULWKPZKLFKXVHV
SULQWI[[
VPDOOHUDQGVLPSOHUWKDQRQHZKLFKXVHV
SULQWI[
SULQWI[
RUYLFHYHUVD"7KLVFDQGHSHQGRQZKDWFRPSLOHU\RXXVHHWF$W
D GHHSHU OHYHO 7KH DERYH VHTXHQFH PD\ DSSHDU UDQGRP DW ILUVW
ORRN EXW XSRQ FDUHIXO DQDO\VLV LW PD\ FRQWDLQ WHQ RU WZHQW\
UHSHWLWLRQVRIWKHVHTXHQFH

ZKLFKFRXOGEHFRGHGLQWRDVXEURXWLQHWRVDYHDKXQGUHGLQVWUXF
WLRQVRUVR$OWKRXJK,GRQRWZDQWWRGHDOZLWKWKHVHTXHVWLRQVLQ
DQ\JUHDWGHSWKKHUHWKH\GROHDGWRDZKROHQHZILHOGWKHVWXG\
RIWKHFRPSOH[LW\RIDOJRULWKPVZKLFKLVYHU\UHOHYDQWWRDOJR
ULWKPLFLQIRUPDWLRQFRQWHQW'HVSLWHWKHVHGLIILFXOWLHVDOJRULWKPLF
LQIRUPDWLRQFRQWHQWJLYHVXVDXVHIXOPHDVXUHRILQIRUPDWLRQHYHQ
LILWLVDOLWWOHELWIX]]\

2QHELJTXHVWLRQZKLFKZHPXVWXQGHUVWDQGLVZKHUHUDQGRP
GDWDILWVLQWRWKLVLGHDRILQIRUPDWLRQ$UDQGRPVHTXHQFHRIV
DQG V FDQ KDYH D KLJK DOJRULWKPLF LQIRUPDWLRQ FRQWHQW HYHQ
WKRXJKLWLVHVVHQWLDOO\PHDQLQJOHVV7KHVHTXHQFHRIOHWWHUV
7<8%7<+5713
DQG
,67+,6$/,9(
KDYHWKHVDPHDOJRULWKPLFLQIRUPDWLRQFRQWHQWKRZHYHURQHKDV
PHDQLQJWRDQ(QJOLVKVSHDNLQJUHDGHUDQGWKHRWKHUGRHVQRW:H
PLJKWORRNDWWKHILUVWVHTXHQFHRIOHWWHUVDQGVD\LWLVPHDQLQJOHVV
JDUEDJHRUZHPLJKWVXVSHFWDFRGHZDVXVHGWRFUHDWHLWDQGWKDW
LWZRXOGEHPHDQLQJIXOWRDQ\SHUVRQZLWKWKHGHFRGLQJUXOHV7KH
LGHD RI DOJRULWKPLF LQIRUPDWLRQ FRQWHQW RU DQ\ RWKHU DWRPLVWLF
GHILQLWLRQRILQIRUPDWLRQDYRLGVVXFKTXHVWLRQVRIPHDQLQJDOWR
JHWKHU
7KHFORVHVWZHFDQJHWWRGHILQLQJPHDQLQJXQGHUWKHXPEUHOOD
RIDOJRULWKPLFLQIRUPDWLRQFRQWHQWLVWRVD\WKDWWKHDFWRIVSHFLI\
LQJDVHTXHQFHOHQGVPHDQLQJWRLW:HHTXDWHPHDQLQJWRVSHFL
ILFLW\
/HWVVHHKRZWKLVZRUNV6XSSRVH,VD\,GOLNHDIDLUO\UDQGRP
VHTXHQFHRIVDQGVZLWKRIWKHGLJLWVV
,WLVQRWWRRGLIILFXOWWRZULWHDSVHXGRUDQGRPQXPEHUJHQHUDWRU
WKDW FDQ SURGXFH VXFK D VHTXHQFH ,W ZLOO EH D IDLUO\ FRPSDFW
DOJRULWKPVRVXFKDVHTXHQFHZRQWKDYHPXFKLQIRUPDWLRQFRQ
WHQW<HWLQGRLQJWKLV,KDYHQWVSHFLILHGWKHVHTXHQFHH[DFWO\DW
DOO,I,GRVSHFLI\DSDUWLFXODUVHTXHQFHRIVDQGV
ZLWK RI WKH GLJLWV V FKDQFHV DUH P\ SVHXGRUDQGRP
QXPEHUJHQHUDWRUZLOOQRWEHDEOHWRSURGXFHWKLVVHTXHQFH7KHQ
, DP VWXFN ZLWK ZULWLQJ D PXFK ODUJHU SURJUDP WR GHWDLO WKH
VHTXHQFHELWE\ELW
,QIDFWLWKDVEHHQHQFRGHGDQG\RXFDQHDVLO\ILJXUHRXWWKHUXOHV

,QJHQHUDOWKHPRUHFORVHO\,VSHFLI\DVHTXHQFHWKHELJJHU
WKH DOJRULWKP , PXVW XVH WR FUHDWH LW 2I FRXUVH LI , VSHFLI\ D
VHTXHQFHYHU\H[DFWO\,KDYHSUHVXPDEO\SXWDORWRIZRUNLQWRLWV
VSHFLILFDWLRQ 6R LQ D FUXGH VHQVH WKDW VHTXHQFH KDV D ORW RI
PHDQLQJWRPH7KHPHDQLQJRIWKLVVHTXHQFHLVWKDW,ZRUNHGKDUG
WRVSHFLI\LWLQGHWDLO7KDWVDERXWLW:LWKLQVXFKDFRQWH[WERWK
VHTXHQFHVRIOHWWHUVDERYHKDYHDVLPLODUVSHFLILFLW\,VSHFLILHG
ERWK H[DFWO\DQG VR LQ D VHQVH WKH\ KDYH D VLPLODU DPRXQW RI
PHDQLQJLUUHVSHFWLYHRIZKDWODQJXDJH,VSHDNRUZKRVHFRGHERRN
,KDYH
7KHUHLVRQHSUREOHPKHUHWKRXJK6XSSRVH,VSHFLILHGDQH[DFW
VHTXHQFHZKLFKMXVWKDSSHQHGWREHLGHQWLFDOWRRQHWKDWDVLPSOH
SVHXGRUDQGRPQXPEHUJHQHUDWRUSXWRXWZLWKDJLYHQVHHG7KHQ
,ZRXOGKDYHOLWWOHDOJRULWKPLFLQIRUPDWLRQFRQWHQWGHVSLWHJUHDW
VSHFLILFLW\ )RUWXQDWHO\ VXFK VLWXDWLRQV DUH H[WUHPHO\ UDUH :LWK
SRVVLEOHVHTXHQFHVRQO\UHODWLYHO\IHZFDQEH
VSHFLILHG E\ VLPSOH DOJRULWKPV 7KHVLPSOHVWDOJRULWKPVVSHFLI\
RQO\ D VWUDLJKW VHTXHQFH RI V RU V $GG D OLWWOH PRUH WR WKH
DOJRULWKPDQGLWFDQGRRUGHSHQGLQJRQ
KRZLWLVVHHGHGHWFHWF6RWKHWUHQGFRQWLQXHV$SVHXGRUDQGRP
QXPEHUJHQHUDWRUEDVHGRQELWLQWHJHUVFDQJHQHUDWHDWEHVWRQO\
GLIIHUHQWVHTXHQFHVVWLOODIDUFU\IURP7KHYDVW
PDMRULW\ RI VHTXHQFHV ZLOO UHTXLUH ODUJH DOJRULWKPV WR GHVFULEH
WKHP6RWKHSUREDELOLW\WKDWRQHZRXOGDFFLGHQWO\KLWRQDVHTXHQFH
ZLWKVPDOODOJRULWKPLFLQIRUPDWLRQFRQWHQWLVYHU\VPDOOUHPHP
EHULVHVVHQWLDOO\]HURLQWKLVJDPH
$ VHFRQGDQG ROGHUZD\ WR GHILQH LQIRUPDWLRQ DWRPLVWL
FDOO\LVXVLQJHQWURS\VLQFHHQWURS\LVDPHDVXUHRIWKHGLVRUGHURI
DSK\VLFDOV\VWHP7RXQGHUVWDQGWKLVSURSHUO\OHWVILUVWVSHQGD
OLWWOH WLPH GLJJLQJ LQWR HQWURS\ WR XQGHUVWDQG LW EHWWHU IURP D
VWDWLVWLFDOSRLQWRIYLHZ
,PDJLQHDSK\VLFDOV\VWHPRIVRPHNLQGVD\DURRPIXOORI
JDV ,I ZH ZDQW WR GHVFULEH WKH VWDWH RI WKLV JDV ZH GR LW ZLWK
TXDQWLWLHVOLNHWHPSHUDWXUHSUHVVXUHYROXPHDQGWKHUDWLRVRILWV
FRQVWLWXHQWVHJ2[\JHQ+HOLXPDQG1LWURJHQ
$OO RI WKHVH DUH PDFURVFRSLF GHVFULSWLRQV RI ZKDW WKH JDV LV
*HQHUDOO\ ZH GR QRWVSHFLI\DOLVWRIPLFURVFRSLFSDUDPHWHUVWR

GHVFULEH WKH JDV )RU H[DPSOH VSHDNLQJ FODVVLFDOO\ ZH GR QRW
SURYLGHDOLVWRIDWRPLFSRVLWLRQVDQGYHORFLWLHV
2[ PY PVHF
+H[ PY PVHF

7R GR VR ZRXOG EH DEVXUGO\ GLIILFXOW DQG LW ZRXOG EH UDSLGO\
FKDQJLQJIURPVHFRQGWRVHFRQG7KHPDFURVFRSLFTXDQWLWLHVWHOO
XVMXVWDERXWHYHU\WKLQJZHUHDOO\FDUHWRNQRZ
,QDZD\HQWURS\EULGJHVWKHJDSEHWZHHQWKHPDFURVFRSLFDQG
WKHPLFURVFRSLF0DWKHPDWLFDOO\WKHHQWURS\6RIDV\VWHPFDQEH
GHILQHGVWDWLVWLFDOO\DV
6 N%OQ

N% [HUJ&

ZKHUH
LV%ROW]PDQQVFRQVWDQWOQLVWKHQDWXUDOORJDULWKPDQGLVWKH
QXPEHURIPLFURVFRSLFVWDWHVRIDV\VWHPZKLFKZLOOSURGXFHWKH
VSHFLILHGPDFURVFRSLFVWDWH,QJHQHUDOIRUDQ\PDFURVFRSLFV\V
WHPVXFKDVRXUURRPIXOORIJDVLVDQDEVROXWHO\KXJHQXPEHU
7KHORJFXWVLWGRZQWRDZRUNDEOHVL]H
:H FDQ DSSO\ WKLV GHILQLWLRQ RI HQWURS\ WR DQ\WKLQJ ZH FDQ
GHILQH DQ IRU DQG LWV LQVWUXFWLYH WR GR VR LQ RUGHU WR EHWWHU
XQGHUVWDQGHQWURS\DQGWKHVHFRQGODZRIWKHUPRG\QDPLFV
6XSSRVH IRU H[DPSOH ZH KDG 0 FRLQV DQG ZH ZLVKHG WR
GHVFULEHDVWDWHLQZKLFK1ZHUHKHDGVDQG01ZHUHWDLOV:HFDQ
ILJXUHRXWZLWKDOLWWOHORJLF'HILQH
01 1XPEHURIVWDWHVIRUZKLFK1RI0FRLQVDUHKHDGV
7KHQLWLVIDLUO\HDV\WRVHHWKDW

00 0

VLQFHWKHUHLVRQO\RQHSRVVLEOHFRQILJXUDWLRQZKHQDOOFRLQVDUH
KHDGVRUWDLOV:HFDQDOVRHVWDEOLVKWKHUHODWLRQVKLS
01 0101

VLQFHZHFDQVLQJOHRXWWKHILUVWFRLQDQGLILWVKHDGVWKHQWKHUH
PXVWEH0FRLQVLQWKHUHVWRIWKHORWZLWK1KHDGV/LNHZLVH
LIWKHILUVWLVWDLOVWKHQWKHUHDUH0FRLQVZLWK1KHDGVLQWKHUHVW
RIWKHORW:LWKWKHVHUHODWLRQVKLSVRQHFDQSURYHWKDW
01 0101

1RZVXSSRVHWKDWZHKDGFRLQV)RUDVWDWHRIDOOKHDGVRUDOO
WDLOVZHKDYH

)RUDVWDWHZLWKKHDGVDQGWDLOV

DQGIRUDVWDWHZLWKKHDGVDQGWDLOV
[

7KHHQWURS\IRUDOOKHDGVRUWDLOVLV]HUR7KHHQWURS\IRURQHKHDG
RUWDLOVLVJLYHQE\
6 N%OQ

ZKHUHDVIRUZHJHW
+HUHDQGWKURXJKRXWWKHUHVWRIWKHFKDSWHUZHZLOOXVHXQLWVIRUZKLFKN%
WRVLPSOLI\FDOFXODWLRQV

6 N%OQ

1RZZHDOONQRZWKDWLIWKHVHFRLQVDUHEHLQJWRVVHGUDQGRPO\
ZHOO XVXDOO\ VHH URXJKO\ D VSOLW $ WR VSOLW ZLOO EH
H[WUHPHO\UDUH(YHQLIZHVWDUWWKHFRLQVRXWDOOKHDGVDQGVKDNH
WKHPXSWKH\ZLOOTXLFNO\JRWRDSSUR[LPDWHO\DVSOLWDQG
VWD\WKHUH([SUHVVHGLQWHUPVRIWKHVHFRQGODZRIWKHUPRG\QDP
LFVWKHV\VWHPQHFHVVDULO\WHQGVWRJRWRZDUGDVWDWHRILQFUHDVHG
HQWURS\
7KHVWDWLVWLFDOIOXFWXDWLRQVIURPWKHELJJHVWDUHVLJQLILFDQW
ZKHQ ZHUH WDONLQJ DERXW FRLQV )RUH[DPSOHDVSOLW
ZRXOGQRWEHFRQVLGHUHGXQXVXDO7KHUHDVRQLVWKDW

LV QRW WRR ELJ +RZHYHU DV WKH QXPEHU RI FRLQV RU DWRPV RU
SDUWLFOHVRUZKDWKDYH\RXJHWVELJJHUDQGELJJHUWKHIOXFWXDWLRQV
VKULQN,QJHQHUDOIRU0SDUWLFOHVWKHUHDVRQDEOHGHYLDWLRQVZLOO
JRDV0 VRDQ\WKLQJZLWKLQRIDVSOLWLVQRW
XQXVXDO +RZHYHUVXSSRVHZHKDGFRLQV1RZWKHVTXDUH
URRWLVZKLFKLVDYHU\VPDOOQXPEHUFRPSDUHGWR1RZ
DQ\WKLQJZLWKLQRIDVSOLWLVQRWXQXVXDO+RZHYHUD
[WR[HJWKHVDPHUDWLRDVDVSOLWZLWK
FRLQVLVDEVXUGO\XQOLNHO\7KDWLVEHFDXVH
[[

LVDEVXUGO\KXJH
:KDWDOOWKLVPHDQVLVWKDWWKHVHFRQGODZRIWKHUPRG\QDPLFV
JRHVIURPEHLQJPHUHO\DVWDWLVWLFDOJXLGHOLQHZKHQWDONLQJDERXW
QXPEHUVOLNHWREHLQJDKDUGDQGIDVWUXOHZKHQWDONLQJDERXW
QXPEHUV RQ WKH RUGHU RI WKH QXPEHU RI DWRPV LQ D PDFURVFRSLF
REMHFW
6RKRZDUHHQWURS\DQGLQIRUPDWLRQUHODWHG"
6XSSRVH,XVHGP\FRLQVWRFUHDWHDELQDU\VHTXHQFHRI
QXPEHUV E\ DVVLJQLQJ WR KHDGV DQG WR WDLOV 7KHQ XVLQJ D

QRQ$6&,,UHSUHVHQWDWLRQRIWKHXSSHUFDVHOHWWHUV,PLJKWDVN
KRZPDQ\FRQILJXUDWLRQVFRQWDLQP\VHTXHQFHRIOHWWHUV 7+,6,6
$/,9( "7KHVWULQJFRQVLVWVRIFKDUDFWHUVDQG,QHHGILYHELWV
SHUFKDUDFWHUWRUHSUHVHQWLW7KXVFRQWLJXRXVELWVPXVWEHXVHG
WRVSHFLI\WKHVWULQJ,IZHKDYHELWVWRZRUNZLWKWKHRWKHU
ELWVFDQEHDQ\WKLQJ\RXOLNHDQGWKH\FDQDSSHDUEHIRUHRUDIWHU
P\VWULQJ$VVXFKWKHUHDUHDERXW[SRVVLEOHFRPELQDWLRQV
ZKLFKFRQWDLQWKLVVHTXHQFHRIOHWWHUV7KXVZHFDQFRPSXWHWKH
HQWURS\RIDVWDWHFRQWDLQLQJWKLVVHTXHQFH
6 N%OQ[

,I,KDGVSHFLILHGDVHTXHQFHFKDUDFWHUVORQJ,ZRXOGKDYHWR
XVH DOO ELWV 7KH VWDWH RI WKH FRLQV ZRXOG EH FRPSOHWHO\
VSHFLILHGDQGZHGKDYH6
1RWH WKDW ERWK LQ WKH FDVH ZKHUH , VSHFLILHG D VHTXHQFH RI
OHWWHUV DQG ZKHUH , VSHFLILHG D UDWLR RI KHDGV DQG WDLOV , KDYH
LPSRVHG D FRQGLWLRQ RQ WKH VWDWH RI WKH FRLQV , KDYH VSHFLILHG
VRPHWKLQJ ZKHWKHU LW EH D SDUWLFXODU VHTXHQFH RU D ZHLJKWLQJ
7KXVWKHHQWURS\FDQEHXQGHUVWRRGDVDPHDVXUHPHQWRIWKHODFN
RIVSHFLILFLW\LQWKHVWDWHRIWKHFRLQVRUZKDWKDYH\RX7KHELJJHU
WKHHQWURS\WKHOHVVWKDWLVVSHFLILHG7KXVLI,VSHFLI\WKHVWDWH
FRPSOHWHO\HLWKHUZLWKDFRPSOH[VHTXHQFHRIELWVRUE\MXVW
VD\LQJ DOOV HJDOOKHDGVWKHHQWURS\LV]HUR2QWKHRWKHU
KDQGLI,VSHFLI\RQO\DPL[,KDYHQWVSHFLILHGWKHVWDWHRI
WKHFRLQVYHU\FDUHIXOO\VLQFHWKHUHDUHPDQ\PDQ\FRPELQDWLRQV
ZKLFKZLOOJLYHDPL[7KXVWKHHQWURS\LVDODUJHSRVLWLYH
QXPEHU
,QWKLVZD\ZHFDQXQGHUVWDQGHQWURS\DVDPHDVXUHRILQIRU
PDWLRQFRQWHQW,IZHKDYHDORWRILQIRUPDWLRQDERXWDSK\VLFDO
V\VWHPDKLJKGHJUHHRIVSHFLILFLW\WKHQLWKDVORZHQWURS\,I
ZHKDYHOLWWOHLQIRUPDWLRQLWKDVKLJKHQWURS\7KHHQWURS\LVD
PHDVXUH RI WKH WRWDO DPRXQW RI PLVVLQJ LQIRUPDWLRQ DERXW WKH
V\VWHP
%XWWKHQZHFDQWXUQWKHWDEOHVDQGGHILQHLQIRUPDWLRQFRQWHQW
LQWHUPVRIHQWURS\$KLJKLQIRUPDWLRQFRQWHQWFDQEHGHILQHGDV
DVWDWHZLWKORZHQWURS\6XFKDGHILQLWLRQRILQIRUPDWLRQLVVLPLODU
WRRXULGHDRIDOJRULWKPLFLQIRUPDWLRQFRQWHQWEXWQRWH[DFWO\WKH

VDPH$VWDWHRIORZHQWURS\KLJKHQWURS\LQIRUPDWLRQFRQWHQW
PD\KDYHORZDOJRULWKPLFLQIRUPDWLRQFRQWHQW)RUH[DPSOHJRLQJ
EDFN WR RXU FRLQV D VWDWH ZLWK DOO KHDGV KDV ORZ DOJRULWKPLF
LQIRUPDWLRQFRQWHQWEHFDXVHWKHDOJRULWKPWRVSHFLI\WKDWVWDWHLV
YHU\FRPSDFW+RZHYHUWKDWVWDWHKDV]HURHQWURS\DQGWKHUHIRUH
KLJKHQWURS\LQIRUPDWLRQFRQWHQW2QWKHRWKHUKDQGDVWDWHZLWK
KLJKDOJRULWKPLFLQIRUPDWLRQFRQWHQWLVJHQHUDOO\DVWDWHRIUHOD
WLYHO\ ORZ HQWURS\ 7KXV WKH LGHD RI DOJRULWKPLF LQIRUPDWLRQ
FRQWHQWDSSHDUVWREHVRPHZKDWVWURQJHUWKDQWKHLGHDRILQIRUPD
WLRQDVODFNRIHQWURS\
6RIDUVRJRRG
1RZOHWVWXUQWRWKHUHDOZRUOGDQGVHHMXVWZKDWDSLFNOHZH
FDQJHWLQWRZLWKWKHVHLGHDVRILQIRUPDWLRQ3LFNXSDURFNDQG
H[DPLQHLW1RZPRGHOLWZLWKDQDOJRULWKP7KHHVVHQWLDO
TXHVWLRQIRURXUSRRUSURJUDPPHULPPHGLDWHO\EHFRPHV 'R\RX
ZDQWDURFNOLNHWKLVRUGR\RXZDQWWKLVURFN" 0DNLQJDPRGHO
IRUDURFNWKDWORRNVVLPLODUDQGKDVDVLPLODUFKHPLFDOVWUXFWXUH
LVQRWWRRGLIILFXOWDQG,VXSSRVHLWFRXOGEHDFFRPSOLVKHGZLWK
OLQHVRIFRGHLQDKLJKOHYHOODQJXDJH+RZHYHUWRPRGHOWKLV
SDUWLFXODUURFNH[DFWO\LVDSUREOHPRILPPHQVHPDJQLWXGH(YHU\
PLFURVFRSLFLUUHJXODULW\RQLWVVXUIDFHPXVWEHDFFRXQWHGIRU(YHU\
WUDFH LPSXULW\ LQ LWV LQWHULRU PXVW EH DFFXUDWHO\ PRGHOHG 7KH
DOJRULWKPIRUWKLVPRGHOLVEH\RQGSUDFWLFDOUHDFK
6RGRHVWKHURFNKDYHDWUHPHQGRXVDOJRULWKPLFLQIRUPDWLRQ
FRQWHQW RU RQO\ D OLWWOH" 7KDW EHFRPHV D GHHSO\ SKLORVRSKLFDO
TXHVWLRQZKLFKVFLHQFHVLPSO\FDQQRWDQVZHUDQGRXUGHILQLWLRQV
RILQIRUPDWLRQFDQQRWDQVZHU
,WLVYHU\LPSRUWDQWWRXQGHUVWDQGWKLVSRLQW
7KHTXHVWLRQJRHVULJKWEDFNWRWKHILUVWFDXVHVWKDW$ULVWRWOH
DQG WKH DWRPLVWLF PDWHULDOLVWV DUJXHG DW JUHDW OHQJWK 2QH PLJKW
WDNH WKH DWRPLVWLF YLHZ RI WKH ZRUOG DQG WKLQN RI WKH URFN DV D
UDQGRPFKDQFHHYHQWDQGKHQFHDUJXHWKDWLWLVPHUHO\DURFNZLWK
OLWWOHLQIRUPDWLRQFRQWHQW<HWRQHFRXOGDOVRWDNHWKHYLHZWKDWWKH
URFNLVDQLQGLYLGXDOVSHFLDOO\IDVKLRQHGE\DQLQWHOOLJHQWIRUFH
ZKRQXPEHUVWKHKDLUVRQRXUKHDGVDQGFRXQWVWKHJUDLQVRIVDQG
RQWKHVHDVKRUH7KHTXHVWLRQRIKRZWKHURFNZDVIRUPHGPDWWHUV
OLWWOHLIWKLVLVWKHFDVH,WPD\EHDQDFWRIVSHFLDOLQVWDQWDQHRXV
FUHDWLRQRUDUHVXOWRIQDWXUDOSURFHVVHVLQDZRUOGYLHZHGDV*RGV

ODERUDWRU\,QWKLVFDVHWKHVSHFLILFPLFURVFRSLFLQGLYLGXDOIHD
WXUHVRIWKHURFNDUHLPSRUWDQWDQGLWZLOOEHYLHZHGDVKDYLQJD
KLJK LQIRUPDWLRQ FRQWHQW $JDLQ WKH URFN FRXOG KDYH EHHQ SXW
WRJHWKHUDVDGHWDLOHGFRPPXQLFDWLRQIURPDQRWKHUEHLQJRQVRPH
RWKHU SODQHW DQG KXUOHG WKURXJK VSDFH WR XVD YLWDO SLHFH RI
LQIRUPDWLRQIRUXVWRGHFRGH:LWKRXWVRPHXQGHUVWDQGLQJRIWKH
RULJLQ RI WKH URFN LQFOXGLQJ WKH PHWDSK\VLFV RI WKDW RULJLQ ZH
FDQQRWUHDOO\DWWDFNWKHTXHVWLRQ&RPPRQO\RQHMXVWPDNHVVRPH
XQGHUWKHWDEOHDVVXPSWLRQVDERXWWKHURFNDQGSURFHHGVRQWKDW
EDVLV+RZHYHUWKDWLVQRWSKLORVRSKLFDOO\VRXQG
7KLVPD\VHHPOLNHDSUHWW\HVRWHULFGLVFXVVLRQIRUDERRNDERXW
FRPSXWHUYLUXVHVEXWLWLVQRW5HPHPEHUWKDWWKHZRUOGRIELWVDQG
E\WHVLQVLGHRIDFRPSXWHULVDERDWORDGRILQIRUPDWLRQWRXVDQG
PDQ\SHRSOHZLOOFRPSODLQDERXWKRZYLUXVHVWUDPSOHWKDWLQIRU
PDWLRQOHIWDQGULJKW+RZHYHUIURPWKLVGLVFXVVLRQZHFDQVHH
WKDWRQHFRXOGYLHZRXUZRUOGLQWKHYHU\VDPHZD\DZRUOGIXOO
RILQIRUPDWLRQWKDWOLYLQJFUHDWXUHVDUHYHU\DGHSWDWGHVWUR\LQJ,Q
IDFWWKH\DUHPDGHWRGHVWUR\LWVLQFHDOLYLQJRUJDQLVPVPHWDER
OLVP UDLVHV WKH HQWURS\ RI LWV VXUURXQGLQJV WR PDLQWDLQ LWV RZQ
ORZHQWURS\ VWDWH ,W FRXOGQW OLYH RWKHUZLVH :HYH DOUHDG\
HTXDWHGDQLQFUHDVHLQHQWURS\ZLWKWKHGHVWUXFWLRQRILQIRUPDWLRQ
$QGKRZZRXOGDYLUXVVHHLWVRZQZRUOGLILWZHUHFRQVFLRXV"
:RXOGLWLPDJLQHWKDW(;(ILOHWREHDSLHFHRILQWULFDWHLQIRUPDWLRQ
QRWWREHWR\HGZLWKRUZRXOGLWORRNOLNHMXVWDQRWKHUJRRGURFN
WRJHWVRPHVXQVKLQHRQWKHWRSRI"(YHQWKLV HVRWHULF SKLORVRSK\
LVUHOHYDQWWRYLUXVHV
$Q\ZD\LWDSSHDUVWKDWRXULGHDVDERXWLQIRUPDWLRQDUHKDUG
WRDSSO\WROLIHDVLV([WUHPHDWRPLVPKDVDWHQGHQF\WRGULYHWRR
PXFK LQIRUPDWLRQ RXW RI WKH XQLYHUVH $WRPLVWLFDOO\ RQH FDQ
KDUGO\GUDZWKHOLQHEHWZHHQDSK\VLFDOSURFHVVWKDWFRQVWLWXWHVOLIH
DQGRQHWKDWGRHVQRWDOODUHMXVWDWRPVDQGSK\VLFV1HLWKHUFDQ
RQHVD\WKDWWKHUHLVDORWRILQIRUPDWLRQLQDOLYLQJRUJDQLVPDQG
QRWLQDQLQDQLPDWHURFN7KHOLYLQJRUJDQLVPLVDFKDQFHRFFXU
UHQFHRQHRIPDQ\SRVVLELOLWLHV$QGORZVSHFLILFLW\PHDQVORZ
LQIRUPDWLRQFRQWHQW2QWKHRWKHUKDQGH[WUHPH$ULVWRWHOLDQLVP
RUFUHDWLRQLVPLI\RXZLOOWHQGVWRSXWWRRPXFKLQIRUPDWLRQLQWR
WKH XQLYHUVH 7KH '1$ LQ D OLYLQJ RUJDQLVP EHFRPHV KLJKO\
VSHFLILF\HVEXWSHUKDSVQRPRUHVRWKDQDURFNRUDQ\P\ULDGRI

RWKHULQDQLPDWHREMHFWV7KHUHIRUH\RXHQGXSZLWKOLIHFRQWDLQLQJ
DVPDOOSLHFHRILQIRUPDWLRQLQDZRUOGLQXQGDWHGZLWKLW
6RLQIRUPDWLRQDSSHDUVWREHDWKHDUWDVXEMHFWLYHDQGSKLOR
VRSKLFDOLGHD:HFDQQRWVHHPWRJHWDZD\IURPLWHYHQZKHQZH
DWWHPSWWRGHILQHLQIRUPDWLRQDWRPLVWLFDOO\,QWKHHQGWKHZKROH
LGHDRILQIRUPDWLRQUHPDLQVSUDFWLFDOO\QRQVHQVLFDODSDUWIURPWKH
TXHVWLRQRIPHDQLQJ,ZLOOQRWWU\WRWDFNOHDOORIWKHVHGHHSLVVXHV
KHUH7KH\FRXOGEHWKHVXEMHFWRIDQHQWLUHERRN+RZHYHUZH
GHVSHUDWHO\QHHGVRPHNLQGRIPLGGOHJURXQGZKHUHZHFDQGHILQH
LQIRUPDWLRQLQVXFKDZD\WKDWLWFDQKHOSXVWRXQGHUVWDQGOLIH
:LWKRXWWKDWWKHZKROHLGHDRIVHOIUHSURGXFWLRQFDQHDVLO\JHWORVW
LQWKHSKLORVRSKLFDOLVVXHV
,QIRUPDWLRQDQG&RPSXWHUV
,QIRUPDWLRQDVZHQRUPDOO\XQGHUVWDQGLWLQIRUPVDQLQWHOOL
JHQWFRQVFLRXVFUHDWXUH2XULGHDRILQIRUPDWLRQKDVODUJHO\EHHQ
ERUQRIWKHFRPSXWHUDJHGXULQJZKLFKSHULRGZHKDYHLQYHQWHG
PDFKLQHVZKLFKFDQLQWHUSUHWDQGSURFHVVLQIRUPDWLRQ7KXVRXU
UHDOLGHDVDERXWLQIRUPDWLRQDUHVWLOOFORVHO\WLHGWRWKHLGHDWKDW
VRPHWKLQJDPDFKLQHRUDQLQWHOOLJHQWEHLQJLQWHUSUHWVLW
7KHVHWKRXJKWVPDNHVHQVHWRXVVXSHUILFLDOO\+RZHYHUWKH\
VWLOOOHDYHDELJTXHVWLRQRIPHDQLQJWRWDFNOH,I,JDYH\RXDERRN
ZULWWHQLQWKHZURQJODQJXDJHLWZRXOGEHPHDQLQJOHVVWR\RXDQG
\RXFRXOGQWHYHQWHOOLILWZRXOGEHPHDQLQJOHVVWRVRPHRQHZKR
NQHZWKDWODQJXDJH:RUVH\HWLI,SXWDSURJUDPLQWRDFRPSXWHU
DQGUXQLWZKDWPDNHVLWDPHDQLQJIXORUPHDQLQJOHVVSURJUDP",
FDQH[HFXWHDQ\UDQGRPVWULQJRIE\WHVRQPRVWFRPSXWHUVDQGWKH\
ZLOO GR VRPHWKLQJ +RZ GR , GLIIHUHQWLDWH EHWZHHQ XVHIXO DQG
XVHOHVVSURJUDPVPHDQLQJIXODQGPHDQLQJOHVVLQIRUPDWLRQ"
$W ERWWRP PHDQLQJ FDQ RQO\ EH UHIHUHQFHG WR D FRQVFLRXV
EHLQJ,QIRUPDWLRQLVPHDQLQJIXORQO\ZLWKUHVSHFWWRDFRQVFLRXV
EHLQJ7KHSURJUDPLVPHDQLQJIXODQGXVHIXORQO\LILWGRHVVRPH
WKLQJWKDWLVPHDQLQJIXOWRVRPHERG\,IZHGHFLGHWRDEVWUDFWWKLV
LGHDRIPHDQLQJDQGGHILQHLWLQVRPHULJRURXVREMHFWLYHZD\WKHQ
DOOZHDUHGRLQJLVVD\LQJWKDWWKDWREMHFWLYHGHILQLWLRQKDVVRPH
PHDQLQJWRXV7KHUHIRUHHYHQRXUREMHFWLILFDWLRQLVVXEMHFWLYH2XU
VXSSRVHGO\REMHFWLYHGHILQLWLRQVRILQIRUPDWLRQFRQWHQWYLDDOJR

ULWKPV DQG HQWURS\ DUH XVHOHVV ZLWKRXW VRPH VXEMHFWLYH SKLOR

VRSKLFDO LQSXW ,W LV WRWDOO\ LQ WKH WUDGLWLRQ RI$ULVWRWOHSODFLQJ
IXQGDPHQWDOYDOXHRQDQLGHDUDWKHUWKDQWU\LQJWRUHGXFHHYHU\
WKLQJWRDWRPVDQGSK\VLFV,WDSSHDUVZHZLOOKDYHWROLYHZLWKWKDW
LIZHZDQWDQ\XVHIXOLGHDRILQIRUPDWLRQ
:LWKLQ WKH UHDOP RI $UWLILFLDO /LIH LW VHHPV UHDVRQDEOH WR
GHILQHPHDQLQJIXOLQIRUPDWLRQLQWHUPVRIVHOIUHSURGXFWLRQ/HW
XVWDNHDGHILQLWLRQOLNHWKLVDVDVWDUWLQJSRLQW
*LYHQ D PDFKLQH ZKLFK FDQ LQWHUSUHW VRPH LQVWUXFWLRQ VHW D
VHTXHQFH RI LQVWUXFWLRQV LV PHDQLQJIXO LI LWV H[HFXWLRQ FDXVHV WKH
LQWHUSUHWHUWRPDNHDQH[DFWFRS\RIERWKWKHLQWHUSUHWHUDQGWKH
LQVWUXFWLRQVLQVRPHVRUWRILQLWLDOVWDWH
2EYLRXVO\WKLVGHILQLWLRQLVQRWLQWHQGHGWREHWKHILQDOZRUGRQ
PHDQLQJ<RXUVSUHDGVKHHWSURJUDPREYLRXVO\H[HFXWHVPHDQLQJ
IXOLQVWUXFWLRQVHYHQWKRXJKLWGRHVQRWUHSURGXFH2XUGHILQLWLRQ
PHUHO\ VLQJOHV RXW D FODVV RI DFWLRQV ZKLFK ZH FRQVLGHU WR EH
PHDQLQJIXO
,QZULWLQJGRZQVXFKDGHILQLWLRQZHZRXOGOLNHWREHDEOHWR
GUDZDFOHDUOLQHEHWZHHQWKHLQWHUSUHWLQJPDFKLQHDQGWKHLQIRU
PDWLRQEHLQJLQWHUSUHWHG:HGOLNHWRSLFWXUHLWOLNHDFRPSXWHU
DQGDWDSHZLWKDSURJUDPRQLW7KHQZHFDQSXOOWKHSURJUDPRXW
RI LW DQG DQDO\]H LWV LQIRUPDWLRQ FRQWHQW XVLQJ HQWURS\ RU DOJR
ULWKPVRUZKDWKDYH\RX
8QGHUVWDQGWKDWPHUHHQWURSLFRUDOJRULWKPLFLQIRUPDWLRQFRQ
WHQW RI D WDSH LQ WKH DEVWUDFW GRHV QRW QHFHVVDULO\ HTXDWH ZLWK
LQIRUPDWLRQZLWKUHVSHFWWRUHSURGXFWLRQ7KHWDSHFRXOGFRQFHLY
DEO\ EH LUUHOHYDQW WR WKH UHSURGXFWLRQ SURFHVV ,I WKH PDFKLQH
UHSURGXFHVQRPDWWHUZKDWWDSH\RXKDYHLQVHUWHGLQLW\RXKDYHD
ODUJHQXPEHURISRVVLEOHWDSHVDQGVRDODUJHHQWURS\DQGOLWWOH
LQIRUPDWLRQFRQWHQW
$QRWKHU SODFH ZKHUH ZH ZRXOG OLNH WR GUDZ D FOHDU OLQH LV
EHWZHHQWKHVHOIUHSURGXFLQJDXWRPDWRQDQGLWVHQYLURQPHQW7KH
YHU\ LGHD RI D PDFKLQH LQWHUSUHWLQJ LQVWUXFWLRQV VXJJHVWV WKLV
GLVWLQFWLRQ7KHPDFKLQHLVQRWWKHHQYLURQPHQWDVDZKROH:HFDQ
LGHQWLI\DVXEVHWRIWKHHQYLURQPHQWDQGVD\ WKHUHLVWKHPDFKLQH
<HW WKH PDFKLQH LV QRW WRWDOO\ LQGHSHQGHQW RI LWV HQYLURQPHQW

,QGHHGLWFDQQRWEH,ILWZHUHLWZRXOGEHDQLVRODWHGV\VWHPDQG
WKHUHIRUHDQHQYLURQPHQWXQWRLWVHOI:HFDQGUDZDOLQHEHWZHHQ
PDFKLQHDQGHQYLURQPHQWEHFDXVHWKHPDFKLQHLVQRUPDOO\XQGHU
VWRRGDVWKHSDUWZKLFKGRHVWKHGHWDLOHGRUJDQL]LQJZRUNQHFHVVDU\
WRHIIHFWUHSURGXFWLRQ7KHHQYLURQPHQWSURYLGHVWKHQHHGHGUDZ
PDWHULDOVDQGDSRRORIQHJDWLYHHQWURS\LI\RXZLOOWRIHHGRQLQ
RUGHUIRUWKLVRUJDQL]LQJZRUNWREHDFFRPSOLVKHG
7KHPDFKLQHLQWHUSUHWLQJWKHLQVWUXFWLRQVDOVRVHUYHVWRLVRODWH
WKHVHTXHQFHRILQVWUXFWLRQVZKLFKLWLQWHUSUHWVIURPWKHHQYLURQ
PHQW7KHRXWVLGHHQYLURQPHQWGRHVQRWPDNHXVHRIWKHLQVWUXF
WLRQV$QGLIWKHVHTXHQFHRILQVWUXFWLRQVLVRIORZHQWURS\WKHQ
WKH HQWURS\LQFUHDVLQJ LQWHUDFWLRQ RI WKH HQYLURQPHQW ZLWK WKH
LQVWUXFWLRQVHTXHQFHRXJKWWREHNHSWWRDPLQLPXP
:KHQZHEHJDQWKLVFKDSWHUZHSXWRXUDWRPLVWLFJODVVHVRQ
DQGVDZKRZ/DQJWRQVGHILQLWLRQRIVHOIUHSURGXFWLRQZDVVRUHO\
DPELJXRXV7KHUHDSSHDUHGWREHQRZD\WRGHILQHWHUPVOLNHDFWLYH
DQGSDVVLYHDWRPLVWLFDOO\:HGXJLQWRWKHLGHDRILQIRUPDWLRQDQG
IRXQG RXUVHOYHV DW D SKLORVRSKLFDO LPSDVVH :H FRXOG QRW HYHQ
GHWHUPLQHZKHWKHUDQHYHU\GD\REMHFWKDGORWVRILQIRUPDWLRQLQLW
RUOLWWOHZLWKRXWNQRZLQJVRPHWKLQJRILWVRULJLQRU ILUVWFDXVH
,Q WKH HQG ZH ILQG WKDW ZH PXVW WKURZ DZD\ RXU DWRPLVWLF
JODVVHVDQGDFFHSW/DQJWRQVGHILQLWLRQDVPRUHWKDQMXVWDGHILQL
WLRQRIVHOIUHSURGXFWLRQ,WEULQJVWRJHWKHUVHYHUDOLPSRUWDQWSKLOR
VRSKLFDOLGHDVWKDWDUHHVVHQWLDOWRRXUXQGHUVWDQGLQJRIZKDWOLIH
LV,WLQWURGXFHVWKHFRQFHSWRIDOLYLQJRUJDQLVPDVDPDFKLQHZKLFK
H[HFXWHVFRGHGLQVWUXFWLRQV,WDOVRLQWURGXFHVWKHFRQFHSWRILQIRU
PDWLRQ GHILQHG VROHO\ ZLWKLQ WKH FRQWH[W RI VHOIUHSURGXFWLRQ
7KHVHLGHDVDUHREYLRXVO\GUDZQIURPRXUXQGHUVWDQGLQJRIFDUE
RQEDVHGOLIH
7KXVZHHQGXSZLWKDIDLUO\FOHDUSLFWXUHRIVHOIUHSURGXFWLRQ
LQWHUPVRIDPDFKLQHLQVWUXFWLRQVDQGWKHHQYLURQPHQW,QDGRSW
LQJWKDWSLFWXUHZHUHDOL]HWKDWZHDUHVWHSSLQJDZD\IURPVWULFW
DWRPLVP VLQFH ZH DUH VHSDUDWLQJ PHDQLQJIXO DQG PHDQLQJOHVV
LQIRUPDWLRQDQGLQWURGXFLQJWKHODQJXDJHRIPDFKLQHV7KDWLVQRW
UHDOO\WRRGLIIHUHQWIURPZKDW$ULVWRWOHGLG\HDUVDJR
$VDQDVLGHQRWHWKDWMXVWEHFDXVHZHKDYHLQWURGXFHGWKHLGHD
RIDPDFKLQHGRHVQRWPHDQZHKDYHWRVD\WKDWDOLYLQJRUJDQLVP
LV D PDFKLQH :H PD\ UHPHPEHU WKH FRQVLGHUDWLRQV RI WKH ODVW

FKDSWHU $OO ZH DUH VD\LQJ LV WKDW D OLYLQJ RUJDQLVP LV OLNH D
PDFKLQHZLWKUHVSHFWWRVHOIUHSURGXFWLRQ7KXVZHPD\XVHVXFK
ODQJXDJHZKLOHPDNLQJRQO\DPLQLPDOSKLORVRSKLFDOFRPPLWPHQW
7KH7DXWRORJ\
8QIRUWXQDWHO\ LI ZH VWDUH ORQJ HQRXJK DW RXU GHILQLWLRQV RI
PHDQLQJIXOLQIRUPDWLRQDQGVHOIUHSURGXFWLRQWKHUHDSSHDUVWREH
DWDXWRORJ\KHUHPHDQLQJIXOLQIRUPDWLRQLVGHILQHGLQWHUPVRI
WKHDELOLW\WRUHSURGXFHDQGVHOIUHSURGXFWLRQLVGHILQHGLQWHUPV
RIPHDQLQJIXOLQIRUPDWLRQ
:HVWLOOKDYHQWIRXQGDJRRGZD\WRGUDZWKHOLQHEHWZHHQ
VHOIUHSURGXFWLRQ DQG SK\VLFVGULYHQ UHSOLFDWLRQ :H KDYH WR JR
EH\RQG/DQJWRQDQGDGGVRPHWKLQJPRUHWRWKLVGHILQLWLRQWRGR
WKDW
/HWPHLOOXVWUDWH:HKDYHDOUHDG\GLVFXVVHG-RKQ%\OVVLP
SOLILFDWLRQVRI/DQJWRQVDXWRPDWRQ%\OGLGQRWWDNHKLVDXWRPDWD
WR WKHLU ORJLFDO OLPLWV WKRXJK ,I ZH GR ZH HQG XS ZLWK D YHU\
VLPSOHDXWRPDWRQGHSLFWHGLQ)LJXUH:LWKPRGHUDWHO\VLPSOH
UXOHVWKLVDXWRPDWRQFDQEHPDGHWRUHSURGXFH,QRQHJHQHUDWLRQ
LWSURGXFHVDVLQJOHFKLOGZKLFKLQWXUQSURGXFHVDQRWKHUFKLOG
XQWLO WKH\ UXQ RII WKH FHOOXODU DUUD\ 7KLV DXWRPDWRQ PDLQWDLQV

7 7 7

7 7 7
)LUVWDXWRPDWRQUHDG\WR
UHSURGXFHDJDLQ
6HFRQGDXWRPDWRQ
QRZFRPSOHWH
)LJXUH0LQLPDOVHOIUHSURGXFLQJDXWRPDWRQ

/DQJWRQDQG%\OVVKHDWKVWUXFWXUHEXWWKHUHLVRQO\RQHFHOORI
H[HFXWDEOHFRGHZKLFKPD\WDNHRQRQHRIVHYHQYDOXHV
,QWKLVVLWXDWLRQLWVHHPVUDWKHUGLIILFXOWWRFDOOWKHREVHUYHG
UHSURGXFWLRQVHOIUHSURGXFWLRQ,WVVLPSOLFLW\LVFOHDUO\VLPLODUWR
FU\VWDO JURZWK <HW LW GRHVQW VHHP WR GLIIHU FRQFHSWXDOO\ IURP
/DQJWRQVRU%\OVPRUHFRPSOH[DXWRPDWD,WKDVDFHOOVKHDWK
DQGDFHOOSLHFHRIFRGH
7KLVPLQLPDODXWRPDWRQVHHPVWRVDWLVI\RXUFULWHULDIRUVHOI
UHSURGXFWLRQ 7KH LQIRUPDWLRQ LQ WKH FHQWUDO FHOO LV FULWLFDO IRU
UHSURGXFWLRQVLQFHDQ\RWKHUYDOXHEXWZLOOQRWZRUN:HVHHP
WR KDYH D PDFKLQH LQ WKH VKHDWK VLQFH WKH DFW RI FRQWDLQLQJ WKH
DFWLYHLQIRUPDWLRQVLWHLVDVPXFKDQH[HFXWLRQRILQVWUXFWLRQVDV
LQPRUHFRPSOH[DXWRPDWDRIWKLVW\SH7KXVLWZRXOGDSSHDUWKDW
RXUDXWRPDWRQHIIHFWVVHOIUHSURGXFWLRQ<HWLWLVREYLRXVO\QRWKLQJ
PRUHWKDQDJURZLQJFU\VWDO
6RKRZFDQZHGUDZWKHOLQH""
6RPHFULWHULDRQWKHTXDQWLW\RILQIRUPDWLRQLQYROYHGLQWKH
UHSURGXFWLRQSURFHVVDUHHVVHQWLDOLQRUGHUWRGUDZDOLQHEHWZHHQ
VHOIUHSURGXFWLRQ DQG SK\VLFVGULYHQ UHSOLFDWLRQ :LWKRXW VXFK
FULWHULDZHZLOOIRUHYHUVWXPEOHRYHUWKHVHJUD\DUHDV:HPXVW
DVNWKHTXHVWLRQ +RZPXFKLQIRUPDWLRQLVUHTXLUHGIRUVHOIUH
SURGXFWLRQ"
8S IURQW , ZDQW WR VD\ WKDW , FDQQRW DQVZHU WKLV TXHVWLRQ
SUHFLVHO\7KHUHDUHGLIILFXOWLHVLQYROYHGEXW\RXKDYHJRWWHQXVHG
WRWKDWE\QRZ,KRSH1RQHWKHOHVVVRPHXVHIXOJXLGHOLQHVVHHP
WREHLQRUGHU,GRQRWZDQWWRVXJJHVWWKDWWKHVHJXLGHOLQHVDUH7KH
$QVZHUWKRXJK,ZLOOXVHWKHPWKURXJKRXWWKHUHVWRIWKLVERRN
7RXQGHUVWDQGRXUJXLGHOLQHVOHWVGHILQHWKUHHTXDQWLWLHV
,167 7KHLQIRUPDWLRQFRQWHQWRIWKHLQVWUXFWLRQVLQDVHOI
UHSURGXFLQJDXWRPDWRQ
0$&+ 7KHLQIRUPDWLRQFRQWHQWRIWKHPDFKLQHH[HFXWLQJ
7KLVDXWRPDWRQLVWKH0,1,0$/FRQILJXUDWLRQIRUXVHZLWK65$B/$%RQ
WKH3URJUDP'LVN

WKHLQVWUXFWLRQV
3+<6 7KHLQIRUPDWLRQFRQWHQWRIWKHSK\VLFDOODZV
JRYHUQLQJWKHXQLYHUVHLQZKLFKWKHDXWRPDWRQH[LVWV
, XVH WKH QRWDWLRQ IRU LQIRUPDWLRQ FRQWHQW EHFDXVH , GR QRW

SDUWLFXODUO\ZDQWWRVSHFLI\KRZWKHLQIRUPDWLRQFRQWHQWLVPHDV
XUHG , DP RSHQ WR WKH SRVVLELOLWLHV )RU H[DPSOH LQ PHDVXULQJ
,167LWPLJKWEHUHDVRQDEOHWRGHWHUPLQHKRZPDQ\GLIIHUHQW
VHTXHQFHVRILQVWUXFWLRQVFRXOGEHSOXJJHGLQWRDJLYHQPDFKLQHWR
HIIHFW UHSURGXFWLRQ 7KHQ RQH FRXOG FDOFXODWH DQG GHILQH WKH
LQIRUPDWLRQ FRQWHQW XVLQJ HQWURS\ 2Q WKH RWKHU KDQG VLQFH WKH
PDFKLQHLVEHLQJFRQVWUXFWHGE\DQRWKHUPDFKLQHZKLFKLVH[H
FXWLQJ DQ DOJRULWKPLW PLJKW EH PRUH FRQYHQLHQW WR GHILQH
0$&+DOJRULWKPLFDOO\
2NOHWVORRNDWVRPHUXOHV
5XOH2QH
)RUERQDILGHVHOIUHSURGXFWLRQWRRFFXUZHPLJKWH[SHFWWZR
LQHTXDOLWLHVWRKROG7KHILUVWLVVLPSO\
,1675 0$&+

6LQFHWKHLQVWUXFWLRQVEHLQJH[HFXWHGVKRXOGVSHFLI\KRZWRFRQ
VWUXFWWKHPDFKLQHWKH\VKRXOGRQO\EHDEOHWRFRQVWUXFWDPDFKLQH
DVFRPSOH[DVWKH\DUHWKHPVHOYHV7KXVWKHLQIRUPDWLRQFRQWHQW
RIWKHPDFKLQHVKRXOGEHOHVVWKDQRUDSSUR[LPDWHO\HTXDOWRWKH
LQIRUPDWLRQ FRQWHQW RI WKH LQVWUXFWLRQV EHLQJ H[HFXWHG , XVH D
JUHDWHU VLJQ KHUH EHFDXVH WKH LQVWUXFWLRQV FRXOG VSHFLI\ PRUH
LQIRUPDWLRQWKDQQHHGHGWRFRQVWUXFWWKHPDFKLQHZLWKRXWKDUP
)RUH[DPSOHDOOWKHOLYLQJFHOOVLQ\RXUERG\FRQWDLQWKHJHQHWLF
LQIRUPDWLRQWRSURGXFHKDLUWKRXJKQRWDOOFHOOVSURGXFHKDLUDQG
WKHKDLUVHHPVWREHDWEHVWYHU\LQGLUHFWO\UHODWHGWRWKHFDSDFLW\
WRUHSURGXFH
,QVLWXDWLRQVZKHUH,16750$&+WKHUHLVDSUREOHP
(LWKHUZHKDYHQRWFRUUHFWO\GHWHUPLQHGWKHVFRSHDQGQDWXUHRIWKH

LQVWUXFWLRQVLQWKHVHOIUHSURGXFLQJDXWRPDWRQRUZHDUHQRWWDON
LQJDERXWVHOIUHSURGXFWLRQ
)RUH[DPSOHVXSSRVHZHKDGDPDFKLQHZKLFKZRXOGUHSUR
GXFHDQH[DFWFRS\RILWVHOIDQGDWDSHELWVORQJQRPDWWHU
ZKDWWDSHZDVLQVHUWHGLQWRLW6LQFHDQ\WDSHZLOOGRWKHHQWURS\
ZLOOEHDVODUJHDVLWFDQJHWDQGWKHUHLVHVVHQWLDOO\QRLQIRUPDWLRQ
FRQWHQW LQ WKH WDSH DSDUW IURP LWV H[DFWO\VSHFLILHG OHQJWK 7KH
PDFKLQHRQWKHRWKHUKDQGLVYHU\FRPSOH[DQGVSHFLILFLWKDVD
KLJKLQIRUPDWLRQFRQWHQW7KHLQHTXDOLW\GRHVQRWKROGEXWLWLV
UDWKHUREYLRXVWKDWWKHPDFKLQHLVQRWGHSHQGHQWXSRQWKHFRQWHQW
RIWKHWDSHEHLQJLQVHUWHGLQWRLWWRDFFRPSOLVKVHOIUHSURGXFWLRQ
8SRQIXUWKHULQYHVWLJDWLRQZHPLJKWILQGWKDW
$7KHUHLVVRPHKLGGHQLQIRUPDWLRQVRPHZKHUHZKLFKZHKDGQRW
DFFRXQWHGIRU)RUH[DPSOHDKLGGHQFLUFXODUWDSHWKDWLVUHDOO\
GLUHFWLQJWKHUHSURGXFWLRQSURFHVV
RU
%7KHUHSURGXFWLRQLVSK\VLFVGULYHQDQGWKHSK\VLFVLVIRUFLQJ
WKHUHSURGXFWLRQWRRFFXU
6LWXDWLRQ$LVUHFRQFLODEOHZLWKRXULGHDRIVHOIUHSURGXFWLRQDV
ORQJDVZHUHGHILQHZKDWPDFKLQHDQGLQVWUXFWLRQVDUH&OHDUO\WKH
WDSHZHUHSXWWLQJLQWRWKHPDFKLQHGRHVQWKDYHDQ\WKLQJWRGR
ZLWKWKHLQVWUXFWLRQV6LWXDWLRQ%LVZKDWZHZDQWWRDYRLGFDOOLQJ
VHOIUHSURGXFWLRQ
1RZZHPLJKWZDQWWRDVNKRZZHOO5XOH2QHKROGVIRUOLYLQJ
RUJDQLVPV DQG IRU VRPH RI WKH FHOOXODU DXWRPDWD ZH KDYH EHHQ
GLVFXVVLQJ
/LYLQJ RUJDQLVPV XVH '1$ WR HQFRGH WKH LQIRUPDWLRQ WKH\
FRQWDLQ7KH'1$VSHFLILHVWKHVWUXFWXUHRIDOOWKHSURWHLQVZKLFK
DFHOOXVHVWRDFFRPSOLVKDOORILWVIXQFWLRQVLQFOXGLQJUHSURGXF
WLRQ7KH'1$PD\VSHFLI\WKHVWUXFWXUHRISURWHLQVZKLFKQHYHU
JHWXVHGLQDSDUWLFXODUFHOOHVSHFLDOO\LQDPXOWLFHOOXODUDQLPDO
VRLQWKLVVHQVHLWPD\KDYHPRUHLQIRUPDWLRQWKDQWKDWFHOOQHHGV
2QWKHRWKHUKDQGDFHOODJDLQLQDPXOWLFHOOXODUDQLPDOPD\
FRQWDLQVRPHLQIRUPDWLRQQRWVSHFLILHGGLUHFWO\E\WKH'1$)RU

H[DPSOHOLYHUFHOOVDQGVNLQFHOOVFRQWDLQWKHVDPH'1$LQDQ\
JLYHQDQLPDOEXWWKH\ORRNUDGLFDOO\GLIIHUHQWDQGSHUIRUPUDGL
FDOO\GLIIHUHQWIXQFWLRQV:KHQWKH\UHSURGXFHWKH\IRUPOLYHUDQG
VNLQ FHOOV UHVSHFWLYHO\ 7KHUH LV LQIRUPDWLRQ FRQWHQW LQ WKHVH
GLIIHUHQFHVZKLFKLVFRQWDLQHGLQWKHUHODWLYHUDWLRVRISURWHLQV
HWF LQ WKH FHOO UDWKHU WKDQ WKH '1$ LWVHOI +RZHYHU WKH '1$
VSHFLILHV DOO RI WKH SURWHLQV LQ ERWK FHOOV DQG WKH LQIRUPDWLRQ
FRQWHQWLQWKHGLIIHUHQWVWUXFWXUHVVKRXOGEHUHODWLYHO\VPDOO7KXV
HYHQWKRXJKZHFDQQRWGRDGHWDLOHGFDOFXODWLRQWRSURYHLW5XOH
2QHDSSHDUVWREHUHDVRQDEOHIRUDOLYLQJFHOO
/DQJWRQVDXWRPDWRQLVDQRWKHUJRRGH[DPSOHWRFKHFNDJDLQVW
5XOH2QH,IZHYLHZWKHVKHDWKDVWKHLQWHUSUHWLQJPDFKLQHDQG
WKHWKUHDGRIVWDWHVLQVLGHWKHVKHDWKDVWKHLQIRUPDWLRQZHFDQ
DQDO\]HWKHDXWRPDWRQLQGHWDLO7KHLQIRUPDWLRQORRNVOLNHWKLV

(DFK VHTXHQFH FDXVHVWKHVKHDWKWREHH[WHQGHGRQHXQLW

IURPWKHHQGDQGWKHWZR VHTXHQFHVPDNHLWWXUQDFRUQHU
6R HVVHQWLDOO\ WKLV LQIRUPDWLRQ VSHFLILHV H[WHQG WKH VKHDWK VL[

)LJXUH7KHVKHDWKRI/DQJWRQVDXWRPDWRQ

XQLWVDQGWXUQOHIW ,QLWVPLQLPDOFRQILJXUDWLRQWKHVKHDWKLVD
ER[OLNHVWUXFWXUH6HH)LJXUH7KHLQVWUXFWLRQVLQWHUSUHWHG
LQWKHVDPHPDQQHUDUHDVLPSOHDOJRULWKPLFGHVFULSWLRQRIDER[
ZKHQUHSHDWHG:LWKVXFKDVLPSOHPLQGHGDQDO\VLVZHFDQVHH
WKDW 5XOH 2QH PDNHV VRPH VHQVH KHUH 7KH HQFRGHG VHTXHQFH
/DQJWRQVDXWRPDWRQFRQWDLQVDSSHDUVWREHDFRPSDFWDOJRULWKP
ZKLFKGHVFULEHVWKHVKHDWKPDFKLQHZKLFKFRQWDLQVLW
:H FDQ WDNH D PRUH TXDQWLWDWLYH DSSURDFK XVLQJ HQWURS\ WR
GHILQHLQIRUPDWLRQFRQWHQW:HJHW
,1675
0$&+
D
E
VR5XOH2QHKROGV,1675!0$&+

1RZ LI ZH WXUQ WR RXU PLQLPDO DXWRPDWRQ DQG DWWHPSW D
VLPLODUDQDO\VLVZHUXQLQWRWURXEOH7KHVLQJOHFHOORILQIRUPDWLRQ
GRHVQRWSURYLGHDQDOJRULWKPWRFRQVWUXFWWKHUDWKHUPRUHFRPSOL
FDWHGWKUHHFHOOVKHDWKDWOHDVWDVIDUDV,FDQVHH7KHUHDSSHDUV
WR EH WRR OLWWOH LQIRUPDWLRQ FRQWHQW LQ WKH LQIRUPDWLRQ $Q
HQWURS\FDOFXODWLRQJLYHVWKHUHVXOWV
,1675
0$&+
D
E
VR5XOH2QHGRHVQRWKROG
,Q FRQFOXVLRQ 5XOH 2QH DSSHDUV WR EH XVHIXO IRU H[FOXGLQJ
VRPHRIWKHWULYLDOFDVHVRIUHSURGXFWLRQWKDWZHGRQRWZDQWWR
FODVVLI\DVVHOIUHSURGXFWLRQ
,1675 OQVLQFHWKHUHDUHLQVWUXFWLRQVLQWKHWDSHZKLFKPD\EH
DQ\WKLQJEXWWKHVKHDWKVWDWH0$&+ OQEHFDXVHZHZDQWD
VSHFLILFDUUDQJHPHQWRIVWDWHVLQFHOOVFHOOVLVREWDLQHGE\XVLQJ
WKH[ER[WKDWWKHVKHDWKFDQEHFRQWDLQHGLQOHVVVWDWHVIRUWKHWDSH
,1675 OQ VLQFH WKHUH LV RQH LQVWUXFWLRQ LQ WKH WDSH ZKLFK PD\ EH
DQ\WKLQJEXWWKHVKHDWKVWDWH0$&+ OQFDOFXODWHGWKHVDPHZD\
DV IRU /DQJWRQ 2EYLRXVO\ WKHUH FDQ EH VRPH YDULDWLRQ LQ WKHVH QXPEHUV
GHSHQGLQJRQKRZ\RXGRLWEXWWKHVKLIWLQLQIRUPDWLRQFRQWHQWKHUHLVFOHDU

5XOH7ZR
7KHVHFRQGUXOHZHZRXOGOLNHWRKROGIRUDVHOIUHSURGXFLQJ
HQWLW\LV
,1675> 3+<6

7KDWLVWKHLQIRUPDWLRQFRQWHQWRIWKHLQVWUXFWLRQVLVJUHDWHUWKDQ
WKHLQIRUPDWLRQFRQWHQWRIWKHSK\VLFVRIWKHV\VWHPZLWKUHJDUG
WRVHOIUHSURGXFWLRQ
,QKLVRULJLQDOSDSHU&KULV/DQJWRQVXJJHVWHGWKDWWKHLGHDRI
VHOIUHSURGXFWLRQVKRXOG UHTXLUHWKDWUHVSRQVLELOLW\UHVLGHSULPDU
LO\ZLWKWKHSDUHQWVWUXFWXUHLWVHOIEXWQRWWRWDOO\7KLVPHDQVWKDW
WKHVWUXFWXUHPD\WDNHDGYDQWDJHRIFHUWDLQSURSHUWLHVRIWKHWUDQ
VLWLRQIXQFWLRQSK\VLFVEXWQRWWRWKHH[WHQWWKDWWKHVWUXFWXUH
LVPHUHO\SDVVLYHO\FRSLHGE\PHFKDQLVPVEXLOWLQWRWKHWUDQVLWLRQ
IXQFWLRQ 2XU 5XOH 7ZR LV VLPSO\ DQ DWWHPSW WR TXDQWLI\
/DQJWRQV SULPDULO\
/DQJWRQVHHPHGWRUHO\SULPDULO\RQDSSHDUDQFHVLQKLVSDSHU
7KH DXWRPDWRQ ORRNHG OLNH LW ZDV VHOIUHSURGXFLQJ $V ZH KDYH
VHHQWKRXJK%\OVDXWRPDWRQDOVRORRNVOLNHLWZDVVHOIUHSURGXF
LQJOLNHDFHOOEXWZHFRXOGGHILQHVRPHWKLQJYHU\VLPLODUZKLFK
ORRNHGPRUHOLNHDFU\VWDO,WVHHPVKDUGWRGUDZWKHOLQHEHWZHHQ
WKHVHWZRDXWRPDWDRQWKHEDVLVRIDSSHDUDQFHVDORQH/LNHZLVH
RXU 0,1,0$/ DXWRPDWRQ DOVR DSSHDUV WR VHOIUHSURGXFH PXFK
OLNH%\O6RPHKRZZHQHHGWRGUDZDOLQH
2QHZRXOGVXVSHFWWKDWLIWKHSK\VLFVRIWKHV\VWHPLVVRPHKRZ
GULYLQJWKHUHSURGXFWLRQWKHQWKHEDVLFSK\VLFVLVLQIRUPLQJWKH
UHSURGXFWLRQ SURFHVV UDWKHU WKDQ WKH LQVWUXFWLRQV ZLWKLQ WKH
DXWRPDWRQ5XOH7ZRLVVLPSO\DTXDQWLWDWLYHDWWHPSWWRVD\WKDW
WKHLQVWUXFWLRQVPXVWGULYHWKHUHSURGXFWLRQSURFHVVPRUHVWURQJO\
WKDQWKHSK\VLFVLWVHOILIZHDUHGHDOLQJZLWKERQDILGHVHOIUHSUR
GXFWLRQ
&KULVWRSKHU/DQJWRQ 6HOI5HSURGXFWLRQLQ&HOOXODU$XWRPDWD 3K\VLFD'
S

7KHSUREOHPZHUXQLQWRZLWK5XOH7ZRLVWKDWZHPXVWVWDUW
PDNLQJ DVVXPSWLRQV LQ RUGHU WR HYHQ GHILQH 3+<6 7KHVH
DVVXPSWLRQVFDQVRPHWLPHVEHMXVWLILHGDQGVRPHWLPHVWKH\FDQ
QRWGHSHQGLQJRQKRZPXFKZHNQRZDERXWWKHFUHDWLRQRIWKH
SK\VLFDOUXOHVLQTXHVWLRQ
,QWKHFDVHRI/DQJWRQVDXWRPDWRQZHFDQVD\DORWDERXWWKH
FUHDWLRQRIWKHUXOHVDQGWKHUHLVDIDLUO\VWUDLJKWIRUZDUGZD\WR
GHILQH3+<66LQFHWKHWUDQVLWLRQUXOHVIRUDFHOOXODUDXWRPDWRQ
DUHGLVFUHWHDQGZHOOXQGHUVWRRGZHFDQFDOFXODWHKRZPDQ\VHWV
RIWUDQVLWLRQUXOHVDUHSRVVLEOH/LNHZLVHZHFDQLPSRVHDFRQGL
WLRQ RQ WKH UXOHV DQG VHH KRZ WKDW UHVWULFWV WKH SRVVLELOLWLHV ,Q
/DQJWRQV V\VWHP WKHUH DUH HLJKW SRVVLEOH VWDWHV SHU FHOO 2QH
VSHFLILHVDUXOHDV
FWUEO F

ZKHUHFWUEDQGOVWDQGIRUFHQWHUWRSULJKWERWWRPDQGOHIW
UHVSHFWLYHO\DQGFLVWKHQHZFHQWHUVWDWH)RUH[DPSOHWKHUXOH

PHDQVWKDWDVWDWHZLWKDDDQGWZRVIRUQHLJKERUVZLOOWXUQ
LQWRD
)RUHLJKWVWDWHVSHUFHOOLWLVIDLUO\HDV\WRVHHWKDWWKHUHDUH
WUDQVLWLRQUXOHVLQDOODQGHLJKWSRVVLELOLWLHVIRUHDFKUXOH
7KXVWKHUHDUHDWRWDORISRVVLEOHGLIIHUHQWVHWVRIUXOHV,I
ZHWDNHLWDVJLYHQWKDWWKHUXOHVDUHURWDWLRQDOO\V\PPHWULFVRWKDW
FWUEOJLYHVWKHVDPHUHVXOWDVFOWUEHWFWKDWUHGXFHVWKHQXPEHU
RISRVVLELOLWLHVWR:KHQ/DQJWRQGHVLJQHGKLVDXWRPDWRQKH
VSHFLILHGUXOHV7RGHILQH3+<6LQWHUPVRIHQWURS\ZH
ZULWH
3+<6 6/DQJWRQ6SHFLILFDWLRQ

,QHVVHQFHWKHLQIRUPDWLRQFRQWHQWRIWKHSK\VLFVLVHTXDOWRPLQXV
WKHFKDQJHLQHQWURS\DVDUHVXOWRIVSHFLI\LQJUXOHV7KDWLV
HDV\WRFDOFXODWHVLQFHWDNLQJN%

68QVSHFLILHG OQ

66SHFLILHG OQ

DQG
7KXV
3+<6 OQ

7KLVLVDKXJHQXPEHUFRPSDUHGWR,1675 VR5XOH7ZR

GRHVQRWKROGDWDOOIRU/DQJWRQVDXWRPDWRQ,QIDFWZHPLJKWKDYH
VXVSHFWHGWKDWVLQFH/DQJWRQVSHFLILFDOO\GHVLJQHGWKHWUDQVLWLRQ
UXOHVWRPDNHKLVDXWRPDWRQZRUN+HGLGQRWVWDUWZLWKDSXUHO\
DUELWUDU\ VHW RI UXOHV DQG WU\ WR GHVLJQ DQ DXWRPDWRQ WKDW FRXOG
UHSURGXFHZLWKRXWWRXFKLQJWKHUXOHV7KXVZHVKRXOGQWEHWRR
VXUSULVHGWRILQGWKDW/DQJWRQVUXOHVKDYHDFRQVLGHUDEOHLQIRUPD
WLRQFRQWHQW
$ VLPLODU DQDO\VLV VKRZV WKDW ERWK %\OV DXWRPDWD DQG RXU
PLQLPDODXWRPDWRQGLVPDOO\IDLO5XOH7ZR2QO\ZKHQZHEDFN
XS DQG VWDUW ORRNLQJ DW DXWRPDWD DV FRPSOH[ DV &RGGV RU 9RQ
1HXPDQQVXQLYHUVDOFRQVWUXFWRUVGRZHILQGFRQILJXUDWLRQVWKDW
PLJKWEHDEOHWRVWDQGXSWRDWHVWOLNH5XOH7ZR
<HWWKHUHDOSUREOHPZHKDYHZLWK5XOH7ZRLVQRWWKDWLWSRLQWV
XSSUREOHPVZLWKWKHDXWRPDWDZHYHEHHQGLVFXVVLQJ5DWKHUZH
KDYHVWHSSHGDZD\IURPRXUYHU\QDUURZGHILQLWLRQRIPHDQLQJIXO
LQIRUPDWLRQ LQWR SKLORVRSKLFDO TXLFNVDQG /HW PH LOOXVWUDWH :H
MXVW JRWGRQHDVVXPLQJWKDWWKHUXOHVIRUWKHFHOOXODUDUUD\ZHUH
URWDWLRQDOO\V\PPHWULF7KDWVHHPVUHDVRQDEOHLIZHZDQWWKHDUUD\
WRPRGHOWKHURWDWLRQDOO\V\PPHWULFUHDOZRUOGKRZHYHUWKHUHLV
QRDSULRULUHDVRQWRDVVXPHLW,IZHGRQRWWKHQ/DQJWRQZRXOG
KDYH VSHFLILHG DERXW [ UXOHV LQVWHDG RI MXVW DQG WKH
LQIRUPDWLRQFRQWHQWRIWKHSK\VLFVZRXOGMXPSWR[$JDLQ
WKHUH LV QRDSULRULUHDVRQWKDWRQO\QHDUHVWQHLJKERUVDIIHFWWKH
WUDQVLWLRQUXOHV,IFRUQHUVDOVRKDYHDEHDULQJRQWKHPZHPXVW
ORRNDWUXOHVRIWKHIRUP
FWUEOTTTTF

DQGWKHUHDUHQRZ PLOOLRQSRVVLEOHUXOHV/DQJWRQVUXOHV
WKHQ VLQJOH RXW WKH FRUQHUVGRQWFRXQW UXOHV DV ZHOO FDXVLQJ
DQRWKHUODUJHMXPSLQ3+<6&RQWLQXLQJVXFKDUJXPHQWVWRWDNH
LQPRUHDQGPRUHSRVVLELOLWLHVLWDSSHDUVZHFRXOGSXVK3+<6
MXVWDERXWDVKLJKDVZHGOLNH$QGZLWKRXWDSUHFLVHZD\WRSXWD
OLPLWRQ3+<65XOH7ZRZRXOGDSSHDUWREHRITXHVWLRQDEOH
YDOXH
<HW LW LV QRW PHDQLQJOHVV ,Q /DQJWRQV FDVH HYHQ D YHU\
V\PSDWKHWLFDWWHPSWWRGHILQH3+<6JDYHXVDELJQXPEHUDQG
TXLWH FRUUHFWO\ OHG XV WR WKH FRQFOXVLRQ WKDW /DQJWRQ FKRVH WKH
WUDQVLWLRQUXOHVWRPDNHDVPDOODXWRPDWRQZRUN7KXVRXUDQDO\VLV
VWURQJO\ VXJJHVWV WKDW HYHQ WKRXJK /DQJWRQV DXWRPDWRQ GRHV
PDQLSXODWHLQIRUPDWLRQLWGRHVQRWPDQLSXODWHQHDUO\HQRXJKWR
EHFRQVLGHUHGDVDFDVHRIERQDILGHVHOIUHSURGXFWLRQ,QHYHQWKH
PRVWV\PSDWKHWLFOLJKWRI5XOH7ZRWKHDXWRPDWRQDSSHDUVWREH
VWURQJO\ SK\VLFVGULYHQ DQG LQIRUPDWLRQ GULYHQ RQO\ WR D UHOD
WLYHO\VPDOOH[WHQW
,WPLJKWDSSHDUWKDWGHILQLQJ
3+<6 66SHFLILFDWLRQ68QVSHFLILHG

ZRXOGPDNHPRUHVHQVH7KDWPDNHVWKHWUDQVLWLRQUXOHLQIRUPDWLRQ
PRUHRIDFRQVWDQWTXDQWLW\ZKHQGHDOLQJZLWKDYDULDEOHVWDUWLQJ
SRLQW7KHQWKHSUREOHPEHFRPHVRQHRIGHILQLQJ,1675LQD
FRPSDWLEOH ZD\ 5XOH WZR ZLOO QHYHU ZRUN LI ZHUH FRPSDULQJ
DSSOHVDQGRUDQJHV
7KHSUREOHPZHIDFHKHUHLVWKHVDPHSUREOHPZHKDGZKHQ
ZHDVNHGZKHWKHUVRPHURFNKDGDORWRILQIRUPDWLRQFRQWHQWRU
QRW:HFRXOGQRWVD\ZLWKRXWPDNLQJVRPHDVVXPSWLRQVDERXWWKH
URFNDQGWKHQDWXUHRIWKHXQLYHUVH7KRVHDVVXPSWLRQVZHUHQRW
REMHFWLYHDQGYHU\XQVFLHQWLILFEXWZHKDGWRPDNHWKHPRQHZD\
RU WKH RWKHULI ZH ZHUH HYHQ JRLQJ WR EHJLQ DVNLQJ VFLHQWLILF
TXHVWLRQV,QWKHVDPHZD\ZHFDQQRWJHWDKDQGOHRQ 3+<6
ZLWKRXWPDNLQJDVVXPSWLRQV
,Q/DQJWRQVFDVHRXUFDOFXODWLRQVHHPVMXVWLILHGEHFDXVHZH
NQHZKHGHVLJQHGWKHUXOHVWRPDNHWKHDXWRPDWRQZRUNDQGZH
NQHZ KH DVVXPHG QHDUHVW QHLJKERU LQWHUDFWLRQV ZLWK URWDWLRQDO

V\PPHWU\ *HQHUDOO\ VSHDNLQJ ZH FDQ PDNH VRPH VHQVH RI

3+<6LIZHNQRZVRPHWKLQJRIWKHRULJLQRIWKHWUDQVLWLRQUXOHV
,I ZH GR QRW NQRZ WKH RULJLQ RI WKH UXOHV GHILQLQJ 3+<6
EHFRPHVPXFKPRUHGLIILFXOW
,QSDUWLFXODUZHZLOOKDYHDKDUGWLPHGHWHUPLQLQJZKHWKHU
,1675!3+<6 IRU UHDOZRUOG FDUERQEDVHG RUJDQLVPV
:LWKRXW VRPH NLQG RI VXSHUPRGHO IRU WKH SK\VLFDO ODZV RI RXU
XQLYHUVHDPRGHOWKDWWHOOVXVZKDWVHWVRIODZVDUHHYHQSRVVL
EOHLWV UDWKHU GLIILFXOW WR GHILQH 3+<6 'R ZH VWDUW ZLWK
FDUERQFKHPLVWU\"ZLWKEDVLFFKHPLVWU\"ZLWKHOHPHQWDU\SDUWLFOH
SK\VLFV" RU ZLWK TXDQWXP JUDYLW\" $QG LI ZH FDQW VKRZ
,1675!3+<6IRUDELRORJLFDORUJDQLVPLWVHHPVXQIDLUWR
PDNHVXFKDUHTXLUHPHQWIRUDUWLILFLDORUJDQLVPV
$Q\ZD\ZHWU\WRJHWRXUKDQGVRQ3+<6IRURXUXQLYHUVH
ZHPXVWPDNHVRPHSKLORVRSKLFDODVVXPSWLRQV/HWVFRQVLGHURQH
VXFKDVVXPSWLRQDQGKRZLWZLOODIIHFWRXUSHUVSHFWLYHRQ5XOH
7ZR:HPLJKWGHFLGHWKDWHLWKHUWKHZRUOGZDVGHVLJQHGVSHFLIL
FDOO\WRVXSSRUWOLIHRULWZDVQRW,IWKHZRUOGZDVGHVLJQHGWR
VXSSRUWOLIHWKLVPLJKWKDYHEHHQGRQHLQDQXPEHURIZD\V)RU
H[DPSOH*RGPLJKWKDYHVHWWKHXQLYHUVHXSZLWKWKHLQWHQWLRQRI
PDNLQJXVIURPWKHEHJLQQLQJ2UWKHVWURQJDQWKURSLFSULQFLSOH
PLJKWKDYHEHHQDWZRUN7KLV SULQFLSOH VXJJHVWVWKDWWKHUHDUH
PDQ\XQLYHUVHVEHLQJFUHDWHGFRQWLQXRXVO\ZLWKDOOGLIIHUHQWODZV
:HOLYHLQRQHZLWKWKHULJKWODZVEHFDXVHRQO\VXFKDXQLYHUVHFDQ
VXSSRUWOLIHRQHWKDWFRXOGQRWVXSSRUWOLIHFRQWDLQVQRFRQVFLRXV
OLIH WR REVHUYH WKH ODZV LQ LW 7KH SUREOHP ZLWK WKLV DQWKURSLF
SULQFLSOHLVWKDWZHFDQQHYHUREVHUYHDOOWKRVHRWKHUXQLYHUVHV$V
VXFKLWLVUHDVRQDEOHWRVXJJHVWWKDWWKH\GRQRWHYHQUHDOO\H[LVW
DW ZKLFK SRLQW WKH VWURQJ DQWKURSLF SULQFLSOH EHFRPHV D VRUW RI
LQWHOOLJHQWFUHDWLQJJRGLQLWVHOI(LWKHURIWKHVHDSSURDFKHVWKHUH
IRUHDUJXHIRUDSRVVLEO\TXLWHODUJHQRQ]HUR3+<6IRUWKH
UHDOZRUOG
, XVH TXRWHV EHFDXVH D[LRP RU DVVXPSWLRQ ZRXOG EH D EHWWHU ZRUG
3ULQFLSOH VXJJHVWVSULRUDVVHQWWRWKHSKLORVRSK\EHKLQGWKHD[LRP

$QDOWHUQDWLYHLVWRVXJJHVWWKDWWKHUHLVVRPHORJLFDOQHFHVVLW\
IRUWKHSK\VLFDOFRQVWDQWVHWFEHLQJZKDWWKH\DUH7KDWLVLIZH
KDGDILQDODQGH[DFWSK\VLFDOWKHRU\LWZRXOGH[SODLQPXFKPRUH
DERXW WKH ODZV RI WKH XQLYHUVH WKDQ ZH NQRZ WRGD\ $OO RI WKH
DSSDUHQWDUELWUDULQHVVZRXOGEHWDNHQRXWRIWKHV\VWHPDQGWKH
ODZVRISK\VLFVZRXOGEHWKHRQO\WKLQJWKH\FDQEH7KLVGLIIHUV
IURPWKHVWURQJDQWKURSLFSULQFLSOHLQWKDWLWGRHVQRWPDNHUHIHU
HQFHWROLIHDQGFRQVFLRXVQHVV7KHORJLFRQO\LQYROYHVWKHPLFUR
VFRSLFODZVRISK\VLFV8QGHUVXFKDQDUUDQJHPHQW,VXSSRVHRQH
FRXOGDUJXHIRU 3+<6 +RZHYHUWKHSK\VLFVZHNQRZWRGD\
LVDORQJORQJZD\IURPPDNLQJDQ\VXFKDUJXPHQW
)LQDOO\ZHPLJKWVXJJHVWWKDWWKHODZVRISK\VLFVDUHHLWKHU
WKHUHVXOWRIEOLQGFKDQFHRUWKDW*RGFUHDWHGWKRVHODZVZLWKRXW
WKHVSHFLILFLQWHQWLRQRIFUHDWLQJOLIH,QHLWKHURIWKHVHFDVHVRQH
PLJKWDUJXHWKDW5XOH7ZRFDQWUHDOO\EHDSSOLHG
6R LQ WKH HQG ZH GRQW NQRZ HQRXJK WR JHW D KDQGOH RQ
3+<6IRUWKHUHDOZRUOGRUWRGHFLGHZKHWKHUZHVKRXOGWU\WR
DSSO\5XOH7ZRRUQRW7KHVLWXDWLRQLVGLIIHUHQWIRUDQ\DUWLILFLDO
OLIHZHPLJKWGHVLJQRQDFRPSXWHUVLPSO\EHFDXVHLWPDNHVVHQVH
WRORRNEHKLQGWKHVFHQHVWRVHHKRZWKH SK\VLFV ZDVGHVLJQHG
DQGH[DPLQHWKHDOWHUQDWLYHV7KXV5XOH7ZRPDNHVVRPHVHQVH
IRUDUWLILFLDOOLIHHYHQWKRXJKZHFDQWWDFNOHLWIRURUJDQLFOLIH:H
ILQGRXUVHOYHVLQWKHVWUDQJHSRVLWLRQRIPDNLQJUXOHVIRUDUWLILFLDO
RUJDQLVPVWKDWZHFDQQRWHYHQEHJLQWRWDFNOHIRUUHDOOLYHRQHV
7ZRFRPPHQWVDUHLQRUGHUKHUH:HQHHGQRWYLHZWKLVXQXVXDO
SUHGLFDPHQWDVEDG$IWHUDOOLWLVRXUJRDOWREHWWHUXQGHUVWDQGUHDO
OLIH E\ VWXG\LQJ DUWLILFLDO OLIH VR SHUKDSV WKH DELOLW\ WR DQDO\]H
DUWLILFLDOZRUOGVPRUHWKRURXJKO\WKDQWKHUHDOZRUOGZLOOLQWKHHQG
JLYHXVVRPHZLVGRPDERXWWKHUHDOZRUOG:HVKRXOGYLHZ
5XOH7ZRDVWHQWDWLYH&HUWDLQO\WKDWZRXOGEHLQNHHSLQJZLWKWKH
VSLULWRIRXUWHQWDWLYHDSSURDFKLQGLYLGLQJOLIHIURPQRQOLIHLQWKH
ILUVWSODFH:HDUHVWLOOYHU\PXFKWKHFKLOGRQWKHVHDVKRUHSLFNLQJ
XSVWRQHVKHUHDQGWKHUH:HKDYHQRLGHDZKDWWUHDVXUHVWKDWRFHDQ
PD\FRQWDLQEXWZHPD\SRQGHUDIHZWKDWZDVKXSKHUHDQGWKHUH
,Q WKH UHDOP RI $/ ZH KDYH DOUHDG\ H[DPLQHG WKH FDVH RI
LQWHQWLRQDOGHVLJQZKHUHWKHUXOHVDUHGHVLJQHGZLWKWKHLGHDRI
JHWWLQJWKHDXWRPDWRQWRZRUN7KDWLVFOHDUO\/DQJWRQVDXWRPD
WRQ,WLVDOVRWUXHRIPRVWRIWKHVLPSOHUDXWRPDWD7KHIDFWWKDW

3+<6!,1675 JLYHV XV VRPH FOXHV DV WR KRZ WKH\ ZHUH
GHVLJQHG , GR QRW NQRZ DOO WKH GHWDLOV DERXW VRPH RI WKH RWKHU
DXWRPDWDEXW,FDQVD\WKDW,GHVLJQHG0,1,0$/E\ILUVWGUDZLQJ
WKHDXWRPDWRQDQGDOLNHO\VHTXHQFHRIVWHSVWRJHWLWWRUHSURGXFH
7KHQ,ZRUNHGRXWZKDWWUDQVLWLRQUXOHVZRXOGEHQHHGHGWRPDNH
WKDWZRUN([DFWO\KRZ5XOH7ZRZRXOGVXJJHVWLWKDSSHQHG
:HFDQDOVRFRQVLGHUDXWRPDWDZKHUHWKHFRQQHFWLRQEHWZHHQ
WKHGHVLJQRIWKHUXOHVDQGWKHGHVLJQRIWKHDXWRPDWRQLVVHYHUHG
+HUH,DPQRWWDONLQJDERXWSLFNLQJUXOHVUDQGRPO\EXWDERXWXVLQJ
UXOHVWKDWZHUHGHYHORSHGTXLWHDSDUWIURPDQ\GHVLUHWRIDFLOLWDWH
DUWLILFLDOOLIH$UWLILFLDOOLIHLQVXFKDQHQYLURQPHQWLVSHUKDSVDW
OHDVWRQHVWHSUHPRYHGIURPEHLQJDSXUHFRQWULYDQFHLQWKDWWKH
WUDQVLWLRQUXOHVZHUHQWGHVLJQHGWRPDNHLWZRUN&RPSXWHUYL
UXVHVDUHDQH[FHOOHQWH[DPSOHRIVXFKDVLWXDWLRQ(DUO\FRPSXWHU
RSHUDWLQJV\VWHPVOLNH06'26ZHUHQRWGHVLJQHGWRHLWKHUKHOS
YLUXVHVRUKLQGHUWKHP1RERG\ZULWLQJWKRVHRSHUDWLQJV\VWHPV
KDG \HW WKRXJKW RI YLUXVHV VR WKH\ GLGQW SODQ IRU WKHP <HW LW
WXUQHGRXWWKDWYLUXVHVFRXOGWKULYHLQVXFKDQHQYLURQPHQW
,QUHWURVSHFWLIZHZHUHWRDSSO\5XOH7ZRWRYLUXVHVPDQ\
RIWKHPZRXOGFRPHXSODFNLQJ)RUH[DPSOHPRVWILOHLQIHFWLQJ
YLUXVHVXVH'26V6HDUFK)LUVW6HDUFK1H[WIXQFWLRQVWRORFDWH
QHZILOHVWRLQIHFW6XFKVHDUFKFDOOVW\SLFDOO\WDNHXSDGR]HQRU
VR E\WHV LQ D YLUXV WKDW PD\ RQO\ EH E\WHV ORQJ <HW WKHVH
IXQFWLRQVDFFHVVWKHGLVNWKURXJK,QWHUUXSW+DQGPDNHVHQVHRI
WKHVHFWRUVE\XVLQJ'26VORZOHYHOILOHV\VWHPIXQFWLRQV7KH
'26FRGHDQGWKH,QWHUUXSW+FRGHWRGRDOORIWKLVPLJKWEH
RUNLORE\WHV$OORILWLVWDNHQDVEHLQJDJLYHQSDUWRIWKHSK\VLFV
RIWKHV\VWHP,WREYLRXVO\FRQWDLQVDORWPRUHLQIRUPDWLRQWKDQWKH
YLUXVLWVHOI,IWKHYLUXVGLGQRWKDYHWKHVHFRQYHQLHQWIXQFWLRQVDW
LWVGLVSRVDOLWZRXOGKDYHWREHDPLQLPXPRIRUNLORE\WHV
ORQJ 1RQH WKHOHVVZHFDQRQO\VD\WKHYLUXVZDVFRQWULYHGWR
H[SORLWWKHRSHUDWLQJV\VWHP:HFDQWVD\WKDWWKHRSHUDWLQJV\VWHP
ZDVGHVLJQHGWRPDNHWKHYLUXVZRUN
,QVKRUW5XOH7ZRVHHPVWRWHOOXVVRPHWKLQJLPSRUWDQWDERXW
VHOIUHSURGXFLQJDXWRPDWD\HWLWLVOHVVWKDQDVDWLVI\LQJUXOHIRU
WKHVFLHQWLVW,WWHOOVXVWRWUHDGVRIWO\LQVRPHDUHDVDQGEHZDUHRI
WKH IDFW WKDW ZH FDQ LQMHFW LQIRUPDWLRQ LQWR D V\VWHP YLD WKH
WUDQVLWLRQUXOHV,WKHOSVXVQRWWRUHO\RQDSSHDUDQFHVZKHQGHFLG

LQJ ZKHWKHU RU QRW VRPHWKLQJ LV VHOIUHSURGXFLQJ $IWHU DOO

ORRNLQJDWVRPHDXWRPDWRQDQGVD\LQJLWLVVHOIUHSURGXFLQJPHUHO\
EHFDXVHLWORRNVOLNHDPXOWLSO\LQJFHOOXODUEORELVWRWDOO\XQVFLHQ
WLILF:HQHHGVRPHTXDQWLWDWLYHZD\WRXQGHUVWDQGWKHFRXSOLQJ
EHWZHHQWKHSK\VLFVRIDV\VWHPDQGDQ\VHOIUHSURGXFLQJDXWRPDWD
WKDWPD\OLYHLQWKDWV\VWHP
<HW ZH ZRXOG OLNH D PRUH V\VWHPDWLF DQG LQYDULDQW ZD\ WR
GHILQH3+<6*LYHQWKDWZHFRXOGDVVLJQDFRQFUHWHQXPEHU
WRDVHWRIWUDQVLWLRQUXOHVDQGDSSO\5XOH7ZRDFURVVWKHERDUG,
GRQW WKLQN WKLV LV RXWVLGH WKH UHDO RI SRVVLELOLW\ DOWKRXJK LW LV
RXWVLGHWKHVFRSHRIWKLVERRN,QRUGHUWRGRLWZHPLJKWQHHGDQ
LGHD RI LQIRUPDWLRQ LQ WKH WUDQVLWLRQ UXOHV WKDW JRHV EH\RQG RXU
VLPSOLVWLFHQWURS\DSSURDFK
$XWRQRP\
,WKDUGO\VHHPVDSSURSULDWHWRGLVFXVVWKHSKLORVRSK\RIOLIHLQ
WKHFRQWH[WRIFRPSXWHUYLUXVHVDQGIDLOWRPHQWLRQDXWRQRP\$IWHU
DOOFRPSXWHUYLUXVHVDUHWKHRQO\IRUPRI$/WKDWKDVVXFFHVVIXOO\
JRWWHQDZD\ IURPWKHLUFUHDWRUVDQGHVWDEOLVKHGDSRSXODWLRQLQ
WKH ZLOG ,I VXGGHQO\ DOO NQRZOHGJH RI KRZ WR ZULWH FRPSXWHU
YLUXVHVZHUHVLPSO\HUDVHGIRUPWKHPLQGVRIDOOZKRKDGLWZHG
VWLOOKDYHYLUXVHVIRUDORQJWLPHWRFRPH
7KHLGHDRIOLIHKDVDOZD\VEHHQFORVHO\UHODWHGWRDXWRQRP\
DQG\HWRQHFDQQRWVD\WKDWOLYLQJRUJDQLVPVDUHVRPHKRZVHOIVXI
ILFLHQW LQ JHQHUDO $ OLYLQJ RUJDQLVP LV QRUPDOO\ GHSHQGHQW RQ
RWKHU RUJDQLVPV IRU LWV VXUYLYDO )RU H[DPSOH WKH HQWLUH DQLPDO
NLQJGRPLVGHSHQGHQWRQWKHSODQWNLQJGRPWRFRQYHUWVRODUHQHUJ\
LQWRXVHIXOELRFKHPLFDOHQHUJ\:LWKRXWSODQWVDQLPDOVFRXOGQRW
VXUYLYH6RDOODQLPDOOLIHLVGHSHQGHQWRQRWKHUIRUPVRIOLIHIRU
LWVYHU\H[LVWHQFH
<HWOLYLQJRUJDQLVPVDUHDSSDUHQWO\DXWRQRPRXVLQWKHVHQVH
RIEHLQJVHOIJRYHUQLQJRURIIXQFWLRQLQJLQGHSHQGHQWO\ZLWKRXW
WKHGLUHFWFRQWURORIRWKHUV,KDYHDQLJXDQDDVDSHW7KRXJKLWV
GHSHQGHQWRQPHWRIHHGLWHWFLWGHILQLWHO\KDVDPLQGRILWVRZQ
,WLVDQHVFDSHDUWLVWSDUH[FHOOHQFH,WZLOOWU\WRELWHPHZKHQLW
IHHOVOLNHLW,ZRXOGSUHIHUVRPHRIWKHVHKDELWVWREHGLIIHUHQW$QG
FHUWDLQO\DFKDQJHZRXOGEHQHILWKLP,IKHHYHUGRHVHVFDSHKH
ZRQWVXUYLYHZHOOLQP\FOLPDWH%XWKHZLOOQRWFKDQJH
:HPLJKWYLHZYLUXVHVLQDVLPLODUOLJKW&HUWDLQO\WKH\DUH
GHSHQGHQWRQXVWRWKHH[WHQWWKDWZHWXUQRQRXUFRPSXWHUVDQG
H[HFXWHSURJUDPV<HWWKH\VHHPWRKDYHPLQGVRIWKHLURZQDV

HYLGHQFHGE\WKHIDFWWKDWWKH\RIWHQGRWKLQJVZHZRXOGQRWKDYH
WKHPGR2QHPLJKWDUJXHWKDWWKLVDXWRQRP\LVRQO\DQDSSHDUDQFH
VLQFHZHFDQGLVDVVHPEOHWKHPDQGXQGHUVWDQGH[DFWO\ZKDWWKH\
GRZKHQDQGZK\+RZHYHUZHVKRXOGUHPHPEHUWKDWPD\EHRQO\
RIWKHZRUOGVSRSXODWLRQFDQGRWKDW7RWKHRWKHUWKH
EHKDYLRURIDYLUXVLVMXVWDVP\VWHULRXVDVWKHEHKDYLRURIDQLJXDQD
, ZRQW EHODERU WKH SRLQW $XWRQRP\ KDV OLWWOH WR GR ZLWK
DQ\WKLQJZHOOGLVFXVVKHUHDIWHU1RQHWKHOHVVDVHOIUHSURGXFLQJ
DXWRPDWRQWKDWPHUHO\H[LVWVLQDQH[SHULPHQWHUVFRPSXWHUIRUD
OLPLWHGWLPHDQGWKHQYDQLVKHVGRHVQWFRPHFORVHWRDQ\LGHDRI
DXWRQRP\ZKHUHDVDYLUXVGRHV
6R$UH9LUXVHV$OLYH"
$IWHUVXUYH\LQJVRPHRIWKHSKLORVRSKLFDOSUREOHPVDVVRFLDWHG
ZLWKFDOOLQJVRPHWKLQJ DOLYH ZHFDQVHHMXVWKRZVKDOORZDQ\
DWWHPSWVWRGHILQHOLIHPHFKDQLFDOO\DUH+RZVLOO\LWLVWRVSHFLI\
DKDOIGR]HQRUVRIXQFWLRQDOSURSHUWLHVDQGVD\VRPHWKLQJLVDOLYH
EHFDXVHLWKDVWKRVHSURSHUWLHV$VVRRQDVZHEHJLQWRWHDUDWVXFK
GHILQLWLRQVZLWKWKHSRLQWHGNQLIHRISKLORVRSK\WKH\FRPHULJKW
DSDUW:HVHHWKHSKLORVRSKLFDOSUHVXPSWLRQVWKDWJRLQWRPDNLQJ
WKHVH GHILQLWLRQV DQG ZH VHH WKH SKLORVRSKLFDO FRQVHTXHQFHV RI
WU\LQJ WR GHILQH OLIH SUHFLVHO\ $QG PRVW RI WKLV SKLORVRSK\ LV
XQIDWKRPDEOHZLWKWKHWRROVRIVFLHQFH
6RDIWHUORRNLQJDWVRPHRIWKHGHHSSKLORVRSKLFDOSUREOHPV
LQYROYHGLQRXUJUDQGTXHVWLRQKRZGRYLUXVHVVWDQG"
(PHUJHQW%HKDYLRU
:HFDQGHVLJQDYLUXVZLWKDOOWKHPHFKDQLFDODVSHFWVRIOLIH
DVODLGRXWLQ3DUW,'RHVWKDWPDNHLWDFWXDOO\DOLYH"&HUWDLQO\LI
VWURQJHPHUJHQWEHKDYLRULVQHFHVVDU\IRUOLIHWKHQDYLUXVLVQRW
DOLYHDQGQRPDWWHUKRZKDUGZHZRUNDWLWLWZLOOQHYHUEHDOLYH
$IWHU DOO D YLUXV LV D SURJUDP DQG RXU LGHD RI VWURQJ HPHUJHQW
EHKDYLRU FHQWHUHG DURXQG WKH SRVVLELOLW\ WKDW VRPH G\QDPLFDO
V\VWHPVFRXOGQRWEHPRGHOHGE\DQ\UHDOZRUOGFRPSXWHUSURJUDP
QRZRULQWKHIXWXUH
,QWHUPVRIUHDOVFLHQFH,WKLQNVWURQJHPHUJHQWEHKDYLRULVDQ
LPSRUWDQW FRQVLGHUDWLRQ WKRXJK LW JRHV DJDLQVW WKH QRZSRSXODU
FRQFHSWLRQ RI VFLHQFH DV D JUDQG SDUDGLJP IRU DOO NQRZOHGJH
,QVWHDGLWDFNQRZOHGJHVWKHOLPLWVRQRXUDELOLW\WRFDOFXODWHDQG

NQRZRXUZRUOG%XW\RXZLOOILQGDVWURQJWUDGLWLRQRIDFNQRZ
OHGJLQJVXFKOLPLWVDPRQJVXFFHVVIXOVFLHQWLVWVRYHUWKHFHQWXULHV
VR,GRQRWDSRORJL]HIRUSUHIHUULQJDQROGHUWUDGLWLRQRYHUPRGHUQ
DUURJDQFH
&DUERQEDVHGOLIHPDNHVDVHULRXVFODLPWRVWURQJHPHUJHQW
EHKDYLRU &RPSXWHUEDVHG VLPXODWLRQV YLUXVHV LQFOXGHG VLPSO\
FDQWPHDVXUHXS7KHGLIIHUHQFHLVIXQGDPHQWDO6WURQJHPHUJHQW
EHKDYLRULVDQLPSHQHWUDEOHEDUULHUWRGRLQJH[DFWLQJFDOFXODWLRQV
7KDW EDUULHU NHHSV GHWHUPLQLVWLF VFLHQFH IURP FRQTXHULQJ OLIH
&RQFHSWVOLNHIUHHZLOODUHOHJLWLPDWHEHFDXVHRIWKDWEDUULHU7KH
EHKDYLRU RI D OLYLQJ RUJDQLVP FDQQRW EH GHWHUPLQHG IURP EDVLF
SK\VLFVVRIUHHZLOOLVIRUDOOSUDFWLFDOSXUSRVHVUHDOL]HG
$FRPSXWHUEDVHGVLPXODWLRQLVIXQGDPHQWDOO\GHWHUPLQLVWLF
HYHQLILWXVHVDSVHXGRUDQGRPQXPEHUJHQHUDWRURUVRPHVXFK
DOJRULWKPWRDOWHULWVEHKDYLRULQDUHODWLYHO\XQSUHGLFWDEOHZD\,W
FDQ QHYHU H[KLELW WKLV HOXVLYH TXDOLW\ ZH FDOO IUHH ZLOO ,WV
EHKDYLRULVSUHGLFWDEOHDWOHDVWLQWKHRU\
2IFRXUVHVWURQJHPHUJHQWEHKDYLRULVQRWDZHOOHVWDEOLVKHG
IDFW 5LJKW QRZ LW LVVSHFXODWLYH,VLWUHDO"&RXOGLWEHGHPRQ
VWUDWHGVRPHKRZ"2ULVWKHZRUOGPLFURVFRSLFDOO\GHWHUPLQLVWLF
LQWKHHQG)URPWRGD\VSHUVSHFWLYHLWZRXOGVHHPWKDWDQVZHULQJ
VXFKTXHVWLRQVLVQRWSRVVLEOHXVLQJVFLHQFHDORQH$WOHDVWVRPH
SKLORVRSKLFDOSUHVXSSRVLWLRQVDUHQHFHVVDU\<HWWKHVDPHFRXOGEH
VDLGRITXDQWXPXQFHUWDLQWLHV
6RLQDVHQVHLI\RXFKRRVHWREHOLHYHWKDWOLYLQJRUJDQLVPV
DUHGHWHUPLQLVWLFDQGH[KLELWRQO\ZHDNO\HPHUJHQWEHKDYLRUWKHQ
\RX FDQ DUJXH WKDW WKH ULJKW NLQG RI VHOIUHSURGXFLQJ DXWRPDWD
LQFOXGLQJ YLUXVHV DUH DFWXDOO\ DOLYH 2Q WKH RWKHU KDQG LI \RX
FKRRVHWREHOLHYHWKDWOLYLQJRUJDQLVPVH[KLELWVWURQJO\HPHUJHQW
EHKDYLRUDQGDVDUHVXOWPD\H[KLELWSKHQRPHQDZKLFKWKHPLFUR
VFRSLF ODZV RI SK\VLFV FDQQRW H[SODLQ WKHQ \RX FDQ DUJXH WKDW
YLUXVHVFDQQRWEHDFWXDOO\DOLYH8QOHVVVFLHQWLVWVDUHDJUHHGRQWKH
XQGHUO\LQJDVVXPSWLRQVWKRXJKDJUHHPHQWLVQRWOLNHO\WREHKDG
3HUKDSVWKLVFRQFOXVLRQLVVRPHZKDWGLVDSSRLQWLQJWR\RXGHDU
UHDGHU:HVWDUWHGRXWZLWKWKHGHVLUHWRGHWHUPLQHZKHWKHURUQRW
YLUXVHVDUHDOLYH,QWKHHQGZHILQGWKDWFUXFLDOHOHPHQWVRIWKH
DQVZHUWRWKDWTXHVWLRQGHSHQGVLPSO\RQZKDW\RXEHOLHYHGWRVWDUW
6R$UH9LUXVHV$OLYH"

RXWZLWK$OOWKHVRSKLVWLFDWHGDQDO\VLVLQWKHZRUOGUHDOO\ZRQW
UHVROYHLW
,UHDOL]HP\GLVFXVVLRQRIWKHZKROHTXHVWLRQ ,VLWDOLYH" PD\
EH VRPHZKDW FUXGH ,YH IDLOHG WR ILQG DQ\ VHQVLEOH DQG KRQHVW
GLVFXVVLRQRIWKHVRUWLQERRNVDQGMRXUQDOVVR,YHWULHGWRWDNH
ZKDWOLWWOH,FRXOGILQGUHDGEHWZHHQWKHOLQHVDQGXQGHUVWDQGWKH
PDWWHU ZLWK DQ H\H WR EHLQJ WUXH WR 7UXWK $QG WKRXJK SHUKDSV
VRPHZKDWURXJK,WKLQNZKDW,YHVDLGZLOOQRWEHVLJQLILFDQWO\
PRGLILHG E\ D PRUH HUXGLWH \HW XQSUHMXGLFHG GLVFXVVLRQ RI WKH
PDWWHU7RZLW,GRQRWEHOLHYHWKDWPHUHREVHUYDWLRQDQGORJLF
WKHWRROVRIVFLHQFHZLOOHYHUJHWXVSDVWWKHJODULQJSKLORVRSKLFDO
ZDOOVZHIDFH
7KHUHIRUHDOOZHFDQGRLVWRDOORZRXUGLVDSSRLQWPHQWWRJURZ
LQWRKXPLOLW\DQGZLVGRP$V,VDLGHDUOLHUPDQ\VFLHQWLVWVIDOOLQWR
WKH WUDS RI SXUVXLQJ D SKLORVRSKLFDOO\ FRUUHFW SURJUDP RI UH
VHDUFK ZLWKRXW HYHU XQGHUVWDQGLQJ WKH SKLORVRSK\ EHKLQG ZKDW
WKH\UH GRLQJ 7KHQ ZKDW LV FRUUHFW FKDQJHV DQG WKHLU ZRUN
EHFRPHV LUUHOHYDQW :KDW ZH KDYH KHUH LV FDVH DQG SRLQW 7KH
GHWHUPLQLVWLF YLHZ RI OLIH LV SKLORVRSKLFDOO\ FRUUHFW IRU WRGD\V
VFLHQWLVW %XW WKDW GHEDWH KDV UDJHG IRU WKRXVDQGV RI \HDUV DQG
VKLIWHG EDFN DQG IRUWK DQG LW ZLOO FRQWLQXH WR GR VR )URP WKH
IRUHJRLQJGLVFXVVLRQ,WKLQN\RXFDQVHHWKDWWKHGHEDWHLVIDUIURP
EHLQJUHVROYHG7KHUHIRUH,DPFRQYLQFHGWKDWWRGRDQ\PHDQLQJIXO
DQGODVWLQJZRUNLQWKLVILHOGZHPXVWEHNHHQWRWKHSKLORVRSK\
DQGSDLQIXOO\DZDUHRIRXUOLPLWDWLRQV7KHUHLQOLHVRXUZLVGRP
$VIDUDVYLUXVHVJRZHPXVWDFNQRZOHGJHWKDWLQWKHVWURQJHVW
OLJKWWKH\IDOOVKRUWRIDFKLHYLQJOLIH,QDPRUHV\PSDWKHWLFOLJKW
WKH\PD\JDLQVXFKDWLWOHEXW,IRURQHSUHIHUWKHKDUVKHVWOLJKW
7KHUHDOORXUZHDNQHVVHVDUHH[SRVHGEXWZKDWHYHUVWLOODSSHDUV
VWURQJZLOODOZD\VEHVWURQJ7KDWLVWKHNH\
,I,LQVLVWWKDWYLUXVHVDUHDOLYHWKHQ,FDQRQO\ILQGDJUHHPHQW
ZLWKWKRVHZKRDFFHSWP\SKLORVRSKLFDODVVXPSWLRQV2QWKHRWKHU
KDQGLIZHVHWDVLGHWKHELJTXHVWLRQDVXQDQVZHUDEOHZLWKRXWSKL
ORVRSK\LWGRHVQRWPHDQZHFDQQRWOHDUQDQ\WKLQJDERXWOLIHIURP
YLUXVHV 7KH\ KDYH PDQ\ RI WKH PHFKDQLFDO SURSHUWLHV RI OLIH
7KHUHIRUHLWZRXOGVHHPHQWLUHO\UHDVRQDEOHWKDWZHPLJKWEHDEOH
WR FRPH WR D EHWWHU XQGHUVWDQGLQJ RI OLIH DQG KRZ LW ZRUNV E\
VWXG\LQJWKHVHPHFKDQLFDOSURSHUWLHVUHJDUGOHVVRISKLORVRSKLFDO

EHOLHIV:HPDNHQRFODLPWKDW$/ZLOOHYHUJLYHXVDFRPSOHWHRU
WRWDOXQGHUVWDQGLQJRIOLIHEXWLWRXJKWWREHDWOHDVWDSLHFHRIWKH
SX]]OH,IOLYLQJRUJDQLVPVH[KLELWVWURQJO\HPHUJHQWEHKDYLRUWKHQ
WKHPLFURVFRSLFODZVRISK\VLFVGRQRWJLYHXVVXIILFLHQWLQIRUPD
WLRQ WR FRPSOHWHO\ XQGHUVWDQG OLIH %XW WKDW GRHV QRW PHDQ ZH
FDQQRWXVHPLFURVFRSLFODZVWRXQGHUVWDQGFHUWDLQDVSHFWVRIOLIH
&HUWDLQO\WKLVDSSURDFKKDVDOUHDG\JLYHQVFLHQWLVWVDWUHPHQGRXV
DPRXQWRILQVLJKWLQWRWKHSURFHVVHVRIOLIH$QGWRWKHH[WHQWWKDW
VXFKDSURJUDPLVSRVVLEOH$/LVHQWLUHO\OHJLWLPDWHDQGYLUXVHV
DUHZRUWKZKLOHPRGHOVRIOLYLQJRUJDQLVPV
7KHUHLVDODUJHFXOWERWKLQWKH$/FRPPXQLW\DQGDPRQJ
ELRORJLVWVSURSHUZKLFKUHYROYHVDURXQGWKHLGHDRIFUHDWLQJOLIH
,QWKLVFXOWWKHDFWRIFUHDWLRQVHHPVWREHWKHJRDOUDWKHUWKDQPHUH
XQGHUVWDQGLQJ7KLVDFWRIFUHDWLRQLWZRXOGVHHPLVDVRUWRIZLOO
WRSRZHUDVXEOLPLQDODWWHPSWWRXVXUS*RGDQGSXWRQHVHOIRQ+LV
WKURQHDV&UHDWRU:HHVFKHZWKLVDOFKHPLFJRDODVWRRIUDXJKW
ZLWKQRQVFLHQWLILFGLIILFXOWLHVWKDWZHFDQQRWRYHUFRPHLWLVWRR
HDV\ WR UHGHILQH OLIH LQ D IDYRUDEOH ZD\LJQRULQJ WKH GLIILFXO
WLHVDQGWKHQFUHDWHZKDW\RXGHILQHDQGWKHQVD\ ,KDYH
FUHDWHGOLIH (YHQLIDELRORJLVWGRHVVRPHGD\VXFFHHGLQFUHDWLQJ
D FDUERQEDVHG DPRHED LQ D WHVWWXEH WKDW GRHV QRW PHDQ KH
XQGHUVWDQGVKLVFUHDWLRQDQ\PRUHWKDQWKHEXWWHUIO\XQGHUVWDQGV
WKDWE\IODSSLQJLWVZLQJVLWZLOONLOODGR]HQSHRSOHZLWKDWRUQDGR
,IOLIHLVVWURQJO\HPHUJHQWKHFDQQRWXQGHUVWDQGLWIXOO\7RWKRVH
SRRUEUDLQZDVKHGVRXOVZKRSD\DOOHJLDQFHWRWKLVFXOWWKHXQGHU
VWDQGLQJLVVHFRQGDU\WKHDFWRIFUHDWLRQLWVHOILVSULPDU\)RUD
UHDOVFLHQWLVWDQGQDWXUDOSKLORVRSKHUWKRXJKWKHXQGHUVWDQGLQJLV
HYHU\WKLQJDQGWKHFXOWLFJRDORIFUHDWLRQLVDWEHVWDVHFRQGDU\
HIIHFWDWZRUVWDQLQWR[LFDQWWKDWZLOOGHOXGHKLPDQGPLVGLUHFWDOO
KLVHIIRUWV
$&RQVHUYDWLYH*RDO
,IZHWDNHXSWKHYHU\FRQVHUYDWLYHJRDORIVLPSO\WU\LQJWRXVH
YLUXVHVWREHWWHUXQGHUVWDQGOLIHKRZFDQWKH\EHVWEHSXWWRZRUN"
7KHPDWWHURIWKHJHQHVLVDQGHYROXWLRQRIOLIHLPPHGLDWHO\SRSV
WRPLQG$OWKRXJKYLUXVHVDUHZHDNRQHYHQZHDNHPHUJHQWEHKDY
LRUWKDWKDVOLWWOHWRGRZLWKHYROXWLRQ(YROXWLRQUHTXLUHVRQO\DQ
6R$UH9LUXVHV$OLYH"

LQIRUPDWLRQEDVHGJHQHWLFVHOIUHSURGXFLQJDXWRPDWRQWRIXQFWLRQ
:HYHDOUHDG\VHHQWKDWYLUXVHVFDQHYROYHLQVLPSOHZD\V
/LNHZLVHFRPSXWHUYLUXVHVPLJKWSURYLGHXVZLWKVRPHIDVFL
QDWLQJLQVLJKWVLQWRWKHRULJLQRIOLIH$OWKRXJKRULJLQVLVQRUPDOO\
FRQVLGHUHG SDUW RI HYROXWLRQ E\ OD\PHQ LW LV DFWXDOO\ D ZKROH
GLIIHUHQWVXEMHFW:HZLOOWUHDWLWDVVXFK,QSDUWLFXODULWLVRIWHQ
VXJJHVWHGWKDWOLYLQJRUJDQLVPVDVZHNQRZWKHPZHUHSUHFHGHG
E\VLPSOHUIRUPVRIOLIHRQVHYHUDOOHYHOV:KDWFRXOGWKLVOLIHKDYH
EHHQOLNH"+RZFRXOGLWKDYHJRWWHQJRLQJ"
%HIRUHZHJRRQWRGLVFXVVWKHVHPDWWHUVWKRXJKZHVKRXOG
UHYLHZZKDWZHFDOOVHOIUHSURGXFWLRQLQFRPSXWHUYLUXVHV,QWKH
ODVWFKDSWHU,VXJJHVWHGDFRXSOHRIUXOHVWRDSSO\LQGHWHUPLQLQJ
ZKHWKHUDSKHQRPHQRQUHDOO\FRQVWLWXWHVVHOIUHSURGXFWLRQRUQRW
:HKDYH\HWWRGLVFXVVKRZ5XOH2QHDSSOLHVWRYLUXVHVDQGWKHUH
LVPRUHWREHVDLGDERXW5XOH7ZR
5XOH2QH
$V\RXZLOOUHFDOO5XOH2QHVWDWHGWKDWWKHLQIRUPDWLRQFRQWHQW
RI WKH LQVWUXFWLRQV EH JUHDWHU WKDQ RU HTXDO WR WKH LQIRUPDWLRQ
FRQWHQWRIWKHPDFKLQHZKLFKH[HFXWHVWKHVHLQVWUXFWLRQV
,1675 0$&+
,QWKHFDVHRIFRPSXWHUYLUXVHVWKHPDFKLQHVHHPVWREHPLVVLQJ
DWILUVWJODQFH$YLUXVDWZRUNDSSHDUVWREHUDZLQVWUXFWLRQVEHLQJ
H[HFXWHGE\WKHFRPSXWHULWVHOI7KHFRPSXWHUDVWKHHQYLURQ
PHQWFDQQRWEHWKHPDFKLQHVRZKHUHLVLW"
$FWXDOO\WKH PDFKLQH LVWULYLDO7KHE\WHVWKDWPDNHXSWKH
YLUXVFDQEHXQGHUVWRRGDVHLWKHULQVWUXFWLRQVRUDVWKHPDFKLQH
<RX PLJKW LPDJLQH WKDW WKH YLUXV KDV WKUHH VHSDUDWH H[LVWHQFHV
)LUVWLWH[LVWVRQGLVNDWWDFKHGWRDILOH6HFRQGLWH[LVWVLQWKHFRGH
VHJPHQW DV LQVWUXFWLRQV H[HFXWLQJ WKLUG LW H[LVWV LQ WKH GDWD
VHJPHQWDVGDWDEHLQJFRSLHG$OWKRXJKFRGHDQGGDWDVHJPHQWV
PD\RIWHQEHSK\VLFDOO\WKHVDPHWKH\DUHORJLFDOO\GLIIHUHQW
$VVXFK5XOH2QHLVSUHWW\PXFKDQHTXDOLW\IRUYLUXVHVDQG
WKDWLVILQH

5XOH7ZR
8S WR WKLV SRLQW ZHYH EDUHO\ WRXFKHG RQ ZK\ FRPSXWHU
YLUXVHVSHUVHVKRXOGEHVRLQWHUHVWLQJ$IWHUDOOFHOOXODUDXWRPDWD
VHHPWREHYHU\YHUVDWLOHDQGVRPHZKDWHDVLHUWRUHODWHWROLYLQJ
RUJDQLVPVGXHWRWKHDSSDUHQWSDUDOOHOLVPRIDFHOOXODUDUUD\2Q
WKHRWKHUKDQGFRPSXWHUYLUXVHVDUHVHULDOSURJUDPVDQGGRQWORRN
D ZKROH ORW OLNH FDUERQEDVHG OLIH 2Q WRS RI WKDW YLUXVHV DUH
SRWHQWLDOO\YHU\GDQJHURXV
6RZK\VKRXOG,SUHIHUWRGLVFXVVYLUXVHVUDWKHUWKDQ$/LQ
JHQHUDORUFHOOXODUDXWRPDWD"
$V,YHPHQWLRQHGKHUHDQGWKHUHYLUXVHVDUHDSKHQRPHQRQ
WKDWJRHVEH\RQGVRPHOLWWOHODERUDWRU\H[SHULPHQWRUVRPHFRP
SXWHUEDVHGFRQVWUXFW7KHSHRSOHZKRGHVLJQHG'26DQGRWKHU
RSHUDWLQJV\VWHPVGDWLQJEHIRUHWKHPLGHLJKWLHVKDGQRFRQFHSW
RIYLUXVHV(YHQODWHURSHUDWLQJV\VWHPVZHUHGHVLJQHGE\SHRSOH
ZKRGLGQWFDUHWRRPXFKDERXWYLUXVHV7KH\GLGQRWGHVLJQWKH
RSHUDWLQJ V\VWHP ZLWK YLUXVHV LQ PLQG DW DOO HLWKHU ZLWK DQ H\H
WRZDUGVWRSSLQJWKHPRUDQH\HWRZDUGPDNLQJWKHPSRVVLEOH7KH
SHRSOHZKRZURWHWKHILUVWYLUXVHVZHUHQRWVFLHQWLVWVWU\LQJWRGR
VRPHWKLQJVFLHQWLILFRUHVWDEOLVKVRPHWKHRU\DERXWOLIH,VHULRXVO\
GRXEW WKHVH ILUVW YLUXV ZULWHUV KDG DQ\ LGHD RI WKH VFRSH RI WKH
SKHQRPHQRQWKDWYLUXVHVZRXOGVRRQEHFRPH
7KLVFDQQRWEHVDLGRI$/LQJHQHUDO$/VWDUWHGRXWDVYHU\
GLUHFWHGUHVHDUFK1RZWKHUHLVQRWKLQJZURQJZLWKWKDWJHQHUDOO\
VSHDNLQJ+RZHYHUDSUHH[LVWLQJSKHQRPHQRQOHWVXVWHVWRXULGHDV
LQDZD\WKDWDEVWUDFWUHVHDUFKDORQHZLOOQRW,WLVVRPHZKDWOLNH
WKHGLIIHUHQFHEHWZHHQSXUHPDWKDQGSK\VLFV,QWKHUHDOPRISXUH
PDWKDQ\WKLQJWKDWLVORJLFDOO\WUXHLVULJKW,WPD\QRWEHLQWHU
HVWLQJWRWKHPDWKHPDWLFLDQRIFRXUVH2QWKHRWKHUKDQGSK\VLFV
PXVWDOVRLQVRPHVHQVHFRQIRUPWRWKHSK\VLFDOZRUOG$SK\VLFDO
WKHRU\PD\VHHPSHUIHFWO\ORJLFDODQG\HWEHHQWLUHO\XQWUXH2Q
WKHRWKHUKDQGDSK\VLFDOWKHRU\PD\EHDWWKHYHU\OLPLWRIORJLFDO
FRPSUHKHQVDELOLW\ DQG \HW EH SHUIHFWO\ WUXH HJ ZDYHSDUWLFOH
GXDOLW\LQTXDQWXPPHFKDQLFV
7KH UHDO SUREOHP ZLWK $/ LV WKDW \RX DUH XVLQJ D XQLYHUVDO
VLPXODWLQJPDFKLQHDFRPSXWHUWRWU\WRVLPXODWHOLIH$QG\RX
6R$UH9LUXVHV$OLYH"

KDYHRQO\DIX]]\LGHDRIZKDWOLIHLVWREHJLQZLWK7KHGDQJHULQ
VXFKDVLWXDWLRQLVWKDW\RXPD\HQGXSVLPXODWLQJH[DFWO\ZKDW\RX
ZDQW WR VLPXODWH UDWKHU WKDQ PRGHOOLQJ OLIH DV LW LV 7KHQ WKH
FRPSXWHURQO\EHFRPHVDWRROWRFRQILUP\RXUSRVVLEO\HUURQHRXV
LGHDVRIZKDWOLIHLVDQGGRHVUDWKHUWKDQDWRROWRUHILQHWKRVHLGHDV
:HKDYHHQFRXQWHUHGWKLVSUREOHPDOUHDG\/DQJWRQVVHOIUH
SURGXFLQJ DXWRPDWRQ KDG D JODULQJSUREOHP7KHSK\VLFVRIWKH
FHOOXODUDUUD\SOD\HGDPDMRUSDUWLQWKHUHSURGXFWLRQSURFHVV,W
ZDV GHVLJQHG WR $QG /DQJWRQ FDQQRW EH VLQJOHGRXW7KHVDPH
FRXSOLQJRISK\VLFVDQGDXWRPDWRQLVFRPPRQSODFHLQ$/ZRUN
LQRQHIRUPRUDQRWKHU1RUPDOO\ERWKDUHGHVLJQHGDWWKHVDPH
WLPHZLWKWKHSK\VLFVVHWXSWRPDNHWKHDXWRPDWRQZRUN
,QOLJKWRIWKLVDSSURDFKZHGLVFXVVHG5XOH7ZRDVDZD\WR
GLIIHUHQWLDWHEHWZHHQSK\VLFVGULYHQUHSURGXFWLRQDQGVHOIUHSUR
GXFWLRQ5XOH7ZRVLPSO\VWDWHGWKDW
,167 3+<6
DQGZHIRXQGWKDWVRPHRIWKHSRSXODU$/DXWRPDWDGRQRWDWDOO
DWWDLQWR5XOH7ZR
'HVSLWHWKHIDFWWKDWPXFKPRGHUQ$/ZRUNSD\VOLWWOHKHHGWR
WKHFRQVLGHUDWLRQVRI5XOH7ZR,WKLQNVRPHRILWLVIDVFLQDWLQJ
DQG , FHUWDLQO\ GRQW ZDQW WR GLVFRXUDJH $/ UHVHDUFKHUV IURP
H[SORULQJWKHSRVVLELOLWLHV+RZHYHU5XOH7ZRFDQDQGVKRXOGEH
DSSOLHGWRDQ\V\VWHPLQZKLFKERWKWKHSK\VLFVDQGWKHDXWRPDWRQ
DUH GHVLJQHG DW WKH VDPH WLPH ,I LW LV QRW WKHQ WKH DQDO\VLV LV
LQFRPSOHWHDQGWKHFRQFOXVLRQVGUDZQIURPWKDWV\VWHPVKRXOGQRW
EHWUXVWHG
$SSO\LQJ 5XOH 7ZR WR D V\VWHP LQ ZKLFK WKH SK\VLFV ZDV
GHVLJQHGZLWKRXWUHJDUGWRWKHDXWRPDWDLVDGLIIHUHQWPDWWHU2QFH
\RX EUHDN WKH ORJLFDO FRQQHFWLRQ DQG \RX PXVW EUHDN LW ZHOO
EHWZHHQWKHWZRLWGRHVQRWPDNHVHQVHWRVD\WKDWWKHSK\VLFVZDV
GHVLJQHGWRPDNHWKHDXWRPDWRQZRUN7KHSK\VLFVWKHQEHFRPHV
DJLYHQ7KHDXWRPDWRQFDQLQGHHGWDNHDGYDQWDJHRIWKHSK\VLFV
DV/DQJWRQVXJJHVWHGLWVKRXOGEHSHUPLWWHGWRGRLQKLVSDSHU6XFK
DFWLYLWLHV DUH OHJLWLPDWH LQ D V\VWHP ZKHUH WKH SK\VLFV ZDVQW
GHVLJQHGIRUWKHDXWRPDWRQ7KH\DUHQRWHQWLUHO\OHJLWLPDWHRWKHU
ZLVHEHFDXVH\RXFDQKLGHFRPSOH[LW\LQWKHSK\VLFDOODZVHJ

WKHWUDQVLWLRQUXOHVDQGXVHWKHPWRIDFLOLWDWHZKDW\RXZDQWWR
DFFRPSOLVKGLVLQJHQXRXVO\
<HWEUHDNLQJWKLVFRQQHFWLRQEHWZHHQSK\VLFVDQGDXWRPDWDLV
QRWHDV\)RUH[DPSOHLIZHDGRSWDVHWRIUDQGRPO\FKRVHQUXOHV
LQ D FHOOXODU DUUD\ WKH\ PD\ QRW EH YHU\ LQWHUHVWLQJ ,I ZH WKHQ
FKDQJHRXUPLQGVDERXWWKDWVHWDQGWU\DQRWKHUUDQGRPO\FKRVHQ
VHWDQGDQRWKHUDQGDQRWKHUXQWLOZHJHWVRPHWKLQJXVHIXOZHYH
GRQHDUDQGRPVHDUFK7KHUHE\ZHYHSXWLQWHOOLJHQFHEDFNLQWKH
JDPH$QGWKHUHLVWKHZKROHTXHVWLRQRIZKRVHVWDQGDUGZHVKRXOG
DGRSW,IUHVHDUFKHU$DQGUHVHDUFKHU%DUHWRWDONWKH\VKRXOGXVH
DFRPPRQVWDQGDUG\HWWKHZKROHLGHDRIUDQGRPO\FKRVHQUXOHV
ZRUNVDJDLQVWVHWWLQJRQHVHWRIUXOHVDSDUWOLNHWKLV
&RPSXWHU YLUXVHV KRZHYHU HYDGH WKLV GLIILFXOW\ :H FDQ
ULJKWO\VD\WKDWHDUO\RSHUDWLQJV\VWHPVZHUHQWGHVLJQHGZLWKWKHP
LQPLQGEHFDXVHWKH\GLGQWH[LVW\HW7KHSHRSOHGHVLJQLQJWKH
RSHUDWLQJ V\VWHPV GLG QRW WDNH WKHP LQWR FRQVLGHUDWLRQ 6R WKH
RSHUDWLQJ V\VWHP LV D JLYHQ IRU DQ\ YLUXV WKDW PLJKWOLYHLQWKDW
HQYLURQPHQW
,FDQQRWVWUHVVHQRXJKKRZLPSRUWDQWWKDWLV
:K\"
0RVWPRGHUQVFLHQWLVWVDVVXPHWKDWWKHODZVRIWKLVXQLYHUVH
ZHUH QRW VSHFLILFDOO\ LQWHOOLJHQWO\ GHVLJQHG LQ VXFK D ZD\ DVWR
PDNHOLIHKDSSHQ LI\RXZLOORUHYHQWRPDNHLWSRVVLEOHIRUOLIH
WRH[LVW7RVXJJHVWWKDWWKH\ZHUHVRGHVLJQHGREYLRXVO\LPSOLHV
WKHH[LVWHQFHRIDQLQWHOOLJHQW&UHDWRURIVRPHNLQG$QGWRVXJJHVW
WKDWWKH\ZHUHQWLPSOLHVQRVXFK&UHDWRURURQHSHUKDSVQRWRYHUO\
FRQFHUQHGZLWKOLIHDWWKHWLPHRIFUHDWLRQ7KLVZKROHDVVXPSWLRQ
LVYHU\SKLORVRSKLFDO,WLVQWVRPHWKLQJWKDWZHFDQYHULI\RUIDOVLI\
VFLHQWLILFDOO\DVIDUDVWKLVUHDOZRUOGJRHV
$OWKRXJK,KDYHOLWWOHORYHIRUPLQJOLQJVXFKDVVXPSWLRQVZLWK
VFLHQFH,VKRXOGSRLQWRXWWKDWPXFK$/ZRUNVHHPVWRJRDJDLQVW
WKHJUDLQRIWKLVLGHD5XOH7ZRFRPELQHGZLWKORRNLQJEHKLQG
WKHVFHQHVPDNHVLWFOHDUZKHQWKHSK\VLFVLVGHVLJQHGWRPDNH
WKHDXWRPDWRQZRUN)URPWKLVSHUVSHFWLYH$/VHHPVWREHKHDGHG
LQ WKH GLUHFWLRQ RI H[SORULQJ WKH SRVVLELOLWLHV RI VRPH YDULHW\ RI
LQWHOOLJHQWFUHDWLRQLVP
1RZWRVXJJHVWWKDW$/UHVHDUFKHUVDUHVWXG\LQJFUHDWLRQLVP
PD\ VHHP VRPHZKDW SUHSRVWHURXV &HUWDLQO\ PDQ\ RI WKHP DUH
6R$UH9LUXVHV$OLYH"

PDLQVWUHDPVFLHQWLVWVZKRKDYHQRORYHIRUFUHDWLRQLVP$QGRIWHQ
WKHLUZRUNLVKLJKO\IRFXVHGRQTXHVWLRQVRIHYROXWLRQDQGFKHPLFDO
HYROXWLRQZKLFKDUHDWOHDVWVXSHUILFLDOO\RSSRVHGWRFUHDWLRQ
LVP<HWGHVLJQLQJWKHSK\VLFVWRGRZKDW\RXZDQWLVZRQGHUIXOO\
FRQYHQLHQW,QVXFKDV\VWHPHYHQWKHPRVWEODWDQWHYROXWLRQZRXOG
EHFUHDWLRQLVWLFLQQDWXUHEHFDXVHLWLVLQWHOOLJHQWO\GHVLJQHGLQ7KH
FUHDWLRQLVW DVSHFW RI LW ZRXOG DSSHDU WR EH DQ XQLQWHQGHG DQG
XQZDQWHGE\SURGXFW%XWLWLVQROHVVUHDOWKDQLILWZHUHDWRWDOO\
LQWHQWLRQDO DWWHPSW E\ SKLORVRSKLFDOO\FRPPLWWHG FUHDWLRQLVWV WR
ZRUN WKHLU PRGHOV RXW ZLWK FRPSXWHUV -XVW EHFDXVH WKH PRGHOV
PLJKWLQYROYHLGHDVOLNHHYROXWLRQPDNHVWKHPQROHVVFUHDWLRQLVW
LQVSLULWLIWKHSK\VLFVLVGHVLJQHGWRPDNHWKHPRGHOVZRUN
6LQFHWKHZKROHTXHVWLRQRIWKHGHVLJQEHKLQGWKHSK\VLFDOODZV
RI RXU ZRUOG LV KLJKO\ SKLORVRSKLFDO D JRRG VFLHQWLVW SUREDEO\
RXJKWWRWU\WRDYRLGPDNLQJFRPPLWPHQWVRQWKLVPDWWHUDWOHDVW
DVIDUDVKLVVFLHQFHJRHV,GRQWWKLQNDQRUPDOKXPDQEHLQJFDQ
DYRLG EHOLHYLQJ VRPHWKLQJ DERXW VXFK PDWWHUV EXW KH FDQ EH
DZDUHRIWKRVHEHOLHIVDQGXQGHUVWDQGKRZWKH\FDQDIIHFWKLVZRUN
$VVXFK,GRQWZDQWWRVLPSO\ZULWHRII$/EHFDXVHRIWKHVH
XQXVXDOZHDNQHVVHV0XFKRI$/LVDGPLWWHGO\YHU\WHQWDWLYH$QG
DW OHDVW VRPH SHRSOH LQ WKH ILHOG DUH SDLQIXOO\ DZDUH RI VXFK
ZHDNQHVVHV,DPRQO\DIUDLGWKDWWKHFUHDWLRQLVWWHQGHQFLHVPDNH
LWKLJKO\TXHVWLRQDEOHZKHWKHU$/LVJRLQJWREHRIPXFKKHOSWR
VFLHQWLVWVZKRPXVWEHFRQVWUDLQHGWRZRUNLQJZLWKDJLYHQIL[HG
VHWRISK\VLFDOODZV2IFRXUVH$/ZLOODSSHDUYHU\KHOSIXOWRWKH
PRUHSKLORVRSKLFDOO\EOLQGEHFDXVHODFNLQJUHVWUDLQWLWFDQVXSHU
ILFLDOO\EHPROGHGWRZRUNZLWKMXVWDERXWDQ\SKLORVRSK\\RXOLNH
7KXV $/ FRXOG FRQFHLYDEO\ EHFRPH PRUH RI D SKLORVRSKLFDO
VRDSER[WKDQDYLDEOHVFLHQWLILFWRRO
1DUURZLQJ RXU IRFXV WR FRPSXWHU YLUXVHV LPSRVHV VRPH UH
VWUDLQWWKDW$/LQJHQHUDODSSHDUVWREHODFNLQJ8VLQJWKHPZH
JDLQDQRSSRUWXQLW\WRH[DPLQHWKHSRVVLELOLWLHVIRUOLIHLQDZRUOG
0RGXOR RXU OLPLWDWLRQV LQ D FRPSXWHU RI FRXUVH $V IDU DV HYROXWLRQ JRHV
YLUXVHVPD\EHLPDJLQHGWREHDOLYHXQOHVVHYROXWLRQLWVHOILVGHSHQGHQWRQ
VRPHHIIHFWRIVWURQJHPHUJHQWEHKDYLRUDQGWKDWZRXOGSXVKLWRXWVLGHWKH
UHDOPRIVFLHQFH

IDUGLIIHUHQWIURPRXURZQDZRUOGLQZKLFKZHNQRZOLIHFDQ
H[LVWEHFDXVHLWGRHVDQG\HWDZRUOGZKHUHZHKDYHQRWVHULRXVO\
H[SORUHGLWVSRVVLELOLWLHV
,Q VR UHVWUDLQLQJ RXUVHOYHV ZH DUH YHULO\ WUDQVIRUPHG IURP
FUHDWLQJJRGVLQWRUHDOVFLHQWLVWV$QLQJORULRXVWUDQVIRUPDWLRQWR
EHVXUHEXW,EHOLHYHDQHVVHQWLDORQH,WLVDQRSSRUWXQLW\WRUHDVVHVV
ZKDWZH NQRZ DERXWRXURZQZRUOGUDWKHUWKDQVLPSO\WU\LQJ
WRFRQILUPLWZLWKFRPSXWHUPRGHOV
3DUW,,,
7KH*HQHVLVDQG
(YROXWLRQ
RI
/LIH
,QWURGXFWLRQ
1RZ,GOLNHWRFRQFHQWUDWHRQWZRUHODWHGEXWYHU\GLIIHUHQW
VXEMHFWV7KHVHDUHWKHJHQHVLVRIOLIHKRZLWRULJLQDOO\FDPHLQWR
EHLQJDQG WKH HYROXWLRQ RI OLIHKRZ LW FKDQJHV DQG GHYHORSV
IURP JHQHUDWLRQ WR JHQHUDWLRQ 2IWHQ WKHVH LGHDV DUH OXPSHG WR
JHWKHU DV HYROXWLRQ LQ SRSXODU GLVFXVVLRQV RI WKH VXEMHFW )RU
FRQYHQLHQFH,ZLOOVRPHWLPHVOXPSWKHPWRJHWKHULQRXUGLVFXV
VLRQ:KHQZHJHWPRUHWHFKQLFDOWKRXJKZHPXVWGLVFXVVWKHVH
WZRDVSHFWVRIOLIHVHSDUDWHO\7ROXPSWKHPLVDUHDOGLVWRUWLRQRI
WZRGLIIHUHQWSKHQRPHQD
8S WR WKLV SRLQW , KDYH UHJDUGHG HYROXWLRQ DV D VHFRQGDU\
SKHQRPHQRQIRUWKHSXUSRVHVRIRXUGLVFXVVLRQDERXWYLUXVHV7KDW
LVDQLQWHQWLRQDOEUHDNIURPWKHWKLQNLQJRIPDQ\$UWLILFLDO/LIH
UHVHDUFKHUV6RPHZRXOGQRWHYHQFDOODQDXWRPDWRQDOLYHXQOHVV
LWFRXOGEHVRPHKRZHYROYHGIURPDQRQOLYLQJV\VWHPDQGXQOHVV
LWFRXOGHYROYHLQWRPRUHFRPSOH[HQWLWLHV,WKLQNVXFKDQDSSURDFK
LVSXWWLQJWKHFDUWEHIRUHWKHKRUVH
, ZRXOG SUHIHU WR ORRN DW HYROXWLRQ DV D WKHRU\ DERXW OLIH
WKDWMXVW OLNH HYHU\RWKHUVFLHQWLILFWKHRU\QHHGVWREHWHVWHG
7KDWRQO\VHHPVSURSHU/LIHLVDIDFWRIRXUZRUOG(YROXWLRQLV
RQO\DIDFWLI\RXDUHFRPPLWWHGWRFHUWDLQSKLORVRSKLHVDERXWKRZ
(YROXWLRQSURSHUUHTXLUHVDJHQHWLFDOO\GLUHFWHGVHOIUHSURGXFLQJDXWRPDWRQ
2QO\WKHQFDQ\RXKDYHDJHQHSRROWKDWFKDQJHVDVDIXQFWLRQRIWLPH7HUPV
OLNH FKHPLFDO HYROXWLRQ DUH D UHDO PLVXVH RI WKH ZRUG DQG GR QRW KDYH
DQ\WKLQJWRGRZLWK'DUZLQLDQHYROXWLRQ

7KH/LWWOH%ODFN%RRNRI&RPSXWHU9LUXVHV,,
WKHZRUOGZRUNV%XWLIHYROXWLRQLVWREHDWKHRU\DERXWOLIHDQG
QRWDGRJPDWKHQLWPXVWEHGLYRULFHGIURPWKHGHILQLWLRQRIOLIH
1RZ,DPQRWQDwYHWRWKHIDFWWKDWLIRQHGDUHVWRVWLFNKLVKHDG
XSDQGFKDOOHQJHWKHLGHDRIHYROXWLRQKHVSUREDEO\JRLQJWRJHW
VKRWDW7KHSKLORVRSKLFDOUHOLJLRXVTXHVWLRQVWKDWDUHLQH[WULFDEO\
WLHGWRHYROXWLRQDUHWRRKRWIRUPDQ\SHRSOHWRKDQGOH4XHVWLRQ
WKHGRJPDVRIWKHGD\DQG\RXOOJHWEUDQGHGDKHUHWLFE\VRPH
DQGEHXVHGDVDKHURE\RWKHUV
0\SRVLWLRQLVTXLWHVLPSOH,DPDSK\VLFDOVFLHQWLVWZKRLV
XVHGWRVHHLQJHTXDWLRQVWKDWPDNHSUHGLFWLRQVDQGH[SHULPHQWV
WKDWFDQWHVWWKHYDOLGLW\RIWKRVHHTXDWLRQV)URPWKLVYDQWDJHSRLQW
HYROXWLRQDU\ELRORJ\WRGD\DSSHDUVWREHXQXVXDOO\YDFXRXV
\HDUVRI'DUZLQLVPKDYHSURGXFHGYHU\OLWWOHLQWKHZD\RIWHVWDEOH
HTXDWLRQVRULGHDV,QIDFW,ZRXOGEHKDUGSXWWRFDOO HYROXWLRQ
DVZHNQRZLWDVFLHQWLILFWKHRU\DWDOO
+RZHYHULWZRXOGVHHPWKDWWKHLQIRUPDWLRQUHYROXWLRQZKLFK
KDVFRPHXSRQXVPD\PDNHLWSRVVLEOHWREULQJHYROXWLRQLQWRWKH
IROG RI UHDO VFLHQFH , H[SHFW WKDW D KXQGUHG \HDUV IURP QRZ
HYROXWLRQPLJKWEHFRQVLGHUHGDEUDQFKRISXUHPDWKHPDWLFV7KDW
PDWKHPDWLFV PLJKW WKHQ EH DSSOLHG WR ELRORJLFDO RUJDQLVPV RU
DUWLILFLDORUJDQLVPVPXFKWKHVDPHZD\WKDWFDOFXOXVLVDSSOLHGWR
SUREOHPVRI1HZWRQLDQG\QDPLFV
<HW LQWHOOHFWXDOO\ VSHDNLQJ ZH DUH D YHU\ ORQJ ZD\ IURP
PDNLQJHYROXWLRQLQWRDVFLHQFH(YHQWKRVHLQWKH$/FRPPXQLW\
ZKRDUHLQDSRVLWLRQWRGRWKDWVHHPWRSUHIHUWRSDQGHUWRELRORJLVWV
ZKRDUHQRWZLOOLQJWROD\WKHLUVDFUHGFRZRQWKHDOWDU7KHUHDO
SUREOHPLQPDNLQJDVFLHQFHRXWRIHYROXWLRQLVWKDWLWPD\QRWEH
QHDUO\VRSRZHUIXODVVRPHSHRSOHWKLQNLWLV7KDWZRXOGGLVFUHGLW
IDUPRUHWKDQDIHZVFLHQWLVWV<HWLIZHDUHWRPDNHDWKHRU\RXW
RILWZHPXVWHQGDQJHULW1RGDQJHUQRWKHRU\,IWKHUHLVQRZD\
WRIDOVLI\LWLWVQRWDVFLHQWLILFWKHRU\
,QWKHQH[WVHYHUDOFKDSWHUV,GOLNHWRGLVFXVVZK\HYROXWLRQ
LV ODFNLQJ DV VFLHQFH VRPH LGHDV DERXW KRZ WR PDNH LW EHWWHU
VFLHQFH DQG ZKDW FRPSXWHU YLUXVHV KDYH WR GR ZLWK DOO RI WKDW
6XUSULVLQJO\ YLUXVHV GR KDYH VRPHWKLQJ WR GR ZLWK DOO RI WKLV
KLJKPLQGHG VWXII , UHVHUYH WKH GLVFXVVLRQ RI ZK\ IRU D IHZ
FKDSWHUVWKRXJK,ZDQWWRVWDUWRXUWRXURIWKHHYROXWLRQDU\ELRORJ\
7KH*HQHVLVDQG(YROXWLRQRI/LIH

EXLOGLQJLQWKHEDVHPHQWZLWKDGLVFXVVLRQRIWKHELUWKDQGJURZWK
RIWKHZKROHLGHDRIHYROXWLRQLWVHOI
7KH&UHDWLRQLVWV)DOO
$WSUHVHQWWKHLGHDRIHYROXWLRQKDVEHFRPHWKHEDVLVIRUDZLGH
VSHFWUXPRIVFLHQWLILFUHVHDUFK(YROXWLRQKDVJRQHIDUEH\RQGMXVW
DVFLHQWLILFWKHRU\DERXWUHSURGXFWLYHPHFKDQLFV,WKDVEHFRPHDQ
DOOHQFRPSDVVLQJ SDUDGLJP WR XQGHUVWDQG RXU ZRUOG 7KXV RQH
PD\UHVSHFWDEO\VSHDNRI PROHFXODUHYROXWLRQ RU VRFLDOHYROX
WLRQ 2QH PD\ UHVSHFWDEO\ XVH HYROXWLRQ DV D IRXQGDWLRQ IRU
DQ\WKLQJIURPSV\FKRORJ\WRHFRQRPLFV
<HWRQO\WZRFHQWXULHVDJRVXFKDQLGHDZDVXQKHDUGRI7KH
IXQGDPHQWDO SULQFLSOH EHKLQGHYHU\WKLQJVH[LVWHQFHZDVLQWHOOL
JHQWFUHDWLRQ7RVXJJHVWDQ\WKLQJGLIIHUHQWYHUJHGRQLQVDQLW\
7KHYHU\VZLIWFKDQJHIURPFUHDWLRQWRHYROXWLRQLVDVUDGLFDO
DQGIDUUHDFKLQJDVSHUKDSVDQ\HYHQWLQKLVWRU\)RUDOOLQWHQWVDQG
SXUSRVHVWKHLGHDRIFUHDWLRQFROODSVHGZLWKLQWZHQW\ILYH\HDUV
DIWHU'DUZLQSXEOLVKHG7KH2ULJLQRIWKH6SHFLHV7KDWLVLWORVW
DOOUHVSHFWDELOLW\DPRQJWKHVFLHQWLILFHVWDEOLVKPHQW7KHKROGRXWV
FDPHWREHVHHQDVOLWWOHPRUHWKDQ\DKRRVE\UHVSHFWDEOHVFLHQ
WLVWVIXQGDPHQWDOLVWVZKRUHDOO\FDUHGQRWKLQJIRUVFLHQFH
,W LV LPSRUWDQW WR XQGHUVWDQG WKH URRWV RI WKH FROODSVH RI
FUHDWLRQLVP,QWKLVKLVWRU\ZHFDQVHHKRZSKLORVRSK\SOD\HGD
&KDUOHV'DUZLQ2QWKH2ULJLQRIWKH6SHFLHVE\0HDQVRI1DWXUDO6HOHFWLRQ
RU WKH 3UHVHUYDWLRQ RI )DYRXUHG 5DFHV LQ WKH 6WUXJJOH IRU /LIH 0XUUD\

/RQGRQ1RWHWKDWWKHVHFRQGKDOIRI'DUZLQVWLWOHZDVTXLHWO\GURSSHG
E\DERXWGXHWRLWVUDFLVWRYHUWRQHV
0LFKDHO 5XVH 7KH 'DUZLQLDQ 5HYROXWLRQ 8QLYHUVLW\ RI &KLFDJR 3UHVV
&KLFDJRSSII

FUXFLDOUROH$QGLQH[DPLQLQJWKHIDOORIFUHDWLRQZHZLOOEHEHWWHU
SUHSDUHGWRORRNDWHYROXWLRQOLNHVFLHQWLVWVDQGOHVVOLNHUHOLJLRXV
GHYRWHHV
%HIRUHGLVFXVVLQJWKHKLVWRU\RIFUHDWLRQLVP,ZDQWWRGUDZD
OLQHEHWZHHQPRGHUQFUHDWLRQLVWVDQGROGFUHDWLRQLVWV2QFH'DU
ZLQLVP EHFDPH HVWDEOLVKHG DQG DFFHSWHG WKRVH ZKR UHIXVHG WR
DFFHSWLWPRVWO\RQUHOLJLRXVJURXQGVEHFDPHUDWKHUGHVSHUDWH,Q
6W*HRUJH0LYDUWDQFKRUHGDQDWWDFNRQ'DUZLQ7KH*HQHVLV
RI WKH 6SHFLHV 7KLV ZDV SHUKDSV WKH ODVW DWWDFN WKDW ZDV WDNHQ
VHULRXVO\DWDOO&HUWDLQO\E\ZKHQ*HRUJH0F&UHDG\3ULFH
ZURWH7KH)XQGDPHQWDOVRI*HRORJ\ZKLFKPLJKWEHFDOOHGWKH
ILUVWPRGHUQFUHDWLRQLVWZRUNVXFKDERRNFRXOGUHFHLYHOLWWOHEXW
VFRUQIURPWKHVFLHQWLILFFRPPXQLW\6RPHZKHUHLQWKHUHDWUDQVL
WLRQ WRRN SODFH 7KH ROG FUHDWLRQLVWV ZHUH LQQRFHQW 7KH\ UHDOO\
EHOLHYHGLQFUHDWLRQDQGIRXQGLWKDUGWRLPDJLQHWKDWDQ\WKLQJHOVH
FRXOGEHWUXH0RGHUQFUHDWLRQLVWVGRQWILWWKDWPROG0RVWKDYH
OLNHLWRUQRWEHHQUDLVHGLQDZRUOGVWHHSHGLQHYROXWLRQ7KH\DUH
UHEHOV DQG WKHLU FUHDWLRQLVPIRU EHWWHU RU ZRUVHLV D UHYROW
DJDLQVWPDLQVWUHDPVFLHQFH,ZDQWWRWDONDERXWWKHROGFUHDWLRQ
LVWVKHUH
/HWVJREDFNDQGORRNDWZK\WKH WKHRU\RIFUHDWLRQ FRO
ODSVHG,XVHTXRWHVKHUHEHFDXVHWKHLGHDRIFUHDWLRQZDVQHYHU
IRUPXODWHGDVDSURSHUVFLHQWLILFWKHRU\\HWLQGLVFXVVLQJLWLQWHUPV
RIVFLHQFHZHZDQWWRORRNDWLWDVLILWZHUHRQH,QUHWURVSHFWWKH
FRQIOLFWVHHPHGYLUWXDOO\LQHYLWDEOH2YHUDWKRXVDQG\HDUSHULRG
RIWLPHZHVWHUQFXOWXUHKDGHPEUDFHG&KULVWLDQLW\DQG&KULVWLDQ
LW\XQGHUJLUGHGZHVWHUQPDQVVFLHQWLILFXQGHUVWDQGLQJRIKLVXQL
YHUVH 1RZ WKDW GRHVQW PHDQ FDUHIXOO\ UHDVRQHG &KULVWLDQ
WKHRORJ\ZDVWKHEDVLVIRUKLVWKLQNLQJ,QPDQ\DUHDVLWRQO\PHDQW
WKDW WUDGLWLRQV DQG P\WKV ZKLFK KDG SHUKDSV QRWKLQJ WR GR ZLWK
&KULVWLDQLW\SHUVHKDGEHHQZRYHQLQWRWKHIDEULFRIUHOLJLRQDQG
6W*HRUJH0LYDUW7KH*HQHVLVRIWKH6SHFLHV0DF0LOODQ/RQGRQ
*HRUJH 0F&UHDG\ 3ULFH 7KH )XQGDPHQWDOV RI *HRORJ\ 3DFLILF 3UHVV
3XEOLVKLQJ$VVQ0RXQWDLQ9LHZ&$
6HHIRUH[DPSOH$OIUHG1RUWK:KLWHKHDG6FLHQFHDQGWKH0RGHUQ:RUOG
/RZHOO/HFWXUHV0DF0LOODQ1HZ<RUNS
7KH&UHDWLRQLVWV)DOO

PDGH SDUW RI D FRVPLF ZRUOG YLHZ *HRFHQWULFLW\ LV D FODVVLF

H[DPSOH7KHLGHDZDVUHDOO\PDGHKRO\E\$ULVWRWOHEXWLWKDG
EHHQ LQFRUSRUDWHG LQWR WKH &KULVWLDQ FRVPLF ZRUOGYLHZ VR WKDW
ZKHQ*DOLOHRFKDOOHQJHGLWKHZDVDUUHVWHGDVDKHUHWLFZKRZDV
WHDFKLQJDJDLQVWVFULSWXUH
&UHDWLRQLVDGLIIHUHQWPDWWHUWKRXJK,WLVWKHILUVWWKLQJLQWKH
%LEOHDQGUHDOO\IRXQGDWLRQDOWRRUWKRGR[&KULVWLDQWKHRORJ\2I
FRXUVHWKRVHILUVWFKDSWHUVRIWKH%LEOHDUHRSHQWRLQWHUSUHWDWLRQ
7KHXQLIRUPO\DFFHSWHGLQWHUSUHWDWLRQDFRXSOHFHQWXULHVDJRLQ
YROYHGDFXULRXVDQGYHU\QDwYHPL[WXUHRIJUHHNSKLORVRSK\DQG
VSHFLDOIL[HV7KHXQLYHUVHZDVFRPPRQO\YLHZHGDV(XFOLGHDQ,W
ZDV IODW LQILQLWH LQ H[WHQW DQG HVVHQWLDOO\ XQFKDQJLQJ $Q XQ
FKDQJLQJXQLYHUVHRIFRXUVHDSSHDUHGWREHZLWKRXWEHJLQQLQJRU
HQG7RILWWKLVXQLYHUVHLQWRWKHIDLWKLWZDVVXSSRVHGWKDW*RG
HLWKHUSRSSHGLWRUWKHPDWWHULQLWLQWRH[LVWHQFHDWVRPHSRLQW
LQWKHSDVW7KHDFFHSWHGWLPHIUDPHRIWKLVPLUDFOHZDVVRPH
\HDUVDJRDVGHWHUPLQHGE\WKHJHQHDORJLHVLQWKH%LEOH
,QWKHWKFHQWXU\ZKHQ1HZWRQLDQPHFKDQLFVZDVIRUPX
ODWHG DQG SXW WR ZRUN VFLHQFH EHJDQ WR VXFFHHG DW GHVFULELQJ
SKHQRPHQDLQRXUZRUOGVRZHOOWKDWWKHLGHDRID*RGZRUNLQJ
SHUVRQDOO\DQGPLUDFXORXVO\LQWKHZRUOGEHJDQWRJLYHZD\WRD
*RG ZKR ZRUNHG SULPDULO\ WKURXJK QDWXUDO ODZ%\DQGE\WKH
PLUDFXORXV ZDV HGJHG RXW IXUWKHUDQGIXUWKHUIURPWKHUHDOPRI
GD\WRGD\H[SHULHQFH1HZWRQLQYRNHG*RGWRH[SODLQSODQHWDU\
RUELWV WKDW YDULHG IURP KLV H[SHFWDWLRQV DQG KH KDG QR TXDOPV
DERXWVXJJHVWLQJOLYLQJRUJDQLVPVPD\QRWIDOOHQWLUHO\XQGHUKLV
ODZVRIPHFKDQLFV<HWE\WKHWKFHQWXU\/DSODFHFRXOGFODLP
KHKDG QRQHHGRIWKDWK\SRWKHVLV DQGELRORJ\KDGEHFRPHD
WKULYLQJ VFLHQFH WKDW ZDV LQWHJUDWHG ZLWK RWKHU VFLHQWLILF GLVFL
'DYLG.XEULQ 1HZWRQDQGWKH&\FOLFDO&RVPRV -RXUQDORIWKH+LVWRU\RI

,GHDVSS
:LOOLDP6WXFNHOH\0HPRLUVRI6LU,VDDF1HZWRQV/LIH7D\ORUDQG)UDQFHV
/RQGRQS
5RJHU +DKQ /DSODFH DQG WKH 9DQLVKLQJ 5ROH RI *RG LQ WKH 3K\VLFDO
8QLYHUVH 7KH$QDO\WLF6SLULW&RUQHOO8QLYHUVLW\3UHVV,WKDFD1<
SS

SOLQHV &HUWDLQO\ E\ WKH PLG WK FHQWXU\ PRVW VFLHQWLILFDOO\

PLQGHGSHRSOHVDZWKHZRUOGDVJRYHUQHGE\QDWXUDOODZ0LUDFOHV
ZHUHDWEHVWDQRFFDVLRQDOGHYLDWLRQIURPWKDWEDFNJURXQGRIODZ
DQGRUGHU$WZRUVWWKH\KDGEHFRPHP\WKVWKHEDJJDJHRIWKH
SDVW
$OOWKHVHHGVIRUDFRQIOLFWKDGEHHQSODQWHGEHIRUHWKHILUVW
VDOYRVZHUHILUHG7KHSUHVHQWZRUOGZDVXQGHUVWRRGLQWHUPVRI
QDWXUDOODZDQGQRWWKHGLUHFWDFWLRQRI*RG7KHSDVWZDVXQGHU
VWRRGLQWHUPVRIDQHWHUQDOVWDWLFXQLYHUVHH[FHSWIRUDEOLQGLQJ
PLUDFOHWKDWFXWVWUDLJKWDFURVVDOOWKLQNLQJLQWHUPVRIQDWXUDOODZ
,QUHWURVSHFWWKDWPLUDFOHVHHPHGFXULRXVO\RXWRISODFHVHWDJDLQVW
GD\WRGD\H[SHULHQFHDVZHOODVWKHJHQHUDOXQGHUVWDQGLQJRIWKH
YHU\QDWXUHRIWKHXQLYHUVHLWVHOI7KHZKROH WKHRU\RIFUHDWLRQ
KDGEHHQSXWLQWRDYHU\VPDOOER[MXVWDERXWWKHULJKWVL]HIRUDQ
LQWHOOLJHQWPDQWRVWHSRQ
$VVXFKFUHDWLRQVIDWHZDVVHDOHGRQSKLORVRSKLFDOJURXQGV
7KHUH ZDV VRPHWKLQJ IXQGDPHQWDOO\ LQFRQVLVWHQW LQ WKH ZKROH
SLFWXUH &UHDWLRQ LQYRNHG WKH VXSHUQDWXUDO EXW LW ZDV QRW UHDOO\
HYHQSKLORVRSKLFDOO\FRQVLVWHQWZLWKDVXSHUQDWXUDOLVWZRUOGYLHZ
EHFDXVHWKDWPLUDFOHZDVVHHQDVDXQLTXHH[FHSWLRQLQDZRUOGRI
ODZ,QWHOOHFWXDOO\VSHDNLQJWKHVWHSIURPDXQLYHUVHDVLPDJLQHG
E\ WKH ROG FUHDWLRQLVWV WR D SXUHO\ QDWXUDO XQLYHUVH ZLWKRXWWKDW
FXULRXVPLUDFOHZDVDVPDOOVWHS2IFRXUVHLWZDVDQHDUWKTXDNHD
WKRXVDQG\HDUVLQWKHPDNLQJWKHRORJLFDOO\VSHDNLQJ
7KH EDWWOH LWVHOI ZDV D FODVVLF ILJKW RYHU WZR SDUDGLJPV DV
GHVFULEHGE\7KRPDV.XKQ2QHJURXSIRXJKWWRSUHVHUYHWKHROG
SDUDGLJPDQGWKHRWKHUVWURYHWRHVWDEOLVKWKHQHZSDUDGLJP7KH
ROGSDUDGLJPFRQWDLQHGVRPHSKLORVRSKLFDOLQFRQVLVWHQFLHVDQGLW
VHHPHGWREHDWYDULDQFHZLWKWKHIRVVLOUHFRUG7KHQHZSDUDGLJP
ZDVPDGHWRRUGHU,WILWWKHIRVVLOUHFRUGDQGLWZDVSKLORVRSKLFDOO\
FRQVLVWHQW
7KHILUVWUHDOVDOYRZDVILUHGZKHQ&KDUOHV/\HOOSURSRVHGWKH
LGHD RI XQLIRUPLWDULDQ JHRORJ\ LQ KLV ERRN 7KH 3ULQFLSOHV RI
7KRPDV.XKQ7KH6WUXFWXUHRI6FLHQWLILF5HYROXWLRQVQGHGLWLRQ8QLYHUVLW\
RI&KLFDJR3UHVV&KLFDJR
7KH&UHDWLRQLVWV)DOO

*HRORJ\ ILUVW SXEOLVKHG LQ 8S WR WKDW WLPH JHRORJLFDO
IRUPDWLRQVZHUHODUJHO\LQWHUSUHWHGLQWHUPVRIFDWDVWURSKHVWKH
1RDKLFIORRGEHLQJWKHPRVWLPSRUWDQW/\HOOVLGHDVIRUPHGWKH
EDVLVIRUDQHZSDUDGLJPZKLFKEURXJKWJHRORJ\LQWRWKHUHDOPRI
GD\WRGD\QDWXUDOFDXVHDQGHIIHFW7KLVSUHFLSLWDWHGDORQJEDWWOH
DQG JHRORJLVWV ZHUH GLYLGHG LQWR XQLIRUPLWDULDQV DQG FDWDVWUR
SKLVWV
/\HOOVLGHDVILWZHOOZLWKLQWKHJHQHUDOIUDPHZRUNRIDQDWX
UDOLVWLFXQGHUVWDQGLQJRIWKHXQLYHUVH$QGWKRXJKWKH\WRXFKRQ
OLIHYLDWKHIRVVLOUHFRUGWKH\VWLOOOHIWDELJTXHVWLRQ+RZGLGOLIH
JHWKHUH"6SRQWDQHRXVJHQHUDWLRQZDVRIIDQGRQDFFHSWHGDVDQ
DQVZHU IRU WKH PRUH SULPLWLYH IRUPV RI OLIH XS XQWLO WKH PLG
V <HW ZKDW PLJKW KDYH SURGXFHG PLFUREHVDQGPDJJRWV
FRXOG QRW H[SODLQ WKH LQFUHGLEOH YDULHW\ RI OLIH RQ HDUWK 2QO\
FUHDWLRQZDVUHDVRQDEOH7KHQ'DUZLQSURSRVHGDSRVVLEOHDQVZHU
ZKLFKUHTXLUHGRQO\QDWXUDOVHQVLEOHODZVLQVWHDGRIDPLUDFOH
7KHDFFHSWDQFHRIKLVZRUNZDVLPPHGLDWH,WSURYLGHGWKHPLVVLQJ
OLQNIRUWKHQHZSDUDGLJP
<HW WKLV QHZ SDUDGLJP ZDV OLWWOH PRUH WKDQ D VSHFXODWLYH
K\SRWKHVLVLQWKHPLGWKFHQWXU\3HUKDSVLWVVWURQJHVWVXSSRUW
ZDVLQWKHSURJUHVVLYHQDWXUHRIWKHIRVVLOUHFRUG,I/\HOOVJHRORJ\
ZDVFRUUHFWWKHQWKHIRVVLOVZHUHQRWDUHFRUGRIDJUHDWIORRGEXW
RIDYHU\ORQJKLVWRU\RIOLIHRQHDUWK$QGZKHQLQWHUSUHWHGLQWKDW
OLJKW RQH IRXQG D JHQHUDO SURJUHVVLRQ IURP VLPSOH WR FRPSOH[
OLIHIRUPV(YROXWLRQPDGHVHQVHLQWKDWOLJKW<HWWKHUHZDVPRUH
WR'DUZLQWKDQWKHIRVVLOUHFRUG6RPH\HDUVEHIRUH'DUZLQ
5REHUW &KDPEHUV DQRQ\PRXVO\ SXEOLVKHG D SRSXODU OLWWOH ERRN
HQWLWOHG9HVWLJHVRIWKH1DWXUDO+LVWRU\RI&UHDWLRQ7KLVERRN
ZDVILOOHGZLWKZLOGVSHFXODWLRQDERXWWKHHYROXWLRQRIOLIH$QGLW
ZDVXQLYHUVDOO\FRQGHPQHGE\HYHU\ERG\ELRORJLVWVJHRORJLVWV
DQGWKHRORJLDQVDOLNH:KDWPDGH'DUZLQGLIIHUHQW"
&KDUOHV/\HOO7KH3ULQFLSOHVRI*HRORJ\-RKQ0XUUD\/RQGRQ
-RKQ )DUOH\ 7KH 6SRQWDQHRXV *HQHUDWLRQ &RQWURYHUV\ IURP 'HVFDUWHV WR
2SDULQ-RKQV+RSNLQV8QLYHUVLW\3UHVV%DOWLPRUH
5REHUW &KDPEHUV 9HVWLJHV RI WKH 1DWXUDO +LVWRU\ RI &UHDWLRQ &KXUFKLOO
/RQGRQ

)RURQHWKLQJ'DUZLQUHDVRQHGKLVLGHDVRXWEULOOLDQWO\+H
H[SODLQHGHYROXWLRQLQWHUPVRIVHOHFWLRQVLPLODUWRWKHVHOHFWLRQ
HPSOR\HGLQDQLPDOEUHHGLQJ+HORRNHGLQWRWKHIRVVLOUHFRUG+H
ORRNHGLQWROLIHDWSUHVHQW+RZHYHUWKHUHDOHYLGHQFHZDVLQFUHG
LEO\VFDQW2XUNQRZOHGJHRIWKHPLFURVFRSLFPHFKDQLFVRIOLIHDQG
UHSURGXFWLRQZDVSUDFWLFDOO\QRQH[LVWHQWDWWKHWLPH*HQHWLFVZDV
XQNQRZQ2XUNQRZOHGJHRIWKHIRVVLOUHFRUGZDVTXLWHOLPLWHG
:HGLGQWHYHQNQRZDERXWUDGLRDFWLYLW\PXFKOHVVUDGLRPHWULF
GDWLQJ6RPHSHRSOHVWLOOEHOLHYHGLQVSRQWDQHRXVJHQHUDWLRQ
,QDZD\,VHH'DUZLQVHYROXWLRQDORWOLNHJHQHUDOUHODWLYLW\
*HQHUDOUHODWLYLW\ZDV(LQVWHLQVV\QWKHVLVRI0D[ZHOOVHTXD
WLRQVIRUHOHFWURG\QDPLFVZKLFKKDGEHHQILQDOL]HGLQWKHVHFRQG
KDOIRIWKHWKFHQWXU\DQGRI1HZWRQLDQJUDYLWDWLRQZKLFK
ZDVDQDUFKDLFDQGDQWLTXDWHGWKHRU\ZKLFKQRORQJHUILWLQZLWK
WKH ILHOGWKHRUHWLF YLHZ RI WKH ZRUOG *HQHUDO UHODWLYLW\ ZDV D
WUHPHQGRXV LQWHOOHFWXDO V\QWKHVLV +RZHYHU RQFH IRUPXODWHG
WKHUHZDVOLWWOHHYLGHQFHIRULWDQGLWSURYHGWREHUDWKHUGLIILFXOW
WRWHVW<HWWRWKHSK\VLFLVWLWZDVORJLFDOO\DQGSKLORVRSKLFDOO\
VRXQG,WZDVHQWLUHO\VHOIFRQVLVWHQW$QGLWPDGHVRPHWHVWDEOH
SUHGLFWLRQV 6R GHVSLWH LWV UDWKHU ZLOG UDPLILFDWLRQV DQG IOLPV\
H[SHULPHQWDOEDVLVPRVWVFLHQWLVWVDFFHSWHGLWDQGZRUNHGWRWHVW
LWDQGILJXUHRXWWKHGHWDLOV'DUZLQVFRQFHSWRIHYROXWLRQZDVLQ
WKH VDPH ZD\ D JUHDW V\QWKHVLV ,W ZDV LQWHOOHFWXDOO\ VRXQG DQG
SKLORVRSKLFDOO\VHOIFRQVLVWHQW$QGRQHFRXOGPDNHVRPHSUHGLF
WLRQV ZLWK LW 6R VFLHQWLVWV DFFHSWHG HYROXWLRQ GHVSLWH WKH WUXO\
UDGLFDOUDPLILFDWLRQVDQGWKH\ZRUNHGWRWHVWDQGYHULI\LW
$QGWKHROGFUHDWLRQLVWVGLHGRXW
(YROXWLRQ0\WKDQG
0DWKHPDWLFV
7KH ROG LGHD RI D VXSHUQDWXUDO FUHDWLRQ KDV ORVW FUHGLELOLW\
DPRQJVFLHQWLVWV+RZHYHU,GRQWWKLQNZHVKRXOGEHWRRTXLFNWR
SXWHYROXWLRQDQGDELRJHQHVLVWKHFKHPLFDOEHJLQQLQJRIOLIHRQ
WKHWKURQHZKLFKFUHDWLRQRQFHRFFXSLHGHYHQLIWKDWLVWKHSRSXODU
WKLQJWRGRULJKWQRZ
$/LPLWHG6FLHQFH
$VORQJDV,DPZHDULQJP\VFLHQWLVWVKDW,PXVWUHFRJQL]H
WKHOLPLWVRIVFLHQFHDQGLWZRXOGDSSHDUWKDWHYROXWLRQLVRQHDUHD
ZKHUHZHFDQHDVLO\SXVKWKHOLPLWVRIVFLHQFHXQDZDUHWKDWZHDUH
GRLQJVR8OWLPDWHO\TXHVWLRQVDERXWSDVWHYHQWVOLNHWKHEHJLQ
QLQJRIOLIHRQHDUWKDUHQRWSURSHUVFLHQWLILFTXHVWLRQV6FLHQFH
FDQQHYHUWHOOXVZKHWKHUOLIHDFWXDOO\EHJDQDVWKHUHVXOWRIDQDWXUDO
FKHPLFDOSURFHVVRUDGLYLQHPLUDFOH,WFDQQHYHUWHOOXVWKDWVSHFLHV
$HYROYHGIURPVSHFLHV%
:KDWVFLHQFHVKRXOGEHDEOHWRWHOOXVLVKRZOLNHO\LWLVWKDWWKH
QDWXUDOODZVRIWKLVXQLYHUVHFRXOGKDYHZRUNHGWRSURGXFHOLIHRU
DFHUWDLQVSHFLHV$QGRIWHQVFLHQFHGRQHSURSHUO\FDQPLWLJDWHQRW
WKHIDFWRIEXWWKHQHHGIRUVXSHUQDWXUDOLQWHUYHQWLRQ
7KLVSRLQWPD\VHHPOLNHDVXEWOHGHWDLOKDUGO\ZRUWKPHQWLRQ
LQJ <HW LW FDQ SURYH WR EH D VHULRXV WUDS IRU WKH ZHOOPHDQLQJ
VFLHQWLVW WR IDOO LQWR 3HRSOH RQ ERWK VLGHV RI WKH PRGHUQ FUHD
WLRQHYROXWLRQ GHEDWH KDYH GRQH MXVW WKDW YHU\ IUHTXHQWO\ )RU
H[DPSOHLI\RXUDGLRPHWULFDOO\GDWHDURFNDWPLOOLRQ\HDUV

ROG D FUHDWLRQLVW ZKR SUHIHUV D \HDU ROG HDUWK FDQ DOZD\V
TXHVWLRQ \RXU GDWH <RX FRXOG QRW SRVVLEO\ NQRZ WKH RULJLQDO
FRQWHQWVRIWKHURFNDQGDQ\DVVXPSWLRQV\RXPDNHDERXWWKRVH
FRQWHQWVDUHMXVWWKDWDVVXPSWLRQV*XHVVZKDWWKHFUHDWLRQLVWLV
ULJKW/LNHZLVHDPDWHULDOLVWZKHQFRQIURQWHGZLWKVRPHRIWKH
VWDWLVWLFDOGLIILFXOWLHVRIDELRJHQHVLVFDQDOZD\VIDOOEDFNRQWKH
PRVWXQOLNHO\FKDQFHHYHQW$SUREDELOLW\QRPDWWHUKRZVPDOOLV
QRW]HUR+HWRRLVULJKW<HWLQERWKWKHVHLQVWDQFHVWKHUHLVDSRLQW
ZKHUHVFLHQFHVWRSVDQGSKLORVRSK\WDNHVXS6RPHWLPHVDQVZHUV
WRTXHVWLRQVOLNHWKHVHGHSHQGPRUHRQ\RXUSKLORVRSKLFDOIRXQGD
WLRQWKDQRQVFLHQFH7KHKRQHVWVFLHQWLVWPXVWEHZDUHDQGWDNHRII
KLVVFLHQWLVWVKDWZKHQWUHDGLQJRQVXFKVKDN\JURXQG8QIRUWX
QDWHO\PDQ\DQGHVSHFLDOO\WKHPRVWYRFDOGRQRW
$VDVFLHQWLVWORRNLQJDWWKHEHJLQQLQJDQGGHYHORSPHQWRIOLIH
RQHDUWK,ZDQWWRWU\WRILQGRXWKRZOLNHO\LWLVWKDWQDWXUDOODZ
FRXOGFDXVHZKDWLVREVHUYHGLQWKHIRVVLOUHFRUGDQGLQWRGD\V
ZRUOG7RWKHH[WHQWWKDWQDWXUDOODZLVFDSDEOHRIH[SODLQLQJWKDW
,FDQVDIHO\GLVSHQVHZLWKPLUDFOHV+RZHYHUDWWKHSRLQWVZKHUH
HYHQWVVHHPXQOLNHO\,PXVWILQGVRPHQHZODZWRH[SODLQZKDW,
VHHLIWKHUHLVVXFKDODZRU,PXVWVD\WKDWIRUQRZ,FDQGRQR
PRUHDQGOHDYHWKHSKLORVRSKHUVDQGWKHRORJLDQVWRWKHLUZRUN
7KLVKXPEOHDWWLWXGHLVUDUHLQVFLHQFHWRGD\HVSHFLDOO\LQWKH
PRUHSRSXODUH[SUHVVLRQVRILW6HOIOLPLWDWLRQLVYLHZHGDVZHDN
QHVVE\FRQILGHQWH[SHUWVDVWKH\EROGO\DVVHUWWKDWVFLHQFHLVWKH
NH\WRDOONQRZOHGJH)RUH[DPSOH&DUO6DJDQLQKLVERRN&RVPRV
VWDUWVRXWE\PDNLQJWKHEROGVWDWHPHQW 7+(&26026,6$//
7+$7 ,6 25 (9(5 :$6 25 (9(5 :,// %( $XWKRUV
FDSLWDOV6DJDQVD\VKHKDVDOZD\VZRQGHUHGDERXWOLIHHOVHZKHUH
LQWKHXQLYHUVH6XFKPXVLQJVDQGVHDUFKLQJVDUHQREOH%XWZLWK
VXFKDVWURQJSKLORVRSKLFDOVWDUW\RXFDQKDUGO\H[SHFWKLVWUHDWLVH
WRJLYH\RXDVWUDLJKWORRNDWZKDWVFLHQFHFDQWHOOXVDERXWWKH
XQLYHUVHRUOLIHLQLW
&DUO6DJDQ&RVPRV5DQGRP+RXVH1HZ<RUNS

,ELGS

3URSHUO\ XQGHUVWRRG WKRXJK WKHUH LV QR VKDPH LQ D OLPLWHG

VFLHQFH)RUH[DPSOHWKDWVULJKWZKHUHUHDOVFLHQFHVWDQGVZLWK
WKHELJEDQJ<RXFDQWXVHJHQHUDOUHODWLYLW\WRFDOFXODWHEDFNSDVW
WKHLQLWLDOVLQJXODULW\$QG\RXFDQWH[SODLQFHUWDLQDVSHFWVRIWKH
ELJEDQJOLNHZK\LWKDGVXFKORZHQWURS\DVWDWHWKDWDSSHDUV
SKHQRPHQDOO\ XQOLNHO\ 6RPH VFLHQWLVWV WKLQN TXDQWXP JUDYLW\
ZLOOKHOSDQVZHUWKDW0D\EHLWZLOO0D\EHLWZRQW%XWLQWKH
PHDQWLPHVSHFXODWLRQDERXWZKDWFDXVHGWKHEDQJRUKRZLWJRW
VWDUWHG LV RXWVLGH WKH UHDOP RI VFLHQFH $QG SHRSOH DUH IUHH WR
VSHFXODWH$VWURQJDQWKURSLFSULQFLSOHDWZRUN"*RG"6FLHQFHE\
LWVHOI FDQQRW DQVZHU WKHVH TXHVWLRQV 2I FRXUVH PHQOLNH6DJDQ
GRQWKHVLWDWHWRDQVZHUWKHPLQVLQXDWLQJLQILQLWHKLHUDUFKLHVRI
XQLYHUVHV ZLWK WXQQHOV EHWZHHQ WKHP HQWURS\ UHYHUVDO DQG DOO
NLQGVRIRWKHUZHLUGLGHDVLQWKHQDPHRIVFLHQFH
,XUJHFDXWLRQEHFDXVHLQWKHSDVWWKLUW\\HDUVERWKHYROXWLRQ
DQGDELRJHQHVLVKDYHVXIIHUHGVRPHGHYDVWDWLQJFULWLFLVP,PQRW
WDONLQJDERXWFUHDWLRQLVWVKHUHHLWKHU7KHVHFULWLFLVPVDUHURRWHG
LQ SXUH PDWKHPDWLFV DQG DUH ODUJHO\ D FRQVHTXHQFH RI ELRORJ\
FRPLQJLQWRWKHLQIRUPDWLRQDJH$OWKRXJKPRVWRIWKLVFULWLFLVP
KDVQWEHHQZHOOUHFHLYHGE\PDLQVWUHDPHYROXWLRQDU\ELRORJLVWV
DQGFHUWDLQO\LWZRQWEHWDXJKWLQWKHVFKRROV,WKLQNLWLVYHU\
YDOLGDQGYHU\UHOHYDQW
$QDO\WLF6FLHQFHLQWKH,QIRUPDWLRQ$JH
<RX KDYH WR XQGHUVWDQG WKDW DQDO\WLFDO VFLHQFHZKHUH \RX
ZULWHHTXDWLRQVGRZQDQGWU\WRVROYHWKHPH[DFWO\LVUHDOO\YHU\
OLPLWHG,WPD\EHDEOHWRSUHGLFWWKHPRWLRQRIDIDOOLQJEDOOLQD
YDFXXP IDLUO\ DFFXUDWHO\ EXW PRVW UHDOZRUOG SKHQRPHQD DUH
FRPSOHWHO\EH\RQGLWVJUDVS)RUH[DPSOHLWZRXOGEHULGLFXORXV
WRPRGHODWUHHDQDO\WLFDOO\PXFKOHVVWRH[DFWO\VROYHLWVHTXDWLRQV
RIPRWLRQRQDZLQG\GD\1RZLQP\OLIHWLPH,YHQHYHUNQRZQ
DQ\RQHZKRGRXEWHGWKDWWKHDQDO\WLFHTXDWLRQVRIPRWLRQIRUWKDW
<RUNS
2S&LW6DJDQS

WUHHZRXOGJLYHWKHULJKWDQVZHULIWKH\FRXOGEHVROYHGH[DFWO\
&HUWDLQO\,GRQRWGRXEWLW<HW,PXVWDGPLWWKDWWKRVHHTXDWLRQV
DUHSUHWW\ZRUWKOHVVDVIDUDVVROYLQJWKLVSUREOHPJRHVZLWKRXW
DFRPSXWHU
&RPSXWHUVKDYHEHFRPHLPSRUWDQWWRROVLQVROYLQJVFLHQWLILF
SUREOHPVLQWKHSDVW\HDUV$QGWKH\KDYHKHOSHGERWKWRVKRZ
XSIDXOWVLQVRPHDQDO\WLFWKHRULHVDQGWRIRUPXODWHWKHRULHVZKHUH
QRQHKDYHH[LVWHG<HWPRUHWKDQWKDWFRPSXWHUVKDYHEHHQDEOH
WRKHOSXVEHWWHUXQGHUVWDQGQDWXUHLQUHDOPVZKHUHLWGRHVQWHYHQ
PDNHDORWRIVHQVHWRWU\WRZULWHGRZQDQDQDO\WLFHTXDWLRQRI
PRWLRQ
$VZHGLVFXVVHGHDUOLHUWKHLGHDWKDWWKHODZVRIQDWXUHDUHLQ
VRPHVHQVHVLPSOHLVHVVHQWLDOWRVFLHQFH2QFHWKHODZVEHFRPH
VRFRPSOH[WKDWWKHKXPDQPLQGFDQQRWXQGHUVWDQGWKHPWKH\DUH
HVVHQWLDOO\ZRUWKOHVV)RUH[DPSOHDEULJKWVWXGHQWFDQVSHQGD
VHPHVWHU DQG OHDUQ WR FRQFHSWXDOO\ XQGHUVWDQG 0D[ZHOOV HTXD
WLRQVD VHW RI FRXSOHG SDUWLDO GLIIHUHQWLDO HTXDWLRQV ZKLFK
GHVFULEH HOHFWURPDJQHWLVP %XW ZKDW KDSSHQV ZKHQ \RX KDYH
FRXSOHG HTXDWLRQV" )HZ SHRSOH FRXOG ZULWH WKHP GRZQ
FRUUHFWO\LQRQHWU\DQGQRRQHFDQVROYHWKHPDQDO\WLFDOO\PXFK
OHVV JDLQ DQ\ VLJQLILFDQW XQGHUVWDQGLQJ IURP WKHP +RZHYHU LW
PLJKWEHSRVVLEOHWRIRUJHWDERXWWKHHTXDWLRQVDOWRJHWKHUDQGFRPH
XS ZLWK D IHZ VLPSOH DOJRULWKPV WR GHVFULEH WKH V\VWHP XQGHU
FRQVLGHUDWLRQ DQG WKHQ PRGHO LW RQ D FRPSXWHU ,Q WKLV ZD\
FRPSXWHUVDUHFKDQJLQJRXUYHU\LGHDRIZKDW VLPSOH PHDQVLQ
QDWXUHDQGRSHQLQJXSZKROHQHZUHDOPVRIVWXG\
0\WKRORJLFDO(YROXWLRQ
1RZ OHWV FRPH EDFN WR HYROXWLRQ , PHQWLRQHG LQ WKH ODVW
FKDSWHU WKDW ZKHQ 'DUZLQ DGYDQFHG HYROXWLRQ KLV LGHD ZDV
IRXQGHGRQSUHFLRXVOLWWOHHYLGHQFHDQGWKDWLWDSSHDUHGWRKDYH
ZRQRXWRYHUFUHDWLRQLVPRQWKHEDVLVRILWVSKLORVRSKLFDOFRQVLV
WHQF\PRUHWKDQDQ\WKLQJ$WWKHULVNRIVRXQGLQJUHGXQGDQW,OO
VD\LWDJDLQ,QVFLHQWLVWVZHUHDOPRVWFRPSOHWHO\LJQRUDQWRI
WKHPLFURVFRSLFZRUNLQJVRIOLYLQJRUJDQLVPV
5HDGLQJPRVWSRSXODUDFFRXQWVRIHYROXWLRQRQHPLJKWEHOLHYH
WKDWWKHKLVWRU\RIHYROXWLRQIURPWRWKHSUHVHQWKDVEHHQRQH

RI YLFWRU\ DIWHU YLFWRU\ ZKHUH XQGHUVWDQGLQJ DGGHG WR XQGHU

VWDQGLQJKDVPDGHHYROXWLRQRQHRIWKHPRVWH[WUDRUGLQDU\YLFWRULHV
IRUVFLHQFHHYHU8QIRUWXQDWHO\VXFKDFFRXQWVDUHXVXDOO\DJORVV
7KRXJKWKHUHKDYHEHHQVLJQLILFDQWYLFWRULHVWKHSDWKLVQRWDOOVR
FXWDQGGULHG$UHFHQWERRN'DUZLQRQ7ULDOE\3KLOOLS-RKQVRQ
FRQWHQGV WKDW HYROXWLRQDU\ VFLHQFH KDV EHFRPH WKH VHDUFK IRU
FRQILUPLQJ HYLGHQFH DQG WKH H[SODLQLQJ DZD\ RI QHJDWLYH HYL
GHQFH UDWKHU WKDQ D FULWLFDO DWWHPSW WR FRQILUP RU IDOVLI\ D
VFLHQWLILFWKHRU\+HIODWO\FRQFOXGHVWKDWHYROXWLRQLVSVHXGRVFL
HQFH DQG QRW MXVW D WKHRU\ RI ELRORJ\ EXW WKH PRVW LPSRUWDQW
HOHPHQWLQDUHOLJLRQRIVFLHQWLILFQDWXUDOLVPZLWKLWVRZQHWKLFDO
DJHQGDDQGSODQIRUVDOYDWLRQWKURXJKVRFLDODQGJHQHWLFHQJLQHHU
LQJ
7KHVHDUHVHULRXVFKDUJHV1RZ-RKQVRQLVDQDGPLWWHG&KULV
WLDQ ZLWK SHUKDSV VRPH V\PSDWKLHV WRZDUG WKH LGHD RI GLYLQH
FUHDWLRQ 7KDW ZRXOG WHQG WR DXWRPDWLFDOO\ GLVFUHGLW KLP DPRQJ
VFLHQWLVWV \HW KLV DUJXPHQWV DUH QRW WR EH GLVPLVVHG OLJKWO\ +H
VXUYH\VDOORIWKHVXSSRUWLQJHYLGHQFHIURPWKHIRVVLOUHFRUGWR
PROHFXODUELRORJ\DQGHYROXWLRQFRPHVXSZDQWLQJ1RZ,GRQW
DJUHHZLWKHYHU\WKLQJ-RKQVRQVD\VDQG,DPQRWJRLQJWRGLJLQWR
WKLVHYLGHQFHLQPXFKGHWDLOKHUHH[FHSWDVLWSHUWDLQVGLUHFWO\WR
RXUGLVFXVVLRQLQWKHDSSURSULDWHSODFHV<RXFDQDQGVKRXOG
JHW-RKQVRQVERRNDQGUHDGLWDVZHOODVKLVFULWLFVWRXQGHUVWDQG
ZKDW,VD\LQDEURDGHUFRQWH[W:KDW,ZRXOGOLNHWRGRULJKWQRZ
LVWU\WRJHWDWZK\HYROXWLRQLVVHHQE\VRPDQ\DVDQDQVZHUWRD
PXOWLWXGHRISKHQRPHQDDQG\HWDVSUDFWLFDOO\YDFXRXVE\RWKHUV
:K\LVLWWKDW-XOLDQ+X[OH\FDQVD\
3KLOOLS-RKQVRQ'DUZLQRQ7ULDO5HJQHU\*DWHZD\:DVKLQJWRQ'&
S
,ELGS
6HH 6WHYHQ -D\ *RXOG ,PSHDFKLQJ D 6HOI$SSRLQWHG -XGJH 6FLHQWLILF
$PHULFDQ -XO\ S )RU -RKQVRQV UHSO\ VHH 3KLOOLS -RKQVRQ
5HVSRQVHWR*RXOG 2ULJLQV5HVHDUFK6SULQJSDYDLDEOHIURP
$5132%R[&RORUDGR6SULQJV&2$OVR\RXPLJKWZDQWWR
ORRNWKURXJK3HUVSHFWLYHVRQ6FLHQFHDQGWKH&KULVWLDQ)DLWKDQG
DV-RKQVRQJRWVRPHILUHWKHUH

7KLVLVRQHRIWKHILUVWSXEOLFRFFDVLRQVRQZKLFKLWKDVEHHQ
IUDQNO\IDFHGWKDWDOODVSHFWVRIUHDOLW\DUHVXEMHFWWRHYROXWLRQIURP
DWRPVDQGVWDUVWRILVKDQGIORZHUVIURPILVKDQGIORZHUVWRKXPDQ
VRFLHWLHVDQGYDOXHVLQGHHGDOOUHDOLW\LVDVLQJOHSURFHVVRIHYR
OXWLRQ
:K\FDQ5LFKDUG'DZNLQVZULWH
,WLVDEVROXWHO\VDIHWRVD\WKDWLI\RXPHHWVRPHERG\ZKRFODLPV
QRWWREHOLHYHLQHYROXWLRQWKDWSHUVRQLVLJQRUDQWVWXSLGRULQVDQH
RUZLFNHGEXW,GUDWKHUQRWFRQVLGHUWKDW
$QG \HW &ROLQ 3DWWHUVRQ D VHQLRU SDOHRQWRORJLVW DW WKH %ULWLVK

1DWXUDO+LVWRU\0XVHXPFDQVWDQGXSDQGVD\
&DQ\RXWHOOPHDQ\WKLQJ\RXNQRZDERXWHYROXWLRQDQ\RQH
WKLQJWKDWLVWUXH",WULHGWKDWTXHVWLRQRQWKHJHRORJ\VWDIIDWWKH
)LHOG 0XVHXP RI 1DWXUDO +LVWRU\ DQG WKH RQO\ DQVZHU , JRW ZDV
VLOHQFH,WULHGLWRQWKHPHPEHUVRIWKH(YROXWLRQDU\0RUSKRORJ\
VHPLQDU LQ WKH 8QLYHUVLW\ RI &KLFDJR D YHU\ SUHVWLJLRXV ERG\ RI
HYROXWLRQLVWV DQG DOO , JRW WKHUH ZDV VLOHQFH IRU D ORQJ WLPH DQG
HYHQWXDOO\RQHSHUVRQVDLG,GRNQRZRQHWKLQJLWRXJKWQRWWREH
WDXJKWLQKLJKVFKRRO "
,V VRPHERG\ LQVDQH RU DUH WKHUH UHDVRQV IRU VXFK VWURQJ DQG
FRQWUDGLFWRU\FRPPHQWV"
,WKLQNDELJSDUWRIWKHSUREOHPLVWKDWWUDGLWLRQDOHYROXWLRQLV
HVVHQWLDOO\EH\RQGWKHUHDFKRIDQDO\WLFDOVFLHQFH/HWVVXSSRVH
IRUDPRPHQWWKDWVRPHRQHIURPWKHSK\VLFDOVFLHQFHVZKRKDG
QHYHUEHIRUHKHDUGRIHYROXWLRQZDVJLYHQWKHWDVNRIVXJJHVWLQJ
VRPHH[SHULPHQWVWRWHVWHYROXWLRQ+HPLJKWYHU\ZHOODVNZKDW
HYROXWLRQFRXOGSUHGLFWFRQFHUQLQJWKHWUDQVIRUPDWLRQRIRQHVSH
6LU-XOLDQ+X[OH\ 7KH(YROXWLRQDU\9LVLRQ LQ6RO7D[(G(YROXWLRQDIWHU
'DUZLQ8QLYHUVLW\RI&KLFDJRSUHVV&KLFDJR9ROS
2S&LW-RKQVRQS
2S&LW-RKQVRQSFLWHVWKLVSDVVDJHDVVRPHWKLQJWKDWZDVQRWSXEOLVKHG
KRZHYHU3DWWHUVRQVD\VDERXWWKHVDPHWKLQJLQ7RP%HWKHOO 'HGXFLQJIURP
0DWHULDOLVP 1DWLRQDO5HYLHZ$XJXVWSS

FLHVLQWRDQRWKHU8QIRUWXQDWHO\WKHGDUNVLGHRIWUDGLWLRQDOHYROX
WLRQLVRQO\WRRDEOHWR SUHGLFW MXVWDERXWDQ\WKLQJ\RXOLNH1R
GRXEW\RXYHVHHQ VXUYLYDORIWKHILWWHVW DUJXPHQWVWRH[SODLQ
KRZGLIIHUHQWDQLPDOVHYROYHGEHLWELUGVIURPUHSWLOHVPDPPDOV
IURPUHSWLOHVDPSKLELDQVIURPILVKRUZKDWKDYH\RX/HWVWU\DQ
LPDJLQDU\RQHRQIRUVL]H
3URSRVLWLRQ6RPHKDPVWHUVHYROYHGLQWRPLFH
([SODQDWLRQ+DPVWHUVDUHVORZPRYLQJFUHDWXUHVWKDWDUHHDVLO\FDXJKW
E\SUHGDWRUV,QVRPHDUHDVZKHUHSUHGDWRUVZHUHSOHQW\ VPDOOHUIDVWHU
KDPVWHUVVXUYLYHGEHWWHUWKDQWKHODUJHVORZRQHV2IWKHIDVWHVWRQHV
ORQJWDLOVSURYHGWREHKHOSIXOIRUEDODQFHZKHQUXQQLQJIDVWWRHYDGHSUH\
7KHIDVWVPDOOORQJWDLOHGDQLPDOVEHFDPHZKDWZHNQRZDVPLFH
1RZOHWVWXUQLWDURXQG
3URSRVLWLRQ6RPHPLFHHYROYHGLQWRKDPVWHUV
([SODQDWLRQ,QDUHDVZKHUHIRRGZDVVFDUFHDODUJHUDQLPDOZLWKDVORZ
PHWDEROLVPDQGZLWKWKHDELOLW\WRVWRUHORWVRIIRRGLQLWVPRXWKTXLFNO\
VXUYLYHGEHWWHUWKDQWKHVPDOODQLPDOVZKLFKFRXOGHDWRQO\DELWHDWDWLPH
7KHODUJHURQHVZRXOGJREEOHXSHQRXJKIRRGIRUDZKROHGD\LQWKHVDPH
WLPH WKDW VPDOOHU RQHV FRXOG RQO\ JHW D FRXSOH PRXWKIXOV $ VORZHU
PHWDEROLVP SURYHG KHOSIXO WR WKH ODUJH DQLPDOV LQ VXUYLYLQJ WKURXJK
SHULRGV ZKHQ WKH\ FRXOG QRW ILQG IRRG )RU VORZHU PRYLQJ DQLPDOV D
VKRUW VWXEE\ WDLO SURYHG EHQHILFLDO EHFDXVH LW PDGH WKHP KDUGHU IRU
SUHGDWRUVWRFDWFK7KHODUJHDQLPDOEHFDPHZKDWZHNQRZDVDKDPVWHU
2EYLRXVO\ZHDUHQWWDONLQJVFLHQFHKHUH7KLVLGHDRIHYROXWLRQLV
QRWIDOVLILDEOHLQDQ\VHQVHRIWKHZRUG*LYHPHDQ\WZRVSHFLHV
DQG,FDQFRQVWUXFWDQDUJXPHQWWRH[SODLQZK\RQHHYROYHGLQWR
WKHRWKHURUYLFHYHUVD
1RGRXEWRXUYHU\WUDGLWLRQDODQGYHU\FRQVHUYDWLYHSK\VLFDO
VFLHQWLVWZRXOGFRPHDZD\IURPDOORIWKLVUKHWRULFYHU\XQKDSS\
:KDWKHZRXOGSUREDEO\OLNHWRVHHLVDFRQFUHWHVHWRIQXPEHUV
)RUH[DPSOH

30RXVH+DPVWHU
3+DPVWHU0RXVH [
ZKHUH3$%LVWKHSUREDELOLW\RI$HYROYLQJLQWR%IRUDJLYHQ
HQYLURQPHQWWLPHSHULRGHWF7KHHYROXWLRQDU\ELRORJLVWZRXOG
SUREDEO\FU\ IRXO LISUHVVHGRQVXFKDTXHVWLRQDQGH[SODLQZK\
LWLVULGLFXORXVWRWU\WRDQVZHULW
$QGLWLVULGLFXORXVDWOHDVWIURPWKHSHUVSHFWLYHRIWUDGLWLRQDO
DWRPLVWLFDQDO\WLFDOVFLHQFH(YHQWKHVLPSOHVWHYROXWLRQDU\VFH
QDULRVLQYROYHWKHFRPSOH[PROHFXODUG\QDPLFVRIDOLYLQJFHOOVR
\RXDUHWDONLQJDERXWDKXJHQXPEHURIHTXDWLRQVDVVRRQDV\RX
WKLQN RI ZULWLQJ VRPH GRZQ :H PLJKW WDNH D QXPEHU OLNH
HTXDWLRQV DV DQ DEVROXWH PLQLPXPRQH IRU HYHU\ EDVH LQ WKH
RUJDQLVPV'1$$QGLWZRXOGSUREDEO\EHPRUHUHDVRQDEOHWR
DUJXHIRUVRPHWKLQJOLNHRUVR2EYLRXVO\LIZHFRXOGHYHQ
ZULWHWKHVHHTXDWLRQVGRZQZHGEHKDUGSXWWRJDLQPXFKXQGHU
VWDQGLQJ IURP WKHP &HUWDLQO\ WKH WKRXJKW WKDW ZH FRXOG OHDUQ
DQ\WKLQJ DERXW HYROXWLRQ IURP VXFK DQ DSSURDFK VHHPV LOOFRQ
FHLYHG
%XWWKDWPHDQVPRVWRIRXULGHDVDERXWHYROXWLRQDUHEH\RQG
WKHUHDFKRIDQDO\WLFDOVFLHQFH
,WKLQNWKLVVLPSOHIDFWDORQHFDQH[SODLQWKHVWUDQJHSDUDGR[
RIHYROXWLRQWKDWLWVHHPVWRH[SODLQHYHU\WKLQJDQG\HWLWH[SODLQV
YHU\OLWWOH1RRQHUHDOO\KRSHVWRPDNHERQDILGHSUHGLFWLRQVRQ
WKHEDVLVRIPDWKHPDWLFDOPRGHOV,Q'DUZLQVGD\WKHWKRXJKWRI
DQDWRPLVWLFPDWKHPDWLFDOPRGHOZDVDEVXUGVLQFHQRRQHNQHZ
DQ\WKLQJDERXWWKHPLFURVFRSLFZRUNLQJRIOLYLQJRUJDQLVPV$QG
WKDWZDVDSUREOHPIRUDKXQGUHG\HDUV7RGD\WKHPDWKHPDWLFDO
PRGHOORRNVYHU\LPSUDFWLFDODOWKRXJKWKHUHLVHQRXJKRIDWKHR
UHWLFDOEDVLVWRDWOHDVWFRQFHLYHRILW,KDYHWRTXHVWLRQZKHWKHU
WU\LQJWRGRUHDOVFLHQFHLQWKDWNLQGRIDQHQYLURQPHQWFDQOHDGWR
DQ\WKLQJEXWKDQGZDYLQJREIXVFDWLRQVDQGVWRU\WHOOLQJ(YROXWLRQ
DWWKLVOHYHOLVQRWKLQJPRUHWKDQDQDFFHSWDEOHP\WK%HOLHYLQJLQ
LWLVVRPHZKDWOLNHEHOLHYLQJFODVVLFDOPHFKDQLFVZLOOZRUNIRUD
WUHH H[FHSW \RX GRQW HYHQ UHDOO\ NQRZ ZKDW WKH HTXDWLRQV RI
PHFKDQLFV DUH OHW DORQH KRZ WR DSSO\ WKHP <RX MXVW KDYH D

PLVFHOODQHRXVFROOHFWLRQRIREVHUYDWLRQVOLNH*DOLOHRV/HDQLQJ
7RZHURI3LVDH[SHULPHQW
0DWKHPDWLFDO(YROXWLRQ
1RZ3KLOOLS-RKQVRQDUJXHGWKDWWRWU\WRVDYHHYROXWLRQXQWLO
DEHWWHUWKHRU\FRPHVDORQJLVOLNHWHOOLQJVRPHRQHDFFXVHGRID
FULPHZKRKDVDQDOLELWKDWKHLVJXLOW\XQOHVVKHFDQFRPHXSZLWK
DEHWWHUVXVSHFW:KHWKHUWKH\ULQJWUXHRUQRWVXFKREMHFWLRQV
ZRQWJHWYHU\IDUZLWKVFLHQWLVWV6FLHQWLILFWKHRULHVWHQGWRWDNH
RQ FHUWDLQ FKDUDFWHULVWLFV RI GRJPDVDQG WKDW LV SDUW RI KRZ
VFLHQFHZRUNVRUVKRXOG,VD\KRZSHRSOHZRUN"VRWKH\FDQQRW
EHHDVLO\UHMHFWHGOLNHVXVSHFWVLQDFULPLQDOFDVH+RZHYHU,GRQRW
EHOLHYH LW LV XQUHDVRQDEOH WR DVN IRU D UHDO WKHRU\ RI HYROXWLRQ
IRXQGHGLQVFLHQFHDQGPDWKHPDWLFV7RGD\ZHGRQWHYHQKDYHD
WKHRU\
+RZHYHU,WKLQNZLWKWKHDGYHQWRI$/DOOWKHHOHPHQWVDUHLQ
SODFHWREHJLQIRUPXODWLQJDWKHRU\
)LUVWZHPXVWXQGHUVWDQGWKHGLVWLQFWLRQEHWZHHQWKHIDFWRI
HYROXWLRQDQGWKHWKHRU\RIHYROXWLRQ7KHIDFWRIHYROXWLRQVLPSO\
VWDWHGLVWKDWLQDVHOIUHSOLFDWLQJV\VWHPLQZKLFKPXWDWLRQVFDQ
RFFXUDQGPXWDWLRQVFDQEHSDVVHGRQIURPSDUHQWVWRFKLOGUHQWKH
JHQHWLF PDNHXS RI WKH SRSXODWLRQ FDQ YDU\ IURP JHQHUDWLRQ WR
JHQHUDWLRQDQGWKHYDULDWLRQFDQEHLQIOXHQFHGE\H[WHUQDOIDFWRUV
7KDWLVDQHDVLO\REVHUYDEOHVFLHQWLILFIDFW1RWHWKDWZHYHOHIW
RXWDQ\PHQWLRQRIVXUYLYDORIWKHILWWHVWEHFDXVHILWQHVVLVDOZD\V
GHILQHGLQWHUPVRIVXUYLYDO7KHUHIRUHVXUYLYDORIWKHILWWHVWLVD
WDXWRORJ\:KDWZHGRNQRZLVWKDWWKHSRSXODWLRQZLOOFKDQJH
2S&LW-RKQVRQS
.DUO 3RSSHU &RQMHFWXUHV DQG 5HIXWDWLRQV QG (G %DVLF %RRNV 1HZ
<RUNS
7KHPRVWZHOONQRZQH[DPSOHLVWKHOLJKWDQGGDUNIRUPVRIWKHSHSSHUHGPRWK
6HH+%'.HWWHUZHOO 'DUZLQV0LVVLQJ(YLGHQFH /HR)/DSRUWH(G
(YROXWLRQ DQG WKH )RVVLO 5HFRUG :+ )UHHPDQ 6DQ )UDQVLVFR SS
$OVRVHHWKHGLVFXVVLRQODWHULQWKLVERRN
2S&LW-RKQVRQSS

DQGWKDWHQYLURQPHQWDOIDFWRUVFDQLQIOXHQFHWKHGLUHFWLRQRIWKDW
FKDQJH
7KHEHVWDQ\RQHFDQGRDWDWKHRU\RIHYROXWLRQULJKWQRZLV
'DUZLQV K\SRWKHVLVLH WKH IDFW RI HYROXWLRQ LV FDSDEOH RI
DFFRXQWLQJIRUDOOWKHYDULHW\RIOLIHRQHDUWK <HWWKLVLVDWKHRU\
RQO\LQWKHVHQVHRIDPHUHFRQMHFWXUHRUJXHVV7KHUHLVVLPSO\QR
WKHRU\LQWKHVHQVHRIDV\VWHPDWLFWHVWDEOHH[SODQDWLRQRIKRZWKH
IDFWRIHYROXWLRQZRUNVLQQDWXUHWRFDXVHFKDQJH2IFRXUVHWKH
WDFLWXQVSRNHQDVVXPSWLRQEHKLQG'DUZLQVK\SRWKHVLVDQGPXFK
RIPRGHUQHYROXWLRQDU\ELRORJ\LVWKDWHYROXWLRQLVRPQLSRWHQWLW
FDQ DFFRPSOLVK DQ\WKLQJ \RX OLNH 7KHUHIRUH QR PDWKHPDWLFDO
TXDQWLILFDWLRQLVQHFHVVDU\RUSRVVLEOH
,QDZD\,ILQGLWVXUSULVLQJWKDWELRORJLVWVKDYHQWFODPRUHG
PRUHIRUDWKHRU\RUHYHQDWHVWRI'DUZLQVK\SRWKHVLV,WKDVEHHQ
DOPRVWXQLIRUPO\DFFHSWHGHYHUVLQFH'DUZLQSURSRVHGLW<HW,
DP QRW WRR VXUSULVHG ,I \RX DUH D PDWHULDOLVW LW LV YHU\ HDV\ WR
HOHYDWHWKHIDFWRIHYROXWLRQWRWKHSRLQWRIEHLQJSURRIHQRXJKRI
'DUZLQVK\SRWKHVLVDQGWKHWKHRU\PXVWORJLFDOO\EH HYROXWLRQ
LVDEOHWRGRDQ\WKLQJ 7KDWLVEHFDXVHWKHIDFWRIHYROXWLRQLVWKH
RQO\QDWXUDOPHFKDQLVPDYDLODEOHDVLWHQFRPSDVVHVDQ\DQGHYHU\
SRVVLEOHPHFKDQLVPIRUPXWDWLRQVKRUWRIGLYLQHLQWHUYHQWLRQ2QO\
RQFHRQHVWHSVEH\RQGWKHLQQRFHQFHRUQDwYHW\RIEOLQGGHYR
WLRQ WR VXFK SKLORVRSK\ GRHV WKH QHHG IRU D PRUH VWULQJHQW WHVW
SUHVHQWLWVHOI
$QGRQO\LQWKHSDVW\HDUVKDYHZHHYHQKDGDFOXHDVWR
KRZWRPDNHDWHVWRIZKHWKHUWKHIDFWRIHYROXWLRQFDQUHDVRQDEO\
H[SODLQ'DUZLQVK\SRWKHVLV:DWVRQDQG&ULFNGHFRGHG'1$LQ
EULQJLQJHYROXWLRQDU\ELRORJ\LQWRWKHLQIRUPDWLRQDJH:H
FDQ RQO\ SXW HYROXWLRQ LQ SHUVSHFWLYH RQFH ZH XQGHUVWDQG WKDW
JHQHWLFVLQYROYHVLQIRUPDWLRQDQGZHKDYHDIHHOIRUKRZPXFK
LQIRUPDWLRQLVLQYROYHGDQGKRZLWLVHQFRGHG
7KH HVVHQWLDO TXHVWLRQV RI HYROXWLRQ FDQ EH XQGHUVWRRG E\
ORRNLQJDWWKHGLDJUDPLQ)LJXUH(DFKTXHVWLRQWKDWZHDUH
LQWHUHVWHGLQLVUHSUHVHQWHGE\DQDUURZ)RUH[DPSOH
-':DWVRQDQG)+&ULFN1DWXUHS

(QYLURQPHQW
3KHQRW\SH
*HQRW\SH
0XWDWLRQV
)LJ7KHHVVHQWLDOTXHVWLRQVRIHYROXWLRQ
:KDWDUHWKHPXWDWLRQPHFKDQLVPVDQGKRZGRWKH\DIIHFWWKH
JHQRW\SH":HZRXOGOLNHWRNQRZKRZFKDQJHVWDNHSODFHDQG
ZKDWWKHUDWHVRIFKDQJHDUH
+RZGRHVWKHJHQRW\SHDIIHFWWKHSKHQRW\SHDQGYLFHYHUVD"
2EYLRXVO\WKHJHQRW\SHRIDQLQGLYLGXDOLVIL[HGEXWWKHJHQHWLF
PDNHXSRIDSRSXODWLRQLVDIIHFWHGE\WKHSKHQRW\SHVFRPSHWLQJ
ZLWKRQHDQRWKHU
+RZGRHVWKHSKHQRW\SHLQWHUDFWZLWKWKHHQYLURQPHQW"+RZ
GRHVWKHHQYLURQPHQWDIIHFWWKHYLDELOLW\RIWKHSKHQRW\SH"
,IZHFRXOGXQGHUVWDQGDOORIWKHVHUHODWLRQVKLSVULJRURXVO\WKHQ
ZH PLJKW EH DEOH WR IRUPXODWH D WKHRU\ WKDW FRXOG PDNH D IDLU
MXGJHPHQW DERXW 'DUZLQV K\SRWKHVLV )RU FDUERQEDVHG RUJDQ
LVPVWKRXJKZHYHRQO\VFUDWFKHGWKHVXUIDFHRIXQGHUVWDQGLQJ
$Q\ NLQG RI UHDO FDOFXODWLRQ IRU 3$% LV FRPSOHWHO\ RXW RI
UHDFK,WLVIDUWRRFRPSOH[IRUDQ\WKLQJEXWWKHVLPSOHVWUHDOZRUOG
VFHQDULR6RLWZRXOGDSSHDUWKDWHYHQWKRXJKZHFDQLPDJLQH
VXFKDWHVWWKHWKHRU\RIHYROXWLRQFDQQRWEHIRUPXODWHGZLWKVXFK
H[DFWQHVVDWOHDVWQRWIRUQRZ,IOLYLQJRUJDQLVPVDUHVWURQJO\
HPHUJHQWWKHQPD\EHWKH\FDQQHYHUEHVRDQDO\]HGLQSULQFLSOH

6R ZH DUULYH DW D GLOHPPD :H ZRXOG OLNH WR WHVW WKH WKHRU\ RI
HYROXWLRQDFFRUGLQJWRVRPHULJRURXVVFLHQWLILFVWDQGDUGVEXWWKH
KRUULEOHFRPSOH[LW\RIWKHSUREOHPEDUVWKHZD\
7KDWGRHVQRWPHDQRXUXQGHUVWDQGLQJRIHYROXWLRQPXVWDO
ZD\VUHPDLQQHEXORXV$UWLILFLDOOLIHLVWKHSHUIHFWVROXWLRQWRWKLV
GLOHPPD7KDWLVEHFDXVHWKHIDFWRIHYROXWLRQZLOORSHUDWHLQDQ\
VHOIUHSURGXFLQJV\VWHP7KDWLVPHUHO\WKHUHVXOWRIWKHGHILQLWLRQV
RI WKH IDFWRIHYROXWLRQDQGVHOIUHSURGXFWLRQ$V\VWHPGRHVQW
QHHGWREHDELRORJLFDORUJDQLVPDQGLWGRHVQWQHHGWREHVWURQJO\
HPHUJHQW IRU HYROXWLRQ WR WDNH SODFH $V ORQJ DV WKH V\VWHP LV
VXIILFLHQWO\FRPSOH[WRSHUPLWPXWDWLRQVWRRFFXUDQGVRORQJDV
WKRVHPXWDWLRQVFDQEHSDVVHGRQIURPSDUHQWVWRFKLOGUHQWKHIDFW
RIHYROXWLRQZLOOEHSUHVHQWWRVRPHGHJUHH6LQFHDUWLILFLDOV\VWHPV
DUHQRUPDOO\PXFKHDVLHUWKDQQDWXUDOV\VWHPVWRDQDO\]HLWPLJKW
MXVWEHSRVVLEOHWREULGJHWKHJDSEHWZHHQWKHIDFWRIHYROXWLRQDQG
WKHWKHRU\RIHYROXWLRQZLWKWKHP
:LWK DQ DUWLILFLDO RUJDQLVP ZH FRXOG FRQFHLYDEO\ DQDO\]H
HYHU\SRVVLEOHPXWDWLRQIRUYLDELOLW\RQHE\RQH7KHQZHFRXOG
QXPHULFDOO\VROYHVRPHVHWRISRSXODWLRQHTXDWLRQVDQGPDNHD
UHDOPDWKHPDWLFDOGHWHUPLQDWLRQRI3$%IRUVRPHVFHQDULR
(DVLHUVWLOOZHPD\EHDEOHWRVLPXODWHZKDWZRXOGKDSSHQLQD
FRPSXWHUDQGORRNDWWKHUHVXOWVZLWKRXWKDYLQJWRGHDOZLWKORWVRI
PHVV\HTXDWLRQV
,QSXUVXLQJWKLVDSSURDFKWRHYROXWLRQZHDUHGLVWLOOLQJRXWLWV
GLIILFXOWLHVDQGEULQJLQJLWLQWRWKHIROGRISXUHPDWKHPDWLFVDQG
LQIRUPDWLRQWKHRU\,QDZD\\RXFDQLPDJLQHVXFKDSURJUDPDV
WKH PRGHUQ HTXLYDOHQW RI EULQJLQJ FODVVLFDO PHFKDQLFV LQWR WKH
UHDOPRIPDWKHPDWLFVYLDFDOFXOXVDQG1HZWRQVODZV7KDWLVDELJ
VWHS%XWLWLVDEVROXWHO\HVVHQWLDOLIWKHWKHRU\RIHYROXWLRQLVWREH
DQ\WKLQJPRUHFRQFUHWHWKDQWKHVFLHQWLILFP\WKRIWKHWKFHQ
WXU\VRPHWKLQJOLNHWKHEL]DUUHDUWVRIDOFKHP\RUPHVPHULVPRI
FHQWXULHVSDVW
,I ZH VXSSRVH WKDW LQ WHQ \HDUV D UHDO DQG XVHIXO WKHRU\ RI
HYROXWLRQFRXOGEHIRUPXODWHGWKHQLWPLJKWEHSRVVLEOHWRDSSO\
WKRVHLGHDVWRWKHUHDOZRUOGDQGPDNHDVFLHQWLILFMXGJHPHQWDVWR
ZKHWKHU'DUZLQVK\SRWKHVLVLVWUXH&HUWDLQO\LIDPDWKHPDWLFDO
WKHRU\RIHYROXWLRQWROGXVWKDWWKH'DUZLQVK\SRWKHVLVZDVKLJKO\
LPSUREDEOHWKHQLWZRXOGIRUDOOLQWHQWVDQGSXUSRVHVEHIDOVLILHG

7KH FRPPLWWHG HYROXWLRQLVW FRXOG DOZD\V FRPH EDFN ZLWK WKH

WKRXJKW WKDW QR PDWWHU KRZ LPSUREDEOH LW LV VWLOO SRVVLEOH 7KH
KRQHVWVFLHQWLVWZRXOGKDYHWRVWRSDQGVLPSO\VD\KHGRHVQWNQRZ
WKHDQVZHUDWOHDVWDVDVFLHQWLVWEXWWKDWKHOOZRUNDWLW:LWKRXW
DWOHDVWWKLVSRVVLELOLW\ZHUHQRWGHDOLQJZLWKVFLHQFH6RPDNLQJ
WKHSRVVLELOLW\SRVVLEOHVKRXOGEHDVWHSLQWKHULJKWGLUHFWLRQ
)URP P\ H[SHULHQFH DV D VFLHQWLVW , ZRXOG JXHVV WKDW WKLV
DSSURDFKWRHYROXWLRQLVJRLQJWRUDLVHDORWPRUHTXHVWLRQVWKDQLW
ZLOODQVZHUDWILUVW7KDWVEHFDXVHZHUHVWDUWLQJIURPD WKHRU\
WKDW LV QR WKHRU\LQDULJRURXVVFLHQWLILFVHQVH7KLV WKHRU\ LV
SUDFWLFDOO\RPQLSRWHQWDWPDNLQJH[SODQDWLRQVIRUKRZWKLQJVDUH
DQGXWWHUO\LQFDSDEOHRIWHOOLQJXVKRZWKH\ZLOOEH7KDWZRXOGQRW
EHWKHFDVHZLWKDWKHRU\WKDWLVURRWHGLQVROLGPDWKHPDWLFVDQG
HVWDEOLVKHGVFLHQWLILFSULQFLSOHV6XFKDWKHRU\LVERXQGWREULQJDQ
DFFRXQWDELOLW\WRWKHILHOGWKDWZLOOWHDUGRZQDORWRIXQIRXQGHG
H[SODQDWLRQVRIYDULRXVSKHQRPHQDDQGOHDYHWKHPXQH[SODLQHG
7KLVPD\EHGLVWXUELQJIRUWKHVFLHQWLVWZKRWKRXJKWVXFKPDWWHUV
KDGDOUHDG\EHHQVHWWOHG,WPD\HYHQRSHQWKHGRRUWRUHOLJLRXVDQG
SKLORVRSKLFDOVSHFXODWLRQLQFHUWDLQDUHDV<HWWKDWLVZKDWZHRXJKW
WRH[SHFWIURPDOLPLWHGVFLHQFH6FLHQFHKDVOLPLWVLQRWKHUDUHDV
OLNHWKHELJEDQJRUTXDQWXPPHFKDQLFVDQGLWLVFOHDUWKDWLWFDQ
SHDFHIXOO\ FRH[LVW ZLWK WKH SKLORVRSKHUV DQG WKHRORJLDQV 7KH
WURXEOHEHJLQVZKHUHWKHOLQHEHWZHHQVFLHQFHDQGSKLORVRSK\LV
LOOGHILQHG7KHQSKLORVRSKHUVDQGWKHRORJLDQVZLOOFURVVWKHOLQH
LQRQHGLUHFWLRQDQGVFLHQWLVWVZLOOJREH\RQGWKHLUOLPLWVLQWKH
RWKHUGLUHFWLRQ7KHJRRGVFLHQWLVWDQGWKHJRRGWKHRORJLDQZRXOG
ERWKSUHIHUWRKDYHWKDWOLQHEHYHU\FOHDUDQGREYLRXV7KDWZD\
WKH\ DYRLG PLVWDNHV DQG DYRLG ZDVWLQJ WKHLU WLPH , H[SHFW D
PDWKHPDWLFDO PRGHO RI HYROXWLRQ FRXOG JR D ORQJ ZD\ WRZDUG
PDNLQJ WKH OLQH EHWZHHQ HYROXWLRQDU\ VFLHQFH DQG HYROXWLRQDU\
SKLORVRSK\FU\VWDOFOHDUMXVWOLNH1HZWRQFODULILHGVRPHRIWKHVH
OLQHVLQWKHKHDYHQV
,GRQRWVWDQGDORQHLQZKDW,VD\,WVHHPVWRPHWKDWWKHVFLHQFH
RIELRORJ\LVKHDGLQJLQWKLVGLUHFWLRQDQGLWKDVEHHQIRUWKHSDVW
WKLUW\ \HDUV RU VR 4XHVWLRQLQJ WKH IRXQGDWLRQV RI HYROXWLRQDU\
WKRXJKWLVQRORQJHUWRWDOO\WDERRVRORQJDVLWLVGRQHSURSHUO\
$/ZRXOGVHHPOLNHWKHLGHDOPHGLXPWRVWXG\WKHPDWKHPDWLFVRI
HYROXWLRQLQ8QIRUWXQDWHO\LWLVKDSSHQLQJLQDORSVLGHGIDVKLRQ

0XFKRI$/VIRFXVVHHPVWREHRQEXLOGLQJPRGHOVZKLFKVXSSRUW
HYROXWLRQ WR WKH ZLGHVW SRVVLEOH H[WHQW UDWKHU WKDQ DFFXUDWHO\
PRGHOLQJOLIHRUWU\LQJWREXLOGDEURDGEDVHGWKHRU\RIHYROXWLRQ
DU\PDWKHPDWLFV6XFKDQDSSURDFKLVDELJEOXQGHU
7KH&UHDWRUDQGWKH
&UHDWHG
,QWKHODVWFKDSWHU,VXJJHVWHGWKDW$/FRXOGKHOSXVIRUPXODWH
DWUXHWKHRU\RIHYROXWLRQ6LQFHWKLVLVDERRNDERXWYLUXVHVWKRXJK
\RXUH SUREDEO\ ZRQGHULQJ ZK\ YLUXVHV VKRXOG EH RI SDUWLFXODU
LQWHUHVWWRVXFKDIRUPXODWLRQ
$VZHKDYHVHHQFRPSXWHUYLUXVHVFRPHYHU\FORVHWRWKHLGHDO
RIDUWLILFLDOOLIHLQWKHVWURQJVHQVHRIVRPHWKLQJWKDWLV DFWXDOO\
DOLYH )RU DOO LQWHQWV DQG SXUSRVHV WKH\ DUH WKH RQO\ DUWLILFLDO
RUJDQLVPVWKDWKDYHJDLQHGDQH[LVWHQFHVHSDUDWHIURPWKHLUFUHD
WRUV
<HWRQWKHIDFHRILWFRPSXWHUYLUXVHVGRQWFRQIRUPZHOO
WRDQHYROXWLRQDU\PRGHO:KHQ\RXJHWDYLUXVLQ\RXUFRPSXWHU
\RX NQRZ IXOOZHOOWKDWVRPHERG\ZURWHLW,WGLGQWKDSSHQE\
FKDQFH RU DULVH QDWXUDOO\ VRPHKRZ 7KH YLUXV KDG D FUHDWRU
)XUWKHUPRUHHDFKPDMRUW\SHRIYLUXVZDV REYLRXVO\ DVHSDUDWH
DFWRIFUHDWLRQ7KH\GLGQRWDOOHYROYHIURPRQHEDVLFYLUXV:HYH
EHHQWUDLQHGWRWKLQNWKDWZD\
7KHUH LV QR UHDVRQ WKH\ VKRXOGQW HYROYH WKRXJK 7KH\ DUH
JHQHWLFVHOIUHSURGXFLQJDXWRPDWDDQGLWZRXOGEHDEVXUGWRVD\
WKDWWKHIDFWRIHYROXWLRQFRXOGQRWDSSO\WRWKHP,QIDFWYLUXVHV
FDQHYROYHDQGZHOOVKRZWKDWWKH\ZLOOGRVRTXLWHQLFHO\XQGHU
WKHULJKWVHWRIFLUFXPVWDQFHV
$QGDVZHKDYHGLVFXVVHGDOUHDG\YLUXVHVKHOSXVWRHYDGHWKH
PD]HRIPLUURUVWKDWTXHVWLRQVDERXWGHVLJQWHQGWRSXWXVLQ

'HVLJQHU/LIH
2QH RI WKH JUHDW SKLORVRSKLFDO EDWWOHV ZKLFK KDV UDJHG IRU
PLOOHQQLDLVWKHTXHVWLRQRIGHVLJQLQRXUXQLYHUVH,VRXUXQLYHUVH
DUHVXOWRIGHVLJQRUVLPSO\DPDWWHURIFKDQFH":DVOLIHGHVLJQHG"
2UGLGLWHYROYHDFFRUGLQJWRGHWHUPLQLVWLFQDWXUDOODZ"'DUZLQSXW
KLPVHOIULJKWLQWKHPLGGOHRIWKDWGHEDWH<HWKHGLGQRWSXWDQHQG
WRLW(YHQLIHYROXWLRQZHUHVFLHQWLILFDOO\HVWDEOLVKHGRQH
FRXOGVWLOODVNWKHTXHVWLRQ 'LG*RGGHVLJQWKHXQLYHUVHVRWKDW
HYROXWLRQZRXOGDFWXDOO\ZRUN" 'LGWKH0DVWHU'HVLJQHUGHVLJQ
RUJDQLVPV WR HYROYH RU GLG WKH\ MXVW GR VR E\ FKDQFH" 'LG +H
GHVLJQ WKH XQLYHUVH WR VSRQWDQHRXVO\ JHQHUDWH OLIH" 2U LV WKHUH
UHDOO\QRLQWHOOLJHQFHEHKLQGLWZKHQDOOLVVDLGDQGGRQH"
7KHVHDUHVRPHRIWKHPRVWIDVFLQDWLQJTXHVWLRQVLQWKHZRUOG
DQG LI ZHUH KRQHVW DERXW LW ZH DUH DOO GHHSO\ LQWHUHVWHG LQ WKH
DQVZHUV$OOVFLHQWLVWVZRUNRQWKHEDVLVRIWKHLGHDWKDWWKHUHLV
VRPHNLQGRIORJLFWRWKHZRUOGDQGVRPHWLPHVWKHEHVWRIWKHP
JHWWRSLFNDZD\DWWKHVHGHHSHUTXHVWLRQVDOLWWOH
,IZHVWDUWDVNLQJSKLORVRSKLFDOTXHVWLRQVOLNHWKHVHRI$UWLIL
FLDO/LIHLQJHQHUDOWKHDQVZHUVDUHGLVWXUELQJ,I,GHVLJQDV\VWHP
OLNH/DQJWRQVVHOIUHSURGXFLQJDXWRPDWRQ,YHREYLRXVO\PRG
HOHGVRPHVRUWRIVSHFLDOFUHDWLRQDQGQRWHYROXWLRQZLWKRXWGH
VLJQRUDELRJHQHVLV7KHUHLVQR UDQGRP QDWXUDOSURJUHVVLRQRI
VWDWHV LQ /DQJWRQV XQLYHUVH WKDW OHDG XS WR KLV DXWRPDWRQ DQG
FUHDWLQJ LW E\ FKDQFH DSSHDUV SKHQRPHQDOO\ XQOLNHO\ <HW LI ,
GHVLJQDV\VWHPRIWUDQVLWLRQUXOHVWKDWFDXVHVVRPHVHOIUHSURGXF
LQJDXWRPDWRQWRHYROYHRXWRIDUDQGRPFRQILJXUDWLRQ,FDQVWLOO
EHDFFXVHGRISOD\LQJWKHFUHDWRU,YHMXVWPRYHGWKHDSSOLFDWLRQ
RI P\ LQWHOOLJHQFH WR D GHHSHU OHYHO , DP VWLOO QRW PRGHOLQJ
HYROXWLRQZLWKRXWGHVLJQ EXW WKHLVWLF HYROXWLRQD YHU\ VSHFLDO
HYROXWLRQFDUHIXOO\FRQWULYHGE\*RG
,Q WKH ODVW VHFWLRQ ZH GLVFXVVHG D 5XOH 7ZR ZKLFK ZH
ZDQWHGWRXVHWRGLVFXVVWKHGLIIHUHQFHEHWZHHQVHOIUHSURGXFWLRQ
5REHUW & 1HZPDQ 6HOI5HSURGXFLQJ $XWRPDWD DQG WKH 2ULJLQ RI /LIH
3HUVSHFWLYHVRQ6FLHQFHDQG&KULVWLDQ)DLWK9RO1R0DUFKS

DQGSK\VLFVGULYHQUHSOLFDWLRQ5XOH7ZRZDVDQDWWHPSWWRKHOS
XVDYRLGVLWXDWLRQVZKHUHWKHSK\VLFVZDVGULYLQJWKHUHSURGXFWLRQ
LQ D OHVVWKDQREYLRXV ZD\ :H KDYH WR XQGHUVWDQG WKDW LQ DQ
DUWLILFLDO XQLYHUVH WKH SK\VLFV ZH GHVLJQ FDQ QRW RQO\ GULYH WKH
UHSOLFDWLRQ LW FDQ GULYH WKH LQLWLDO IRUPDWLRQ RI OLIH DQG LWV VXE
VHTXHQWHYROXWLRQDVZHOO
<HWLIHYROXWLRQLVWREHDUHDOSULQFLSOHRIQDWXUHZHVKRXOG
QRWH[SHFWLWWREHDGLYLQHWULFN,IWKHODZVRIQDWXUHKDYHVRPH
SKHQRPHQDOO\XQOLNHO\FRQWULYHGIRUPWKDWPDNHVHYROXWLRQZRUN
WKHQHYROXWLRQLVQRWKLQJEXWDGLYLQHWULFN7KH GLYLQHWULFN ZDV
ZKDW JRW FUHDWLRQLVP LQ WURXEOH 6FLHQWLILFDOO\ ZH PLJKW H[SHFW
HYROXWLRQWREHDSULQFLSOHWKDWFRXOGEHEURDGO\DSSOLHGLQPDQ\
VLWXDWLRQVVRPHPRUHIDYRUDEOHWRLWDQGVRPHOHVVIDYRUDEOHDQG
ZHGH[SHFWRXUZRUOGWRIDOOVRPHSODFHDORQJWKLVVSHFWUXPRI
SRVVLELOLWLHV:LWKRXWXQGHUVWDQGLQJWKDWVSHFWUXPZHFDQQRWHYHQ
IXOO\XQGHUVWDQGRXURZQZRUOG
,W ZRXOG VHHP WKDW $/ UHVHDUFK LQ JHQHUDO LVIXQGDPHQWDOO\
XQDEOHWRPRGHODQHYROXWLRQDU\V\VWHPZLWKQRLQWHOOLJHQFHEH
KLQG LW 7KH UHVHDUFKHU DOZD\V LQVHUWV KLV LQWHOOLJHQFH LQWR WKH
HTXDWLRQIURPWKHYHU\VWDUW+HGHVLJQVWKHHQYLURQPHQWDQGWKH
UXOHV
5LFKDUG 'DZNLQV SURJUDP 7KH %OLQG :DWFKPDNHU LV WKH
HSLWRPHRIVXFKSKLORVRSKLFDOIRROLVKQHVV+HVHHPVWRDFWXDOO\

EHOLHYHWKDWKLVSURJUDPEOLQGO\HYROYHVWKLQJVWKDWORRNOLNHSODQWV
LQVHFWV DQG WKH OHWWHUV RI KLV QDPH <HW HYHU\ VWHS RI WKH ZD\
5LFKDUG 'DZNLQV 7KH %OLQG :DWFKPDNHU /RQJPDQ *URXS (VVH[
(QJODQG SS )RU QDPH VSHOOLQJ VHH 5LFKDUG 'DZNLQV 7KH
(YROXWLRQRI(YROYDELOLW\ &KULVWRSKHU/DQJWRQ(G$UWLILFLDO/LIH$GGLVRQ
:HVOH\5HGZRRG&LW\&DOLIRUQLDSS
7KRVHZKRGRQRWVWXG\KLVWRU\DUHGRRPHGWRUHSHDWLW'DZNLQV UHVHDUFK
UHPLQGVPHRIDQDPXVLQJSLHFHRIIRROLVKQHVV'U-RKDQQ%$%HULQJHUZDV
DQWKFHQWXU\SK\VLFLDQDQGSDOHRQWRORJLVWZKRFROOHFWHGIRVVLOV6WXGHQWV
EHJDQWREULQJKLPH[WUDRUGLQDU\IRVVLOVRILQVHFWVIURJVELUGVVQDLOVHWF:LWK
WLPHKHGLVFRYHUHGIRVVLOVHYHQPRUHLQFUHGLEOH FOHDUGHSLFWLRQVRIWKHVXQ
DQGPRRQRIVWDUVDQGODVWO\PDJQLILFHQWWDEOHWVHQJUDYHGLQ/DWLQ$UDELF
DQG +HEUHZ FKDUDFWHUV ZLWK WKH LQHIIDEOH QDPH RI -HKRYDK $OWKRXJK WKH
KRD[WHUVWULHGWRRSHQ%HULQJHUVH\HVWHOOLQJKLPGLUHFWO\WKDWLWZDVDSUDQN

'DZNLQVLVLQVHUWLQJKLVRZQLQWHOOLJHQFH7KHUXOHVDUHKLVLQWHO
OLJHQFH6RKLVSURJUDPLVDQ\WKLQJEXWEOLQGDQGKHVPRGHOLQJ
KLVRZQSHFXOLDUIODYRURIVSHFLDOFUHDWLRQQRWHYROXWLRQ
,QDOOIDLUQHVVDYRLGLQJSXWWLQJLQWHOOLJHQFHLQWRWKHHTXDWLRQ
LV KDUGHU WKDQ DQ\RQH PD\ UHDOL]H ,I \RX SOD\ DURXQG ZLWK WKH
65$B/$%SURJUDPRQWKH3URJUDP'LVN\RXOOILQGWKDW\RXFDQ
VSHQG DOO GD\ FUHDWLQJ UDQGRP UXOHV DQGUDQGRPFRQILJXUDWLRQV
DQGQHYHUFRPHXSZLWKDQ\WKLQJLQWHUHVWLQJ$QGLI\RXGLGDQG
\RXVWDUWHGSOD\LQJZLWKLW\RXGEHEULQJLQJLQWHOOLJHQFHLQWRWKH
HTXDWLRQE\PDNLQJWKHVHOHFWLRQRIWKDWRQHHQYLURQPHQWRYHUDOO
WKHRWKHUV
$WWKHILUVW$/ZRUNVKRSLQ++3DWWHHZDUQHGWKRVH
DWWHQGLQJWKHFRQIHUHQFHDERXWWKHSKLORVRSKLFDOGDQJHUVRIWU\LQJ
WRFUHDWHOLIHLQDFRPSXWHU7KHFRPSXWHULVDXQLYHUVDOFDOFXOD
WRURUXQLYHUVDOVLPXODWRU7KHUHIRUHRQHFDQSRWHQWLDOO\VLPXODWH
DQ\TXDQWLILDEOHSKHQRPHQRQLQLWVERZHOV2QHFDQVLPXODWHOLIH
RUWKHSURSHUWLHVRIOLIH
2QHFDQVLPXODWH'DUZLQLDQHYROXWLRQ
/LNHZLVHRQHFDQVLPXODWH/DPDUNLDQHYROXWLRQ
,QIDFWVRPH$/UHVHDUFKHUVKDYHVLPXODWHG/DPDUNLDQHYR
OXWLRQDQGVKRZQWKDWLWFDQEHYHU\HIIHFWLYHO\XVHGE\DUWLILFLDO
RUJDQLVPV/LNHZLVHZHFDQZULWHDYLUXVWKDWLQFRUSRUDWHV/D
KHZDVEOLQGWRLWDQGSXEOLVKHGDERRNDERXWKLVILQGLQJVLQ7KHQFDPH
WKHGD\ZKHQ%HULQJHUIRXQGWKHJUHDWHVWIRVVLORIDOORQHZLWKKLVRZQQDPH
RQLW7KLVVWRU\LVUHODWHGLQ:LOOLDQ%URDG1LFKRODV:DGH%HWUD\HUVRIWKH
7UXWK6LPRQDQG6FKXVWHU1<S
++3DWWHH 6LPXODWLRQV5HDOL]DWLRQVDQG7KHRULHVRI/LIH (G&KULVWRSKHU
/DQJWRQ$UWLILFLDO/LIH$GGLVRQ:HVOH\5HGZRRG&LW\&DOLIRUQLDSS

/DPDUNLDQHYROXWLRQLVWKHLGHDWKDWLID*LUDIIHPXVWVWUHWFKLWVQHFNWRJHW
OHDYHVDWWKHWRSRIWUHHVWKHQWKLVVWUHWFKLQJZLOOEHSDVVHGGLUHFWO\RQWRLWV
FKLOGUHQDQGWKH\ZLOOEHERUQZLWKORQJHUQHFNVHWF,QFRQWUDVW'DUZLQLDQ
HYROXWLRQLVLQGLUHFW7KHJLUDIIHFDQQRWSDVVRQDORQJHUQHFNEXWWKRVHZLWK
WKHJHQHVIRUDORQJHUQHFNDUHSUHVXPDEO\PRUHOLNHO\WRVXUYLYHDQGKDYH
FKLOGUHQ
'DYLG $FNOH\ 0LFKDO /LWWPDQ ,QWHUDFWLRQ %HWZHHQ /HDUQLQJ DQG
(YROXWLRQ &KULVWRSKHU /DQJWRQ HW DO (GV $UWLILFLDO /LIH ,, $GGLVRQ
:HVOH\5HGZRRG&LW\&DOLIRUQLDSS

PDUNLDQHYROXWLRQ6HHWKH/$0$5.YLUXVRQWKH3URJUDP'LVN
7KDWGRHVQRWPHDQWKDW/DPDUNKDVEHHQYLQGLFDWHGWKRXJK7KHUH
LVQRSK\VLFDOEDVLVIRU/DPDUNLDQHYROXWLRQLQWKHUHDOZRUOGVR
WKHFRPSXWHUVLPXODWLRQVDUHZLWKRXWSDUDOOHOLQQDWXUH$VIDUDV
UHDOZRUOGDWRPVDQGSK\VLFVJRHVWKHPRGHOVDUHLUUHOHYDQW
<HW RQH KDV WR DVN LI /DPDUNLDQ HYROXWLRQ FDQ EH PDGH
VXFFHVVIXO LQ DQ DUWLILFLDO ZRUOG FRXOG 'DUZLQLDQ HYROXWLRQ EH
PDGHPRUHVXFFHVVIXOLQDQDUWLILFLDOZRUOGWKDQLWLVLQWKHUHDO
ZRUOG"%HFDXVHRIWKHXQLYHUVDOVLPXODWLQJQDWXUHRIDFRPSXWHU
WKHDQVZHULVREYLRXVO\ \HV DVORQJDVVRPHNLQGRIVWURQJHPHU
JHQWSKHQRPHQRQGRHVQRWSDUWLFLSDWHLQWKHHYROXWLRQDU\SURFHVV
,QIDFWLWLVQRWWRRKDUGWRGHYLVHDUWLILFLDOHYROXWLRQDU\VFHQDU
LRVZKLFKKDYHQRQDWXUDODQDORJ6RPHRIWKHILUVWH[SHULPHQWVLQ
RSHQHQGHGHYROXWLRQDVRSSRVHGWRWKHGLUHFWHGHYROXWLRQRID
JHQHWLFDOJRULWKPVKRZHGWKDWDSDUDVLWHTXLFNO\HYROYHGIURPDQ
DUWLILFLDORUJDQLVP<HWLQQDWXUHSDUDVLWHVDUHQRWXVXDOO\FORVHO\
UHODWHGWRWKHLUKRVWV,NQRZRIQRLQVWDQFHLQZKLFKDSDUDVLWHLV
EHOLHYHGWREHDGLUHFWGHVFHQGDQWRIWKHKRVW6RWKLVSKHQRPHQRQ
WKRXJK TXLWH UHDVRQDEOH LQ DQ DUWLILFLDO ZRUOG KDV QR QDWXUDO
DQDORJ
1RZ LI \RX DUH SKLORVRSKLFDOO\ FRPPLWWHG WR WKH LGHD RI
HYROXWLRQDVDQRPQLSRWHQWIRUFHLQQDWXUHWKHQXVLQJDXQLYHUVDO
VLPXODWRUWRGHVLJQWKHPRVWSRWHQWHYROXWLRQDU\PHFKDQLVPSRV
VLEOH LV QR FDXVH IRU ZRUU\ %HFDXVH WKH XQVSRNHQ WKHRU\ RI
HYROXWLRQLVWKDWRIDPDJLFDODQGRPQLSRWHQWIRUFHDQ\VLPXODWLRQ
LVDWEHVWRQSDUZLWKWKHZRUOG7KHWKRXJKWWKDWLWPLJKWHQGXS
EHLQJEHWWHUVHHPVWRKDYHEHHQQHJOHFWHG
:HDUHWU\LQJWRPDNHDVFLHQFHRXWRIHYROXWLRQWKRXJK,QVR
GRLQJWKHWKRXJKWWKDWRXUVLPXODWLRQLVGHVLJQHGWREHWRRSRZHU
IXOLVDUHDOFRQFHUQ7RLJQRUHVXFKTXHVWLRQVDQGVLPSO\GHVLJQ
WKH PRVW SRZHUIXO HYROXWLRQHQJLQH ZH KDYH WKH LQJHQXLW\ WR
DFKLHYHPD\EHPLVVLQJWKHPDUNZLGHO\7KDWLVZK\SUHVHQWGD\
$/VDSSURDFKWRHYROXWLRQLVDEOXQGHU
7KRPDV65D\ $Q$SSURDFKWRWKH6\QWKHVLVRI/LIH (G&KULVWRSKHU
/DQJWRQ$UWLILFLDO/LIH,,$GGLVRQ:HVOH\5HGZRRG&LW\&DOLISS

7KH9LUXVDVD3KHQRPHQRQ
8VLQJ FRPSXWHU YLUXVHV WR VWXG\ HYROXWLRQ FDQ KHOS XV WR
VLGHVWHSWKHVHSUREOHPV7KHFRPSXWHUYLUXVOLYHVLQDZRUOGWKDW
ZDVQRWGHVLJQHGWRDOORZDUWLILFLDOOLIHRUYLUXVHVWRIRUPH[LVWRU
HYROYH SHU VH ,I ZH VWXG\ DUWLILFLDO OLIH ZLWKLQ WKH FRQWH[W RI D
SUHH[LVWLQJRSHUDWLQJV\VWHPZHFDQQRWEHDFFXVHGRIGHVLJQLQJ
WKDWSDUWWRGRZKDWZHZDQWRUKLGLQJWKLQJLQWKHSK\VLFV:HDUH
QRWWU\LQJWRFUHDWHWKHPRVWSRWHQWHYROXWLRQHQJLQHWKDWZHFDQ
1R ORQJHU DUH ZH FUHDWRUV VWXG\LQJ RXU FUHDWLRQ :H EHFRPH
VFLHQWLVWVREVHUYLQJDSKHQRPHQRQ7KDWGRHVQWPHDQZHGRQW
KDYHWREHFDUHIXODERXWLQVHUWLQJRXULQWHOOLJHQFHLQWRWKHHTXDWLRQ
RIFRXUVHEXWLWGRHVPDNHRXUMREHDVLHU
&RQVLGHUWKHSRVVLELOLW\WKDWZHKDYHULJKWXQGHURXUQRVHVD
VRUWRIVHFRQGFUHDWLRQ:HKDYHZLWQHVVHGLQWKHSDVWWHQ\HDUV
VRPHWKLQJWKDWPDQNLQGZLOOQHYHUEHDEOHWRZLWQHVVDJDLQ1HYHU
DJDLQZLOORSHUDWLQJV\VWHPGHVLJQHUVDQGXVHUVEHVRQDwYHDVWR
QHJOHFWWKHSRVVLELOLW\RIYLUXVHVVRZHZLOOQHYHUDJDLQEHDEOHWR
VD\WKDWDQRSHUDWLQJV\VWHPVGHVLJQLVGHFRXSOHGIURPWKHLGHDRI
D VHOIUHSURGXFLQJ DXWRPDWRQ $Q\ GHWHUUHQWV \RX GHSOR\ ZLOO
LQIOXHQFHWKHGHVLJQIDFWRU$Q\IHDWXUHWKDWPLJKWIDFLOLWDWHYLUXVHV
FRXOGKDYHEHHQLQWURGXFHGE\DPLVFKLHYRXVSURJUDPPHU
7KXV LWVHHPVHPLQHQWO\ZRUWKZKLOHWRSUREHTXHVWLRQVOLNH
HYROXWLRQDQGDELRJHQHVLVZLWKLQWKLVUHDOPRISULPLWLYHRSHUDWLQJ
V\VWHPVDQGYLUXVHV
9LUXVHVDSSHDUWREHDFWVRIVSHFLDOFUHDWLRQE\LQGHSHQGHQW
LQWHOOLJHQWEHLQJV+RZHYHUWKDWGRHVQRWSUHFOXGHWKHSRVVLELOLW\
WKDW WKH\ FRXOG IRUP VSRQWDQHRXVO\ RU DFFLGHQWDOO\ RU WKDW WKH\
FRXOG HYROYH :H VKRXOG VWXG\ VXFK TXHVWLRQV IURP D SXUHO\
VFLHQWLILFYLHZSRLQW:KDWZRXOGLWWDNHIRUDYLUXVWRDULVHVSRQ
WDQHRXVO\"&RXOGRQHKDYHGRQHVRDOUHDG\DQGZHMXVWGRQWNQRZ
LW"&HUWDLQO\ZHGRQRWNQRZZKRZURWHHYHU\NQRZQYLUXV&RXOG
VRPHPXWDWLRQVRIYLUXVHVKDYHEHHQFDXVHGVSRQWDQHRXVO\"&RXOG
WKH\HYROYHLQDQRSHQHQGHGIDVKLRQQRZWKDWWKH\KDYHDVWDUW"
:HZLOOSXUVXHWKLVVWXG\WKURXJKRXWWKHUHVWRIWKLVERRN,Q
GRLQJVR,WKLQN\RXZLOOJHWDEHWWHUSLFWXUHRIWKLVLGHDRIDOLPLWHG
EXWVFLHQWLILFHYROXWLRQ,QWKHZRUOGRIYLUXVHVZHZLOOILQGWKDW

HYROXWLRQFDQEHYHU\HIIHFWLYHDWWLPHVEXWWKDWLWSRVVHVVHVOHVV
WKDQDPDJLFDORPQLSRWHQFH7KDWVKRXOGQRWEHWRRVXUSULVLQJLQ
DZRUOGWKDWZDVQRWGHVLJQHGWRPDNHHYROXWLRQSRZHUIXO
,DPQRWSURSRVLQJWKDWYLUXVHVFDQWHDFKXVHYHU\WKLQJZHQHHG
WRNQRZDERXWHYROXWLRQ)DUIURPLW,WKLQNWKHUHLVDQLPSRUWDQW
OHVVRQ KHUH WKDW ZH QHHG WR VHH DQG XQGHUVWDQG 7KH ZRUOG RI
YLUXVHV LV IDU GLIIHUHQW IURP RXU ZRUOG WKRXJK DQG ZH FDQQRW
QHJOHFWWKDWIDFWLQWKHSXUVXLWRIVFLHQFH/LNHZLVHPDQ\DUWLILFLDO
ZRUOGV DUH SRVVLEOH 6RPH PD\ DOORZ D JUHDW GHDO RI HYROXWLRQ
6RPHREYLRXVO\DOORZQRQH7KDWLVLQWHUHVWLQJLQLWVRZQULJKWDQG
LWZLOOKDYHWREHEHWWHUXQGHUVWRRGLQRUGHUWRGHYHORSWKHIXOO
EORZQWKHRU\RIHYROXWLRQ,GOLNHWRVHH+RZHYHUZLWKRXWDSURSHU
SHUVSHFWLYH RQ HYROXWLRQ ZH DUH KDUGO\ SUHSDUHG WR WDFNOH WKH
ELJJHUTXHVWLRQVREMHFWLYHO\7KDWSHUVSHFWLYH,EHOLHYHZHFDQ
ILQGLQWKHZRUOGRIYLUXVHV7KH\DUHDVLQJOHEXWZHOOGHYHORSHG
H[DPSOH RI$/DQGZHVWXG\WKHPLQWKDWFRQWH[WZLWKDQH\H
WRZDUGWDFNOLQJHYROXWLRQIRU$/LQJHQHUDO
7KH)DFWRI(YROXWLRQ
, ZRXOG OLNH WR VWDUW RXU GLVFXVVLRQ RI QDWXUDO SURFHVVHV IRU
FUHDWLQJYLUXVHVZLWKDGLVFXVVLRQRIHYROXWLRQUDWKHUWKDQDGLVFXV
VLRQRIEHJLQQLQJV$OWKRXJKLWPLJKWVHHPPRUHVHQVLEOHWRVWDUW
ZLWKWKHEHJLQQLQJZHUHDOO\FDQWGLVFXVVWKDWLQWHOOLJHQWO\XQWLO
ZHXQGHUVWDQGVRPHWKLQJPRUHRIHYROXWLRQ6LPSO\SXWZHKDYH
WR KDYH VRPH LGHD RI KRZ HYROXWLRQ FRXOG DIIHFW VRPH RI WKH
VLPSOHVW YLUXVHV WR NQRZ ZKDW UROH LW PLJKW KDYH SOD\HG LQ WKH
EHJLQQLQJRIYLUDOOLIH7KHWUDQVLWLRQEHWZHHQDQRQUHSURGXFLQJ
V\VWHPLQZKLFKHYROXWLRQLVLUUHOHYDQWWRDUHSURGXFLQJRQHZKHUH
LWPD\EHUHOHYDQWLVIX]]\7KHUHIRUHDEHWWHUXQGHUVWDQGLQJRI
HYROXWLRQFRPHVILUVW
7KH$%&VRI(YROXWLRQ
/HWXVVXSSRVHZHDUHJLYHQWZRVLPLODUDQGYHU\SUHYDOHQW
YLUXVHV9DQG9DQGZHNQRZ9LVWKHROGHURIWKHWZR:HDUH
DVNHGWRGHWHUPLQHZKHWKHU9FRXOGKDYHHYROYHGIURP9ZLWKRXW
WKHLQWHUYHQWLRQRIDQRXWVLGHLQWHOOLJHQFHHJDYLUXVDXWKRU+RZ
GRZHJRDERXWGHWHUPLQLQJWKLV"
7KHILUVWVWHSLVREYLRXVO\WRFRPSDUH9DQG9DQGXQGHU
VWDQG WKHLU VLPLODULWLHV DQG GLIIHUHQFHV ,I 9 DQG 9 DUH YHU\
GLIIHUHQWZHPLJKWH[SHFWHYROXWLRQWREHXQOLNHO\XQOHVVERWKKDG
D YHU\ ORQJ KLVWRU\ DQG ZH FRXOG GRFXPHQW VRPH WUDQVLWLRQDO
IRUPV2QWKHRWKHUKDQGLIWKH\DUHDOPRVWLGHQWLFDOWKHQHYROX
WLRQPLJKWPDNHVHQVH
$ YHU\ VLPSOH FRPSDULVRQ RI WKH YLUXVHV PLJKW EH GRQH E\
FRPSDULQJHDFKE\WHDQGVHHLQJZKLFKE\WHVGLIIHU7KDWPD\ZRUN

LQVRPHLQVWDQFHVEXWLWFDQDOVROHDGXVIDUDVWUD\)RUH[DPSOH
WZRJHQHUDWLRQVRID0XWDWLRQ(QJLQHEDVHGYLUXVPD\ORRNFRP
SOHWHO\GLIIHUHQWLQDE\WHE\E\WHFRPSDULVRQDOWKRXJKWKH\DUH
UHDOO\WKHVDPHYLUXV7KXVDQ\FRPSDULVRQRIWZRYLUXVHVPXVW
EHDQLQWHOOLJHQWFRPSDULVRQEDVHGRQDDNQRZOHGJHRIKRZWKH
YLUXVZRUNVDQGEDNQRZOHGJHRIWKHSRVVLEOHPXWDWLRQPHFKD
QLVPVWKDWPLJKWKDYHEHHQLQYROYHGLQWUDQVIRUPLQJ9LQWR9
2IFRXUVHWKDWPHDQVZHPXVWXQGHUVWDQGPXWDWLRQPHFKD
QLVPVDQGPXWDWLRQUDWHV,ILQWHUPHGLDWHIRUPVDUHFDOOHGIRUWKHQ
WKHYLDELOLW\RIWKRVHIRUPVDOVRHQWHUVWKHFDOFXODWLRQ
:KDW , ZDQW WR GR LQ WKLV FKDSWHU LV TXDQWLI\ DOO RI WKHVH
HOHPHQWDU\FRPSRQHQWVRIWKHHYROXWLRQRIDYLUXVDQGLOOXVWUDWH
KRZWKH\ILWWRJHWKHULQDPDWKHPDWLFDOPRGHORIHYROXWLRQIRUD
YLUXV7KLVZLOOLOOXVWUDWHERWKWKHIDFWRIHYROXWLRQDVDPHDQVIRU
FKDQJH DQG VRPH RI WKH SUREOHPV WKDW DQ DWWHPSW DW D FRQFUHWH
WKHRU\PXVWIDFH
$6LPSOH9DULDWLRQ
3HUKDSVWKHHDVLHVWSUREOHPRIHYROXWLRQRQHFDQDQDO\]HLVD
VLPSOHRQHELWVXEVWLWXWLRQ/HWVGHVLJQDFRQFUHWHWKRXJKWH[SHUL
PHQWDORQJWKHVHOLQHVVRWKDWZHFDQFRQVLGHUWRLOOXVWUDWHHDFK
IDFWRULQWKHHYROXWLRQRIDYLUXV7KH/LWWOH%ODFN%RRNRI&RPSXWHU
9LUXVHVGLVFXVVHGDYLUXV7,0,'ZKLFKZDVDVPDOOE\WH
&20 ILOH LQIHFWRU 3DUW RI LWV FRGH LV D URXWLQH FILE_OK ZKLFK
GHWHUPLQHVZKHWKHUDJLYHQILOHLVVXLWDEOHIRUWKHYLUXVWRLQIHFWRU
QRW,IVXLWDEOHWKHURXWLQHUHWXUQVWRWKHFDOOHUZLWKWKH=IODJVHW
7KHFRGHIRUFILE_OKORRNVOLNHWKLV
),/(B2.
PRYG[2))6(7)1$0(ILUVWRSHQWKHILOH
PRYD['+UZRSHQILOH
LQW+
MF)2.B1=(1'HUURURSHQLQJILOH
PRYE[D[SXWILOHKDQGOHLQE[
SXVKE[DQGVDYHLWRQWKHVWDFN
PRYF[QH[WUHDGE\WHVDWVWDUW
PRYG[2))6(767$57B,0$*(DQGVWRUHWKHPKHUH
PRYDK)+'26UHDGIXQFWLRQ
LQW+
SRSE[UHVWRUHWKHILOHKDQGOH
PRYDK(+
LQW+DQGFORVHWKHILOH
PRYD[:25'375>)6,=(@JHWKRVWILOHVL]H
7KH)DFWRI(YROXWLRQ

DGGD[2))6(7(1'9,5862))6(79,586DGGYLUXVVL]H
MF)2.B1=(1'FVHWLID[RYHUIORZV
FPS%<7(375>67$57B,0$*(@(+LVILUVWE\WHMXPS"
MQ])2.B=(1'QRSH
FPS:25'375>67$57B,0$*(@+RNLV9,WKHUH"
MQ])2.B=(1'QRILOHFDQEHLQIHFWHG
)2.B1=(1'
PRYDO%GRQWLQIHFWWKLVILOH
RUDODO&VRUHWXUQZLWK]UHVHW
UHW&
)2.B=(1'
[RUDODORNWRLQIHFW
UHW
ZKHUH WKH QXPEHUV WR WKH ULJKW UHSUHVHQW WKH PDFKLQH ODQJXDJH
LQVWUXFWLRQVWKDWFRUUHVSRQGWRWKHDVVHPEO\ODQJXDJH/HWVFDOO
WKLVYLUXV9$QGOHWVFRQVLGHUWZRPXWDWLRQVRI99DQG9
ZKLFKGLIIHUIURP9E\MXVWRQHELW9GLIIHUVIURP9LQWKDWLW
HPSOR\VWKHLQVWUXFWLRQmov al,17DWFOK_NZ_ENDLQVWHDGRImov
al,1
)2.B1=(1'
PRY
RU
UHW
DO
DODO
%
&
&
9GLIIHUVIURP9LQWKDWLWHPSOR\VDQor ax,axUDWKHUWKDQDQor
al,alLQWKHQH[WLQVWUXFWLRQDIWHUmov al,1
)2.B1=(1'
PRY
RU
UHW
DO
D[D[
%
&
&
2WKHUPXWDWLRQVRI9ZLOOEHODEHOHG999RU9MLQJHQHUDO
/HWXVVXSSRVHWKDWWKHUHDUHPLOOLRQSHUVRQDOFRPSXWHUV
LQWKHZRUOGDQGELOOLRQLQIHFWDEOH&20ILOHV:HZRUNYHU\
KDUGWRJHWDVDPSOHRILQGLYLGXDOVIURPWKHZRUOGZLGH
SRSXODWLRQRI9DQGDOOH[LVWLQJPXWDWLRQVWKDWGLIIHUE\DWPRVW
E\WH7KLVVDPSOHZDVWDNHQ\HDUVDIWHU9ZDVILUVWUHOHDVHG,Q
LWZHILQGFRSLHVRI9FRSLHVRI9DQGFRSLHVRI9
)XUWKHUVXSSRVHZHYHZDWFKHGWKHSRSXODWLRQRI9PHWLFX
ORXVO\VRZHFDQGHWHUPLQHWKHFRUUHFWSDUDPHWHUVIRUDQ\PDWKH

PDWLFDOPRGHOZHPLJKWGHYLVHWRGHVFULEHWKHSRSXODWLRQVRIWKLV
IDPLO\RIYLUXVHV
1RZZHDVN&RXOG9RU9KDYHHYROYHGIURP9"
2EYLRXVO\WKLVLVDYHU\VLPSOHVLWXDWLRQZKHUHWKHHYROXWLRQ
RIDFRPSXWHUYLUXVPD\EHRFFXUULQJ%XWLVLW"&DQWKHIDFWRI
HYROXWLRQH[SODLQWKLVVFHQDULR"2ULVWKHRQO\UHDVRQDEOHSRVVLELO
LW\WKDWVRPHRQHKDFNHGWKHYLUXV"$QGLIHYROXWLRQLVSRVVLEOHFDQ
DFRQFUHWHWKHRU\PDNHDQ\RWKHUSUHGLFWLRQVWKDWZHPLJKWXVHWR
WHVWWKHWKHRU\DQGVD\ \HV LWLVHYROXWLRQDIWHUDOO"&HUWDLQO\
WKHHDV\DQVZHULVWRVD\WKDWVRPHYLUXVDXWKRUKDFNHGWKHYLUXV
$QGWKHVLWXDWLRQORRNVSUHWW\EODFNDQGZKLWHWKUHHYDULDQWVRQH
ROGWZRQHZDQGVRPHVLPSOHFKDQJHIRUZKRNQRZVZKDWUHDVRQ
&HUWDLQO\WKHNQHHMHUNUHDFWLRQLVWREODPHVRPHERG\IRUFKDQJLQJ
LW%XWFRXOGVRPHWKLQJHOVHEHDWZRUN"
:H DUH JRLQJ WR QHHG WKUHH NH\ SLHFHV RI XQGHUVWDQGLQJ WR
GHVFULEHWKHHYROXWLRQDU\G\QDPLFVRI9
:HQHHGDQHTXDWLRQWRGHVFULEHWKHSRSXODWLRQRI9 DQGDQ\
SRVVLEOHYDULDQWV
:HQHHGDQXQGHUVWDQGLQJRIZKDWFDQFDXVHPXWDWLRQVLQWKLV
V\VWHPDQGDUHDVRQDEOHHVWLPDWHRIPXWDWLRQUDWHV
:HKDYHWRGRVRPHDQDO\VLVRIWKHYLUXVWRGHWHUPLQHZKDWWKH
HIIHFWRIYDULRXVPXWDWLRQVZRXOGEH
:LWK WKHVH WKUHH HOHPHQWV RI WKH SLFWXUH ZH VKRXOG EH DEOH WR
DQDO\]HWKHEHKDYLRXURI9LQGHWDLODQGPDNHDSUHFLVHGHWHUPL
QDWLRQRIZKHWKHUHYROXWLRQLVDQRSWLRQ
0XWDWLRQ0HFKDQLVPV
/HWV ILUVW GLVFXVV PXWDWLRQ PHFKDQLVPV 2QO\ DQ XQGHU
VWDQGLQJRIWKHPHFKDQLVPVLQYROYHGLQFDXVLQJPXWDWLRQVZLOOJLYH
XV WKH QHFHVVDU\ XQGHUVWDQGLQJ RI ZKDW NLQGV RI PXWDWLRQV ZH
VKRXOGFRQVLGHULQRXUHTXDWLRQVGHVFULELQJSRSXODWLRQVHWF7KH
PXWDWLRQ PHFKDQLVP ZLOO DOVR JLYH XV DQ LGHD RI ZKDW NLQG RI
PXWDWLRQUDWHWRH[SHFW$OWKRXJKWKDWPXWDWLRQUDWHFDQDOVREH
GHWHUPLQHGHPSLULFDOO\WKHFRQQHFWLRQZLWKVRPHNLQGRIWKHRU\
IRUPXWDWLRQVZLOOEHYDOXDEOH
7KH)DFWRI(YROXWLRQ

7KH PXWDWLRQ PHFKDQLVP LV VLPSO\ VRPHWKLQJ WKDW FDXVHV

PXWDWLRQVFKDQJHVLQWKHFRGHRIDSURJUDP7ZRSRVVLEOHPXWD
WLRQPHFKDQLVPVTXLFNO\FRPHWRPLQG
$PHPRU\HUURULQZKLFKDJLYHQE\WHZDVVWRUHGLQDPHPRU\
ORFDWLRQDQGWKHQH[WWLPHWKDWORFDWLRQZDVDFFHVVHGWKHE\WH
ZDVGLIIHUHQW
$GLVNUHDGRUZULWHHUURULQZKLFKDJLYHQE\WHZDVVWRUHGWR
GLVNDQGZKHQQH[WUHDGWKHE\WHZDVFKDQJHG
$WWKHORZHVWOHYHOERWKRIWKHVHPHFKDQLVPVFDXVHVLQJOHELW
PXWDWLRQV %RWK FRPSXWHU PHPRU\ HJ '\QDPLF 5$0V DQG
PDJQHWLFPHGLDVWRUHGDWDRQHELWDWDWLPHQRWRQHE\WHDWDWLPH
$W\SLFDOFRPSXWHUXVHV'\QDPLF5DQGRP$FFHVV0HPRU\FKLSV
WKDWDUHFRQILJXUHGDVELW[.LORE\WHVRUELW[0HJDE\WH
HWF7KXVWKHLQGLYLGXDOELWVRIDQ\JLYHQPHPRU\E\WHDUHQRWHYHQ
VWRUHGRQWKHVDPHFKLS(YHQLIWKH\ZHUHHDFKELWLVVWLOOVWRUHG
LQGLIIHUHQWORJLFHOHPHQWVRQWKHFKLS/LNHZLVHGDWDVWRUHGRQ
GLVNLVVWRUHGDVDOLQHDUVHTXHQFHRIPDJQHWLFGRPDLQVRQHDIWHU
WKHRWKHU
+RZHYHUWKHUHDUHIDFWRUVZKLFKFDQSUHYHQWVLQJOHELWHUURUV
,QWKHFDVHRIPHPRU\HUURUVPRVW3&VPDQXIDFWXUHGWRGD\VWRUH
GDWDLQPHPRU\XVLQJQLQHELWVHLJKWELWVRIGDWDDQGDSDULW\ELW
DOWKRXJKVRPHGRRPLWWKHSDULW\ELW:KHQDSDULW\HUURURFFXUV
WKH\LVVXHD1RQPDVNDEOHLQWHUUXSWZKLFKLVMXVWDQ,QWHUUXSW
7KHLQWHUUXSWVHUYLFHURXWLQHIRUINT 2 PD\RUPD\QRWGRDQ\WKLQJ
GHSHQGLQJRQKRZWKH%,26LVZULWWHQ6HH)LJXUH2IWHQLW
ZLOODOHUWWKHXVHUWKDWDSDULW\HUURURFFXUUHGDQGIRUFHKLPWRVKXW
GRZQWKHV\VWHP+RZHYHULQWKHVHGD\VZKHQFRVWFXWWLQJLVRQ
HYHU\ PDQXIDFWXUHUV PLQG PDQ\ KDYH FKRVHQ WR HOLPLQDWH WKLV
XQQHFHVVDU\FRQYHQLHQFH
2QFRPSXWHUVZLWKSDULW\FKHFNLQJDFWLYHDWZRELWHUURULV
UHTXLUHGWRDYRLGEHLQJLPPHGLDWHO\FDXJKWE\WKHKDUGZDUH7KDW
PD\LQYROYHWZRGDWDELWVRURQHGDWDELWDQGRQHSDULW\ELW6RLQ
PDFKLQHVOLNHWKLVWZRELWHUURUVDQGRQHELWHUURUVZLOORFFXULQD
UDWLRRI7KHWZRELWHUURUVZLOOEHPRUHOLNHO\+RZHYHUWKH
HUURUVRQWKHVHV\VWHPVWKDWVQHDNE\ZLOOEHPXFKUDUHUWKDQRQ
V\VWHPVZKLFKGRQWFKHFNSDULW\%DVLFDOO\LIWKHSUREDELOLW\RID
RQHELWHUURULQDQ\PHPRU\WUDQVDFWLRQLV3WKHQDWZRELWHUURU


3
1RUPDOPHPRU\ZLWKDSDULW\ELWRGG

3
2QHELWHUURUSDULW\LVZURQJ

3

3
7ZRELWHUURUVSDULW\LVULJKW
)LJXUH0HPRU\SDULW\HUURUV
)LJXUHRXWZK\DVDQH[HUFLVH
7KH)DFWRI(YROXWLRQ

ZLOORFFXUZLWKSUREDELOLW\31RZLI3ZKLFKLWKDGEHWWHUEH
LIWKHFRPSXWHULVJRLQJWRZRUNWKHWZRELWHUURUVDUHUDUHUWKDQ
RQHELWHUURUVE\DIDFWRU3
(UURUVRFFXUULQJZLWKPDJQHWLFPHGLDFDQEHHYHQPRUHRE
WXVH7KDWLVEHFDXVHHDFKVHFWRUZULWWHQWRGLVNLVDFFRPSDQLHGE\
D&5&WRKHOSPDLQWDLQWKHLQWHJULW\RIWKHGDWD,IDVLQJOHELWLQ
WKHGDWDLVPRGLILHGWKH&5&ZLOOFKDQJHDQGWKHSURJUDPZKLFK
UHTXHVWHGWKHVHFWRUZLOOEHQRWLILHGWKDWWKHGDWDLVEDG7KXVRQO\
HUURUV ZKLFK PDLQWDLQ WKH &5& ZLOO EH YLDEOH PXWDWLRQV :KDW
WKRVH PXWDWLRQV DUH FDQ EHFRPH D YHU\ FRPSOLFDWHG IXQFWLRQ RI
ZKDWGDWDLVRQWKHGLVNLQDVHFWRU
$OWKRXJKIORSS\GLVNVDUHTXLWHXQUHOLDEOHDVIDUDVFRPSXWHU
FRPSRQHQWVJRDQGWKH\PLJKWDFFRXQWIRUDVLJQLILFDQWSRUWLRQRI
DQ\ PXWDWLRQ UDWH IRU YLUXVHV WKH SDUWLFXODU PXWDWLRQV ZH DUH
FRQVLGHULQJKHUHDSSHDUWREHVLQJOHELWHUURUV)RUH[DPSOHWKH
GLIIHUHQFHEHWZHHQmov al,1DQGmov al,17LVVHWWLQJELWLQWKHE\WH
EHLQJPRYHGWRDO$OWKRXJKDPDJQHWLFPHGLDHUURUFRXOGKDYH
FDXVHG WKLV FKDQJH HYHQ WKRXJK ZH GRQW VHH WKH HIIHFWV RI LW
HOVHZKHUHLQWKHYLUXVLWPDNHVVHQVHWRK\SRWKHVL]HDPHPRU\
HUURU7KHUHIRUHZHDEDQGRQIXUWKHUGLVFXVVLRQRIGLVNHUURUVKHUH
2IRQHELWPHPRU\HUURUVWKHJURVVPDMRULW\SUREDEO\RFFXU
RQ V\VWHPV ZKLFK GRQW KDYH SDULW\ FKHFNLQJ ,I ZH VD\ WKDW D
IUDFWLRQI1&RIDOOFRPSXWHUVGRQWKDYHSDULW\FKHFNLQJWKHQZLWK
DERXW PLOOLRQ SHUVRQDO FRPSXWHUV LQ WKH ZRUOG WKH UDWLR RI
PXWDWLRQVIURPSDULW\FKHFNLQJPDFKLQHVWRQRQSDULW\FKHFNLQJ
PDFKLQHVLVDERXWI1&3I1&31RZLWVKDUGWRJXHVVZKDWI1&
LVEXW,ZRXOGQWEHWRRVXUSULVHGLILWZHUHDVKLJKDVHJ
RQHLQIRXUPDFKLQHVGRQRWDFWXDOO\FKHFNSDULW\RUGRDQ\WKLQJ
DERXWVXFKHUURUV/HWVFRQFHQWUDWHRQWKHVHPDFKLQHVDELW
7KHUH DUH WKUHH GLIIHUHQW ZD\V WKDW DQ HUURU FDQ RFFXU LQ D
PHPRU\ELW
:KHQWKHGDWDLVZULWWHQWRWKDWELWWKHORJLFOHYHODSSOLHGWRWKH
GDWDOLQHVLVPLVLQWHUSUHWHGE\WKHPHPRU\FKLSDQGWKHZURQJ
ELWLVZULWWHQ
7KH\FRXOGEHVRPHZKHUHLQWKHVHFWRUZKHUHWKHYLUXVGRHVQRWUHVLGH

:KHQGDWDLVUHDGIRUPWKHPHPRU\FKLSWKHORJLFOHYHOJHQHU
DWHGE\LWLVPLVLQWHUSUHWHGE\WKHDVVRFLDWHGFLUFXLWU\
'DWDVWRUHGLQWKHPHPRU\FKLSLVDOWHUHGLQWHUQDOO\
7KHILUVWWZRSRVVLELOLWLHVFRXOGEHGXHWRVHYHUDOIDFWRUVHJD
HOHFWULFDOQRLVHLQWKHWUDFHVRQWKHPRWKHUERDUGEDPDOIXQFWLRQ
LQJSRZHUVXSSO\UHVXOWLQJLQDPDUJLQDOYROWDJHLQWKHFLUFXLWF
EHFDXVHWKHFLUFXLWU\LVEHLQJXVHGEH\RQGLWVUDWHGVSHHGRUG
EHFDXVHVRPHRIWKHOHDGVRQWKHPHPRU\FKLSKDYHR[LGL]HGDQG
WKH\DUHQRWPDNLQJSURSHUFRQWDFWZLWKWKHVRFNHW7KHWKLUGHUURU
PHFKDQLVPDQ LQWHUQDO DOWHUDWLRQFRXOG EH GXH WR D GHIHFWLYH
PHPRU\FKLSRUFRQWUROOHURUHYHQDVWUD\FRVPLFUD\1RUPDOO\
G\QDPLF5$0VVWRUHGDWDLQOLWWOHVLOLFRQFDSDFLWRUVZKLFKQHHG
WREHSHULRGLFDOO\UHIUHVKHG,IWKHUHIUHVKWLPHLVQWVKRUWHQRXJK
WKHFKLSVFDQORVHGDWDWRR
1RZLQDOORIWKHVHSRVVLEOHPHFKDQLVPVZHDUHUHDOO\LQWHU
HVWHG LQ ERUGHUOLQH FDVHV $ FRPSXWHU WKDW LV KDYLQJ WRR PDQ\
PHPRU\HUURUVZLOOQRWIXQFWLRQ7KHRSHUDWLQJV\VWHPDQGDSSOL
FDWLRQVSURJUDPVZLOOEHTXLFNO\FRUUXSWHGDQGWKHFRPSXWHUZLOO
EHVKXWGRZQIRUUHSDLULPPHGLDWHO\&HUWDLQO\YLUXVHVFDQPXWDWH
LQ VXFK D V\VWHP SURYLGHG WKH\ HYHQ JHW D FKDQFH WR JHW LQWR
PHPRU\EXWLIWKHFRPSXWHULVLQEDGVKDSHWKH\ZRQWJHWWKDW
IDU
/HWV DQDO\]H MXVW RQH RI WKH IDLOXUH PHFKDQLVPV GLVFXVVHG
DERYHWRGHWHUPLQHWKHPXWDWLRQUDWHUHVXOWLQJIURPLW,I\RXYH
EHHQDURXQG3&VDORW\RXYHQRGRXEWH[SHULHQFHGFRQWDFWR[L
GDWLRQIURPWLPHWRWLPH7\SLFDOO\WKHFRPSXWHUVWDUWVDFWLQJXS
DQG\RXIL[LWE\UHPRYLQJDOOWKHPHPRU\FKLSVRU6,00VIURP
WKHLUVRFNHWVDQGUHSODFLQJWKHP1RZIRUWKHVDNHRIDUJXPHQW
OHWVVD\WKDWRQHLQWKUHH3&VH[SHULHQFHWKLVSUREOHPRQFHHYHU\
ILYH \HDUV /HWV DOVR VD\ WKDW WKH\ UXQ LQ WKLV FRQGLWLRQ IRU DQ
DYHUDJHRIILYHGD\VEHIRUHWKH\DUHVKXWGRZQIRUUHSDLU1RUPDOO\
WKHSUREOHPVWDUWVRXWXQQRWLFHDEOHEXWLWJHWVZRUVHDQGZRUVH
XQWLOWKHPDFKLQHFUDVKHVYHU\TXLFNO\DQGWKHUHLVQRWKLQJ\RXFDQ
GRZLWKLWEXWUHSDLULW
1RZW\SLFDOO\DQ\WLPH\RXDUHUXQQLQJDFRPSXWHUVRPHRI
WKHPHPRU\LVIUHHVRPHFRQWDLQVGDWDRUFRGHWKDWZLOOQRWEH
H[HFXWHGIRUDZKLOHDQGVRPHFRQWDLQVFULWLFDOFRGHWKDWLVEHLQJ
7KH)DFWRI(YROXWLRQ

H[HFXWHG$PRGLILFDWLRQRIWKLVFULWLFDOFRGHZLOOJULQGWKHFRP
SXWHUWRDKDOW1RZDJDLQIRUWKHVDNHRIDUJXPHQWVXSSRVHWKHUH
LVNLORE\WHVRIFULWLFDOFRGHLQDNLORE\WH3&7KHQ
RIWKHWLPHDQHUURUFDXVHVQRLPPHGLDWHKDUP
,IZHVXJJHVWWKDWRQDJLYHQ3&WKHIUHTXHQF\RIDRQHELW
HUURUVRPHZKHUHLQV\VWHPPHPRU\LVV\VDQGWKHSUREDELOLW\RI
DV\VWHPFUDVKZKHQDUDQGRPHUURURFFXUVLV&R\RXFDQHDVLO\
SURYHWKHSUREDELOLW\RIDFUDVKE\WLPHWZRUNVOLNHUDGLRDFWLYH
GHFD\
&W H[S&RV\VW

6RHVVHQWLDOO\WKHFRPSXWHUKDVDKDOIOLIHW,IWKHKDOIOLIHLV
PLQXWHV WKH FRPSXWHU ZLOO EH VRPHZKDW DQQR\LQJ EXW QRW
XQXVHDEOH6ROHWVVXSSRVHWKHV\VWHPVWD\VLQWKLVFRQGLWLRQIRU
GD\VZLWKDPLQXWHKDOIOLIH:HFDQVROYHHTXDWLRQTXLFNO\
WRGHWHUPLQHV\VWKHPHPRU\HUURUUDWH
V\V OQ&RW [VHF

HJWKHUHLVDQHUURUDERXWRQFHHYHU\WKUHHPLQXWHV7KHHUURUUDWH
IRUDVSHFLILFELWLVWKHQ
ELW V\V[[ [VHFRQG

6RLI9LVLQPHPRU\IRUDERXWDVHFRQGZKHQLWH[HFXWHVSUHWW\
W\SLFDOWKHFKDQFHVRILWPXWDWLQJLQWR9ZKHQLWUHSURGXFHVRQ
WKLVV\VWHPDUHDERXWLQDELOOLRQ7KDWVQRWWRROLNHO\+RZHYHU
WKLVQXPEHULVDERXWDVELJDVDVSHFLILFPXWDWLRQUDWHIRUDOLYLQJ
FHOOVRZHVKRXOGQRWEHWRRYHU\GLVFRXUDJHG
6XSSRVH9UHSOLFDWHV0WLPHVRQDQ\JLYHQGD\+RZPDQ\
PXWDWLRQVFDQZHH[SHFW"6LQFH9LVE\WHVORQJDQGHDFKE\WH
DGPLWV RQHELW PXWDWLRQV ZH DUH LQWHUHVWHG LQ D WRWDO RI
SRVVLEOH PXWDWLRQV RI 9 RI ZKLFK 9 LV RQO\ RQH 2I WKH 0
UHSOLFDWLRQV0I1&RFFXURQFRPSXWHUVZLWKQRSDULW\FKHFNLQJ2I
WKHFRPSXWHUVZLWKQRSDULW\FKHFNLQJDUHVXEMHFWWRFRQWDFW
R[LGDWLRQIDLOXUH7KHUHIRUHDWDQ\JLYHQWLPH

I1&[[GD\V\HDUV [

RIDOOWKHSHUVRQDOFRPSXWHUVRUDERXWFRPSXWHUVZLOOEH
LQDVWDWHZKHUHWKHPXWDWLRQUDWHLVKLJKGXHWRFRQWDFWR[LGDWLRQ
IDLOXUH7KHSRVVLELOLW\RIDPXWDWLRQZLOOWKHQEH
0[[[ELW[ 0[[

7KHQH[WVWHSLVWRWDNHDPXWDWLRQUDWHOLNHWKLVDQGZRUNLWLQWR
VRPHHTXDWLRQVWRGHVFULEHWKHSRSXODWLRQVRI9DQG9
7KH3RSXODWLRQ(TXDWLRQV
/HWV ILUVW GHVFULEH WKH SRSXODWLRQ RI 9 XVLQJ D GLIIHUHQWLDO
HTXDWLRQ 2QFH ZH KDYH DQ XQGHUVWDQGLQJ RI WKH QRQPXWDWLQJ
YLUXV ZH FDQ DGG PXWDWLRQV LQ DQG VHH ZKDW KDSSHQV WR WKH
HTXDWLRQV,QWKHDEVHQFHRIDQWLYLUDOPHDVXUHVZHPLJKWZULWHD
YHU\VLPSOHSRSXODWLRQHTXDWLRQIRU3WKHSRSXODWLRQRI9DV
IROORZV
G3GW .1313

,IWKHVHNLQGVRIHTXDWLRQVDUHP\VWLI\LQJSOHDVHVHH$SSHQGL['
6ROYLQJ'LIIHUHQWLDO(TXDWLRQVIRUDEHWWHUXQGHUVWDQGLQJRIWKHP
7KHGHULYDWLYHRQWKHOHIWLVWKHUDWHRIFKDQJHRI3ZLWKUHVSHFWWR
WLPH7KHFRQVWDQW.RQWKHULJKWLVWKHFRQWULEXWLRQWR3GXHWR
WKH IDFW WKDW DERXW . QHZ FRSLHV RI 9 DUH EHLQJ FUHDWHG DQG
GLVWULEXWHGLQDJLYHQSHULRGRIWLPHE\WKHSXEOLVKHUVRIWKH%ODFN
%RRNDQGRWKHUOHJLWLPDWHDQGLOOHJLWLPDWHRUJDQL]DWLRQV7KHWHUP
1313

LVWKHUHSURGXFWLYHWHUPZKLFKFDQEHUHZULWWHQDV
313

7KH)DFWRI(YROXWLRQ

7KHILUVWWHUPLQWKHH[SDQVLRQLVGXHWRWKHVLPSOHUHSURGXFWLYH
PXOWLSOLFDWLRQRIWKHYLUXVDQGLWFDXVHVWKHSRSXODWLRQWRIROORZ
WKHIDPLOLDUH[SRQHQWLDO SRSXODWLRQH[SORVLRQ FXUYH7KHVHFRQG
SDUW LV D SRSXODWLRQ VDWXUDWLRQ WHUP 1 LV WKH WRWDO QXPEHU RI
LQIHFWDEOHSURJUDPVLQWKHYLUXVXQLYHUVH$VWKHYLUXVJHWVWRWKH
SRLQWZKHUHLWKDVLQIHFWHGMXVWDERXWHYHU\SURJUDPLWFDQUHSUR
GXFWLRQHYHQWXDOO\VORZVDQGFHDVHVHDFKH[HFXWLRQRIWKHYLUXV
LVOHVVDQGOHVVOLNHO\WRILQGDQLQIHFWDEOHKRVW0DWKHPDWLFDOO\
WKLVLVPRGHOHGE\WKHDERYHWZRWHUPVFDQFHOOLQJHDFKRWKHURXW
DV31LVD IHUWLOLW\IDFWRU IRUWKHYLUXVZKLFKPHDVXUHV
KRZPDQ\WLPHVLWFDQUHSURGXFHLQDJLYHQLQFUHPHQWRIWLPH
6RIDUZHKDYHLJQRUHGDQ\DQWLYLUXVHVZKLFKPLJKWGHVWUR\
9,QVXFKDVLWXDWLRQWKHYLUXVGRHVQRW GLH (YHU\LQGLYLGXDO
HYHUFUHDWHGFRQWLQXHVLQH[LVWHQFHLQGHILQLWHO\7KHDQWLYLUXVDGGV
DQRWKHUWHUPWRRXUHTXDWLRQVRWKDWLWEHFRPHV
G3GW .13133

ZKHUHLVDPHDVXUHRIWKHHIIHFWLYHQHVVRIWKHDQWLYLUXV*HQHU
DOO\GHSHQGVRQWKHIUDFWLRQRIV\VWHPVRQZKLFKWKHDQWLYLUXV
LVGHSOR\HGDQGWKHIUHTXHQF\ZLWKZKLFKWKHDQWLYLUXVLVUXQWR
FOHDQXSSRWHQWLDOO\LQIHFWHGV\VWHPV$OWKRXJKWKLVHTXDWLRQIRU
3LVYHU\PXFKVLPSOLILHGLWLVFDSDEOHRIGLVSOD\LQJPRVWRIWKH
FKDUDFWHULVWLFEHKDYLRXURIDSRSXODWLRQWKDWZHZRXOGH[SHFWZLWK
DPRUHDFFXUDWHHTXDWLRQ$WWKHYHU\OHDVWDPRUHDFFXUDWHPRGHO
ZRXOGKDYHWRQRWHWKDW.1DQGFRXOGEHIXQFWLRQVRIWLPH
DQG3DQGDOORIWKHRWKHUYDULDEOHVVKRXOGEHIXQFWLRQVRIORFDWLRQ
DVZHOODVWLPH)RUH[DPSOHWKHUHZLOOEHDUHDVZKHUHWKHSRSX
ODWLRQRIWKHYLUXVLVVDWXUDWHGZKLOHRWKHUDUHDVKDYH\HWWRVHHWKH
ILUVWH[DPSOHLQVRPHSODFHVWKHDQWLYLUXVZLOOEHYHU\SRSXODU
DQGLQRWKHUVLWZLOOQRW5HVHDUFKHUVKDYHQRWFRPHXSZLWKDQ\
DFFXUDWHPRGHOVWRGHVFULEHWKHVSUHDGRIFRPSXWHUYLUXVHV:H
QHHGQRWGZHOORQVXFKGHWDLOVKHUHDVWKH\DUHQRWWUXO\IXQGDPHQ
WDOWRWKHHYROXWLRQDU\SURFHVVHVZHDUHLQWHUHVWHGLQ2XUJRDOULJKW
QRZLVWRLOOXVWUDWHKRZHYROXWLRQFDQEHPDWKHPDWLFDOO\GHVFULEHG
$W\SLFDOH[DPSOHRIWKHEHKDYLRURI3DVDIXQFWLRQRIWLPH
LVSORWWHGLQ)LJXUH1RWLFHWKDWMXVWXVLQJWKLVHTXDWLRQZH

FDQXQGHUVWDQGDORWDERXWWKHLQIHFWLYLW\RI9)RUH[DPSOHWKH
SRSXODWLRQRI9ZLOOVDWXUDWHRXWWRDYDOXHRIURXJKO\
3 1

,IXVHUVDUHVXIILFLHQWO\DIUDLGRI9ZLOOEHODUJHHQRXJKWKDW3
FRXOGEHFRPHH[WLQFW3,IWKH\DUHQRWVRFDXWLRXV3ZLOO
VDWXUDWHWRNHHSDFHUWDLQUDWLRRIDOOSRVVLEOHILOHVLQIHFWHGDOOWKH
WLPHGHVSLWHWKHDQWLYLUXV
7KH(IIHFWRI0XWDWLRQV
7KHQH[WVWHSLQRXUDQDO\VLVRI9VHYROXWLRQLVWRXQGHUVWDQG
KRZPXWDWLRQVZLOODIIHFWLW6LQFH9DQG9 DUHRQO\DRQHELW
PRGLILFDWLRQVRI9ZHZLOORQO\FRQFHUQRXUVHOYHVZLWKRQHELW
PRGLILFDWLRQVRI9RIZKLFKWKHUHDUHSRVVLELOLWLHVDVZH
KDYH DOUHDG\ GLVFXVVHG HDFK RI ZKLFK KDV DQ HTXDO FKDQFH RI
RFFXUUHQFH
)LJXUH3DVDIXQFWLRQRIWLPH
7KH)DFWRI(YROXWLRQ

,WLVHQWLUHO\SRVVLEOHWRJRWKURXJKWKHYLUXVE\WHE\E\WHDQG
GHWHUPLQHWKHHIIHFWRIHYHU\FRQFHLYDEOHPXWDWLRQ/HWPHJLYH
\RXDQH[DPSOH7KHVWDUWXSFRGHIRUWKHYLUXVWDNHVWKHIRUP
VIRUS_START:
call GET_START
GET_START:
sub [VIR_START],OFFSET GET_START - OFFSET VIRUS
7KHFDOOLVHQFRGHGDV(:KDWZRXOGKDSSHQLIRQHRIWKHVH
WKUHHE\WHVZHUHPRGLILHGLQDQ\ZD\"
$ OLWWOH LQYHVWLJDWLRQ UHYHDOV WKDW WKLV LV D FULWLFDO VHFWLRQ RI
FRGH%DVLFDOO\WKUHHWKLQJVKDYHWRKDSSHQKHUHIRUWKHYLUXVWR
ZRUNSURSHUO\
7KHFDOOKDVWRSXWWKHDEVROXWHRIIVHWRIGET_STARTRQWKHVWDFN
ZKLFKHQGVXSODQGLQJLQVIR_START
7KHVWDFNSRLQWHUPXVWHQGXSMXVWEHORZVIR_STARTDQG
7KHsubDWGET_STARTPXVWDGMXVWVIR_STARTWRSURSHUO\ORFDWH
WKHVWDUWRIWKHYLUXVLQPHPRU\
,IDQ\RIWKHVHWKUHHWKLQJVIDLOVWRRFFXUWKHYLUXVZLOOEHLQFDSDEOH
RIUHSURGXFLQJ7KHILUVWSODFHZKHUHDOORIWKHVHIDFWRUVPXVWFRPH
WRJHWKHULVZKHQWKHVXEURXWLQHFIND_FILELVILUVWFDOOHG,ILWGRHV
QRWSURSHUO\JLYHWKH'26VHDUFKIXQFWLRQDSRLQWHUWRWKHVWULQJ
*.COM LQWKHYLUXV'26ZLOOQRWEHDEOHWRILQGDQ\ILOHVWRLQIHFW
7KXVWKHPXWDWLRQZLOOEHVWHULOHDQGWKDWZLOOEHWKHHQGRILW
1RZZLWKWKLVLQPLQGOHWXVORRNDWZKDWPRGLI\LQJWKH(
ZLOOGR,IZHFKDQJHWKH(WRDQ\WKLQJEHVLGHV(LWLVQR
ORQJHU D QHDU FDOO $V VXFK WKH VWDFN ZLOO QRW EH ULJKW DQG WKH
DGGUHVV LQ VIR_START ZLOO EH ZURQJ 7KXV PRGLILFDWLRQ RI (
OHDGVRQO\WRVWHULOLW\0RGLI\LQJWKHWZR]HURVZKLFKIROORZ(
ZLOOFDXVHWKHFDOOWRWUDQVIHUFRQWUROWRDGLIIHUHQWORFDWLRQ,IWKDW
ORFDWLRQLVEH\RQGWKHHQGRIWKHPDLQFRQWUROURXWLQHIRUWKHYLUXV
WKHQWKHEHVWZHFDQKRSHIRULVWKDWWKHFDOOHGFRGHZLOOH[HFXWHD
UHWXUQDQGDOORZFRQWUROWRFRPHEDFNWRGET_STARTGET_START
ZLOOSURSHUO\PRGLI\WKHDGGUHVVDWVIR_START,EXWVIR_STARTLV
QRORQJHURQWKHVWDFN6RZKHQFIND_FILELVFDOOHGVIR_START
JHWVZLSHGRXWDQGFIND_FILEFDQQRWILQGDILOHWRLQIHFW0RUH

OLNHO\WKHFDOOHGFRGHZLOOQRWUHWXUQWRGET_STARTEXWZLOOMXVW
FUDVKWKHPDFKLQHLQVWHDG,IFRQWUROLVWUDQVIHUUHGDQ\ZKHUHLQWKH
PDLQ FRQWURO URXWLQH RI WKH YLUXV H[FHSW WR GET_START WKHQ
VIR_STARTZLOOQRWEHSURSHUO\DGMXVWHGDQGWKHYLUXVZLOOQRWEH
DEOHWRILQGDQHZKRVW,QWKLVZD\ZHKDYHMXVWSURYHGWKDW
GLIIHUHQWSRVVLEOHPXWDWLRQVZLOODOOEHVWHULOH
,QWKHVDPHZD\ZHFRXOGJRWKURXJKHYHU\E\WHRIWKHYLUXV
DQGGHWHUPLQHZKDWWKHHIIHFWRIDPXWDWLRQLQWKDWVLWHZRXOGEH
2EYLRXVO\WKLVLVDWHGLRXVSURFHVVEXWLWLVPXFKHDVLHUWKDQZLWK
DOLYLQJRUJDQLVP(PHUJHQWEHKDYLRXUGRHVQRWIUXVWUDWHVXFKDQ
DQDO\VLV KHUH :H ZLOO QRWSXUVXHWKLVDQDO\VLVLQDOORILWVJRU\
GHWDLOV7KDWPLJKWEHILWWLQJIRUDGLVVHUWDWLRQRUVRPHWKLQJEXW,
GRQRWZDQWWRERUH\RXZLWKDKXQGUHGPRUHSDUDJUDSKVOLNHWKH
DERYH
,Q WKH HQG PRVW PXWDWLRQV RI WKH YLUXV ZLOO OHDYH LW VWHULOH
6RPH KRZHYHU DUH RI QR SDUWLFXODU EHQHILW RU KDUP 9 LV DQ
H[DPSOHRIVXFKDPXWDWLRQDORQJZLWKRWKHUVMXVWOLNHLWWKDW
PRGLI\GLIIHUHQWELWVQRWWKHELWLQWKHmov al,1LQVWUXFWLRQ7KHUH
DUHRWKHUVLWHVZKLFKDOORZDPRUHOLPLWHGFKDQJHWKDWUHVXOWVLQD
QHXWUDOPXWDWLRQ)RUH[DPSOHPRGLI\LQJ
)2.B1=B(1'
PRYDO
RUDODO
UHW
&
WR
)2.B1=B(1'
PRYDO
RUD[D[
UHW
&
ZLOOZRUNMXVWDVZHOO7KLVLVRXU9YLUXV)LQDOO\VRPHPXWDWLRQV
FRXOGDFWXDOO\EHEHQHILFLDOWRWKHYLUXVLQWKHVHQVHWKDWWKH\ZLOO
HLWKHU LQFUHDVH RU GHFUHDVH LQ WKH SRSXODWLRQ HTXDWLRQ )RU
H[DPSOHFRQVLGHUWKHVWDUWXSFRGH
7KH)DFWRI(YROXWLRQ

*(7B67$57

FDOO),1'B),/(
MQ](;,7B9,586
FDOO,1)(&7

,IWKHjnz+H[DIWHUWKHFDOOWRFIND_FILEPXWDWHVWRVRPHWKLQJ

WKDWZLOOQRWMXPSRUZLOOQRWMXPSDVRIWHQ\HWZLOODOORZWKHFDOO
WRINFECTWRSURFHHGWKHPXWDWLRQFDQEHEHQHILFLDOIURPDQHR
'DUZLQLDQVWDQGSRLQW
$VORQJDVFIND_FILEVXFFHHGVLQILQGLQJDQDFFHSWDEOHKRVW
VXFKDSURSRVHGPXWDQWZLOOEHKDYHMXVWOLNH9+RZHYHULQWKH
DEVHQFHRIDQXQLQIHFWHGKRVWWKHPXWDQWZLOOUHLQIHFWWKHODVW&20
ILOHLQWKHGLUHFWRU\7KDWLVQWWRRSUHWW\DQGLWFDQEHDQQR\LQJ
EXWZKHQWKDWILOHJHWVPRYHGLQWRDFOHDQV\VWHPLWZLOOWKHQLQIHFW
PXOWLSOHILOHVHYHU\WLPHLWLVUXQ7KHUHVXOWLVWKDWWKHPXWDQWFDQ
UHSOLFDWH D OLWWOH IDVWHU WKDQ WKH RULJLQDO LQ VRPH VLWXDWLRQV 7KH
GRZQVLGHRIFRXUVHLVWKDWWKHPXOWLSO\LQIHFWHGILOHPD\JURZVR
ODUJHWKDWLWZLOOIDLOWRORDG7KHQWKHXVHUZLOOUHDOL]HVRPHWKLQJ
LV ZURQJ UXQ KLVDQWLYLUXVDQGZLSHRXWHYHU\LQIHFWLRQLQWKH
FRPSXWHU )URP DQ HYROXWLRQDU\ SRLQW RI YLHZ WKLV PD\ EH D
EHQHILFLDOPXWDWLRQDIWHUWKHSURVDQGFRQVRILWDUHDGGHGXS
%XWDUHDQ\VXFKPXWDWLRQVSRVVLEOHZLWKRQO\DRQHELWFKDQJH"
&HUWDLQO\WKH\DUH)RUH[DPSOHWKHPXWDWLRQ)ZLOOWXUQWKH
jnz EXIT_VIRUS LQWR D cmcdec si ZKLFK FDXVHV QR KDUP DQG
VXFFHVVIXOO\ DYHUWV WKH MXPS /LNHZLVH PXWDWLRQV WR DQG
VKRXOGIDUHEHWWHUZKLOHPXWDWLRQVWR'DQGZLOOEH
KDUPIXO DQG ZLOO EH HLWKHU QHXWUDORUKDUPIXOGHSHQGLQJRQ
ZKHWKHU\RXUHUXQQLQJRQDRUQRW
M] MD MQR' MJH SXVKES [RUD[::) FPF

JVVHJPHQWRYHUULGH

$QRWKHUEHQHILFLDOPXWDWLRQFRXOGRFFXULQWKHHYHQWWKDWWKH
DQWLYLUXVDWWDFNV9XVLQJVFDQQLQJDPRQJRWKHUWHFKQLTXHV7KHQ
DPRGLILFDWLRQWKDWGLVUXSWHGWKHVFDQVWULQJZRXOGGHFUHDVHVLQFH
VFDQQLQJZRXOGQRORQJHUEHYLDEOH7KLVZRXOGDOORZWKHLQGLYLG
XDO9WROLYHORQJHURQWKHDYHUDJHDQGPDNHPRUHFRSLHVRILWVHOI
0RGLI\LQJWKH3RSXODWLRQ(TXDWLRQV
2NVRIDUZHYHZULWWHQGRZQVRPHSRSXODWLRQHTXDWLRQVIRU
9DQGZHYHH[DPLQHGPXWDWLRQPHFKDQLVPVDQGORRNHGDWZKDW
VLPSOH PXWDWLRQV PLJKW GR 7KH QH[W VWHS LV WR LQFRUSRUDWH RXU
XQGHUVWDQGLQJ RI PXWDWLRQV LQWR D PDWKHPDWLFDO IUDPHZRUN WR
GHVFULEHWKHSRSXODWLRQRI9DQGLWVPXWDWLRQV
7R GR WKDW OHW XV LQYHQW D QXPEHU WR GHQRWH WKH
PXWDWLRQUDWH:KDWWKLVQXPEHUPHDQVLVWKDWLQRQHJHQHUDWLRQRI
WKHYLUXVDVLQJOHE\WHLQWKDWYLUXVKDVDQFKDQFHRIEHLQJPXWDWHG
LQWRDQRWKHUVSHFLILFYDOXH
1RZLQRQHJHQHUDWLRQRIDYLUXVDQ\E\WHKDVDQ[FKDQFH
RIPXWDWLQJLQWRVRPHRWKHUYDOXHE\ZD\RIDVLQJOHELWPXWDWLRQ
,IWKHYLUXVLV6E\WHVORQJWKHQWKHUHLVDQ6[IRUVPDOO
FKDQFHWKDWLWZLOOVXIIHUVRPHPXWDWLRQGXULQJDVLQJOHUHSOLFDWLRQ
7KDWFKDQJHVHTXDWLRQWR
G3GW .13M1633
D
,QHVVHQFHWKLVMXVWVD\VWKDWDOLWWOHRI3LVGUDLQHGRIIEHFDXVHRI
PXWDWLRQV7KHPXWDWLRQWHUP6LVSDUWRIWKHUHSURGXFWLRQ
WHUPEHFDXVHPXWDWLRQVRFFXUZKHQWKHYLUXVUHSURGXFHVHJZKHQ
LWLVLQPHPRU\7KH13LQHTXDWLRQKDVDOVREHHQUHSODFHG
E\13MVLQFHLIDILOHLVLQIHFWHGE\9M9ZLOOVWD\DZD\IURP
LWXQOHVVRQHRIWKH,'E\WHVZKLFK9XVHVWRUHFRJQL]HLWVHOILV
PRGLILHG$VORQJDVWKH3MVDUHVPDOOWKHRQO\VLJQLILFDQWWHUPLQ
WKHVXPPDWLRQLV3DQ\KRZ
2QHZRXOGH[SHFWWKDWWKHUHRXJKWWREHDSRSXODWLRQHTXDWLRQ
IRUHDFKRIWKH6SRVVLEOHPXWDWLRQVDQGDQXPEHU3MWRWHOOXV
ZKDWWKHSRSXODWLRQRI9MLVDWDQ\JLYHQLQVWDQWRIWLPH7KHVH
HTXDWLRQVZLOOEHRIWKHIRUP
7KH)DFWRI(YROXWLRQ
G3MGW M13M13MM3M 13M13

E
ZKHUHJHQHUDOO\MDQGMDUHGLIIHUHQWIURPDQG
:H GR QRW WDNH LQWR DFFRXQW WKH FRQWULEXWLRQ IURP UHYHUVH
PXWDWLRQV RU WKH FRQWULEXWLRQ IURP VHFRQGDU\ PXWDWLRQV ,I 9
PXWDWHVLQWR9MDQGWKHSRSXODWLRQRI9MLQFUHDVHVVLJQLILFDQWO\
ZHVKRXOGQRWEHWRRVXUSULVHGLI9MPXWDWHVEDFNLQWR9$WD
PLFURVFRSLFOHYHODOOPXWDWLRQVVKRXOGEHUHYHUVLEOH0RUHOLNHO\
WKRXJK 9M ZLOO PXWDWH LQWR VRPHWKLQJ HQWLUHO\ QHZ %XLOGLQJ
PXWDWLRQVLQWRODUJHFKDQJHZLOOEHWKHVXEMHFWRIWKHQH[WFKDSWHU
%HIRUHXVLQJRXUSRSXODWLRQHTXDWLRQVDZRUGRIFDXWLRQLVLQ
RUGHU 6LQFH LV D VPDOO QXPEHU WKH SRSXODWLRQ LV JRLQJ WR EH
VXEMHFWWRDKLJKGHJUHHRIVWDWLVWLFDOXQFHUWDLQW\,QDQ\JLYHQWLPH
LQFUHPHQWWKHUHZLOOEHVRPHSUREDELOLW\WKDWDPXWDWLRQ99M
ZLOO RFFXU ,I D VXFFHVVIXO PXWDWLRQ RFFXUV WKH QHZ YLUXV ZLOO
UHSURGXFH DQG GULYH WKH SRSXODWLRQ VN\ KLJK +RZHYHU LI WKH
PXWDWLRQGRHVQRWRFFXUWKHSRSXODWLRQZLOOEH]HUR(TXDWLRQVOLNH
EJLYHDQDFFXUDWHSLFWXUHRIWKHDYHUDJHSRSXODWLRQEXWWKH\
WHOOXVQRWKLQJDERXWWKHXQFHUWDLQWLHVLQYROYHG$VVXFKZHKDYH
WRLQWURGXFHDVWRFKDVWLFPRGHOZKLFKDVVLJQVDSUREDELOLW\WRHDFK
SRVVLEOH SRSXODWLRQ RI 9M DW DQ\ JLYHQ WLPH 7KLV DSSURDFK LV
GLVFXVVHG LQ $SSHQGL[ ( DQG XVHG WR SURYH WKDW RXU HTXDWLRQV
E DUH LQGHHG YDOLG IRU DYHUDJH SRSXODWLRQV +HUH ZH ZLOO
VDWLVI\RXUVHOYHVRQO\ZLWKORRNLQJDWVRPHRIWKHUHVXOWVREWDLQHG
IURPWKLVVWRFKDVWLFPRGHO
:HDUHLQWHUHVWHGLQWZRW\SHVRIPXWDWLRQVVWHULOHZLWKM
DQGOLYHZLWKM!)RUVWHULOHPXWDWLRQVLWFDQEHVKRZQWKDWXQGHU
VWHDG\VWDWHFRQGLWLRQVZKHUHWKHSRSXODWLRQRI9DQGWKHVWHULOH
PXWDWLRQV KDV VWDELOL]HG WKH SRSXODWLRQ RI 9M LV D YHU\ VPDOO
FRQVWDQWYDOXH
3M 3131 3131

*HQHUDOO\WKLVLVDYHU\VPDOOQXPEHUVLQFHLVVPDOOEXWLWKDVD
ODUJHYDULDWLRQWRR$SRSXODWLRQRILVWKXVYHU\OLNHO\

7KHFDVHZKHUH9MFDQUHSURGXFHM!LVPRUHLQWHUHVWLQJ$W

ILUVWZHPLJKWZDQWWRDVNWRZKDWH[WHQWELVYDOLG-XVWKRZ
ODUJHDUHWKHXQFHUWDLQWLHV"7RLOOXVWUDWHWKLVVRPHW\SLFDOSORWVRI
WKHSUREDELOLW\IRUILQGLQJDFHUWDLQQXPEHURI9MVDWJLYHQWLPHV
DUHSORWWHGLQ)LJXUH1RWLFHKRZIRUH[DPSOHDWW GD\V
WKHKLJKHVWSUREDELOLW\LVIRUDSRSXODWLRQRIEXWWKHUHLVDYHU\
ORQJWDLORQWKHGLVWULEXWLRQVRHYHQDSRSXODWLRQRILQGLYLGXDOV
LVQRWKRUHQGRXVO\XQOLNHO\DERXWWKWKHSUREDELOLW\IRU
:KHQWKHSRSXODWLRQLVVPDOOHTXDWLRQEFDQWWHOOXVDZKROH
ORWDERXWWKHSUREDELOLW\RIILQGLQJYHUVXVFRSLHVRI9MLQWKH
SRSXODWLRQ,WMXVWJLYHVXVDQDYHUDJH+RZHYHURQFHWKHSRSXOD
WLRQVWDUWVWRJURZHTXDWLRQEEHFRPHVPRUHDQGPRUHXVHIXO
3XWWLQJLW$OO7RJHWKHU
1RZZHKDYHDOOWKHWRROVZHQHHGWRGLVFXVVWKHTXHVWLRQSRVHG
DWWKHEHJLQQLQJRIWKHFKDSWHU,VLWUHDVRQDEOHWRVXJJHVWWKDW9
RU9FRXOGKDYHHYROYHGIURP9"
7
7
7
)LJXUH3RSXODWLRQRIYLUXVPXWDWLRQV
7KH)DFWRI(YROXWLRQ

)LUVW ZH PXVW GHILQH RXU WKRXJKW H[SHULPHQW D OLWWOH EHWWHU

/HWVPDNHVRPHILQDOVLPSOLI\LQJDVVXPSWLRQV
:HYHVWXGLHGWKHYDULRXVPXWDWLRQVRI9 DQGIRXQGHOHYHQWKDW
ZLOOEHQHXWUDORUEHQHILFLDO/HWVVXSSRVHWKHUHZLOOEHDWRWDO
RISRVVLEOHPXWDWLRQVWKDWZLOOEHQHXWUDORUEHQHILFLDODQG
WKHUHVWZLOOUHVXOWLQVWHULOLW\
/HWXVDVVXPHWKDWDOORIWKHPXWDWLRQVZLOOKDYHM VRQRQH
LV PRUH VXFFHVVIXO WKDQ DQRWKHU DW LQFUHDVLQJ LWV UHSURGXFWLRQ
UDWH+RZHYHUOHWXVDVVXPHWKDW9 MXVWKDSSHQVWRGLVUXSWWKH
VFDQVWULQJIRUWKHDQWLYLUXV$QGVLQFHWKHYLUXVLVGHWHFWHGE\
VFDQQLQJRXWRIWLPHVZHZLOOKDYH
/HWXVDVVXPHWKDW9 KDVEHHQDURXQGIRUDERXW\HDUVDQG
ZHKDYHGHWHUPLQHGLWVSDUDPHWHUVIRUHTXDWLRQDWREH
. GD\

:H XVH WKH PXWDWLRQ UDWH [ DV GHULYHG IURP
PHPRU\FKLSR[LGDWLRQDERYH
$VVWDWHGHDUOLHUWKHUHDUHDERXW1 LQIHFWDEOHSURJUDPVLQ
WKHYLUXVXQLYHUVH
*LYHQ WKHVH DVVXPSWLRQV ZH KDYH HQRXJK LQIRUPDWLRQ WR VROYH

HTXDWLRQVDQGWHVWRXUHYROXWLRQDU\K\SRWKHVLV7KHVROXWLRQ
RI VXFK HTXDWLRQV LV DFFRPSOLVKHG YHU\ QDWXUDOO\ ZLWK D VLPSOH
FRPSXWHUSURJUDP7KHSURJUDP(92B9RQWKH3URJUDP'LVNLV
GHVLJQHGMXVWIRUWKLVWDVN3OXJJLQJLQWKHSURSHUSDUDPHWHUVDQG
UXQQLQJLWDQXPHULFDOFRSURFHVVRULVKHOSIXOJLYHVWKHSRSXOD
WLRQVRI99DQG9ZKLFKDUHGHSLFWHGLQ)LJXUH$WWZHQW\
\HDUVZHILQG
3 [
3 [
3 [

)LJXUH3DQG3YHUVXVWLPH
7KH)DFWRI(YROXWLRQ

1RWLFH WKDW WKH SRSXODWLRQ RI 9 VHHPVWRVDWXUDWHDIWHUDERXW

\HDUV$WWZHQW\\HDUVLWLVVDWXUDWHGDQGGRHVQWFKDQJHPXFK
IURPGD\WRGD\
7KH(YROXWLRQRI9
$V\RXFDQVHHLQ)LJWKHDYHUDJHSRSXODWLRQRI3QHYHU
HYHQ JHWV FORVH WR RQH 6R HYHQ WKRXJK 9 UHSUHVHQWV D QHXWUDO
PXWDWLRQLWGRHVQWEHFRPHDQHTXDOSDUWQHUZLWK97KHUHDVRQ
IRUWKLVLVIDLUO\VLPSOH7KHWHUP
M13MQ3M

LQHTXDWLRQEGHWHUPLQHVWKHPXOWLSOLFDWLRQUDWHIRU9,WFDQW
JHWELJXQWLO3JHWVELJ$VPDOOPXWDWLRQUDWHJXDUDQWHHVXVWKDW
3ZLOOQRWJHWELJXQWLO3JHWVELJ+RZHYHUDV3JHWVELJWKH
WHUPJHWVVPDOO7KHSRSXODWLRQRI9VWDELOL]HVDWVRPHWKLQJ
OHVVWKDQ1 VLPSO\EHFDXVHWKHFRUUHVSRQGLQJWHUP
13M163

LQ HT D JRHV WR ]HUR EHIRUH 3 JHWV WKDW ELJ 7KLV LV WKH
VDWXUDWLRQSRLQWIRU9JLYHQDSSUR[LPDWHO\E\HT
(VVHQWLDOO\ZKDWLVKDSSHQLQJKHUHLVWKDW\RXKDYHWZRHIIHFWV
UHSURGXFWLRQZKLFKEXLOGVWKHSRSXODWLRQDQGGHVWUXFWLRQZKLFK
GHFUHDVHVWKHSRSXODWLRQ,ID9PXWDWLRQKDSSHQVWRRFFXULWKDV
WRKDYHDJRRGFKDQFHRIILQGLQJILOHVWRLQIHFW7KHQWKHSRSXODWLRQ
ZLOOJURZ,ILWFDQQRWILQGWKHPIDVWHUWKDQLWLVJHWWLQJGHVWUR\HG
WKHQWKHFKDQFHVDUHLWZLOOEHGHVWUR\HGE\WKHDQWLYLUXVEHIRUHLW
HYHUWDNHVKROG
7KXVLQWKLVFDVHZHVHHWKDWWKHQHXWUDOPXWDWLRQ9ZLOOWHQG
WRJHWGHVWUR\HGE\WKHDQWLYLUXVEHFDXVHLWLVDODWHFRPHULQWKH
JDPHRIOLIH7KDWDVDPSOHRIFRSLHVRIWKHIDPLO\9MZRXOG
VKRZXSFRSLHVRI9VXJJHVWVWKDWVRPHWKLQJHOVHLVJRLQJRQ
KHUH7KHUHDUHDQXPEHURIRSWLRQV

)RUVRPHUHDVRQHLWKHULVODUJHURULVVPDOOHUWKDQDQG
UHVSHFWLYHO\ 7KLV FRQGLWLRQ ZRXOG DOORZ 9 WR LQFUHDVH LQ
SRSXODWLRQ
7KHPXWDWLRQUDWHLVKLJKHUWKDQZHWKRXJKWVRWKDW9FDQJDLQ
DIRRWKROGEHIRUHWKHSRSXODWLRQRI9VDWXUDWHV
9JRWD ERRVW HJLWZDVQRWWKHUHVXOWRIUDQGRPPXWDWLRQV
EXWRIDQLQWHOOLJHQWPRGLILFDWLRQ
,IZHFDQUXOHRXWRSWLRQVDQGWKHQZHFDQUXOHHYROXWLRQ

RXWDVDYLDEOHPHDQVIRUEULQJLQJ9LQWRWKHZRUOG,VWUHVVWKH
ZRUGYLDEOH2QHFRXOGDOZD\VUHVRUWWRWKHFKDQFHWKDWWKLVGLG
KDSSHQQRPDWWHUWKDWLWLVXQOLNHO\$V,VDLGHDUOLHU3MLVRQO\DQ
DYHUDJHDQGZHUHDOO\KDYHWRORRNDWWKHSUREDELOLW\WKDWWKHUHZLOO
EHDWRWDORINLQGLYLGXDOVRI9MIRUHYHU\SRVVLEOHN)URP$SSHQGL[
(WKHVHSUREDELOLWLHVDUHJLYHQE\
N N^>3131N131@N
>3131N131@N`

IRUDVWDEOHUHSURGXFLQJSRSXODWLRQ7KLVLVDPRVWIDYRUDEOHFDVH
VFHQDULR VLQFH WKH SRSXODWLRQ LVQW VWDEOH EXW JURZLQJ DQG LW
ZRXOGWDNHDORQJWLPHWRUHDFKVWDELOLW\)RUDVWDEOHSRSXODWLRQ
WKHDYHUDJHSRSXODWLRQRI9LVDURXQG1RZH[DPSOHV
RI9LQRXUVDPSOHRIVXJJHVWDWRWDOSRSXODWLRQRI9RI
3 [[

7KH XQFHUWDLQW\ KHUH LV GXH WR WKH VWDWLVWLFDO XQFHUWDLQW\ LQ RXU
VDPSOH(TXDWLRQKRZHYHUSUHGLFWVDYHU\ODUJHXQFHUWDLQW\
LQWKHSRSXODWLRQRI9EHFDXVHWKHNGLVWULEXWLRQKDVDYHU\ORQJ
WDLO7KHSUREDELOLW\WKDW3ZRXOGIDOOLQWKLVUDQJHLVJLYHQE\
N [
7KHSURJUDP3,B.RQWKH3URJUDP'LVNGRHVWKLVFDOFXODWLRQ

7KH)DFWRI(YROXWLRQ

9
9
)LJXUH3RSXODWLRQRI9DQG9
7KLV LV D IDLUO\ VPDOO QXPEHUVPDOO HQRXJK WKDW WKRXJK QRW
LPSRVVLEOHLWLVSHUKDSVXQUHDVRQDEOHWRVXJJHVWWKDWLWKDSSHQHG
ZKHQRSWLRQFDQH[SODLQWKHREVHUYHGSRSXODWLRQVRUHDGLO\
,W LV HQWLUHO\ VHQVLEOH WR VXJJHVW WKDW RQH \HDU DIWHU 9 ZDV
UHOHDVHGVRPHERG\LQWHOOLJHQWO\PRGLILHG9DQGSODQWHGFRSLHV
RILWDURXQGKLVQHLJKERUKRRG7KDWDORQHZRXOGDFFRXQWIRUDWRWDO
SRSXODWLRQRIDERXW[FRSLHVRI9DQGLWZRXOGH[SODLQWKH
9FRQVWLWXHQWRIRXUYLUXVVDPSOH
7KH(YROXWLRQRI9
7KH YLUXV 9 KDV DQ DGYDQWDJH RYHU 9 EHFDXVH LV PXFK
VPDOOHUWKDQ7KXVHYHQZKHQWKHSRSXODWLRQRI9KDVVDWXUDWHG
9GRHVQRWUXQLQWRDEULFNZDOOZKHQWU\LQJWRUHSURGXFHIDVWHU
WKDQWKHDQWLYLUXVFDQFDWFKLW7KXVWKHSRSXODWLRQRI9LV
PLOOLRQDIWHU\HDUV:HZRXOGWKXVH[SHFWRXUVDPSOHRI
7RVHHWKLVVHWWKH%2267YDULDEOHWR758(LQWKHSURJUDP(92B9

YLUXVHVWRFRQWDLQDERXW[3333 FRSLHVRI9

:H IRXQG 7KH VDPSOLQJ HUURU LV WKRXJK VR RXU GDWD LV
FHUWDLQO\FRQVLVWHQWZLWKDSRSXODWLRQRIPLOOLRQDQGWKHZKROH
LGHDWKDW9GLGHYROYHIURP9ZLWKRXWLQWHOOLJHQWLQWHUYHQWLRQ
2QFHDSRSXODWLRQRI9KDVEHHQHVWDEOLVKHG VXUYLYDORIWKH
ILWWHVW WDNHVRYHUDQGWKHUHLVDEUXWHFRPSHWLWLRQEHWZHHQWKHWZR
YDULDWLRQV2XUSURJUDP(92B9GLVSOD\VWKLVFRPSHWLWLRQYHU\
FOHDUO\)LJVKRZVWKHSRSXODWLRQVRI9DQG9DVDIXQFWLRQ
RIWLPH$V\RXFDQVHHDIWHU\HDUV9YLUWXDOO\ZLSHV9RXW
ZLWKSRSXODWLRQV
3
3 [

UHVSHFWLYHO\7KXVHYROXWLRQRIFRPSXWHUYLUXVHVZKHUHRQHYDUL
HW\DOPRVWFRPSOHWHO\UHSODFHVDQRWKHULVSRVVLEOH
7KH(YROXWLRQRI6WHULOH0XWDWLRQV
:HKDYHRQHPRUHEDVH\HWWRFRYHU:HVKRXOGDVNZKDWWKH
OLNOLKRRGRIILQGLQJDVWHULOHPXWDWLRQLQRXUSRSXODWLRQRXJKWWR
EH7KRXJKWKHSUREDELOLW\RIILQGLQJDQ\RQHSDUWLFXODUPXWDWLRQ
RXJKWWREHSUHWW\VPDOOWKHUHDUHVWHULOHPXWDWLRQV:KDWLV
WKHOLNHOLKRRGWKDWRQHZLOOVKRZXSLQRXUVDPSOHIURPWLPHWR
WLPH")URP(92B9ZHILQGWKDWWKHDYHUDJHSRSXODWLRQRIDQ\
JLYHQVWHULOHPXWDWLRQDIWHU\HDUVRXJKWWREH
3M [

7KHSRSXODWLRQRIGLIIHUHQWRQHVDOOSXWWRJHWKHURXJKWWREH
3VWHULOH [3M

7KXVDIWHU\HDUVRQWKHDYHUDJHWKHUHZLOOEHIRXUH[DPSOHVRI
DVWHULOHPXWDWLRQLQWKHHQWLUHSRSXODWLRQ7KHFKDQFHVRIRQHRI
WKRVHPXWDWLRQVODQGLQJLQRXUVDPSOHRILVWKXVDERXWLQ
6RZHVKRXOGQWEHVXUSULVHGDWDOOWKDWZHIRXQGQRQH
7KH)DFWRI(YROXWLRQ

&RQFOXVLRQ
,QFRQFOXVLRQZHILQGWKDWUDQGRPJHQHWLFPXWDWLRQVLQFRP
ELQDWLRQZLWK VXUYLYDORIWKHILWWHVW VW\OHSRSXODWLRQSUHVVXUHV
FDQZRUNWRFDXVHHYROXWLRQLQWKHZRUOGRIFRPSXWHUYLUXVHV
,QHVVHQFHZHKDYHFRQILUPHGWKHIDFWRIHYROXWLRQDVDSSOLHV
WRFRPSXWHUYLUXVHV7KDWVKRXOGEHQRELJVXUSULVH:HH[SHFWHG
LWWRRFFXULQDQ\LQIRUPDWLRQGULYHQVHOIUHSURGXFLQJV\VWHPLQ
ZKLFKPXWDWLRQVDUHSRVVLEOH
6HFRQGO\ZHKDYHDOVREHHQDEOHWRDQDO\]HDEDVLFHYROXWLRQ
DU\SUREOHPTXDQWLWDWLYHO\DQGSUHGLFWSRSXODWLRQVHWFDQGWKHQ
H[DPLQH H[SHULPHQWDO UHVXOWV WR FRQILUP RU IDOVLI\ RXU WKHRULHV
6RPHWLPHVWKRVHWKHRULHVZHUHVXIILFLHQWWRH[SODLQWKHUHVXOWVDQG
VRPHWLPHVWKH\ZHUHQRW
:KLOH OLPLWHG TXDQWLWDWLYHDQDO\VLVLVVRPHWLPHVSRVVLEOHLQ
WKHUHDOZRUOGWKHUHDUHDQXPEHURIREVWDFOHVWKDWZHDYRLGE\
XVLQJYLUXVHV)LUVWO\VLQFHWKHJHQRW\SHWRSKHQRW\SHFRQQHFWLRQ
LQDYLUXVLVWULYLDOHQRXJKWKDWZHFDQUHDVRQRXWZKDWWKHHIIHFW
RI D PXWDWLRQ ZLOO EH ZH FDQ GHYHORS D FRPSOHWHPDWKHPDWLFDO
PRGHODQGILJXUHRXWDOORIWKHUHTXLUHGSDUDPHWHUV:HGRQWKDYH
WRZRQGHUZKDWQHYHUEHIRUHREVHUYHGPXWDWLRQVZRXOGGR$QG
RXU PRGHO QHHG QRW HYHQ EH WKDW FRPSOLFDWHG :KHQ HPHUJHQW
EHKDYLRUEHFRPHVDIDFWRULWLVLPSUDFWLFDOWRVLPSO\ORRNDWDOO
SRVVLEOH PXWDWLRQV RI WKH JHQRW\SH DQG GHWHUPLQH KRZ ZHOO WKH
1RZ REYLRXVO\ RQH FRXOG FULWLFL]H WKH SDUWLFXODU HTXDWLRQV XVHG KHUH WKH
SDUDPHWHUV HWF DQG VD\ WKH\ ZHUHQW UHDOLVWLF $IWHU DOO WKH\ ZHUHQW WRR
UHDOLVWLFIRUWKH7LPLGYLUXV,GRQWH[SHFW7LPLGZLOOHYHUVXFFHHGLQLQIHFWLQJ
RIDOOWKH&20ILOHVLQWKHZRUOGQRPDWWHUKRZKDUG7KH/LWWOH%ODFN
%RRNJHWVSURPRWHG7KDWLVQRWWKHSRLQWWKRXJK:KDWHYHUPRGHOZHXVH
PXWDWLRQV DUH SRVVLEOH DQG WKH\ ZLOO RFFXU DW D UDWH SURSRUWLRQDO WR WKH
SRSXODWLRQRIWKHRULJLQDOYLUXV7KHUHIRUHHYROXWLRQLVSRVVLEOH$QG,WKLQNLW
LVSRWHQWLDOO\SRVVLEOHIRUDYLUXVWRLQIHFWELOOLRQILOHVWKRXJKSHUKDSVQRW
ULJKWQRZ7HFKQRORJ\LVDGYDQFLQJYHU\TXLFNO\+RZORQJZLOOLWWDNHEHIRUH
ELOOLRQZRXOGUHSUHVHQWRQO\RIDOOWKHDYDLODEOHILOHV",GRQWNQRZ
EXW,GRNQRZWKDW\HDUVDJR,ZRXOGKDYHEHHQWKULOOHGWRKDYHD520
ZKHUH,FRXOGVWRUHDVLQJOHE\WHSURJUDPVR,ZRXOGQWKDYHWRNH\LWLQ
ELWE\ELWHYHU\WLPH,VWDUWHGXSP\FRPSXWHU

SKHQRW\SHZLOOSHUIRUP7KHHDVLHVWZD\WRDQVZHUVXFKTXHVWLRQV
WKHQEHFRPHVVLPSO\WRFUHDWHRQHDQGOHWLWJRWRVHHZKDWKDSSHQV
6HFRQGO\ D TXDQWLWDWLYH DQDO\VLV LV PXFK OHVV WKUHDWHQLQJ
VLQFHLWLVQRELJGHDOLIRXUHYROXWLRQDU\PRGHOIDLOVWRJLYHXVWKH
ULJKWDQVZHU3RVWXODWLQJDQLQWHOOLJHQWFUHDWRUIRUDQHZYDULHW\RI
YLUXVLVQRWJRLQJWRVHQGWKHSKLORVRSKLFDOIRXQGDWLRQVRIHYROX
WLRQDU\ELRORJ\WXPEOLQJ/LNHZLVHSURYLQJHYROXWLRQLVWKHDXWKRU
ZRQWRIIHQGDQ\RQHZLWKUHOLJLRXVFRQYLFWLRQV6RPHWLPHVDVLQ
WKHFDVHRI9WKDWLQWHOOLJHQWFUHDWRULVVLPSO\QRWQHFHVVDU\DQG
ZHFDQGLVSHQVHZLWKLQWHOOLJHQWLQWHUYHQWLRQ$WRWKHUWLPHVDV
ZLWK9ZHPD\QRWEHDEOHWRUHDVRQDEO\DYRLGFRQVLGHUDWLRQRI
DFUHDWRU
7KLV LV QRW PHUHO\ D PDWWHU RI FRPIRUW HLWKHU &RQVLGHU WKH
GLIIHUHQWEHKDYLRUWKDWZLOOUHVXOWZKHQ,VXJJHVWWKDWDQHYROXWLRQ
DU\PRGHOFDQQRWDFFRXQWIRUWKHREVHUYHGUHVXOWV
$VIDUDVYLUXVHVJRLQYRNLQJDFUHDWRUZLOOQRWJHW\RXODEHOHG
DV FUD]\ 7KHUHIRUH RQH FDQ UHDOLVWLFDOO\ ZHLJK WKH IRUP RI WKH
HTXDWLRQVXVHGWRPRGHOHYROXWLRQDU\EHKDYLRUDQGWKHSDUDPHWHUV
LQWKRVHHTXDWLRQV,I,DPIDLUO\FHUWDLQWKH\DUHULJKWWKHQ,DP
IDLUO\FHUWDLQWKDWWKHSRSXODWLRQVWKH\SUHGLFWDUHZKDWHYROXWLRQ
FDQDFFRXQWIRU,QWKLVZD\,FDQXVHUHDVRQWRZHLJKWKHUHVXOWV
DQGWKHHTXDWLRQVLQWKHEDODQFH,I,NQRZWKHHTXDWLRQVDUHDJRRG
TXDQWLWDWLYH VWDWHPHQW RI WKH WKHRU\ DQG WKH H[SHULPHQWDO IDFWV
GRQWVWDFNXSWKHQ,FDQUHDVRQDEO\VD\WKDWWKHWKHRU\EHKLQGP\
HTXDWLRQVLVXQDEOHWRDFFRXQWIRUZKDW,KDYHREVHUYHG
,Q WKH UHDO ZRUOG HYROXWLRQ LV WKH RQO\ VFLHQWLILFHJ RQO\
QDWXUDOLVWLFH[SODQDWLRQIRUKRZWZRYDULHWLHVRIRUJDQLVPVFRXOG
FRPHLQWRH[LVWHQFH7KHUHIRUHLI,ZULWHGRZQVRPHHTXDWLRQVDQG
ILQGWKDWWKH\IDLOWRH[SODLQP\REVHUYDWLRQV,PXVWDVVXPHWKDW
WKHVHHTXDWLRQVGRQRWSURYLGHDJRRGTXDQWLWDWLYHVWDWHPHQWRIWKH
WKHRU\:KDW,FDQQHYHUGRLVXVHWKHUHVXOWVWRZHLJKWKHXQGHU
O\LQJLGHDRQO\WKHSDUWLFXODUTXDQWLWDWLYHVWDWHPHQWRIWKDWLGHD
(YHQLIWKHEHVWDSSURDFK,FDQFRPHXSZLWKZLOORQO\JLYHPH
ULGLFXORXVO\VPDOOSUREDELOLWLHV,FDQQRWFKDOOHQJHWKHXQGHUO\LQJ
LGHDRIHYROXWLRQ6XFKSKLORVRSKLFDOIXQGDPHQWDOLVPLVSRVVLEOH
RQO\EHFDXVHDHYROXWLRQLVJURXQGHGLQKLVWRU\QRWODERUDWRU\
H[SHULPHQWDQGEEHFDXVHHPHUJHQWEHKDYLRUEDUVWKHZD\IRUD
FRPSUHKHQVLYHDQDO\WLFDOWHVW
7KH)DFWRI(YROXWLRQ

6RE\VWXG\LQJWKHHYROXWLRQRIYLUXVHVZHKDYHHQWHUHGDVRUW
RIQHXWUDO]RQH:HFDQVLPSO\MHWWLVRQWKHSKLORVRSK\WKDWEDUVWKH
GRRU WR TXHVWLRQLQJ HYROXWLRQ 3HUVRQDOO\ , FRXOGQW FDUH OHVV
ZKHWKHUFRPSXWHUYLUXVHVFDQHYROYHRUQRW$QG,FRXOGQWFDUH
OHVV ZKHWKHU HYROXWLRQ LV VXIILFLHQW WR FUHDWH D ZKROH ZRQGHUIXO
ZRUOGRIFRPSXWHUL]HG OLIHIRUPV LQDPLOOLRQ\HDUVRUZKHWKHU
LWLVFRPSOHWHO\LPSRWHQW,ZRQWEHDURXQGWRVHHLWDQ\KRZ$QG
LI , DP QRW SKLORVRSKLFDOO\ LQYROYHG WKHQ PD\EH , FDQ ORRN DW
HYROXWLRQPRUHREMHFWLYHO\LQWKLVUHDOPDQGVLPSO\WDNHZKDWHYHU
UHVXOWV,FRPHXSZLWKDWIDFHYDOXH$QGWKHQPD\EH,FDQXVH
WKRVHUHVXOWVWREHWWHUXQGHUVWDQGZKHWKHUHYROXWLRQLQDQGRILWVHOI
LVVFLHQWLILFDOO\FDSDEOHRIH[SODLQLQJOLIHLQVRPHDUWLILFLDOZRUOG
RUOLIHDVZHNQRZLW7KDWEULQJVXVWRWKHWKHRU\RIHYROXWLRQ
$IHZFKDSWHUVEDFN,VHSDUDWHGWKHIDFWRIHYROXWLRQIURPWKH
WKHRU\RIHYROXWLRQ,QWKHODVWFKDSWHUZHGHPRQVWUDWHGWKDWWKH
IDFWRIHYROXWLRQGRHVDSSO\WRFRPSXWHUYLUXVHV7KDWVKRXOGQRW
EH D ELJ VXUSULVH $Q\ VHOIUHSURGXFLQJ DXWRPDWRQ RXJKW WR EH
VXEMHFW WR WKH IDFW RI HYROXWLRQ 7KH UHDO LQWHUHVWLQJ TXHVWLRQ
WKRXJKLVWKHWKHRU\RIHYROXWLRQ
:KDWLVWKH7KHRU\RI(YROXWLRQ"
-XVWZKDWLV WKHWKHRU\RIHYROXWLRQ IRUFRPSXWHUYLUXVHV
WKRXJK"6KRXOGZHQDwYHO\WUDQVSRUW'DUZLQVK\SRWKHVLVRYHUWR
WKHZRUOGRIYLUXVHVDQGVD\
7KHIDFWRIHYROXWLRQRIYLUXVHVLVFDSDEOHRIDFFRXQWLQJIRUDOO
WKHYDULHW\LQFRPSXWHUYLUXVHVIRXQGLQFRPSXWHUVWRGD\
7KHNQHHMHUNUHDFWLRQLVWRVD\WKDWZHNQRZWKLVVWDWHPHQWLV
IDOVH:HNQRZYLUXVHVGLGQRWHYROYHWKH\ZHUHZULWWHQ0DQ\
SHRSOH HYHQ FODLP WR ZULWH WKHP DQG ZLOO GR VR LQ IXOO YLHZ RI
DQ\RQHZKRFDUHVWRVHHLWGRQH<HWWKLVNQHHMHUNUHDFWLRQJRHV
EH\RQGVFLHQWLILFPHWKRGIRUSURRI,WUHOLHVRQDXWKRULW\7KDWGRHV
QRWPHDQVXFKDQDSSURDFKLVQHYHUYDOLGLWLVMXVWQRWVFLHQWLILF,I
VRPHERG\ \RX NQRZ DQG WUXVW WHOOV\RXYLUXVHVZHUHZULWWHQE\
SHRSOHDQGGLGQRWHYROYH\RXPLJKWEHGRLQJYHU\ZHOOWREHOLHYH
KLP7KDWLVILQHIRU\RX%XWVXSSRVH\RXZHUHOLYLQJVRPHWLPH
DIWHUWKHVL[WKQXFOHDUZRUOGZDU3UDFWLFDOO\QRERG\NQRZVDQ\
WKLQJDERXWFRPSXWHUVDQ\PRUHOHWDORQHYLUXVHV<RXYHZRUNHG

KDUGDQGJRWWHQDQROG3&XSDQGUXQQLQJDQGDVVHPEOHGDPRGHVW
FROOHFWLRQ RI VRIWZDUH LQFOXGLQJ VRPH YLUXVHV <RX DOVR KDYH D
PDQXDOIRUDQDQWLYLUXVSURJUDPWKDWFODLPVSHRSOHFUHDWHGWKHVH
YLUXVHV<HWWKLVLVIRUHLJQWR\RX<RXNQRZ\RXUIRUHIDWKHUVZHUH
JUHDWGHFHLYHUVDQGWKHSHRSOHZKRZURWHWKHVHW\SHVRISURJUDPV
ZHUHVRPHRIWKHZRUVWVR\RXUHDQ\WKLQJEXWVXUH\RXFDQWUXVW
LW ,Q WKLV VLWXDWLRQ WKH VFLHQWLILF DSSURDFK EHJLQV WR VKLQH $
VFLHQWLILF GHWHUPLQDWLRQ DERXW ZKHUH YLUXVHV FDPH IURP KDV D
XQLYHUVDOLW\WKDWDXWKRULW\GRHVQRW
6XFKDQDQDO\VLVLVQRWWKDWGLIILFXOWLQSULQFLSOH,QWKHODVW
FKDSWHUZHVDZWKDWLWWRRNDERXW\HDUVIRUDYHU\PLQRUPXWDWLRQ
WRWDNHKROGHYHQXQGHUIDYRUDEOHFRQGLWLRQV6RVXSSRVH\RXKDG
VHYHUDOPDMRUYDULDWLRQVRIYLUXVHVZKLFKZRXOGKDYHWDNHQPDQ\
WKRXVDQGVRIPXWDWLRQVWRHYROYHIURPRQHDQRWKHU,I\RXNQHZDOO
RIWKHPGDWHGEHWZHHQDQGDQG\RXKDGVRPHGDWDRQ
WKHQXPEHURIFRPSXWHUVVWRUDJHFDSDFLW\HWFDYDLODEOHLQWKDW
WLPHSHULRG\RXVKRXOGEHDEOHWRFRQFOXGHWKDWWKHYLUXVHVGLGQRW
DOOHYROYHIURPDFRPPRQDQFHVWRU7KHSUREDELOLW\IRULWZRXOG
EHULGLFXORXVO\VPDOODQGWKDWZRXOGSXWDQHQGWRIXUWKHUVSHFX
ODWLRQ
+HUHLQZHFDQVHHWKDWYLUXVHVDUHQWHYROYLQJQHDUO\
IDVWHQRXJKWRPDNHRXU'DUZLQV+\SRWKHVLVIRU9LUXVHVYLDEOH
<HWFRXOGWKHUHEHVRPHSRLQWLQWKHIXWXUHZKHUHHYROXWLRQZLOO
WDNHRYHUDQGPDNHVRPHWKLQJOLNHLWZRUN"0RGXORWKHQHHGIRU
PXOWLSOH VWDUWV RI YLUDO OLIH EDVHG RQ ZKDW ZH NQRZ RI WKHLU
RULJLQV WRGD\ $IWHU DOO WKH ELJJHU WKH YLUXV WKH PRUH OLNHO\ D
PXWDWLRQZLOOEH$QGWKHPRUHRIWKHPWKHPRUHOLNHO\PXWDWLRQV
ZLOO EH %RWK DUH SRVVLELOLWLHV DV VWRUDJH FDSDFLWLHV FRQWLQXH WR
JURZ2QWKHRWKHUKDQGPRUHUHOLDEOHFRPSXWHUVFRXOGGHFUHDVH
1RWHWKDWLQDOOZHYHVDLGVRIDUZHKDYHQWDVNHGWKHTXHVWLRQZKHUHWKHILUVW
YLUXV FDPH IURP :H WDNH WKDW ILUVW YLUXV DV D JLYHQ ,Q HYROXWLRQ ZHUH
FRQFHUQHGZLWKZKDWKDSSHQVDIWHUWKDWILUVWJLYHQ:HOOH[DPLQHEHJLQQLQJV
LQDFRXSOHFKDSWHUV

WKHEDVLFPXWDWLRQUDWHVLJQLILFDQWO\DQGEHWWHUVHFXULW\PHDVXUHV
FRXOGUHGXFHWKHYLUXVSRSXODWLRQ
$V , KDYH VDLG DOUHDG\ 'DUZLQV K\SRWKHVLV LVQW UHDOO\ D
WKHRU\RIHYROXWLRQ,WLVDPHUHVSHFXODWLRQRUDSKLORVRSKLFDO
WUXLVP2QFHZHVWDUWORRNLQJDWWKHZRUOGRIYLUXVHVZHEHJLQWR
VHHWKHQHHGIRUDUHDOWKHRU\'DUZLQVK\SRWKHVLVGRHVQWPDNH
VHQVHWKHUHDWOHDVWQRWULJKWQRZ\HWZHGOLNHWREHDEOHWRVD\
VRPHWKLQJ DERXW ZKDW HYROXWLRQ FDQ DQG ZLOO GR LQ WKLV ZRUOG
EH\RQGWKHVLPSOHIDFWWKDWLWFDQRFFXU
6LQFHWKHUHUHDOO\LVQRWKHRU\RIHYROXWLRQLQWKHUHDOZRUOG
QRZD\IRUPHDVDVFLHQWLVWWRSUHGLFWZKDWVRPHELRORJLFDOV\VWHP
ZLOORUZLOOQRWGRZHFDQQRWVLPSO\SXOORQHRYHUIURPWKHUH:H
DUHJRLQJWRKDYHWRIRUPXODWHDWKHRU\LIZHZDQWRQH:HFDQQRW
VLPSO\UHO\RQWKHSKLORVRSKLFDOWUXLVPRI'DUZLQVK\SRWKHVLVDQG
DVVXPHWKDWHYROXWLRQLVRPQLSRWHQW$OUHDG\ZHFDQVHHWKDWLWLV
QRWRPQLSRWHQWLWLVQRWDEOHWRH[SODLQHYHU\REVHUYDWLRQDERXWWKH
GLIIHUHQW VSHFLHV RIFRPSXWHUYLUXVHV
,QIRUPXODWLQJDWKHRU\RIHYROXWLRQLWZRXOGVHHPUHDVRQDEOH
WRWXUQDZD\IURPWKHUHDOZRUOGDOWRJHWKHUDQGIRUPXODWHLWRQO\
ZLWKUHIHUHQFHWRDUWLILFLDOOLIH:HZDQWWREURDGHQRXUKRUL]RQV
WREHJLQZLWKDQGLWZRXOGVHHPWKDWWKHUHDOZRUOGWKHRU\DVLW
VWDQGV WRGD\ GRHVQW KDYH D ZKROH ORW WR RIIHU XV ,Q WXUQLQJ WR
DUWLILFLDOOLIHZHJHWDZKROHORWRIGLIIHUHQWVFHQDULRVWRH[DPLQH
VRPH ZKHUH HYROXWLRQ FDQ SUHVXPDEO\ GR VRPHWKLQJ DQG VRPH
ZKHUH LW FDQQRW 7KLV UHRULHQWDWLRQ DOVR WHDUV XV DZD\ IURP WKH
SKLORVRSKLFDO G\QDPLWH WKDW DQ\ DWWHPSW DW D UHDOZRUOG WKHRU\
ZRXOGLQYDULDEO\LJQLWH:HGRQRWVHWRXWWRILQGWKHZRUOGZKHUH
HYROXWLRQLVPRVWSRZHUIXODFWLQJOLNHVRPHFUHDWLQJJRGEXW
UDWKHUWRORRNDWWKHEURDGVSHFWUXPDQGOHDUQZKDWHYROXWLRQFDQ
DQGFDQQRWGR:HQHHGQRWLQGHHGFDQQRWDIIRUGWREHERXQG
E\WKHLGHDRIHYROXWLRQDVP\VWLFDODQGRPQLSRWHQW)RUWXQDWHO\
DUWLILFLDOOLIHFDQEHDQDO\]HGLQDZD\WKDWWKHUHDOZRUOGFDQQRW
EHDWOHDVWQRWDWSUHVHQW7KDWOHWVXVSUREHHYROXWLRQDORWPRUH
GHHSO\PRUHVFLHQWLILFDOO\WKDQZHFDQLQWKHUHDOZRUOG6RZH
KDYHVRPHKRSHIRUIRUPXODWLQJDUHDOWKHRU\DWKHRU\ZKLFKWDNHV
DOO WKH SRVVLELOLWLHV LQWR DFFRXQW DQG SHUKDSV ORRNV PRUH OLNH
PDWKHPDWLFVWKDQDQ\WKLQJHOVH*LYHQVXFKDWKHRU\ZHPLJKWWKHQ
JREDFNWRWKHUHDOZRUOGDQGVHHZKDWRXUWKHRU\PLJKWWHDFKXV

)RUPXODWLQJDUHDOWKHRU\RIHYROXWLRQULJRURXVO\ZLWKORWVRI
HTXDWLRQVDQGGRJPDLVFOHDUO\SUHPDWXUHULJKWQRZ7RVWDUWRXW
ZHQHHGVRPHEDVLFLGHDVDURXQGZKLFKDWKHRU\PLJKWEHIRUPX
ODWHGVRPHNH\VZKLFKZLOODOORZXVWRXQGHUVWDQGZKDWHYROXWLRQ
LVDQGZKDWLWFDQGR7KHUHVWRIWKLVFKDSWHUZLOOIRFXVRQWU\LQJ
WRGHILQHVRPHRIWKHVHLGHDV
6HOHFWLRQ3URFHVVHV
$WWKHKHDUWRIHYROXWLRQLVWKHLGHDRIWKHVHOHFWLRQSURFHVV
:KHQ\RXKDYHDSRSXODWLRQRIOLYLQJRUJDQLVPVDQG,XVHWKHWHUP
EURDGO\ WR LQFOXGH $/ D VHOHFWLRQ SURFHVV FDQ SUHIHUHQWLDOO\
FKRRVHVRPHRIWKHVHRUJDQLVPVDVPRUHRUOHVVILWWKDQRWKHUV7KH
PRUHILWLQGLYLGXDOVVXUYLYHDQGWKHOHVVILWGRQRWDWOHDVWVWDWLV
WLFDOO\ 7KH PRVW ILW LQGLYLGXDOV WKHQ JHQHWLFDOO\ SDVV RQ WKHLU
ILWQHVVWRWKHLUSURJHQ\
$ VHOHFWLRQ SURFHVV LV PHUHO\ $ D ILWQHVV FULWHULRQ HJ D
GHILQLWLRQRIZKDW ILWQHVV PHDQVDQG%DPHWKRGRIFRXSOLQJ
WKLVILWQHVVFULWHULRQLQWRDV\VWHP
,W ZRXOG DSSHDU WKDW PXFK RI WKH VFLHQFH LQ HYROXWLRQ LV
ZUDSSHGXSLQVHOHFWLRQSURFHVVHV7KHV\VWHPVEHKDYLRUXQGHU
WKHLQIOXHQFHRIVHOHFWLRQSURFHVVHVVHHPVPRUHDPDWWHURIPDWKH
PDWLFVWKDQVFLHQFH(VVHQWLDOO\ZLWKLQWKHOLPLWVRIWKHPDWKHPDW
LFVWKHVHOHFWLRQSURFHVVHVZLOOGHWHUPLQHKRZSRZHUIXOHYROXWLRQ
LVLQDJLYHQVLWXDWLRQ
1RZ LQ WHUPV RI XQGHUVWDQGLQJ WKH UHDO ZRUOG 'DUZLQLVP
WHQGVWRWXUQWKHVHOHFWLRQSURFHVVLQWRDWDXWRORJ\ 6XUYLYDORIWKH
ILWWHVW GHILQHVILWQHVVLQWHUPVRIVXUYLYDOVR\RXJHWDQHQGOHVV
FLUFOH7KHILWWHVWLVZKDWVXUYLYHV:KDWVXUYLYHVLVWKHILWWHVW,WV
KDUGWRGRPXFKZLWKWKDW7KHQHRGDUZLQLDQGHILQLWLRQRIILWQHVV
DVZKDWHYHUKDVWKHPRVWSURJHQ\GRHVQREHWWHU
7KLQJV DUH GLIIHUHQW ZKHQ ZH WXUQ WR FRQWUROOHG ODERUDWRU\
H[SHULPHQWVLQ$/WKRXJK:HFDQSRVLWLYHO\GHILQHVRPHFRQFHSW
RI ILWQHVV DQG DSSO\ LW WR D SRSXODWLRQ RI DXWRPDWD *LYHQ D
VXIILFLHQWXQGHUVWDQGLQJRIWKH ILWQHVVIXQFWLRQ WKRXJKWKHLGHD
RIVXUYLYDORIWKHILWWHVWVHHPVUDWKHUWULYLDO2IFRXUVHVRPHWKLQJ
ZLOOVXUYLYHLIZHGHVLJQDV\VWHPWRPDNHLWVXUYLYH1RQHWKHOHVV
ZHFDQGHILQHILWQHVVZLWKRXWPDNLQJDWDXWRORJ\RXWRILW

,QRXULPDJLQDWLRQVVHOHFWLRQSURFHVVHVFDQEHDOPRVWRPQLSR
WHQWRUSRZHUOHVVGHSHQGLQJRQKRZZHFRQFHLYHRIWKHP,WKLQN
WKHUHLQOLHVWKHP\VWLFDOQDWXUHRIHYROXWLRQDVZHKDYHLWWRGD\
(YROXWLRQFRXOGFRQFHLYDEO\GRDQ\WKLQJZLWKWKHULJKWVHOHFWLRQ
SURFHVVHV$QGLWFDQGRQRWKLQJZLWKRXWWKHP7KXVRQHVFLHQWLVW
FDQ HDVLO\ LPDJLQH KRZ DOO RI OLIH HYROYHG IRUP RQH DUFKHW\SH
ZKLOHDQRWKHUFDQWLPDJLQHKRZDFRPSOH[VWUXFWXUHOLNHWKHH\H
FRXOGKDYHHYROYHG
,QRUGHUWRXQGHUVWDQGVHOHFWLRQSURFHVVHVEHWWHUZHFDQGL
YRUFHWKHLGHDIURPOLIHDQGHYROXWLRQ,PDJLQHIRUDPRPHQWWKDW
,KDGDQLQWHJHULQPLQGDQG,ZDQWHG\RXWRJXHVVZKDWLWZDV$OO
\RXNQRZLVWKDWWKLVLQWHJHULVE\WHVORQJ(DFKWLPH\RXJXHVV
, ZLOO VD\ \HV RU QR WR WHOO \RX ZKHWKHU \RX JRW WKH ULJKW
DQVZHU5DQGRPO\JXHVVLQJOLNHWKLV\RXKDYHRQO\D [
SUREDELOLW\ RI JHWWLQJ WKH ULJKW DQVZHU LQ DQ\ RQH JXHVV
0DNLQJDPLOOLRQJXHVVHVSHUVHFRQG\RXZRXOGQRWHYHQKDYHD
FKDQFHRIKLWWLQJRQWKHULJKWDQVZHULQWKHDJHRIWKHXQLYHUVH
,Q RWKHU ZRUGV \RX FRXOGQW GR LW 7KH UHDVRQ LV WKDW WKH RQO\
VHOHFWLRQFULWHULRQ\RXKDYHJLYHV\RXQRLQIRUPDWLRQDERXWKRZ
JRRGRUEDG\RXUJXHVVZDVXQOHVV\RXJHWLWH[DFWO\FRUUHFW:H
PLJKWWKLQNRILWDVLIHDFKJXHVVQLVEHLQJDVVLJQHGDQXPEHUIQ
E\DILWQHVVIXQFWLRQI7KHIXQFWLRQILVWKHRQO\PHDQVZHKDYHIRU
GHWHUPLQLQJZKHWKHURUQRWZHKDYHIRXQGWKHULJKWDQVZHU,QWKH
FDVHZHMXVWGLVFXVVHGIJLYHVXVYHU\OLWWOHKHOSLQILQGLQJWKHULJKW
DQVZHUEHFDXVHLWKDVWKHVDPHYDOXHHYHU\ZKHUHH[FHSWDWWKH
ULJKWDQVZHUZKHUHLWLV,WORRNVVRPHWKLQJOLNH)LJXUH
$ILWQHVVIXQFWLRQVXFKDVGHSLFWHGLQ)LJXUHLVPXFKPRUH
KHOSIXO8VLQJLWZHFDQGHYLVHDYHU\VLPSOHVFKHPHWRILQGWKH
ULJKWDQVZHUQRPDWWHUZKDWLWLVLQDERXWVWHSV+HUHVWKH
VFKHPH
6WDUW ZLWK WZR QXPEHUV Q DQG Q )))))))))))))))
)))))))))))))))))+WKHODUJHVWE\WHQXPEHU
,IIQIQWKHQVHWQ QQRWKHUZLVHVHWQ QQ
5HSHDWVWHSXQWLOIQ

)LJXUH$SRRUILWQHVVIXQFWLRQ
)LJXUH$KHOSIXOILWQHVVIXQFWLRQ

7KXVDJRRGILWQHVVIXQFWLRQFDQFKDQJHRXUVHDUFKIRUWKHULJKW
QXPEHU IURP DQ H[HUFLVH LQ IXWLOLW\ LQWR DQ HDVLO\ DFFRPSOLVKHG
WDVN
1RZRIFRXUVHWKHILWQHVVIXQFWLRQLVDGHILQLWLRQRIZKDWZH
PHDQE\ ILWQHVV LQWKLVSDUWLFXODUVLWXDWLRQ2XUVHOHFWLRQSURFHVV
FRQVLVWVQRWRQO\RIWKHILWQHVVIXQFWLRQEXWWKHVWHSSURJUDPZH
GHILQHG WR PDNH XVH RI WKH ILWQHVV IXQFWLRQ 7KDW LV KRZ WKH
LQIRUPDWLRQZKLFKWKHILWQHVVIXQFWLRQJLYHVXVLVFRXSOHGLQWRRXU
JXHVVLQJ:HFRXOGGHYLVHEHWWHURUZRUVHZD\VWRFRXSOHLWLQ)RU
H[DPSOH ZH FRXOG GHYLVH D VLQJOHVWHS SURFHVV ZKLFK WDNHV WKH
GHULYDWLYHRIIDWVRPHSRLQWDQGWKHQJXHVVHVWKHULJKWDQVZHUYHU\
TXLFNO\$WWKHRWKHUHQGRIWKHVSHFWUXPZHFRXOGPDNHYHU\
SRRUXVHRII)RUH[DPSOHZHFRXOGVD\
3LFNQDWUDQGRP
,IIQWKHQUHSHDWVWHSRQH
7KLVDSSURDFKGRHVQREHWWHUWKDQZKHQISURYLGHGQRLQIRUPDWLRQ
DWDOOEHFDXVHLWGRHVQWPDNHXVHRIWKHLQIRUPDWLRQIJLYHVXV
7KXVLQJHQHUDODVHOHFWLRQSURFHVVLQYROYHVDILWQHVVFULWHULRQ
DQGDPHDQVRIFRXSOLQJLWLQWRDV\VWHP
5HWXUQLQJWRJHQHWLFVHOIUHSURGXFLQJV\VWHPVZHPD\HPSOR\
WKHVH LGHDV DERXW VHOHFWLRQ SURFHVVHV (VVHQWLDOO\ ZH FDQ WKLQN
DERXW D ILWQHVV IXQFWLRQ ZKLFK GHILQHV ILWQHVV DV D IXQFWLRQ RI
JHQRW\SH7KXVWKH;D[LVLQDSORWOLNH)LJXUHZRXOGQRWEH
DUDQJHRIQXPEHUVEXWDUDQJHRIJHQHVJHQRW\SHVSDFH7\SL
FDOO\LWZRXOGEHEHVWUHSUHVHQWHGLQDPXOWLGLPHQVLRQDOIDVKLRQ
HJRQHGLPHQVLRQIRUHDFKEDVHZKLFKGHILQHVWKHJHQHV:HFDQ
SLFWXUHLWDVRQHRUWZRGLPHQVLRQDOWKRXJKIRUPRVWSXUSRVHV
6HOIUHSURGXFWLRQZLWKFKDQJH LV WKH FRXSOLQJ PHFKDQLVP
ZKLFKDOORZVWKHILWQHVVIXQFWLRQWRPRGLI\WKHJHQHVLQWKHV\VWHP
:H PLJKW YLHZ WKH ILWQHVV IXQFWLRQ DV WKH DYHUDJH QXPEHU RI
RIIVSULQJDSDUWLFXODUJHQRW\SHPLJKWKDYH(DFKDXWRPDWRQUH
1HZWRQVPHWKRG
$OWKRXJKWKLVSLFWXUHLVDELWVLPSOLVWLFLWZLOOGRIRUQRZ7KHVLPSOLILFDWLRQ
LVVLPSO\WKDWZHFDQWUHDOO\YLHZHYHU\LQGLYLGXDODVDQLQGHSHQGHQWHQWLW\

SURGXFHVDQGWKHFKLOGUHQDUHDOLWWOHGLIIHUHQWIURPWKHSDUHQWV
GXHWRPXWDWLRQVDQGVH[XDOUHFRPELQDWLRQ7KXVLIZHVWDUWHGD
V\VWHPZLWKDVLQJOHJHQHZKLFKH[LVWVDWDSRLQWLQDJHQRW\SH
VSDFHPXWDWLRQVZRXOGFDXVHWKDWSRLQWWRVSUHDGRXWLQWRDIX]]\
EDOO,IWKHILWQHVVIXQFWLRQZDVQRWIODWLQWKHQHLJKERUKRRGRIWKLV
IX]]\EDOOSDUWVRIWKHEDOOZRXOGEHPRUHILWWKDQRWKHUV7KHEDOO
ZRXOGWKXVJURZLQWKDWGLUHFWLRQEHFDXVHWKHLQGLYLGXDOVLQWKDW
UHJLRQZRXOGKDYHPRUHFKLOGUHQVWDWLVWLFDOO\HDFKZLWKIXUWKHU
PXWDWLRQVLQWKHLURZQQHLJKERUKRRG7KHIX]]\EDOOZRXOGWKXV
DSSHDUWRPRYHWRZDUGKLJKHUYDOXHVRIIDQGVWD\WKHUH
7KLVFRQFHSWLVJUDSKLFDOO\LOOXVWUDWHGE\WKHSURJUDP6(/(&7
RQ WKH 3URJUDP 'LVN 6(/(&7 HVVHQWLDOO\ LPSOHPHQWV D WZR
GLPHQVLRQDOYHUVLRQRIRXU ILQGWKHQXPEHU JDPHDERYHRUD
V\VWHPZLWKWZRJHQHV(DFKSRLQWRQWKHGLVSOD\LVDVHOIUHSUR
GXFLQJDXWRPDWRQZKLFKZLOOUHSURGXFHE\HLWKHUPDNLQJDQH[DFW
FRS\RILWVHOIVDPHJHQRW\SHVDPHSRVLWLRQRQWKHVFUHHQRUE\
PDNLQJDQHDUFRS\RILWVHOIRFFXS\LQJDQHLJKERULQJSRLQWRQWKH
VFUHHQ7KHSRSXODWLRQRIWKLVV\VWHPLVNHSWDWDIL[HGQXPEHUE\
NLOOLQJRIIDXWRPDWDUDQGRPO\LQSURSRUWLRQWRWKHVTXDUHRIWKHLU
GLVWDQFHIURPWKHFHQWHUSRLQWRQWKHVFUHHQ,QRWKHUZRUGVZH
VHOHFWDXWRPDWDDWUDQGRPDQGWKHQPHDVXUHWKHLUGLVWDQFHIURPWKH
FHQWHUSRLQW,IWKDWGLVWDQFHLVWKHPD[LPXPGLVWDQFHZHNLOOWKH
DXWRPDWRQRIWKHWLPH,ILWVKDOIWKHPD[LPXPZHNLOOWKH
DXWRPDWRQ RI WKH WLPH HWF 7KLV LPSOHPHQWV D VPRRWKO\
YDU\LQJ ILWQHVV IXQFWLRQ WKDW JXLGHV WKH SRSXODWLRQ RI DXWRPDWD
ULJKWWRWKHFHQWHUSRLQW
)LJXUHGHSLFWVWKHEHKDYLRURIDSRSXODWLRQRIDXWRPDWD
LQWKLVDUUDQJHPHQW7KH\LQYDULDEO\HYROYHWRZDUGWKHFHQWHUSRLQW
LQWKHV\VWHP<RXFDQVHHWKLVE\UXQQLQJWKH6(/(&7SURJUDP
DIHZWLPHV,WVUHDOO\SUHWW\IRROSURRI
$VVXFKZHFDQVHHWKDWVHOIUHSURGXFWLRQZLWKJHQHWLFYDUL
DWLRQFDQZRUNWRVROYHFHUWDLQSUREOHPVSXWWRWKHP
+RZPDQ\RIIVSULQJDQLQGLYLGXDOKDVZLOOGHSHQGRQDOOWKHRWKHULQGLYLGXDOV
WRR7KLVDOORZVXVWRXQGHUVWDQGSKHQRPHQDOLNHRYHUFURZGLQJ7RPRGHOLW
ULJKWZHZRXOGOLNHWRKDYHDVRUWRIJHQHSKDVHVSDFHZKHUHDOORIWKHJHQHWLF
PDWHULDOIRUDZKROHSRSXODWLRQLVUHSUHVHQWHGE\DSRLQW

2SWLPXP
SRLQW
)LJXUH(YROXWLRQZLWKDVPRRWKILWQHVV
IXQFWLRQ
*HQHWLF&KDQJHDQG/LPLWVRQ6HOHFWLRQ
1RZWKHUHDUHOLPLWVRQHYROXWLRQVDELOLW\WRQHJRWLDWHWKHLQV
DQGRXWVRIDILWQHVVIXQFWLRQ7KHVHOLPLWVDUHGHULYHGIURPWKH
PHFKDQLVPVZKLFKFDXVHJHQHWLFFKDQJHVLQDSRSXODWLRQ7KHWZR
3UREOHPVZKLFKKDYHDQLFHILWQHVVIXQFWLRQ

PHFKDQLVPV ZKLFK FDXVH JHQHWLF FKDQJH LQ WKH UHDO ZRUOG DUH
PXWDWLRQVDQGVH[XDOUHSURGXFWLRQ/HWVGLVFXVVHDFKRIWKHPLQ
WXUQDQGVHHMXVWKRZWKH\ZRUNLQHYROXWLRQ
:KHQ , VD\ PXWDWLRQV , DOZD\V PHDQ WLQ\ PLFURPXWD
WLRQVDVLQJOHJHQHDWDWLPHWKHNLQGZHGLVFXVVHGLQWKHODVW
FKDSWHU7KHUHDVRQPLFURPXWDWLRQVIRUPWKHEDVLVIRUHYROXWLRQ
DU\FKDQJHUDWKHUWKDQODUJH PDFURPXWDWLRQV LVWKDWPDFURPX
WDWLRQVDUHHVVHQWLDOO\DVKRWLQWKHGDUN7KH\DUHZLOGUDQGRP
JXHVVHVDWWKHVROXWLRQRIDVHOHFWLRQSUREOHP1RZLQDQGRILWVHOI
WKHUH LV QR UHDVRQ WR EHOLHYH WKDW VXFK JXHVVLQJ FRXOG QRW EH
HIIHFWLYH,QIDFWLWLVHIIHFWLYHZLWKVRPHWKLQJDVVLPSOHDVWKH
6(/(&7SURJUDP,I\RXLQFUHDVHWKHGLVWDQFHWKDWDPXWDWLRQFDQ
MXPS6(/(&7ZLOOVROYHLWVSUREOHPDORWIDVWHU7KDWHIIHFWLYH
QHVVJHQHUDOO\GHFUHDVHVKRUULEO\DVWKHLQIRUPDWLRQFRQWHQWRID
VHOIUHSURGXFLQJDXWRPDWRQVJHQHWLFPDWHULDOLQFUHDVHV)RUH[
DPSOH LI ZH KDG D WZR NLORE\WH YLUXV DQG ZH WRRN D E\WH
VXEURXWLQH DQG UHSODFHG LW ZLWK D UDQGRP FKXQN RI FRGH \RXG
H[SHFWWKDWFRGHWRGRMXVWDERXWDQ\WKLQJEXWPDNHWKHYLUXVPRUH
HIIHFWLYH7KDWLVEHFDXVHWKHUHDUHSRVVLEOHVXEVWLWXWLRQV
DQGRQO\DYHU\YHU\VPDOOQXPEHURIWKRVHZLOOKDYHDQ\WKLQJWR
GRZLWKEHLQJDXVHIXOVXEURXWLQHPXFKOHVVVRPHWKLQJKHOSIXOWR
WKHYLUXV8QOHVVWKHFKRLFHRIVXFKDVXEVWLWXWLRQLVLQWHOOLJHQWO\
PDGHLWKDVQRKRSHRIKLWWLQJRQDJRRGDQVZHU7\SLFDOO\DEOLQG
VHDUFKZRUNVRQO\ZKHQWKHUHDUHDYHU\OLPLWHGQXPEHURISRVVL
ELOLWLHVWRH[DPLQH2QFH\RXVWDUWWDONLQJQXPEHUVOLNHLWV
XVHOHVV,WVOLNHDOORZLQJ\RXUVHOIWREHWUDQVSRUWHGWRVRPHUDQ
GRPSODFHLQWKHXQLYHUVHLQDQLQVWDQWDQGMXVWKRSLQJLWOOEHD
SODFH\RXFDQOLYH:HOOWDONPRUHDERXWWKLVODWHU
0LFURPXWDWLRQVGLIIHULQWKDWWKH\DUHYDULDWLRQVRQDNQRZQ
HVWDEOLVKHGWKHPH7KH\PDNHDVLPSOHFKDQJHDQGWKHQWKHILWQHVV
IXQFWLRQDQVZHUVWKHTXHVWLRQ EHWWHURUZRUVH"
1RZPLFURPXWDWLRQVKDYHVRPHVHULRXVOLPLWDWLRQVEHFDXVH
WKH\FDQRQO\H[SORUHWKHORFDOEHKDYLRURIWKHILWQHVVIXQFWLRQ,I
\RX KDG D ILWQHVV IXQFWLRQ WKDW ORRNHG OLNH )LJXUH DQG D
SRSXODWLRQDWSRLQW$PLFURPXWDWLRQVZRXOGGXWLIXOO\OHDGLWWR
WKHORFDOSHDNDWSRLQW%DQGNHHSLWWKHUHIRUHYHU7KHSRSXODWLRQ
FRXOGSUREDEO\QRWQHJRWLDWHWKHPLQLPXPDWSRLQW&WRILQGLWVZD\
WRSRLQW'7KDWSODFHVDUHDOOLPLWRQHYROXWLRQ:HFRXOGFRQFOX

%
$
'
&
)LJXUH$ILWQHVVIXQFWLRQZLWKDORFDO
PD[LPXP
VLYHO\VD\WKDWWKHSRSXODWLRQDWSRLQW$FRXOGQHYHUHYROYHLQWRD
SRSXODWLRQDW'LQWKLVV\VWHP7KDWGRHVQRWRIFRXUVHPHDQZH
FRXOGQWPRGLI\RXUV\VWHPWRPDNHLWSRVVLEOHWRJHWWR')RU
H[DPSOHZHPLJKWLQWURGXFHDSUHGDWRU7KDWDGGVPRUHGLPHQ
VLRQVWRWKHJHQRW\SHVSDFHVRWKDW\RXPLJKWHQGXSZLWKDEULGJH
IURP % WR ' DV LQ )LJXUH ,Q GRLQJ WKLV KRZHYHU \RXYH
PRGLILHG WKH V\VWHP 7KH VDPH FRQFOXVLRQ VWLOO DSSOLHV WR WKH
RULJLQDOV\VWHP
7KLVSUREOHPRIILQGLQJORFDOPD[LPDLVDOVRPRGHOHGE\WKH
SURJUDP6(/(&77KLVSURJUDPDOORZV\RXWRSXWLQDZDOODURXQG
WKHFHQWHUSRLQWLQZKLFKWKHDXWRPDWDDUHOHVVOLNHO\WRVXUYLYH
:KHQ\RXUXQWKHSURJUDPLIWKHLQLWLDOSRSXODWLRQLVRXWVLGHWKH
ZDOOLWZLOOVWD\RXWVLGHIRUHYHUSURYLGHG\RXPDNHWKHZDOOWKLFN
HQRXJKDQGKLJKHQRXJKHYHQWKRXJKWKHLQVLGHRIWKHZDOOKDVD
ORZHUILWQHVVIXQFWLRQWKDQDQ\SRLQWRXWVLGHRILW
7KHVHFRQGOLPLWDWLRQRIPLFURPXWDWLRQVLVWKDWWKH\FDQEH
LQHIIHFWLYHLQUHJLRQVZKHUHWKHILWQHVVIXQFWLRQLVIODWRUQHDUO\
IODW7\SLFDOO\PLFURPXWDWLRQVVHOHFWLYHO\FRXSOHLQWRWKHVORSH
RIWKHILWQHVVIXQFWLRQ:KHUHWKHIXQFWLRQLVVWHHSOLNHWKHVLGHRI
DPRXQWDLQVPDOOPXWDWLRQVDUHYHU\HIIHFWLYHLQILJXULQJRXWZKLFK

)LJXUH3RVVLEOHILWQHVVIXQFWLRQZLWKD
SUHGDWRU
ZD\ WR JR +RZHYHU LI WKH IXQFWLRQ LV IODW OLNH D SODWHDX WKH
PXWDWLRQSURFHVVEHFRPHVDEOLQGVHDUFKIRUILWWHUJHQHV,IWKHDUHD
WREHVHDUFKHGLVWRRODUJHWKDWEOLQGVHDUFKLVSUDFWLFDOO\JXDUDQ
WHHGWREHIUXLWOHVV<RXFDQPDWKHPDWLFDOO\GHWHUPLQHKRZJRRG
WKHVHDUFKZLOOEHEDVHGRQWKHSRSXODWLRQVL]HWKHUHSURGXFWLRQ
UDWHWKHPXWDWLRQUDWHWKHDOORWWHGDPRXQWRIWLPHDQGWKHYROXPH
RIWKHJHQHVSDFHWREHVHDUFKHG
)RUH[DPSOHVXSSRVH,KDYHDYLUXVWKDWFRXOGWDNHDPDMRU
OHDSLQILWQHVVE\PRGLI\LQJE\WHVRIFRGHELWV<HWQR
LPSURYHPHQWLQILWQHVVFRXOGEHKDGXQWLODOOELWVZHUHLQSODFH
MXVWDVQHHGHGHJWKHILWQHVVIXQFWLRQLVIODWLQWKLVUHJLRQ7KXV
DSRSXODWLRQRIYLUXVHVZRXOGKDYHWRVHDUFKDVSDFHRI
[GLIIHUHQWYDULDWLRQVWRKLWRQWKHRQHWKDWZDVDQLPSURYH
PHQW1RZZKHQWKHSRSXODWLRQRIYLUXVHVFRPHVQHDUWKLVSODWHDX
LWZLOOEHJLQWRGLIIXVHDFURVVLWE\PXWDWLQJ6HH)LJXUH$IWHU
DORQJORQJWLPHWKHYLUXVZLOOSUHVXPDEO\ILOOWKLVVSDFHIDLUO\
HYHQO\+RZHYHUDWWKDWWLPHLWZLOOEHVSUHDGVRWKLQO\WKDWHYHQ
LIWKHUHDUHDKXJHQXPEHURIYLUXVHVWKHFKDQFHVWKDWDQ\RQHRI
WKHPZLOOILQGWKHLPSURYHPHQWZLOOEHPLQXVFXOH)RUH[DPSOH

VXSSRVHWKHWRWDOYLUXVSRSXODWLRQ37ZDVDKXJHQXPEHU,I

HYHQO\VSUHDGRXWWKHDYHUDJHSRSXODWLRQRIDQ\JLYHQYDULDWLRQLV
RQO\
3L 37 [

7KDWLVWKHEHVWFDVHVFHQDULR0RVWRIWKHWLPHWKHSRSXODWLRQLQ
WKHUHJLRQRIWKHLPSURYHGYLUXVZLOOEHPXFKORZHUEHFDXVHWKH
GLIIXVLRQZLOOWDNHDORQJWLPHWRJHWWRWKDWQHLJKERUKRRG2QO\
WKHQZLOOWKHSRSXODWLRQLQWKLVQHLJKERUKRRGUHDFKWKHYDOXHDERYH
:LWKRQO\DLQFKDQFHRIILQGLQJWKHULJKWPXWDWLRQPLFUR
PXWDWLRQVFDQQRWDFFRPSOLVKLWLQDUHDVRQDEOHWLPHIUDPH
7KHDELOLW\RIDSRSXODWLRQWRWUDYHUVHDSODWHDXRIDJLYHQVL]H
LVHYHU\WKLQJLQWKLVJDPH7KHUHVHHPWREHDOPRVWDEVROXWHOLPLWV
IRUODUJHHQRXJKSODWHDXVDVWKHDERYHGLVFXVVLRQZRXOGLQGLFDWH
,QVXFKDVLWXDWLRQLWGRHVQWPDWWHUKRZELJWKHSRSXODWLRQRUKRZ
KLJKWKHPXWDWLRQUDWH$Q\UHDVRQDEOHQXPEHUVVWLOOGRQWPHHWWKH
FKDOOHQJH7KDWLVEHFDXVHDUDQGRPVHDUFKLVLQFUHGLEO\LQHIILFLHQW
)LJXUH0LJUDWLRQDFURVVDSODWHDXLQJHQH
VSDFH

LILWKDVWRORRNYHU\IDU2QWKHRWKHUKDQGPXFKVPDOOHUSODWHDXV
FRXOGVWLOOEHXQQHJRWLDEOHEHFDXVHWKHQXPEHUVRIPXWDWLRQVLQD
SRSXODWLRQDUHMXVWWRRVPDOOWRGLIIXVHWKHSRSXODWLRQDFURVVWKH
SODWHDX
7KH6(/(&7SURJUDPZLOODOORZ\RXWRSXWDVPDOOSODWHDX
LQWRWKHILWQHVVIXQFWLRQLQVWHDGRIDZDOO,I\RXPDNHWKHWKLFNQHVV
RIWKHZDOODERXWXQLWVWKHSODWHDXLVMXVWELJHQRXJKWRVORZWKH
IX]]\EDOOUHSUHVHQWLQJWKHSRSXODWLRQGRZQ,I\RXPDNHLWPXFK
ELJJHUWKDWEDOOFDQQRWILQGLWVZD\DFURVVWKHSODWHDX7RXQGHU
VWDQGWKHIXWLOLW\RIDODUJHUDQGRPVHDUFKSOD\DURXQGZLWKWKLV
SURJUDPIRUDELWDQGWKHQLPDJLQHPDNLQJWKHRXWHUHGJHRIWKH
SODWHDXWKHVL]HRIWKHHDUWKVRUELWDURXQGWKHVXQ
/HWVJRRQWRGLVFXVVWKHRWKHUPHDQVRIFKDQJHZKLFKHYROX
WLRQKDVDWLWVGLVSRVDOVH[XDOUHSURGXFWLRQDQGUHFRPELQDWLRQ,Q
UHDOZRUOG RUJDQLVPV WKH JHQHWLF LQIRUPDWLRQ VWRUHG LQ '1$ LV
EURNHQXSLQWRRQHRUPRUHFKURPRVRPHV(DFKFKURPRVRPHLVD
VLQJOH VWUDQG RI '1$ FRQWDLQLQJ D ODUJH QXPEHU SHUKDSV WKRX
VDQGVRIJHQHV,QVH[XDOUHSURGXFWLRQWKHFKLOGUHFHLYHVZKROH
FKURPRVRPHVIURPWKHSDUHQWVZLWKHYHQRGGVRIJHWWLQJDQ\JLYHQ
FKURPRVRPHIURPIDWKHURUPRWKHU7KXVLIWKHIDWKHUVFKURPR
VRPHVDUHODEHOOHG)))DQGWKHPRWKHUV000
WKHQWKHFKLOGPD\HQGXSZLWKFKURPRVRPHV00)0)
) 0 ) 0 ) *HQHUDOO\ VSHDNLQJ HDFK FKURPRVRPH LV
LGHQWLFDOWRHLWKHUWKHPRWKHUVRUWKHIDWKHUVWKRXJKWKHFKLOGZLOO
UDUHO\JHWDOORILWVFKURPRVRPHVIURPRQHPDWH,QRXUH[DPSOH
ZLWKFKURPRVRPHVWKHSUREDELOLW\LVRQO\7KXVVH[XDO
UHSURGXFWLRQDOORZVIRUDFKLOGZKLFKLVVXEVWDQWLDOO\GLIIHUHQWIURP
HLWKHUSDUHQWEXWVWLOOVLPLODUWRERWK
,QDGGLWLRQWRJHQHWLFPL[LQJRQDFKURPRVRPDOOHYHODSURFHVV
FDOOHGFKLDVPDVRPHWLPHVRFFXUVLQZKLFKWKHSDUHQWVFKURPR
VRPHV FURVV VHH )LJXUH DQG FRPELQH LQWR QHZ FKURPR
VRPHV QRW SUHVHQW LQ HLWKHU SDUHQW 7KXV WKH FKLOG JHWV D QHZ
FKURPRVRPHZKLFKKDVJHQHVIURPERWKSDUHQWV7KHFURVVRYHU
FDQRFFXUDQ\ZKHUHDORQJWKHOHQJWKRIWKHFKURPRVRPHDQGFDQ
UHVXOWLQDQHZDQGSRVVLEO\GHIHFWLYHJHQH&KLDVPDLVDUHOD
WLYHO\UDUHSURFHVVWKRXJKDQGUDUHUWKHKLJKHU\RXJRRQWKHFKDLQ
RIOLIH

)DWKHU
$&7**$&&7*$$
$&7**$&7$$*$
&KLOG
*&&$*&&7$$*$
0RWKHU
)LJXUH&KLDVPD
,Q DUWLILFLDO OLIH VH[XDO UHSURGXFWLRQ FDQ EH D PXFK PRUH
HIILFLHQWZD\WRVHDUFKIRUILWQHVVVROXWLRQVWKDQPXWDWLRQVDORQH
GHSHQGLQJ RQ VWDUWLQJ SDUDPHWHUV IRU D V\VWHP DQG KRZ \RX
LPSOHPHQW WKH UHSURGXFWLRQ SURFHVV 7KH JHQHWLF DOJRULWKP LV
SHUKDSVWKHPRVWZHOONQRZQH[DPSOHRIDQDUWLILFLDOOLIHLPSOH
PHQWDWLRQRIVH[XDOUHSURGXFWLRQDWWKLVWLPH,WGLIIHUVLPSRUWDQWO\
IURP UHDO ZRUOG VH[XDO UHSURGXFWLRQ LQ WKDW W\SLFDOO\ RQO\ RQH
FKURPRVRPHLVLPSOHPHQWHGEXWFKLDVPDLVJUHDWO\PDJQLILHGVR
WKDW WKH FKURPRVRPH LV RIWHQ EURNHQ DQG FURVVHG RYHU DW VRPH
UDQGRPO\VHOHFWHGSRLQWDORQJLWVOHQJWK
6XFKDOJRULWKPVKDYHSURYHQYHU\HIILFLHQWDWVROYLQJVLPSOH
SUREOHPV SURYLGHG WKDW D IDLUO\ XQLIRUP ILWQHVV IXQFWLRQ FDQ EH
LQYHQWHGWRKRQHWKHPZLWK,I\RXFRQVLGHUDPXWDWLQJV\VWHPZLWK
DEXQFKRIUDQGRPVWDUWLQJSRLQWVWKHQWKHQH[WJHQHUDWLRQFDQDW
EHVWH[SORUHDVPDOOQHLJKERUKRRGDURXQGHDFKSRLQWDVGHSLFWHG
LQ)LJXUH2QWKHRWKHUKDQGDVH[XDOO\UHSURGXFLQJV\VWHP
FDQ H[SORUH WKH OLQH EHWZHHQ DQ\ WZR LQGLYLGXDOV 6R LQ HIIHFW
VH[XDO UHSURGXFWLRQ DOORZV D SRSXODWLRQ WR FRYHU PRUH JURXQG
%HQMDPLQ /HZLQ *HQHV 6HFRQG (GLWLRQ -RKQ :LOH\ DQG 6RQV 1HZ
<RUNS

0XWDWLRQ
6H[XDO5HSURGXFWLRQ
)LJXUH0XWDWLRQYHUVXVVH[XDOUHSURGXFWLRQ

IDVWHU7KHUHDUHRIFRXUVHOLPLWDWLRQV,IUDWKHUWKDQVWDUWLQJZLWK
D UDQGRPL]HG SRSXODWLRQ ZH VWDUWHG ZLWK D YHU\ ZHOO GHILQHG
SRSXODWLRQZHZRXOGQRWEHDEOHWRLQWURGXFHQHZYDULDWLRQLQWR
WKHV\VWHP)RUH[DPSOHFURVVLQJWZRELQDU\FKURPRVRPHVWKDW
GLIIHUE\RQO\RQHELW
&KURPRVRPH$
&KURPRVRPH%
ZLOODOZD\VJLYH\RXRQO\RQHRUWKHRWKHURIWKHRULJLQDOV&UHDWLQJ
DQ\WKLQJQHZLVLPSRVVLEOH2QWKHRWKHUKDQGDPXWDWLQJV\VWHP
JLYHV\RXQHZFRPELQDWLRQVWRWU\QRPDWWHUKRZIHZFKURPR
VRPHV\RXVWDUWRXWZLWK7KXVVH[XDOUHSURGXFWLRQDSSHDUVWREHD
XVHIXOVHDUFKPHFKDQLVPLQVRPHVLWXDWLRQVDQGQRWLQRWKHUV
7KHUHLVDQLPSRUWDQWWUDGHRIIZHPXVWXQGHUVWDQGZKHQGLV
FXVVLQJVH[XDOUHSURGXFWLRQ7KHPXOWLSOHFKURPRVRPHVRIWKHUHDO
ZRUOGDUHVRPHZKDWRIDQHQFXPEUDQFHZKHQFRQVLGHULQJDSXUHO\
ORJLFDO JHQHWLF V\VWHP $ V\VWHP ZLWK WKUHH FKURPRVRPHV IRU
H[DPSOHLVLGHQWLFDOWRDV\VWHPZLWKRQHFKURPRVRPHLQZKLFK
FKLDVPDRFFXUVZLWKDSUREDELOLW\DWWZR KRWVSRWV 6HH
)LJXUH7KXVWKHFURVVRYHUPHFKDQLVPFDQORJLFDOO\SHUIRUP
WKHVDPHIXQFWLRQDVPXOWLSOHFKURPRVRPHV7KHIDFWWKDWWKHUHDUH
PXOWLSOHFKURPRVRPHVLQWKHUHDOZRUOGLVDIHDWXUHRIWKHLPSOH
PHQWDWLRQRIWKHJHQHWLFORJLFUDWKHUWKDQDIXQGDPHQWDODVSHFWRI
&7*$&77*$&&&$$&*7$&&7$*$&$&*
+RW
6SRW
+RW
6SRW
)LJXUH&KURPRVRPHVFDQEHLPSOHPHQWHG
ZLWKKRWVSRWV

WKDWORJLF7KXVIURPQRZRQZHQHHGRQO\FRQVLGHUV\VWHPVZLWK
RQHFKURPRVRPH
,QGHVLJQLQJDJHQHWLFV\VWHPZHKDYHWRGHFLGHZKHUHFURVV
RYHUFDQRFFXUDQGKRZRIWHQ7KDWGHFLVLRQZLOOGHWHUPLQHKRZ
ELJ D SRSXODWLRQ ZLOO EH QHHGHG WR FRYHU WKH ZKROH JHQH VSDFH
HIIHFWLYHO\XVLQJVH[XDOUHSURGXFWLRQ/HWPHH[SODLQVXSSRVHZH
DOORZ FURVVRYHU ZLWK HTXDO IUHTXHQFLHV EHWZHHQ HYHU\ ELW LQ D
FKURPRVRPH7KHQZHVWDUWRXUSRSXODWLRQRXWZLWKDVHWRIUDQGRP
FKURPRVRPHV:HFDQHDVLO\GHFLGHKRZPDQ\FKURPRVRPHVZLOO
EHQHFHVVDU\WRFRYHUWKHZKROHJHQHVSDFH(VVHQWLDOO\ZHZDQW
WR EH DEOH WR PDNH DQ\ FKURPRVRPH IURP RXU VHW RI UDQGRP
FKURPRVRPHVE\UHSHDWHGO\FURVVLQJWKHP*HQHUDOO\JLYHQWZR
UDQGRPFKURPRVRPHVRIWKHELWVZLOOPDWFKDQGZRQW
$WKLUGZLOOPDWFKZLWKHDFKRIWKHILUVWWZRDQGZLOO
PDWFKZLWKERWK,QJHQHUDODIUDFWLRQ1RIWKHWRWDOELWVLQ1
UDQGRPFKURPRVRPHVZLOODOOPDWFK6RIRUH[DPSOHZLWKDWZR
E\WH ELW FKURPRVRPH ZHG QHHGDERXW1 IRUD
SUREDELOLW\RIKDYLQJQRELWVZKLFKPDWFKLQDOO1FKURPRVRPHV
VR1 (VVHQWLDOO\ILYHFKURPRVRPHVZRXOGSUREDEO\FRYHUWKH
ZKROHVSDFH:LWKWKHVHILYHFKURPRVRPHV,FRXOGEXLOGDQ\RWKHU
WZRE\WHVHTXHQFHE\FURVVLQJWKHP2QWKHRWKHUKDQGLI,RQO\
DOORZFURVVRYHUWRWDNHSODFHRQE\WHERXQGDULHV,OOQHHGDORW
PRUHFKURPRVRPHVWRVWDUWRXWZLWK2QO\DERXW E\WHVZLOO
PDWFKEHWZHHQDQ\SDLURIFKURPRVRPHV ZLOOQRWPDWFK
<RXFDQGHWHUPLQHWKDW\RXOOQHHGVRPHUDQGRPFKURPR
VRPHVWRGRDVZHOODVELWZLVHFURVVRYHUGLGZLWKILYH
)URPRXUGLVFXVVLRQLWZRXOGVHHPWKDWELWZLVHFURVVRYHULV
PXFKPRUHHIILFLHQWDWH[SORULQJWKHJHQHVSDFHDQGLWLV+RZ
HYHULWGRHVQRWDOZD\VIROORZWKDWZHVKRXOGXVHLW7KHSUREOHP
ZLWKELWZLVHFURVVRYHULVWKDWLWGHVWUR\VDOOORQJUDQJHRUGHULQ
WKHJHQH)RUH[DPSOHLIDFHUWDLQFRPELQDWLRQRIELWVLQWKHJHQH
JLYHVPXFKLPSURYHGVXUYLYDOFKDUDFWHULVWLFVWRLQGLYLGXDOVZKLFK
SRVVHVLWWKHQ\RXZDQW\RXUV\VWHPWRSUHVHUYHWKDWFRPELQDWLRQ
,IKRZHYHUWKLVFRPELQDWLRQFRQVLVWVRIWZRFRQWLJXRXVE\WHVLW
KDVDSUREDELOLW\RISRIEHLQJSUHVHUYHGIURPWKHSDUHQWWR
FKLOGZKHUHSLVWKHSUREDELOLW\RIDVLQJOHELWZLVHFURVVRYHU7KH
RQO\ZD\WRSUHVHUYHWKLVSDWWHUQWKHQLVWRPDNHSYHU\VPDOO,I
\RX GR WKDW WKRXJK \RX PDNH FURVVRYHU DQ LQHIIHFWLYH ZD\ WR

H[SORUHWKHJHQHVSDFH8VLQJDODUJHUJUDQXODULW\LQWKHFURVVRYHU
SHUPLWV WKH SUHVHUYDWLRQ RI ORQJUDQJH RUGHU ZKLOH DOORZLQJ DQ
DFFHSWDEOHWKRXJKUHGXFHGDPRXQWRIJHQHVSDFHH[SORUDWLRQE\
NHHSLQJSODUJH
7KHVHDUHWKHWUDGHRIIVRIVH[XDOUHSURGXFWLRQ2EYLRXVO\WKHUH
FRXOGEHPDQ\YDULDWLRQVRQWKLVEDVLFDSSURDFK7KHUHDOZRUOG
DFWXDOO\ PDNHV D VHQVLEOH FRPSURPLVH 0XOWLSOH FKURPRVRPHV
DOORZIUHTXHQWJHQHPL[LQJZLWKJRRGSUHVHUYDWLRQRIORQJUDQJH
RUGHU7KHPRUHLQIUHTXHQWLQWUDFKURPRVRPDOFURVVRYHUDOORZVD
ORZHUOHYHORIPL[LQJZKLFKUHVXOWVLQQHZFKURPRVRPHV
7KHGLVWLQFWLRQEHWZHHQPXWDWLRQDQGFURVVRYHULVUDWKHUYDJXH
ZKHQFURVVRYHURFFXUVDWWKHOHYHORIWKHVPDOOHVWEXLOGLQJEORFNV
LQ D V\VWHP DQG ZKHQ WKHUH LV VXIILFLHQW YDULHW\ LQ WKH RULJLQDO
SRSXODWLRQ)RUH[DPSOHWKHUHLVQRGLIIHUHQFHEHWZHHQPXWDWLQJ
WKHE\WH$+H[LQWR$+H[DQGREWDLQLQJWKH$KH[IURPDFURVV
EHWZHHQ$DQG+H[7KHHQGUHVXOWLVDQ$QRPDWWHUZKDW
2IFRXUVHLIQRQHRIWKHLQLWLDOSRSXODWLRQKDGDJHQHZLWKWKHWK
ELWVHWLQWKLVE\WHWKHQQRDPRXQWRIFURVVLQJFRXOGSURGXFHDQ
$+H[
7\SLFDOO\DVSHFLHVLQWKHUHDOZRUOGLVUHFRJQL]HGE\DOLPLWHG
JHQHWLFYDULDWLRQLQLWVSRSXODWLRQV)RUH[DPSOHWZRJHQHVFRGH
IRU WZR GLIIHUHQW W\SHV RI KXPDQ KHPRJORELQ DQG 7KHVH
JHQHVDUHDQGXQLWVLQOHQJWKUHVSHFWLYHO\DQGDJUHHLQ
SODFHVKDYHJDSVDQGGLIIHULQSODFHV:LWKRQO\WZRJHQHV
WRFRGHIRUDPLQRDFLGV\RXKDYHDYHU\OLPLWHGDPRXQWRI
FKDQJHDYDLODEOHIURPWKHH[LVWLQJKXPDQSRSXODWLRQYLDDVWUDLJKW
FURVVRYHUPHFKDQLVP
7KH%LJ4XHVWLRQ
,QIDFWPDQ\ZRXOGGHILQHDVSHFLHVDVDQLVRODWHGVSHFLILFSRSXODWLRQ
<RXFDQSXWWRJHWKHURQO\DERXWSRVVLEOHJHQHVPRVWRIZKLFKZLOOEH
OHWKDODVFRPSDUHGWRSRVVLELOLWLHV$QG LVDVPDOOSDUW
RIWKHWRWDOVSDFH7RJLYH\RXDQLGHDRIKRZVPDOOLWLVLWLVVPDOOHUWKDQWKH
UDWLRRIWKHYROXPHRIDSURWRQWRWKHWRWDOYROXPHRIWKHXQLYHUVH

8SWRWKLVSRLQWZHYHVHHQWKDWWKHUHDUHORWVRISUDFWLFDOOLPLWV
RQHYROXWLRQWKDWDUHLQWHUHVWLQJWRH[SORUHXVLQJ$/)RUH[DPSOH
LQWKHODVWFKDSWHUZHVDZKRZPXWDWLRQUDWHVDIIHFWWKHWLPHIUDPH
RIHYROXWLRQ(YHQDVPDOOPXWDWLRQFDQQRWEHFRPHHVWDEOLVKHGLI
LW LV QRW JLYHQ HQRXJK WLPH :H DOVR VDZ KRZ WKH SRSXODWLRQ
HTXDWLRQVFRXOGVXSSUHVVHYROXWLRQ,QWKLVFKDSWHUZHYHVHHQKRZ
WKHDELOLW\RIPXWDWLRQVWRQHJRWLDWHDILWQHVVIXQFWLRQFDQEHIRLOHG
ZHYHVHHQKRZWUDGHRIIVKDYHWREHPDGHLQVH[XDOUHSURGXFWLRQ
DQGKRZWKHYHU\DFWRIGHILQLQJD VSHFLHV OLPLWVZKDWVH[XDO
UHSURGXFWLRQFDQGR$OORIWKHVHP\ULDGIDFWRUVPXVWHYHQWXDOO\
JRLQWRDQ\DQDO\VLVRIHYROXWLRQLQWKHUHDOZRUOG7KHSUREOHP
ZLWKDSSO\LQJWKHPWRWKHUHDOZRUOGLVWKDWWKHUHDOZRUOGLVWRR
FRPSOH[:KDWLVWKHILWQHVVIXQFWLRQRIRXUHFRV\VWHP",QDVSDFH
RIVRPHJHQHWLFSRVVLELOLWLHVMXVWKRZZHOOGHILQHGLV
WKHKXPDQVSHFLHV":KDWDUHWKHPXWDWLRQPHFKDQLVPVPXWDWLRQ
UDWHVDQGFURVVRYHUUDWHVVLWHE\VLWHRIVRPHFKURPRVRPH"7KHVH
TXHVWLRQVDUHPLQGERJJOLQJ$WKHDUWWKLVLVZK\HYROXWLRQFDQW
DQVZHUWRRPDQ\TXHVWLRQVIRUWKHLQVLVWHQWVFLHQWLVW
,IZHZDQWDUHDOVFLHQWLILFDVVHVVPHQWRI'DUZLQVK\SRWKHVLV
ZHPLJKWEHIDFHGZLWKZHLJKLQJDOORIWKHVHIDFWRUVIRUWKHUHDO
ZRUOG$Q\RQHRIWKHVHREVWDFOHVFRXOGHDVLO\SURYHLQVXUPRXQW
DEOH)RUH[DPSOHZHKDYHQRUHDVRQWREHOLHYHWKDWWKHILWQHVV
IXQFWLRQRIRXUZRUOGGRHVQRWORRNOLNHDEXQFKRILVODQGVLQWKH
VHDZLWKSRSXODWLRQVFHQWHUHGDURXQGHDFKLVODQG)LJXUH
7KDWZRXOGDSSHDUWRPDNH'DUZLQVK\SRWKHVLVLPSRVVLEOH2I
FRXUVHDWWKHVDPHWLPHQRQHRIWKHVHREVWDFOHVFDQEHSURYHQWR
EHLQVXUPRXQWDEOH:HKDYHQRUHDVRQWREHOLHYHWKHILWQHVVIXQF
WLRQGRHVQRWORRNOLNHDULVLQJPRXQWDLQUDQJHZLWKVRPHSRSXOD
WLRQV DW WKH SHDNV DQG VRPH RQ WKH VORSHV 3HUKDSV VRPHGD\
ELRFKHPLVWU\E\LWVHOIFRXOGDQVZHUDPDMRUSDUWRIWKLVTXHVWLRQ
7KHQDJDLQPD\EHQRW:HMXVWGRQWNQRZULJKWQRZ5LJKWQRZ
LWVKDUGWRVD\ZKDWZHFDQOHDUQDERXWWKHOLPLWDWLRQVRIUHDOZRUOG
HYROXWLRQIURPWKHVHLGHDV&HUWDLQO\,YHVHHQWKHPXVHGWRDUJXH
ERWKWKHSURVDQGFRQVRIYDULRXVHYROXWLRQDU\VFHQDULRV
+RZHYHU , KDYH WR ORRN EH\RQG DOO RI WKHVH VSHFLILFV DQG
ZRQGHULIWKHUHLVQRWOXUNLQJLQWKHVKDGRZVVRPHJUDQGSULQFLSOH
ZKLFKDOWKRXJK LW FDQQRW EH FOHDUO\ VHHQ DV \HWSODFHV VRPH
WUXO\IXQGDPHQWDOOLPLWDWLRQVRQHYROXWLRQ$Q\WKHRU\RIHYROX

)LJXUH$ILWQHVVIXQFWLRQXQIUHLQGO\WR
HYROXWLRQ
WLRQLQWKHWUXHVHQVHRIWKHZRUGDOPRVWKDVWRHPERG\VRPHVXFK
JHQHUDOSULQFLSOH:LWKRXWDQ\OLPLWLQJSULQFLSOHVHYROXWLRQMXVW
LVQW D VFLHQWLILF WKHRU\LW LVQW DQ\WKLQJ EXW WDON :H PLJKW
GHYHORSDWKHRU\DERXWILWQHVVRUDWKHRU\DERXWPXWDWLRQVEXWWKDW
GRHVQWPHDQZHKDYHDWKHRU\RIHYROXWLRQDWDOO7KHYHU\LGHDRI
DWKHRU\RIHYROXWLRQVXJJHVWVWKDWWKHUHLVVRPHSULQFLSOHEHKLQG
LW
:KDWFRXOGWKDWSULQFLSOHEHWKRXJK"
$IWHU GRLQJ D ORW RI H[SHULPHQWLQJ ZLWK YLUXVHV WKDW HYROYH
ZKLFKZHOOGLVFXVVLQDPRPHQWP\JHQHUDOIHHOLQJLVWKDWWKHUH
DUHIXQGDPHQWDOOLPLWVRQHYROXWLRQ7KHVHOLPLWVVHHPWRUHYROYH
DURXQG RQH TXHVWLRQ ZKLFK PXVW QHFHVVDULO\ EH FHQWUDO WR DQ\
WKHRU\RIHYROXWLRQ
,VHYROXWLRQDFUHDWLYHIRUFHRUDUHDFWLYHIRUFH"
7KHFRPPRQSHUFHSWLRQLVWKDWHYROXWLRQPXVWEHDFUHDWLYH
IRUFH,IQRWWKHQKRZFRXOGDOOWKHYDULHW\RIOLIHRQHDUWKKDYH

HYROYHG"<HWLIZHSUHWHQGWKDWWKHUHLVQRUHDOZRUOGDQG$/LV
DOOZHKDYHWRVWXG\HYROXWLRQZLWKWKDWSRSXODUSHUFHSWLRQEH
FRPHVKLJKO\VXVSHFW7KDWVEHFDXVH$/LVIXQGDPHQWDOO\GLIIHU
HQWIURPWKHUHDOZRUOG,QWKHUHDOZRUOGDQDO\]LQJLQIRUPDWLRQ
IORZLVSUDFWLFDOO\LIQRWSKLORVRSKLFDOO\LPSRVVLEOH:LWKDUWL
ILFLDOZRUOGVLQVLGHRXUFRPSXWHULWLVSRVVLEOH
:HYHDOUHDG\GLVFXVVHGWKHLGHDWKDWWKHSK\VLFDOODZVRID
V\VWHPFRQWDLQLQIRUPDWLRQZLWKLQWKHFRQWH[WRIWU\LQJWREHWWHU
GHILQH VHOIUHSURGXFWLRQ (VVHQWLDOO\ ZH ZDQWHG WR WU\ WR DYRLG
WULYLDOUHSURGXFWLRQZKLFKZDVGLFWDWHGE\WKHSK\VLFDOODZVRIWKH
V\VWHP$SURSRVHGVROXWLRQZDVVLPSO\WRVXJJHVWWKDWWKHLQIRU
PDWLRQ FRQWHQW RI WKH JHQHWLF PDWHULDO LQ D VHOIUHSURGXFLQJ
DXWRPDWRQRXJKWWREHJUHDWHUWKDQWKHLQIRUPDWLRQFRQWHQWRIWKH
SK\VLFVRIWKHV\VWHPLQZKLFKLWH[LVWHG
:KHQ,VSHDNRIHYROXWLRQDVDFUHDWLYHIRUFH,DPSULPDULO\
LQWHUHVWHG LQ LQIRUPDWLRQ 7KDW LV HYROXWLRQ RXJKW WR EH DEOH WR
FUHDWHLQIRUPDWLRQ2WKHUZLVHLILWLVPHUHO\UHDFWLYHWKHQLWFDQ
RQO\FRXSOHSUHH[LVWLQJHQYLURQPHQWDOLQIRUPDWLRQLQWRWKHVHOI
UHSURGXFLQJSRSXODWLRQVJHQHVEXWLWFDQQRWJHQHUDWHQHZLQIRU
PDWLRQRQLWVRZQ
7RWKHPRGHUQVFLHQWLVWWKH PLUDFOH RIOLIHLVWKHLQIRUPD
WLRQWKHVSHFLILFLW\RIWKHJHQHVUHTXLUHGE\OLYLQJRUJDQLVPV7KH
JHQHVSDFHLVKXJHHJVRPHWKLQJOLNH$OOWKHOLIH
WKDWKDVHYHUOLYHGH[SORUHVRQO\DQLQILQLWHVLPDOLQILQLWHVLPDOELW
RI WKLV VSDFH ,QVLGH WKDW LQILQLWHVLPDO ELW WKH YDULRXV VSHFLHV
RFFXS\HYHQPRUHLQILQLWHVLPDOELWVRIVSDFH7KHQXPEHUVDUHVR
LQFUHGLEOHWKDWZRUGVFDQWJLYHXVDQ\SHUVSHFWLYHRQWKHP7KHVH
LQILQLWHVLPDO ELWV WHOO XV WKDW WKHUH LV D WUHPHQGRXV DPRXQW RI
LQIRUPDWLRQRUVSHFLILFLW\DVVRFLDWHGZLWKOLIH)LIW\\HDUVDJR
QRERG\UHDOO\NQHZWKDW:HNQHZWKDWWKHUHZDVLQIRUPDWLRQWKHUH
EXWKRZPXFKZDVXQFOHDU
:HPLJKWVXSSRVHWKDWWKHUHDVRQZHHQGHGXSLQWKHUHJLRQRI
JHQHVSDFHZHGLGDQGWKHUHDVRQZHVSUHDGRXWWKHZD\ZHGLG
ZDVMXVWDQDFFLGHQW$IWHUDOOLWKDGWRVWDUWVRPHZKHUH%H\RQG
WKDWWKRXJKZHKDYHWRZRQGHUZK\WKHJHQHVSDFHLVSRSXODWHG
WKHZD\LWLV5DWKHUWKDQORRNLQJOLNHDGLIIXVHJDVLWDSSHDUVPRUH
OLNH WKH YLVLEOH PDWWHU LQ RXU XQLYHUVH ZLWK VPDOO FOXPSV DQG
V\VWHPVRIFOXPSVDQGJDOD[LHVRIV\VWHPVDQGFOXVWHUVRIJDOD[

LHV(DFKFOXPSLVIXQFWLRQDOWKRXJKDKLJKO\RUJDQL]HGSURJUDP
RIVRUWV:KHQZHUXQLQWRWKLVNLQGRIIXQFWLRQDOLQIRUPDWLRQDOLQ
WKHDEVWUDFWZHQRUPDOO\DVVRFLDWHLWZLWKLQWHOOLJHQWGHVLJQ7KH
FODVVLFH[DPSOHLVGXHWR:,OOLDP3DOH\ZKRFRPSDUHGDQDWXUDOO\
GHULYHG OLYLQJ RUJDQLVP WR DQ LQWULFDWH ZDWFK DVVHPEOHG E\
FKDQFH6RPHKRZZHGOLNHHYROXWLRQWRH[SODLQKRZOLIHJRWWR
EHWKHZD\LWGLGLQIRUPDWLRQDOO\VSHDNLQJLILQGHHGHYROXWLRQLV
UHVSRQVLEOHIRUOLIHDVLWLV
:LWKLQWKHGRPDLQRI$/LWVHHPVKDUGWRVHHKRZHYROXWLRQ
FRXOGEHDQ\WKLQJRWKHUWKDQSXUHO\UHDFWLYH:HYHDOUHDG\VHHQ
WKDW UDQGRP VHDUFKHV RI D JHQH VSDFH DUH HVVHQWLDOO\ XVHOHVV
ZKHQHYHUDFKURPRVRPHFRQVLVWVRIPRUHWKDQDERXWILIW\E\WHVRI
LQIRUPDWLRQ,QHVVHQFHUDQGRPPXWDWLRQVGHVWUR\LQIRUPDWLRQLQ
D VHOIUHSURGXFLQJ V\VWHP WKH\ GRQW FUHDWH LW ,W LV WKH ILWQHVV
IXQFWLRQWKDWUHILQHVLQIRUPDWLRQFRQWHQWLQDSRSXODWLRQ<HWWKH
ILWQHVVIXQFWLRQLWVHOILVOLWWOHPRUHWKDQDPDWKHPDWLFDOVWDWHPHQW
DERXWWKHHQYLURQPHQW,WLVZKDWFRXSOHVHQYLURQPHQWDOLQIRUPD
WLRQLQWRWKHSRSXODWLRQRIDXWRPDWD
7KHEHVWZD\WRVHHKRZDOORIWKLVZRUNVLVWRLOOXVWUDWHLWXVLQJ
DQH[DPSOHIURPRXUZRUOGRIYLUXVHV
7KH'DUZLQLDQ*HQHWLF0XWDWLRQ(QJLQH
&HUWDLQO\DYLUXVFDQEHGHVLJQHGWRIDFLOLWDWHHYROXWLRQ$O
WKRXJKWKHPXWDWLRQUDWHVRQWKHDYHUDJHFRPSXWHUDUHYHU\ORZ
E\GHVLJQZHFRXOGLQWURGXFHIDLUO\UDQGRPPXWDWLRQVLQWRDYLUXV
RQSXUSRVHWRKHOSHYROXWLRQDORQJ:HFRXOGDOVRLQWURGXFHVH[XDO
UHSURGXFWLRQ,QJHQHUDOLI\RXFDQTXDQWLI\DSURFHGXUHVXFKDV
PXWDWLRQRUVH[XDOUHSURGXFWLRQLWFDQEHFRGHG
%HWWHUWKDQPHUHO\GHVLJQLQJDYLUXVWKDWFDQHYROYHZHFDQ
GHVLJQDPRGXOHWKDWFRXOGEHLQFOXGHGLQDQ\YLUXV7KLVPRGXOH
FRXOGEHGHVLJQHGWRPDQLSXODWHDSLHFHRIJHQHWLFPDWHULDOZKLFK
LV MXVW D VWULQJ RI E\WHVDQG SDVV WKLV FKURPRVRPH RQ IURP
:LOOLDP 3DOH\ $ 9LHZ RI WKH (YLGHQFHV RI &KULVWLDQLW\ 5 )DXOGHU
/RQGRQ 6HH WKH GLVFXVVLRQ LQ )UHG +R\OH DQG &KDQGUD
:LFNUDPDVLQJKH(YROXWLRQIURP6SDFH-0'HQW/RQGRQS

JHQHUDWLRQWRJHQHUDWLRQ$Q\YLUXVFDQXVHWKHJHQHWLFPDWHULDOWR
PDNHGHFLVLRQVDERXWKRZLWRSHUDWHV)RUH[DPSOHRQHELWLQWKH
JHQHWLF PDWHULDO PLJKW WHOO WKH YLUXV WR LQIHFW &20 ILOHV DQG
DQRWKHU ELW PLJKW WHOO LW WR LQIHFW (;( ILOHV ,Q WKH EHJLQQLQJ
SHUKDSVRQO\WKH&20ILOHELWLVVHWVRWKHYLUXVZLOOQRWLQIHFW
(;(V7KHQDWVRPHODWHUWLPHWKHYLUXVPXWDWHVDQGVHWVWKHELW
WRLQIHFW(;(ILOHV6XGGHQO\WKHSKHQRW\SHKRZWKHYLUXVEH
KDYHVFKDQJHVGUDVWLFDOO\1RQHRIWKLVLVKDUGWRSURJUDPLQ
,QIDFW,GHYHORSHGMXVWVXFKDPRGXOHWRIDFLOLWDWHHYROXWLRQ
IRU D YLUXV , FDOO LW WKH 'DUZLQLDQ *HQHWLF 0XWDWLRQ (QJLQH
'*0(DQGLWLVGHWDLOHGLQ$SSHQGL[)
6XFKDJHQHWLFHQJLQHFRXOGDFWXDOO\EHYHU\XVHIXOLQWKHZRUOG
RI YLUXVHV LQSOD\LQJWKHXVXDOFDWDQGPRXVHJDPHVRIZULWLQJ
YLUXVHVWKDWFDQQRWEHVFDQQHG7\SLFDOO\DYLUXVZULWHUZULWHVD
YLUXVWKDWFDQQRWEHVFDQQHGIRUDQGLWLVJRRGIRUDOLWWOHZKLOHEXW
WKHQ WKH VFDQQHU PDQXIDFWXUHV JHW D KROG RI LW DQG XSGDWH WKHLU
SURGXFWVWRFDWFKLW7KHUHLVQRUHDVRQWKRXJKWKDWDYLUXVFRXOG
QRWHYROYHWRHYDGHVFDQQHUV
$WSUHVHQWPXWDWLRQHQJLQHVDUHDSRSXODUZD\WRDYRLGGHWHF
WLRQE\DQWLYLUXVVRIWZDUHZKLFKVFDQVIRUNQRZQYLUXVHV%DVL
FDOO\DPXWDWLRQHQJLQHHQFU\SWVWKHERG\RIDYLUXVXVLQJDVLPSOH
HQFU\SWLRQ DOJRULWKP VR LW QHYHU ORRNV TXLWH WKH VDPH LQ WZR
LWHUDWLRQV7KHQWKHHQJLQHJHQHUDWHVDYDULDEOHGHFU\SWLRQURXWLQH
WR GHFU\SW WKH ERG\ RI WKH YLUXV ZKHQ LW JHWV H[HFXWHG 7KLV
GHFU\SWLRQURXWLQHLVYDULDEOHVRHVVHQWLDOO\WKHYLUXVQHYHUORRNV
WKHVDPHWZLFH6FDQQHUVWKDWVHDUFKIRUPXWDWLRQHQJLQHJHQHUDWHG
YLUXVHVW\SLFDOO\XVHDQDOJRULWKPWRGHWHFWWKHP7KHSUREOHPLV
VXFK DOJRULWKPV DUH QRW DOZD\V HIILFLHQW 7\SLFDOO\ WKH\
PLJKWFDWFKRURIDOOPXWDWLRQV$WSUHVHQWVXFK
OHYHOVRISHUIRUPDQFHDUHJHQHUDOO\DFFHSWDEOH,I\RXKDYHVXFKD
YLUXVLQ\RXUFRPSXWHUWKHVFDQQHUZLOOSUREDEO\FDWFKLW
0RVWPXWDWLRQHQJLQHVDYDLODEOHWRGD\UHO\RQUDQGRPQXPEHU
JHQHUDWRUV WR HQFU\SW FRGH DQG JHQHUDWH GHFU\SWRUV7KLVFDXVHV
WZRSUREOHPV7KHQXPEHURISRVVLEOHVWDWHVRIWKHYLUXVDUH
RQO\DVPDQ\DVWKHUHDUHSRVVLEOHVHHGVIRULW)RUH[DPSOHLIWKH
UDQGRP QXPEHU JHQHUDWRU LV VHHGHG E\ D ELW ':25' WKHQ
WKHUHDUHDERXWELOOLRQSRVVLELOLWLHV:RUVH\HWQRLQIRUPDWLRQ
LVSDVVHGIURPJHQHUDWLRQWRJHQHUDWLRQDERXWWKHHIIHFWLYHQHVVRI

WKH SDUHQWV FRQILJXUDWLRQ 7KXV LI D SDUHQW IDOOV LQ WKH QDUURZ
UDQJHZKLFKDVFDQQHUFDQQRWFDWFKWKHFKLOGZLOOVWLOOKDYH
DFKDQFHRIEHLQJFDXJKW
8VLQJJHQHWLFLQIRUPDWLRQLQVWHDGRIDUDQGRPQXPEHUJHQHU
DWRUVROYHVERWKRIWKHVHSUREOHPV7\SLFDOO\LI\RXDGGXSDOOWKH
GHFLVLRQVDQGYDULDEOHVLQDPXWDWLRQHQJLQH\RXFRXOGKDYHORWV
PRUHWKDQELOOLRQ2QHFRXOGHDVLO\GHVLJQDQHQJLQHZLWK
RUVRSRVVLELOLWLHV%HLQJDEOHWRH[SORUHWKLVPXFKODUJHUVSDFHRI
SRVVLELOLWLHVVKRXOGPDNHWKHHQJLQHPXFKPRUHHIIHFWLYHDWILQGLQJ
KROHV LQ WKH DOJRULWKP XVHG WR GHWHFW LW 6HFRQGO\ WKH JHQHWLF
LQIRUPDWLRQ ZLOO DOORZ WKH YLUXV WR SUHVHUYH D NQRZOHGJH DERXW
ZKDWW\SHVRIPXWDWLRQVKDYHZRUNHGLQWKHSDVW,WPDNHVOLWWOH
VHQVHIRUDYLUXVWKDWKDVIRXQGWKHKROHQRWWRH[SORLWLW
8VLQJDJHQHWLFDSSURDFKDOORZVWKHFKLOGUHQWRPDLQWDLQPRVWRI
WKHSDUHQWVTXDOLWLHV
,WHVWHGWKHVHLGHDVRXWXVLQJWKH7ULGHQW3RO\PRUSKLF(QJLQH
73(DQGDVLPSOH&20ILOHLQIHFWLQJYLUXVZKLFK,OOFDOO6&$1
6OLS7KH73(ZKLFKLVVXSSOLHGDVDQREMHFWILOHQRUPDOO\UHOLHV
RQDUDQGRPQXPEHUJHQHUDWRUZKLFKLVLQWHJUDOWRWKH73(6R,
GLVDVVHPEOHGWKH73(DQGUHZURWHLWDELWVRWKDWLWFDOOVWKH'*0(
LQVWHDGRIWKHUDQGRPQXPEHUJHQHUDWRU%RWKWKH'*0(DQGWKH
73(DUHLQFOXGHGRQWKH3URJUDP'LVN7KLVSURYLGHGDJUDSKLF
LOOXVWUDWLRQ RI MXVW KRZ HIIHFWLYH HYROXWLRQ FDQ EH ZKHQ SLWWHG
DJDLQVWDVFDQQHUWKDWLVQRWHIIHFWLYH
, FRQGXFWHG DQ H[SHULPHQW DV IROORZV 7R EHJLQ , SXW WKH
'*0(LQ UDQGRP PRGHDQGFUHDWHGYLUXVHVZLWKUDQGRP
FKURPRVRPHVE\WHVORQJ7KHQ,UDQ0F$IHH$VVRFLDWHV6FDQ
9HUVLRQ9DJDLQVWWKHLQLWLDOSRSXODWLRQRIWKHYLUXVHV
(YHU\LQVWDQFHRIWKHYLUXVWKDWJRWFDXJKWZDVGHVWUR\HG7KHQHZ
SRSXODWLRQZDVXVHGWRFUHDWHQHZYLUXVHVLQ JHQHWLF PRGH
ZKLFKPXWDWHVWKHH[LVWLQJFKURPRVRPHV7KHSRSXODWLRQRIQHZ
YLUXVHV ZHUH VFDQQHG DQG DOO LQVWDQFHV WKDW JRW FDXJKW ZHUH GH
VWUR\HG7KLVSURFHVVZDVUHSHDWHGDJDLQDQGDJDLQZLWKWKHUHVXOWV
0DUN /XGZLJ 'HVLJQLQJ D 0XWDWLRQ (QJLQH &RPSXWHU 9LUXV

'HYHORSPHQWV4XDUWHUO\9RO1R6SULQJSS

)LJXUH([DPSOHVRI6&$16OLSFDXJKWE\
6FDQYVWLPH
GHSLFWHGLQ)LJXUH$V\RXFDQVHHDIWHUDERXWJHQHUD
WLRQVWKHYLUXVZDVEHWWHUWKDQHIILFLHQWDWHYDGLQJWKHVDPH
6&$1SURJUDPWKDWRULJLQDOO\FDXJKWRIWKHP$QGLI\RX
WKHQ WXUQ WKH PXWDWLRQ UDWH GRZQ \RX FDQ LPSURYH WKH HYDVLRQ
HIILFLHQF\WRRUVR
7KXVLWZRXOGVHHPWKDWDQHYROYLQJYLUXVZRXOGUHSUHVHQWD
VLJQLILFDQWDGYDQFHLQDQWLDQWLYLUXVWHFKQRORJ\,WZRXOGDSSHDU

WREHHVSHFLDOO\HIIHFWLYHDJDLQVWWKHVRFDOOHGKHXULVWLFVFDQQHUV
ZKLFK DWWHPSW WR ORFDWH YLUXVHV JHQHULFDOO\ DQG DUH XVXDOO\ QRW
HYHQFORVHWRHIIHFWLYH$QGWKHSRVVLELOLWLHVDUHHQGOHVV)RU
H[DPSOHRQHFRXOGHYROYHD0F$IHHHYDGLQJYLUXVDQGD&HQWUDO
3RLQWHYDGLQJYLUXVDQGWKHQFURVVWKHPWRJHWDYLUXVWKDWHYDGHV
ERWK HWF HWF 7KH RQO\ VXUHILUH FXUH ZRXOG EH WR GHYHORS DQ
DOJRULWKPWKDWLVHIILFLHQW
'HYHORSLQJEHWWHUYLUXVWHFKQRORJ\LVRQO\DE\SURGXFWRIRXU
ZRUNKHUH7KHUHLVQRGRXEWWKDWHYROXWLRQZRUNHGEHDXWLIXOO\
%XWZHGOLNHWRXQGHUVWDQGZKDWKDVKDSSHQHGLQWKHH[SHULPHQW
HYROXWLRQZLVHDQGLQIRUPDWLRQZLVH
$QDO\VLVRIWKH([SHULPHQW
%HIRUH ZH WXUQ RQ WKH VFDQQHU RXU YLUXV ZLOO UHSOLFDWH DQG
PXWDWHDWUDQGRP7KHUHDUHHVVHQWLDOO\QRVHOHFWLRQSUHVVXUHVRQ
LW VR QR RQH FKURPRVRPH LV IDYRUHG RYHU DQ\ RWKHU 7KH LQLWLDO
SRSXODWLRQPLJKWORRNVRPHWKLQJOLNH)LJXUHLQJHQHVSDFH
:LWKWKHSDVVDJHRIWLPHWKHGRWVZLOOVLPSO\ZDQGHUDLPOHVVO\
WKURXJKRXWWKHVSDFH,IWKH\ZHUHQRWGLVWULEXWHGHYHQO\WREHJLQ
ZLWKWKH\ZLOOGLIIXVHDQGEHFRPHPRUHDQGPRUHHYHQ7KHVSHHG
RI WKDW GLIIXVLRQ SURFHVV LV SURSRUWLRQDO WR WKH PXWDWLRQ UDWH
$FWXDOO\WKHUHLVVRPHVHOHFWLYHSUHVVXUHEHFDXVHWKH73(KDVD
EXJLQLWZKLFKPDNHVVRPHGHFU\SWLRQURXWLQHVIDLO7KXVWKHUH
DUHVRPHUDUHOHWKDOPXWDWLRQVFRPSULVLQJSHUKDSVRIDOO
SRVVLEOH YDULDWLRQV :H QHJOHFW WKHVH EXJV LQ RXU DQDO\VLV 2QH
YLUXVLVSUHWW\PXFKDVJRRGDVWKHQH[W
,IZHGHILQHLQIRUPDWLRQFRQWHQWDVVSHFLILFLW\LQJHQHVSDFH
LHQHJDWLYHHQWURS\WKHQLWVKRXOGEHFOHDUWKDWPXWDWLRQVWHQGWR
$IDQF\QDPHIRU HGXFDWHGJXHVV
$QGGRQWJHWDOOEHQWRXWRIVKDSH\RXDQWLYLUXVGHYHORSHUV7KLVLVWKHEHVW
ZD\WRWHVW\RXUDOJRULWKPVWRVHHKRZJRRGWKH\DUHDQGILQGRXWZK\KROHV
DUHZKHUHWKH\DUH

)LJXUH9LUXVSRSXODWLRQZLWKRXWDVFDQQHU
)LJXUH$VFDQQHUFRQILQHVWKHYLUXV
SRSXODWLRQ

GHVWUR\LQIRUPDWLRQ,I,VWDUWZLWKDSRSXODWLRQRI1YLUXVHV
WKDWLVZHOOGHILQHGLQJHQHVSDFHWKDWSRSXODWLRQKDVDUHODWLYHO\
ORZHQWURS\)RUH[DPSOHLI,VWDUWHGZLWKDSRSXODWLRQRIYLUXVHV
ZKHUHDOOWKHE\WHVLQWKHFKURPRVRPHDUHVHWWRHLWKHURUFKRVHQ
DWUDQGRPWKHQWKHHQWURS\LV
6 OQ

SHUYLUXV2YHUWLPHPXWDWLRQVZLOOFDXVHWKHFKURPRVRPHVWRWDNH
RQDOOSRVVLEOHYDOXHVVRWKDWDWHTXLOLEULXP
6 OQ

SHUYLUXV7KXVPXWDWLRQVDORQHZLWKRXWWKHDFWLRQRIDVHOHFWLRQ
SURFHVV LQFUHDVH WKH HQWURS\ WRZDUGV LWV PD[LPXP YDOXH DQG
GHFUHDVHWKHLQIRUPDWLRQFRQWHQWVSHFLILFLW\LQWKHJHQHWLFLQIRU
PDWLRQRIWKHSRSXODWLRQ(VVHQWLDOO\\RXFDQWKLQNRIWKLVSKH
QRPHQRQVRPHZKDWOLNHRSHQLQJDVPDOOFRQWDLQHURIJDVLQDODUJH
URRP7KHJDVILOOVWKHURRPWKHHQWURS\LQFUHDVHGDQGPRVWRI
WKHJDVZLOOQHYHUJREDFNWRWKHVPDOOFRQWDLQHURQLWVRZQ
:KHQZHWXUQWKHVFDQQHURQLWLPSRVHVDILWQHVVIXQFWLRQRQ
WKH V\VWHP 7KH ZD\ , GHVLJQHG WKH H[SHULPHQW WKH VHOHFWLRQ
SURFHVVLVDQDOORUQRWKLQJDIIDLU*LYHQWKHULJKWFKURPRVRPHWKH
VFDQQHUZLOOQRWFDWFKLWVRLWZLOODOZD\VVXUYLYHDQGUHSURGXFH
7KHZURQJFKURPRVRPHLVNLOOHGLPPHGLDWHO\DQGQHYHUKDVDQ\
FKLOGUHQ7KLVILWQHVVIXQFWLRQZRUNVWRFRQILQHWKHSRSXODWLRQRI
RXUYLUXVWRDVXEUHJLRQRIWKHWRWDOJHQHVSDFH6HH)LJXUH
7KDWGHFUHDVHVWKHHQWURS\DQGLQFUHDVHVWKHLQIRUPDWLRQFRQWHQW
,IWKHILWQHVVIXQFWLRQLQWKLVSDUWLFXODUFDVHIDYRUVDYROXPHURXJKO\
WKRIWKHWRWDOYROXPHRIRXUJHQHVSDFHWKHQLWHVVHQWLDOO\
LQMHFWVLQIRUPDWLRQFRUUHVSRQGLQJWRDSSUR[LPDWHO\
6 OQOQ OQ

SHUYLUXVLQWRWKHV\VWHP
6RLQHVVHQFHWKHVHOHFWLRQSURFHVVLVLQMHFWLQJLQIRUPDWLRQLQWR
WKHV\VWHPE\UHILQLQJWKHSRSXODWLRQVJHQHWLFLQIRUPDWLRQFRQ
WHQW7KLVLVDSXUHO\UHDFWLYHSURFHVV,QIRUPDWLRQLVEHLQJLQMHFWHG

LQWRWKHVHOIUHSURGXFLQJSRSXODWLRQIURPRXWVLGHWKDWSRSXODWLRQ
7KHVHOHFWLRQIXQFWLRQLWVHOIFRQWDLQVWKHVDPHLQIRUPDWLRQWKDWLW
VXFFHHGV LQ LQMHFWLQJ LQWR WKH SRSXODWLRQ 7KH SRSXODWLRQ LV MXVW
FRQIRUPLQJWRWKDWIXQFWLRQ
7KLVLVDW\SLFDOFDVHRIZKDW,ZRXOGFDOOUHDFWLYHHYROXWLRQ
$VHOIUHSURGXFLQJV\VWHPLVPHUHO\UHDFWLQJWRDILWQHVVIXQFWLRQ
-XVWEHFDXVHWKDWV\VWHPGRHVH[DFWO\ZKDW\RXGRQWZDQWLWWRGR
ZKHQ \RX VWDUW XVLQJ D VFDQQHU WR FDWFK D YLUXV GRHVQW PDNH LW
FUHDWLYH ,WV LQIRUPDWLRQ FRQWHQW LV V\VWHPDWLFDOO\ LQFUHDVHG E\
PXWDWLRQRUVH[XDOUHSURGXFWLRQLWGRHVQWPDWWHUDQGUHILQHG
E\WKHILWQHVVIXQFWLRQ7KHZKROHVHOHFWLRQSURFHVVLVQRWKLQJEXW
DZRUNDEOHEDODQFHEHWZHHQWKHVHWZRIDFWRUV
7KH UHDO TXHVWLRQ WR PH LV ZKHWKHU DQ\ HYROXWLRQ FDQ EH
DQ\WKLQJPRUHWKDQWKLV6XSHUILFLDOO\WKHDQVZHUZRXOGVHHPWR
EHQR,IZHSRNHRXUKHDGVXSDQGORRNDURXQGLWZRXOGDSSHDU
WKDWDOOFRPSXWHUSURJUDPVZKLFKPDNHXVHRIHYROXWLRQPDNHXVH
RIUHDFWLYHHYROXWLRQ1RUPDOJHQHWLFDOJRULWKPVDUHSXUHO\UHDF
WLYH7KH\XVHLQGXFHGPXWDWLRQVDQGDZHOOEHKDYHGILWQHVVIXQF
WLRQWRVROYHDSUREOHP$SURJUDPOLNH5LFKDUG'DZNLQV%OLQG
:DWFKPDNHULVSXUHO\UHDFWLYHGHSHQGLQJRQRSHUDWRULQSXWDW
HYHU\VWHSWREXLOGLQIRUPDWLRQ,QV\VWHPVOLNHWKLVWKHLQIRUPDWLRQ
LQWKHVHOIUHSURGXFLQJSRSXODWLRQLVQRPRUHRUOHVVWKDQZKDWV
EHHQLQMHFWHGLQWRWKHP
:KHUHWKHUHDFWLYHQDWXUHRIHYROXWLRQPLJKWFRPHLQWRTXHV
WLRQLVLQV\VWHPVZKLFKFRQVLVWRIPRUHWKDQRQHVHOIUHSURGXFLQJ
DXWRPDWRQ HJSUH\SUHGDWRUV\VWHPV(YROXWLRQDU\DUPVUDFHV
DUHRIWHQGLVFXVVHGLQSRSXODUOLWHUDWXUH7KHFODVVLFH[DPSOHLV
WKHLGHDWKDWJLUDIIHVZLWKORQJHUQHFNVFDQUHDFKPRUHOHDYHVRQ
WDOOWUHHVVRWKH\VXUYLYHEHWWHUDQGJLUDIIHVWHQGWRJHWWDOOHU$W
WKH VDPH WLPH WDOOHU WUHHV ZLOO VXUYLYH EHWWHU ZKHUH WKHUH DUH
JLUDIIHVEHFDXVHWKH\GRQWJHWVREDGO\VWULSSHG6RWKHLGHDLV
)RUDUHDGDEOHLQWURGXFWLRQWRJHQHWLFDOJRULWKPVVHH6WHYHQ/HY\$UWLILFLDO
/LIH3DQWKHRQ%RRNV1HZ<RUNSSDQGKLVUHIHUHQFHV
(QJODQGSS
,ELGSS

ERWKWUHHVDQGJLUDIIHVHYROYHDQGJHWWDOOHU6XFKV\VWHPVFDQEH
PRGHOHGZLWK$/WRR
$UHWKHVHSUH\SUHGDWRUV\VWHPVFUHDWLYHWKRXJK":HPLJKW
ZHOODUJXHWKDWWKH\DUHQRW$IWHUDOOPRVWDQ\SRSXODWLRQZLOOKDYH
FRPSHWLWLRQEHWZHHQLWVRZQPHPEHUVJRLQJRQ:LWKWZRGLVWLQFW
VSHFLHVWKHILWQHVVIXQFWLRQVKRXOGVSDQWKHJHQHVSDFHRIERWKRI
WKHP5DWKHUWKDQVSHFLI\LQJDSRLQWLQWKLVVSDFHZLWKRQHJHQH
\RXQRZQHHGWZR7KLVLVVRPHZKDWOLNHWKHGLIIHUHQFHEHWZHHQ
D FRRUGLQDWH VSDFH DQG D SKDVH VSDFH GHVFULSWLRQ RI D JDV 7KDW
DOORZVXVWRPRGHOWKHGHSHQGHQFHRIWKHWZRDXWRPDWDRQHDFK
RWKHU7KHVDPHFRQVLGHUDWLRQVZRXOGVHHPWRDSSO\WRWKLVQHZ
V\VWHPDVWKH\GLGLQWKHVLQJOHVSHFLHVV\VWHPWKRXJK,QRWKHU
ZRUGVWKHH[WHUQDOO\GHWHUPLQHGILWQHVVIXQFWLRQZRXOGPHUHO\
LQMHFWLQIRUPDWLRQLQWRWKHV\VWHP
/LNHZLVH ZH PLJKW ZRQGHU DERXW RSHQHQGHG V\VWHPV OLNH
7KRPDV5D\V7LHUUD$SSDUHQWO\KHZDVDEOHWRHYROYHDYDULHW\
RIDUWLILFLDORUJDQLVPVIURPDVLQJOHEDVLFVHOIUHSURGXFLQJDXWRPD
WRQ+HUHZHFHUWDLQO\KDYHWKHDSSHDUDQFHRIFUHDWLYHHYROXWLRQ
<HWDQH[DPLQDWLRQRIKRZWKHV\VWHPZRUNVUHYHDOVWKDWDORWRI
LQIRUPDWLRQJRHVLQWRWKHSK\VLFVDQGLQWRWKHVHOHFWLRQIXQFWLRQ
ZKLFKLVLPSOHPHQWHGE\5D\V UHDSHU 1HLWKHUGRWKHDXWRPDWD
VLPSO\HYROYHWROHYHOVRIDUELWUDU\XQERXQGHGFRPSOH[LW\6RLWV
QRWKDUGWRLPDJLQHWKDWVXFKDV\VWHPLVVWLOOUHDFWLYH
5LJKW QRZ LWV KDUG WR GHFLVLYHO\ DQVZHU WKH TXHVWLRQ RI
FUHDWLYHYHUVXVUHDFWLYHHYROXWLRQ7KHVLPSOHVWHYROYLQJV\VWHPV
DOOVHHPWREHSXUHO\UHDFWLYH,QPRUHFRPSOH[V\VWHPVZHFDQW
WHOOYHU\HDVLO\$WWKHVDPHWLPHDFDUHIXOO\GHVLJQHGDQGDQDO\]HG
$/H[SHULPHQWRXJKWWREHDEOHWRVKRZXSVRPHVRUWRIDQDQVZHU
7KDWZRXOGEHDOOEXWLPSRVVLEOHLIZHFRQILQHGRXUYLHZWRWKHUHDO
ZRUOGVLQFHHYHQWKHVLPSOHVWUHDOZRUOGVFHQDULRVHHPVIDUPRUH
FRPSOH[WKDQDQ$/H[SHULPHQW
$QGDJDLQWKLVLVDVLPSOLILFDWLRQ$EHWWHUDQDO\VLVZRXOGUHTXLUHXVWRVSHFLI\
HYHU\VLQJOHJHQHLQHYHU\LQGLYLGXDO
7KRPDV65D\ $Q$SSURDFKWRWKH6\QWKHVLVRI/LIH $UWLILFLDO/LIH,,
&KULVWRSKHU/DQJWRQHWDOHGV$GGLVRQ:HVOH\5HGZRRG&LW\&$
SS

3UREOHPVZLWK,QIRUPDWLRQ
7KHUHDUHDQXPEHURISUREOHPVZHOOKDYHWRIDFHLQRUGHUWR
FRPHXSZLWKDJRRGDQVZHUWRRXUELJTXHVWLRQ1RWWKHOHDVWLV
KRZWRGHILQHDOOWKHLQIRUPDWLRQZHYHEHHQWDONLQJDERXWPRUH
SUHFLVHO\,QGHILQLQJQXPEHUV,XVHGHQWURS\IRUVLPSOLFLW\VVDNH
+RZHYHURXULGHDRIHQWURS\DVLQIRUPDWLRQUXQVLQWRVRPHWURXEOH
ZKHQ GHDOLQJ ZLWK VHOIUHSURGXFLQJ DXWRPDWD ,I , KDYH RQH
DXWRPDWRQ ZLWK D JHQH RI 1 E\WHV , FDQ GHILQH LWV LQIRUPDWLRQ
FRQWHQWDV
66SHF OQ1 1[OQ

2QFHLWUHSURGXFHV,KDYHWZRJHQHVRIOHQJWK1VRP\HQWURS\
EDVHGLQIRUPDWLRQFRQWHQWGRXEOHV
66SHF OQ1

7KXV LW ZRXOG DSSHDU WKDW WKH DFW RI VHOIUHSURGXFWLRQ LWVHOI LQ
FUHDVHV WKH LQIRUPDWLRQ FRQWHQW &RQWLQXHG UHSURGXFWLRQ ZRXOG
LQFUHDVHLWWRDUELWUDULO\KLJKOHYHOV
&OHDUO\WKLVSLFWXUHLVIDXOW\,WGRHVQRWKLQJWRGLIIHUHQWLDWH
EHWZHHQ D FRS\ RI H[LVWLQJ LQIRUPDWLRQ DQG IXQGDPHQWDOO\ QHZ
LQIRUPDWLRQ0DNLQJDFRS\RIDQ\LQIRUPDWLRQEHLWDFKURPRVRPH
RUWKLVERRNLVPXFKHDVLHUWKDQEXLOGLQJDQHQWLUHO\QHZLQIRUPD
WLRQ VWUXFWXUH 6R LW ZRXOG VHHP ZHUH UHDOO\ PRUH LQWHUHVWHG LQ
VRPHWKLQJOLNHDOJRULWKPLFLQIRUPDWLRQFRQWHQWKHUH7KHQLI,KDG
DSUHVXPDEO\ODUJHDOJRULWKP$WRGHILQHWKHFKURPRVRPHRID
VHOIUHSURGXFLQJDXWRPDWRQWKHQDSDLUZRXOGEHGHVFULEHGE\DQ
RQO\VOLJKWO\PRUHFRPSOH[DOJRULWKPHJ[$HWF\HWWRGHILQH
DQRWKHULQGHSHQGHQWDXWRPDWRQ,GQHHGDZKROHQHZDOJRULWKP
%
7KLVSRLQWVHHPVRIWHQFRQIXVHGLQHYROXWLRQDU\OLWHUDWXUHDQG
LWKDVEHHQIRUDORQJORQJWLPH)RUH[DPSOH,RIWHQVHHVRPHRQH
DUJXLQJWKDWZHVKRXOGQRWGRXEWHYROXWLRQEHFDXVHDIWHUDOOWKH
GHYHORSPHQWRIDVLQJOHFHOOHGFUHDWXUHLQWRVRPHWKLQJDVFRPSOH[
DVDPDQLVDFRPPRQRFFXUUHQFHLWKDSSHQVHYHU\WLPHVRPHRQH

KDVDEDE\6XFKDUJXPHQWVDUHDOODSSHDUDQFHV,QIDFWWKHDOJR
ULWKPLF LQIRUPDWLRQ FRQWHQW FKDQJHV OLWWOH LI DW DOO GXULQJ WKLV
GHYHORSPHQW $OO LV SURJUDPPHG LQWR WKH RULJLQDO FHOO 7KDWV
ZRUOGV GLIIHUHQW WKDQ WU\LQJ WR FKDQJH DQ ( &ROL LQWR D KXPDQ
EHFDXVHRIWKHLQIRUPDWLRQQXFOHRWLGHVYHUVXVQXFOHRWLGHV
/LNHZLVHWKLVSRLQWLVFRQIXVHGE\$/UHVHDUFKHUVWRRZKHQWKH\
FRQIXVHFRPSOH[LW\RUDV\VWHPVDELOLW\WRKDQGOHLQIRUPDWLRQZLWK
PHDQLQJIXOLQIRUPDWLRQLWVHOI
,QGLVFXVVLQJRXU6&$1HYDGLQJYLUXVWKHILWQHVVIXQFWLRQV
LQIRUPDWLRQFRQWHQW FRXOGEHDQDO\]HGSUHWW\ZHOOZLWKHQWURS\
EHFDXVHLWUHVWULFWHGWKHVSDFHRIDOORZDEOHJHQHVLQDYHU\ZHOOGH
ILQHGZD\<HWLWLVE\QRPHDQVFOHDUWKDWWKLVVKRXOGDOZD\VEH
WKHFDVH3HUKDSVDEHWWHUGHILQLWLRQLVQHHGHGKHUHWRR$QGWKHQ
ZHGOLNHWRUHODWHWKHIXQFWLRQDOLQIRUPDWLRQFRQWHQWRIWKHILWQHVV
IXQFWLRQWRWKHDOJRULWKPLFLQIRUPDWLRQFRQWHQWRIRXUSRSXODWLRQ
RI VHOIUHSURGXFLQJ DXWRPDWD 7KLV LV QRW QHFHVVDULO\ D WULYLDO
SUREOHP3UHVXPDEO\WKHILWQHVVIXQFWLRQPXVWXOWLPDWHO\EHGH
ILQHGE\WKHSK\VLFVRIDV\VWHPDQGLWVLQLWLDOFRQILJXUDWLRQ7KXV
ZHPXVWKDYHDPHDQLQJIXOZD\WRFRQQHFWWKHLQIRUPDWLRQFRQWHQW
RIERWKSK\VLFVDQGFRQILJXUDWLRQLQWRRXUSLFWXUHDVZHOO,QVKRUW
ZHQHHGEHWWHUGHILQLWLRQVRIZKDWZHPHDQE\LQIRUPDWLRQLQRUGHU
WRTXDQWLWDWLYHO\DQDO\]HDQ\WKLQJEXWWKHVLPSOHVWFDVHVRIHYROX
WLRQ
,QWKHHQGZHGOLNHWRIRUPXODWHWKHLGHDRIDUHDFWLYHHYROXWLRQ
PDWKHPDWLFDOO\VRPHWKLQJOLNHWKLV
HYROYHGVHOIUHSURGXFLQJV\VWHP
LQLWLDOVHOIUHSURGXFLQJV\VWHP
FRQWULEXWLRQIURPSK\VLFV
FRQWULEXWLRQIURPHQYLURQPHQW

6HHIRUH[DPSOH&KULVWRSKHU/DQJWRQ /LIHDWWKH(GJHRI&KDRV $UWLILFLDO

/LIH,,$GGLVRQ:HVOH\5HGZRRG&LW\&DOLIRUQLDSS

&RQFOXVLRQV
,W ZRXOG DSSHDU WKDW WKH TXHVWLRQ RI ZKHWKHU HYROXWLRQ LV
FUHDWLYH RU UHDFWLYH LV RI IXQGDPHQWDO LPSRUWDQFH LQ OD\LQJ WKH
IRXQGDWLRQIRUDQ\WKHRU\RIHYROXWLRQIRUDUWLILFLDOOLIH)RUH[DP
SOH LI LW LV FUHDWLYH WKHQ ZH ZRXOG H[SHFW HYROXWLRQ WR EH XQ
ERXQGHGLQVRPHV\VWHPV7KDWLVDQHYROYLQJV\VWHPRIDXWRPDWD
FRXOGE\WKHPVHOYHVSURGXFHDFKDLQRIHYHULQFUHDVLQJO\FRPSOH[
IRUPVRIOLIHRUDUWLILFLDOOLIH2QWKHRWKHUKDQGLIHYROXWLRQLV
UHDFWLYHXQERXQGHGHYROXWLRQZRXOGDSSHDUWREHLPSRVVLEOH$
V\VWHPZRXOGDWEHVWHYROYHRXWZKDWHYHUFRPSOH[LW\ZDVSXWLQWR
LWDQGWKHQVWRS
7KHDQVZHUWRRXUELJTXHVWLRQZRXOGDOVRJXLGHXVLQWRZKDW
TXHVWLRQVWRDVNQH[W,IFUHDWLYHFRXOGZHTXDQWLI\WKHFUHDWLYLW\"
&RXOGZHHQKDQFHLW",ILWLVUHDFWLYHWKHQZHUHPRUHLQWHUHVWHG
LQXQGHUVWDQGLQJWKHHQYLURQPHQWHYROXWLRQLVUHDFWLQJWRDQGKRZ
LQIRUPDWLRQ FRXSOHV LQWR WKH VHOIUHSURGXFLQJ V\VWHP 8QGHU
VWDQGLQJWKHVHNLQGVRITXHVWLRQVZRXOGSURYLGHDIUDPHZRUNWR
XQGHUVWDQG ZKDW HYROXWLRQ LV DQG ZKDW LWV SODFH LV LQ RXU WRWDO
XQGHUVWDQGLQJRIWKHZRUOG
<HW D WKHRU\ RI HYROXWLRQ VKRXOG DOVR DOORZ XV WR DQVZHU
VSHFLILFTXHVWLRQVGUDZLQJDOOWKHSUDFWLFDOOLPLWVLQWRWKHSLFWXUH
&RXOG$HYROYHLQWR%"'LG$HYROYHLQWR%"7KLVWKHRU\RXJKWWR
ZRUNIRUDQ\ZRUOGIRUDQ\SK\VLFDOUXOHVIRUDQ\W\SHRIDXWRPDWD
$OUHDG\ZHFDQDQVZHUVRPHRIWKHVSHFLILFTXHVWLRQVLQWKH
DUWLILFLDOZRUOGVZHYHFUHDWHGDQG,WKLQNZHKDYHDVKRWDWWKH
ELJTXHVWLRQV$OORIWKLVWHOOVPHWKDWHYROXWLRQLQWKHZRUOGRI$/
SURPLVHVWREHTXLWHGLIIHUHQWWKDQHYROXWLRQDU\WKRXJKWLQWKHUHDO
ZRUOGKDVEHHQ,QWKHUHDOPRI$/HYROXWLRQLVVXEMHFWWRDGHHSHU
OHYHORIDQDO\VLVWKDQLWLVLQWKHUHDOZRUOGEHFDXVHHYHU\WKLQJLV
XQGHUFRQWURO7KDWPHDQVZHFDQGRVRPHWKLQJWKDWORRNVDORW
PRUHOLNHDERQDILGHH[SHULPHQWWKDQWHOOLQJDWDOOWDOH$QGWKDW
PHDQVZHFDQGRPDQ\H[SHULPHQWVZKHUHDVZHFDQGRYHU\IHZ
$SDUWIURPIDFWRULQJLQVRPHRIWKHDPELJXLWLHVRIPLQGDQGLQWHOOLJHQFHRI
FRXUVH

LQWKHUHDOZRUOG)XUWKHUPRUHLIZHGHVLJQDZRUOGZKHUHHYROX
WLRQLVYHU\HIILFLHQWRUDZRUOGZKHUHLWLVQRWZHZRQWWUDPSOH
DOORYHUWKHUHOLJLRXVRUSKLORVRSKLFDOVHQVLELOLWLHVRIRWKHUV$QG
WKDW VXJJHVWV WR PH WKDW $/ PLJKW KHOS XV IRUPXODWH D PRUH
SKLORVRSKLFDOO\QHXWUDOWKHRU\RIHYROXWLRQWKDWFRXOGEHDUJXHGIRU
RUDJDLQVWZLWKQXPEHUVDQGFRPSXWHUVDQGQRWZLWKDSSHDOVWR
SKLORVRSK\RUWKHRORJLFDOH[HJHVLV
,WVHHPVRQO\VHQVLEOHWRWDNHZKDWZHOHDUQDERXWHYROXWLRQ
IURP$UWLILFLDO/LIHDQGDSSO\LWWRWKHUHDOZRUOG,QSDUWLFXODU
ZHGOLNHWRVHHWKHUHDOZRUOGDVRQHH[DPSOHRIDPXFKELJJHU
SLFWXUH 7R GR WKDW WKRXJK ZH QHHG WR EH DZDUH RI MXVW ZKHUH
HYROXWLRQVWDQGVLQWKHUHDOZRUOG
,YH DOUHDG\ PHQWLRQHG 3KLOOLS -RKQVRQV ERRN 'DUZLQ RQ
7ULDO,WVDJRRGERRNEHFDXVHLWH[SRVHVVRPHRIWKHURWWKDWOLHV
MXVWEHQHDWKWKHVXUIDFHRIPRGHUQ'DUZLQLVP,GOLNHWRWDNHD
IHZSDJHVWRUHYLHZVRPHRI-RKQVRQVDQGRWKHUVFULWLFLVPVRI
PRGHUQHYROXWLRQ7KLVLVDJRRGZD\WRILQGRXWKRZPXFKZH
UHDOO\NQRZVXEMHFW\RXULGHDVWRWKHKDUVKHVWFULWLFLVPDQGVHH
ZKDWVOHIW
7KH)RVVLO5HFRUG
6RPHRIWKHFULWLFLVPVZHOOUHYLHZDUHUDWKHUROG7KLQJVWKDW
GDWHEDFNWR'DUZLQVRULJLQDOZRUN$WWKHVDPHWLPHWKH\DUH
FULWLFLVPV WKDW UHDOO\ KDYH QRW EHHQ VDWLVIDFWRULO\ DQVZHUHG 7KH
IRVVLOUHFRUGLVRQHH[DPSOHRIWKLV'DUZLQLDQJUDGXDOLVPZRXOG
VXJJHVWWKDWWKHIRVVLOUHFRUGVKRXOGEHDJUDQGSLFWXUHRIJUDGXDO
FKDQJH$FFRUGLQJWR'DUZLQZHKDYHWKHLGHDRIIL[HGVSHFLHV
WRGD\RQO\EHFDXVHZHVHHWKHZRUOGDWDQLQVWDQWLQJHRORJLFDOWLPH
7KHVSHFLHVRXJKWWREHPHUHO\DVQDSVKRWRIDELJJHUSLFWXUHRI
FRQWLQXRXVDQGJUDGXDOFKDQJH:KDWZHFDOOVSHFLHVWRGD\ZHUH
QRWWKHVDPHWKRXVDQGVRUPLOOLRQVRI\HDUVDJR/LIHRQHDUWKWRGD\
LVVRPHZKDWOLNHWDNLQJDQHYROXWLRQDU\OLQHDJHDQGFXWWLQJLWDW

&RPSXWHU9LUXVHV/LIHDQG(YROXWLRQ
VRPH WLPH DV LQ )LJXUH 7KHIRVVLOUHFRUGRXJKWWREHOLNH

ORRNLQJGRZQRQWKDWVDPHWUHHIURPDERYHDVLQ)LJXUH
,Q 'DUZLQV GD\ WKRXJK WKH IRVVLO UHFRUG GLG QRW ORRN OLNH
WKDWLWORRNHGPRUHOLNH)LJXUH'DUZLQDVVXPHGWKDWRXU
NQRZOHGJHRILWZDVLQFRPSOHWHDQGWKDWIXWXUHGLVFRYHULHVZRXOG
ILOOLQWKHJDSV<HWWKHVLWXDWLRQKDVQWVXEVWDQWLDOO\FKDQJHGLQ
\HDUV0RVWRIWKHIRVVLOUHFRUGLVFKDUDFWHUL]HGE\WKHVXGGHQ
DSSHDUDQFHRIQHZVSHFLHVWKHQQRFKDQJHVWDVLVLQWKHLUIRUPIRU
ORQJORQJSHULRGVRIWLPHDQGWKHQH[WLQFWLRQ0XFKRIWKHIRVVLO
UHFRUGWKHUHIRUHGRFXPHQWVVWDVLVDQGVXGGHQFKDQJHQRWJUDGXDO
FKDQJH7UDQVLWLRQDOIRUPVDUHUDUH7KRVHWKDWGRH[LVWDUHZHOO
NQRZQEHFDXVHWKH\UHUDUH7KH\UHDOVRFRQWURYHUVLDO)RUH[DP
SOH$UFKDHRSWU\[KDVEHHQSURSRVHGDVDQLQWHUPHGLDWHEHWZHHQ
UHSWLOHDQGELUG$SSDUHQWO\LWKDGIHDWKHUVVFDOHVDQGWHHWKPDNLQJ
LWDJRRGFURVVEHWZHHQDELUGDQGDVPDOOGLQRVDXU$WWKHVDPH
WLPH LWV ZLQJ LV DPD]LQJO\ VLPLODU WR D PRGHUQ SLJHRQV DQG
FUDQLDOFDVWVLQGLFDWHWKDWLWVEUDLQLVGLVWLQFWO\DYLDQPRUSKRORJL
FDOO\VSHDNLQJ3UHVXPDEO\WKHUHZRXOGKDYHWREHPDQ\WUDQVL
WLRQDOIRUPVRQWKLVOLQHDJHQRQHRIZKLFKKDYHEHHQIRXQG
1RZHYROXWLRQDU\ELRORJLVWVGRQWWDNHWKLVVLWXDWLRQWRPHDQ
WKDWHYROXWLRQLVZURQJ,QVWHDGPDQ\VXJJHVWWKDWWKHIRVVLOUHFRUG
LVVWLOODQGDOZD\VZLOOEHLQFRPSOHWH6WHSKHQ-D\*RXOGKDV
SURSRVHGDFRQWURYHUVLDOWKHRU\FDOOHGSXQFWXDWHGHTXLOLEULXPWR
GHDOZLWKWKHREVHUYHGFKDUDFWHURIWKHIRVVLOUHFRUG+HVXJJHVWV
WKDW ODUJH SRSXODWLRQVZKLFK FRQWULEXWH PRVW WR WKH IRVVLO UH
FRUGDUH UHODWLYHO\ VWDEOH DQG ODUJH HYROXWLRQDU\ FKDQJHV QRU
PDOO\RQO\WDNHSODFHLQVPDOOSRSXODWLRQVZKLFKDUHLVRODWHGIURP
3KLOOLS-RKQVRQ'DUZLQRQ7ULDO5HJHQHU\*DWHZD\:DVKLQJWRQ'&
S
0LFKDHO 'HQWRQ (YROXWLRQ $ 7KHRU\ LQ &ULVLV$GOHU $GOHU %HWKHVGD
0DU\ODQGS
-HUULVRQ %UDLQ(YROXWLRQDQG$UFKDHRSWHU\[ 1DWXUHSS
'DYLG5DXSDQG6WHYHQ6WDQOH\3ULQFLSOHVRI3DOHRQWRORJ\:+)UHHPDQ
6DQ)UDQVLVFRSS
6WHSKHQ-D\*RXOG7KH3DQGDV7KXPE::1RUWRQ1HZ<RUNSS


)LJXUH/LIHWRGD\LQSHUVSHFWLYH
/RRNLQJGRZQIURPDERYH
+RZWKH
WUHHORRNV
)LJXUH7KHIRVVLOUHFRUGLQSHUVSHFWLYH

WKHPDLQSRSXODWLRQ7KHQWKRVHVPDOOSRSXODWLRQVVXFFHHGDEXQ
GDQWO\DQGTXLFNO\JURZLQWRODUJHSRSXODWLRQV
,QDVHQVHWKHVH H[SODQDWLRQV FDQEHFRPHPHUHH[FXVHVWR
H[SODLQDZD\DIRVVLOUHFRUGWKDWLVKRVWLOHWR'DUZLQVK\SRWKHVLV
&HUWDLQO\ VXFK LGHDV FDQ H[SODLQ VRPH RI ZKDW ZH VHH EXW LI
JUDGXDOLVPLVWUXHZHPXVWZRQGHUKRZLWKDVHVFDSHGGHWHFWLRQ
WLPHDQGWLPHDQGWLPHDJDLQ,IWKHIRVVLOUHFRUGZHUHDOORZHGWR
EHDWHVWRI'DUZLQLDQJUDGXDOLVPLWZRXOGIDOVLI\LW,WZRXOGWHQG
WRVXJJHVWWKDWWKHILWQHVVIXQFWLRQRIVSHFLHVPD\ORRNVRPHWKLQJ
OLNH )LJXUH LVODQGV RI YLDELOLW\ VXUURXQGHG E\ IRUELGGHQ
]RQHV
0DMRU2UJDQV
2QHRIWKHROGHVWREMHFWLRQVWRJUDGXDOHYROXWLRQKDVEHHQWKDW
LWDSSDUHQWO\ODFNVWKHSRZHUWRH[SODLQKRZPDMRURUJDQVOLNH
WKHH\HRUDELUGVZLQJFDPHLQWREHLQJ,QVXUYH\LQJWKHDQLPDO
NLQJGRPWKHUHDUHWKRXVDQGVXSRQWKRXVDQGVRIVXFKTXHVWLRQV
/HWVIRFXVRQWKHPRVWIDPRXVRQHWKHH\HDVDQH[DPSOH
7KHDUJXPHQWJRHV :KDWJRRGLVRIDQH\H"$QGLI
RIDQH\HLVRIQRXVHWKHQQRVHOHFWLRQPHFKDQLVPFDQSRVVLEO\
VHOHFWIRULW
7KHDQVZHUZKLFK'DUZLQJDYHKDVRIWHQEHHQUHVWDWHGZLWK
OLWWOHFKDQJHDQG\RXFDQILQGLWLQWH[WERRNVHYHU\ZKHUH7KDWLV
WKHUHDUHPDQ\SULPLWLYHH\HGHVLJQVDPRQJOLYLQJDQLPDOVDQG
WKHVHFDQIRUPDSODXVLEOHVHULHVRILQWHUPHGLDWHIRUPV
8QIRUWXQDWHO\WKHVHH\HVGRQWDSSHDUWRKDYHHYROYHGIURP
RQHDQRWKHUDWDOOWKH\DUHWRRGLIIHUHQW5DWKHUWKHH\HPD\KDYH
KDGWRHYROYHLQGHSHQGHQWO\VRPHGLIIHUHQWWLPHV
,IZHSXUVXHWKHDUJXPHQWLQWHUPVRIVHOHFWLRQWKHUHDUHWZR
DQVZHUV 2QH LV WKDW RI DQ H\H PLJKW KDYH EHHQ XVHG IRU
$QGLWGRHVQWPDWWHUWRRPXFKZKHWKHUWKH\UHLVODQGVRQDIODWVXUIDFHRU
LVRODWHGSHDNVRQDQLQFOLQH
7KLVGLVFXVVLRQLVEDVHGRQ-RKQVRQSS
'DUZLQ DOVR DGPLWWHG WKDW WKH LQWULFDFLHV RI WKH KXPDQ H\H JDYH KLP FROG
VKXGGHUV
2S&LW-RKQVRQS

VRPHWKLQJHOVH7KHRWKHULVEDVHGRQWKHIDOODF\WKDWRIDQ
H\HZRXOGFRQIHUYLVLRQDQGWKDWLVEHWWHUWKDQQRWKLQJDWDOO
$QRWKHUOLWWOHNQRZQZRQGHULVQRWWKHELUGVZLQJEXWLWVOXQJ
)LJXUHZKLFKLVFRPSOHWHO\GLIIHUHQWIURPDQ\RWKHUYHUWH
EUDWH ,W VHHPV FRPSOHWHO\ OHJLWLPDWH WR DVN KRZ D FRXOG
HYROYHFRQWLQXDOO\DQGJUDGXDOO\LQWRE7RSRORJ\VHHPVWR
IRUELGLWHVSHFLDOO\VLQFHWKHOXQJLVVRFULWLFDOWRVXUYLYDODQGD
PLVIXQFWLRQZRXOGUHVXOWLQDYHU\TXLFNGHDWK
$VIDUDV,FDQVHHPDQ\VXFKREMHFWLRQVKDYHEHHQPDGHRYHU
WKH\HDUVDQGQRQHKDYHUHDOO\EHHQSURSHUO\DQDO\]HGRUDQVZHUHG
)RUH[DPSOHLQJHQHWLFLVW5LFKDUG*ROGVFKPLGWFKDOOHQJHG
WRHYROXWLRQLVWVWRH[SODLQDYDULHW\RIVXFKVWUXFWXUHV5DWKHUWKDQ
UHFHLYLQJDQDQVZHUKHRQO\JRWULGLFXOH7KLVDSSHDUVWREHTXLWH
W\SLFDO7KLVNLQGRI DQVZHU UHDOO\ERLOVGRZQWRSKLORVRSKLFDO
WUXLVP7KHVHVWUXFWXUHVH[LVWDQGHYROXWLRQLVWKHRQO\PHFKDQLVP
WKDWFRXOGKDYHFUHDWHGWKHPWKHUHIRUHWKH\REYLRXVO\HYROYHG
:KDWPRUHLVQHHGHG"
6XFK DQVZHUV DUHWUHPHQGRXVO\XQVDWLVI\LQJWRDQ\VHULRXV
VFLHQWLVW WKRXJK7KH\UHYHDOWKHKRVWLOLW\RIDUHOLJLRXVGHYRWHH
ZKHQKHVWROGKLVWDOHVDUHEXQNDQGQRWWKHKRQHVWVFLHQWLVWZKR
FDQVLPSO\DGPLWKHGRHVQWNQRZWKHDQVZHUDQGH[SODLQZK\
,QWKHHQGHYROXWLRQPD\EHDEOHWRH[SODLQWKHFRQVWUXFWLRQ
RIVXFKPDMRURUJDQVEXWLWZLOOQRWEHZLWKRXWWKHXVHRIDYHU\
FOHYHUILWQHVVIXQFWLRQ7KHVXJJHVWLRQWKDWRIDQH\HPD\KDYH
EHHQ XVHIXO DV VRPHWKLQJ RWKHU WKDQ DQ H\H UHDOO\ DPRXQWV WR
DGPLWWLQJWKDWWKHH\HZDVDQ DFFLGHQW )URPWKHODVWFKDSWHUZH
OHDUQHGWKDWWKLVNLQGRIDQDFFLGHQWUHDOO\DPRXQWVWRDQLQIRUPD
WLRQULFKFRXSOLQJRIWKHHQYLURQPHQWLQWRDVHOIUHSURGXFLQJV\V
WHPYLDDVRSKLVWLFDWHGILWQHVVIXQFWLRQ2QHPXVWUHPHPEHUWKDW
ZHDUHQRWMXVWEXLOGLQJDEORERIMHOO\EXWDQH[WUHPHO\FRPSOH[
(QJODQGS
5LFKDUG*ROGVFKPLGW7KH0DWHULDO%DVLVRI(YROXWLRQ<DOH8QLYHUVLW\3UHVV
1HZ+DYHQ&RQQHFWLFXW6HHDOVR5LFKDUG*ROGVFKPLGW (YROXWLRQDV
9LHZHGE\2QH*HQHWLFLVW $PHULFDQ6FLHQWLVWS
2S&LW*RXOGSSII

9HUWHEUDWH
OXQJ
%LUGOXQJ
)LJXUH7KHELUGVOXQJ
VWUXFWXUHZKLFKSUHVXPDEO\KDVDORWRILQIRUPDWLRQEHKLQGLWLQWKH
JHQHV
%UHHGLQJ([SHULPHQWV
'DUZLQ EDVHG KLV ZKROH LGHD RI QDWXUDO VHOHFWLRQ RQ DQLPDO
EUHHGLQJFRQGXFWHGE\IDUPHUVDQGEUHHGHUV'DUZLQKLPVHOIEUHG
SLJHRQV<HWEUHHGHUVNQRZRQO\WRRZHOOWKDWWKHUHDUHOLPLWDWLRQV
WRWKHVHOHFWLRQZKLFKWKH\FDQFDUU\RXW<RXFDQEUHHGDODUJH
RUDVPDOOGRJKRZHYHU\RXFDQWEUHHGDGRJWREHDVELJDVD
KRUVHRUDVVPDOODVDPRXVH$QG\RXFDQIRUJHWDERXWDIO\LQJ
GRJ:KHQ\RXFDUU\EUHHGLQJWRRIDULQDQ\GLUHFWLRQWKHUHVXOWLV
RIWHQVWHULOLW\DIWHUZKLFKWKHEUHHGLQJH[SHULPHQWLVIRUFHGWRDQ
HQG
)RUH[DPSOHWKHVHHIIHFWVKDYHEHHQQRWLFHGLQIDPRXVH[
SHULPHQWVRQIUXLWIOLHV([SHULPHQWHUVKDYHWULHGWRLQFUHDVHDQG
1RUPDQ0DFEHWK'DUZLQ5HWULHG*DPELW%RVWRQSS

GHFUHDVHWKHQXPEHURIEULVWOHVRQWKHIOLHV:LOGIOLHVDYHUDJHG
EULVWOHVDQGRQHFDQUHGXFHWKHQXPEHUWRRULQFUHDVHLWWR
%XWEH\RQGWKDWVWHULOLW\SURKLELWVIXUWKHUFKDQJH0D\UFRQFOXGHG
7KHPRVWIUHTXHQWFRUUHODWHGUHVSRQVHRIRQHVLGHGVHOHFWLRQLV
D GURS LQ JHQHUDO ILWQHVV 7KLV SODJXHV YLUWXDOO\ HYHU\ EUHHGLQJ
H[SHULPHQW 7KHWHUPJHQHWLFKRPHRVWDVLVRUJHQHWLFLQWHUWLDLV
XVHGWRGHVFULEHWKLVUHVLVWDQFHWRFKDQJH
$OORIWKLVZRXOGWHQGWRLQGLFDWHWKDWWKHILWQHVVIXQFWLRQIRU
PRVWVSHFLHVORRNVOLNH)LJ%\DGGLQJDVHOHFWLRQFULWHULRQ
RIRXURZQZHPLJKWDOWHUWKHVKDSHVRIWKHLVODQGVDELWEXWQRW
FKDQJH WKH IDFW WKDW WKH\ DUHLVODQGV7KDWLVMXVWDERXWKRZWKH
HYROXWLRQ DUJXHV WKLV DSSDUHQW URDGEORFN 1DWXUDO VHOHFWLRQ KDV
DOUHDG\ IRXQG WKH ILWQHVV SHDNV DQG DUWLILFLDO VHOHFWLRQ FDQ RQO\
UHGXFHJHQHUDOILWQHVV
2I FRXUVH WKLV JHQHUDO REVHUYDWLRQ GRHV QRW SXW DQ HQG WR
ODUJHVFDOH HYROXWLRQ $Q\ EUHHGLQJ H[SHULPHQW QHFHVVDULO\ LQ
YROYHV D YHU\ OLPLWHG SRSXODWLRQ DQG D YHU\ OLPLWHG DPRXQW RI
JHQHWLFYDULDWLRQ6RWKHVHH[SHULPHQWVPD\QRWEHUHSUHVHQWDWLYH
RIZKDWDODUJHSRSXODWLRQLQWKHZLOGFDQGR7KHJHQHVSDFHRI
DQ\UHDOOLYLQJRUJDQLVPLVPXOWLGLPHQVLRQDODQGKLJKO\FRPSOH[
0XWDWLRQVPLJKWRFFXULQDQ\RIDPXOWLWXGHRIGLUHFWLRQVDQGWKHUH
LVQRZD\IRUUHDOOLIHWRVKRZWKDWQRQHRIWKRVHGLUHFWLRQVFDQ
SURYHIUXLWIXO,QRWKHUZRUGV)LJXUHPLJKWEHDXJPHQWHGE\
ILQHEULGJHVUXQQLQJEHWZHHQWKHLVODQGV:KDWEUHHGLQJH[SHUL
PHQWVWHOOXVLVWKDWLIWKHUHDUHEULGJHVEHWZHHQWKHLVODQGVWKH\
DUHSHUKDSVQRWWRRHDV\WRILQG&HUWDLQO\WKHFUDVVILWQHVVFULWHULD
ZHLPDJLQHDUHOLWWOHEHWWHUWKDQDFKLOGVIDQF\<RXFDQQRWWKLQN
DERXWWKHJHQHVSDFHWKDWDQRUJDQLVPOLYHVLQDVIHZGLPHQVLRQDO
KHUH,I\RXOLYHGLQDPLOOLRQGLPHQVLRQDOVSDFHWKHQMXVWWHOOLQJ
VRPHRQHKRZWRVWDUWRQDWULSLVQRVLPSOHPDWWHURIVD\LQJ JR
QRUWKHDVW <RXKDYHWRVSHFLI\DYHFWRUZLWKDPLOOLRQFRPSR
QHQWV 7KDW ZRXOG PHDQ WKDW VXFFHVVIXO ODUJH VFDOH FKDQJH LV D
(UQVW 0D\U $QLPDO 6SHFLHV DQG (YROXWLRQ +DUYDUG 8QLYHUVLW\ 3UHVV
&DPEULGJHS
,ELGS
2IFRXUVHWKDWJRHVDJDLQVW*RXOGVSXQFWXDWHGHTXLOLEULXP

KLJKO\ LQIRUPDWLRQGULYHQ SURFHVV 7KH FKDQFHV RI VHOHFWLQJ D

GLUHFWLRQIRUFKDQJHWKDWLVIUXLWIXOLQWKHORQJUXQE\XVLQJDJURVV
ILWQHVVFULWHULRQOLNHWKHLQGLYLGXDOVVL]HLVSUDFWLFDOO\QLO
0ROHFXODU(YLGHQFH
1RZOHWVFRPHXSWRPRGHUQWLPHVDQGGLVFXVVZKDWPROHFX
ODU VWXGLHV WHOO XV DERXW HYROXWLRQ $IWHU DOO ZHG H[SHFW VRPH
WHOOWDOHVLJQVRIHYROXWLRQKHUH
2QHLQWHUHVWLQJPDWWHUWKDWGHVHUYHVRXUDWWHQWLRQLVWKHVWXG\
RISURWHLQVHTXHQFHVLQOLYLQJRUJDQLVPV$ZHOONQRZQVHTXHQFH
VWXG\KDVEHHQFDUULHGRXWRQF\WRFKURPH&DSURWHLQFRQQHFWHG
ZLWKHQHUJ\SURGXFWLRQ%HFDXVHLWLVVREDVLFWRFHOOXODUPHWD
EROLVP F\WRFKURPH & RFFXUV LQ D ZLGH YDULHW\ RI RUJDQLVPV
UDQJLQJIURPEDFWHULDWRPDQ,WLVDSURWHLQDERXWDPLQRDFLGV
ORQJ VR WKH VHTXHQFH RI DPLQR DFLGV FDQ EH FRPSDUHG IURP
RUJDQLVPWRRUJDQLVPDQGSHUFHQWGLIIHUHQFHVFDQEHWDOOLHGXS,Q
WKLVZD\\RXFDQGHWHUPLQHKRZGLIIHUHQWRUJDQLVPVDUHUHODWHGDW
DPROHFXODUOHYHO
,I JUDGXDO HYROXWLRQ ZHUH WKHUXOHRQHPLJKWH[SHFWDZLGH
YDULHW\ RI GLIIHUHQFHV ZKHUH WKH PRVW VLPLODU RUJDQLVPV ZRXOG
KDYH WKH PRVW VLPLODU F\WRFKURPH & HWF 7KLV LV LQGHHG ZKDW
UHVHDUFKHUVILQGKRZHYHUWKHGLVWULEXWLRQVRIWKHGLIIHUHQFHVDUH
PRVW LQWULJXLQJ ,I JUDGXDO HYROXWLRQ ZHUH WKH UXOH \RX PLJKW
H[SHFW H[LVWLQJ RUJDQLVPV WR KDYH D IDPLO\ WUHH VRPHWKLQJ OLNH
)LJXUH 7KLV ZRXOG VXJJHVW WKDW RQH FRXOG ILQG DQ DOPRVW
FRQWLQXRXV YDULDWLRQ LQ SURWHLQV EHWZHHQ GLIIHUHQW VSHFLHV 1HZ
EUDQFKHVZRXOGFRQWLQXDOO\EHIRUPLQJRQWKHWUHH,QIDFWZKDW
WKHPROHFXODUHYLGHQFHVXJJHVWVLVDWUHHPRUHOLNH)LJXUH,Q
RWKHU ZRUGV PDMRU W\SRORJLFDO JURXSV DUH HTXLGLVWDQW IURP RQH
DQRWKHU6SHFLHVLQDJLYHQJHQHUDDUHURXJKO\HTXLGLVWDQW'LIIHU
HQWJHQHUDLQWKHVDPHSK\OXPDUHHTXLGLVWDQWHWF)RUH[DPSOH
WKHSURNDU\RWHVZKLFKDUHDOOVLPSOHEDFWHULDOLNH(&ROLDQGDUH
2S&LW'HQWRQSS
0''D\KRII$WODVRI3URWHLQ6HTXHQFHDQG6WUXFWXUH1DWLRQDO%LRPHGLFDO
5HVHDUFK)RXQGDWLRQ6LOYHU6SULQJ0DU\ODQG9RO0DWUL[S'

GLVWDQFH
)LJXUH(YROXWLRQVXJJHVWVDFRQWLQXXPRI
FKDQJH
GLVWDQFH
)LJXUH0ROHFXODUHYLGHQFHVXJJHVWV
HTXLGLVWDQWJURXSV

FKDUDFWHUL]HGE\DQRQQXFOHDUFHOOVHHPWREHHTXLGLVWDQWIURPDOO
HXNDU\RWHVZKLFKLQFOXGHDOOOLIHZLWKFHOOVWKDWKDYHDQXFOHXV
UDQJLQJ IRUP VLPSOH \HDVW WR DOO PXOWLFHOOXODU RUJDQLVPV 7KHLU
F\WRFKURPH&DOOGLIIHUE\URXJKO\WRSHUFHQW
$OWKRXJKWKHHYROXWLRQDU\ELRORJLVWFDQFHUWDLQO\H[SODLQWKLV
VLWXDWLRQLWGRHVQRWDSSHDUWREHZKDWRQHZRXOGH[SHFWDSULRUL
,IJUDGXDOHYROXWLRQLVWKHPHDQVIRUFKDQJHLWZRXOGPDNHPRUH
VHQVHWRVXJJHVWWKDWVRPHSURNDU\RWHVORZO\HYROYHGLQWRDHX
NDU\RWHDQGLWVF\WRFKURPH&FKDQJHGVORZO\
$WYDULRXVSRLQWVDORQJWKLVHYROXWLRQDU\SDWKZD\ZH
PLJKWH[SHFWLWEUDQFKHGRXWLQWRRWKHUSURNDU\RWHVRUHXNDU\RWHV
%XW WKHQ ZHG H[SHFW WR VHH D UDWKHU FRQWLQXRXV YDULDWLRQ LQ
F\WRFKURPH & GLIIHUHQFHV EHWZHHQ HXNDU\RWHV DQG SURNDU\RWHV
(YLGHQWO\HLWKHUDWKHDUFKHW\SHRIWKHHXNDU\RWHVHYROYHGIRUD
ORQJWLPHZLWKRXWEUDQFKLQJRUELWGLGEXWDOOWKHEUDQFKHVDUH
QRWH[WLQFW$OWKRXJKLWLVHDV\HQRXJKWRSRVWXODWHDRUELQRQH
FDVHWKLVLVQRWDQLVRODWHGSUREOHP0ROHFXODUFRPSDULVRQVOLNH
WKLVVXJJHVWJDSVDUHWKHQRUP$JDLQWKLVWDNHVXVEDFNWRDILWQHVV
IXQFWLRQOLNH)LJ
0DWKHPDWLFDO4XHVWLRQV
,QWKHUHZDVDVHPLQDOFRQIHUHQFHDWWKH:LVWDU,QVWLWXWH
LQZKLFKPDWKHPDWLFLDQVIDFHGRIIDJDLQVWHYROXWLRQLVWVWRGLVFXVV
VRPHRIWKHDSSDUHQWPDWKHPDWLFDOGLIILFXOWLHVRIHYROXWLRQ
6RPH RI WKH SUREOHPV UDLVHG E\ PDWKHPDWLFLDQV ZHUH YHU\
EDVLF)RUH[DPSOH0XUUD\(GHQSRLQWHGRXWWKDWWKH'1$LQPDQ
FRQVLVWVRIVRPHQXFOHRWLGHVRUDERXWRQHQXFOHRWLGHIRUHYHU\
\HDUWKDWOLIHKDVH[LVWHGRQHDUWK6RWKHHYROXWLRQRIPDQZRXOG
DSSHDUWRUHTXLUHDQLQFUHGLEOHUDWHRIFKDQJHHVSHFLDOO\FRPSDUHG
WRZKDWZHNQRZWREHWDNLQJSODFHQRZ
2WKHUSUREOHPVZHUHVSHFLILFKRZFRXOGKXPDQKHPRJORELQ
DQGFKDLQVEHGHULYHGIURPRQHDQRWKHURUIURPDFRPPRQ
0XUUD\ (GHQ ,QDGHTXDFLHV RI 1HR'DUZLQLDQ (YROXWLRQ DV D 6FLHQWLILF
7KHRU\ 0DWKHPDWLFDO &KDOOHQJHV WR WKH 1HR'DUZLQLDQ ,QWHUSUHWDWLRQ RI
(YROXWLRQ:LVWDU,QVWLWXWH3UHVV3KLODGHOSKLDSS

DQFHVWRU" 7\SLFDO WKRXJK GHEDWDEOH FDOFXODWLRQV VXJJHVW

PXWDWLRQVZRXOGEHUHTXLUHGIRUWKLVSURFHVV(YHQZLWKWKHVWURQJ
HVWSRVVLEOHVHOHFWLRQSUHVVXUHWKLVZRXOGVXJJHVWJHQ
HUDWLRQV ZRXOG EH QHHGHG WR WUDQVIRUP RQH LQWR WKH RWKHU <HW
VHOHFWLRQ EHWZHHQ WKH WZR VHHPV PHDJHU DW EHVW DQG HYHQ
PLOOLRQJHQHUDWLRQVLVDELWWRRORQJ
6XPPDU\
6RIDUZHYHGLVFXVVHGVRPHVHULRXVSUREOHPVZLWKDQGFKDO
OHQJHVWRWKHXVXDOSLFWXUHRIUHDOZRUOGHYROXWLRQSDLQWHGIRUXV
E\PRGHUQHYROXWLRQLVWV%HIRUHZHJRRQ,ZLOODGPLWWZRWKLQJV
)LUVWPRVWRIZKDW,YHVDLGLQWKHSDVWIHZSDJHVFRXOGEHFODVVLILHG
DVKLJKO\FRQWURYHUVLDOHYHQKHUHWLFDOLQWKHKDOORZHGKDOOVRI
VFLHQFH6HFRQGO\,DGPLW,KDYHQWJLYHQ\RXORWVRIJRU\GHWDLOV
MXVWDYHU\EULHIRYHUYLHZ0\SXUSRVHLVQRWWRGHEXQNHYROXWLRQ
KHUHRUWRDUJXHDJDLQVWLWWKRXJK,GRKRSH\RXOOORRNXSVRPH
RIP\UHIHUHQFHVDQGORRNLQWRWKHVHPDWWHUVDOLWWOHRQ\RXURZQ
,ZLOOOHWWKRVHDXWKRUVWU\WRGHEXQNHYROXWLRQLQWKHUHDOZRUOGLI
WKDWLVZKDWWKH\DUHWU\LQJWRGR
7KHUHDVRQ,EULQJXSVXFKREMHFWLRQVVRPHFODVVLFDQGVRPH
QRYHOLVWRVKRZ\RXWKDWWKHHYROXWLRQLVP\RXZHUHIHGRXWRID
WH[WERRNLVDP\WK7KHILHOGLVDQ\WKLQJEXWVHWWOHGVROLGVFLHQFH
&RQWHQWLRQVDQGVSHFXODWLRQVDERXQG7KHYHU\IDFWWKDWZHFDQ
LQWHUSUHW WKH GDWD LQ D PDQQHU KRVWLOH WR 'DUZLQ LI ZH ZDQW WR
VXJJHVWVWKDWVRPHWKLQJLVZURQJZLWKWKLVVFLHQFH$QGIDUIURP
VHHNLQJ WR VROYH PDQ\ RI WKHVH SUREOHPV ZLWK D FRPSUHKHQVLYH
WKHRU\PDQ\HYROXWLRQLVWVVLPSO\EHFRPHKRVWLOHZKHQTXHVWLRQV
DUHEURXJKWXS
,IZHDUHDIWHUHYROXWLRQLQWKHEURDGSLFWXUHDQHYROXWLRQWKDW
DSSOLHVWR$UWLILFLDO/LIHDQGUHDOOLIHHTXDOO\DQGZLWKRXWSUHMXGLFH
WKHQ WKH REMHFWLRQV ,YH GLVFXVVHG VKRXOG EH HQOLJKWHQLQJ 7KH\
VXJJHVWWKDWWKHVDPHSUREOHPVDQGTXHVWLRQVZHUDQLQWRLQWKH
HYROXWLRQRIYLUXVHVDUHTXHVWLRQVIRUWKHUHDOZRUOG7KHILWQHVV
IXQFWLRQVFDQEHGLIILFXOWWRQHJRWLDWHDVZHFDQVHHIURPEUHHGLQJ
H[SHULPHQWV%RWKPROHFXODUHYLGHQFHDQGWKHIRVVLOUHFRUGVHHP
WRFRUURERUDWHDGLIILFXOWDQGYHU\FRPSOH[ILWQHVVIXQFWLRQ3URE
OHPVZLWKWKHGHYHORSPHQWRIPDMRURUJDQVVXJJHVWUHDVRQVZK\

ILWQHVVIXQFWLRQVFDQEHVXFKSUREOHPV'U(GHQVGLVFXVVLRQRI
PXWDWLRQUDWHVSRLQWVXSIDXOWVLQWKHLGHDWKDWWKHUDWHRIHYROXWLRQ
LVVXIILFLHQWWRH[SODLQWKHZD\WKHZRUOGLV
7KH'DUZLQLVWV*DPELW
:KDW,ILQGPRVWVXUSULVLQJLQDOORIWKLVFRQIXVLRQLVWKDWHYHQ
PDQ\KDUGFRUH'DUZLQLVWVIUHHO\FRQIHVVWKDWHYROXWLRQLVWHUULEO\
XQOLNHO\ DQG HYHQ FRQVLGHU WKDW DQ DVVHW )RU H[DPSOH -XOLDQ
+X[OH\ZULWHV ,PSUREDELOLW\LVWREHH[SHFWHGDVDUHVXOWRIQDWXUDO
VHOHFWLRQDQGZHKDYHKHUHWKHSDUDGR[WKDWDQH[FHHGLQJO\KLJK
DSSDUHQWLPSUREDELOLW\LQLWVSURGXFWVFDQEHWDNHQDVHYLGHQFHIRU
WKHKLJKGHJUHHRILWVHIILFDF\
/HWXVWDNHXSZLWKRXUIULHQG5LFKDUG'DZNLQVEHFDXVHKHLV
WKHPRVWDUGHQWDQGLQJHQXRXVDQDUFKLVW,FDQILQG+HZULWHV 7KH
WKHRU\ RI HYROXWLRQ E\ FXPXODWLYH QDWXUDO VHOHFWLRQ LV WKH RQO\
WKHRU\ZHNQRZRIWKDWLVLQSULQFLSOHFDSDEOHRIH[SODLQLQJWKH
HYROXWLRQRIRUJDQL]HGFRPSOH[LW\(YHQLIWKHHYLGHQFHGLGQRW
IDYRULWLWZRXOGVWLOOEHWKHEHVWWKHRU\DYDLODEOH7KHHVVHQFH
RIOLIHLVVWDWLVWLFDOLPSUREDELOLW\RQDFRORVVDOVFDOH +HJRHV
RQWRVD\WKDWHYROXWLRQWDPHVFKDQFHE\EUHDNLQJLWGRZQLQWRVPDOO
VWHSV 7KXV HYHQ LI HYROXWLRQ E\ QDWXUDO VHOHFWLRQ SURYHG WR EH
LQFUHGLEO\UHPRWHLWFRXOGQHYHUEHDVUHPRWHDVVRPHWKLQJOLNH
VSRQWDQHRXV FUHDWLRQ RU PDFURPXWDWLRQ RWKHUZLVH NQRZQ DV
VDOWDWLRQ
7KLVLVWKH'DUZLQLVWVJDPELW,WZRXOGVHHPWRJLYHHYROXWLRQ
WKHDGYDQWDJHQRPDWWHUZKDW,QVKRUWLWGRHVQRWPDWWHUZKHWKHU
WKHREVWDFOHWRRYHUFRPHLVDQH\HDJDSLQWKHIRVVLOUHFRUGDQ
LPSRVVLEOHPXWDWLRQUDWHRUZKDW(YROXWLRQLVVWLOOEHWWHURIIWKDQ
DQ\YDULHW\RIFUHDWLRQRUVDOWDWLRQVWDWLVWLFDOO\VSHDNLQJ
&HUWDLQO\ WKLV JDPELW KDV SDLG RII LQ WUDGLWLRQDO VFLHQWLILF
FLUFOHV 7KH VFLHQWLVW DIWHU DOO ZKHQ ZHDULQJ KLV VFLHQWLVWV KDW
-XOLDQ+X[OH\(YROXWLRQLQ$FWLRQ+DUSHUDQG%URWKHUV1HZ<RUNS

2S&LW'DZNLQVS
(JZKHUHDFKLFNHQKDWFKHVIURPDUDWWOHVQDNHHJJ

VKRXOGWDNHWKHPRVWOLNHO\DSSURDFK6RPRVWVFLHQWLVWVGREHOLHYH
WKHHYROXWLRQDU\URXWHLVFRUUHFWHYHQLIWKH\GRQWH[SUHVVWKHLU
IDLWKDVFOHDUO\DV'DZNLQV
$Q$OWHUQDWLYH"
7KH HYROXWLRQLVWV JDPELW RQO\ ZRUNV ZKHQ ZH GRQW NQRZ
HQRXJKDERXWDV\VWHPWRUHDOO\ORRNKDUGDWWKHVWDWLVWLFVLQYROYHG
,WVZRUNHGLQWKHUHDOZRUOGEHFDXVHWKHUHDOZRUOGLVVRFRPSOH[
WKDWLWKDVGHILHGDQDO\VLV
3ODLQO\LQWKHZRUOGRIDUWLILFLDOOLIHZHFDQVHHWKDWPLFUR
PXWDWLRQV ZLWK QDWXUDO VHOHFWLRQ DUH QRW DOZD\V WKH PRVW OLNHO\
URXWHWRDQHZJHQH6RPHWLPHVDPDFURPXWDWLRQLVDORWFKHDSHU
SUREDELOLW\ZLVH7RVHHWKLVOHWVJREDFNWRRXU6&$16OLSYLUXV
$V\RXZLOOUHFDOOLWKDGDFKURPRVRPHWKDWZDVE\WHVORQJ
1RZVXSSRVHWKDWWKHILWQHVVIXQFWLRQLPSRVHGE\6&$1KDGWZR
VHSDUDWHGLVFRQQHFWHGUHJLRQVZKHUHWKHYLUXVZDVIUHHWROLYH,I
6&$1GRHVQWILWWKLVSUHVFULSWLRQ,JXDUDQWHH\RX,FRXOGZULWHD
%
$
)LJXUH6HSDUDWHGUHJLRQVRIYLDELOLW\LQJHQH
VSDFH

VFDQQHUWKDWGLG6HH)LJXUH$SRSXODWLRQLQ5HJLRQ$FRXOG

QRWHDVLO\PLJUDWHWR5HJLRQ%ZLWKRXWDPDFURPXWDWLRQEHFDXVH
DQ\LQGLYLGXDOVFDXJKWLQEHWZHHQWKRVHUHJLRQVZRXOGEHLQVWDQWO\
NLOOHG7KXVLIZHKDGDSRSXODWLRQLQUHJLRQ$DWWLPH7DQGWKHQ
DSRSXODWLRQLQERWKUHJLRQVDWWLPH7DQG7ZHFRXOGVD\IRU
FHUWDLQWKDWPLFURPXWDWLRQVGLGQRWRULJLQDWHWKH%SRSXODWLRQ
7RPRGHOWKHUHDOZRUOGDOLWWOHPRUHFORVHO\ZHFRXOGPDNH
NLOOLQJ LQGLYLGXDOV D VWDWLVWLFDO SURFHVV UDWKHU WKDQ D PDWWHU RI
FHUWDLQW\6XSSRVHWKDWHYHU\YLUXVZKLFKLVQRWLQWKHVDIHUHJLRQV
KDV D FKDQFHRIEHLQJNLOOHGEHIRUHUHSURGXFLQJDJDLQ$OVR
VXSSRVHWKDWDWFORVHVWDSSURDFKUHJLRQ$DQG%DUHPXWDWLRQV
DSDUWDQGZHKDYHDQDYHUDJHRIRQHPXWDWLRQSHUFKURPRVRPHSHU
UHSOLFDWLRQ,IHYHU\PXWDWLRQLVLQWKHULJKWGLUHFWLRQWKHQLWZLOO
WDNHVWHSVWRPXWDWHIURP5HJLRQ$WR5HJLRQ%7KHSUREDELOLW\
RI D YLUXV GRLQJ WKDW DQG VXUYLYLQJ LV 3 ,Q FRPSDULVRQ D
PDFURPXWDWLRQZRXOGKDYHDSUREDELOLW\RI
3 $UHDRI5HJLRQ%$UHDRIWRWDOJHQHVSDFH
IRUIDOOLQJLQWR5HJLRQ%,IERWKUHJLRQ$DQG%RFFXS\WK
RIWKHWRWDOJHQHVSDFHDQGWKH\DUHRIHTXDOVL]HWKHQ3 [
DQG3 [6RPDFURPXWDWLRQVZRXOGEHDPRUHHIILFLHQWZD\
WRJHWIURP5HJLRQ$WR5HJLRQ%7KHUHDVRQLVVLPSOHWKHILWQHVV
IXQFWLRQKDVKXPSVDW$DQG%DQGDJUHDWYDOOH\LQEHWZHHQWKHP
ZKLFKLVKDUGWRJHWDFURVV7KDWGRHVQRWRIFRXUVHPHDQWKDW
PDFURPXWDWLRQVZLOOEHWKHZD\DYLUXVQHJRWLDWHVWKLVSUREOHP
,WPXVWKDYHDPHFKDQLVPWRPXWDWHWKDWZD\WREHJLQZLWK1RWH
KRZHYHUWKDWRXU'*0(GLGKDYHWKDWIDFLOLW\:HPLJKWDOVRQRWH
WKDWODUJHPXWDWLRQVDUHQRWXQNQRZQLQWKHUHDOZRUOG)RUH[DP
SOH'RZQV6\QGURPHLVWKHUHVXOWRIDZKROHH[WUDFKURPRVRPH
DQGWKDWVDKXJHFKDQJH$QGLWVDIDLUO\FRPPRQRFFXUUHQFH
ZKHQDQROGHUZRPDQKDVDFKLOG
,I6FDQGRHVQWILWWKLVSUHVFULSWLRQ,JXDUDQWHH\RX,FRXOGZULWHDVFDQQHUWKDW
GLG
,QJHQHUDOWKH\ZRQWEH7\SLFDOO\WRJHWDPRUHDFFXUDWHDQGOHVVIDYRUDEOH
DQVZHU\RXQHHGVRPHWKLQJOLNHD)H\QPDQSDWKLQWHJUDO

6RZKDWSDVVHVIRUVHQVLEOHLQWKHUHDOZRUOGLVVLPSO\IDOVHIRU
RXUYLUXVHV7KHRQO\UHDVRQWKHHYROXWLRQLVWVJDPELWFDQSDVVIRU
VHQVLEOH LV EHFDXVH LQ WKH UHDO ZRUOG WKH ILWQHVV IXQFWLRQV DUH
FORXGHGLQP\VWHU\2IFRXUVHZHFDQLPDJLQHVRPHILWQHVVIXQF
WLRQWRGRWKHMREZKHQZHKDYHQRNQRZOHGJHRIKRZDQHYROYLQJ
V\VWHPUHDOO\ZRUNV%XWZKHQZHFDQGRDUHDOH[SHULPHQWZKHUH
DOOWKHLQSXWVDUHNQRZQ'DZNLQVORJLFGURSVGHDG
7KHOLNHOLKRRGWKDWDPDFURPXWDWLRQZLOOEHVXFFHVVIXOGURSV
RIIYHU\IDVWZKHQWKHUHLVDJUHDWGHDORILQIRUPDWLRQLQYROYHGLQ
EXLOGLQJDVHOIUHSURGXFLQJV\VWHPDQGWKHILWQHVVIXQFWLRQFRQ
VLVWVRIYHU\VPDOOUHJLRQVRIYLDELOLW\DQGODUJHUHJLRQVRILPSRV
VLELOLW\7KHQWKHSUREDELOLW\RIKLWWLQJDYLDEOHUHJLRQDWUDQGRP
JRHVWR]HURYHU\TXLFNO\7KHSUREOHPZLWKWKDWLVWKHVDPHWKLQJ
FDQZRUNWRSUHYHQWPLFURPXWDWLRQVIURPEHLQJVXFFHVVIXO,IWKH
ILWQHVVIXQFWLRQORRNVOLNH)LJXUHLVODQGVRIYLDELOLW\LQDQ
RFHDQRILPSRVVLELOLW\WKHQPLFURPXWDWLRQVEX\XVQRWKLQJ2Q
WKHRWKHUKDQGLILWORRNVPRUHOLNHWKHLPSULQWRIDWUHHLQDQRFHDQ
RILPSRVVLELOLW\WKHQPLFURPXWDWLRQVPDNHVHQVH2QO\DGHWDLOHG
DQDO\VLVRIDV\VWHPZLOOWHOO\RXZKDWZLOOZRUNEHWWHU$QGULJKW
QRZWKDWLVLPSRVVLEOHIRUWKHUHDOZRUOG,WVMXVWWRRFRPSOLFDWHG
&UHDWLYHRU5HDFWLYH"
6RIDURXUGLVFXVVLRQKDVFHQWHUHGRQGHWDLOVOLNHWKHVKDSHRI
WKHILWQHVVIXQFWLRQRUWKHPXWDWLRQUDWH+RZHYHUZHKDYHVHHQ
WKDWHYROXWLRQLVPHUHO\UHDFWLYHLQVRPHVLWXDWLRQVDQGLWPD\EH
SXUHO\ UHDFWLYH TXLWH JHQHUDOO\ ,Q VXFK VLWXDWLRQV LW ZRXOG DOVR
VHHPWKDW'DZNLQVJDPELWIDOOVDSDUW,IWKHLQIRUPDWLRQFRQWHQW
LQDQHYROYHGVHOIUHSURGXFLQJDXWRPDWRQLVQRJUHDWHUWKDQZKDW
LWVWDUWHGZLWKSOXVZKDWZDVLQMHFWHGLQWRLWWKHQLWZRXOGDSSHDU
WKDWQRWKLQJFRXOGEHJDLQHGZLWKHYROXWLRQ
-XVW DV WKH LQIRUPDWLRQ 6&$16OLS SLFNV XS LQ OHDUQLQJ WR
HYDGH6&$1DOUHDG\H[LVWVLQWKH6&$1SURJUDPLQWKHIRUPRI
DQDOJRULWKPGHVLJQHGWRFDWFKWKH73(ZHPLJKWZRQGHUZKHWKHU
DQ\HYROXWLRQLQWKHUHDOZRUOGLVWKHUHVXOWRILQIRUPDWLRQVXSSOLHG
6SHFLILFDOO\WKHVWFKURPRVRPH2S&LW*RXOGSS

E\HQYLURQPHQWDQGSK\VLFV:KHQZHDQDO\]HLQIRUPDWLRQLWV
REYLRXVWKHUHLVDORWKLGGHQLQ6&$1:HFDQQRWVLPSO\FORVHRXU
H\HVWRWKDWLQDSURSHUDQDO\VLV$QGZHVKRXOGQWFORVHRXUH\HV
WRLWLQWKHUHDOZRUOGHLWKHU
$VZHYHDOUHDG\GLVFXVVHGDERYHWKLQJVOLNHEUHHGLQJH[SHUL
PHQWV PLJKW VXJJHVW WKDW D KLJK GHJUHH RI LQIRUPDWLRQ PXVW EH
LQMHFWHGLQWRDV\VWHPWRMXVWJHWLWPRYLQJLQWKHULJKWGLUHFWLRQ
&HUWDLQO\ VRPH NQRZQ UHDOZRUOG HYROXWLRQDU\ VFHQDULRV OLNH
HYROXWLRQRISHSSHUHGPRWKVLQ(QJODQGFDQEHVRDQDO\]HG$
VLPSOLILHGDQDO\VLVRIWKHVHOHFWLRQSURFHVVLVVWUDLJKWIRUZDUG
ZHPD\YLVXDOL]HLWDVDVLQJOHELWRIH[WHUQDOLQIRUPDWLRQGHWHU
PLQLQJZKHWKHU*HQH$RU*HQH%SURVSHUV%RWKJHQHVH[LVWLQ
DQLQLWLDOSRSXODWLRQDQGRQHFRGHVIRUOLJKWFRORUHGPRWKVWKH
RWKHUIRUGDUNPRWKV:KHQOLJKWWUHHVDUHFRORUHGGDUNE\LQGXVWULDO
SROOXWLRQLWLQMHFWVLQIRUPDWLRQLQWRWKHVHOIUHSURGXFLQJV\VWHP
EHFDXVHWKHPRWKVVLWRQWKHVHWUHHVDQGELUGVHDWWKHPRWKVZKHQ
WKH\VHHWKHP6RWKHSRSXODWLRQIROORZVWKHLQMHFWHGLQIRUPDWLRQ
DQGWKH\JRIURPSUHGRPLQDQWO\OLJKWWRSUHGRPLQDQWO\GDUN7KH
SROOXWLRQ LV FOHDQHG XS DQG \RXU ELW LV IOLSSHG DJDLQ VR WKH
SRSXODWLRQJRHVEDFNWROLJKWFRORUHGPRWKV6HH)LJXUH
<HWLIHYROXWLRQLVMXVWUHDFWLYHFDQLWVWLOOEHWKH EHVWWKHRU\
DYDLODEOH HJWKHPRVWSUREDEOH",WZRXOGVHHPQRW7KH PLU
DFOH RIDQ\VHOIUHSURGXFLQJDXWRPDWRQLVLWVLQIRUPDWLRQFRQWHQW
:KHQSHRSOHORRNDWOLIHDQGVD\HYROXWLRQLVLPSUREDEOHEHFDXVH
RIWKHH\HRUZKDWQRWWKH\DUHDWERWWRPORRNLQJDWLQIRUPD
WLRQ,IOLIHZHUHDVVLPSOHDVPL[LQJDIHZFKHPLFDOVWRJHWKHUDQG
+ % ' .HWWHUZHOO 'DUZLQV 0LVVLQJ (YLGHQFH / ) /DSRUWH (G
(YROXWLRQ DQG WKH )RVVLO 5HFRUG : + )UHHPDQ 6DQ )UDQVLVFR SS
2UVHHWKH6FLHQWLILF$PHULFDQ0DUFK
7KHVLPSOLILFDWLRQLVVLPSO\WKDWWKHUHDUHSUREDEO\DQXPEHURIGLIIHUHQWJHQHV
DQGILWQHVVIDFWRUVLQYROYHGLQWKHUHDOZRUOG7KHLQIRUPDWLRQEHLQJLQMHFWHG
LQWRWKHV\VWHPFKDQJHVWKHFRPELQDWLRQRIWKHVHJHQHVUDWKHUWKDQMXVWRQH
1RWHWKDWWKHRULJLQRIWKHVHJHQHVLVDQHQWLUHO\GLIIHUHQWPDWWHU$OWKRXJK
.HWWHUZHOOVSHDNVDVLIWKHJHQHVPXWDWHGLQWRH[LVWHQFHLQSDUWRIKLVDUWLFOH
KHDFNQRZOHGJHWKDWWKH\KDGDOUHDG\H[LVWHGIRUWKRXVDQGVRI\HDUVLQDQRWKHU
SDUW SHUKDSV HYROYLQJ DV SDUW RI D PXFK PRUH FRPSOH[ VHW RI FRQGLWLRQV
&HUWDLQO\ RQH ZRXOG H[SHFW D PXFK JUHDWHU LQIRUPDWLRQ LQSXW LQ RUGHU WR
DFWXDOO\EULQJVXFKJHQHVLQWRH[LVWHQFHLIHYROXWLRQLVUHDFWLYH

)LJXUH7KHHYROXWLRQRISHSSHUHGPRWKV

VKRRWLQJ D VSDUN WKURXJK WKHP WKHQ WKHLU LQIRUPDWLRQ FRQWHQW

ZRXOGQRWEHDVLJQLILFDQWIDFWRU,IWKHH\HZDVMXVWDEORERIMHOO\
DQGQRWDFRPSOH[VWUXFWXUHLQIRUPDWLRQZRXOGQRWEHDSUREOHP
,Q UHDOLW\ LQIRUPDWLRQ LV D YHU\ ELJ SDUW RI OLIH &UHDWLQJ WKDW
LQIRUPDWLRQWKDW KLJK GHJUHH RI PHDQLQJIXO VSHFLILFLW\LV WKH
PLUDFOH5DQGRPJXHVVLQJHJVDOWDWLRQFDQQRWILQGWKHDQVZHU
IDVWHQRXJKIRUXVWRVXSSRVHWKDWVXFKSURFHVVHVLQYROYHDQ\WKLQJ
OHVVWKDQGLYLQHLQWHUYHQWLRQRUZRQGURXVFKDQFH,QWKLV'DZNLQV
LV TXLWH FRUUHFW +RZHYHU LI HYROXWLRQ LV UHDFWLYH WKHQ WKH RQO\
WKLQJHYROXWLRQGRHVLVSXVKRXULQIRUPDWLRQPLUDFOHEDFNLQWRWKH
SK\VLFV DQG WKH HQYLURQPHQW (TXDWLRQ ZRXOG VXJJHVW WKDW
HYROXWLRQEX\V\RXQRWKLQJLQH[SODLQLQJWKHPLUDFOH$OOLWGRHVLV
KLGHWKHPLUDFOHVR\RXGRQWKDYHWRIDFHLWLPPHGLDWHO\,QIDFW
LWZRXOGVHHPWKDWLQVXFKDFDVHHYROXWLRQPD\UHTXLUHDJUHDWHU
PLUDFOH 1RWLFH WKH LQHTXDOLW\ LQ (TXDWLRQ ,Q HVVHQFH WKH
SK\VLFV DQG HQYLURQPHQW DOZD\V FRXSOH WR WKH VHOIUHSURGXFLQJ
V\VWHPLPSHUIHFWO\VRVRPHLQIRUPDWLRQPD\EHORVWLQWKHSURFHVV
RIHYROXWLRQ
<RXPLJKWWKLQNDERXWWKHVLWXDWLRQOLNHWKLV*LYHQDEULFNLW
KDVDFHUWDLQSRWHQWLDOHQHUJ\GXHWRJUDYLW\GHSHQGLQJRQLWVKHLJKW
DERYHWKHHDUWK7KDWEULFNZLOOKDYHWKHVDPHDPRXQWRISRWHQWLDO
HQHUJ\DWDJLYHQKHLJKWQRPDWWHUKRZ\RXJHWLWWRWKDWKHLJKW
<RXFRXOGVLPSO\OLIWWKHEULFNRIIWKHJURXQG<RXFRXOGWDNHVPDOO
FORWVRIFOD\DQGOLIWWKHPLQGLYLGXDOO\DQGWKHQEDNHWKHPWRJHWKHU
WRIRUPWKHEULFN<RXFRXOGGURSLWIURPDKLJKHUVSRW$Q\ZD\
\RXJRDERXWLWWKHHQGUHVXOWLVWKHVDPH+RZHYHUWKHPRUHGLUHFW
ZD\VDUHWKHEHVWLI\RXZDQWWRDYRLGH[SHQGLQJHQHUJ\\RXUVHOI
7R OLIW WKH EULFN KLJKHU WKDQ QHFHVVDU\ DQG GURS LW LV FHUWDLQO\
SRVVLEOHEXWLWLVZDVWHIXOEHFDXVH\RXWXUQPRUHFKHPLFDOHQHUJ\
LQ\RXUERG\WRKHDW
,QWKHVDPHZD\LIWKHLQIRUPDWLRQFRQWHQWLQDVHOIUHSURGXF
LQJDXWRPDWRQLVVRPHKRZUHTXLUHGWR FRPHIURPVRPHZKHUH
WKHQLWZRXOGVHHPWKHPRVWHIILFLHQWPHWKRGPD\QRWEHPLFUR
PXWDWLRQSOXVVHOHFWLRQZKHQHYHU\WKLQJLVEURXJKWLQWRWKHHTXD
WLRQ
2IFRXUVHZHFDQQRWEULQJHYHU\WKLQJLQWRWKHHTXDWLRQLQWKH
UHDOZRUOGULJKWQRZ%XWWKDWGRHVQRWPHDQZHFDQQRWDQDO\]HWKH
UHDOZRUOGZLWKWKLVLGHDLQPLQG)RURQHLWZRXOGDSSHDU'DUZLQV

K\SRWKHVLVUHTXLUHVHLWKHUDDFUHDWLYHHYROXWLRQRUEDZRUOG

FDUHIXOO\FRQWULYHGWRLQMHFWWKHULJKWLQIRUPDWLRQLQWRWKHHFRV\V
WHP 2WKHUZLVH LW VHHPV UDWKHU GLIILFXOW IRU QXFOHRWLGHV RI
PHDQLQJIXOLQIRUPDWLRQWREHFRPH2IFRXUVHFKRLFHEJRHV
DJDLQVWWKHYHU\VSLULWRIHYROXWLRQDU\VFLHQFHDQGZRXOGSUREDEO\
UHTXLUHDJUHDWHUPLUDFOHWKDQRXWULJKWFUHDWLRQ7KXVLWZRXOG
DSSHDUWKDW'DUZLQVK\SRWKHVLVZRXOGUHTXLUHDFUHDWLYHHYROXWLRQ
WRKDYHDQ\KRSHDWDOO2IFRXUVHDSSHDUDQFHVFDQEHGHFHLYLQJ
HVSHFLDOO\ZKHQGLVFXVVLQJWKLVWRSLFVR,DPQRWUHDG\WRWLHWKH
FRQQHFWLRQEHWZHHQFUHDWLYHHYROXWLRQDQG'DUZLQWRRWLJKWO\
:KDW,FDQVD\LVWKDWH[DPLQHGWKURXJKWKHH\HVRIDVNHSWLF
RQHFRXOGFRPHWRWKHFRQFOXVLRQWKDWEDVHGRQWKHHYLGHQFHZH
KDYHWRGD\HYHQUHDOZRUOGHYROXWLRQDSSHDUVWREHRQO\UHDFWLYH
DQGLWIDLOVWRH[SODLQWKHFRPSOH[LW\DQGGLYHUVLW\RIOLIHDVZH
NQRZLW$OORIWKHREMHFWLRQVWRHYROXWLRQFLWHGDERYHZKHQSXW
WRJHWKHU UHDOO\ VHHP WR IDYRU D UHDFWLYH HYROXWLRQ WKDW SDUDOOHOV
ZKDWZHIRXQGRSHUDWLQJDPRQJYLUXVHV,QWKHH\HVRIDVNHSWLF
:KDW,DPDGGLQJWRWKLVGLVFXVVLRQLVVLPSO\WKLV'HILQLQJMXVW
ZKDW UHDFWLYH HYROXWLRQLVXVLQJRQO\WKHUHDOZRUOGKDVQRWEHHQ
SRVVLEOH:KHQZHJRWRDFRPSOHWHO\GHILQDEOHZRUOGVXFKDVZH
FDQFRQVWUXFWLQ$/WKRXJKZHFDQEHJLQWRILJXUHRXWDZD\WR
PDWKHPDWLFDOO\IRUPXODWHWKLVLGHD$QGWKRXJKDUHDFWLYHHYROX
WLRQPD\QRWIDOVLI\'DUZLQVK\SRWKHVLVLWZRXOGVXUHVHHPWRSXW
LWRQSDUZLWKRWKHUPRUHEODWDQWO\WKHRORJLFDOSURSRVLWLRQV
7KH0\VWHU\RI0\VWHULHV
,I HYROXWLRQ LV UHDFWLYH DQG 'DUZLQV K\SRWKHVLV LV GHHSO\
LPEXHG ZLWK SKLORVRSK\ DQG PLUDFOH WKHQ WKH JUHDW P\VWHU\ LV
ZKHUHGLGDOOWKHYDULHW\RIOLIHRQHDUWKFRPHIURP"7KHUHZRXOG
VHHP WR EH QR ORJLFDO HJ VFLHQWLILFDOO\ SUREDEOHFKRLFH
DYDLODEOH7KHRQO\ZD\WRGLVWLQJXLVKEHWZHHQVD\'DUZLQLVP
DQGVRPHIRUPRIFUHDWLRQLVPRUYLWDOLVPZRXOGEHRQWKHEDVLVRI
&HUWDLQO\WKHHQYLURQPHQWZLOOFRXSOHDOLWWOHELWRILQIRUPDWLRQLQWRWKHV\VWHP
E\DFFLGHQWEXWQRWQHDUO\HQRXJK,WZRXOGEHPRUHOLNHWKHELWUHTXLUHGE\
WKHSHSSHUHGPRWKWKDQWKHRUVRQHHGHG

RQHVSHUVRQDOSUHIHUHQFHVDERXWZKHUHDQGZKHQWKHLQIRUPDWLRQDO
PLUDFOHRFFXUUHGQRWZKHWKHULWRFFXUUHG$VVXFKVFLHQFHDVZH
NQRZLWZRXOGKDYHWRVWRSVKRUWRIDQVZHULQJWKLVTXHVWLRQ:H
KDYHWRVWHSLQWRWKHUHDOPRISKLORVRSK\DQGWKHRORJ\WKHQ7KLV
PD\EHH[WUHPHO\GLVFRQFHUWLQJWRWKHGLHKDUGVFLHQWLVWEXWWKHQ
,QHYHUSURPLVHGDQ\HDV\DQVZHUVZLWKWKLVERRN,OOGLVFXVVWKLV
PDWWHUPRUHLQDOLWWOHZKLOHEXWILUVWZHQHHGWRJRWDNHDORRNDW
DQRWKHUSLHFHRIRXUSX]]OHWKHEHJLQQLQJRIOLIH
,QWKH%HJLQQLQJ
1RZWKDWZHKDYHGLVFXVVHGHYROXWLRQDOLWWOHOHWVUHWXUQWR
WKHTXHVWLRQRIWKHEHJLQQLQJRIOLIHLQRXUZRUOGRIELWVDQGE\WHV
7KHLGHDRIEHJLQQLQJVFDQRQO\EHH[SORUHGRQFHZHKDYHDEDVLF
XQGHUVWDQGLQJRIHYROXWLRQ
,QRXUZRUOGLWLVFRPPRQO\LPDJLQHGWKDWOLIHEHJDQDVWKH
FXOPLQDWLRQ RI D VHULHV RI LQFUHDVLQJO\ FRPSOH[ FKHPLFDO UHDF
WLRQVVRFDOOHG FKHPLFDOHYROXWLRQ ZKLFKILQDOO\SURGXFHGD
PROHFXOHFDSDEOHRIVHOIUHSURGXFWLRQ)URPWKHUHWKLVVHOIUHSUR
GXFLQJPROHFXOHHYROYHGLQWRDOOWKHPDQ\DQGYDULHGIRUPVRIOLIH
RQHDUWKWRGD\$IWHUORRNLQJDWWKHHYROXWLRQRIYLUXVHVWKRXJK
WKLVFRPPRQFRQFHSWLRQPD\VHHPDELWVLPSOLVWLF
:HYHVHHQWKDWHYROXWLRQDOWKRXJKYHU\UHDODQGVRPHWLPHV
YHU\HIIHFWLYHLVQRWDPDJLFDORPQLSRWHQWIRUFH5DWKHULWLVD
SURFHVVRIOLPLWHGSUHGLFWDEOHFDSDELOLW\:LWKWKLVOLPLWHGFDSD
ELOLW\LQPLQGLWVKRXOGEHFOHDUWKDWPHUHO\ILJXULQJRXWKRZD
VLPSOH VHOIUHSURGXFLQJ DXWRPDWRQ FRXOG FRPH LQWR H[LVWHQFH LV
QRWHQRXJKWRVROYHWKHTXHVWLRQRIEHJLQQLQJV,IWKDWDXWRPDWRQ
FDQQRW HYROYH LQWR LQFUHDVLQJO\ FRPSOH[ IRUPV WKHQ LW PD\ EH
DOLYH EXWLWLVDGHDGHQG,WLVDXQLTXHSKHQRPHQRQDQGQRW
WKHVHHGRIDOOOLIHLQLWVZRUOGDQGWKHRULJLQVUHVHDUFKHUKDVQRW
VROYHGWKHRULJLQVTXHVWLRQ7KXVZHFDQQRWDQVZHUWKHTXHVWLRQ
RIEHJLQQLQJVZLWKRXWXQGHUVWDQGLQJHYROXWLRQ
/HWVFRQVLGHUWZRH[WUHPHVVWURQJHYROXWLRQDQGZHDNHYR
OXWLRQ,QDZRUOGZKHUHHYROXWLRQLVYHU\VWURQJDQGSRZHUIXOD
VLPSOH VHOIUHSURGXFLQJ DXWRPDWRQ PLJKW EH FRQVWUXFWHG ZKLFK
ZRXOG HYROYH LQWR PDQ\ GLIIHUHQW YDULHWLHV RI VHOIUHSURGXFLQJ

DXWRPDWDJLYHQHQRXJKWLPH,QWKLVZRUOGWKHTXHVWLRQRIEHJLQ
QLQJV PLJKW UHYROYH DURXQG WKH FRQVWUXFWLRQ RI WKDW RULJLQDO
DXWRPDWRQZKLFKJRWWKLQJVJRLQJ
,QDZRUOGZKHUHHYROXWLRQLVZHDNDQGLQHIILFLHQWDWFDXVLQJ
PDMRUYDULDWLRQVWKHTXHVWLRQRIEHJLQQLQJVORRNVYHU\GLIIHUHQW
,I\RXKDYHDZLGHYDULHW\RIDXWRPDWDWKDWGRQWDSSHDUWRKDYH
HYROYHG IURP RQH DQRWKHU \RX GR QRW KDYH RQH EHJLQQLQJV
TXHVWLRQEXWPDQ\:KHUHGLGWKLVRQHFRPHIURP":KHUHGLGWKDW
RQHFRPHIURP":KLFKLIDQ\HYROYHGLQWRGLIIHUHQWIRUPV"
&OHDUO\WKHFRPSXWHUYLUXVSKHQRPHQRQDVZHREVHUYHLWWRGD\
SRLQWVWRDZHDNHYROXWLRQWKDWFRXOGQRWSRVVLEO\KDYHJLYHQULVH
WRDOOWKHPDQ\YDULHWLHVZHNQRZDERXW)XUWKHUPRUHZHJHQHUDOO\
EHOLHYHWKDWPRVWRIWKHVHYLUXVHVZHUHZULWWHQE\SHRSOHDQGZHUH
QRWVRPHKRZVSRQWDQHRXVO\JHQHUDWHG<HWDVVFLHQWLVWVZHFDQ
QRW EH FRQWHQW ZLWK WKH FRPPRQ EHOLHI WKDW YLUXVHV FDQQRW EH
VSRQWDQHRXVO\JHQHUDWHG:HRXJKWWRPDNHVRPHVRUWRIVFLHQWLILF
VWDWHPHQWDERXWWKHVXEMHFW
$ELRJHQHVLVE\5DQGRP3URFHVVHV
*HQHUDOO\VFLHQWLVWVLPDJLQHWKDWWKHVPDOOHUDQGVLPSOHUDQ
RUJDQLVPLVWKHEHWWHUWKHFKDQFHVWKDWLWPLJKWEHVSRQWDQHRXVO\
JHQHUDWHG,QDQFLHQWWLPHVLWZDVVXSSRVHGWKDWPDQ\IRUPVRIOLIH
FRXOG EH VSRQWDQHRXVO\ JHQHUDWHG ZLWKRXW D ORW RI WURXEOH )RU
H[DPSOHZRUPVPLJKWEHGHULYHGIURPDSLHFHRIPHDW%\WKH
PLGQLQHWHHQWKFHQWXU\WKHTXHVWLRQKDGEHHQSXVKHGWRWKHPL
FURELDO OHYHO /DWHU VWLOO LW ZDV SXVKHG WR WKH VXEFHOOXODU DQG
FKHPLFDOOHYHO
,V WKHUH DQ\ VHQVH LQ VHHNLQJ VSRQWDQHRXV JHQHUDWLRQ LQ WKH
VLPSOHVWSRVVLEOHVHOIUHSURGXFLQJFRQVWUXFWRULVWKLVWUHQGPHUHO\
WKHUHVXOWRIH[SHULPHQWJUDGXDOO\FRQWDLQLQJWKHLGHDLQDVPDOOHU
DQGVPDOOHUER[",WKLQNERWKVLGHVFRXOGEHHIIHFWLYHO\DUJXHG
/HWVDQDO\]HVRPHVHOIUHSURGXFLQJFRPSXWHUFRGHWRVHHZK\
:KHWKHUDVDUHVXOWRIFUHDWLYHHYROXWLRQRUWKHSURSHULQIRUPDWLRQFRQWHQWLQ
WKHSK\VLFV
,QWKH%HJLQQLQJ

:HOOVWDUWE\ORRNLQJDWIRXUGLIIHUHQWSLHFHVRIVHOIUHSURGXF
LQJFRGHDQGWU\WRJHWDQLGHDRIZKDWLWZRXOGWDNHWRFUHDWHWKHP
E\JHQHUDWLQJILOHVRIWKHDSSURSULDWHVL]HDWUDQGRP7KHILUVWSLHFH
RIFRGHLVWKH7,0,'YLUXVIURP7KH/LWWOH%ODFN%RRNRI&RPSXWHU
9LUXVHV,WLVDVPDOOEXWHIIHFWLYHYLUXVWKDWFDQLQIHFW&20ILOHV
LQDJLYHQGLUHFWRU\,WFRQWDLQVE\WHVRUELWVRILQIRUPD
WLRQ7KHVHFRQGLVDYLUXVFDOOHG&203$1,21ZKLFKZDV
GHYHORSHGIRUWKH)LUVW,QWHUQDWLRQDO9LUXV:ULWLQJ&RQWHVW$W
E\WHV&203$1,21PDNHVDIDLUFODLPWREHLQJWKHVPDOOHVW
YLUXV SRVVLEOH ZLWK WKH OHYHO RI IXQFWLRQDOLW\ VSHFLILHG E\ WKH
FRQWHVW6HH$SSHQGL[&IRUPRUHDERXWWKLVFRQWHVWDQGDIXOO
OLVWLQJRIWKHYLUXV7KHWKLUGSLHFHRIFRGHLVRQHRIWKHVPDOOHVW
YLUXVHVNQRZQLI\RXZDQWWRFDOOLWDYLUXVFDOOHGWKH0,1,
7KLVLVDQDVW\E\WHSURJUDPWKDWRYHUZULWHVDOOWKH&20ILOHV
LQDGLUHFWRU\DQGGHVWUR\VWKHP7KHIRXUWKDQGILQDOSLHFHRI
FRGHLVQRWDYLUXVEXWDSURJUDPWKDWUHSOLFDWHVLQPHPRU\,WLV
JLYHQE\WKHLQVWUXFWLRQV
PRYVL
PRYGL
PRYVE
DQGLVVHYHQE\WHVORQJ,OOFDOOLW3,&2
1RZVXSSRVHZHZHUHWRZULWHDSURJUDP5)*(1WKDWZRXOG
GRQRWKLQJEXWVLWDURXQGDQGJHQHUDWHWUXO\UDQGRPILOHVWKDWZHUH
DQ\VSHFLILHGOHQJWK:KDWZRXOGLWWDNHIRUWKLVSURJUDPWRFUHDWH
HDFKRIWKHIRXUVHOIUHSURGXFLQJDXWRPDWDDERYH"7KHFDOFXODWLRQV
DUHIDLUO\VWUDLJKWIRUZDUG/HWVWDNHWKH&203$1,21IRU
H[DPSOH7KHUHDUH GLIIHUHQWSRVVLEOHILOHVWKDW
DUHH[DFWO\E\WHVORQJ7KDWPHDQVLQJHQHUDOWKHUHLVDLQ
FKDQFHRI5)*(1FRPLQJXSZLWK&203$1,21RQ
DQ\JLYHQWU\
1RZOHWVFRQVLGHUWZRGLIIHUHQWVFHQDULRVIRUFUHDWLQJWKHVH
DXWRPDWDZKLFK,OOODEHO6FHQDULR$DQG6FHQDULR%
6FHQDULR$LVVRPHWKLQJWKDWFRXOGEHGRQHLIZHFRXOGJHWDOO
WKH3&XVHUVLQWKHZRUOGWRGHGLFDWHWKHLUPDFKLQHVWRUHVHDUFK
7KHUHDUHDERXWPLOOLRQ3&VLQWKHZRUOG6XSSRVHZHFRXOG
VHWWKHPDOOXSZLWK5)*(1DQGWKDWLWFRXOGFUDQNRXWDERXW

ILOHVSHUVHFRQG3&VKDYHEHHQDURXQGIRUDERXW\HDUVVROHWV
VD\DOOWKHVHPDFKLQHVZHUHVHWWRZRUNGRLQJWKLVWHQ\HDUVDJR
:KDWZRXOGEHWKHOLNHOLKRRGRIFRPLQJXSZLWKDQ\RIWKHVHILOHV"
+HUHDUHWKHDQVZHUV
6FHQDULR$
$XWRPDWRQ
5)*(1&UHDWLRQ3UREDELOLW\
)LJXUH7KH0,1,9LUXV/LVWLQJ
E\WHYLUXVRYHUZULWHVDOOWKH&20ILOHVLQWKHFXUUHQW
GLUHFWRU\ZLWKLWVHOI
PRGHOVPDOO
FRGH
)1$0((48(+VHDUFKIXQFWLRQILOHQDPH
25*+
67$57
PRYDK(+VHDUFKIRUILUVW &20
PRYG[2))6(7&20B),/(
LQW+
6($5&+B/3
PRYD['+RSHQILOHZHIRXQG
PRYG[)1$0(
LQW+
[FKJD[E[ZULWHYLUXVWRILOH
PRYDK+
PRYFOVL]HRIWKLVYLUXV
PRYG[+ORFDWLRQRIWKLVYLUXV
LQW+
PRYDK(+
LQW+FORVHILOH
PRYDK)+
LQW+VHDUFKIRUQH[WILOH
MQE6($5&+B/3
UHWQH[LWWR'26
&20B),/('% &20VWULQJIRU&20ILOHVHDUFK
(1'67$57
,QWKH%HJLQQLQJ
7,0,'
&203$1,21
0,1,
3,&2

[
[
[

&OHDUO\WKHRQO\DXWRPDWRQZLWKDVKUHGRISRVVLELOLW\LV3,&2
(YHQ ZLWK WKDW XVLQJ D ODUJH QXPEHU RI PDFKLQHV LV DEVROXWHO\
PDQGDWRU\,IZHZHUHWRVWDJHWKHVDPHVFHQDULRZLWKRQO\RQH
PDFKLQH WKH FKDQFHV RI JHQHUDWLQJ HYHQ 3,&2 ZRXOG EH DQ
XQOLNHO\[HJLQDPLOOLRQ
6RPHRIWKHVHQXPEHUVDUHVRKXJHWKDWWKH\UHUHDOO\KDUGWR
FRQWHPSODWH-XVWWRJLYH\RXDQLGHDRIKRZELJWKLVSUREOHPLV
OHWV FRQVLGHU 6FHQDULR % LQ ZKLFK ZH WDNH HYHU\ HOHPHQWDU\
SDUWLFOHLQWKHXQLYHUVHVD\RIWKHPDVDUDWKHUODUJHXSSHU
OLPLW DQG WXUQ LW LQWR D FRPSXWHU 6XSSRVH IXUWKHU WKDW WKHVH
FRPSXWHUVDUHVRIDQWDVWLFDOO\SRZHUIXOWKDWZKHQ5)*(1LVUXQ
RQWKHPLWFDQJHQHUDWHDUDQGRPILOHRQFHHYHU\ VHFRQGV
ZKLFKLVDERXWKRZORQJLWWDNHVOLJKWWRWUDYHODGLVWDQFHHTXDOWR
WKHGLDPHWHURIDSURWRQ)LQDOO\VXSSRVHHDFKRIWKHVHFRPSXWHUV
KDGEHHQZRUNLQJIURPWKHWLPHRIWKHELJEDQJXQWLOQRZDERXW
VHFRQGV+HUHDUHWKHUHVXOWVZHJHW
6FHQDULR%
$XWRPDWRQ
7,0,'
&203$1,21
0,1,
3,&2
5)*(1&UHDWLRQ3UREDELOLW\
[
[

$OWKRXJKWKLVGUHDPODQGVFHQDULRKDVEURXJKW0,1,LQWRWKH
UHDOPRISRVVLELOLW\WKHRWKHUVDUHVWLOODEVXUGO\XQOLNHO\7REULQJ
7,0,'LQWRWKHUHDOPRISRVVLELOLW\\RXGKDYHWRH[SDQGHYHU\
HOHPHQWDU\ SDUWLFOH LQ WKH XQLYHUVH LQWR D QHZ XQLYHUVH PDNH
FRPSXWHUVRIDOOWKHHOHPHQWDU\SDUWLFOHVLQHDFKQHZXQLYHUVHDQG
UHSHDWWKDWSURFHVVWKUHHPRUHWLPHV
7KHERWWRPOLQHRIDOORIWKLVLVWKDWVL]HLVH[WUHPHO\LPSRUWDQW
LQDQ\DWWHPSWWRFUHDWHDVHOIUHSURGXFLQJDXWRPDWRQE\UDQGRP

SURFHVVHV+RZHYHUVL]HLVQRWWKHRQO\FRQVLGHUDWLRQ-XVWEHFDXVH
3,&2 PLJKW EH ZLWKLQ UHDFK GRHV QRW PHDQ LW LV WKH REYLRXV
DUFKHW\SDO VHOIUHSURGXFLQJ DXWRPDWRQ ZKLFK PXVW KDYH VXE
VHTXHQWO\ HYROYHG LQWR WKH ILUVW YLUXV DQG WKHQ LQWR DOO NQRZQ
YLUXVHV:HZLOOGLVFXVVREMHFWLRQVWRWKLVLQDPRPHQW
'LUHFWHG$ELRJHQHVLV
$VZHKDYHDOUHDG\GLVFXVVHGLQWKHUHDOPRIHYROXWLRQDQG
DJDLQKHUHDUDQGRPVHDUFKLVDQLQHIILFLHQWZD\WRILQGWKHDQVZHU
WRDQ\SUREOHP,IZHFDQGLUHFWWKHUDQGRPSURFHVVRIFRXUVH
HYHU\WKLQJFKDQJHV7KLV GLUHFWLRQ FDQQRWEHE\PHDQVRI'DU
ZLQLDQVHOHFWLRQQRZWKRXJKEHFDXVHZHUHWU\LQJWREXLOGDILUVW
VHOIUHSURGXFLQJDXWRPDWRQ'DUZLQLDQVHOHFWLRQRQO\ZRUNVDIWHU
\RXKDYHVHOIUHSURGXFWLRQZRUNLQJ<HWLWLVQRWKDUGWRGHVLJQ
WKHUHVWKDWEODVWHGZRUGDJDLQDVHOHFWLRQPHFKDQLVPWRGRZKDW
ZHZDQW
7RLOOXVWUDWH,ZURWHDSURJUDP*(1),/(RQWKH3URJUDP
'LVNZKLFKWDNHVDQ\YLUXVRUDQ\ILOH\RXOLNHDVDWHPSODWH
7KHQ LW JHQHUDWHV D UDQGRP DUUD\ RI E\WHV WKH VDPH OHQJWK ,W
FRPSDUHVWKHVHE\WHVWRWKHWHPSODWHDQGNHHSVWKRVHWKDWPDWFK
7KHE\WHVWKDWGRQWPDWFKDUHUDQGRPL]HGDJDLQDQGWKHPDWFK
DQGNHHSSURFHVVLVUHSHDWHGXQWLOHYHU\E\WHLQWKHDUUD\PDWFKHV
WKHWHPSODWHH[DFWO\7\SLFDOO\WKLVSURJUDPFDQUHFUHDWH&20
3$1,21LQDQDYHUDJHRIJHQHUDWLRQV7KLVSURFHVVFDQ
W\SLFDOO\EHSHUIRUPHGLQDFRXSOHVHFRQGVRQD3&7KLVLVDIDU
FU\ IURP QXPEHUV OLNH \HDUV ZKLFK QRQGLUHFWHG UDQGRP
SURFHVVHVUHTXLUHG
2IFRXUVHWKLVGLUHFWHGSURFHVVDVVXPHVWKHDQVZHULQDGYDQFH
$VRUWRIYLWDOLVP(YHQWKRXJKLWXVHVDUDQGRPQXPEHUJHQHU
DWRULWGRHVOLWWOHPRUHWKDQDOORZ\RXWRSLFNZKDWE\WHV\RXZDQW
1RWHWKDWZHFDQLPSURYHWKHVHQXPEHUVDOLWWOHELWE\WDNLQJLQWRDFFRXQWDOO
SRVVLEOHYDULDWLRQVRIWKHVHYLUXVHV)RUH[DPSOH&203$1,21FRXOGEH
ZULWWHQ LQ D YDULHW\ RI ZD\V IRU H[DPSOH ZLWK VRPH SXVKSRS VHTXHQFHV
UHYHUVHG7KDWLVQRWKRZHYHUOLNHO\WRJLYH\RXPRUHWKDQDIDFWRURI
,QWKH%HJLQQLQJ

ZKHUHE\DQVZHULQJ\HVQRTXHVWLRQV,QWKLVZD\\RXDUHFDUHIXOO\
LQMHFWLQJLQWHOOLJHQFHLQWRWKHV\VWHP
*LYHQ DQ 1 E\WH YLUXV ZKLFK LV JHQHUDWHG E\WHE\E\WH WKH
UDQGRPQXPEHUJHQHUDWRUKDVDFKDQFHRIVHOHFWLQJDQ\JLYHQ
E\WHFRUUHFWO\7KHFKDQFHRIJHWWLQJDWOHDVWRQHRIWKH1E\WHV
ULJKWLVWKXV
3 1

)RUDE\WHYLUXV3 DIDLUO\OLNHO\HYHQW
7KHILQHUDVHOHFWLRQSURFHVV,LPSRVHRQWKHSURSRVHGVROXWLRQ
WKHPRUHTXLFNO\LWFRQYHUJHVWRWKHGHVLUHGUHVXOW)RUH[DPSOHLI
,UHTXLUHELWZLVHPDWFKHVLQVWHDGRIE\WHZLVHPDWFKHVWKHQWKH
UDQGRPQXPEHUJHQHUDWRUZLOOJHWULJKWRQWKHILUVWWU\DQG
PRUHRQWKHQH[WWU\,WFDQWKHQFRQYHUJHWRDVROXWLRQLQDERXW
JHQHUDWLRQVIRUDE\WHYLUXVLQVWHDGRIJHQHUDWLRQV2U
ZH FRXOG PDNH WKH VHOHFWLRQ FRDUVHU E\ UHTXLULQJ ZRUGZLVH
PDWFKHVWKHUHE\SXVKLQJWKHVHOHFWLRQSURFHVVRXWRYHU
JHQHUDWLRQV5DQGRPSURFHVVHVDUHZHOODEOHWREULGJHJDSVDWWKH
ELWE\WHDQGHYHQZRUGOHYHOLQDUHDVRQDEOHDPRXQWRIWLPHVR
P\*(1),/(VVHOHFWLRQSURFHVVZRUNV*RLQJXSWR':25'V
RU4:25'VWKRXJKPDNHV*(1),/(VWDVNLPSRVVLEOHRQDUHDO
FRPSXWHU
$VZHKDYHDOUHDG\VHHQZLWKHYROXWLRQDOOWKHUHDOVFLHQFHOLHV
LQILQGLQJDUHDVRQDEOHVHOHFWLRQSURFHVV&HUWDLQO\ZHFDQLPSRVH
DVHOHFWLRQSURFHVVDQGWKDWSURFHVVZLOOEHVXFFHVVIXOLILWVXIIL
FLHQWO\UHIOHFWVZKDWDYLUXVORRNVOLNH<RXMXVWKDYHWRPDNHVXUH
WKDW WKH JDSV ZKLFK PXVW EH MXPSHG E\ UDQGRP SURFHVVHV DUH
MXPSDEOH6XFKDQLQWHOOLJHQWSURFHVVKDVQRWKLQJWRGRZLWKWKH
VFLHQFH RI EHJLQQLQJV WKRXJK 'HVLJQLQJ WKH EHJLQQLQJ LQWR D
VHOHFWLRQSURFHVVLVREYLRXVO\FKHDWLQJ)RUH[DPSOHWKH&20
3$1,21 YLUXV KDV WR H[LVW DOUHDG\ EHIRUH *(1),/( FDQ
FUHDWHLW+RZHYHU\RXGRQWQHFHVVDULO\KDYHWRZULWHWKHYLUXV
EHIRUHKDQG<RXMXVWKDYHWRNQRZHQRXJKDERXWZKDWDYLUXVORRNV
OLNH )RU H[DPSOH WKHUH DUH D QXPEHU RI KHXULVWLFVEDVHG YLUXV
VFDQQHUVRQWKHPDUNHWWRGD\7KH\GRQWVFDQIRUVSHFLILFYLUXVHV
7KH\MXVWH[DPLQHILOHVDQGGHFLGHLIWKH\ORRNOLNHDYLUXVEDVHG
RQ NQRZQ SURSHUWLHV RI YLUXVHV <RX FRXOG FRQFHLYDEO\ ZULWH D

YLUXVFUHDWLRQODEZKLFKXVHGWKHVHKHXULVWLFVFDQQHUVWRJHQHUDWH
YLUXVHV-XVWFUHDWHDEXQFKRIUDQGRPILOHVDQGOHWWKHVFDQQHUV
YRWH RQ WKHP 7DNH WKH EHVW RI WKH EXQFK DQG FUHDWH UDQGRP
YDULDWLRQVRIWKRVHDQGDOORZDQRWKHUYRWH.HHSJRLQJXQWLODOORI
\RXUVFDQQHUVDJUHHWKDW\RXFHUWDLQO\KDYHDYLUXV3HUKDSV\RX
UHDOO\ZLOOKDYHRQHWKHQ<HWHYHQLQWKLVVLWXDWLRQWKHKHXULVWLF
VFDQQHU ZDV GHVLJQHG E\ VRPHRQH ZKR NQHZ D ORW DERXW ZKDW
YLUXVHVORRNOLNH
, VD\ DOO RI WKLV EHFDXVH WKHUH VHHPV WR EH D JUHDW GHDO RI
FRQIXVLRQDERXWVXFKVHOHFWLRQSURFHVVHVLQWKHSXEOLFH\H7KHLGHD
RI FKHPLFDOHYROXWLRQ LVQRWHYROXWLRQDWDOOEXWDQRQ'DUZLQLDQ
VHOHFWLRQ SURFHVV7KDWVHOHFWLRQSURFHVVPXVWXOWLPDWHO\EHSXUH
FKHPLVWU\2EYLRXVO\ZHFDQV\QWKHVL]HWKHFKHPLFDOVRIOLIHLQD
ODERUDWRU\:HFRXOGJRVWHSE\VWHSWKURXJKDSURFHVVWKDWILUVW
EXLOGVPRQRPHUVDQGWKHQPRUHDQGPRUHFRPSOH[SRO\PHUVDQG
WKHQSHUKDSVSXWVDOOWKHSRO\PHUVWRJHWKHUMXVWULJKW,WLVDUHDO
VWUHWFKWRFDOOWKLVSURFHVV QDWXUDOVHOHFWLRQ RIDQ\VRUWWKRXJK
7KHVHOHFWLRQSURFHVVLQVXFKDFDVHLVFKHPLVWU\SOXVLQWHOOLJHQFH
7KDWKDVQRWKLQJWRGRZLWKWKHEHJLQQLQJRIOLIHRQHDUWKWKRXJK
EHFDXVH WKH VHOHFWLRQ LV LQWHOOLJHQWO\ FRQWUROOHG DQG GLUHFWHG $
VFLHQWLVWKDVDGHVLUHGUHVXOWLQPLQGDQGKHZRUNVWRREWDLQLWMXVW
OLNHWKH*(1),/(SURJUDP7KHUHDOTXHVWLRQIRUWKHEHJLQQLQJRI
OLIHLVZKHWKHUFKHPLVWU\DORQHZLWKRXWLQWHOOLJHQWLQSXWFDQGR
WKH MRE 7KH UHDO VFLHQFH OLHV LQ ILQGLQJ D UHDVRQDEOH VHOHFWLRQ
SURFHVV
7KXV WKH LPSRUWDQW TXHVWLRQ LQ GLUHFWHG DELRJHQHVLV LV QRW
ZKHWKHUZHFDQLPSRVHDVHOHFWLRQSURFHVVEXWZKHWKHUWKHUHPLJKW
EHVRPHUHDVRQDEOHSURFHVVDWZRUN LQWKHZLOG ,IZHLPSRVHD
SURFHVV ZHUH MXVW SOD\LQJ WKH FUHDWRU +RZHYHU LI ZH ILQG D
SURFHVVDWZRUNTXLWHDSDUWIURPRXULQWHQWLRQVZHFDQFHUWDLQO\
FRQVLGHULWVSRWHQWLDOIRUKHOSLQJDELRJHQHVLV7KDWDSSOLHVWRWKH
UHDOZRUOGDQGLWDSSOLHVWRFRPSXWHUYLUXVHV
$FWXDOO\,WKLQNKHXULVWLFVFDQQHUVZLOOKDYHWRJHWDORWVPDUWHUEHIRUHWKLV
VFKHPHZLOOZRUN
,QWKH%HJLQQLQJ

1RZREYLRXVO\LQWKHUHDOZRUOGWKHUHDUH SUHIHUUHG FRPEL

QDWLRQVRIFKHPLFDOHOHPHQWV)RUH[DPSOH+\GURJHQDQG2[\JHQ
SUHIHU WR FRPELQH LQWR ZDWHU +2 7KLV UHDFWLRQ LV GULYHQ E\
HQHUJ\:KHQWZR+\GURJHQVFRPELQHZLWKRQH2[\JHQDORWRI
HQHUJ\LVUHOHDVHG7RJHWWKHPDSDUW\RXKDYHWRSXWDORWRIHQHUJ\
EDFNLQ7KXVLWLVQRWVXUSULVLQJWKDWPRVWRIWKH+\GURJHQRQHDUWK
LVIRXQGLQFRPELQDWLRQZLWK2[\JHQ,IWKHUHZHUHVRPHVLPLODU
SKHQRPHQRQLQRXUFRPSXWHUVPHPRU\WKDWZRXOGWHQGWRDUUDQJH
E\WHVLQFHUWDLQRUGHUVRUWRVHWPHPRU\ORFDWLRQVWRFHUWDLQYDOXHV
LWPLJKWHLWKHUZRUNWRHQDEOHDELRJHQHVLVRULQKLELWLWGHSHQGLQJ
RQZKDWWKRVHSUHIHUUHGFRQILJXUDWLRQVZHUH+RZHYHUWKHZKROH
LGHDEHKLQGDQLQIRUPDWLRQVWRUDJHPHGLXPLVWRDYRLGVXFKSKH
QRPHQD:KHQZHGHVLJQFRPSXWHUPHPRU\ZHZDQWWRPDNHLW
MXVWDVHDV\WRVWRUHRQHFRQILJXUDWLRQDVWKHQH[W$VVXFKWKHUH
DUH LGHDOO\ QR SXUHO\ QDWXUDO VHOHFWLRQ SURFHVVHV OLNH WKLV DW
ZRUNWRFDXVHWKHHTXLYDOHQWRIFRPSOH[FKHPLFDOVWRIRUP,I
WKHUHZHUHDQ\VXFKSURFHVVHVWKH\ZRXOGLQKLELWRXUFRPSXWHU
IURPEHLQJDFRPSXWHULQWKHILUVWSODFH)RUH[DPSOHDQ\SURFHVV
ZKLFKPHDVXUDEO\DOLJQHGPDJQHWLFGRPDLQVRQDKDUGGLVNLQD
ZD\IDYRUDEOHWRDELRJHQHVLVZRXOGDOVRPHDVXUDEO\GHVWUR\RWKHU
GDWDRQWKHGLVN7KHUHIRUH GLUHFWHG DELRJHQHVLVGRHVQRWDSSHDU
WREHDUHDVRQDEOHDOWHUQDWLYHDWOHDVWQRWLIGLUHFWHGE\SXUHO\
QDWXUDO SURFHVVHV
%RRWVWUDSSHG$ELRJHQHVLV
+RZHYHUZHFDQQRWVD\WKDWMXVWDQ\FRPELQDWLRQRIE\WHVRQ
DFRPSXWHUGLVNLVDVOLNHO\DVDQ\RWKHU0RVWFRPSXWHUVDUHILOOHG
ZLWKSURJUDPFRGHWKDWKDVEHHQLQWHOOLJHQWO\GHVLJQHGIRUDYDULHW\
RI SXUSRVHV :H KDYH WR ZRQGHU LI VRPH RI WKLV FRGH ZDV MXVW
$OWKRXJKWKHUHLVDVOLJKWO\ORZHUHQHUJ\DVVRFLDWHGWRVSHFLILFDUUDQJHPHQWV
RIPDJQHWLFGRPDLQVZKLFKVWRUHGDWDRQDKDUGGLVNWKDWHQHUJ\GLIIHUHQFH
DQG DQ\ SUHIHUHQFH LW ZRXOG FDXVH LV QHJOLJLEOH ,Q IDFW LW LV VSHFLILFDOO\
GHVLJQHGWREHQHJOLJLEOHVRWKDWWKHKDUGGLVNZLOOEHUHOLDEOH(YHQVXFKD
SUHIHUHQFHGRHVQRWKLQJIRUDELRJHQHVLVEHFDXVHLWLVIDUWRRWULYLDO
2EYLRXVO\ WKDW FKDQJHV ZKHQ ZH KDYH VHOIUHSURGXFLQJ FRGH EHFDXVH
'DUZLQLDQVHOHFWLRQFDQWKHQNLFNLQ

VLPLODUHQRXJKWRDFRPSXWHUYLUXVFRXOGDVPDOOPXWDWLRQWXUQDQ
RWKHUZLVHRUGLQDU\SURJUDPLQWRDYLUXV"RUFDXVHLWWRUHOHDVHD
YLUXV"&HUWDLQO\RUGLQDU\FRPSXWHUSURJUDPVSHUIRUPDOOWKHVDPH
ORJLFDOIXQFWLRQVWKDWYLUXVHVGRWKH\VHDUFKIRUILOHVRSHQDQG
FORVHWKHPDQGZULWHWRWKHP
$YLUXVJHQHUDWHGLQWKLVPDQQHUQHHGQRWQHFHVVDULO\EHVPDOO
,WFRXOGEHWKHUHVXOWRIWKHLQWHUDFWLRQRIKXQGUHGVRINLORE\WHVRI
FRGHZKHQDVLQJOHVPDOOPXWDWLRQRFFXUV
/HWVORRNDWWZRGLIIHUHQWSHUVSHFWLYHV&RXOGVRPHRIWKH
VPDOO YLUXVHV ZHYH EHHQ GLVFXVVLQJ EH ERRWVWUDSSHG" $QG
FRXOGVRPHFRPPRQQRQYLUDOSURJUDPEHERRWVWUDSSHGLQWREH
FRPLQJYLUDO"
7RWHVWWKHILUVWSRVVLELOLW\,ZURWHDSURJUDP3$77(51WKDW
FDQORDGXSDVPDOOYLUXVDQGWKHQVFDQDZKROHGLVNIRUDQ\PDWFKHV
RIYLUDOFRGHWKDWDUHWZRRUPRUHE\WHVLQOHQJWK5XQQLQJWKLV
SURJUDPRQDQRUGLQDU\PHJDE\WHGLVNZKLFKGLGQWKDYHDQ\
RWKHUYLUXVHVRQLWJDYHWKHIROORZLQJUHVXOWVZKLFKDUHFRPSDUHG
ZLWKWKHQXPEHURIPDWFKHVH[SHFWHGLIWKDWPHJDE\WHVZDV
SXUHO\UDQGRPGDWD
0DWFK6L]H
E\WHV

'LVN
0DWFKHV

5DQGRP
0DWFKHV

,QRWKHUZRUGVHYHQWKRXJKZHGRPXFKEHWWHUWKDQUDQGRPGDWD
WKHUHLVJHQHUDOO\YHU\OLWWOHORQJUDQJHRUGHULQSURJUDPVDQGLWV
SUDFWLFDOO\ LPSRVVLEOH WR ILQG WZR FKXQNV RI FRGH WKDW DUH YHU\
VLPLODURQWKHRUGHURIE\WHVORQJ7KHRQO\ZD\WRPDNHXSWKH
GLIIHUHQFH ZRXOG EH WR DSSHQG UDQGRP FRGH RU DVVHPEOH WKHVH
FKXQNVRIPDWFKLQJFRGHDOOWRJHWKHULQRQHSODFH6LQFHQRQHRI
,QWKH%HJLQQLQJ

WKHPDWFKHVDUHYHU\ODUJHDSSHQGLQJUDQGRPFRGHVWLOOJLYHVXV
DOOWKHSUREOHPVDVVRFLDWHGZLWKUDQGRPDELRJHQHVLV$QGWKHUHLV
QRPHFKDQLVPWRDVVHPEOHWKHPDWFKLQJFRGHLQRQHSODFH7KHUH
IRUHWKLVERRWVWUDSSLQJWHFKQLTXHVHHPVWREHDGHDGHQG
3HUKDSVDPRUHOLNHO\VRXUFHRIVSRQWDQHRXVO\JHQHUDWHGYL
UXVHVZRXOGEHSURJUDPVZULWWHQWRSHUIRUPIXQFWLRQVVLPLODUWR
YLUXVHV ZKLFK DUH PRGLILHG E\ D UDQGRP PXWDWLRQ WR DFWXDOO\
EHKDYHOLNHDYLUXVDQGVWDUWUHSURGXFLQJ,WLVQRWKDUGWRWXUQ'26
LWVHOILQWRDVRUWRIDYLUXV6XSSRVH\RXKDYHDERRWGLVNZLWKWKH
6<6SURJUDPRQLW$OO\RXKDYHWRGRWRPDNHDUXGLPHQWDU\YLUXV
LVSXWWKHFRPPDQG V\VF LQWRWKH$872(;(&%$7ILOHDQG
WKDWVRQO\E\WHVVPDOOHUWKDQ3,&21RZZKHQ\RXERRWWKLV
GLVNLWZLOOFRS\WKHV\VWHPILOHVWRWKHKDUGGLVN7KXVLWORRNV
NLQGRIOLNHDQRYHUZULWLQJERRWVHFWRUYLUXVSHUKDSVQRWVRYHU\
GLIIHUHQWIURPWKH.,/52<YLUXVGLVFXVVHGLQ9ROXPH,
2IFRXUVHE\WHVLVDORWWREHKDGE\DFFLGHQWDVZHDOUHDG\
NQRZ 7KH FKDQFHV RI JHWWLQJ WKHP ULJKW DUH D PHDVO\ LQ
7KXVZHKDYHWRORRNIRUDPXFKPRUHOLNHO\DFFLGHQW
SHUKDSVLQYROYLQJRQO\RQHRUWZRELWV
,ZURWHMXVWVXFKDSURJUDPWRVHHLILWFRXOGEHGRQH7KLV
SURJUDP LV FDOOHG &23,(5 ,W LV MXVW D VLPSOH SURJUDP WR GR D
ORZOHYHOGLVNFRS\RID.GLVNHWWHIURPGLVNGULYH$WRGULYH
% DQG LW LV E\WHV ORQJ &23,(5 LV D SHUIHFWO\ OHJLWLPDWH
SURJUDPZLWKDOHJLWLPDWHSXUSRVHWRFRS\GLVNV&KDQFHVDUH
\RX ZRQW XVH LW EHFDXVH LW GRHVQW KDYH DOO WKH IDQF\ EHOOV DQG
ZKLVWOHVWKDWVRPHWKLQJOLNH',6.&23<GRHVEXW\RXFRXOGXVH
LW-XVWSXWDVRXUFHGLVNHWWHLQGULYH$DGHVWLQDWLRQGLVNHWWHLQ
GULYH%DQGUXQWKHSURJUDP
7KHLQWHUHVWLQJWKLQJDERXW&23,(5LVWKDWDVLPSOHRQHELW
PXWDWLRQZLOOWXUQLWLQWRDQDVW\ERRWVHFWRUYLUXV6XSSRVH\RXKDG
DFRS\RI&23,(5LQZKLFKWKHVHFRQGLQVWUXFWLRQ
DGG
F[+
KDGEHHQPRGLILHGWR
&

7KH&23,(5GLVNFRS\LQJSURJUDP7KLVSURJUDPFRSLHVD.IORSS\
GLVNLQGULYH$WRGULYH%-XVWLQVHUWGLVNVLQERWKGULYHVDQG
UXQLW
PRGHOVPDOO
FRGH
25*+
67$57
FDOO67$57
67$57SRSVLJHWVWDUWLQJDGGUHVV
VXEVL
PRYF[VHWLQLWLDOWUNDQGVHF
PRYGKVHWLQLWLDOKHDG
&23<B/223
PRYD[+SUHSDUHWRUHDGVHFWRUV
PRYE[VL
DGGE[+EXIIHUIRUUHDG
PRYGOVHWGULYH$
LQW+UHDGLWLQWREXIIHU
MF&23<B/223UHWU\RQHUURU
PRYD[+SUHSDUHWRZULWHVHFWRUV
PRYE[VLEXIIHUIRUZULWH
DGGE[+
PRYGOVHWGULYH%
LQW+ZULWHWKHGDWD
LQFGKQH[WKHDGRQGLVN
FPSGKODVWRQH"
MQH&23<B/223QRSHJRFRS\QH[WKHDG
PRYGK\HVVHWKHDG
LQFFKDQGJRWRQH[WWUDFN
FPSFKODVWRQH"
MQH&23<B/223QRSHJRFRS\LW
HOVHIDOOWKURXJK
PRYD[&+WHUPLQDWHWKHSURJUDP
LQW+DQGH[LWWR'26
(1'67$57
)LJXUH7KH&23,(5SURJUDP
DGG
F[
&
6XGGHQO\WKH&23,(5SURJUDPFRSLHVLWVHOIWRWKHILUVWVHFWRURI
HYHU\WUDFNRQWKHGHVWLQDWLRQGLVNLQVWHDGRIWKHILUVWVHFWRURIWKH
VRXUFHGLVN$QGVLQFH&23,(5ZLOOSXWDFRS\RILWVHOILQ7UDFN
+HDG6HFWRULWZLOOH[HFXWHZKHQ\RXERRWIURPWKHGLVN
\RXMXVWPDGH:KHQLWH[HFXWHVZKDWZLOOLWGR",WZLOOFRS\WKH
GLVNLQGULYH$WRGULYH%SXWWLQJLWVHOILQWKHERRWVHFWRUDJDLQ
DQGWKHQLWZLOOKDQJWKHV\VWHP7KXVLWLVUHSOLFDWLQJDQGLWLV
,QWKH%HJLQQLQJ

WKHUHIRUHDYLUXVDQDVW\YLUXVWKDWUXLQVHYHU\WKLQJLWWRXFKHVWR
EHVXUHEXWVWLOODYLUXV$QGLWPDGHWKDWWUDQVLWLRQVLPSO\E\
FKDQJLQJRQHELWWKHE\WHEHFDPHDLQWKHDERYHLQVWUXFWLRQ
LQ WKH HQWLUH SURJUDP ,W LV DOVR D IDLUO\ VPDOO YLUXV DV IDU DV
ERRWVHFWRUYLUXVHVJREHLQJRQO\E\WHVORQJ
2EYLRXVO\DQ\YLUXVHVJHQHUDWHGLQWKLVPDQQHURXJKWWRUHWDLQ
WKH WUDLWV RI WKHLUSDVW OLIH DVDXVHIXOFRPSXWHUSURJUDP:H
NQRZWKDWHYROXWLRQKDVQWKDGHQRXJKWLPHWRHUDVHVXFKWUDLWV
&HUWDLQO\ , NQRZ RI QR VXFK YLUXVHV LQ WKH ZLOG <HW KDYLQJ
H[DPLQHGDFRQWULYHGH[DPSOHLWLVDWOHDVWFRQFHLYDEOHWKDWVXFK
DSURJUDPFRXOGEHZULWWHQE\DFFLGHQWDQGPXWDWHGE\DFFLGHQW
LQWRDYLUXV1RWKLQJHOVHZHYHH[DPLQHGVRIDUFRXOGPDWFKWKDW
FODLP<HWLIWKLVZHUHWRKDSSHQZHVKRXOGEHDEOHWRVSRWLWULJKW
DZD\
)LQDOO\VXFKDYLUXVFRXOGKDUGO\EHFDOOHGDSURGXFWRIQDWXUH
ZKHQPRVWRILWKDGEHHQLQWHOOLJHQWO\GHVLJQHG,WLVPRVWO\WKH
SURGXFWRIKXPDQLQWHOOLJHQFHZLWKMXVWDWRXFKRIDFFLGHQWWKURZQ
LQ
'HDG(QGV
:HKDYHVHHQWKDWUDQGRPSURFHVVHVLQVLGHDUHDOFRPSXWHUDUH
LQVXIILFLHQWWRFUHDWHHYHQDYHU\VPDOOZRUNDEOHYLUXV(YHQLIZH
KHOSWKHPDORQJFRQVLGHUDEO\E\UXQQLQJSURJUDPVWKDWJHQHUDWH
UDQGRP ILOHV HWF ZH DUH XVXDOO\ WDONLQJ DERXW D YHU\ XQOLNHO\
HYHQW 7KH RQO\ UHDO FKDQFH RI JHWWLQJ YLUXVHV JRLQJ DSDUW IURP
LQWHOOLJHQWGHVLJQLVWKHERRWVWUDSSURFHVV,YHMXVWGHVFULEHG<HW
VXSSRVH WKLV SURFHVV LV FDSDEOH RI DELRJHQHVLV 6XSSRVH LW GRHV
FUHDWHDYLUXV:KDWWKHQ"
:LOO WKHVH YLUXVHV JR RII DQG VWDUW HYROYLQJ LQWR ELJJHU DQG
EHWWHUYLUXVHV"0D\EHQRW,WZRXOGVHHPWKDWPDQ\RIWKHYLUXVHV
ZHYHEHHQORRNLQJDWLQWKLVFKDSWHUDUHHYROXWLRQDU\GHDGHQGV
)RUH[DPSOH3,&2KDVDVOLPVOLPFKDQFHRIEHLQJSRSSHGLQWR
EHLQJE\UDQGRPSURFHVVHV,ILWZHUHWKRXJKZHKDYHWRDVNKRZ
FRXOGLWHYROYHLQWRVRPHWKLQJPRUHUREXVW"0XVWLWEHWKHDUFKH
W\SHRIDOOYLUXVHVRULVLWVLPSO\DQLVRODWHGSHFXOLDULW\"
7KHUHDUHDQXPEHURIREMHFWLRQVWRFDOOLQJ3,&2WKHDUFKH
W\SHRIDOOYLUXVHV

7KHSUREDELOLW\WKDW3,&2ZRXOGFRPHLQWRH[LVWHQFHXVLQJ
DQ\UHDVRQDEOHPRGHORIVSRQWDQHRXVJHQHUDWLRQLVYHU\VPDOO
(YHQRQDPDFKLQHWU\LQJWRJHQHUDWHLWLWZRXOGWDNHPLOOLRQ
\HDUV ,Q D UHDO FRPSXWLQJ HQYLURQPHQW LW ZRXOG WDNH D ORW
ORQJHU
6LQFHWKHSURJUDPH[LVWVRQO\LQ5$0LWLVH[WUHPHO\WUDQVLWRU\
2QFHWKHFRPSXWHULVWXUQHGRIILWVJRQH6LQFHWKHSURJUDP
QHYHU UHWXUQV FRQWURO WR WKH RSHUDWLQJ V\VWHP LW SUHWW\ PXFK
JXDUDQWHHVLWVRZQGHPLVH6XFKEHKDYLRUDVVXUHVDTXLFNVKXW
GRZQRIWKHPDFKLQH(YHQWKHPRVWLQWHUHVWHGUHVHDUFKHUZLOO
JHW ERUHG DIWHU RQH PLQXWH $V VXFK WKH OHQJWK RI WLPH WKDW
3,&2LVLQPHPRU\ZLOOEHPLQLPDO:LWKDVPDOOPXWDWLRQ
UDWHWKHFKDQFHVWKDW3,&2ZLOOHYHUKDYHWKHRSSRUWXQLW\WR
PXWDWHZLOOEHPLQXVFXOH
6LQFH3,&2LVDPHPRU\RQO\SURJUDPHYHQLILWPXWDWHVWKH
PXWDWLRQZLOOSUREDEO\QRWEHDEOHWRVDYHLWVHOIDQ\ZKHUHDQG
SURSDJDWH7KXVWKHPXWDWLRQZLOOGHDGHQGLQWKHPHPRU\RI
WKHPDFKLQHRQZKLFKLWZDVFUHDWHG7KXVWKHUHLVQRRSSRUWXQLW\
IRUHYROXWLRQWRNLFNLQ
7KHUHDSSHDUWREHQRUHDOLVWLFHYROXWLRQDU\SDWKZD\VWRPRUH
FRPSOH[IRUPVRIWKHDXWRPDWRQ
:H VHH D VLWXDWLRQ ZKHUH 3,&2 LV XQOLNHO\ WR JHW D FKDQFH WR
PXWDWH DQG HYHQ LI LW GLG WKH PXWDWLRQ ZRXOG DSSDUHQWO\ JR
QRZKHUH7KHQLFHWKLQJDERXWXVLQJDYLUXVKHUHLVWKDWZHFDQORRN
LQWRWKHVHVWDWHPHQWVLQGHWDLODQGSXWQXPEHUVRQWKHP
7KHRQO\ZD\IRUWKHSURJUDPWRPXWDWHZRXOGEHIRUWKH$
+H[ZKLFKLVWKHPRYVELQVWUXFWLRQWREHFKDQJHGLQWRVRPHWKLQJ
HOVHZKHQLWFRSLHVLWVHOI7KHUHDUHRQO\SRVVLELOLWLHVIRUZKDW
LWPLJKWEHFKDQJHGLQWRVRZHFDQJRWKURXJKHDFKRQHDQGVHH
ZKDWWKHUHVXOWRIHDFKPXWDWLRQZRXOGEH
)LUVWWKRXJKZHVKRXOGGHILQHZKDWDIDWDOPXWDWLRQLV:H
FDOODPXWDWLRQIDWDOLILWGRHVQRWFKDQJHWKHUHSURGXFLQJLQVWUXFWLRQ
LQWRDQHZLQVWUXFWLRQZKLFKDOVRUHSURGXFHV$OWKRXJKWKHUHDUH
PDQ\LQVWUXFWLRQVWKDWZLOOQRWFUDVKWKHV\VWHPHJQRS+H[
WKHRQO\PXWDWLRQWKDWZLOOHYHQSRVVLEO\NHHSWKHUHSOLFDWLRQJRLQJ
LQWKHQH[WLQVWUXFWLRQLVWKHE\WH$$+H[ZKLFKFRUUHVSRQGVWR
VWRVE7KDWZLOOUHSOLFDWHRQO\LIDOKDSSHQVWREH$$+H[DOVR7KH
,QWKH%HJLQQLQJ

RQO\WKLQJWKLVQHZYDULDWLRQFDQPXWDWHHDVLO\LQWRLVLWVDQFHVWRU
$+H[$WWKLVOHYHOWKHVLPSOHVWUHSOLFDWRULVDGHDGHQG
2QHPLJKWVXJJHVWWKDWLIWKHVHJPHQWWKHUHSOLFDWRULVH[HFXW
LQJ LQ LV ILOOHG ZLWK UDQGRP E\WHV WKHQ SRVVLEO\ D PXWDWLRQ LQ
FRPELQDWLRQ ZLWK VRPH RI WKHVH UDQGRP E\WHV FRXOG SURGXFH D
PXOWLE\WHUHSOLFDWRU+RZHYHUDGHWDLOHGDQDO\VLVRIVXFKVFHQDU
LRV FDQ SURYH WKH\ DUH LUUHOHYDQW 7R GR WKDW OHWV FRQVLGHU DQ
HLJKWE\WHUHSOLFDWRUWKDWFDQEHVHWXSOLNHWKLV
PRYVL
PRYGL
PRYVZ
LQFE[
&DOOWKLV3,&21RWHWKDWWKHLQFE[LQVWUXFWLRQLVQRWSDUWLFXODUO\
UHOHYDQW$Q\LQVWUXFWLRQWKDWGRHVQRWXSVHWWKHUHSOLFDWLRQZLOOGR
1RZOHWXVDVNKRZ3,&2FRXOGPXWDWHLQWR3,&27KH
WUDQVLWLRQZRXOGKDYHWRORRNVRPHWKLQJOLNHWKLVLQPHPRU\

PRYVE$
PRYVE$
LQFGL
PRYVZ$
LQFE[
PRYVZ$
LQFE[

RULJLQDO
WUDQVLWLRQ
QHZUHSOLFDWRU
6R$PXVWPXWDWHLQWRDWDSODFHZKHUHWKHE\WHV$IROORZ
WKH,IWKHE\WHVLQWKHVHJPHQWDUHUDQGRPDQGWKHPXWDWLRQLV
UDQGRPWKHQWKHSRVVLELOLW\RIWKLVKDSSHQLQJLVRQWKHRUGHURI
SHUUHSOLFDWLRQZKHUHLVWKHVLQJOHELWPXWDWLRQUDWHSHU
UHSOLFDWLRQ
)LYHELWVPXVWEHPXWDWHGZKLFKJLYHVXVWKHIDFWRUDQGZHKDYHDLQ

1RZOHWVFRPHXSZLWKDQXSSHUOLPLWIRU:HYHDOUHDG\
GLVFXVVHGPXWDWLRQVLQFRQQHFWLRQZLWKWKHIDFWRIHYROXWLRQDQG
ZHYHVHHQWKDWWKH\FDQDULVHIURPDQXPEHURIVRXUFHV6XSSRVH
KRZHYHU WKDW ZHUH ZRUNLQJ RQ D FRPSXWHU WKDW FDQ ORDG DQG
H[HFXWHDNLORE\WHSURJUDPRXWRIWLPHVZLWKRXWDOORZLQJ
DRQHELWPXWDWLRQ6XFKDPDFKLQHVWDQGVDJRRGFKDQFHRIEHLQJ
XVHG,QRUGHUIRUWKLVWREHSRVVLEOHRQHPHPRU\ZULWHDWOHDVW
RQHPHPRU\UHDGDQGPHPRU\VWRUDJHIRUDWOHDVWDIHZVHFRQGV
PXVWEHSRVVLEOH)RUVXFKRSHUDWLRQVWRRFFXUVXFFHVVIXOO\RXW
RIWLPHVZHUHTXLUH
1RZRQFH3,&2LVUXQQLQJLWZLOOH[HFXWHWLPHVDQG
WKHQWKHZKROHVHJPHQWLVILOOHGZLWK$VDQGZHFDQQRWXVHWKH
SRVVLELOLW\RIUDQGRPE\WHVLQPHPRU\WRFUHDWH3,&2DQ\PRUH
7KXV ZH KDYH DERXW FKDQFHV RI FUHDWLQJ D PXWDWLRQ DV
3,&2UHDGVDE\WHDQGZULWHVLWHDFKWLPHLWH[HFXWHV:HQHHG
DELWPXWDWLRQWRWUDQVIRUP$LQWR7KHFKDQFHRIJHWWLQJWKLV
PXWDWLRQEHIRUH3,&2ILOOVPHPRU\ZLWK$VLVWKXV
[ [
7KDWLVDQRWKHUULGLFXORXVO\VPDOOQXPEHU:KDWLWWHOOVXVLVWKDW
HYROXWLRQLVQRWDYLDEOHJDWHZD\EHWZHHQ3,&2DQG3,&27R
VHHWKLVOHWVVXSSRVHZHKDGRQHPDFKLQHUXQQLQJ5)*(1WU\LQJ
WR FUHDWH 3,&2 DQG WKHQ HYROYH LW LQWR 3,&2 E\ UXQQLQJ
3,&2 WLPHV SHU VHFRQG DQG DQRWKHU PDFKLQH UXQQLQJ
5)*(1 WU\LQJ WR FUHDWH 3,&2 GLUHFWO\ +RZ ORQJ ZLOO LW WDNH
EHIRUHWKHUHLVDILIW\SHUFHQWFKDQFHRIFUHDWLQJ3,&2E\HLWKHU
JDWHZD\"
7KHILUVWPDFKLQHPXVWFUHDWH3,&2ILUVW7KDWZLOOWDNHDERXW
PLOOLRQ\HDUVRQDVLQJOHPDFKLQH1H[WLWPXVWHYROYH3,&2
LQWR3,&2%HFDXVHRIWKHVPDOOSUREDELOLW\RIWKDWKDSSHQLQJLW
ZLOOWDNH[\HDUV7KDWIDURXWZHLJKVWKHPLOOLRQ\HDUV
UHTXLUHGWRFUHDWH3,&2
FKDQFHRIKDYLQJWKHULJKWWZRE\WHVLQSODFHDIWHUWKHPXWDWLRQ
,QWKH%HJLQQLQJ

7KHVHFRQGPDFKLQHPXVWVLPSO\FUHDWH3,&2$FDOFXODWLRQ
VKRZVWKDWZLOOWDNHDERXWPLOOLRQ\HDUVRQDVLQJOHPDFKLQH
:KLOHWKDWVDORWORQJHUWKDQZKDWVQHHGHGWRFUHDWH3,&2LWLV
VWLOOPXFKOHVVWKDQWKH\HDUVQHHGHGWRHYROYH3,&2IURP
3,&27KXVZHFDQFRQFOXGHWKDWHYROXWLRQLVQRWDYLDEOHZD\
WR EULQJ 3,&2 LQWR WKH ZRUOG ,W LV PXFK ZRUVH WKDQ UDQGRP
JXHVVLQJ7KXVLI\RXIRXQGFRSLHVRI3,&2DQG3,&2LQWKH
ZLOG\RXZRXOGEHEHWWHURIIVD\LQJWKH\DUHVHSDUDWHFUHDWLRQVWKDQ
VD\LQJRQHHYROYHGIURPWKHRWKHU
7KHEDUULHUWRHYROXWLRQIURP3,&2WR3,&2LVODUJHO\GXH
WRWKHVPDOODPRXQWRIWLPHWKDW3,&2VSHQGVLQPHPRU\DQG
WKHIDFWWKDW3,&2OLYHVRQO\LQPHPRU\7KXVZHFDQQRWJHW
HQRXJK FRSLHV RI 3,&2 UHSOLFDWLQJ DW RQFH HYHQ LQ RXU YHU\
IDYRUDEOHPRGHOWRPDNHLWUHDVRQDEOHWRPXOWLSO\WKHYHU\VPDOO
IDFWRUE\DQXPEHUELJHQRXJKWRPDNHWKHUHVXOWELJ7KDW
LV WKH ILUVW EDUULHU WR HYROXWLRQ 'DUZLQLDQ HYROXWLRQ GRHV XV QR
JRRGXQOHVVWKHSRSXODWLRQLVODUJHHQRXJKWRRYHUFRPHWKHVPDOO
PXWDWLRQUDWHV6LQFH3,&2FDQWUHDOLVWLFDOO\GRWKDWLWFRXOGQRW
ORJLFDOO\ EH DQ DUFKHW\SDO YLUXV ,WV HDVLHU WR MXVW XVH UDQGRP
SURFHVVHVWRPDNHVRPHWKLQJDOLWWOHELJJHUWKDQLW
3UREDEO\&203$1,21LVWKHVPDOOHVWYLUXVWKDWVWDQGV
DUHDVRQDEOHFKDQFHRIEXLOGLQJDODUJHSRSXODWLRQLQHYHQWKHPRVW
IDYRUDEOHFLUFXPVWDQFHVHJZKHUHHYHU\ERG\LJQRUHGLW$OORI
WKHVPDOOHUYLUXVHVDUHUHDOQXLVDQFHV7KH\GHVWUR\SURJUDPVRU
KDQJ\RXUFRPSXWHUVRSHRSOHZLOOQRWLJQRUHWKHP$WEHVWWKH\
ZLOOWHVWWKHPRQFHDQGSXWWKHPDZD\$WZRUVWWKH\ZLOOREOLWHUDWH
WKHP6RWKHLUSRSXODWLRQZLOODOZD\VEHYHU\VPDOO
&203$1,21LVDOVRSUREDEO\YHU\QHDUWKHPLQLPXP
VL]HIRUDYLUXVZLWKLWVIXQFWLRQDOLW\WRR7KDWZDVWKHZKROHSRLQW
RIWKH)LUVW,QWHUQDWLRQDO9LUXV:ULWLQJ&RQWHVW1RZVRPHJHQLXV
SURJUDPPHUPLJKWILJXUHRXWKRZWRPDNHWKHVDPHWKLQJZRUNLQ
E\WHVEXWQRERG\ZLOOHYHUJHWLWWRZRUNLQE\WHV7KHFRQWHVW
VKRZHGWKDWWKHUHLVDPLQLPXPOHYHORIIXQFWLRQDOLW\\RXUXQXS
DJDLQVW$IWHUDSRLQW\RXFDQRQO\FXWWKHVL]HDWWKHH[SHQVHRI
IXQFWLRQDOLW\
7KXVZHDUHSUHWW\PXFKORRNLQJDWWKHSRVVLELOLW\WKDWHYROX
WLRQFDQQRWUHDOLVWLFDOO\NLFNLQIRUFRPSXWHUYLUXVHVWKDWDUHOHVV
WKDQDERXWE\WHVORQJ6LPSO\SXWWKH\ZLOOQHYHUJHWDFKDQFH

WR UHSURGXFH HQRXJK WR EXLOG WKH ODUJH SRSXODWLRQ QHFHVVDU\ IRU
HYROXWLRQ
*HWWLQJ HYROXWLRQ WR NLFN LQ UHTXLUHV PRUH WKDQ MXVW D ODUJH
SRSXODWLRQWKRXJK,WDOVRUHTXLUHVDIDYRUDEOHILWQHVVIXQFWLRQ,I
DYLUXVLVWUDSSHGLQDUHJLRQRIVSDFHZKHUHDQ\PXWDWLRQZRXOG
EHXQIDYRUDEOHWKHQLWZLOOQRWHYROYHZLWKRXWDPDFURPXWDWLRQ
WRJHWLWRXWRILWVWUDS/LNHZLVHLIDYLUXVKDGWRSHUIRUPDUDQGRP
VHDUFKRILWVJHQHVSDFHEHFDXVHWKHILWQHVVIXQFWLRQZDVDWEHVWIODW
ZKHUHLWZDVHYROXWLRQFRXOGEHFRPSOHWHO\LQHIIHFWLYHDWFDXVLQJ
DQ\UHDOFKDQJH7KHUDQGRPVHDUFKVLQHIILFLHQF\FDQHDVLO\GZDUI
WKHPXWDWLRQUDWHHYHQLIWKHSRSXODWLRQLVKXJH<RXOOUHPHPEHU
WKDWDUDQGRPVHDUFKZDVXVHOHVVIRUE\WHVHYHQZKHQDOOWKH
SDUWLFOHVLQWKHXQLYHUVHZHUHWU\LQJFRPELQDWLRQVDVIDVWDVLPDJ
LQDEOH
/HWVLOOXVWUDWHWKHVHWZRSUREOHPVLQRXUZRUOGRI'26YL
UXVHV7RGRWKDW,FUHDWHGDOLWWOHVLPSOLILFDWLRQRI&203$1,21
ZKLFK,FDOO67203(567203(5RYHUZULWHVILOHV
UDWKHUWKDQRSHUDWLQJDVDFRPSDQLRQYLUXV7KHHIIHFWLYHOHQJWKRI
67230(5LVE\WHVEXWLWLVSDGGHGZLWKQRSVWRPDWFK
&203$1,21 DV PXFK DV SRVVLEOH 6LQFH 67203(5
RYHUZULWHVLWSUREDEO\ZRQWEXLOGDELJSRSXODWLRQ/HWVQHJOHFW
WKDWIDFWIRUDPRPHQW,IZHZHUHWRLPDJLQHKRZ67203(5
FRXOGHYROYHLQWR&203$1,21ZHPLJKWWU\WRFRQVWUXFWD
YLDEOHVHTXHQFHRIRQHELWPXWDWLRQVWRJRIURPRQHWRWKHRWKHU
+RZHYHU VRPH RI WKH VWUXFWXUHV LQ &203$1,21 EDU WKH
ZD\ )RU H[DPSOH LW LV VRPHZKDW RI D P\VWHU\ KRZ RQH PLJKW
JHQHUDWHSXVKSRSVHTXHQFHVZLWKVLPSOHRQHELWPXWDWLRQV
QRS

SXVKE[

QRS
SRSE[
2QFH\RXKDYHRQHSXVKRUSRSLQSODFHWKHSURJUDPZLOOFUDVK
ZLWKRXWWKHRWKHU,WVILWQHVVLVPXFKORZHUWKDQWKHSDUHQW,WFDQQRW
UHSOLFDWHDWDOO7KHRQO\ZD\WRJHWDURXQGWKLVSUREOHPDSSHDUVWR
EHDPDFURPXWDWLRQZKHUHPXOWLSOHELWVDUHPXWDWHGDWWKHVDPH
WLPHLQGLIIHUHQWSDUWVRIWKHSURJUDP$OOVLQJOHELWPXWDWLRQVZLOO
EHHIIHFWLYHO\VWRSSHG
,QWKH%HJLQQLQJ

2WKHUPXWDWLRQVSRVHQRXQXVXDOSUREOHPVLQWKDWWKH\GRQW
PHDVXUDEO\GHWUDFWIURP67203(5VDELOLW\WRVXUYLYH)RUH[
DPSOHWKHVHTXHQFHVHH&203$1,21DQG67203(5VOLVWLQJ
QRS
QRS

PRY
DO
%
PRY
DK
%
PRY
DK
%
DK
%

PRY
LVYLDEOH$OORIWKHYLUXVHVLQWKHVHTXHQFHDUHMXVWDVYLDEOHDV
67203(5+RZHYHULWZRXOGDSSHDUWKDWQRQHRIWKHPJLYH
WKHPXWDWHGFRGHDQDGYDQWDJHRYHUWKHRULJLQDO7KXVQRVXUYLYDO
PHFKDQLVPFDQNLFNLQWRGLUHFWWKHHYROXWLRQRI67203(5
LQWRWKHQHZIRUP7KHILWQHVVIXQFWLRQLVIDLUO\IODW7KDWPHDQV
\RX PD\ JHW PXWDWLRQV EXW WKH PXWDWLRQV FDQ RQO\ SHUIRUP D
UDQGRPVHDUFK7KHUHLVQRVHOHFWLRQSURFHVVWRJXLGHWKHPWRZDUG
&203$1,21 7KH RQO\ UHDOO\ ELJ MXPS LQ ILWQHVV FRPHV
ZKHQ\RXJHWWKHIXOOIXQFWLRQDOLW\RI&203$1,21DQGWKDW
ZRQW KDSSHQ XQWLO \RXUH SUHWW\ QHDU WR KDYLQJ DGGHG VRPH
E\WHVRIFRGH7KDWLVMXVWWRRPXFKWRH[SHFWDUDQGRPVHDUFKWR
SHUIRUPLQDUHDOLVWLFPRGHO
6XPPDU\
:HKDYHVHHQKRZXQOLNHO\LWZRXOGEHWRFUHDWH&203$1
,21E\UDQGRPSURFHVVHVHYHQZKHQULGLFXORXVO\DFFHOHU
DWHG 8QOLNHO\ LVQWHYHQDJRRGZRUG 0LUDFOH VHHPVPRUH
DSSURSULDWH $V VXFK ZH FDQQRW UHO\ RQ UDQGRP SURFHVVHV RU
FKDQFHWREULQJDQ\WKLQJOLNHWKLVYLUXVLQWRH[LVWHQFH

)XUWKHUPRUH &203$1,21 LV DERXW WKH VPDOOHVW YLUXV

ZKLFKFRXOGSUROLIHUDWHZHOOHQRXJKWRKDYHDQ\FKDQFHRIJHWWLQJ
HYROXWLRQWRNLFNLQ$Q\WKLQJVPDOOHUPXVWVDFULILFHVRPHIXQF
WLRQDOLW\ 7KHUHIRUH LW GRHV QRW PDNH VHQVH WR ORRN IRU VPDOOHU
YLUXVHVWKDWPLJKWKDYHEHHQFUHDWHGE\FKDQFHDQGWKHQKRSHWKH\
FRXOG HYROYH LQWR &203$1,21 7KH SURFHVV RI HYROXWLRQ
LWVHOIZRXOGUHTXLUHPRUHOXFNWKDQWKHFUHDWLRQRIDIXOO\ZRUNLQJ
&203$1,21WREHJLQZLWK7KDWLVEHFDXVHVPDOOPXWDWLRQ
UDWHV DQG VPDOO SRSXODWLRQV GRQW ERGH ZHOO IRU HYROXWLRQ 7KH
VWUXFWXUHV UHTXLUHGWRHYROYHVRPHWKLQJOLNH&203$1,21
SUHVHQWVLJQLILFDQWREVWDFOHVWRHYROXWLRQDQGZHH[SHFWWKHUHZLOO
EHODUJHDUHDVZKHUHHYROXWLRQLWVHOIZLOOKDYHWRSHUIRUPDUDQGRP
VHDUFKIRUWKHULJKWYLUXVZLWKRXWWKHDLGRIVLJQLILFDQWVHOHFWLRQ
SURFHVVHV
$VVXFKZHFDQILQGQRYLDEOHPHDQVRIH[SODLQLQJKRZSUHVHQW
GD\YLUXVHVJRWKHUHVKRUWRIVD\LQJWKDWWKH\ZHUHLQWHOOLJHQWO\
GHVLJQHGE\SHRSOH,QWKHZRUOGRI'26YLUXVHVDELRJHQHVLVLV
RXWSHULRG7KDWPD\VHHPDQWLFOLPDFWLF+RZHYHULWLVDQWLFOL
PDFWLFRQO\LIWKLVFRQFOXVLRQLVLUUHOHYDQWWR$/LQJHQHUDODQGWR
RXU ZRUOG RI FDUERQEDVHG RUJDQLVPV ,Q IDFW LW LV DQ\WKLQJ EXW
LUUHOHYDQW
7KH5HDO:RUOG
%HJLQQLQJV
,QWKHODVWFKDSWHUZHIDFHGVRPHUDWKHUVHULRXVREVWDFOHVWR
JHWWLQJYLUXVHVVWDUWHGLQWKHZRUOGRIELWVDQGE\WHV:HIRXQGWKDW
LWZDVDOPRVWHVVHQWLDOWRLQMHFWLQWHOOLJHQFHLQWRWKHV\VWHPLQVRPH
ZD\7KHOLNHOLKRRGWKDWYLUXVHVFRXOGJHWJRLQJSXUHO\E\FKDQFH
DSSHDUHGWREHEH\RQGRXUZLOGHVWGUHDPVRIUHPRWH
7KLV SLFWXUH LV YHU\ GLIIHUHQW IURP WKH SRSXODU YLHZ RI WKH
RULJLQRIOLIHRQHDUWK0RVWSHRSOHVHHPWREHOLHYHWKDWOLIHVWDUWHG
DVDUHVXOWRIQDWXUDOFKHPLFDOSURFHVVHVRQWKHVXUIDFHRIWKHHDUWK
PDQ\ELOOLRQVRI\HDUVDJR7KLVSLFWXUHRIWKHEHJLQQLQJLVSDLQWHG
LQERRNDIWHUERRNDQGLQFODVVURRPVDURXQGWKHZRUOG<RXZRXOG
WKLQNLWZDVDZHOOHVWDEOLVKHGVFLHQWLILFIDFW8QIRUWXQDWHO\QRWK
LQJFRXOGEHIXUWKHUIURPWKHWUXWK2QFH\RXVWDUWGLJJLQJLQWRWKH
VFLHQWLILF MXVWLILFDWLRQ IRU VXFK QRWLRQV \RX ILQG RXW MXVW KRZ
YDFXRXVWKH\DUH7KHVLWXDWLRQLVPXFKZRUVHWKDQWKHSUREOHPV
ZHHQFRXQWHUHGZLWKHYROXWLRQ
)UDQFLV&ULFNRQHRIWKHPHQZKRXQUDYHOOHGWKHP\VWHULHVRI
'1$LQWKHILIWLHVZURWHLQ
$QKRQHVWPDQDUPHGZLWKDOOWKHNQRZOHGJHDYDLODEOHWRXV
QRZFRXOGRQO\VWDWHWKDWLQVRPHVHQVHWKHRULJLQRIOLIHDSSHDUV
DWWKHPRPHQWWREHDOPRVWDPLUDFOHVRPDQ\DUHWKHFRQGLWLRQV
ZKLFKZRXOGKDYHKDGWRKDYHEHHQVDWLVILHGWRJHWLWJRLQJ
7KRXJK &ULFN VDZ QR UHDVRQ WR EHOLHYH WKDW OLIH FRXOG QRW KDYH
DULVHQE\UHDVRQDEOHFKHPLFDOSURFHVVHVKHVHHPHGGULYHQWRVSHQG

RYHU KDOI RI KLV ERRN /LIH ,WVHOI GHIHQGLQJ WKH LGHD RI GLUHFWHG
SDQVSHUPLD'LUHFWHGSDQVSHUPLDLVWKHLGHDWKDWOLIHSUREDEO\GLG
QRW RULJLQDWH RQ HDUWK EXW VRPHZKHUH HOVH LQ WKH XQLYHUVH DQG
PLFURRUJDQLVPVZHUHVXEVHTXHQWO\VHQWWRHDUWKWRSRSXODWHLW7KH
SXUSRVHRIVXFKDZLOGLGHDLVWRPLWLJDWHWKHGLIILFXOWLHVRI DOPRVW
DPLUDFOH WRJHWOLIHJRLQJRQHDUWK
:HKDYHWRZRQGHUZKDWLVLWWKDWGULYHVD1REHO/DXUHDWHWR
LQYRNHVSDFHPHQWRGHDOZLWKWKHRULJLQRIOLIHRQHDUWK"1HLWKHULV
KHDORQH$*&DULQV6PLWKLQ6HYHQ&OXHVWRWKH2ULJLQRI/LIH
ZULWHV
%XW\RXVD\ZLWKDOOWKHWLPHLQWKHZRUOGDQGVRPXFKZRUOG
WKHULJKWFRPELQDWLRQVRIFLUFXPVWDQFHVZRXOGKDSSHQVRPHWLPH"
,VWKDWQRWSODXVLEOH"
7KHDQVZHULVQRWKHUHZDVQRWHQRXJKWLPHDQGWKHUHZDVQRW
HQRXJKZRUOG
+HDUJXHVWKDWPRGHUQFDUERQEDVHGOLIHZDVWKHE\SURGXFWRID
JHQHWLFWDNHRYHUIURPDV\VWHPRIFOD\EDVHGFKHPLVWU\7KD[WRQ
%UDGOH\DQG2OVHQLQ7KH0\VWHU\RI/LIHV2ULJLQ5HDVVHVVLQJ
&XUUHQW7KHRULHVDUHGULYHQWRFRQVLGHUGLYLQHFUHDWLRQ5REHUW
6KDSLURLQ2ULJLQV$6NHSWLFV*XLGHWRWKH&UHDWLRQRI/LIHRQ
(DUWKEHOLHYHVDVFLHQWLILFDQVZHUZLOOFRPHEXWDGPLWVWKDWPXFK
RIWKHPRGHUQDSSURDFK GRHVQRWUHSUHVHQWVFLHQFHEXWUDWKHUD
VHDUFKIRUHYLGHQFHLQVXSSRUWRIDQHVWDEOLVKHGP\WKRORJ\
)UDQFLV&ULFN/LIH,WVHOI6LPRQ 6FKXVWHU1HZ<RUNS

$*&DLUQV6PLWK6HYHQ&OXHVWRWKH2ULJLQRI/LIH&DPEULGJH8QLYHUVLW\
3UHVV&DPEULGJHS
&KDUOHV7KD[WRQ:DOWHU%UDGOH\5RJHU2OVHQ7KH0\VWHU\RI/LIHV2ULJLQ
5HDVVHVVLQJ&XUUHQW7KHRULHV3KLORVRSKLFDO/LEUDU\1HZ<RUN
5REHUW6KDSLUR2ULJLQV$6NHSWLFV*XLGHWRWKH&UHDWLRQRI/LIHRQ(DUWK
6XPPLW%RRNV1HZ<RUNS
,ZRXOGXUJH\RXWRSLFNXSVRPHRIWKHVHERRNVDQGUHDGWKHP7KH\OOJLYH
\RXDSURSHUSHUVSHFWLYHRQWKHPDJQLWXGHRIWKLVSUREOHPZKHUH,FDQRQO\
WRXFKRQLWKHUHDQGUHIHU\RXWRWKHVHDXWKRUVIRUWKHDUJXPHQWVWREDFNXS
ZKDW,VD\2IWKHVHIRXUERRNV0\VWHU\LVWKHEHVWEHFDXVHLWEHVWGHDOVZLWK
WKHLQIRUPDWLRQDOFRQWHQWRIOLIHDQGWKDWLVZKDWFDXVHVDOOWKHSUREOHPV

,QIDFWWKHYRLFHVRIWKHVHVNHSWLFVVHHPWRHFKRPDQ\RIWKH
SUREOHPVZHIRXQGZLWKWKHLGHDWKDWYLUXVHVPLJKWKDYHIRUPHG
VSRQWDQHRXVO\LQVRPHPDQQHU7RVHHWKLVOHWVILUVWJREDFNDQG
ORRNDWWKHSUREOHPVZHUDQLQWRLQWKHODVWFKDSWHURQO\QRZLQWKH
UHDOZRUOG
5DQGRP3URFHVVHV
,Q WKH ODVW FKDSWHU ZH IRXQG WKDW UDQGRP SURFHVVHV ZHUH
IULJKWIXOO\LQDGHTXDWHZKHQLWFDPHWRWKHWDVNRIWU\LQJWRDVVHPEOH
D ILUVW OLYLQJ RUJDQLVP )RU HYHQ WKH VLPSOHVW YLDEOH YLUXVHV
SUREDELOLWLHVRIJHWWLQJWKHULJKWDQVZHUDWUDQGRPZHUHRQWKHRUGHU
RILQRUZRUVH,QIDFWWKHSUREDELOLWLHVZHUHVRVWDFNHG
DJDLQVW XV WKDW KDG ZH VHHQ D YLUXV SRS RXW RI RXU UDQGRP ILOH
JHQHUDWRUZHGEHMXVWLILHGWRFDOOLWDPLUDFOH
*HQHUDOO\WKHVDPHNLQGVRIDQDO\VHVJLYHSUHSRVWHURXVQXP
EHUVIRUUHDOZRUOGRUJDQLVPVWRR/HWVLQYHVWLJDWHWKLVE\H[DP
LQLQJVRPHFRPPRQUHDOZRUOGOLIHDQGVRPHSURSRVHGIRUPVRI
SURWROLIH
([DPSOH7KH%DFWHULXP(&ROL
(&ROLLVRQHRIWKHVLPSOHVWOLYLQJRUJDQLVPVDRQHFHOOHG
EDFWHULXP,WZRXOGVHHPIDLUO\FHUWDLQWKDWDQRUJDQLVPRIVLPLODU
FRPSOH[LW\FRXOGVXUYLYHDQGSURVSHURQWKHHDUO\HDUWK2QHPLJKW
UHDVRQDEO\DUJXHWKDWLWLVWKHPLQLPXPYLDEOHOLIHIRUP$VIDUDV
SUHVHQWGD\OLIHJRHVWKHRQO\WKLQJVLPSOHUDUHYLUXVHVDQGWKH\
UHTXLUHDYHU\VSHFLDOHQYLURQPHQWWROLYHWKHLQVLGHRIDFHOO$V
VXFKRQHFRXOGFHUWDLQO\DUJXHWKDWWRGD\VYLUXVHVZRXOGQRWEH
YLDEOHXQWLOWKHPRUHFRPSOH[RQHFHOOHGRUJDQLVPVKDGILUVWFRPH
LQWREHLQJ
( &ROL KDV D '1$ PROHFXOH ZKLFK LV URXJKO\
QXFOHRWLGHVORQJ(DFKRIWKHVHIRXUPLOOLRQVLWHVLVRFFXSLHGE\
$QH[FHOOHQWUHYLHZRIDOOWKHZRUNLQJVRI(&ROLLVJLYHQE\5REHUW*ODVV
*HQH )XQFWLRQ ( &ROL DQG LWV +HULWDEOH (OHPHQWV &URRP +HOP
/RQGRQ
,ELGS

RQHRIIRXUGLIIHUHQWQXFOHRWLGHV7KXVWKHSUREDELOLW\RIFUHDWLQJ
LWDWUDQGRPIURPWKHULJKWEDVHVLVLQ LQ
7KLVLVDQDEVXUGO\VPDOOQXPEHUPXFKVPDOOHUWKDQDQ\WKLQJZH
HQFRXQWHUHGZLWKRXUVLPSOHYLUXVHV(YHQSXWWLQJHYHU\DWRPLQ
WKHXQLYHUVHWRZRUNV\QWKHVL]LQJPROHFXOHVZRXOGQWPDNHDGHQW
LQWKLVQXPEHU2IFRXUVHZHGRQWUHDOO\NQRZKRZGHJHQHUDWH
WKHLQVWUXFWLRQVDUH-XVWDVZLWKWKH&203$1,21YLUXVZH
IRXQGWKDWZHFRXOGUHDUUDQJHVRPHLQVWUXFWLRQVDQGJHWHVVHQWLDOO\
WKHVDPHIXQFWLRQDOLW\ZHPLJKWEHDEOHWRPDNHVRPHFKDQJHVLQ
VRPHRIWKHVHQXFOHRWLGHVDQGVWLOOJHWDQRUJDQLVPWKDW
FRXOGGRZHOORQWKHHDUO\HDUWK7KHUHGXQGDQF\RIWKHJHQHWLF
FRGHKHOSVXVRXWDORWKHUH(VVHQWLDOO\LWJHWVRXUQXPEHUGRZQ
WR *RLQJEH\RQGWKDWWKRXJKDWWKHSURWHLQ
OHYHO DUH WKHUH D KXQGUHG YLDEOH FRPELQDWLRQV" $ WKRXVDQG" $
PLOOLRQ"1RRQHNQRZVIRUVXUHVRLWVQRWVXUHKRZIDUZHFRXOG
VKULQNGRZQ2QWKHRWKHUKDQGZHKDYHDORQJORQJ
ZD\WRVKULQNLWEHIRUHLWFRPHVZLWKLQWKHUHDOPRISRVVLEOH
([DPSOH7KH0'951$4UHSOLFDVHVHTXHQFH
4LVDEDFWHULDOYLUXVPDGHXSRI51$WKDWFDQEHHYROYHGLQ
WKHSURSHUPHGLXPLQDWHVWWXEHTXLWHDSDUWIURPWKHEDFWHULDLW
QRUPDOO\ LQIHFWV 7KLV PHGLXP LQFOXGHV DQ HQ]\PH FDOOHG 4
UHSOLFDVHWRNHHSWKHVHOIUHSURGXFWLRQJRLQJ,QWKDWVSHFLDOHQYL
URQPHQWLWFDQEHHYROXWLRQDULO\ WXQHG WRIDYRUVKRUWFKDLQVRI
JHQHWLFPDWHULDOEHFDXVHWKHVKRUWFKDLQVUHSOLFDWHIDVWHU7KHUHVXOW
LVDVWUDQGRI51$QXFOHRWLGHVORQJGXEEHG0'9,WKDV
EHHQGHPRQVWUDWHGWKDWWKLV0'951$VHTXHQFHFDQHYROYHD
UHVLVWDQFH WR (WKLGLXP %URPLGH LQ D ODERUDWRU\ HQYLURQPHQW
$QGZHFDQPDNHWKHQXPEHUDORWELJJHULIZHZDQWWRE\FRQVLGHULQJGLIIHUHQW
W\SHVRIFKHPLFDOERQGVDQGLVRPHUVRIWKHQXFOHLFDFLGVDOORIZKLFKPXVWEH
MXVWULJKWLQRUGHUIRUWKHPROHFXOHVWRZRUNDVWKH\DUHVXSSRVHGWR
.DFLDQ0LOOV.UDPHU 6SLHJHOPDQ $5HSOLFDWLQJ51$0ROHFXOH6XLWDEOH
IRU D 'HWDLOHG $QDO\VLV RI ([WUDFHOOXODU (YROXWLRQ DQG 5HSOLFDWLRQ
3URFHHGLQJV RI WKH 1DWLRQDO $FDGHP\ RI 6FLHQFH 86$ SS

.UDPHU0LOOV&ROH1LVKLKDUD 6SLHJHOPDQ (YROXWLRQLQYLWUR6HTXHQFH
DQG3KHQRW\SHRID0XWDQW51$5HVLVWDQWWR(WKLGLXP%URPLGH -RXUQDORI

6RPHWKLQJOLNHWKLVSHUKDSVUHSUHVHQWVDPLQLPDOVHOIUHSOLFDWLQJ
DQG HYROYLQJ PROHFXOH LQ WKH UHDO ZRUOG SHUKDSV VRPHZKHUH LQ
EHWZHHQ 0,1, DQG 3,&2 IXQFWLRQDOO\ ,QIRUPDWLRQ ZLVH
ZHUHWDONLQJDERXWVRPHE\WHVRIFRGH
7KHSUREDELOLW\RIFUHDWLQJWKLV51$VHTXHQFHDWUDQGRPLV

LQ SHUDWWHPSW7KDWLVXQOLNHO\EXWQRWQHDUO\VREDG
DVIRU(&ROL
([DPSOH/HVOLH2UJHOV1DNHG51$JHQH
/HVOLH 2UJHO KDV VKRZQ WKDW VRPH VLQJOH VWUDQGV RI 51$
W\SLFDOO\WHQQXFOHRWLGHVORQJFDQEHFRQYHUWHGWRDGRXEOHVWUDQG
RI 51$ LQ WKH IRUP RI D GRXEOHKHOL[ ZLWKRXW DQ\ FDWDO\]LQJ
HQ]\PHOLNH4UHSOLFDVH$VVXFKWKLVVLQJOHVWUDQGIRUPLQJD
GRXEOHKHOL[ LV D VLQJOH UHSOLFDWLRQ $W WKDW SRLQW WKH UHSOLFDWLRQ
VWRSV6RPHWKLQJOLNHWKLVLVQRWTXLWHUHSOLFDWLQJDQGKDVSHUKDSV
DOLWWOHOHVVIXQFWLRQDOLW\WKDQ3,&2
1RZWKHQXPEHUVLQ([DPSOHDQGDUHVRODUJHWKDWHYHQ
WKRXJKWKHUHDOZRUOGLVDYDVWO\GLIIHUHQWSODFHWKDQWKHLQVLGHRI
DFRPSXWHUZHVWLOOIDFHLQFUHGLEOHLPSUREDELOLW\)RUH[DPSOHLW
WDNHVDQLQFUHGLEOHDPRXQWRIHIIRUWWREXLOGFRPSXWHUVEXWLW
LV YHU\ HDV\ WR VHW XS D FKHPLFDO UHDFWLRQ LQYROYLQJ RU VR
LQGLYLGXDO UHDFWDQWV <HW D IDFWRU RI LV QRWKLQJ DW DOO LQ
FRPSDULVRQ WR -XVW DV LQ WKH ODVW FKDSWHU ZH PLJKW PDNH
DUJXPHQWV ZLWK ULGLFXORXV QXPEHUV )RU H[DPSOH RQO\ LI HYHU\
HOHPHQWDU\ SDUWLFOH LQ WKH XQLYHUVH ZHUH D VHTXHQFLQJ PDFKLQH
WXUQLQJRXWUDQGRPSURWHLQVDWWKHUDWHRIVHFRQGIRUWKHOLIH
RIWKHXQLYHUVHWKHFKDQFHVWKDW([DPSOHZRXOGHYHUVKRZXS
ZRXOGEHRQO\LQ7RDGGWRWKHSUREOHPIRUWKLV51$VWUDQG
WREHDYLDEOHDUFKHW\SHRIDOOOLIH\RXGKDYHWRV\QWKHVL]HWKH4
UHSOLFDVHDORQJZLWKWKH51$EHIRUHUHSURGXFWLRQFRXOGEHJLQ7KH
UHSOLFDVHLVPRUHFRPSOLFDWHGWKDQWKH51$LWVHOIDQGVLQFHWKH
51$ FDQW V\QWKHVL]H LW \RXG QHHG DQ DEXQGDQW VXSSO\ 7KDW
0ROHFXODU%LRORJ\SS

/HVOLH 2UJHO DQG 7 ,QRXH $ 1RQHQ]\PDWLF 51$ 3RO\PHUDVH 0RGHO
6FLHQFHSS

SXVKHVWKHSUREDELOLW\RIVSRQWDQHRXVO\JHQHUDWLQJVXFKDV\VWHP
HYHQIXUWKHULQWRWKHUHDOPRIPLUDFOHV
1RZ2UJHOVQDNHGJHQHFRXOGJHWFUHDWHGUHODWLYHO\HDVLO\E\
RXU VHTXHQFLQJ PDFKLQH 7KDW GRHV QRW KRZHYHU PHDQ WKDW LW
UHSUHVHQWVDYLDEOHILUVWOLIHIRUP-XVWDVZLWKWKH3,&2UHSOLFD
WRUWKHUHDUHPDQLIROGREMHFWLRQVWRFDOOLQJLWWKHDUFKHW\SHRIOLIH
ZKLFK ZHOO H[DPLQH LQ D PRPHQW -XVW OLNH WKH 3,&2 DQ\
UHDOLVWLFPRGHORIVWDUWLQJFRQGLWLRQVVXJJHVWWKDWWKHIRUPDWLRQRI
DQDNHGJHQHOLNH([DPSOHZRXOGEHDUDUHHYHQW<HWLWDSSHDUV
VRPHWKLQJYHU\VPDOOOLNHWKLVLVWKHRQO\KRSHLIUDQGRPSURFHVVHV
DUHDOOZHKDYHWRZRUNIRUXV
'LUHFWHG$ELRJHQHVLV
,ISXUHO\UDQGRPSURFHVVHVZRXOGKDYHDKDUGWLPHJHQHUDWLQJ
VRPHWKLQJDVODUJHDV0'951$GLUHFWO\ZHKDYHWRZRQGHULI
WKHUHPLJKWEHVRPHJXLGLQJSULQFLSOHSHUKDSVLQWKHFKHPLVWU\
WKDWPLJKWKHOSDVVHPEOHDVPDOOVHOIUHSURGXFLQJV\VWHPWKDWFRXOG
QHYHUEHDVVHPEOHGE\UDQGRPFKDQFH,QWKHZRUOGRIYLUXVHVZH
KDGWRUHMHFWWKLVSRVVLELOLW\GXHWRWKHQDWXUHRIGDWDVWRUDJHPHGLD
,Q WKH UHDO ZRUOG WKRXJK FRXOG WKHUH EH VRPHWKLQJ DERXW WKH
FKHPLVWU\WKDWZRXOGJHWWKLQJVJRLQJ"$IWHUDOO0LOOHUDQG8UH\
KDYHVXFFHHGHGLQFUHDWLQJVRPHXVHIXOELRORJLFDOFKHPLFDOVOLNH
DPLQRDFLGVIURPDVRXSRISULPLWLYHFKHPLFDOVDQGDVSDUN
1RZZHKDYHWREHFDUHIXOLQGLVFXVVLQJGLUHFWHGSURFHVVHV
OHVWZHVKRXOGLQVHUWRXURZQLQWHOOLJHQFHLQWRWKHHTXDWLRQ,WLV
SRVVLEOHIRUPDQWRVHTXHQFHDVLPSOHSURWHLQRUDSLHFHRI'1$
DQGWKHUHE\V\QWKHVL]HLWLQWKHODERUDWRU\7KDWLVVRPHZKDWOLNH
ZULWLQJDSURJUDPLQDFRPSXWHUWKRXJK(YHQLI\RXFRXOGVD\
V\QWKHVL]HDYLUXVRUIRUFHLWWRHYROYHLQWKHODERUDWRU\WKDWLVQRW
SHUWLQHQWWRWKHTXHVWLRQRIRULJLQV:HPXVWHLWKHUVHHNUHDVRQDEOH
QDWXUDOSURFHVVHVWRFRQVWUXFWSURWHLQVHWFRUZHPXVWFRQIHVVWKDW
ZHDUHPRGHOLQJDIRUPRILQWHOOLJHQWFUHDWLRQ
,ELGS
6WDQOH\0LOOHU $3URGXFWLRQRI$PLQR$FLGVXQGHU3RVVLEOH3ULPLWLYH(DUWK
&RQGLWLRQV 6FLHQFHS

7KD[WRQ HW DO LQ WKHLU ERRN7KH0\VWHU\RI/LIHV2ULJLQ

GLVFXVVWKHFKHPLVWU\RIOLIHLQTXLWHDELWRIGHWDLO7KHLUDQDO\VLV
LVDQ\WKLQJEXWHQFRXUDJLQJ:KLOHELRPRQRPHUVOLNH8UH\V\Q
WKHVL]HGDUHWREHH[SHFWHGSRO\PHUVOLNH'1$51$DQGSURWHLQV
DUH SUREOHPDWLF 7KH PRQRPHUV DUH HQHUJHWLFDOO\ IDYRUHG 7KH
SRO\PHUVDUHQRW$OVRWKHSRO\PHUVDUHLGHDOO\VXLWHGIRULQIRU
PDWLRQVWRUDJH7KDWPHDQVSUHIHUUHGDUUDQJHPHQWVGRQRWH[LVW
1RZ7KD[WRQJRHVLQWRVRPHXVHIXOGHWDLORQWKLVSRLQWWKDW
RWKHU DXWKRUV VHHP WR PLVV ,Q IRUPLQJ ELRSRO\PHUV D FUXFLDO
TXHVWLRQLVKRZPXFKZRUNPXVWEHGRQHWRIRUPWKHP<RXPXVW
SXWHQHUJ\LQWRWKHVHSRO\PHUVWRPDNHWKHP7KHIDFWWKDWSUH
IHUUHGDUUDQJHPHQWVRIELRSRO\PHUVGRQRWH[LVWPHDQV\RXFDQ
EUHDNWKLVZRUNGRZQLQWRWZRFRPSRQHQWVWKHZRUNUHTXLUHGWR
ERQGWKHPROHFXOHVWRJHWKHUDQGWKHZRUNUHTXLUHGWRFRQVWUXFWWKH
VSHFLILFDUUDQJHPHQWIRUDJLYHQ'1$VHTXHQFHSURWHLQRUZKDW
KDYH\RX7KHVHWZRFRPSRQHQWVDUHGHFRXSOHG7\SLFDOO\WKHUHDO
ZRUOGVFHQDULRVZKLFKRULJLQVUHVHDUFKHUVVWXG\FDQDWEHVWH[SODLQ
KRZ WKH WKHUPRG\QDPLF ZRUN LV GRQH (VVHQWLDOO\ WKHUH DUH QR
DQVZHUVUHJDUGLQJFRQILJXUDWLRQDOZRUN7KDWLVOHIWWRUDQGRP
FKDQFHSURFHVVHV$QGZHNQRZWKDWZRQWZRUN
,Q WKH ODERUDWRU\ RQH FDQ IRU H[DPSOH VSHFLILFDOO\ GHVLJQ
FKHPLFDOSURFHVVHVWRFRQVWUXFWDSURWHLQ7KHVHHODERUDWHSURF
HVVHVGRWKHFRQILJXUDWLRQDOZRUNQHFHVVDU\MXVWOLNHSURJUDPPLQJ
DFRPSXWHU7KH\VWRUHLQIRUPDWLRQLQWKHPROHFXOHVEHLQJDVVHP
EOHG+RZHYHULWZRXOGVHHPWKDWEDVLFFKHPLVWU\DORQHVWRSVVKRUW
RIGHILQLQJSUHIHUUHGFRQILJXUDWLRQV
6RWKHLGHDRIGLUHFWHGDELRJHQHVLVLQWKHUHDOZRUOGKDVVRPH
IRUPLGDEOHSUREOHPV
%RRWVWUDSSHG$ELRJHQHVLV
2S&LW7KD[WRQSS
$QGWRVXJJHVWWKDWDQLQWHOOLJHQWO\GHVLJQHGSURFHVVFRXOGRFFXULQWKHZLOG
LVVRPHWKLQJOLNHVD\LQJWKDW\RXFRXOGORDGXS'(%8*RQ\RXUFRPSXWHU
DQGZDWFKDODQGVOLGHKLWWKHNH\ERDUGDQGFRUUHFWO\W\SHLQDQHZYLUXV

$*&DULQV6PLWKVWKHRU\WKDWFDUERQEDVHGOLIHEHJDQDVD
JHQHWLFWDNHRYHUIURPFOD\FKHPLVWU\LVQRWWRRGLIIHUHQWIURPWKH
LGHDRIDYLUXVERRWVWUDSSLQJRIIRIVRPHSUHH[LWLQJSLHFHRIFRGH
7KLVJHQHWLFWDNHRYHUDSSURDFKLVYHU\SRSXODUDPRQJDUWLILFLDOOLIH
IDQV 0DQ\ HYHQ XVH LW DV D PRGHO IRU WKHLU ZRUN GHVLULQJ WR
ERRWVWUDSDVLOLFRQEDVHGOLIHWKDWPLJKWRQHGD\SLFNXSDQGHYROYH
EH\RQGZKDWFDUERQEDVHGOLIHKDVEHHQDEOHWRDFKLHYH
:KHUH &DULQV6PLWKV LGHDV IDLO LV WKDW HYHQ LI FOD\V FRXOG
GHYHORSLQWRVRPHNLQGRIVHOIUHSURGXFLQJRUJDQLVPVHYROXWLRQ
ZRXOG RSWLPL]H WKH FOD\ FKHPLVWU\ ,W ZRXOG QRW RSWLPL]H WKH
FDUERQEDVHG FKHPLVWU\ (YHQ JLYHQ D FOD\ VWUXFWXUH WKDW FRXOG
FDWDO\]HDSURWHLQRUDQ51$PROHFXOHLQWRH[LVWHQFHWKRVHPROH
FXOHVZRXOGEHHVVHQWLDOO\UDQGRPDVIDUDVDQ\DELOLW\WRFUHDWHRU
VXVWDLQFDUERQEDVHGOLIHJRHV&KDQFHVDUHWKH\ZRXOGKDYHQRWK
LQJWRGRZLWKDOLYLQJRUJDQLVPMXVWOLNHDUDQGRPO\JHQHUDWHG
VHTXHQFHRIE\WHVZRXOGKDYHQRWKLQJWRGRZLWKDYLUXV7KDWWKHUH
VKRXOGEHDFRUUHODWLRQEHWZHHQWKHFOD\FKHPLVWU\DQGWKHFDUERQ
FKHPLVWU\VR WKDW RSWLPL]LQJ RQH FRXOG RSWLPL]H WKH RWKHU
ZRXOGEHDPLUDFXORXVFRLQFLGHQFHVWDWLVWLFDOO\VSHDNLQJ,WZRXOG
EH OLNH SXOOLQJ D JRRG YLUXV RII RI D 0DFLQWRVK FRPSXWHU DQG
UXQQLQJLWRQD3&DQGILQGLQJWKDWWKHVDPHELQDU\FRGHSURYHG
WR EH D EHWWHU YLUXV RQ D 3& 7KDW LV PXFK OHVV OLNHO\ WKDQ WKH
SRVVLELOLW\ WKDW D FKXQN RI SURJUDPPHG FRGH RQ D 3& FRXOG EH
DOPRVW D YLUXV E\ DFFLGHQW $IWHU DOO WKH 3& FRGH LV DW OHDVW
SHUIRUPLQJVRPHXVHIXOIXQFWLRQRQWKH3&ZKHUHDVWKH0DFFRGH
LVMXVWUDQGRPWUDVKDVLWLVFRGHGIRUDGLIIHUHQWRSHUDWLQJV\VWHP
DQGDGLIIHUHQWSURFHVVRU
%RRWVWUDSSHG DELRJHQHVLV LQ WKH ZRUOG RI '26 YLUXVHV ZDV
RQO\HYHQUHPRWHO\SRVVLEOHEHFDXVHFRPSXWHUSURJUDPVLQRQH
ZD\RUDQRWKHUSHUIRUPDOOWKHVDPHIXQFWLRQVWKDWYLUXVHVGR7KH\
RSHQILOHVSXWGDWDLQWKHPHWFHWF7KHVHSURJUDPVWKHPVHOYHV
ZHUHLQWHOOLJHQWO\GHVLJQHGWRGRWKHVHWKLQJV6RLQHVVHQFHWKH
PLVFHOODQHRXVFRGHRQDGLVNZDVQRWUDQGRPDQGWKHSRVVLELOLW\
+DQV 0RUDYHF +XPDQ &XOWXUH $ *HQHWLF 7DNHRYHU 8QGHUZD\ 6
/DQJWRQ (G $UWLILFLDO /LIH $GGLVRQ :HVOH\ 5HGZRRG &LW\
&DOLIRUQLDSS

SUHVHQWHGLWVHOIWKDWDQRUGLQDU\SURJUDPPLJKWEHVXIILFLHQWO\OLNH
DYLUXVWKDWLWFRXOGWXUQLQWRRQHZLWKDOLWWOHSURGGLQJ7KHUHLVQR
DQDORJ\WRWKLVLQWKHUHDOZRUOGXQOHVVZHLPDJLQHWKDW&ULFNV
VSDFHPHQXVHG'1$EDVHGVWRUDJHLQWKHLUFRPSXWHUVDQGRQHRI
WKHLUVSDFHVKLSVFUDVKHGRQHDUWKLQRWKHUZRUGVZHZRXOGQHHGD
SUHH[LVWLQJ'1$51$SURWHLQEDVHGFKHPLVWU\ZKLFKZDVSHU
IRUPLQJVLPLODUIXQFWLRQVWRWKRVHRIOLYLQJRUJDQLVPVWRERRWVWUDS
RIIRI6RPHWKLQJOLNH&DULQV6PLWKVPRGHOGRHVQWRIIHUXVWKDW
7KHFKHPLVWU\LVVXIILFLHQWO\GLIIHUHQWWREHLUUHOHYDQW
$QG VR ERRWVWUDSSHG DELRJHQHVLV LQ WKH UHDO ZRUOG SURYHV
ODFNLQJWRR
(YROXWLRQDU\'HDG(QGV
:HOOVXSSRVHVRPHWKLQJOLNHDVPDOOQDNHGJHQHZDVVSRQWD
QHRXVO\ JHQHUDWHG RU D QDNHG SURWHLQ RI VLPLODU FRPSOH[LW\LW
GRHVQWUHDOO\PDWWHUIRURXUDUJXPHQW&RXOGLWEHWKHDUFKHW\SH
RIDOOOLIH"$VZLWKYLUXVHVWKHUHDUHDQXPEHURIREMHFWLRQVQRW
WRRGLIIHUHQWWKDQZKDWZHHQFRXQWHUHGZLWK3,&2
7KHSUREDELOLW\WKDWWKLVQDNHGJHQHFRXOGFRPHLQWRH[LVWHQFH
LQDUHDOLVWLFPRGHORIRXUZRUOGLVYHU\WLQ\
7KH UHSOLFDWLRQ LV YHU\ OLPLWHG VR WKHUH LV QR RSSRUWXQLW\ IRU
HYROXWLRQWRNLFNLQ
7KHUHLVQRYLDEOHVHTXHQFHRIVWHSVWRJRIURPWKLVJHQHWRWKH
QH[W VWHS XS RQ WKH ODGGHU ZKLFK PLJKW EH VRPHWKLQJ OLNH
6SLHJHOPDQV51$ZLWKUHSOLFDVH
2UJHOKLPVHOILVKHVLWDQWWRFDOOKLV51$WKHDUFKHW\SHRIOLIH0XFK
UHVHDUFKKDVEHHQGRQHWRGHWHUPLQHWKHFRPSRVLWLRQRIWKHSUHEL
RWLFHQYLURQPHQWDQGWKHLGHDRIRFHDQVILOOHGZLWKDSUHELRWLF
VRXSFRQVLVWLQJRIDOOWKHULJKWFKHPLFDOVIRUOLIHKDVODUJHO\EHHQ
GLVPLVVHG ,I WKHUH HYHU ZDV DQ\ VRXS LW H[LVWHG LQ RQO\ YHU\
ORFDOL]HG DUHDV IRU EULHI SHULRGV RI WLPH $QG LW DSSHDUV TXLWH
SRVVLEOHWKDWQRVRXSHYHUH[LVWHGDQ\ZKHUH6RJHWWLQJWKHQDNHG
JHQHLQWKHILUVWSODFHLVSUREOHPDWLFDQXQOLNHO\HYHQW
2QFH\RXKDGDQDNHGJHQHLI\RXFRXOGJHWLWWRUHSOLFDWHPRUH
UHDGLO\\RXPLJKWJHWLWWRHYROYH<HWLWZRXOGKDYHWRMXPSVRPH
PDMRUKXUGOHVLQRUGHUWRHYROYHWRWKHQH[WOHYHORIFRPSOH[LW\,W

LVKDUGWRLPDJLQHKRZDSXUH51$V\VWHPFRXOGHYROYHFKDUDF
WHULVWLFVVXLWDEOHWRVSDZQDQ51$(Q]\PHV\VWHPZLWKVRPHWKLQJ
OLNH 45HSOLFDVH 2QH ZRXOG H[SHFW WKH IDFWRUV WKDW ZHQW LQWR
PDNLQJDSXUH51$FKHPLVWU\VXUYLYHEHWWHUZRXOGKDYHOLWWOHWR
GRZLWKZKDWZRXOGPDNHDGLIIHUHQWFKHPLVWU\ZRUNZHOO$QG
WKHQ\RXKDYHWKHTXHVWLRQRIKRZWRJHWWKHUHSOLFDVHV\QWKHVL]HG
DQGLQYROYHGLQWKHUHDFWLRQ$WEHVW\RXPLJKWKDYHWRWUDYHUVHD
ODUJHJDSYLDUDQGRPSURFHVVHV$WZRUVW\RXPD\ILQGDGHDGHQG
ZKHQDPXWDWLRQQHFHVVDU\WRJHWWKH51$HQ]\PHV\VWHPJRLQJ
ZLOOSURYHIDWDOWRWKHSXUH51$V\VWHPVRPHZKDWOLNHWKHSUREOHP
ZHIDFHGWU\LQJWRHYROYHSXVKSRSVHTXHQFHVLQDYLUXV
7KHVH NLQG RIHYROXWLRQDU\SUREOHPVVHHPWRDERXQGLQWKH
EHJLQQLQJVRIOLIHRQHDUWKMXVWDVWKH\GLGZLWKYLUXVHV2QFH\RX
EXLOGVRPH51$DQGWKH4UHSOLFDVHWRPDNHLWZRUNKRZGR\RX
JHWWKH51$WRV\QWKHVL]HLWVRZQHQ]\PHV"+RZGR\RXEXLOG
'1$LQ"&HOOZDOOV"5LERVRPHV"DQGVRRQ
8QIRUWXQDWHO\ZHFDQWDQDO\]HWKHSUREOHPVLQWKHUHDOZRUOG
DVHDVLO\DVZHFRXOGZLWKFRPSXWHUYLUXVHV:HFDQKRZHYHUVHH
HQRXJKWRUHDOL]HWKDWWKHSUREOHPVDQGFKDOOHQJHVPD\EHMXVWDV
ELJ RU HYHQ ELJJHU LQ WKH UHDO ZRUOG WKDQ WKH\ ZHUH IRU '26
YLUXVHV&HUWDLQO\LIVRPHWKLQJOLNH(&ROLLVDPLQLPDOOLIHIRUP
WKHUHZRXOGKDYHWREHDQLQFUHGLEOHQXPEHURIVWHSVLQYROYHGLQ
FUHDWLQJ LW DV LW LV PXFK ODUJHU WKDQ RXU PLQLPXP YLDEOH YLUXV
&203$1,21
0RVWVFLHQWLVWVZRXOGDJUHHWKDWVRPHWKLQJDVFRPSOH[DV(
&ROL ZRXOG EH YLDEOH LQ WKH HDUO\HDUWK,IKRZHYHUZHORRNDW
VRPHWKLQJDIDFWRURIWHQVPDOOHULWVQRWFOHDUWKDWLWZRXOGEH
YLDEOH DW DOO 7KH VDPH VL]H YHUVXV IXQFWLRQ OLPLWV ZKLFK ZH
HQFRXQWHUHGZLWKYLUXVHVZLOOEHLPSRUWDQWLQWKHUHDOZRUOGWRR
7RKDYHDYLDEOHWKHRU\RIDELRJHQHVLVZHDWOHDVWQHHGWRILQGWKH
PLQLPDOOLIHIRUPWKDWFDQUHSURGXFHHQRXJKWRKDYHDIDLUVKRWDW
HYROYLQJ5LJKWQRZDVIDUDVZHFDQVHHDQDNHGJHQHGRHVQW
KDYHPXFKRIDFKDQFHDWWKDW3UREDEO\DQ51$HQ]\PHV\VWHP
GRHVQWKDYHPXFKRIDFKDQFHLQWKHUHDOZRUOGHLWKHU
6RLWZRXOGVHHPWKDWWKHLGHDRIDELRJHQHVLVLQWKHUHDOZRUOG
LVIUDXJKWZLWKGLIILFXOWLHVSHUKDSVHYHQPRUHVRWKDQLWZDVIRU
RXUYLUXVHV,QVKRUW RQHPXVWFRQFOXGHWKDWQRYDOLGVFLHQWLILF

H[SODQDWLRQRIWKHRULJLQRIOLIHH[LVWVDWSUHVHQW &HUWDLQO\LW
ZRXOGDSSHDUWKDWWKHVHGLIILFXOWLHVZLOOQRWJRDZD\DQ\WLPHVRRQ
*HQHUDOL]DWLRQV
,UHDOL]HWKDW,YHMXVWWKURZQDORWRIREMHFWLRQVWRWKHLGHDRI
DELRJHQHVLVDW\RXWKDW\RXYHSUREDEO\QHYHUKHDUGEHIRUH$QG,
DGPLWWKDW,PQRWPDNLQJPXFKRIDQHIIRUWWRDUJXHWKHVHSRLQWV
DQGFRQYLQFH\RXWKDWELRORJLFDOUHVHDUFKVXSSRUWVZKDW,YHVDLG
7KHERRNV,YHFLWHGWDNHRQWKDWZRUNDQG,GVXJJHVW\RXUHDG
WKHPLI\RXUHVNHSWLFDODQG,KRSH\RXDUH
,QWKHSDVWWZRFKDSWHUVZHYHH[DPLQHGWZRIDFWVRIFUHDWLRQ
2QHWKHZRUOGRIYLUXVHVWZRWKHUHDOZRUOG:HFRXOGDQDO\]H
WKH ZRUOG RI YLUXVHV FDUHIXOO\ DQG VHH UHDO PDWKHPDWLFDO REMHF
WLRQVUHDVRQVZK\YLUXVHVPXVWQRWKDYHSRSSHGXSRXWRIQR
ZKHUH$OWKRXJKZHFDQQRWDQDO\]HWKHUHDOZRUOGVRHDVLO\ZHGR
VHHWKDWWKHH[SHULPHQWDOZRUNRIWKHSDVWIHZGHFDGHVKDVUDLVHG
PDQ\ VLPLODU REMHFWLRQV DV WR ZK\ FDUERQEDVHG OLIH FRXOG QRW
VLPSO\SRSXSRXWRIQRZKHUH7KDWLVDSURIRXQGP\VWHU\ZKLFK
VHHPVWRGULYHHYHQ1REHOODXUHDWHVWRORRNIRUOLWWOHJUHHQPHQ
:HVKRXOGDFNQRZOHGJHLWIRUWKHP\VWHU\LWLVDQGQRWEUXVKLW
XQGHUWKHUXJ
7KDWWZRZRUOGVZKLFKDUHVRYHU\GLIIHUHQWVKRXOGERWKVKRZ
XSVXFKVLPLODUSUREOHPVLQWKHTXHVWLRQRIEHJLQQLQJVLVHQWLUHO\
VKRFNLQJ $W WKH YHU\ OHDVW RXU ILQGLQJV IRU YLUXVHV VHHP WR
FRUURERUDWHVRPHRIWKHVHVNHSWLFDOSRVLWLRQVDERXWWKHRULJLQRI
OLIH RQ HDUWK $QG SHUKDSV WKH VLPLODULWLHV VKRXOG EH WDNHQ DV D
VXJJHVWLRQWKDWZHVHHNVRPHJHQHUDOSULQFLSOHVWKDWPD\EHDWZRUN
KHUHSULQFLSOHVZKLFKPLJKWEHDSSOLHGWRDQ\ZRUOGZHGHVLJQ
RU ILQG ZKLFK GHILQH OLPLWV RQ WKH DELRJHQHVLV RI OLIH LQ VXFK
ZRUOGV
'HVSLWHWKHGLIIHUHQFHVEHWZHHQWKHZRUOGVZHORRNHGDWWKH
SUREOHPZDVH[DFWO\WKHVDPH,QERWKZRUOGVZHFRXOGILQGQR
PHFKDQLVPVKRUWRILQWHOOLJHQFHWRGRWKHFRGLQJZKLFKLVHVVHQWLDO
+XEHUW<RFNH\ 6HOI2UJDQL]DWLRQ2ULJLQRI/LIH6FHQDULRVDQG,QIRUPDWLRQ
7KHRU\ -RXUQDORI7KHRUHWLFDO%LRORJ\SS

WR JHW OLIH RII WKH JURXQG $ UHDOO\ YLDEOH RUJDQLVP DSSHDUHG WR
UHTXLUHHQRXJKH[DFWLQJLQIRUPDWLRQFRQWHQWWKDWUDQGRPFKDQFH
SURFHVVHVZHUHXWWHUO\LQFDSDEOHRIEULQJLQJLWDERXW1XPEHUVOLNH
DUH QRW VPDOO SUREDELOLWLHVWKH\ DUH PLUDFOHV $QG WKH
VFLHQWLVW FDQQRW GR VFLHQFH ZLWK PLUDFOHV ,Q ERWK ZRUOGV WKH
LQIRUPDWLRQDOFKDUDFWHURIZKDWZHKDGWREXLOGVHHPHGWRSUHFOXGH
XVLQJWKHSK\VLFVRIWKDWZRUOGWRGRLW$WWKHVDPHWLPHZHFRXOG
QRWFDOORQHYROXWLRQWRKHOSXVXQWLOZHKDGDVXFFHVVIXOVHOIUH
SURGXFLQJ V\VWHP <HW WKDW VXFFHVV LV EDVHG RQ IXQFWLRQ ZKLFK
UHTXLUHVVXIILFLHQWLQIRUPDWLRQWRHQFRGHLW,QERWKZRUOGVZHKDYH
WKLVGLOHPPD7KHP\VWHU\RIOLIHVRULJLQLVIXQGDPHQWDOO\LQIRU
PDWLRQDO
/HWXVVXSSRVHIRUDIHZPRPHQWVWKDWWKHZRUVWRIRXUVNHSWLFV
DUHDEVROXWHO\ULJKW/LIHRQRXUHDUWKFDQQRWEHH[SODLQHGE\DQ\
UHDVRQDEOHPRGHORIDELRJHQHVLV7KHSKLORVRSKHUFDQLQYRNHWKH
LQILQLWHVLPDOFKDQFHHYHQW7KHWKHRORJLDQFDQLQYRNH*RG7KH
VFLILZULWHUFDQLQYRNHJUHHQPHQ%XWVFLHQFHVWRSV7KHVFLHQWLVW
LV DSSDUHQWO\ DW D GHDG HQG IRU H[SODLQLQJ ZKDW KDSSHQHG +H
WKURZVXSKLVKDQGVLQGHVSDLU7KHQKHVWHSVEDFNIURPWKH
VLWXDWLRQWRWU\WRJHWDJOLPSVHRIWKHEURDGHUSLFWXUH:KDWZHQW
ZURQJ"&DQDWOHDVWWKHGLIILFXOWLHVEHPDGHLQWRVRPHPRGHORI
KRZWKHZRUOGZRUNV"
6XSSRVHZHZHUHWRFRQVLGHUDOOWKHSRVVLEOHZRUOGVWKDWPLJKW
VXSSRUWDUWLILFLDOOLIHRUUHDOOLIH:HPLJKWFODVVLI\WKHPLQWRWKUHH
EURDGFDWHJRULHV
$$OOSRVVLEOHZRUOGV
%:RUOGVWKDWVXSSRUWDUWLILFLDOOLIH
&:RUOGVWKDWVXSSRUWVSRQWDQHRXVO\JHQHUDWHGDUWLILFLDOOLIH
2EYLRXVO\%LVDVXEVHWRI$DQG&LVDVXEVHWRI%:HPLJKWWDNH
LQWHUHVWLQZKDWWKHUDWLRRI%W\SHZRUOGVWR&W\SHZRUOGVLV:H
PLJKWLPDJLQHDSORWOLNH)LJXUHZKHUHZHJUDSK JHUPLQDO
LW\ YHUVXVWKHSDUDPHWHUVWKDWGHILQHDSDUWLFXODUZRUOG3HUKDSV
WKHUHDUHVRPHUHJLRQVZKHUHHYHQD%W\SHZRUOGLVDUDUHFRP
PRGLW\7KHQWKHUHDUHRWKHUUHJLRQVZKHUHD%W\SHZRUOGLVIDLUO\
FRPPRQEXWD&W\SHZRUOGLVYHU\UDUH)LQDOO\WKHUHPD\EH
UHJLRQVZKHUHD&W\SHZRUOGLVSHUKDSVQRWVRUDUH

&7\SH
%7\SH
$7\SH
)LJXUH3UREDELOLW\RIILQGLQJ%DQG&W\SH
ZRUOGV
7KH&RVWRID&W\SH:RUOG
%RWK WKH ZRUOG RI '26 YLUXVHV DQG RXU ZRUOG DSSHDU WR EH
%W\SHZRUOGV7KH\ERWKVXSSRUWLQIRUPDWLRQEDVHGVHOIUHSUR
GXFLQJ DXWRPDWD <HW WKH GLIILFXOWLHV RI IRUPLQJ WKRVH DXWRPDWD
VHHPWRSUHFOXGHDELRJHQHVLV0DQ\RWKHU$/FRQVWUXFWVVHHPWR
EH%W\SHZRUOGVDVZHOO)RUH[DPSOH/DQJWRQVDXWRPDWRQDQG
%\OVERWKDUH%W\SHZRUOGV
:HPLJKWZRQGHUKRZH[SHQVLYHZRXOGLWEHWRFRQYHUWD%
W\SHZRUOGLQWRD&W\SHZRUOG",QPDNLQJVXFKDFRQYHUVLRQZH
KDYHWRSXWDGGLWLRQDOLQIRUPDWLRQLQWRWKHSK\VLFVRIWKDWZRUOG
7KLVDGGLWLRQDOLQIRUPDWLRQLVWKH FRVW RIFRQYHUVLRQ
/HWVWU\LWZLWK%\OVDXWRPDWRQ%\DGGLQJWZRQHZVWDWHV
DQGQHZWUDQVLWLRQUXOHVZHFDQGHYLVHDZRUOGLQZKLFKWKH%\O
DXWRPDWRQ FDQ EH IRUPHG IURP D VLPSOH WZRFHOO FRQILJXUDWLRQ


7 7 7

7 7
)LJXUH6SRQWDQHRXVO\JHQHUDWLQJWKH%\O
DXWRPDWRQ
ZKLFKFDQEHIRUPHGDWUDQGRPZLWKUHODWLYHHDVH7KLVVSRQWDQH
RXVJHQHUDWLRQVFHQDULRLVGHSLFWHGLQ)LJXUH7KLVZRUOGLVVHW
XSE\WKH*(1(6,6ILOHVLQWKH65$B/$%SURJUDPRQWKH3UR
JUDP'LVN
,IZHORRNRQO\DWWKHDXWRPDWRQLWZRXOGDSSHDUZHJDLQDORW
7KH FKDQFHV RI FUHDWLQJ WKH RULJLQDO FHOO %</ E\ UDQGRP
SURFHVVHVLVVRPHWKLQJOLNHLQRULQELOOLRQ%\FRPSDUL
VRQWKHFKDQFHVRIFUHDWLQJWKHWZRFHOOSUH%</DUHRQO\LQ
7KHGLIIHUHQFHLQLQIRUPDWLRQFRQWHQWRIWKHWZRVWDUWLQJSRLQWVLV
66LPSOHUVWDUWLQJSRLQW OQOQ

+RZHYHUWKHDGYDQFHZHKDYHPDGHLVRQO\VXSHUILFLDO2QFHZH
VWDUWORRNLQJDWWKHWUDQVLWLRQUXOHVLWEHFRPHVDSSDUHQWZHKDYH
WDNHQWZRVWHSVEDFNZDUGUDWKHUWKDQRQHIRUZDUG7KHRULJLQDO
%</DXWRPDWRQUHTXLUHGUXOHV,QJRLQJIURPDVWDWHVSDFHWR
DQVWDWHVSDFHZHKDYHLQFUHDVHGWKHLQIRUPDWLRQFRQWHQWRIWKH
WUDQVLWLRQUXOHVE\
61HZ6WDWHV OQOQ

DQG LQ DGGLQJ QHZ UXOHV ZH KDYH LQFUHDVHG WKH LQIRUPDWLRQ
FRQWHQWE\
61HZ5XOHV OQ

IRUDWRWDOLQIRUPDWLRQLQFUHDVHRI
6

,QRWKHUZRUGVWKHDFWRIVSHFLDOFUHDWLRQZDVFKHDSHULQIRU
PDWLRQZLVHWKDQZRUNLQJVRPHNLQGRIVSRQWDQHRXVJHQHUDWLRQ
LQWRWKHV\VWHP)XUWKHUPRUHDOORIWKHUXOHVZHSXWLQVHHPWR
EHYHU\QHFHVVDU\LI\RXRQO\DGGWZRQHZVWDWHV$GGLQJRQO\RQH
QHZVWDWHLIWKDWLVSRVVLEOHZLOOQHFHVVLWDWHPRUHUXOHVWKHUHE\
LQFUHDVLQJ61HZ5XOHV$GGLQJPRUHQHZVWDWHVPD\KHOSFXWGRZQ
RQWKHUXOHVQHHGHGEXWLWZLOOLQFUHDVH61HZ6WDWHV(VVHQWLDOO\ZH
SUREDEO\FDQWGRPXFKEHWWHUWKDQZHKDYHQRPDWWHUKRZZHJR
DERXWLW7KDWPHDQVLI\RXZHUHWRVWDUWFUHDWLQJV\VWHPVDWUDQGRP
ZLWKERWKUDQGRPUXOHVDQGUDQGRPFRQILJXUDWLRQV\RXGEHPXFK
PRUHOLNHO\WRFRPHXSZLWKD%W\SHZRUOGWKDQD&W\SHZRUOGDW
OHDVWLQWKHUHJLRQZKHUHWKH%\ODXWRPDWRQH[LVWV7RJLYH\RXDQ
LGHDRIMXVWKRZPXFKHDVLHULWZRXOGEHWRJHWD%W\SHZRUOGWKH
UDWLRRI&W\SHWR%W\SHLVH [7KDWPHDQVWKDWLI
WKHDUHDRIWKHZKROH8QLWHG6WDWHVZDVPDGHLQWRDSORWOLNH)LJXUH
WKHYDVWH[SDQVHRILWZRXOGEH%W\SHZRUOGVDQGRXU&W\SH
PRGLILFDWLRQZRXOGEHDSODWHDXDERXWWKHVL]HRIDEDFWHULXPRQ
WKLVSORW&W\SHZRUOGVDUHWKXVYHU\YHU\UDUH
&RXOGLWEHWKDW&W\SHZRUOGVDUHDOZD\VPXFKUDUHUWKDQ%
W\SHZRUOGV"2XUUHVXOWVFHUWDLQO\VXJJHVWWKHWKRXJKW7RTXDQWLI\
WKLVLGHDZHPLJKWVXJJHVWDUXOHRIWKHIRUP
&W\SH%W\SH $XWRPDWRQ6HHG

,QRWKHUZRUGVJLYHQDQ\VHOIUHSURGXFLQJDXWRPDWRQWKHLQIRU
PDWLRQZHKDYHWRDGGWRJRIURPD%W\SHZRUOGWKDWZLOOVXSSRUW
WKHDXWRPDWRQWRD&W\SHZRUOGWKDWFDQJHQHUDWHLWIURPVRPH
VHHGLVDOZD\VJUHDWHUWKDQRUHTXDOWRWKHGLIIHUHQFHLQLQIRUPDWLRQ
FRQWHQWEHWZHHQWKHDXWRPDWRQDQGWKHVHHG)RU%\OWKHLQHTXDOLW\
DSSDUHQWO\KROGV:HPLJKWLPDJLQHWKDWLQVRPHEHWWHUFLUFXP
VWDQFHVWKHHTXDOLW\FRXOGKROG
(VVHQWLDOO\ZKDWWKLVUXOHVD\VLVWKDW\RXFDQQRWEX\DQ\WKLQJ
E\JRLQJWRD&W\SHZRUOG7KH&W\SHZRUOGFDQQRWVSRQWDQHRXVO\
JHQHUDWHDQDXWRPDWRQPRUHFRPSOH[WKDQZKDWLVEXLOWLQWRLW7KH
IDFWWKDWZHKDYHDQLQHTXDOLW\VLPSO\VD\VWKDWWKHUXOHVZKLFKGR
WKHEXLOGLQJDUHVRPHWLPHVOHVVWKDQSHUIHFWO\HIILFLHQWDWEXLOGLQJ
WKHDXWRPDWRQ
1RZ REYLRXVO\ VLQFH ZHUH WDONLQJ DERXW WKH LQIRUPDWLRQ
FRQWHQWRIWKHSK\VLFDOODZVZHFDQDSSO\WKLVODZULJRURXVO\WR
WKHUHDOPRIDUWLILFLDOOLIHDQGQRWWRVLWXDWLRQVZKHUHWKHVHODZV
FDQQRWEHVRDQDO\]HGDVZLWKWKHUHDOZRUOG+RZHYHUWKDWGRHV
QRWPHDQWKLVODZKDVQRWKLQJWRVD\DERXWWKHUHDOZRUOG,IZH
EHOLHYHWKDWWKHODZVRIWKLVZRUOGZHUHQRWVSHFLILFDOO\FUHDWHGZLWK
DQH\HWRZDUGVSRQWDQHRXVO\JHQHUDWLQJOLIHWKHQFKDQFHVDUHZH
ZRXOGOLYHLQD%W\SHZRUOG,QIDFWRXUODZWHOOVXVWKDWFKDQFHV
DUH VR ZHLJKWHG LQ IDYRU RI D %W\SH ZRUOG WKDW D &W\SH ZRUOG
ZRXOGEHDJUHDWHUPLUDFOHWKDQD%W\SHZRUOGZLWKDPLUDFXORXVO\
FUHDWHGOLYLQJRUJDQLVPWRJHWOLIHJRLQJ7RSXWLWDQRWKHUZD\WKH
PDJLFWKDWZRXOGKDYHWREHEXLOWLQWRWKHIRXQGDWLRQRIWKHXQLYHUVH
ZRXOGEHDPRUHXQOLNHO\PLUDFOHWKDQWKDWQHHGHGIRUDQDFWRI
VSHFLDOFUHDWLRQ7KXVRXUODZZRXOGWHOOXVQRWWREHVXUSULVHGLI
WKHWZRZRUOGVZHH[DPLQHGWKDWKDG JLYHQ SK\VLFDOODZVWXUQHG
RXW WR EH %W\SH ZRUOGV (YHQ LQ WKH HYHQW WKDW ZH FRXOG QRW
VFLHQWLILFDOO\ H[SODLQ KRZ OLIH JRW LQWR RQH RI WKRVH ZRUOGV ZH
VKRXOGQRWEHVXUSULVHG
2IFRXUVHWKLVODZLVRQO\K\SRWKHWLFDOULJKWQRZ<HWLWZRXOG
VHHP SRVVLEOH WR SURYH RU GLVSURYH LW ZLWK IXUWKHU DUWLILFLDO OLIH
UHVHDUFK,ILWLVWUXHLWVLPSOLFDWLRQVDUHGHYDVWDWLQJ)RUPRUHWKDQ
DFHQWXU\VFLHQWLVWVKDYHHPEUDFHGDELRJHQHVLVLQDQDWWHPSWWR
WDNHWKH PLUDFOH RXWRIWKHEHJLQQLQJRIOLIH$VZHKDYHVHHQLQ
WKLV FKDSWHU WKLV UHVHDUFK DSSHDUV WR EH LQ VRPH UDWKHU VHULRXV

WURXEOH2XUODZZRXOGVXJJHVWWKDWDOORILWLVRQO\LQWKHHQGD
TXHVWIRUDELJJHUPLUDFOH
7KH-XJJHUQDXWRI$/"
,I\RXKDYHUHDG6WHYHQ/HY\VERRN$UWLILFLDO/LIH7KH4XHVW
IRU D 1HZ &UHDWLRQ WKHQ \RX NQRZ WKH ERRN ZDV D YLUWXDO
FHOHEUDWLRQRIWKLV QHZFUHDWLRQ ULJKWXSWRWKHODVWFKDSWHU7KH
ODVWFKDSWHULVRPLQRXVDQGIRUHERGLQJWKRXJK:KDWKDSSHQVLI
RXUV\QWKHWLFRUJDQLVPVFDQHYROYHLQDIHZVHFRQGVZKDWPLJKW
WDNHDELOOLRQ\HDUVIRUFDUERQEDVHGOLIH":LOOWKH\EHFRPHVPDUWHU
WKDQXV":LOOWKH\ZLSHXVRXW":LOOWKH\PDNHSHWVRIXV"
,IHYROXWLRQLVDVFUHDWLYHDVPDLQVWUHDPELRORJLVWVWKLQNLWLV
WKHQZHFRXOGEHLQELJWURXEOH$/FRXOGPDNHQXFOHDUSUROLIHUD
WLRQ ORRN OLNH D NLGGLH JDPH 2Q WKH RWKHU KDQG LI HYROXWLRQ LV
UHDFWLYHDV,WKLQNLWPLJKWEHWKHQPD\EHZHDUHQRWLQDVPXFK
WURXEOHDVVXSSRVHG
/HY\ ZDV ULJKW WR VRXQG DQ RPLQRXV FKRUG 7KURXJKRXW KLV
ERRN KH QHYHU TXHVWLRQV WKH SRZHU RI HYROXWLRQ 1HLWKHU GR KLV
VWDUV$QGLIHYROXWLRQLVRPQLSRWHQWWKHQDQ\DUWLILFLDOOLIHIRUP
WKDW FDQ SDVV JHQHWLF LQIRUPDWLRQ RQ WR LWV RIIVSULQJ LV OLDEOH WR
EHFRPHDWKUHDWVRRQHURUODWHU7KHRQO\ZD\WRFRQWDLQWKDWWKUHDW
ZRXOG EH WR OLPLW RXU DUWLILFLDO FUHDWLRQV WR WKLQJV WKDW DUH YHU\
GXPEDQGWKDWFDQQRWUHSOLFDWHYHU\IDVW,IRXUFUHDWLRQVUHSOLFDWH
IDVWWKH\FDQHYROYHIDVWDQGEHFRPHVPDUWHUWKDQXV,IWKH\DUH
WRRVPDUWWREHJLQZLWKWKH\FDQILJXUHHYROXWLRQRXWDQGILJXUH
RXWKRZWRUHSOLFDWHIDVW7KHORJLFDOFRQFOXVLRQPLJKWVHHPWREH
6WHYHQ/HY\$UWLILFLDO/LIH7KH4XHVWIRUD1HZ&UHDWLRQ3DQWKHRQ%RRNV
1HZ<RUN

WRRXWODZ$/UHVHDUFK+RZHYHUVXFKDWWHPSWVWRSURVFULEHWHFK
QLFDOGHYHORSPHQWKDYHKLVWRULFDOO\EHHQVXLFLGDO6RRQHURUODWHU
VRPHRQH VRPHZKHUH GHYHORSV WKH WHFKQRORJ\ DQG WKRVH ZKR
FKRRVHWRUHPDLQEOLQGWRLWDUHEXULHGE\LW
2QWKHRWKHUKDQGLIHYROXWLRQLVHIIHFWLYHRQO\LQFRXSOLQJ
H[WHUQDOLQWHOOLJHQFHLQWRDV\VWHPEXWQRWYHU\XVHIXOLQFUHDWLQJ
VRPHWKLQJRXWRIWKLQDLUWKHQWKHSUREOHPDWKDQGLVYHU\GLIIHUHQW
:HPLJKWEHDEOHWRFUHDWHPDFKLQHVWKDWJHWVPDUWHUZLWKVXFFHV
VLYHJHQHUDWLRQVEXWWKH\ZRXOGKDYHDKDUGWLPHVXUSDVVLQJXV
:H FRXOG DOVR OLPLW WKHLU HYROXWLRQDU\ GHYHORSPHQW E\ EHLQJ
FDUHIXODERXWKRZZHFRXSOHLQWHOOLJHQFHLQWRWKHV\VWHP
+RZHYHUDSXUHO\UHDFWLYHHYROXWLRQZRXOGQRWPLWLJDWHWKH
GDQJHULQFUHDWLQJDUWLILFLDOOLIH0DQNLQGFRXOGHDVLO\EHFRQTXHUHG
E\VRPHWKLQJIDUGXPEHUWKDQKHLV0HQDUHIDUPRUHLQWHOOLJHQW
WKDQDOLWWOHFKXQNRI51$DQG\HWWKH$,'6YLUXVLVZUHDNLQJ
KDYRFRQKXPDQLW\,WLVPXWDWLQJDQGHYROYLQJWRR,ILWKDSSHQHG
WR HYROYH LQWR D VWUDLQ WKDW FRXOG WUDYHO DQG LQIHFW YLD DLUERUQH
SDUWLFOHVDOORIXVFRXOGEHLQIHFWHGLQDPDWWHURIPRQWKVEHIRUH
ZH HYHQNQHZLW)LIW\\HDUVKHQFHDILIWHHQ\HDUROGZRXOGEH
FRQVLGHUHGDQROGPDQKXPDQFLYLOL]DWLRQZRXOGEHDVKDGRZRI
ZKDWLWLVWRGD\DQGQRRQHZRXOGHYHQGUHDPWKDWWKHYLUXVFRXOG
EHHOLPLQDWHG7KLVLVDVLPSOHUHVXOWRIWKHIDFWWKDWLWLVPXFKHDVLHU
WRGHVWUR\VRPHWKLQJWKDQWREXLOGLW$GXPEYLUXVWKDWLVOLWWOH
PRUHWKDQDFRPSOH[PROHFXOHFDQGHVWUR\\RXU7FHOOVEXWDOORI
KXPDQLQWHOOLJHQFHFDQQRWEXLOGQHZRQHV,QWKHVDPHZD\HYHQ
DYHU\VWXSLGDUWLILFLDOOLIHIRUPFRXOGFRQFHLYDEO\ZUHDNDOONLQGV
RIKDYRFRQXV,WQHHGQWHYHQEH DOLYH LQDQ\VWURQJVHQVH2XU
HQYLURQPHQWLVYHU\IUDJLOHLQZD\VDQGLIZHZDQWHGWRZHFRXOG
ZUHFNLWZLWKRUZLWKRXW$/
:KHQDSSOLHGWR$/WKHGLIIHUHQFHEHWZHHQDFUHDWLYHDQGD
UHDFWLYHHYROXWLRQLVWKHGLIIHUHQFHEHWZHHQDQXQOLPLWHGWKUHDWDQG
DFRQWDLQDEOHWHFKQRORJ\$Q\WHFKQRORJ\LVSRWHQWLDOO\WKUHDWHQ
LQJLIDEXVHG1XFOHDUILVVLRQFDQEHDWKUHDWEXUQLQJIRVVLOIXHOV
FDQEHDWKUHDWFRPSXWHUL]HGPRQH\FDQEHDWKUHDWWKHWHFKQRORJ\
WRPDNHLURQFDQEHDWKUHDW+RZHYHUSURSHUO\XVHGPRVWWHFK
QRORJ\FDQEHEHQHILFLDO(YHQQXFOHDUERPEVPLJKWVRPHGD\EH
XVHGWRVDYHKXPDQLW\SHUKDSVE\GLYHUWLQJDFRPHWRQDFROOLVLRQ
7KH-XJJHUQDXWRI$/"

FRXUVHZLWKWKHHDUWK$KRVWLOHRUMXVWVHOILVKLQWHOOLJHQFHVXSHULRU

WRRXURZQWKRXJKLVSRWHQWLDOO\XQFRQWUROODEOH
6RPH$/UHVHDUFKHUVKDYHDFXULRXVO\QLKLOLVWLFDWWLWXGHWRZDUG
WKHLUZRUN7KH\DFNQRZOHGJHWKH\UHZRUNLQJWRFUHDWHRXUVXF
FHVVRUVDQGVHHPWRFRQVLGHURXUHYHQWXDOGHPLVHDQLQHYLWDEOHIDFW
RIHYROXWLRQ6RZK\QRWEULQJLWDERXW"8QIRUWXQDWHO\,WKLQNLW
LVIDUPRUHOLNHO\WKDWDVXFFHVVIXOFRFNURDFKZLOOGRXVLQWKDQDQ
LQWHOOLJHQW VXSHUPDQ 5DWKHU WKDQ FUHDWLQJ RXU VXFFHVVRUV ZHOO
VLPSO\EHILJXULQJRXWRQHPRUHZD\WRNLOORXUVHOYHV
7KHVXFFHVVIXOFRFNURDFKGRHVQRWUHTXLUHXQERXQGHGHYROX
WLRQPD\EHMXVWDOLWWOHHYROXWLRQWRPDNHLWWRXJK,ILUPO\EHOLHYH
WKDWLIZHGRQRWSURSHUO\XQGHUVWDQG$/DQGHYROXWLRQDQGOHDUQ
KRZWRFRQWDLQLWZHDUHSOD\LQJZLWKILUH/HWPHWDNH\RXILIW\
\HDUVLQWRWKHIXWXUHWRH[SODLQ
$WRPLF VWRUDJH WHFKQRORJ\ ZDV GHYHORSHG DQG SXW WR ZRUN LQ
FRPSXWHUVIRUW\\HDUVDJR)LYH\HDUVODWHUWKHILUVWQRWHERRNFRP
SXWHUVZLWK7HUDE\WHVRISLFRVHFRQGDFFHVVQRQYRODWLOHVWRU
DJHEHFDPHDYDLODEOHIRUXQGHU2IFRXUVHVRIWZDUHODJJHG
IDUEHKLQGKDUGZDUH)RUQHDUO\WZHQW\\HDUVWKHVRIWZDUHJLDQWV
EDWWOHGLWRXWGHYHORSLQJRSHUDWLQJV\VWHPVWRPDNHHIIHFWLYHXVHRI
WKLV VWRUDJH WHFKQRORJ\ ,Q IDFW RSHUDWLQJ V\VWHPV SUROLIHUDWHG WR
VXFKDQH[WHQWWKDWUHDOSURJUHVVLQSURJUDPPLQJJDYHZD\WREUXWH
FRPSHWLWLRQEHWZHHQRSHUDWLQJV\VWHPV%\DQGE\,%0FDPHXS
ZLWKWKHVROXWLRQ7KHLU26RSHUDWLQJV\VWHPZDVDQLQFUHGLEOH
HQJLQHHULQJ IHDW $ERXW WHUDE\WHV RI FRGH IXOO\ LQWHUDFWLYH
VSHHFK UHFRJQLWLRQ WRXFK DQG YLVLRQ LQWHUIDFH DUWLILFLDO UHDOLW\
IHHGEDFN %XW WKH FOLQFKHU ZDV WKH DUWLILFLDO LQWHOOLJHQFH ZKLFK
DOORZHGWKHRSHUDWLQJV\VWHPDQGDSSOLFDWLRQVWRDGDSWWRERWKWKH
LQGLYLGXDOXVHUDQGWKHVRIWZDUHGHYHORSHU,WZDVDFLQFKWRZULWH
YHU\FRPSOH[SURJUDPVLQWKLVHQYLURQPHQWEHFDXVHRIWKHDUWLILFLDO
LQWHOOLJHQFH GHVSLWH WKH IDFW WKDW WKHUH ZHUH QHDUO\ WZR PLOOLRQ
SRVVLEOHV\VWHPFDOOV6KDUHZDUHSUROLIHUDWHGIRULWDQGWKHQFRP
PHUFLDO SURJUDPV WKDW ZRXOG ERJJOH WKH PLQG RI DQ\RQH MXVW WHQ
\HDUVHDUOLHU
,ELGS

%\26ZDVWKHGHIDFWRVWDQGDUG7KHUHZHUHQWHYHQDQ\
FORVHFRPSHWLWRUV1RERG\HYHQKDGDQ\LQWHUHVWLQQHZRSHUDWLQJ
V\VWHPVEHFDXVHWKLVRQHVHHPHGWRILWHYHU\RQHVQHHGVVRZHOO,W
VHHPHGWREHWKHJROGHQDJHRIFRPSXWLQJH[FHSWIRURQHWKLQJ26
KDGVRPHDQWLYLUXVPHDVXUHVEXLOWLQWRLW7KH\ZRUNHGSUHWW\ZHOO
+RZHYHUDIDLUO\VLPSOHEXWEHQLJQYLUXVDSSHDUHGLQWKLVHQYLURQ
PHQWWKDWWKRVHDQWLYLUXVPHDVXUHVFRXOGQWFRSHZLWK7KLVYLUXV
ZDVRQO\DERXWPHJDE\WHVLQVL]HDQGVLQFHLWZDVEHQLJQQRERG\
FDUHGWRRPXFKDERXWLW+RZHYHUDWWKHWLPHWKH8QLWHG6WDWHVKDG
EHFRPHDW\UDQQ\ZKRVHHYLOVIDUHFOLSVHGHYHQWKRVHRI6WDOLQDQG
+LWOHU0RVWLQWHOOLJHQWSHRSOHKDGIOHGWKHFRXQWU\ORQJDJR7KDW
JRYHUQPHQWZHQWRQDFUXVDGHWRILQGWKHDXWKRURIWKHYLUXV7KH\
JRWWKHLUPDQDQGVXEMHFWHGKLPWRIXQFWLRQDOUHHQJLQHHULQJDWWKH
KDQGVRIQDQRURERWV$KRUULEOHIDWH7KLVIRFXVHGTXLWHDELWRI
DWWHQWLRQ RQ WKH YLUXV DQG LWV DOOHJHG DXWKRU 7R GHIHQG WKLV SRRU
VFDSHJRDWDWHDPRIVFLHQWLVWVJRWWRJHWKHUDQGSURYHGWKDWMXVWVXFK
DYLUXVVKRXOGHYROYHLQWRDXVHIXOV\VWHPFOHDQXSXWLOLW\LIMXVWOHIW
DORQH
$FRXSOHZHHNVODWHU,%0UHOHDVHGDVXSSOHPHQWDU\DQWLYLUXV
XWLOLW\WRWDNHFDUHRIWKHSUREOHP(YHQWKRXJKWKHVFLHQWLVWVVDLG
QRWWRZRUU\DORWRISHRSOHZDQWHGWKHYLUXVRXWDQG,%0VDZWKLV
DVDJRRGZD\WRPDNHDPRUDOVWDWHPHQWDERXWYLUXVZULWLQJWKDW
ZRXOGPDNHDQXPEHURIJRYHUQPHQWVKDSS\7KLVDQWLYLUXVXWLOLW\
ZDVWKHEHJLQQLQJRIWKHHQGWKRXJK$W\SLFDOFDVHRIWKHTXLFNIL[
1RERG\WRRNWKHWLPHWRGLVDVVHPEOHWKHYLUXV1RERG\OLVWHQHGWR
WKHWHDPRIVFLHQWLVWV
8QWLOWKDWDQWLYLUXVXWLOLW\ZDVUHOHDVHGWKHUHZDVOLWWOHHYROX
WLRQDU\SUHVVXUHRQWKHYLUXVDQGPRVWRILWFDXVHGWKHYLUXVWRHYROYH
LQEHQHILFLDOZD\V7KHXWLOLW\ZDVTXLWHDGHSWDWSXWWLQJHYROXWLRQDU\
SUHVVXUHRQWKHYLUXVWRPDNHLWPDOHYROHQWWKRXJK$QGWKHYLUXV
PXWDWHGZLWKLQFUHGLEOHHDVH,YHKHDUGHVWLPDWHVWKDWLWPXWDWHG
RYHUWHQPLOOLRQWLPHVRQWKHILUVWGD\,IWKDWZHUHQRWHQRXJKWKH
DUWLILFLDOLQWHOOLJHQFHRIWKHDQWLYLUXVRQO\VXFFHHGHGLQGULYLQJWKH
YLUXVHVZKLFKDOVRXVHGV\VWHP$,UHVRXUFHVWREHFRPHVPDUWHU
DQGPRUHSUROLILF7KHDQWLYLUXVZDVPDGHDYDLODEOHRQD0RQGD\
IUHHRIFKDUJHWRWKHJHQHUDOSXEOLF%\:HGQHVGD\WKHZKROHZRUOG
ZDVLQFKDRV(YHU\WKLQJZDVVKXWGRZQ)LQDQFLDOPDUNHWV&RP
PXQLFDWLRQV+RVSLWDOVWKHZRUNV3HRSOHZHUHG\LQJ1RERG\ZHQW
WRZRUN1RERG\WXUQHGWKHLUFRPSXWHUVRQ
7KHRQHH[FHSWLRQZDVDKRVWRIJRYHUQPHQWWHFKQLFLDQVZKRVH
MRELWZDVWRPRQLWRUDQGFRQWUROWKHSRSXODWLRQLQWKH867KHVH
JX\VZHUHZRUNLQJIXULRXVO\WRNLOOWKHYLUXVEXWWKH\GLGQRWGDUH
7KH-XJJHUQDXWRI$/"

WR WXUQ WKH FRPSXWHUV RII 7KH ZKROH SRSXODWLRQ ZDV ZDLWLQJ IRU
WKHPWRDQGZRXOGNLOOWKHPWKHPLQXWHWKH\GLG%\)ULGD\WKH
YLUXVHVKDGEHFRPHVRSKLVWLFDWHGHQRXJKWRILJXUHRXWWKDWWKHUHZDV
DQLQWHOOLJHQFHH[WHUQDOWRWKHFRPSXWHUDQGWRVXUYLYHWKH\KDGWR
ILJKW WKLV H[WHUQDO WKUHDW 7KH YLUXVHV WKHQ WRRN FRQWURO RI DOO WKH
QDQRURERWVXVHGWRNHHSWKHFLWL]HQU\LQFKHFN1RRQHKHUHLVTXLWH
VXUH RI ZKDW KDSSHQHG DIWHU WKDW 6RPH QXFOHDU ZHDSRQV ZHUH
ODXQFKHG7KHQSUDFWLFDOO\WKHZKROHZRUOGZHQWXSLQVPRNH,YH
KHDUGWKHYLUXVHVZRQ
)DURXW"3HUKDSV,PSRVVLEOH"0D\EHQRWHYHQLIFUHDWLYHHYROX
WLRQLVKRFXVSRFXV7RDYRLGVXFKQLJKWPDUHVLWZRXOGVHHPZLVH
WRRYHUFRPHWKHGLIILFXOWLHVRIGHYHORSLQJDUHDOWKHRU\RIHYROX
WLRQ DQG OHDUQ KRZHYROXWLRQFUHDWHVRUDWOHDVWKRZLWFRXSOHV
H[WHUQDOLQWHOOLJHQFHLQWRDVHOIUHSURGXFLQJV\VWHPLQDYHU\GH
WDLOHGZD\
,W ZRXOG VHHP UHDVRQDEOH WR VXJJHVW WKDW ZLWK WKH SURSHU
XQGHUVWDQGLQJ RQH FRXOG GHVLJQ DQ RSHUDWLQJ V\VWHP WKDW NHSW
HYROXWLRQXQGHUFRQWURORUHYHQGLUHFWHGLWWRDJUHHDEOHHQGV7KDW
E\ LWVHOI FRXOG JRDORQJZD\WRZDUGFRQWDLQLQJWKHSUREOHPRI
XQGHVLUHGYLUXVHVHYROYLQJLQWRPRUHVRSKLVWLFDWHGDQGGHVWUXFWLYH
IRUPV
2QHZD\WRKHOSVRPHFDWDVWURSKHOLNHWKHDERYHVFHQDULRFRPH
DERXW LV WR GR VRPHWKLQJ VWXSLG OLNH SDVV D ODZ DJDLQVW ZULWLQJ
YLUXVHVRUFUHDWLQJ$/$QXPEHURIJRYHUQPHQWVDURXQGWKHZRUOG
VHHPWREHHDJHUWRSDVVDQGHQIRUFHVXFKODZV,QIDFWWKH\DUH
ILJKWLQJDJDLQVWQDWXUH6XFKODZVDUHDERXWDVLQWHOOLJHQWDVWU\LQJ
WROHJLVODWHDKRXUGD\LQRUGHUWRJHWPRUHZRUNRXWRIWKHZRUN
IRUFHRUWU\LQJWROHJLVODWHWKHHDUWKLQWREHLQJDWWKHFHQWHURIWKH
XQLYHUVH ,W VKRXOG EH SODLQ E\ QRZ WKDW YLUXVHV FDQ HYROYH GR
HYROYH DQG ZLOO HYROYH LQ WKH IXWXUH ,I HYROXWLRQ LV VRPHWLPHV
FUHDWLYHWKHQQHZRSHUDWLQJV\VWHPVDQGKDUGZDUHFRXOGFRQFHLY
DEO\ SXVK WKLV HYROXWLRQDU\ FDSDELOLW\ IDU EH\RQG ZKDW \RXYH
WDVWHG LQ WKLV ERRN :LWK PRVW RI WKH ZRUOG VWLOO FRQYLQFHG WKDW
HYROXWLRQ LV D SRZHUIXO FUHDWLYH IRUFH VXFK OHJLVODWLRQ VHHPV
SDUWLFXODUO\ DQDFKURQLVWLF $QG ZKHWKHU HYROXWLRQ LV FUHDWLYH RU
FRQVHUYDWLYH QHZ YLUXVHVDUHJRLQJWRJURZXSTXLWHDSDUWIURP
KXPDQDJHQF\DQGWKH\FDQWH[DFWO\UHDGDODZWKDWWHOOVWKHPQRW
WR

:KDWV ZRUVH LV WKDW D ODZ ZLOO RQO\ VWRS WKH WLQNHUHUV DQG
H[SHULPHQWHUV ZKR ILQG YLUXVHV LQWHUHVWLQJ DQG WKH UHVHDUFKHUV
ZKR DUH WU\LQJ WR XQGHUVWDQG WKHP EHWWHU 7KH PDOLFLRXV WKH
FULPLQDOVWKHSROLWLFDOGLVVLGHQWVDQGWKHHYLOJRYHUQPHQWDJHQWV
ZLOOEHXQGDXQWHGE\DODZ7KDWKDVSUDFWLFDOFRQVHTXHQFHV5LJKW
QRZ,GJXHVVWKDWRUPRUHRIDOOYLUXVHVZULWWHQDUHHLWKHU
EHQLJQ RU H[WUHPHO\ ODPH 7KH\ DUHQW ZULWWHQ E\ SHRSOH RXW WR
GHVWUR\WKHZRUOG2XWODZWKHPDQGWKHSRSXODWLRQRIYLUXVHVZLOO
EHJLQWRJHWVHHGHGE\LQFUHDVLQJO\PDOHYROHQWYDULHWLHV&RXSOH
WKDW ZLWK HYROXWLRQ DQG JUHDWHU SXEOLF LJQRUDQFH FDXVHG E\VXS
SUHVVLQJNQRZOHGJHDQG\RXPD\KDYHGLVFRYHUHGWKHHTXDWLRQIRU
VRPHELJSUREOHPVGRZQWKHURDG
$QRWKHUZD\WRLQGXFHDFDWDVWURSKHLVWRDFTXLHVFHWRWKHLGHD
RI XQOLPLWHG RPQLSRWHQW HYROXWLRQWKH LGHD WKDW LW FDQ FUHDWH
ZLWKRXWERXQGV7KLVWHQGVWROHDGRQHWRGHVSDLURIDQVZHUV,I
HYROXWLRQLVWUXO\RSHQHQGHGLQDQRSHUDWLQJHQYLURQPHQWWKHQLW
FDQILQGLWVZD\DURXQGDQ\REVWDFOH,WKURZLQLWVSDWK6RZK\
ERWKHU" ,Q WKLV UHVSHFW , WKLQN 'DUZLQV K\SRWKHVLV LV D UHDO
KLQGHUDQFHWRJHWWLQJDWDSURSHUWKHRU\WKDWZLOOEHXVHIXOLQWKH
HOHFWURQLF ZRUOG RI $/ &HUWDLQO\ LW VHHPV UHVSRQVLEOH IRU WKH
QLKLOLVWLFDWWLWXGHVRIPDQ\$/UHVHDUFKHUV
7KHERWWRPOLQHLVVLPSOHWKHYHU\SRVVLELOLW\RI$/UXQQLQJ
DPRNLQRXUFRPSXWHUV\VWHPVZKLFKZLOOEHZDONLQJDQGWDONLQJ
EHIRUHORQJLVPRUHWKDQDOLWWOHLQFHQWLYHWRFRQVLGHUZKDWDUHDO
WKHRU\RIHYROXWLRQVKRXOGORRNOLNH,IHYROXWLRQLVFUHDWLYHZHG
EHWWHUXQGHUVWDQGWKDWSRZHUUHDOTXLFN:KHQGRHVFUHDWLYLW\NLFN
LQ"$QGLIHYROXWLRQLVRQO\UHDFWLYHZHQHHGWRXQGHUVWDQGWKDW
WRR EHFDXVH ZHG SUHIHU QR VXUSULVHV ,Q VKRUW HLWKHU ZH JHW D
KDQGOHRQLWRULWPD\JHWDKDQGOHRQXV
7KH1HZ(YROXWLRQ"
$W SUHVHQW LW ZRXOGDSSHDUWKDWWKHIRUPXODWLRQRIDSURSHU
WKHRU\RIHYROXWLRQZLOOEHWKHSUL]HQRWRIWUDGLWLRQDOELRORJLVWV
EXWRI$UWLILFLDO/LIHUHVHDUFKHUV5HDOZRUOGELRORJ\LVWRRFRP
SOLFDWHG5HDOZRUOGHYROXWLRQKDVEHFRPHVRERJJHGGRZQLQWKH
GHWDLOVDQGP\VWHULHVRIOLIHDQGWKHHFRV\VWHPWKDWLWZRXOGVHHP
GUDZLQJJHQHUDOFRQFOXVLRQVIRUPWKHLQGLYLGXDOGHWDLOVLVDOOEXW
LPSRVVLEOH7KDWLVZK\VRPHWKLQJOLNH'DUZLQVK\SRWKHVLVWKH
LGHDWKDWDOOOLIHHYROYHGYLDPLFURPXWDWLRQVDQGVHOHFWLRQLVVR
RIWHQFDOOHGD WKHRU\RIHYROXWLRQ WKRXJKLWKDVWKHFKDUDFWHURI
DQXQIDOVLILDEOHSKLORVRSK\LWFDQH[SODLQDQ\WKLQJDQGSUHGLFWV
SUDFWLFDOO\QRWKLQJ7KDWLVZK\RQHHYROXWLRQLVWFDQMXELODQWO\WHOO
XVLWLVWKHJUDQGSDUDGLJPRIH[LVWHQFHDQGDQRWKHUFDQDUJXHWKDW
LW WHOOV XV QRWKLQJ 7KDW LV ZK\ D VHQVLEOH OD\PDQ OLNH 3KLOOLS
-RKQVRQFDQWDNHDQKRQHVWORRNDWWKHHYLGHQFHDQGFRQFOXGHWKDW
HYROXWLRQLVOLWWOHPRUHWKDQDP\WK
)XUWKHUPRUH WKH SKLORVRSKLFDO FRPPLWPHQWV RI 'DUZLQLVP
VHHPWREHSRLVRQLQJLWIURPZLWKLQ'DUZLQVK\SRWKHVLVLVXQGH
QLDEO\OLQNHGWRWKHLGHDWKDWDWRPLVWLFPDWHULDOLVPLVDEVROXWHWUXWK
EHFDXVH LW SRVLWV WKDW PDWHULDOLVP QRW LQ WKH ODERUDWRU\ EXW LQ
KLVWRU\7KHUHIRUH'DUZLQLVPGHPDQGVDGHJUHHRISKLORVRSKLFDO
FRPPLWPHQW ZKLFK RUGLQDU\ VFLHQFH GRHV QRW 7KDW PDNHV 'DU
ZLQVK\SRWKHVLVSKLORVRSKLFDOO\IUDJLOH,WUHTXLUHVEHOLHI'HVSLWH
WKHIUDJLOLW\RIWKLVLGHDLWKDVEHFRPHWKHVFLHQWLVWVSDUDGLJPDQG
KH LV UDUHO\ UHDG\ WR DGPLW WKDW LW LV IUDJLOH DQG FKDUJHG ZLWK
SKLORVRSK\ 7KLV GUDJV VFLHQFH RII FRXUVH EHFDXVH WKH VFLHQWLVW

WHQGVWRWDNHORWVRIOLWWOHTXHVWLRQVZKLFKPD\RUPD\QRWOLQHXS
ZLWKWKHELJWKHRU\DQGDUUDQJHWKHPDVIROORZV
)DFWVZKLFKFDQEHPDGHVHUYDQWVWRWKHSDUDGLJP
)DFWVZKLFKFDQEHH[SODLQHGDZD\E\VWRU\WHOOLQJ
)DFWVZKLFKDUHLUUHFRQFLODEOHDQGPXVWWKHUHIRUHEHLJQRUHG
1RZWKDWVQRWWRRGLIIHUHQWIURPWKHZD\VFLHQFHLQJHQHUDOZRUNV
+RZHYHUZKHQWKHUHDUHWRRPDQ\W\SHIDFWVWKHSDUDGLJPLWVHOI
JHWVFDOOHGLQWRTXHVWLRQ,QDVLWXDWLRQZKHUHWKHSDUDGLJPLQYROYHV
QRW DQ RSHUDWLRQDO SUREOHPVROYLQJ VWDWHPHQW EXW D VWDWHPHQW
DERXW WKH SKLORVRSKLFDO QDWXUH RI UHDOLW\ DQG WKH KLVWRU\ RI WKDW
UHVXOWLQJUHDOLW\WKHUHZRXOGDSSHDUWREHQRZD\WRXVHW\SHIDFWV
WRRYHUWXUQWKHSDUDGLJPLQWKHH\HVRIWKHSKLORVRSKLFDOO\FRP
PLWWHG7KLVZDVH[DFWO\WKHSUREOHPQDWXUDOVFLHQWLVWVKDGZLWK
FUHDWLRQLVPLQWKHODVWFHQWXU\$QGWKHSUREOHPLQHYLWDEO\FDXVHV
DGLVFLSOLQHWREHSRLVRQHGEHFDXVHWKHSDUDGLJPQRORQJHUIXQF
WLRQVDVDUDWLRQDOPHDQVIRUXQGHUVWDQGLQJRXUZRUOG,WEHFRPHV
DSKLORVRSKLFDOVRDSER[$QGWKDWPHDQVLWVWUXWKGRHVQRWWUDQ
VFHQGVSDFHWLPHDQGFXOWXUHVLWLVDSDUDEOHIRUEHOLHYHUV
$UWLILFLDO OLIH KROGV WKH SURPLVHQRWRQO\RIDUHDOWKHRU\RI
HYROXWLRQEXWDSKLORVRSKLFDOO\QHXWUDOWKHRU\DVZHOO$OODUWLILFLDO
ZRUOGVFRQIRUPWRWKHDWRPLVWLFPDWHULDOLVWLFYLHZEHFDXVHWKH\
DUHDOJRULWKPLF7KH\GRQRWH[KLELWVWURQJHPHUJHQWEHKDYLRUWKH\
OLYHLQDFRPSXWHU$QG\HWDWWKHVDPHWLPHWKH\FRQIRUPWRD
VXSHUQDWXUDOLVWLFYLHZWRREHFDXVHWKHLUUXOHVDUHZHOOGHILQHGDQG
WKH\PXVWEHVWDUWHGZLWKVRPHLQLWLDOFRQILJXUDWLRQHYHQLILWLV
UDQGRP $Q\ WKHRU\ ZH IRUPXODWH RXJKW WR H[SODLQ WKH ZKROH
JDPXWRIZRUOGVUDQJLQJIURPWKRVHZKLFKFRXOGQWHYROYHDQ\
WKLQJWRWKRVHZKLFKHYROYHDVPXFKDVSRVVLEOH2QWRSRIWKLVDOO
RI RXU ZRUN FDQ RFFXU LQ WKH ODERUDWRU\ RI D FRPSXWHU ZKHUH
UHSHDWDEOHYHULILDEOHPDWKHPDWLFDOH[SHULPHQWVDUHSHUIRUPHG
7KHNH\WRWKLVSURPLVHKRZHYHUVHHPVWREHDVXIILFLHQWO\
GHHSOHYHORIDQDO\VLV:LWKDXQLYHUVDOVLPXODWLQJPDFKLQHZHFDQ
VLPXODWHDQ\SURFHVVZHOLNHUHJDUGOHVVRIZKHWKHULWLVUHODWHGWR
WKHUHDOZRUOGRUQRW3UHVHQWGD\$/UHVHDUFKHUVVHHPWRQHJOHFW
WKLVVLPSOHIDFW7KH\EXLOGPRGHOVWRVXSSRUW'DUZLQVK\SRWKHVLV
DQG WKH LGHD RI XQOLPLWHG FUHDWLYH HYROXWLRQ ZLWKRXW DVNLQJ WKH
7KH1HZ(YROXWLRQ"

KDUGTXHVWLRQRIZKDWWKH\YHSXWLQWRWKHPRGHO7KLVLVVLPSO\
PDWKHPDWLFDOVWRU\WHOOLQJZKLFKLVQRGLIIHUHQWIURPWKH MXVWVR
VWRULHV ZKLFK HYROXWLRQLVWV VHHP VR DGHSW DW PDNLQJ XS 6XFK
SRLQWOHVVH[HUFLVHVDUHLQGLUHQHHGRIVRPHVHULRXVFULWLFDOUHDV
VHVVPHQW :H FDQQRW SURSHUO\ XQGHUVWDQG ZKDW FRPHV RXW RI D
PRGHOXQOHVVZHXQGHUVWDQGZKDWZHSXWLQWRLW
:KHQ,VD\WKDWVXFKDWKHRU\RIHYROXWLRQZRXOGEHSKLORVRSKL
FDOO\QHXWUDO,GRQRWPHDQWKDWRXUUHVXOWVZLOOQRWKDYHSKLOR
VRSKLFDOLPSOLFDWLRQV$OOJRRGVFLHQFHGRHV:KDW,GRPHDQLV
WKDWWKHEDVLVRIWKHWKHRU\ZLOOEHIRXQGHGLQHPSLULFDOIDFWVDQG
QRWLQDGHVLUHWRPDNHDJUDQGH[SODQDWLRQRIZK\WKHZRUOGLVWKH
ZD\LWLV&HUWDLQO\VXFKDWKHRU\FRXOGKDYHVHULRXVSKLORVRSKLFDO
LPSOLFDWLRQV)RURQH,WKLQNLWFRXOGRYHUWKURZ'DUZLQVK\SRWKH
VLVZLWKRXWWRXFKLQJRQSKLORVRSK\,IHYROXWLRQLVUHDFWLYHUDWKHU
WKDQ FUHDWLYH WKHQ 'DUZLQV K\SRWKHVLV ZRXOG DSSHDU WR EH LQ
WURXEOH3HUKDSVWKHRQO\ZD\LWFRXOGEHVXSSRUWHGZRXOGEHWR
UHWUHDW LQWR SKLORVRSKLFDO WUXLVP 7KHQ 'DUZLQ ZRXOG EH LQ WKH
VDPHFXULRXVSRVLWLRQWKDWFUHDWLRQLQDQHWHUQDOHXFOLGHDQXQLYHUVH
ZDVLQWZRFHQWXULHVDJR
$Q\ODERUDWRU\EDVHGWKHRU\RIHYROXWLRQZLOOSUREDEO\ORRND
ORWGLIIHUHQWIURPWKHHYROXWLRQZHNQRZWRGD\DVDUHVXOWRILWV
GLIIHUHQW IRFXV IURP WKH VWDUW 6XFK D WKHRU\ ZRXOG EH WRWDOO\
RULHQWHGWRZDUGSUHGLFWLQJWKHEHKDYLRURIFRQWUROOHGH[SHULPHQWV
+RSHIXOO\WKHWKHRU\ZRXOGEHUHDOJRRGDWWKDWDQGLILWGLGQWRIIHU
H[SODQDWLRQV IRU WKH JUDQG TXHVWLRQV RI OLIH LW ZRXOG EH QR ELJ
SUREOHPDQ\PRUHWKDQLWLVDSUREOHPIRU*HQHUDO5HODWLYLW\WKDW
LWFDQWWHOOXVZKHUHWKHELJEDQJFDPHIURP
,H[SHFWVXFKDWKHRU\ZRXOGKHDGLQYHU\GLIIHUHQWGLUHFWLRQV
GHSHQGLQJ RQ ZKHWKHU HYROXWLRQ LV IRXQG RXW WR EH FUHDWLYH RU
UHDFWLYH:HKDYHDOUHDG\VHHQWKDWHYROXWLRQFDQEHSXUHO\UHDFWLYH
DWWLPHV)RUH[DPSOHRXU6&$16OLSYLUXVUHVSRQGHGUHDFWLYHO\
WRDVFDQQHUDQGWKHSHSSHUHGPRWKVUHDFWHGWRWKHFKDQJHLQWKHLU
HQYLURQPHQW6RLIHYROXWLRQLVFUHDWLYHLHFDSDEOHRIFUHDWLQJ
LQIRUPDWLRQUDWKHUWKDQPHUHO\FRXSOLQJLWLQWRDVHOIUHSURGXFWLYH
V\VWHPWKHQRQHZRXOGOLNHWRNQRZZKHUHWRGUDZWKHOLQH:KHQ
GRHVHYROXWLRQEHFRPHFUHDWLYH"+RZGRHVWKDWFUHDWLYLW\ZRUN"
:HZRXOGDOVROLNHWRNQRZKRZFUHDWLYHLWLV+RZPXFKLQIRU

PDWLRQ FDQ LW FUHDWH" +RZ IDVW FDQ LW JR" +RZ GR FUHDWLYH DQG
UHDFWLYHHYROXWLRQLQWHUDFW"
2Q WKH RWKHU KDQG LI HYROXWLRQ LV SXUHO\ UHDFWLYH WKH ELJ
TXHVWLRQVFHQWHUDURXQGFRXSOLQJLQIRUPDWLRQLQWRDVHOIUHSURGXF
LQJV\VWHP6XFKTXHVWLRQVVHHPYHU\LQWHUHVWLQJLQWKHLURZQULJKW
EHFDXVHWKDWFRXSOLQJLVUHDFWLYHDQGLWZRUNVWRUHVLVWFKDQJHLQD
ZD\WKDWJLYHVRQHWKHLPSUHVVLRQRILQWHOOLJHQWIRUFHVDWZRUN)RU
H[DPSOHZDWFKLQJVXFFHVVLYHJHQHUDWLRQVRIYLUXVHVLPSURYHWKHLU
DELOLW\ WR HYDGH D VFDQQHU \RXG VZHDU WKH\UH OHDUQLQJ 7KH
LQWURGXFWLRQRIWKHVFDQQHULQWRWKHLUHQYLURQPHQWFDXVHVWKHPWR
GRH[DFWO\WKHRSSRVLWHRIZKDWWKHSHUVRQZKREURXJKWWKHVFDQQHU
LQUHDOO\ZDQWV7KXVWKHYLUXVHVDSSHDUWRHYROYHDQHZLQWHOOL
JHQFHEHFDXVHLWLVFRQWUDU\WRWKHLQWHOOLJHQFHRIWKRVHZKRDUH
WDNLQJDFWLYHPHDVXUHVWRHOLPLQDWHLW,QIDFWWKHYLUXVLVPHUHO\
UHDFWLQJ WR WKH LQWHOOLJHQWO\GHVLJQHG VFDQQHU LQ D FRQVHUYDWLYH
IDVKLRQ WR SUHVHUYH LWVHOI LQ D FKDQJLQJ HQYLURQPHQW 7KXV WKH
FRXSOLQJPHFKDQLVPVHHPVVRPHZKDWFRXQWHULQWXLWLYHLQWKHZD\
WKDWVRPHWKLQJOLNH1HZWRQV7KLUG/DZRIPHFKDQLFVLVFRXQWHU
LQWXLWLYH
,ZRXOGJXHVVWKDWLIHYROXWLRQKDGRULJLQDWHGLQWKHZRUOGRI
$/RQHPLJKWH[SHFWWKHUHDFWLYHWHQGHQF\RIHYROXWLRQWRGRPL
QDWHWKHWKLQNLQJRIHYROXWLRQLVWVUDWKHUWKDQWKHFUHDWLYHLGHDWKDW
GRPLQDWHVWRGD\7KHFUHDWLYHLGHDLVDOPRVWZKROO\PRWLYDWHGE\
WKHFRQYLFWLRQWKDWHYROXWLRQLVWKHPHFKDQLVPEHKLQGDOOWKHJUHDW
YDULHW\RIOLIHRQHDUWK7KXVLWKDVWREHFUHDWLYH,IHYROXWLRQZDV
ZKROO\DSURGXFWRI$/UHVHDUFKWKDWURRWZRXOGEHLUUHOHYDQW
6HFRQGO\,WKLQNLGHDVOLNHGHVLJQLQWHOOLJHQFHDQGLQIRUPD
WLRQZRXOGEHWUHDWHGPXFKPRUHUDWLRQDOO\E\DQ$/EDVHGWKHRU\
RIHYROXWLRQ5HDOZRUOGHYROXWLRQLVWVDUHVRFRPPLWWHGWRPDWHUL
DOLVPWKDWWKH\WHQGWRKDYHVWUDQJHDWWLWXGHVWRZDUGVVXFKLVVXHV
&HUWDLQO\WKHLGHDRIGHVLJQLVQRWIRUHLJQWRVFLHQFH-XVWDERXW
HYHU\ VFLHQWLILF H[SHULPHQW LV DIWHU DOO D GHVLJQHG WHVW RI VRPH
VFLHQWLILFWKHRU\2IWHQYHU\XQXVXDOVLWXDWLRQVDUHVHWXSVLWX
DWLRQVWKDWZRXOGQHYHURFFXU LQWKHZLOG LQRUGHUWRWHVWD
(JHYHU\DSSOLHGIRUFHKDVDQHTXDODQGRSSRVLWHDSSOLHGIRUFH
7KH1HZ(YROXWLRQ"

WKHRU\)RUH[DPSOH\RXPLJKWGRDORWRIZRUNWRFUHDWHDYDFXXP
DQGVHWXSVRPHHOHFWULFILHOGVDQGWKHQGHVLJQDQHOHFWURQVRXUFH
1H[W\RXVHWXSVRPHPRUHHOHFWULFDQGPDJQHWLFILHOGV$OOZLWK
WKHLGHDRIWHVWLQJWKHHQHUJ\PDVVHTXDWLRQRIUHODWLYLW\( PF
$JUHDWGHDORIGHVLJQLVLQYROYHGLQHVWDEOLVKLQJWKHLQLWLDOFRQGL
WLRQV:LWKDELWRIOXFNFDUHIXOPHDVXUHPHQWVDUHSHUIRUPHGDQG
\RXJHWVRPHQXPEHUVRXWWKDWFRQILUPWKHWKHRU\7KXVDQHOHPHQW
RIGHVLJQLVHVVHQWLDOWRMXVWDERXWDQ\H[SHULPHQWDOVFLHQFH
:KHQ,VD\ GHVLJQ ,DPQRWE\WKDWLQYRNLQJWKHVXSHUQDWX
UDO$WWKHOHYHORIDQH[SHULPHQWLWRQO\PDNHVVHQVHWRWDONDERXW
GHVLJQHGLQSXWV)RUH[DPSOHLI,GRDQH[SHULPHQWZKHWKHULWEH
ZLWKDFRPSXWHUYLUXVRUZLWKDQ(&ROL,FDQIXOO\ZHOOWKLQNRI
LWVJHQHVDVEHLQJ GHVLJQHG ZLWKRXWSXOOLQJSKLORVRSK\LQWRWKH
HTXDWLRQ)RUWKHSXUSRVHVRIWKHH[SHULPHQWWKH\DUHGHVLJQHG
+RZHYHUIRUWKHSXUSRVHVRIWKHH[SHULPHQW,GRQWSDUWLFXODUO\
FDUHZKHWKHUWKH\ZHUHGHVLJQHGE\*RGE\DVRIWZDUHHQJLQHHU
RUE\QDWXUDOSURFHVVHV
,EULQJDOORIWKLVXSEHFDXVHLWVHHPVSRVVLEOHWKDWDQ$/EDVHG
HYROXWLRQPLJKWDFWXDOO\WXUQWKHWDEOHVRQWKHGHVLJQLVVXH:HYH
DOUHDG\ VHHQ KRZ D YLUXV OLNH 6&$16OLS GHVLJQHG ZLWK WKH
'*0( KDG D JRRG DELOLW\ WR HYROYH GHIHQVHV DJDLQVW VFDQQHUV
ZKLOH RQH GHVLJQHG ZLWKRXW UHJDUG WR HYROXWLRQ FRXOG QRW 7KH
OLNHOLKRRG WKDW DQ\ UDQGRP YLUXV FRXOG VROYH WKH YHU\ SUDFWLFDO
HYROXWLRQDU\ SUREOHP RI LPSURYLQJ LWV DELOLW\ WR HYDGH D VPDUW
VFDQQHUZLWKRXWKDYLQJLWGHVLJQHGLQVHHPVUHPRWHLQGHHG
<HWHYHQZKHQFDUHIXOO\GHVLJQHGWRHYROYHRXUYLUXVGRHV
QRWKDYHDQXQOLPLWHGSRZHUWRHYDGHVFDQQHUV,WZLOOJHQHUDOO\
ILQGDQLFKHZKHUHLWFDQUHSURGXFHZLWKDIDLUGHJUHHRIVXFFHVV
:KHUHWKDWQLFKHLVDQGKRZVXFFHVVIXOWKHYLUXVLVWKHUHGHSHQGV
RQIDFWRUVOLNHSDUHQWDJHWKHPXWDWLRQUDWHDQGIXQFWLRQDOFDSD
ELOLWLHV<RXFDQQRWH[SHFWWKHYLUXVWRHYDGHWKHVFDQQHUSHUIHFWO\
LQ D IHZ JHQHUDWLRQV <RX FDQQRW H[SHFW HYHU\ FKLOG WR DOZD\V
HYDGHLWIRUDQXQOLPLWHGQXPEHURIJHQHUDWLRQVXQOHVV\RXFDQ
WXUQPXWDWLRQVRIIDQGVLPSO\WHOOWKHYLUXVWRVWRSHYROYLQJ$QG
RIFRXUVHLI\RXSXUVXHHYDGLQJRQHVFDQQHUEOLQGO\\RXFDQRSHQ
XSWKHSRVVLELOLW\RILQFUHDVHGYXOQHUDELOLW\WRRWKHUV)RUH[DPSOH
WXUQLQJWKHPXWDWLRQUDWHIRU6&$16OLSGRZQLPSURYHVWKHUHVXOWV
ZLWK0F$IHHV73(DOJRULWKPEXWLWPDNHVWKHYLUXVYXOQHUDEOHWR

WRWDO HUDGLFDWLRQ E\ RQWKHIO\ VFDQQHUV ZKLFK DOORZ WKH XVHU WR

HQWHUDQHZVFDQVWULQJEHFDXVHLWGRHVQWPXWDWHIDVWHQRXJK7KH
NH\LVWKLVWRLPSURYHWKHUHVXOWVZLWK0F$IHHZLWKRXWLQFUHDVLQJ
WKH YXOQHUDELOLW\ WR RWKHUV \RX QHHG D EHWWHU GHVLJQD IDQFLHU
73(DQGPD\EHDORQJHUFKURPRVRPHRUYDULDEOHPXWDWLRQUDWHV
IRUHDFKJHQH,QVKRUWDEURDGHYROXWLRQDU\FDSDELOLW\PLJKWEH
HTXDWHGZLWKFDUHIXOGHVLJQUDWKHUWKDQEHLQJXVHGWRDUJXHDJDLQVW
GHVLJQ
$OORIWKLVJRHVWRVKRZWKDWWKHWKHRU\RIHYROXWLRQZKLFK,
EHOLHYHZLOOFRPHIURP$/KDVWKHSRWHQWLDOWRHQGXSORRNLQJOLNH
DYHU\GLIIHUHQWDQLPDOWKDQHYROXWLRQGRHVWRGD\
6OD\LQJWKH3KLORVRSKLFDO'UDJRQ
,PFRQYLQFHGWKDWVFLHQWLVWVDVVFLHQWLVWVQHHGWROD\DVLGH
'DUZLQVK\SRWKHVLV$V,VDLGLWLVK\SHUFKDUJHGZLWKSKLORVRSK\
DQG,WKLQNLWLVSRLVRQLQJZKDWFRXOGEHJRRGVFLHQFH+RZHYHU
DVKXPDQEHLQJVLWLVDOPRVWLPSRVVLEOHWROD\DVLGHWKHTXHVWLRQ
'DUZLQV K\SRWKHVLV WULHV WR DQVZHU ,I 'DUZLQV LGHD DERXW WKH
RULJLQRIOLIHZHUHQRWWUXHZKDWWKHQ"$QGZKHQ\RXOD\DVLGHWKLV
LGHDDQGDOORILWVSURWRFROWKHUHDOVFLHQFHRIHYROXWLRQWKDWVOHIW
ORRNVSUHWW\PLVHUDEOH7KDWPDNHVWKH ZKDWWKHQ" ORRPODUJH
7KHVFLHQWLVWZDQWVWRH[SODLQWKHZRUOGE\ZD\RIQDWXUDOODZ
LQDVPXFKDVKHLVDEOHWR<HWZKHUHODZFDQQRWUHDFKWKHUHLV
VRPHVHQVHLQLQYRNLQJWKHPLUDFXORXVHYHQWKRXJKWKDWLVDQDWK
HPDWRWKHFRPPLWWHGPDWHULDOLVW
$V,VDLGVHYHUDOFKDSWHUVEDFNWKHEHVWVFLHQFHZLOOHYHUEH
DEOHWRGRDVIDUDVRULJLQVJRHVLVWRGHWHUPLQHZKHWKHUWKLVRUWKDW
HYHQWLVOLNHO\RQWKHEDVLVRIQDWXUDOODZ:KHQDQHYHQWDSSHDUV
YHU\XQOLNHO\ZHKDYHWKUHHFKRLFHV
6HHNDQHZQDWXUDOODZWRH[SODLQWKHHYHQW
6XJJHVWWKDWDQDWXUDOSKHQRPHQRQWKDWFDQQRWEHH[SODLQHGLQ
WHUPVRIODZLVUHVSRQVLEOH$QH[WUHPHO\UDUHLQ
FKDQFHHYHQWLVDQH[DPSOHRIWKLV/LNHZLVHVWURQJHPHUJHQFH
PLJKWEHDQH[DPSOH
,QYRNHWKHVXSHUQDWXUDO
7KH1HZ(YROXWLRQ"

&KRLFHLVDQREOHZD\WRJREXWLWLVUHDOO\QRWKLQJPRUHWKDQ
DQDGPLVVLRQWKDW\RXGRQWNQRZWKHDQVZHU&KRLFHVDQG
DUHSKLORVRSKLFDOO\DQWDJRQLVWLFDQGWHQWDWLYH7KH\DUHWHQWDWLYH
EHFDXVH VRPHRQH FRXOG DOZD\V ILQG WKDW WKH DQVZHU LV LQ IDFW
QXPEHURQHDWDODWHUGDWHDQGDUHDQWDJRQLVWLFEHFDXVHRQH
SRVLWVPDWHULDOLVPWKHRWKHUQRQPDWHULDOLVP$WWKHVDPHWLPH
DQGGHSULYHGRIWKHLUSKLORVRSKLFDOSHUVSHFWLYHVDUHUHDOO\
DERXWWKHVDPH$IWHUDOOLVWKHLQFKDQFHHYHQWDQ\
WKLQJ EXW ZKDW ZH FDOODPLUDFOH",VVWURQJHPHUJHQFHDQ\WKLQJ
PRUHWKDQDVWDWHPHQWWKDWDWRPLVWLFQDWXUDOODZDVZHNQRZLWLV
LQFDSDEOHRIH[SODLQLQJHYHU\WKLQJ"$QGZKDWLVWKHVXSHUQDWXUDO
H[FHSWWKDWUHDOPZKLFKFDQQRWEHWRXFKHGE\QDWXUDOODZ"6RWKH
TXHVWLRQ RI YHUVXV UHVROYHV LWVHOI LQWR ZKHWKHU WKHUH LV
DQ\WKLQJ RXWVLGH RI RXU PDWHULDO XQLYHUVH ZKLFK FDQ LQIOXHQFH
HYHQWV LQVLGH LW 6R WKH UHDO FKRLFH IRU WKH VFLHQWLVW ZHDULQJ KLV
VFLHQWLVWVKDWLVRU
1RZWKHSRVLWLYLVWVFKRRORISKLORVRSK\ZRXOGKDYHXVEHOLHYH
WKDWFKRLFHLVQRWUHVSHFWDEOHEHFDXVHLWLVWHQWDWLYH,QWKH
SDVWPDQ\ZKRKDYHUHOLHGRQWKHVXSHUQDWXUDOWRKROGWKHKHDYHQV
WRJHWKHUDQGZKDWQRWKDYHEHHQSURYHQZURQJ(YHQJUHDWPHQ
OLNH1HZWRQ:KDWWKH\WKRXJKWUHTXLUHGLQIDFWRQO\UHTXLUHG
D SURSHU XQGHUVWDQGLQJ RI QDWXUDO ODZ $V D VFLHQWLVW \RX PXVW
FKRRVHDQGRQO\DGPLWWKDW\RXGRQWNQRZWKHDQVZHU\HW
$WWKHVDPHWLPHWKHUHLVDWUHPHQGRXVIUDLOW\LQWKLVORJLF
:KHQ VFLHQFH GHDOV ZLWK ODERUDWRU\ H[SHULPHQWV LW LJQRUHV WKH
PLUDFXORXV7KDWLVSHUIHFWO\UHDVRQDEOH$QH[SHULPHQWDOUHVXOW
VKRXOGEHUHSHDWDEOHDQGWKDWZRXOGEHGLIILFXOWLILWGHSHQGHGRQ
DRQHWLPHPLUDFOH:KHQVFLHQFHGHDOVZLWKKLVWRU\WKRXJKDV
HYROXWLRQLVWVKDYHDWWHPSWHGWRGRLQWKHSDVWFHQWXU\RQHPXVW
HVVHQWLDOO\LQVLVWWKDWWKHUHEHQRPLUDFOHV2QHVLQJHPLUDFOHUXLQV
WKHZKROHDUJXPHQW7RVXJJHVWWKDWWKHUHQHYHUKDVEHHQDQGQHYHU
ZLOOEHDPLUDFOHLVDQLQFUHGLEO\VWURQJVWDWHPHQWWRPDNHHVSH
FLDOO\DERXWVXFKDGRXEWIXOVXEMHFW7REXLOGDZKROHWKHRU\RQ
WKDWJDPEOHVHHPVLQVDQH
1RZ,PXVWWDNHRIIP\VFLHQWLVWVKDWIRUDPRPHQW,XVHGWR
EHYHU\PXFKFRPPLWWHGWRQDWXUDOLVP7RPHWKLVZRUOGDQGLWV
ODZVZHUHDOOWKHUHZDVSHULRG2FFDVLRQDOO\VRPHSRRU-HKRYDKV
:LWQHVVHVZRXOGFRPHNQRFNLQJRQP\GRRUDQG,ORYHGQRWKLQJ

EHWWHUWKDQWRLQYLWHWKHPLQDQGODPEDVWWKHPIRUWKHLUIRROLVKQHVV
$OORIWKRVHPLUDFOHVDUHMXVWVWRULHV7KH\UHOLHV ,GVD\ +RZ
FDQ\RXEHOLHYHWKDW",WGRHVQWKDSSHQWRGD\6KRZPHDPLUDFOH
DQG ,OO EHOLHYH,P RSHQ PLQGHG 7KH\ FRXOG QRW <HW WKH\
DVVXUHGPHWKH\EHOLHYHGHYHU\ZRUGRILW,MXVWPDUYHOOHGDWWKHLU
LQVDQLW\
/DWHRQHQLJKWZKLOHLQJUDGXDWHVFKRRO,ZDVOLVWHQLQJWRD
UDGLRWDONVKRZ$IHOORZIURPDJURXSFDOOHG6LOYD0LQG&RQWURO
ZDVRQWHOOLQJKRZWKHLUGD\FRXUVHZRXOGWHDFK\RXKRZWRKDYH
DSV\FKLFH[SHULHQFH7KHFDWFKHUZDV\RXFRXOGJHW\RXUIHH
EDFNLI\RXZHUHQWVDWLVILHG7KLVJX\DFWXDOO\JXDUDQWHHG
D SV\FKLF H[SHULHQFH RU \RXU PRQH\ EDFN , UHDOO\ ZDV RSHQ
PLQGHGVR,VDYHGXSP\PRQH\DQGZHQW7KHFRXUVHGHOLYHUHG
$WWKHHQGHYHU\RQHZDVDVNHGWRZULWHGRZQRQDFDUGGHWDLOHG
LQIRUPDWLRQDERXWSHRSOHWKH\NQHZZKRKDGDPHGLFDOSUREOHP
7KHFDUGVZHUHPL[HGXSDQGSDVVHGRXW7KHQRQHSHUVRQZRXOG
KROGDFDUG\RXYHQHYHUVHHQDERXWDSHUVRQQHLWKHURI\RXNQRZ
+HZRXOGWHOO\RX ,KDYHDPDQLQ1HZ<RUN DQGWKDWZDVDOO
<RXZRXOGWKHQFORVH\RXUH\HVDQGJRLQWRDVWDWHRIPHGLWDWLRQ
DQGJLYHDOOWKHGHWDLOVRQWKLVFDUGZKLFK\RXYHQHYHUVHHQ
1RZLI\RXZHUHDQREVHUYHUZDWFKLQJWKLVSURFHVVLWZRXOG
EHHDV\WRLPDJLQHDWKRXVDQGZD\VWRULJLWDQGFKHDW1RGRXEW
WKH ZKROH VKRZ ZRXOG EH YHU\ XQFRQYLQFLQJ +RZHYHU ZKHQ
\RXUHVLWWLQJWKHUHZLWK\RXUH\HVVKXWUDWWOLQJRIIWKHGHWDLOVRQ
WKHVH FDUGV ZLWK DFFXUDF\HYHQ WKURZLQJ LQ WKLQJV WKDW
DUHQW RQ WKH FDUGV EXW ODWHU JHW FRQILUPHG\RX JHW D ZKROH
GLIIHUHQWSHUVSHFWLYH<RXIHHOOLNH\RXUHMXVWPDNLQJLWXSWKHQ
\RXRSHQ\RXUH\HVDQGILQGRXWLWZDVWRWDOO\FRUUHFW
:DV,WDNLQJDGYDQWDJHRIVRPHFRPSOH[DSSOLFDWLRQRINQRZQ
SK\VLFDO ODZV" :HUH WKH HOHFWURQV LQ P\ EUDLQ FRPPXQLFDWLQJ
HOHFWURPDJQHWLFDOO\ZLWKRWKHUVLQWKHURRP"2UZDVLWVRPHQHZ
XQNQRZQ ODZ RI SK\VLFV DW ZRUN" +DG , MXVW JRWWHQ LQFUHGLEO\
OXFN\"2UKDG,MXVWGHOYHGLQWRWKHVXSHUQDWXUDO"$VDVFLHQWLVW,
FDQWDQVZHUWKDW,GRQWNQRZHQRXJKWRDQVZHULW3HUKDSVLWZDV
MXVWQDWXUDOODZDIWHUDOO,I,FRXOGGHPRQVWUDWHWKHSKHQRPHQRQLQ
DPDWKHPDWLFDOPRGHOXVLQJNQRZQODZLWZRXOGEHDQRWKHUVWRU\
EXWVRPHKRZ,WKLQNWKDWVOLNHO\WREHIRUHYHUEH\RQGP\JUDVS
7KH1HZ(YROXWLRQ"

6LQFHWKLVWXUQLQJSRLQW,KDYHSXUVXHGWKHVXEMHFWFDVXDOO\
DQGIRXQGRXWWKDW PLUDFOHV DUHQRWQHDUO\VRUDUHDV,VXSSRVHG
,YHGDEEOHGZLWKWKHRFFXOWDQGHDVWHUQP\VWLFLVP,YHVWRRGLQ
HYDQJHOLVWLFPHHWLQJVZKHUHD&KULVWLDQSURSKHWGLVSOD\HGVRPH
XQGHQLDEOHSRZHU,YHUHDGERRNVILOOHGZLWKWKHPLUDFXORXVDV
ZHOODVVWXGLHVE\VFLHQWLVWVDLPHGDWGHEXQNLQJSDUDSV\FKRORJ\
DQGPLUDFOHZRUNHUV
:KHQDOOLVVDLGDQGGRQH,KDYHWRDGPLWWKHVXSHUQDWXUDOLQWR
P\ZRUOGYLHZ,VD\WKLVZLWKP\VFLHQWLVWVKDWRII,VD\LWE\ZD\
RISHUVRQDOH[SHULHQFHQRWUHSHDWDEOHH[SHULPHQWDOWKRXJKWKHVH
WKLQJV DUH QRW EHLQJ GRQH LQ KLGLQJ , NQRZ WKHVH PDWWHUV DUH
LQFUHGLEO\GLIILFXOWWRWDFNOHZLWKVFLHQWLILFPHWKRGDQG,DPQRW
WKH OHDVW VXUSULVHG WR ILQG WKDW LW LV VR (YHQ RUGLQDU\ KXPDQ
SV\FKRORJ\ ZKLFK DWWHPSWV WR GHDO ZLWK QDWXUDO LQWHOOLJHQFHV
DSSHDUVWREHDEDQNUXSWVFLHQFH3V\FKRWKHUDS\ZKLFKLVDIWHU
DOO WKH SURRI RI WKH SXGGLQJ LV QRWRULRXVO\ XQDEOH WR SURGXFH
VWDWLVWLFDOO\ VLJQLILFDQW UHVXOWV 6R LI XQQDWXUDO DQG VRPHWLPHV
SHUKDSVLPSLVKLQWHOOLJHQFHVDUHLQYROYHGLQVXSHUQDWXUDOSKHQRP
HQDRQHFRXOGKDUGO\KRSHWRGREHWWHUWKDQRUGLQDU\SV\FKRORJ\
7KH VFLHQWLVW ZKR EX\V LQWR PDWHULDOLVWLF QDWXUDOLVP KDV GH
FLGHGWKDWWKHUHDUHQRVXSHUQDWXUDOSKHQRPHQD+HKDVFORVHGD
GRRU WKDW VFLHQFH E\ LWVHOI FDQQRW FORVH 7KHQ KH XVXDOO\ WXUQV
DURXQGDQGFDOOVWKDWGHFLVLRQ VFLHQWLILF DVLIWRJLYHLWUHVSHFW
DELOLW\7KLVLVWKHKHLJKWRIDUURJDQFH
,I,GRQRWFORVHWKLVGRRUWKHQHYHQDVDVFLHQWLVW,KDYHWR
DGPLWWKDWQDWXUDOODZPD\QRWDFFRXQWIRUHYHU\WKLQJ7KHUHIRUH,
KDYHWRDGPLWWKDW'DUZLQVK\SRWKHVLVFRXOGEHIODWRXWHPSLUL
FDOO\ ZURQJ 3HUKDSV VFLHQFH KDV QRW GLVFRYHUHG KRZ FRPSOH[
RUJDQLVPVFDPHLQWREHLQJ,I,FDQH[SHULHQFHHYHQRQHVXSHUQDWX
7 / 2VERUQH +HDOLQJ WKH 6LFN WK (G +DUULVRQ +RXVH 7XOVD
2NODKRPD(LWKHUWKLVJX\VVHHQVRPHUHDOPLUDFOHVRUKHVWKHELJJHVW
OLDUZKRHYHUOLYHG
)RUH[DPSOH0DUWLQ*DUGQHU6FLHQFH*RRG%DGDQG%RJXV3URPHWKHXV
%RRNV%XIIDOR1HZ<RUN
7KRPDV 6]DV] 7KH0\WKRI3V\FKRWKHUDS\'RXEOHGD\*DUGHQ&LW\1HZ
-HUVH\

UDOHYHQWLQP\OLIHHYHQDWWKHOHYHORIUHDUUDQJLQJDIHZHOHFWURQV
LQ P\ EUDLQWKHQ , KDYH WR DGPLW WKDW LW FRXOG KDYH ZRUNHG WR
FKDQJHKLVWRU\LQWKHSDVW2QFH,PDNHWKDWDGPLVVLRQWKHWUXWKRI
'DUZLQLVPEHFRPHVDUHDOTXHVWLRQDQGQRWMXVWDSKLORVRSKLFDO
QHFHVVLW\DQGWKHSRVVLELOLW\WKDWLWLVZURQJLVQRWDFDWDVWURSKH
$PLUDFOHFDQQRWWRSSOHDUHDOVFLHQWLILFWKHRU\WKDWKDVSUHGLF
WLYHYDOXH,I,ZHUHWRVHHVRPHJXUXLQ,QGLDOHYLWDWH,ZRXOGQRW
GLVFDUG 1HZWRQV ODZ RI JUDYLWDWLRQ DQ\ PRUH WKDQ , GLVFDUG LW
EHFDXVH(LQVWHLQVD\VLWQHHGVWREHPRGLILHG,WVWLOOKDVWUHPHQ
GRXVYDOXH2QWKHRWKHUKDQG,ZLOOQRWHOHYDWHVXFKDODZWRWKH
VWDWXV RI VRPH NLQG RI $EVROXWH 7UXWK DQG UDWKHU UHFRJQL]H LWV
OLPLWDWLRQV
)RUWKLVUHDVRQ,DPIXUWKHUFRQYLQFHGWKDWVFLHQWLVWVVKRXOG
WDNHJUHDWSDLQVWRIRXQGDQ\WKHRU\RIHYROXWLRQLQDSKLORVRSKL
FDOO\QHXWUDOZD\,QVD\LQJWKDW,DPQRWVXJJHVWLQJWKDWVFLHQWLVWV
DVSURIHVVLRQDOVFLHQWLVWVUHVRUWWRPLUDFOHVRUUHOLJLRQWRH[SODLQ
QDWXUH(YHQWKRXJKVXFKPDWWHUVPD\EHTXLWHUHDOWKH\DUHQRW
VFLHQFH:KDW,DPVD\LQJLVWKDWLI\RXEDVHDWKHRU\RQODEZRUN
WKHQ\RXFDQUHDVRQDEO\PLWLJDWHWKHQHHGIRUWKHVXSHUQDWXUDOLQ
VLWXDWLRQVZKHUH\RXUWKHRU\LVXSWRWKHFKDOOHQJHRIH[SODLQLQJ
HJFRUUHWO\SUHGLFWLQJKRZVRPHREVHUYHGSKHQRPHQRQZRUNV
,I\RXUWKHRU\LVQRWXSWRWKHFKDOOHQJH\RXMXVWNHHS\RXUPRXWK
VKXW2QWKHRWKHUKDQGLI\RXEDVHDWKHRU\RQDSKLORVRSKLFDO
WUXLVP \RX RQO\ HQG XS LQ D SKLORVRSKLFDO FRQXQGUXP EHFDXVH
\RXUWKHRU\LVDVFLHQWLILFWREHJLQZLWKDQG\RXUHIRUHYHUGDPQHG
WR EH DUJXLQJ SKLORVRSKLFDO LVVXHV ZKLOH WU\LQJ WR PDLQWDLQ D
QRQSKLORVRSKLF VFLHQWLILF SRVWXUH 7KDW LV H[DFWO\ WKH SUREOHP
ZKLFKSUHVHQWGD\HYROXWLRQIDFHVDQGLWLVH[DFWO\ZKDW$/FDQ
KHOSXVRXWRI
/DVW:RUGV
:KHQ ZH VWDUWHG RQ RXU MRXUQH\ LQWR D QHZ ZRUOG ZH ILUVW
VRXJKWWROHDUQZKHWKHUDUWLILFLDOOLIHDQGFRPSXWHUYLUXVHVFRXOG
EHDOLYH7RGRWKDWZHKDGWROHDUQZKDWZDVPHDQWE\OLIH:H
IRXQGWKDWFRPSXWHUYLUXVHVIXOILOOHGRXUPHFKDQLFDOLGHDVRIZKDW
OLIHLVSUHWW\ZHOO<HWZHDOVRVDZWKDWWRWDONDERXWOLIHZHKDGWR
WDONDERXWPRUHWKDQPHFKDQLFVDQGZHGHOYHGLQWRWKHSKLORVRSKL
FDOUHDOPWRGLVFXVVVRPHRIWKRVHLVVXHVDELW,QZD\VFRPSXWHU
YLUXVHV VHHPHG WR GR EHWWHU WKDQ PDQ\ RWKHU DUWLILFLDO OLIH FRQ
VWUXFWVSKLORVRSKLFDOO\VSHDNLQJ)RUH[DPSOHWKH\KDYHJDLQHGD
GHJUHH RI DXWRQRP\ )RU H[DPSOH WKHLU HQYLURQPHQW ZDV QRW
VSHFLILFDOO\ GHVLJQHG IRU WKHP VR WKH\ FRXOG EH DQDO\]HG DV D
SKHQRPHQRQUDWKHUWKDQDSXUHFRQVWUXFW,QRWKHUZD\VWKH\IHOO
VKRUW:HFRXOGQRWFODLPVWURQJHPHUJHQWEHKDYLRUIRURXUYLUXVHV
RUIRUDQ\RWKHUIRUPRIDUWLILFLDOOLIH,QWKHHQGZHGHFLGHGWKDW
LQWKHVWURQJHVWOLJKWYLUXVHVDUHQRWDFWXDOO\DOLYH$WWKHVDPH
WLPHZHVDZWKDWWKH\FRXOGEHXVHGWRVWXG\WKHSKHQRPHQDRI
OLIH ZLWKRXW UHSURDFK ,Q SDUWLFXODU HYROXWLRQ DSSHDUHG WR EH D
SDUWLFXODUO\LQWHUHVWLQJSUREOHPWRDSSURDFK
$UWLILFLDO OLIH VHHPV WR RIIHU XV WKH PDFKLQHU\ WR JR DERXW
IRUPXODWLQJ D WKHRU\ RIHYROXWLRQWKDWGRHVQRWVWDUWZLWKSKLOR
VRSKLFDOWUXLVPVDQGGRHVQRWDLPWRSURYLGHDQDQVZHUWRHYHU\
WKLQJ,WRIIHUVXVWKHDELOLW\WRDQDO\]HHYROXWLRQDU\VFHQDULRVPXFK
PRUHFOHDUO\DQGGHHSO\WKDQSRVVLEOHLQWKHUHDOZRUOG:LWKRXW
WKHSKLORVRSKLFDOEDJJDJHLWPLJKWMXVWJLYHXVVRPHQHZLQVLJKWV
LQWROLIHWKDWDUHZRUWKNQRZLQJ<HWPRUHZRUNKDVWREHGRQH
7KRXJK LW VHHPV FOHDU WKDW WKH LGHD RI LQIRUPDWLRQ FRQWHQW DV LW

UHODWHVWRDUWLILFLDOOLIHDQGWKHSK\VLFVRIDV\VWHPFDQEHXQDPEL
JXRXVO\GHILQHGPRUHZRUNLVQHHGHGLQWKLVDUHD7KHQVRPHRI
WKHELJTXHVWLRQVOLNHZKHWKHUHYROXWLRQLVUHDOO\RQO\UHDFWLYHRU
ZKHWKHU LW FRQWDLQV D FUHDWLYH HOHPHQW DV ZHOO FDQ EH SURSHUO\
DGGUHVVHG
:HOOWKLVLVWKHHQGRIRXUWRXURIWKLVDPD]LQJQHZZRUOG,Q
DZD\,IHHODVLI,FRXOGJRRQDQGRQH[SORULQJHYHUIXUWKHUDQG
GHHSHU7KHUHLVDOZD\VDQRWKHUKLOODQGZKDWOLHVEH\RQGLW,GRQW
NQRZ<HWDOOWKLQJVPXVWFRPHWRDQHQG,GLGQRWSURPLVH\RXD
ODQG DOO EXLOW XS ZLWK FLWLHV DQG FULVVFURVVHG ZLWKKLJKZD\VVR
GRQWEHGLVDSSRLQWHGLI\RXKDYHQWJRWLW,I,YHVKRZQ\RXDQHZ
ZRUOGDQXQWDPHGZRUOGWKDWLVSHUKDSVPRUHLQWHUHVWLQJDQG
PRUHLPSRUWDQWWKDQ\RXILUVWWKRXJKWWKHQ,KDYHVXFFHHGHGLQP\
SODQVIRUWKLVH[SORUDWRU\MRXUQH\DQG,KRSHWRPHHW\RXLQWKLV
FRXQWU\DJDLQVRPHGD\
$SSHQGL[$
$Q,QWURGXFWLRQWR
&HOOXODU$XWRPDWD
7KLV FKDSWHU LV LQWHQGHG WR SURYLGH WKH UHDGHU ZKR LV QRW
IDPLOLDUZLWKWKHFRQFHSWRIFHOOXODUDXWRPDWDZLWKDEDVLFNQRZO
HGJHRIZKDWWKH\DUHDQGKRZWRZULWHDSURJUDPWKDWLPSOHPHQWV
RQH
7KH%DVLFV
,PDJLQHDQDUUD\RIFHOOV7KLVDUUD\PD\EHRQHGLPHQVLRQDO
WZRGLPHQVLRQDO
RUPXOWLGLPHQVLRQDO7KHDUUD\PD\EHILQLWHRULQILQLWHDWOHDVW
LQWKHRU\1RZLPDJLQHWKDWHDFKFHOOLQWKHDUUD\FRQVLVWVQRWRI
DQHPSW\ER[EXWDOLWWOHPDFKLQHRUFRPSXWHUWKDWFDQUHSRUW
DQXPEHUWR\RXUHSUHVHQWDWLYHRILWVLQWHUQDOVWDWH(DFKPDFKLQH
PD\KDYHDVPDQ\LQWHUQDOVWDWHVDV\RXOLNH(DFKRIWKHVHOLWWOH

PDFKLQHVLVDOVRFRQQHFWHGWRRWKHUVLQWKHDUUD\QRUPDOO\LQVRPH
V\VWHPDWLFIDVKLRQ)RUH[DPSOHHDFKPDFKLQHPLJKWEHFRQQHFWHG
WRLWVQHDUHVWQHLJKERUVDVZLWK/DQJWRQVDXWRPDWRQ
QHDUHVWQHLJKERUVSOXVFRUQHUVDVZLWK&RQZD\VJDPHRIOLIH
RULQVRPHPRUHFRPSOLFDWHGDUUDQJHPHQWLQYROYLQJQRWVRQHDU
QHLJKERUVDVLQWKLVRQHGLPHQVLRQDODUUD\
1RZFRQQHFWHGGRHVQRWPHDQDWWDFKHGZLWKVWULQJVRUVRPH
WKLQJ RI WKDW QDWXUH 5DWKHU ZH PHDQ WKDW WKH PDFKLQHV VKDUH
LQIRUPDWLRQDERXWWKHLUVWDWHWKHQXPEHUZKLFKWKH\UHSRUWWRXV
ZLWKHDFKRWKHU(DFKFRQQHFWLRQLVERWKDQLQSXWDQGDQRXWSXW
/HWV FRQVLGHU RQH SDUWLFXODU PDFKLQH (DFK LQSXW FRQVLVWV RI D
QXPEHUDUHSRUWRIWKHVWDWHZKLFKHYHU\FRQQHFWHGPDFKLQHLV
LQ (DFK RXWSXW LV VLPSO\ WKH QXPEHU DVVRFLDWHG WR WKH PDFKLQH
ZHUHORRNLQJDW
$Q,QWURGXFWLRQWR&HOOXODU$XWRPDWD

1RZHYHU\PDFKLQHLQDQDUUD\FDQXVHLWVFXUUHQWVWDWHDQG
DOOLWVLQSXWVWRGHWHUPLQHDQHZVWDWHLQDQDOJRULWKPLFIDVKLRQ
/HWVFRQVLGHUDRQHGLPHQVLRQDODUUD\WRPDNHWKLVDELWPRUHFOHDU
6XSSRVH HDFK PDFKLQH KDV RQO\ WZR VWDWHV RQ DQG RII DQG KDV
LQSXWVRQO\IURPQHDUHVWQHLJKERUV

7KHQDW\SLFDOWUDQVLWLRQUXOHWDNHVWKHIRUP ,IPDFKLQHVWDWHLVRQ
DQGERWKQHLJKERUVDUHRQFKDQJHPDFKLQHVWDWHWRRII :HFDQ
UHSUHVHQWWKLVUXOHLQDWUDQVLWLRQWDEOH
0DFKLQH

/1HLJKERU

51HLJKERU

5HVXOW

1RZLI\RXVSHFLI\HYHU\SRVVLEOHFRPELQDWLRQRIWKHPLQWKLV
FDVHLQWKLVWDEOH\RXKDYHFRPSOHWHO\VSHFLILHGWKHEHKDYLRURI
WKHPDFKLQH
$FHOOXODUDXWRPDWRQLVVLPSO\DQDUUD\RILGHQWLFDOPDFKLQHV
FRQQHFWHG WR HDFK RWKHU LQ VRPH ZD\ 7KDW LV LI WKHUH DUH WZR
PDFKLQHV$DQG%LQWKHDUUD\WKH\FRXOGEHLQWHUFKDQJHG
ZLWKRXWFKDQJLQJWKHORJLFDOVWUXFWXUHRIWKHDUUD\7\SLFDOO\RQH
DOVRLPSRVHVRWKHUUHVWULFWLRQVRQWKHPDFKLQHV)RUH[DPSOHRQH
PLJKW UHTXLUH WKH PDFKLQHV WR EH URWDWLRQDOO\ LQYDULDQW 7KDW
PHDQVIRUH[DPSOHWKDWWKHFRQILJXUDWLRQ

PXVWJLYHWKHVDPHUHVXOWDVDURWDWLRQ

7KLVLGHDFRPHVIURPWKHUHDOZRUOGVLQFHWKHSK\VLFDOODZVLQRXU
ZRUOGDUHURWDWLRQDOO\LQYDULDQW2IWHQSHRSOHGRLQJFHOOXODUDXWR
PDWDZRUNDUHRQO\LQWHUHVWHGLQUXOHVWKDWLQYROYHQHDUHVWQHLJK
ERUVRUQHDUHVWQHLJKERUVDQGFRUQHUVDVZHOO7KLVUHVWULFWLRQ
WRRLVDERUURZLQJIURPSK\VLFVEHFDXVHSK\VLFDOODZVDUHORFDO
3URJUDPPLQJD&HOOXODU$XWRPDWRQ
&HOOXODUDXWRPDWDFRXOGEHLPSOHPHQWHGZLWKDQDFWXDODUUD\
RIFRPSXWHUVEXWSURYLGHGWKHUXOHVDUHVLPSOHHQRXJKLHWKHUH
DUH D VPDOO QXPEHU RI SRVVLEOH VWDWHV WKH\ DUH QRUPDOO\ LPSOH
PHQWHG LQ D VLQJOH FRPSXWHU DV DQ DUUD\ RI QXPEHUV 7KHQ WKH
FRPSXWHURSHUDWHVRQWKHQXPEHUVLQWKHDUUD\WRPDNHWKHPEHKDYH
OLNHWKHPDFKLQHVLQDFHOOXODUDXWRPDWRQZLWKWKHJLYHQWUDQVLWLRQ
UXOHV7\SLFDOO\WKHIDVWHVWZD\WRGRWKLVLVWRGHILQHWZRDUUD\V
&DQG&&LVWKHFHOOXODUDUUD\DWWLPHW,Q&WKHSURJUDP
EXLOGVWKHDUUD\DWWLPHW)RUH[DPSOHJRLQJEDFNWRRXURQH
GLPHQVLRQDODXWRPDWRQWKHURWDWLRQDOO\LQYDULDQWUXOHWDEOH
0DFKLQH

/1HLJKERU

51HLJKERU

FRXOGEHLPSOHPHQWHGZLWKWKHIROORZLQJORJLF
5HVXOW

$Q,QWURGXFWLRQWR&HOOXODU$XWRPDWD

IRU1 WR0GR^
LI&>1@ WKHQ^
FDVH&>1@&>1@RI
&>1@
&>1@
&>1@
`
LI&>1@ WKHQ^
FDVH&>1@&>1@RI
&>1@
&>1@
&>1@
`
`
& &
:KHUHWKHDUUD\VUDQJHLVWR0DQG1LVDQLQGH[YDULDEOH6HWWLQJ
& &DWWKHHQGVHWV&XSSURSHUO\WREHJLQWKHFDOFXODWLRQIRU
WLPHW
2QHILQDOELWRIKRXVHNHHSLQJLVQHHGHGWRLPSOHPHQWDFHOOXODU
DXWRPDWRQ:KDWWRGRZLWKWKHHGJHVRIWKHDUUD\"2EYLRXVO\RXU
FDOFXODWLRQZRUNVILQHH[FHSWZKHQ1 RU07KHQ&>1@RU
&>1@GRHVQRWH[LVW:HFDQKDQGOHHGJHVWZRZD\V:H
FDQLPSRVHDERXQGDU\FRQGLWLRQ)RUH[DPSOHZHFDQMXVWDOZD\V
DVVXPHWKDW&>@ &>0@ RU$OWHUQDWLYHO\ZHFDQ
LPSRVH D V\PPHWU\ RQ WKH DUUD\ WR UHPRYH WKH ERXQGDU\ )RU
H[DPSOHZHFDQGHILQH&>@ &>0@DQG&>0@ &>@7KLV
HVVHQWLDOO\WUDQVIRUPVRXUOLQHDUDUUD\LQWRWKHVKDSHRIDFLUFOH
ZKLFKKDVQRERXQGDU\7KLVDUUDQJHPHQWLVFDOOHGDF\FOLFERXQG
DU\FRQGLWLRQ,OHDYHWKHFRGHIRUGRLQJWKLVDVDQH[HUFLVH
7KHSURJUDP65$B/$%RQWKH3URJUDP'LVNLPSOHPHQWVD
JHQHUDOWZRGLPHQVLRQDOFHOOXODUDXWRPDWRQZLWKIL[HGERXQGDU\
FRQGLWLRQV<RXFDQFKDQJHWKHWUDQVLWLRQUXOHVE\PRGLI\LQJWKH
FKHPLVWU\ILOHDQGFKDQJHWKHLQLWLDOFRQILJXUDWLRQDVZHOOWKHQUXQ
WKHDXWRPDWRQDQGVHHKRZLWRSHUDWHV
$SSHQGL[%
6RPH%DVLF%LRFKHPLVWU\
7KLVDSSHQGL[LVVLPSO\DTXLFNDQGGLUW\LQWURGXFWLRQWRVRPH
RIWKHEDVLFFKHPLVWU\RIOLIHVRWKDWZKHQ,VWDUWWKURZLQJWHUPV
OLNH'1$DURXQG\RXOOKDYHVRPHLGHDRIZKDW,PWDONLQJDERXW
7KHUHDUHWZRLQWHUUHODWHGVXEMHFWV,GOLNHWRFRYHUWKH'1$51$
V\VWHPDQGSURWHLQV
7KH'1$51$6\VWHP
'1$'HR[\ULERQXFOHLF$FLGLVWKHPDWHULDOLQZKLFKDOOWKH
JHQHWLFLQIRUPDWLRQRIDOLYLQJRUJDQLVPLVVWRUHG,WLVDUHODWLYHO\
LQHUWPDWHULDOLQVLGHWKHFHOOZKLFKFDUULHVRXWDSDVVLYHIXQFWLRQ
,WGRHVQRWEXLOGDQ\WKLQJLWVHOILWPHUHO\VLWVWKHUHOLNHDERRN
EHLQJUHDGDQGFRSLHG\HWLWFRQWDLQVLQVWUXFWLRQVWREXLOGHYHU\
WKLQJLQWKHRUJDQLVP
'1$LVEXLOWIURPIRXUEDVLFEXLOGLQJEORFNVFDOOHGQXFOHR
WLGHV(DFKQXFOHRWLGHFRQVLVWVRIDDVXJDUUDGLFDOULERVHED
SKRVSKDWHDQGFDQLWURJHQRXVEDVH6HH)LJXUH%7KHUHDUH
IRXUGLIIHUHQWQXFOHRWLGHVXVHGWREXLOGD'1$PROHFXOHZKLFK
GLIIHU RQO\ LQ WKH QLWURJHQRXV EDVH 7KHVH DUH FDOOHG $GHQLQH
7K\PLQH *XDQLQH DQG &\WRVLQH DQG DEUHYLDWHG $ 7 * DQG &
UHVSHFWLYHO\WKHOHWWHUVRIWKHJHQHWLFFRGH7KH\OLQNWRJHWKHULQ
ZKDWLVFDOOHGDSKRVSKRGLHVWHUERQGWREXLOGDORQJFKDLQLQ
WKHVKDSHRIDKHOL[
(DFK QXFOHRWLGH LQ WKH KHOL[ OLQNV K\GURJHQ ERQGV ZLWK D
FRPSOHPHQWDU\ QXFOHRWLGH WR IRUP D FRLOHG ODGGHU VWUXFWXUH RU

5HSODFHGZLWK2+LQ51$
)LJXUH%7KHFKHPLFDOVWUXFWXUHRI'1$
GRXEOHKHOL[)LJXUH%$GHQLQHSDLUVZLWK7K\PLQHDQG*XD
QLQHSDLUVZLWK&\WRVLQH7KLVFRPSOHPHQWDU\ODGGHUVWUXFWXUHLV
LPSRUWDQW LQ UHSURGXFWLRQ EHFDXVH FRS\LQJ WKH '1$ LV DFFRP
SOLVKHG E\ VSOLWWLQJ WKH ODGGHU GRZQ WKH PLGGOH %HFDXVH HDFK
QXFOHRWLGHSDLUVRIIZLWKDFRPSOHPHQWDQHZGRXEOHKHOL[FDQEH
EXLOWIURPHDFKRIWKHWZRVLGHVZKHQVSOLW

$&*7$*$$*&&7$7$
7*&$7&77&**$7$7
)LJXUH%6FKHPDWLFUHSUHVHQWDWLRQRID'1$
GREXOHKHOL[
51$5LERQXFOHLF$FLGLVYHU\VLPLODUWR'1$,WGLIIHUVRQO\
LQWKDWDK\GURJHQLRQLQWKHVXJDUFLUFOHGLQ)LJXUH%LVUHSODFHG
ZLWKDK\GUR[LGH2+DQGWKHEDVH7K\PLQHLQ'1$LVUHSODFHG
ZLWK8UDFLO7KXVLQ51$WKHJHQHWLFFRGHLVUHSUHVHQWHGZLWKWKH
OHWWHUV$8*DQG&
51$LVQRWQHDUO\VRVWDEOHDV'1$7KDWPHDQVLWLVQRWDV
XVHIXOIRUVWRULQJLQIRUPDWLRQIRUORQJSHULRGVRIWLPH2QWKHRWKHU
KDQG D PRUH UHDFWLYH LQIRUPDWLRQEHDULQJ PROHFXOH LV XVHIXO LQ
WXUQLQJWKDWLQIRUPDWLRQLQWRVRPHWKLQJXVHIXOLQWKHFHOOQDPHO\
DSURWHLQ(VVHQWLDOO\51$DFWVDVDQLQWHUPHGLDU\LQWKHSURFHVV
FDOOHGWUDQVFULSWLRQRIXVLQJWKHLQIRUPDWLRQLQWKH'1$WREXLOG
SURWHLQV7KHUHDUHWKUHHGLIIHUHQWW\SHVRI51$ZKLFKSHUIRUP
GLIIHUHQW IXQFWLRQV %DVLFDOO\ PHVVHQJHU 51$ P51$ ZKLFK
FDUULHVWKHWUDQVFULSWLRQRIWKH'1$FRPELQHVZLWKWUDQVIHU51$
W51$DQGJRHVWRWKHFHOOVULERVRPHWRLQWHUDFWZLWKULERVRPDO
51$U51$7KHULERVRPHVWUDQVODWHWKHLQIRUPDWLRQLQP51$
LQWRSURWHLQVZKLFKDUHWKHEXLOGLQJEORFNVIRUDOOWKHUHVWRIWKH
FHOO
3URWHLQV
3URWHLQV DUH VWULQJV RI DPLQR DFLGV 7KHVH VWULQJV DUH EXLOW
XVLQJ WKH JHQHWLF FRGH LQ WKH ULERVRPH IURP WKH LQVWUXFWLRQV
FRQWDLQHGLQWKH'1$7KUHHVHTXHQWLDOQXFOHRWLGHVLQWKH'1$
FRGHIRUDVLQJOHDPLQRDFLG$W\SLFDOSURWHLQPLJKWEHRQWKHRUGHU

RIDPLQRDFLGVORQJFRUUHVSRQGLQJWRQXFOHRWLGHV7KH
VWULQJRIQXFOHRWLGHVZKLFKFRGHIRURQHFRPSOHWHSURWHLQLVFDOOHG
D JHQH $ FKURPRVRPH LV HVVHQWLDOO\ D VWUDQG RI '1$ DQG LW
QRUPDOO\FRQWDLQVWKRXVDQGVRIJHQHV
6LQFHWKHUHDUHIRXUQXFOHRWLGHV\RXFDQVHHWKDWWKUHHOHWWHUV
LQWKHJHQHWLFFRGHJLYH SRVVLELOLWLHV<HWWKHVHSRVVLEOH
FRPELQDWLRQV FRGH IRU RQO\ SRVVLEOH DPLQR DFLGV 7KXV WKH
JHQHWLFFRGHLVUHGXQGDQW7ZRGLIIHUHQWOHWWHUFRGHVFDQFRGH
IRUWKHVDPHDPLQRDFLG7KDWPDNHVWKHVDPHWZRFRGHVIXQFWLRQ
DOO\HTXLYDOHQWLQWKHFHOO)LJXUH%GHWDLOVWKHJHQHWLFFRGHDQG
LWVUHGXQGDQFLHV
7\SLFDOO\WKHVWULQJVRIDPLQRDFLGVZKLFKPDNHXSDSURWHLQ
ZLOO QRW UHPDLQ OLQHDU ,QVWHDG WKH\ FRLO XS LQWR YHU\ FRPSOH[
VKDSHV 7KH VKDSH LQ FRPELQDWLRQ ZLWK WKH FKHPLFDO VWUXFWXUH
PDNHWKHVHSURWHLQVH[WUHPHO\YHUVDWLOH7KH\SHUIRUPDOORIWKH
FKHPLFDO DQG VWUXFWXUDO IXQFWLRQV D OLYLQJ RUJDQLVP UHTXLUHV IRU
OLIH7KH\UHJXODWHWKHFHOOVPHWDEROLVPWKH\KHOSWREXLOGQHZ
51$ DQG VSOLW WKH '1$ DQG FRS\ LW 7KH\ UHPRYH XQZDQWHG
PDWHULDOV IURP WKH FHOO DQG IXQFWLRQ DV HQ]\PHV WR EUHDN GRZQ
IRRG7KH\EXLOGWKHFHOOZDOOSURGXFHKDLUWKH\FKHZXSXQQHHGHG
SURWHLQVDQGWKH\KHOSWREXLOGQHZRQHV
&RGH
$PLQR$FLG
8883KHQ\ODODQLQH
88&
88$/HXFLQH
88*
&88
&8&
&8$
&8*
$88,VROHXFLQH
$8&
$8$
$8*0HWKLRQLQHRUVWDUW
*889DOLQH
*8&
*8$9DOLQHRUVWDUW
*8*
8&86HULQH
8&&
8&$
8&*
&&83UROLQH
&&&
&&$
&&*
$&87KUHRQLQH
$&&
$&$
&RGH

$PLQR$FLG
8$87\URVLQH
8$&
8$$6WRS
8$*
&$8+LVWLGLQH
&$&
&$$*OXWDPLQH
&$*
$$8$VSDUDJLQH
$$&
$$$/\VLQH
$$*
*$8$VSDUWLFDFLG
*$&
*$$*OXWDPLFDFLG
*$*
8*8&\VWHLQH
8*&
8*$6WRS
8**7U\SWRSKDQ
&*8$UJLQLQH
&*&
&*$
&**
$*86HULQH
)LJXUH%7KHJHQHWLFFRGH
$SSHQGL[&7KH)LUVW
,QWHUQDWLRQDO9LUXV
:ULWLQJ&RQWHVW
7KH IROORZLQJ ILOH ZDV GLVWULEXWHG LQ )HEUXDU\ RQ D
YDULHW\RIEXOOHWLQERDUGVWKURXJK7KH&U\SW1HZVOHWWHUDQGWKH
&RPSXWHU8QGHUJURXQG'LJHVWHWFHWF
:(/&20(
72
7+(
),567

,17(51$7,21$/

&20387(5

9,586

:5,7,1*

&217(67

)LQDO'DWH)RU6XEPLVVLRQV$35,/
7KLV&RQWHVWLV6SRQVRUHGE\
$PHULFDQ(DJOH3XEOLFDWLRQV,QF
32%R[
7XFVRQ$=86$

3XEOLVKHURI7KH/LWWOH%ODFN%RRNRI&RPSXWHU9LUXVHV

',675,%87(7+,6),/($//29(57+(.12:181,9(56(

2NDOO\RXJHQLXVKDFNHUVRXWWKHUH+HUHLVDFKDOOHQJH
IRU\RX3URYH\RXUVWXII
7KLVLVDQ,17(51$7,21$/FRQWHVWDQGWKLVILOHLV
EHLQJFLUFXODWHGDOORYHUWKHZRUOGVRLI\RXZDQWWRFRPSHWH
EHIRUHZDUQHG\RXYHJRWZRUOGZLGHFRPSHWLWLRQ2QO\WKHEHVW
KDYHDFKDQFHLQWKLVJDPH
6WLOOXSWRWKHFKDOOHQJH"
2NKHUHLWLV
,DPZULWLQJ9ROXPHRI7KH/LWWOH%ODFN%RRNRI&RPSWHU
9LUXVHV7KLVLVDVWXG\RIWKHVFLHQWLILFDSSOLFDWLRQVRI
FRPSXWHUYLUXVHVDQGWKHLUXVHLQDUWLILFLDOOLIHUHVHDUFK
DQGDOORIWKDWQHDWVWXII2QHRIWKHWKLQJV,ZDQWWRGLVFXVV
LQWKHERRNLVWKHOLPLWRQWKHVL]HRIDYLUXVIRUDJLYHQ
OHYHORIIXQFWLRQDOLW\6R,WRRNWKH7,0,'YLUXVIURP9ROXPH
DQGWRUHLWGRZQWRWKHEDUHPLQLPXP1RWJRRGHQRXJK,ZURWH
DYLUXVWKDWZRUNHGDOLWWOHGLIIHUHQWO\,WRUHWKDWRQHGRZQ
WRWKHEDUHPLQLPXP*RRGHQRXJK":HOOPD\EH%XWPD\EHQRW
,KDYHVRPHSUHWW\FRPSDFWFRGHEXWLVLWWKHDEVROXWHEHVW"
,PJXHVVLQJVRPHERG\RXWWKHUHFDQWRSLW
+HUHDUHWKHUXOHV
7KHREMHFWRIWKLVJDPHLVWRZULWHWKHVPDOOHVW
YLUXV\RXFDQZLWKWKHUHTXLUHGOHYHORIIXQFWLRQDOLW\
7KHYLUXVPXVWEHFDSDEOHRILQIHFWLQJDOO&20ILOHV
RQWKHORJJHGGULYHLQWKHFXUUHQWGLUHFWRU\RID3&
QRPDWWHUKRZPDQ\&20ILOHVDUHWKHUH,WPD\LQIHFW
WKHPDVTXLFNO\RUDVVORZO\DV\RXOLNHVRORQJDV
LWFDQEHGHPRQVWUDWHGWKDWLWZLOOGRVRLQDQKRXU
ZKHQUXQQLQJWKHSURJUDPVLQWKDWGLUHFWRU\RQHDIWHU
WKHRWKHULQVHTXHQWLDORUGHU
7KHYLUXVPXVWUHFRJQL]HLWVHOIDQGDYRLGUHLQIHFWLQJ
ILOHVWKDWKDYHEHHQLQIHFWHG$WPRVWRQO\RQHLQ
ILIW\WKRXVDQGILOHVVKRXOGJHWDFFLGHQWO\UHLQIHFWHG
DVVXPLQJWKDWWKHGDWDLQXQNQRZQ&20ILOHVLVUDQGRP
7KHYLUXVPXVWWHUPLQDWHJUDFHIXOO\LILWFDQQRWILQGD
ILOHWRLQIHFW
7KHYLUXVPXVWQRWGHVWUR\DQ\RIWKHFRGHLQDQ\ILOH
ZKLFKLWLQIHFWV,WPXVWDOORZWKDWFRGHWRH[HFXWH
SURSHUO\RUUHIXVHWRLQIHFWDILOH
7KHYLUXVPXVWEHVHOIFRQWDLQHG,WFDQQRWKLGH
FRGHLQVRPHFRPPRQORFDWLRQRQGLVN
7KHYLUXVPXVWIXQFWLRQSURSHUO\XQGHU06'26ZLWK
QR765VUHVLGHQWDQGQRWKLQJORDGHGKLJK
7KHVL]HZLOOEHGHWHUPLQHGE\WKHODUJHURI$WKH
QXPEHURIE\WHVWKHYLUXVFRGHLWVHOIWDNHVXSLQ
DQLQIHFWHGILOHDQG%WKHODUJHVWQXPEHURIE\WHV
WKHYLUXVDGGVWRDSURJUDPZKHQLWLQIHFWVLW
7KH)LUVW,QWHUQDWLRQDO9LUXV:ULWLQJ&RQWHVW
7KHEHVWFRGH,KDYHIRUDYLUXVWKDWIROORZVWKHVHUXOHVULJKW
QRZLVE\WHVORQJ%RWKVRXUFHDQGH[HFXWDEOHDUHLQFOXGHG
LQWKH=,3QDPHG/,77/($60DQG/,77/(&20
,QWKHHYHQWRIDWLHIRUVL]HRULJLQDOLW\DQGLQJHQXLW\RI
WKHFRGHZLOOEUHDNWKHWLH$OOMXGJHVGHFLVLRQVDUHILQDO

7KHZLQQHUZLOOUHFHLYHWKHIROORZLQJ
$&$6+5(:$5'
<RXUFRGHZLOOEHSXEOLVKHGLQ7KH/LWWOH%ODFN%RRN
RI&RPSXWHU9LUXVHV9ROXPH
,ZLOOJLYH\RXFUHGLWIRUWKHFRGHDQGIRUZLQQLQJ
WKH,QWHUQDWLRQDO9LUXV&RQWHVWLQWKHERRNXVLQJ
HLWKHU\RXUUHDOQDPHRUDQDOLDV\RXUFKRLFH
SXEOLVKHGLQWKHERRN
<RXUQDPHZLOOEHSRVWHGRQWKH0,66EXOOHWLQERDUG
DVWKHFRQWHVWZLQQHU
$IUHHFRS\RI7KH/LWWOH%ODFN%RRNRI&RPSXWHU
9LUXVHV9ROXPHDQGDRQH\HDUVXEVFULSWLRQWR
&RPSXWHU9LUXV'HYHORSPHQWV4XDUWHUO\YDOXH
7KUHHKRQRUDEOHPHQWLRQZLQQHUVZLOOUHFHLYHDIUHHFRS\RI
7KH/LWWOH%ODFN%RRNRI&RPSXWHU9LUXVHV9ROXPH

<RXPD\PDNHDQHQWU\LQWZRZD\V
0DLO\RXUHQWU\RQD3&IRUPDWIORSS\GLVNWR$PHULFDQ(DJOH
3XEOLFDWLRQV,QF32%R[7XFVRQ$=86$
8SORDG\RXUHQWU\WRWKH0,66EXOOHWLQERDUGDW
LQWKH86$/RJRQDV*8(67SDVVZRUG9,586
ODVWGLJLWVRISKRQHQXPEHUDQGXSORDGWRWKH&217(67
83/2$'6GLUHFWRU\
$YDOLGHQWU\FRQVLVWVRIWKHIROORZLQJLWHPV
$&RPSOHWHVRXUFHFRGHIRUDYLUXVZKLFKFDQEHDVVHPEOHG
XVLQJHLWKHU7$600$60RU$,I\RXXVHDQRWKHUDVVHPEOHU
DQGGRQWNQRZLIRQHRIWKHDERYHZLOOZRUNWKHQVHQGWKH
DVVHPEOHUDORQJZLWKWKHVXEPLVVLRQ,I\RXGRDQ\WKLQJWULFN\
WKDWZHPD\QRWXQGHUVWDQG\RXPXVWH[SODLQLWLQFRPPHQWVLQ
WKHDVVHPEOHUVRXUFH
%$VWDWHPHQWRIZKR\RXDUHDOLDVHVDFFHSWHGDQGKRZWR
JHWLQWRXFKZLWK\RXLQFDVH\RXZLQWKHFRQWHVW7KLV
LQIRUPDWLRQZLOOEHNHSWVWULFWO\FRQILGHQWLDODQGHQFU\SWHG
DWDOOWLPHV
%\VXEPLWWLQJDQHQWU\WRWKHFRQWHVW\RXDJUHHWKDWWKH
FRS\ULJKWWR\RXUHQWU\ZLOOEHFRQVLGHUHGWKHSURSHUW\RI
$PHULFDQ(DJOH3XEOLFDWLRQV7KHFRS\ULJKWWRDQ\ORVLQJ
HQWU\ZLOOEHUHWXUQHGWRWKHRZQHUXSRQZULWWHQUHTXHVW
,QWKHHYHQWWKDW\RXZLQRUUHFHLYHKRQRUDEOHPHQWLRQLQWKH
FRQWHVWWKHFRS\ULJKWWRWKHFRGHZLOOUHPDLQWKHSURSHUW\
RI$PHULFDQ(DJOH3XEOLFDWLRQV,QF

7KH IROORZLQJ YLUXV GXEEHG /,77/( ZDV LQFOXGHG LQ WKH

FRQWHVWDVDQH[DPSOHRIZKDWZDVZDQWHG,WZHLJKHGLQDW
E\WHV
$ VPDOO E\WH YLUXV ZLWK PLQLPDO UHTXLUHG IXQFWLRQDOLW\
7KLV 9LUXV IRU UHVHDUFK SXUSRVHV RQO\ 3OHDVH GR QRW UHOHDVH
3OHDVH H[HFXWH LW RQO\ RQ D FDUHIXOO\ FRQWUROOHG V\VWHP DQG RQO\
LI \RX NQRZ ZKDW \RXUH GRLQJ
$Q H[DPSOH IRU

7+( ),567 ,17(51$7,21$/ 9,586 :5,7,1* &217(67

VSRQVRUHG E\

$PHULFDQ (DJOH 3XEOLFDWLRQV ,QF

$VVHPEOH WKLV ILOH ZLWK 7$60 RU KLJKHU 7$60 /,77/(
/LQN DV 7/,1. 7 /,77/(
%DVLF H[SODQDWLRQ RI KRZ WKLV YLUXV ZRUNV

7KH YLUXV WDNHV FRQWURO ZKHQ WKH SURJUDP ILUVW VWDUWV XS $OO RI LWV FRGH LV
RULJLQDOO\ ORFDWHG DW WKH VWDUW RI D &20 ILOH WKDW KDV EHHQ LQIHFWHG :KHQ
WKH YLUXV VWDUWV LW WDNHV RYHU D VHJPHQW . DERYH WKH RQH ZKHUH WKH SURJUDP
ZDV ORDGHG E\ '26 ,W FRSLHV LWVHOI XS WKHUH DQG WKHQ VHDUFKHV IRU DQ
XQLQIHFWHG ILOH 7R GHWHUPLQH LI D ILOH LV LQIHFWHG LW FKHFNV WKH ILUVW WZR
E\WHV WR VHH LI WKH\ DUH WKH VDPH DV LWV ILUVW WZR E\WHV ,W UHDGV WKH ILOH
LQWR PHPRU\ ULJKW DERYH ZKHUH LW LV VLWWLQJ DW + LQ WKH XSSHU VHJPHQW
,I QRW DOUHDG\ LQIHFWHG LW MXVW ZULWHV LWVHOI SOXV WKH ILOH LW LQIHFWHG EDFN
RXW WR GLVN XQGHU WKH VDPH ILOH QDPH 7KHQ LW PRYHV WKH KRVW LQ WKH ORZHU
VHJPHQW EDFN WR RIIVHW + DQG H[HFXWHV LW
PRGHO WLQ\
7LQ\ PRGHO WR FUHDWH D &20 ILOH
FRGH
'7$ GHILQLWLRQV
'7$
(48
)6,=(
(48
)1$0(
(48
25*
+
'7$$+
'7$(+
'LVN WUDQVIHU DUHD

ILOH VL]H ORFDWLRQ LQ ILOH VHDUFK
ILOH QDPH ORFDWLRQ LQ ILOH VHDUFK
+

7KH YLUXV VWDUWV KHUH
9,567$57
PRY
DGG
PRY
PRY
PRY
PRY
PRY
UHS
PRY
SXVK
PRY
SXVK
UHWI
D[GV
D[+
HVD[
XSSHU VHJPHQW LV WKLV RQH +
VL+
SXW YLUXV LQ WKH XSSHU VHJPHQW
GLVL
DW RIIVHW +
FO%<7( 2))6(7 +267 $1' ))+FDQW FRGH WKLV ZLWK 7$60
FO%+
ZH FDQ DVVXPH FK
PRYVE
GVD[
VHW GV WR KLJK VHJPHQW
GV
D[2))6(7 ),1'B),/(
D[
MXPS WR KLJK PHPRU\ VHJPHQW
1RZ LWV WLPH WR ILQG D YLDEOH ILOH WR LQIHFW :H ZLOO ORRN IRU DQ\ &20 ILOH
DQG VHH LI WKH YLUXV LV WKHUH DOUHDG\
),1'B),/(
[RU
G[G[
PRYH GWD WR KLJK VHJPHQW
PRY
DK$+
GRQW WUDVK FPG OLQH
LQW
+
KRVW H[SHFWV LW
PRY
G[2))6(7 &20),/(
PRY
FK)+
VHDUFK IRU DQ\ ILOH
PRY
DK(+
'26 VHDUFK ILUVW
LQW
+
&+(&.B),/(
MF
$//'21(
QR &20 ILOHV WR LQIHFW
PRY
PRY
LQW
MF
PRY
G[)1$0(
D['+
+
1(;7B),/(
E[D[
ILUVW RSHQ WKH ILOH

UZ DFFHVV RSHQ ILOH
HUURU RSHQLQJ ILOH
SXW ILOH KDQGOH LQ E[
PRY
PRY
PRY
GL)6,=(
F[>GL@
G[VL
JHW ILOH VL]H

DQG UHDG ILOH LQ
PRY
LQW
PRY
MF
D[:25' 375 >9,567$57@

,1)(&7B),/(
VHH LI LQIHFWHG DOUHDG\

QRSH JR GR LW
PRY
LQW
&20),/(
'26 UHDG IXQFWLRQ
FPS
MQ]
1(;7B),/(
DK)+
+
D[>VL@
1(;7B),/(
DK(+
+
HOVH FORVH WKH ILOH

VHDUFK IRU DQRWKHU ILOH
PRY
LQW
MPS
DK)+
+
6+257 &+(&.B),/(
DQG JR FKHFN LW RXW
'%

&20
VL 2))6(7 +267 KHUH

VNLS ILOH LI HUURU
ORRN IRU DQRWKHU ILOH
:KHQ ZH JHW KHUH ZHYH RSHQHG D ILOH VXFFHVVIXOO\ DQG UHDG LW LQWR PHPRU\
,Q WKH KLJK VHJPHQW WKH ILOH LV VHW XS H[DFWO\ DV LW ZLOO ORRN ZKHQ LQIHFWHG
7KXV WR LQIHFW ZH MXVW UHZULWH WKH ILOH IURP WKH VWDUW XVLQJ WKH LPDJH
LQ WKH KLJK VHJPHQW
,1)(&7B),/(
[RU
F[F[
PRY
G[F[
UHVHW ILOH SRLQWHU
PRY
D[+
LQW
+
PRY
PRY
PRY
DGG
LQW
PRY
LQW
7KH LQIHFWLRQ SURFHVV
GRZQ VR WKDW LWV FRGH
$//'21(
PRY
PRY
PRY
SXVK
VKU
PRY
LQW
PRY
SXVK

PRY

VXE
PRY
UHS
UHWI
DK+
G[+
F[:25' 375 >GL@
F[2))6(7 +267 +
+
DK(+
+
DGMXVW VL]H RI ILOH

ZULWH LQIHFWHG ILOH
FORVH WKH ILOH
LV QRZ FRPSOHWH 7KLV URXWLQH PRYHV WKH KRVW SURJUDP

VWDUWV DW RIIVHW + DQG WKHQ WUDQVIHUV FRQWURO WR LW
D[VV
GVD[
HVD[
D[
G[
DK$+
+
GL+
GL
F[VS
F[VL
F[)()+
PRYVE
VHW GV HV WR ORZ VHJPHQW DJDLQ

SUHS IRU UHWI WR KRVW
UHVWRUH GWD WR RULJLQDO YDOXH
IRU FRPSDWLELOLW\
PRYLQJ KRVW EDFN WR RULJ ORF
PRYH FRGH GRQW WUDVK VWDFN
KDQG FRGHVDYH D E\WH
PRYH FRGH
DQG UHWXUQ WR KRVW

7KH KRVW SURJUDP VWDUWV KHUH 7KLV RQH LV D GXPP\ WKDW MXVW UHWXUQV FRQWURO
WR '26
+267
PRY
LQW
D[&+
+
(1'
7HUPLQDWH HUURU FRGH
9,567$57
+267B(1'
7KH &203$1,21 9LUXV ZDV MXGJHG WKH *UDQG 3UL]H

ZLQQHU,WIXILOOHGDOORIWKHUHTXLUHPHQWVIRUWKHFRQWHVWLQDPHUH
E\WHV,WLVDPHPRU\UHVLGHQWFRPSDQLRQYLUXVZKLFKUHQDPHV
WKHILOHLWLQIHFWVWRWKHVDPHQDPHRQO\ZLWKD 9 DVWKHYHU\ODVW
OHWWHU7KHDXWKRU6WRUPEULQJHUSUHIHUVWRUHPDLQDQRQ\PRXVWR
WKLVGD\7KHVRXUFHOLVWLQJRIWKLVYLUXVIROORZV,WPD\EHFRPSLOHG
ZLWK7$60RU0$60

&RPSDQLRQ


0HPRU\ 5HVLGHQW &RPSDQLRQ )LOH 9LUXV E\ 6WRUPEULQJHU

7KLV YLUXV LV D VLPSOH FRPSDQLRQ YLUXV WKDW ZRUNV E\ UHQDPLQJ DQ\ ILOH
WKDW LV H[HFXWHG WR ""9 DQG FUHDWLQJ D KLGGHQ ILOH ZLWK WKH RULJLQDO QDPH
,I LW LV QRW LQ PHPRU\ WKHQ WKH ILUVW WLPH DQ LQIHFWHG SURJUDP LV UXQ LW
ZLOO LQVWDOO LWVHOI LQ PHPRU\ DQG WHUPLQDWH $IWHU WKDW DQ\ DWWHPSW WR
H[HFXWH DQ LQIHFWHG ILOH ZLOO H[HFXWH WKH UHQDPHG KRVW DQG DQ\ RWKHU
H[HFXWLRQ DWWHPSW ZLOO LQIHFW WKH ILOH H[HFXWHG 7KH YLUXV LV E\WHV
LQ OHQJWK

PRGHO VPDOO
UDGL[
FRGH
RUJ
VWDUW
PRY
LQW
PRY
PRY
D[

ZRUG SWU >,3B@E[
ZRUG SWU >&6B@HV
*HW ,QW DGGUHVV DQG VDYH
PRY
PRY
LQW
PRY
LQW
,17B
G[RIIVHW ,17B
DK

GORIIVHW (QGB0HPRU\

FPS
MQH
DKEK
*RB,QWB
,I LWV QRW DQ H[HFXWH

FRPPDQG FRQWLQXH ZLWK
,17
VL E[ F[ GL HV D[ GV G[
'6'; )LOHQDPH
6DYH 5(*6
([HFXWH
SXVK
PRY
SXVK
PRY
GLRIIVHW 1HZB)QDPH
GL
VLG[
SXVK
SRS
6HW ,QW KDQGOHU

*R 765
FV
HV
/RDGB)LOHQDPH
ORGVE
VWRVE
RU
DODO
MQ]
/RDGB)LOHQDPH
PRY
E\WH SWU HV>GL@9
PRY
SRS
LQW
MF
DK
GL

$OUHDG\BWKHUH
&UHDWHB1HZB)LOH
PRY
DKF
SRS
G[
SXVK
G[
PRY
FOE
LQW

SXVK
SRS
6HWXS UHJV WR FRS\ ILOHQDPH
/RDG ILOHQDPH LQWR 1HZB)QDPH
1HZ QDPH FKDUDFWHU

5HQDPH ILOH WR ""9
,I LW GRHVQW ZRUN WKHQ
LWV SUREDEO\ DOUHDG\
LQIHFWHG VR OHWV UXQ WKH
KRVW ILOH
&UHDWH ILOH ZLWK RULJLQDO

QDPH
FV
GV
[FKJ
D[E[
PRY
PRY
PRY
LQW
DK
F[RIIVHW HQGBSURJ
G[

:ULWH YLUXV WR LW
PRY
LQW
DKH

&ORVH
$OUHDG\B7KHUH
SRS
G[ GV D[ HV GL F[ E[
PRY
E\WH SWU GV>VL@9
SRS
*RB,QWB
GE
HQGBSURJ
,3B GZ
&6B GZ
1HZB)QDPH
(QGB0HPRU\
VL
5HVWRUH DOO EXW 6,

&KDQJH ODVW E\WH RI RULJ
ILOHQDPH WR UXQ KRVW
UHVWRUH 6,
HD
-XPS WR ,QW
"
"
GE
GXS "

HQG VWDUW
7KH 67203(5 YLUXV GLVFXVVHG LQ WKH FKDSWHU ,Q WKH

%HJLQQLQJLVDVLPSOHPRGLILFDWLRQRIWKH&203$1,21,W
GLIIHUVIURPWKHFRPSDQLRQYLUXVLQWKDWLWVLPSO\RYHUZULWHVILOHV
LQVWHDGRIUHQDPLQJWKHP,WVHIIHFWLYHVL]HLVE\WHV,WVOLVWLQJ
IROORZV

67203(5

$ VLPSOH PHPRU\ UHVLGHQW RYHUZULWLQJ YLUXV YHU\ FORVH WR &203$1,21
123V LQVHUWHG WR PDNH LW DV FORVH WR &203$1,21 DV SRVVLEOH
PRGHO VPDOO
UDGL[
FRGH
RUJ
VWDUW
PRY
LQW
PRY
PRY
D[

ZRUG SWU >,3B@E[
ZRUG SWU >&6B@HV
PRY
PRY
LQW
PRY
LQW
,17B
G[RIIVHW ,17B
DK

GORIIVHW (QGB0HPRU\

FPS
MQH
DKEK
*RB,QWB
*HW ,QW DGGUHVV DQG VDYH
([HFXWH
GE
SXVK

E[ F[ GL HV D[ GV
6HW ,QW KDQGOHU

*R 765
,I LWV QRW DQ H[HFXWH
FRPPDQG FRQWLQXH ZLWK
,17
'6'; )LOHQDPH
SXVK VL
GE

SXVK G[
GE
GE
GE

PRY
SXVK
PRY
GLRIIVHW 1HZB)QDPH
GL
VLG[
GE
GE

SXVK
SRS
FV
HV

/RDG ILOHQDPH LQWR 1HZB)QDPH

ORGVE
VWRVE
RU
DODO
MQ]
/RDGB)LOHQDPH
GE

PRY
GE
GE
GE
GE

PRY
DK
SRS
GL
LQW

MF
$OUHDG\BWKHUH
LWV SUREDEO\ DOUHDG\
LQIHFWHG VR OHWV UXQ WKH
KRVW ILOH
/RDGB)LOHQDPH
GE
GE
GE
GE
&UHDWHB1HZB)LOH
PRY
DKF
GE

GE

PRY
FOE
LQW

SXVK
SRS
E\WH SWU HV>GL@9
SRS
G[
SXVK
G[
&UHDWH ILOH ZLWK RULJLQDO
QDPH
FV
GV
[FKJ
D[E[
PRY
PRY
PRY
LQW
DK
F[RIIVHW HQGBSURJ
G[

:ULWH YLUXV WR LW
PRY
LQW
DKH

&ORVH

$OUHDG\B7KHUH
GE

SRS
GV D[ HV GL F[ E[
GE

&KDQJH ODVW E\WH RI RULJ
LUHW
VWRUH 6,
*RB,QWB
GE
HQGBSURJ
,3B GZ
&6B GZ
1HZB)QDPH
(QGB0HPRU\
HQG VWDUW
HD
"
"
GE
SRS
G[
5HVWRUH DOO EXW 6,
PRY
E\WH SWU GV>VL@9
ILOHQDPH WR UXQ KRVW
SRS
VL
UH
-XPS WR ,QW

GXS "
,QVHFRQGSODFHZDVWKH(HP'269RRUGH9HUVLRQYLUXV
ZKLFKGLGQWZRUNTXLWHDVZHOODVWKH&203$1,21,WZDV
ZULWWHQE\'DUN5D\IURPWKH7ULGHQWYLUXVZULWLQJJURXS9RRUGHV
OLVWLQJIROORZV

7KH (HP'26 9RRUGH 9LUXV YHUVLRQ

6PDOOHVW E\WHV &20 ILOH LQIHFWRU ZKLFK ZRUNV ZLWK WH IRORZLQJ
SULQFLSH

%HIRUH

BBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBB
>ILUVW E\WHV RI ILOH@>UHVW RI ILOH@

$IWHU

BBBBBBBBBBBB BBBBBBBBBBBB BBBBB BBBBBBBBBBBBBBBBBBBBB
>MPS WR YLUXV@>UHVW RI ILOH@>YLUXV@>ILUVW E\WHV RI ILOH@

7KLV ZD\ WKH YLUXV FDQ UHVWRUH WKH ILUVW E\WHV RI WKH ILOH VR
WKH ILOH ZLOO VWLOO ZRUN

,I \RX ZDQW QR UHJLVWHUV WR FKDQJH \RX FDQ DGG VRPH SXVKHV EXW
LWOO PDNH WKH YLUXV PXFK ODUJHU

& E\ >'D5N5D<@ 7ULGHQ7

%7: 7KLV LV RQO\ D HGXFDWLRQDO VRXUFH DQG WKLV YLUXV VKRXOG QRW EH
VSUHDG \RX PD\ SXEOLVK WKLV ILOH LQ LWV RULJLQDO IRUP
,I \RX LQWHQG WR VSUHDG WKLV YLUXV \RX ZLOO WDNH DOO WKH UHVSRQVLELOLWLHV
RQ \RXVHOI VR WKH DXWKRU ZLOO QRW JHW LQWR WUXEEOH
,I \RX GR QRW DJUHH ZLWK WKLV GHVWUR\ WKLV ILOH QRZ

B&2'( 6(*0(17
$6680( &6B&2'(
25*
7KLV EDEV OHQJWK
'%
(K
-XPS WH YLUXV FDUULHU

SURJUDP
386+
386+
323
6,
6,
',
3XW K LQ ', DQG VDYH

LW DV UHWXUQ SRLQW

5(/$7,9(
6,
6,2/'B%<7(6 5(/$7,9(

&DOFXODWH ZKHUH WKH ROG
E\WHV DUH VWRUHG

6,
6DYH LW IRU ODWHU
029
5(3
&/
0296%
5HVWRUH WKH ILUVW E\WHV

029
';6,
6HW '; WR ILOH VSHF
323
9;
(48 7+(B(1' 9;
386+
67$57
K
/(1
6,
5HVWRUH 6,
$;
$+)K
K
(;,7

6HDUFK IRU QH[W ILOH
DQG H[LW LI QRQ IRXQG

&$//
5(/$7,9(
323
$''
'(&
$*$,1 $''
,17
-&
029
$+)K
,2
5HDG ILUVW E\WHV

%<7( 375 >',@(K

$*$,1
1H[W ILOH LI ILUVW LQVWU

LV D -03 )$5 PDUNHU
029
;25
&:'
,17
$;K
&;&;
K

*RWR (2)

68%
$''
029
$;
',
:25' 375 '6>',@$;

6HW -03 WR YLUXV

029
029
029
68%
&$//
23(1
&ORVH RSHQ ILOH DOVR

QLFH DQWLGHEXJ WULFN
&03
-(
(;,7
3XW 6, LQ ',
$+(K
23(1
029
&$//
,2
',6,
029
&$//
$+K
&//(1
';',
';2/'B%<7(6 9;
23(1

:ULWH YLUXV DQG RSHQ
ILOH DJDLQ

'(&
029
',
$+K
:ULWH -03

029
029
,17
&/
';',
K

5HDG RU ZULWH E\WHV

5(7
,17
029
029
,17
;&+*
5(7
2/'B%<7(6
6WDUW FDUULHU SURJUDP

K
$;'K
';(K
K
%;$;

2SHQ ILOH

123
123
5(7

)LUVW E\WHV RI FDUULHU
SURJUDP
),/(B1$0(
'%
K
)LOH WR VHDUFK IRU DOO
1(:B%<7(6
'%
(K
-03 WR YLUXV EXIIHU
7+(B(1'
B&2'(
(1'6
(1'
67$57
7KLUGDQGIRXUWKSODFHVZHUHDOVRFDSWXUHGE\6WRUPEULQJHU
ZLWKWZRE\WHYLUXVHVERWK&20ILOHLQIHFWRUV7KHVHDUHDOVR
OLVWHGKHUHIRU\RXUHQMR\PHQW7KHILUVWLV9LGHR6KLIW

9LGHR 6KLIW E\WHV

:ULWWHQ E\ 6WRUPEULQJHU

:ULWWHQ H[FOXVLYHO\ IRU WKH )LUVW ,QWHUQDWLRQDO 9LUXV :ULWLQJ

&RQWHVW WKLV YLUXV LV D UHODWLYHO\ VPDOO GLUHFW DFWLRQ YLUXV WKDW ZLOO
LQIHFW &20 ILOHV LQ WKH FXUUHQW GLUHFWRU\ 6RPH RSWLRQV FDQ EH H[FOXGHG
IURP WKH FRGH ZKLFK ZKLOH PDNLQJ WKH YLUXV PRUH OLNHO\ WR FDXVH D SURJUDP
WR PDOIXQFWLRQ ZLOO FKDQJH LWV VL]H IURP E\WHV WR E\WHV 96B
FRQWDLQV WKH UHGXFHG YHUVLRQ RI WKLV YLUXV

PRGHO VPDOO
UDGL[
FRGH
RUJ

VWDUW
PRY
PRY
PRY
PRY
SXVK
PRY
UHSQ]
PRY
SXVK
UHWI
$IWHUB-XPS
SXVK
SRS
PRY
SRS
PRY
UHSQ]
D[E
HVD[
GL
VLGL
FV GL GL HV
FOHQGBSURJVWDUW
PRYVZ
D[RIIVHW $IWHUB-XPS
D[
,P XVLQJ D EDFN SDJH LQ YLGHR PHP

WR VWRUH WKH YLUXV ZKLOH UHVWRULQJ
WKH KRVW DQG SHUIRUPLQJ LQIHFWLRQV
$GGUHVV %
SXVK QXPEHUV IRU ODWHU 5(7)V
&RS\ YLUXV XS LQWR PHPRU\
-XPS WR QHZ FRS\
&RS\ KRVW WR RIIVHW K
SXVK
SRS
FDOO
FV
GV
VHWB'7$
6HW '7$
PRY
PRY
LQIHFW
GV
HV
VLRIIVHW HQGBSURJ
GL
FKIH
PRYVE
DKH
G[RIIVHW PDVNH
&20
ILQGBQH[W
LQW
MF

UHVWRUH
)LQG D ILOH
5HWXUQ WR KRVW LI QRQH DUH IRXQG
PRY
G[H
PRY
LQW
[FKJ
D[G

D[E[
PRY
PRY
PRY
LQW
G[RIIVHW HQGBSURJ
DKI
FKII

SXVK
FPS
MH
D[
E\WH SWU >HQGBSURJ@E &KHFN IRU LQIHFWLRQ
GRQHBLQIHFW
PRY
[RU
[RU
LQW
D[
F[F[
G[G[

SRS
SXVK
F[
F[
DGG
GE
F[HQGBSURJVWDUW
FD
'LUHFW E\WHV 7$60 DGGV 123

RWKHUZLVH
LQF
PRY
LQW
GK
DK

:ULWH LQIHFWHG ILOH EDFN WR GLVN
GRQHBLQIHFW
SRS
2SHQ ILOH 5($':5,7(

3XW KDQGOH LQ %;
5HDG LQ HQWLUH ILOH
*R EDFN WR EHJLQQLQJ RI ILOH
D[
PRY
LQW
DKH

&ORVH ILOH RSWLRQDO

PD\ EH UHPRYHG IRU D GHFUHDVH RI E\WHV
PRY
MPS
DKI
ILQGBQH[W
)LQG QH[W ILOH

.HHS LQIHFWLQJ ILOHV XQWLO LW UXQV RXW
G[
DKD

6HW '7$
HV
GV
VHWBGWD
5HVWRUH '7$ WR RULJLQDO DQG JR WR KRVW SURJ
VHWBGWD
PRY
PRY
LQW
UHW
UHVWRUH
SXVK
SRS
FDOO
UHWI
PDVNH
GE
HQGBSURJ
UHW
HQG VWDUW
&20
)LOH PDVN IRU VHDUFK URXWLQH

&RXOG EH FKDQJHG WR &
WR HOLPLQDWH RQH E\WH EXW WKLV ZRXOG
FDXVH PLVILUHV RQ WKLQJV OLNH &$3 DQG
&)* ILOHV
1RW SDUW RI YLUXV MXVW WKHUH IRU
ILUVW UXQ

7KHILQDOYLUXVWRJDLQUHFRJQLWLRQLQWKHFRQWHVWLVWKH0,1,
0(0E\6WRUPEULQJHU

0LQL0HP E\WHV

:ULWWHQ E\ 6WRUPEULQJHU

:ULWWHQ H[FOXVLYHO\ IRU WKH )LUVW ,QWHUQDWLRQDO 9LUXV :ULWLQJ

&RQWHVW WKLV YLUXV LV D UHODWLYHO\ VPDOO PHPRU\ UHVLGHQW YLUXV WKDW

ZLOO LQIHFW &20 ILOHV DV WKH\ DUH H[HFXWHG 7R VDYH SURJUDPPLQJ VSDFH
LW JRHV PHPRU\ UHVLGHQW RQ LWV ILUVW UXQ WDNLQJ . WR XVH DV D ZRUNLQJ
DUHD %HFDXVH RI WKLV PHWKRG WKH ILUVW WLPH DQ LQIHFWHG SURJUDP LV UXQ
DIWHU ERRWXS WKH SURJUDP ZLOO IDLO $IWHU WKDW KRZHYHU LQIHFWHG

UXQ SHUIHFWO\

PRGHO VPDOO
UDGL[
FRGH
RUJ
VWDUW
*RB0HP
,QWB
PRY
PRY
LQW
PRY
PRY
PRY
LQW
QRW
LQW
D[
G[RIIVHW ,QWB

ZRUG SWU >,3B@E[
ZRUG SWU >&6B@HV
DK

GK

FPS
MH
FPS
MQH
FPS
MQH
DKEK
H[HFXWH
DO
*RB,QWB
G[RIIVHW ,QWB
*RB,QWB
5HVWRUHB&RQWURO
PRY
GL
SRS
VL
PRY
VLRIIVHW HQGBSURJ
SXVK
GL
PRY
FKIGK
UHSQ] PRYVE
[RU
D[D[
LUHW
([HFXWH
SXVK
PRY
LQW
[FKJ
D[ E[ F[ G[ GV
D[G

D[E[
*HW ,17 DGGUHVVHV

6DYH DGGUHVVHV IRU KDQGOHU
6HW ,QW
*R 765 WDNH D OLWWOH .
([WUD VSDFH XVHG LQ LQIHFWLRQ
,V LW DQ H[HFXWH FRPPDQG"
&RXOG EH LQVWDOO FKHFN
,I QRW OHW ,17 FRQWLQXH
,V LQVWDOO FKHFN UHVWRUH
KRVW ILOH DQG UXQ LW
&RS\ KRVW ILOH GRZQ LQ PHPRU\
5HWXUQ WR KRVW
,QIHFW SURJUDP EHLQJ H[HFXWHG
2SHQ ILOH UHDGZULWH
SXVK
SRS
FV
GV
PRY
PRY
PRY
LQW
G[RIIVHW HQGBSURJ
DKI
FKIH

PRY
VLG[
FPS
MH
FPS
MH
E\WH SWU >VL@E

GRQH
E\WH SWU >VL@0
GRQH
SXVK
PRY
[RU
[RU
LQW
SRS
D[
D[
F[F[
G[G[

F[
*R WR EHJLQQLQJ RI SURJ
DGG
GE
F[HQGBSURJVWDUW
FDK
7$60 LQVHUWV D 123 VR GR LW GLUHFWO\
PRY
LQF
LQW
DK
GK

:ULWH SURJUDP EDFN ZLWK YLUXV
5HDG LQ HQWLUH SURJ
&KHFN IRU ,QIHFWLRQ

&KHFN IRU (;(

GRQH
PRY
LQW
SRS
*RB,QWB
GE
,3B GZ
&6B GZ
HQGBSURJ
+RVWB3URJUDP
UHW
DKH

GV G[ F[ E[ D[
&ORVH ILOH
HD

-XPS WR ,QW

1RW " EHFDXVH RI WKH QHHG WR SXW
D SURJUDP GLUHFWO\ DIWHU LW LQ
PHPRU\
+RVW 3URJUDP QRW SDUW RI YLUXV
7KLV H[HFXWHV DQ ,17 IURP WKH 363
HQG VWDUW
$OORIWKHVHYLUXVHVERWKVRXUFHDQGH[HFXWDEOHVDUHLQFOXGHG
RQWKH3URJUDP'LVN
$SSHQGL['6ROYLQJ
'LIIHUHQWLDO(TXDWLRQV
7KLVDSSHQGL[ZLOOVHUYHWRLQWURGXFHGLIIHUHQWLDOHTXDWLRQVWR
WKRVHZKRDUHQRWIDPLOLDUZLWKWKHPDQGSURYLGHDVLPSOHLQWUR
GXFWLRQWRVROYLQJWKHPQXPHULFDOO\$OWKRXJKLQWLPLGDWLQJWRWKH
XQLQLWLDWHGWKHFRQFHSWRIDGHULYDWLYHLVIDLUO\VLPSOHDQGVROYLQJ
GLIIHUHQWLDOHTXDWLRQVDWOHDVWWKHVLPSOHRQHVLQWKLVERRNQHHG
QRWEHVKURXGHGLQP\VWHU\
7RXQGHUVWDQGZKDWDGHULYDWLYHLVWKLQNRIDOLQH7KHHTXDWLRQ
RIDOLQHFDQEHZULWWHQDV
I[ P[E
'
ZKHUHELVWKH\LQWHUFHSWWKHSRLQWZKHUHWKHOLQHLQWHUVHFWVWKH
\D[LV6HH)LJXUH'DQGPLVWKHVORSHZKLFKPHDVXUHVKRZ
VWHHSWKHOLQHLV$OLQHZLWKDVORSHRILVDWDGHJUHHDQJOH$
JUHDWHUVORSHPHDQVDVWHHSHUOLQH7KHVORSHRIWKHOLQHLQ)LJXUH
'LV
7KHVORSHLVZKDWZHZDQWWRFRQFHQWUDWHRQ:KHQ\RXNQRZ
WKHVORSHRIDOLQH\RXFDQYLVXDOL]HLW7KHVORSHJLYHV\RXYDOXDEOH
LQIRUPDWLRQ DERXW WKH OLQH /LNHZLVH \RX FDQ LPDJLQH WKDW ZH
FRXOGGHILQHDVORSHIRUDIXQFWLRQWKDWLVQRWDVPRRWKOLQH7KLV
VORSH FRXOG QRW RI FRXUVH EH D FRQVWDQW ,W PXVW EH DQRWKHU
IXQFWLRQD QHZ IXQFWLRQ WKDW WHOOV XV WKH VORSH RI WKH RULJLQDO
IXQFWLRQDWDQ\JLYHQSRLQW)RUH[DPSOHWKHIXQFWLRQSLFWXUHGLQ
)LJXUH'KDVVRPHVWHHSSDUWV$DQGVRPHJUDGXDOO\LQFUHDVLQJ

<D[LV
;D[LV
I[ P[E
)LJXUH'$/LQH
<
7DQJHQWOLQH
%
;
)LJXUH'$IXQFWLRQZLWKYDULDEOHVORSH
6ROYLQJ'LIIHUHQWLDO(TXDWLRQV

SDUWV%:HPLJKWLPDJLQHWKHVORSHRIDIXQFWLRQDWDQ\SRLQW[
DVEHLQJWKHVORSHRIDOLQHZKLFKLVWDQJHQWWRWKDWOLQHDVGHSLFWHG
LQ)LJXUH'1RZLPDJLQHDIXQFWLRQJ[ZKLFKLVHYHU\ZKHUH
WKH VORSH RI WKH OLQH WDQJHQW WR I[ :H FDOO WKLV IXQFWLRQ J WKH
GHULYDWLYHRII0DWKHPDWLFDOO\ZHFDQGHILQHDGHULYDWLYHDV
J[ GI[G[ OLPLWI[ OLPLWI[[I[[
[
[
'
ZKHUH [ LV MXVW VRPH VPDOO QXPEHU 7KLV OLPLWLQJ SURFHVV LV

GHSLFWHGLQ)LJXUH'$QDSSUR[LPDWHGHULYDWLYHFDQHDVLO\EH
FRPSXWHGE\VLPSO\FRPSXWLQJWKHQXPEHU
I[ I[[I[[
'
ZKHUH[LVFKRVHQVPDOOHQRXJKVRWKDWI[QHDUO\ORRNVOLNHD
VWUDLJKWOLQHLQWKHLQWHUYDO[WR[[)RUPDQ\VLPSOHIXQFWLRQV
WKHGHULYDWLYH'FDQEHFRPSXWHGH[DFWO\DQGWKHVHGHULYDWLYHV
DUHRIWHQWDEXODWHGLQERRNV)RUH[DPSOHZHFDQVROYH'ZKHQ
I[LVWKHIXQFWLRQIRUDVWUDLJKWOLQH,I
7DQJHQWOLQH
;
;
;
)LJXUH'7DNLQJWKHGHULYDWLYHDVDOLPLW

I[ P[E
'
GI[G[ OLPLWP[[EP[E[ P
'
WKHQ
[
,QRWKHUZRUGVWKHVORSHLVPMXVWDVZHZRXOGH[SHFW
:KDWZHDUHLQWHUHVWHGLQKHUHDUHGLIIHUHQWLDOHTXDWLRQV7KHVH
DUHHTXDWLRQVLQYROYLQJWKHGHULYDWLYHVRIVRPHIXQFWLRQZHZDQW
WRVROYHIRU)RUH[DPSOHZHPLJKWKDYHWKHHTXDWLRQ
GI[G[ [
'
DQGZHZDQWWRGHWHUPLQHZKDWI[LV7KHUHDUHYDULRXVDQDO\WLF
WHFKQLTXHV IRU VROYLQJ VLPSOHU GLIIHUHQWLDO HTXDWLRQV EXW WKH\
XVXDOO\EUHDNGRZQDVVRRQDVWKHHTXDWLRQVEHFRPHWRRFRPSOH[
RUQRQOLQHDU7\SLFDOO\ZHPXVWUHVRUWWRQXPHULFDOWHFKQLTXHVWR
VROYHVXFKHTXDWLRQV7KDWLVQRWQRUPDOO\WRRKDUGEHFDXVHZH
FDQXVHWKHDSSUR[LPDWHGHILQLWLRQRIDGHULYDWLYH')RUH[DP
SOHVXSSRVHZHKDYHDSRSXODWLRQHTXDWLRQRIWKHIRUP
G3WGW N3W
'
7KHQLIZHNQRZWKHSRSXODWLRQDWW LV3 ZHFDQFDOFXODWH

3WE\FKDQJLQJ'LQWRWKHDSSUR[LPDWHHTXDWLRQ
SW 3WW3WW N3W
'
DQGVROYLQJIRU3WW
3WW 3WWN3W
'
7KXV
3W NW
'
6ROYLQJ'LIIHUHQWLDO(TXDWLRQV

$SSO\LQJ HTXDWLRQ ' DJDLQ DQG DJDLQ ZH FDQ GHULYH 3W

3WHWF)RUH[DPSOH
3W 3WWN3W
NWNW
'D
'E
7KLV NLQG RI DQ DOJRULWKPLF VXEVWLWXWLRQ SURFHVV LV YHU\ HDV\ WR
SURJUDP)RUH[DPSOHDVLPSOHORRS
3
IRUW WWRW GW3 3GW NDOSKD 3
ZLOOFDOFXODWH3WR*HQHUDOO\WKLVDSSURDFKLVVXIILFLHQWIRUDQ\
RIWKHHTXDWLRQVGLVFXVVHGLQWKLVERRN7KHUHDUHDQXPEHURIWKLQJV
WREHDZDUHRILQZULWLQJVXFKDSURJUDPWKRXJK0RVWLPSRUWDQW
LV D SURSHU VHOHFWLRQ RI GW ,W PXVW EH VPDOO HQRXJK VR WKDW WKH
IXQFWLRQ3WLVIDLUO\ZHOODSSUR[LPDWHGE\OLQHVLQDQ\LQWHUYDOW
WRWGW2IFRXUVHVLQFH\RXGRQWNQRZZKDW3WORRNVOLNHXQWLO
\RXYH VROYHG WKH HTXDWLRQ IRU LW SLFNLQJ D VPDOO HQRXJK 'W LV
VRPHZKDWRIDQDUW7\SLFDOO\\RXSLFNDYDOXHDQGORRNDWWKH
UHVXOWLQJ3WWRGHFLGHLI\RXUFKRLFHZDVJRRG<RXDOVRPLJKW
UHSHDWWKHFDOFXODWLRQXVLQJGWMXVWWRVHHKRZLWFKDQJHVWKHUHVXOW
:LWK WKHVH SUREOHPV LQ PLQG \RX PLJKW EH WHPSWHG WR XVH WKH
VPDOOHVWGWLPDJLQDEOH2IFRXUVHWKDWZLOOOHDGWRSUREOHPVWRR
)LUVWO\WKHVPDOOHU\RXUGWWKHORQJHU\RXUORRSZLOOWDNHWRILQLVK
6HFRQGO\ LI GW LV WRR VPDOO \RX FDQ UXQ LQWR URXQGLQJ HUURUV
EHFDXVH WKH QXPEHUV \RXU FRPSXWHU XVHV KDYH RQO\ VR PDQ\
VLJQLILFDQWGLJLWV6RZKDW\RXUHDOO\ZDQWWRGRLVSLFNWKHODUJHVW
GWWKDWZLOOSURYLGHDQDQVZHURIDFFHSWDEOHDFFXUDF\
$SSHQGL[(6WRFKDVWLF
3RSXODWLRQ(TXDWLRQV
7KLVDSSHQGL[H[SODLQVVRPHRIWKHQXPEHUVGLVFXVVHGLQWKH
FKDSWHU7KH)DFWRI(YROXWLRQ7KH\DUHUHVHUYHGIRUWKLVDSSHQGL[
EHFDXVHP\IHHOLQJZDVWKH\ZHUHSHUKDSVDELWWRRFRPSOH[DQG
WKH\ERJJHGWKHJHQHUDOWH[WGRZQLQPDWKHPDWLFV
%DVLFDOO\WKHHTXDWLRQV
G3RGW .13M163R 3R
(D
G3MGW M13M13M3M13M13R
(E
DQG
ZKLFKDUHHTXDWLRQVLQWKHWH[WGHVFULEHWKHEHKDYLRURIWKH
DYHUDJH SRSXODWLRQ RI WKH JLYHQ PXWDWLRQV 9M RI 9R DFFXUDWHO\
+RZHYHU WKH\ GR QRW GHVFULEH WKH VWDWLVWLFDO YDULDWLRQV LQ WKH
SRSXODWLRQDWDOO7KRVHVWDWLVWLFDOYDULDWLRQVFDQEHLPSRUWDQWLQ
GHWHUPLQLQJWKHOLNHOLKRRGWKDWRQHYLUXVHYROYHGLQWRDQRWKHU)RU
H[DPSOHZHQHHGWKHPWRGHWHUPLQHZKHWKHU9RDFWXDOO\HYROYHG
LQWR9LQWKHGLVFXVVLRQLQWKHWH[W
7R PRGHO WKH SRSXODWLRQLQFOXGLQJ WKH VWDWLVWLFDO YDUL
DWLRQVSURSHUO\ ZH QHHG D VWRFKDVWLF PRGHO 7R EXLOG VXFK D
PRGHOZHGHILQHSUREDELOLWLHV
MNW 3UREDELOLW\WKDWWKHUHDUHNLQGLYLGXDOVRI9 MDWWLPHW (

7KHMNWREH\WKHHTXDWLRQ
MNW
(
VXPPLQJRYHUNZKLFKMXVWVD\VWKDWWKHUHPXVWEHVRPHQXPEHU
RIYLUXVHVZKDWHYHUWKDWQXPEHULV7KH\DOVRDUHUHODWHGWRWKH
SRSXODWLRQ3MWRI9MLQHTXDWLRQ(E\
3MW NMNW
(
1RZUDWKHUWKDQXVLQJDVLQJOHHTXDWLRQIRU3MZHZLOOKDYH
WRGHDOZLWKDQLQILQLWHVHULHVRIHTXDWLRQVRQHIRUHDFKMNWIRU
DOOSRVVLEOHYDOXHVRIN2EYLRXVO\WKDWFRPSOLFDWHVPDWWHUVTXLWH
DELWEXWWKHEHQHILWVDUHHVVHQWLDO
7KHHTXDWLRQIRUMNZLOOWDNHWKHIRUP
GMNGW MNMN
>13M13RM13MQN@MN
>13M13RM13M1NMN@MN
(
:HUHWDLQ(TXDWLRQ(DIRU3RUDWKHUWKDQLQWURGXFLQJDVHULHVRI
RNVWRDYRLGRYHUFRPSOLFDWLQJWKHV\VWHP*HQHUDOO\3RZLOOEH
ODUJHDQGWKHVWDWLVWLFDOGHYLDWLRQVZLOOEHLUUHOHYDQWWRRXUTXHVWLRQV
DERXWHYROXWLRQ
:HDUHSULPDULO\LQWHUHVWHGLQDSSO\LQJHTXDWLRQ(WR9DQG
WRWKHVWHULOHPXWDWLRQVKHUH)RUWKHVHOHWVDVVXPHWKDWM R7KDW
PHDQVWKHDQWLYLUXVLVMXVWDVHIIHFWLYHDWFDWFKLQJ9MDVLWZDVDW
FDWFKLQJ9R:HDOVRDVVXPH3M3RLHWKHPDLQFRPSRQHQWRI
WKHYLUXVSRSXODWLRQLV9RDQG9MPDNHVXSRQO\DVPDOOSDUWRIWKH
EDODQFH7KDWLVXVXDOO\WKHFDVHZKHQHYHUWKHVWDWLVWLFDODVSHFWRI
WKH MNV DUH RI DQ\ UHDO XVH WR XV :LWK WKHVH DVVXPSWLRQV (
UHGXFHVWR
1RWHWKDWWKLVZDVQRWWUXHRI9
6WRFKDVWLF3RSXODWLRQ(TXDWLRQV
GMNGW NMN
>13R13RM13R1N@MN
>13R13RM13R1NN@MN

(
7KHUHDUHWZRVROXWLRQVRIWKLVHTXDWLRQZHUHLQWHUHVWHGLQ
ZKHQM DQGZKHQM:HWDNHXSWKHM FDVHILUVWM
PHDQVWKHYLUXVLVVWHULOH,WLVFUHDWHGDVDPXWDWLRQEXWLWFDQQRW
UHSURGXFHDQ\IXUWKHU:HZRXOGH[SHFWDIL[HGFRQVWDQWEDFN
JURXQG RI VXFK PXWDWLRQV WR H[LVW RQFH WKH SRSXODWLRQ RI 9R
VWDELOL]HV:HFDQFDOFXODWHWKLVEDFNJURXQGE\VHWWLQJ3RW 3RD
FRQVWDQWDQGORRNLQJIRUDFRQVWDQWVROXWLRQZKHUH
GMNGW N
(
7KHILUVWHTXDWLRQLQWKHVHULHV(EHFRPHV
M13R13RM
(
M 13R13RM
(
VR
7KHNWKHTXDWLRQZLOOJLYH
MN >3R13R1NNN@MN
>3R13R1N@MN
(
'HILQLQJ
3R13R1
(
WKLVVHTXHQFHWDNHVWKHIRUP
M M
(D
MN NMNMNNNMN
(E

ZKLFKLVVROYHGE\
MN NNNM
(
8VLQJWKHQRUPDOL]DWLRQFRQGLWLRQ(ZHJHW

M H
(D
MN NNNH
(E
:HFDQWKHQXVH(WRFDOFXODWHWKHDYHUDJHQXPEHURI9MLQWKH

V\VWHPZLWKWKHUHVXOW
3M! 3R13R1
(
/LNHZLVHWKHVWDQGDUGGHYLDWLRQRI3MPD\EHFDOFXODWHGXVLQJ
M N!N! NMN
(
$JDLQWKLVPD\EHVROYHGWRJLYH
M 3R13R1
(
ZKLFKWHOOVXVWKDW3M!LVQRWYHU\VKDUSO\GHILQHG7KLVLVHTXDWLRQ

/HW XV QRZ FRQVLGHU M 3UDFWLFDOO\ VSHDNLQJ DQ DQDO\WLF
VROXWLRQ RI WKLV V\VWHP LV QRW SRVVLEOH 2QH FDQ KRZHYHU XVH
HTXDWLRQ(WRSURYHWKDWHTXDWLRQLVWUXHXVLQJ3M!WKH
DYHUDJHSRSXODWLRQLQVWHDGRI3MDQH[DFWSRSXODWLRQ/LNHZLVH
RQHFDQGHWHUPLQHWKHMNVXQGHUVWHDG\VWDWHFRQGLWLRQVZKHQ3R
DQGMNDUHDOOFRQVWDQW7RGRWKLVZHVLPSO\VHWWKHOHIWKDQGVLGH
RIHTXDWLRQV(DDQG(WR]HUREHFDXVHLQRUGHUWREHFRQVWDQW
WKHWLPHGHULYDWLYHPXVWEH]HUR7KHQWKHVHULHVRIHTXDWLRQVLV
HDVLO\VROYHGWRJLYH
MN N^>3R13R1MN13R1@MN
6WRFKDVWLF3RSXODWLRQ(TXDWLRQV
>3R13R1MN13R1@MN`
ZKLFKLVZKHUHHTXDWLRQFRPHVIURP

(
$SSHQGL[)7KH
'DUZLQLDQ*HQHWLF
0XWDWLRQ(QJLQH
,Q WKLV DSSHQGL[ DUH DOO WKH WHFKQLFDO GHWDLOV FRQFHUQLQJ WKH
'DUZLQLDQ*HQHWLF0XWDWLRQ(QJLQHDQGKRZWRXVHLWDVZHOODV
DFRPSOHWHOLVWLQJRIWKHHQJLQHDQGDQH[DPSOHYLUXVIRULW
7KHHQJLQHLVGHVLJQHGDVDQREMHFWILOHZKLFKFDQEHLQFOXGHG
LQDQ\YLUXVDQGXVHGIRUDQ\W\SHRIHYROXWLRQDU\EHKDYLRU\RX
OLNH,QWKLVWH[WZHXVHGWKH'*0(LQFRQMXQFWLRQZLWKDPXWDWLRQ
HQJLQHWKH7ULGHQW3RO\PRUSKLF(QJLQHKRZHYHU\RXFRXOGMXVW
DVZHOOXVHLWWRFDXVHWKHYLUXVWRFKDQJHLWVPRGHRILQIHFWLRQ
ZKLFKVWHDOWKWHFKQLTXHVWRXVHHWFHWF7KHUHLVYLUWXDOO\QROLPLW
RQ ZKDW YDULDELOLW\ FRXOG EH EXLOW LQWR D YLUXV EDVHG RQ JHQHWLF
GHFLVLRQV
2SHUDWLRQRIWKH'*0(
)LUVWOHWVGLVFXVVWKH'*0(LWVHOIDQGKRZWRXVHLW,OOPDNH
DFRXSOHJHQHUDOFRPPHQWV2QHLVWKDWWKLVHQJLQHPD\ORRNPRUH
FRPSOH[WKDQLWLVDWILUVWJODQFH6RPHRIWKHSXEOLFVDUHMXVWIRU
WKH73(2WKHUVDUHVWULFWO\IRUWKHPRUHDGYDQFHGSURJUDPPHU
6HFRQGO\WKHUDQGRPQXPEHUJHQHUDWRULQFOXGHGLQWKH'*0(LV
QRWWKHJUHDWHVW,WJHWVWKHMREGRQHEXWLI\RXZDQWVRPHWKLQJ
UHDOO\ IDQWDVWLFDOO\ XQSUHGLFWDEOH , VXJJHVW \RX EXLOG RQH DIWHU
UHDGLQJXSRQWKHVXEMHFW)LQDOO\WKH'*0(LVRIIVHWUHORFDWDEOH

7KHHQJLQHKDVVHYHUDOHQWU\SRLQWVDQGVHYHUDOSXEOLFYDUL
DEOHV/HWVJRRYHUZKDWHDFKRIWKHVHGRHVRQHE\RQH
'1$/2&':25'9DULDEOH
7KLVYDULDEOHPXVWEHVHWWRWKHVHJPHQWRIIVHWDGGUHVVRIWKH
ELQDU\'1$VWUDQGEHIRUHDQ\RIWKH'*0(IXQFWLRQVDUHFDOOHG
$OOD ELQDU\'1$VWUDQG LVLVDFRQWLQJXRXVVWULQJRIE\WHV,WLV
HVVHQWLDOO\WKHJHQHWLFGDWDZKLFKDYLUXVZLOOXVHWRPDNHGHFL
VLRQV DQG ZKLFK WKH '*0( ZLOO PDQLSXODWH E\ PXWDWLRQV DQG
VH[XDOPDWLQJ7KLV'1$VWUDQGQRUPDOO\UHVLGHVVRPHZKHUHLQ
\RXUYLUXVDQGLWLVVHSDUDWHIURPWKH'*0(
'1$/(1:25'9DULDEOH
7KLVYDULDEOHVSHFLILHVWKHOHQJWKRIWKHELQDU\'1$VWUDQG
DQGLWPD\WDNHDQ\YDOXHIURPWR,WPXVWEHVHWXSSURSHUO\
EHIRUHWKH'*0(LVFDOOHG
*(1(B375':25'9DULDEOH
7KLVYDULDEOHLVXVHGLQWHUQDOO\E\WKH'*0(ZKHQDFFHVVLQJ
GDWDIURPWKHELQDU\'1$1RUPDOO\DYLUXVZLOOLQLWLDOL]HLWWRWKH
VDPH VHJPHQWRIIVHW YDOXH DV '1$/2& DERYH 7KLV YDULDEOH
KRZHYHULVLQFUHPHQWHGE\HYHU\WLPH*(1(B*(7LVFDOOHGDQG
LWLVUHVHWWR'1$/2&DIWHULWKDVEHHQLQFUHPHQWHGWR'1$/(1
,WLVMXVWDSRLQWHULQWRWKHELQDU\'1$IRU*(1(B*(7VXVH<RX
PXVWVHWLWXSEHIRUHFDOOLQJ*(1(B*(7IRUWKHILUVWWLPH
'(),1(B5$1'20B'1$1($53URFHGXUH
7KLVSURFHGXUHLVFDOOHGWRSLFNDUDQGRPVHTXHQFHRIQXPEHUV
IRUWKHELQDU\'1$,WVLPSO\ILOOVWKHPHPRU\ORFDWLRQ'1$/2&
ZLWKUDQGRPGDWDIRU'1$/(1E\WHV7KLVURXWLQHLVXVHIXOIRU
VWDUWLQJXSDSRSXODWLRQRIYLUXVHVZKHQ\RXKDYHQRLGHDDERXW
ZKDWELQDU\'1$ZRXOGZRUNEHVW7KH6&$16OLSYLUXVXVHVWKLV
URXWLQHWRJHWVWDUWHG$IWHULWLVDVVHPEOHGDQGUXQIRUWKHILUVWWLPH
6HHIRUH[DPSOH'RQDOG.QXWK7KH$UWRI&RPSXWHU3URJUDPPLQJ9ROXPH
6HPLQXPHULFDO $OJRULWKPV$GGLVRQ :HVOH\ 5HDGLQJ 0DVV SS


LW FDOOV WKLV URXWLQH VR WKDW WKH ILUVW LQIHFWLRQ ZLOO KDYH UDQGRP
'1$$IWHUWKDWLWVNLSVWKLVURXWLQHDQGFDOOV0$7(B'1$DQG
087$7(B'1$LQVWHDG<RXFRXOGDOVRXVHWKLVURXWLQHWRSOD\
DURXQGZLWKVDOWDWLRQ)RUH[DPSOH\RXFRXOGWULJJHUDFDOOWRWKLV
IXQFWLRQLQ\RXUYLUXVZKHQDFHUWDLQJHQHWLFFRPELQDWLRQRUVRPH
UDUHUDQGRPHYHQWRFFXUUHG7KHQWKHQH[WFKLOGZRXOGHVVHQWLDOO\
EHD KRSHIXOPRQVWHU ZKLFKPD\KDYHZRQGHUIXOQHZSURSHUWLHV
RULWPD\JHWFDXJKWULJKWRIIWKHEDW
087$7(B'1$1($53URFHGXUH
7KLVSURFHGXUHVLPSO\PXWDWHVWKHELQDU\'1$LQWKHYLUXVDW
UDQGRP,WDOORZVIRUPXOWLSOHPXWDWLRQVLQDVLQJOHFDOOEXWRQO\
RQHELWFDQFKDQJHSHUE\WHSHUFDOO7KHPXWDWLRQUDWHLVFRQWUROOHG
E\WKHYDULDEOH087B5$7(
0$7(B'1$1($53URFHGXUH
7KLVURXWLQHDOORZVWKHYLUXVWRVH[XDOO\UHSURGXFH:KHQ\RX
FDOOLW\RXPXVWSXWWKHDGGUHVVRIDQRWKHUELQDU\'1$VWUDQGLQ
(66,DQGWKH'1$RIWKHYLUXVGRLQJWKHPDWLQJLVDVVXPHGWREH
DW'1$/2&7KHIUHTXHQF\RIFURVVRYHULQWKHPDWLQJSURFHVVLV
FRQWUROOHGE\WKHYDULDEOH&5266B)5(4*HWWLQJDQRWKHUYLUXV
'1$LQWRPHPRU\DWHVVLLVOHIWHQWLUHO\XSWRWKHYLUXVLWVHOI7KLV
FDQEHDWULFN\WDVNZLWKDPXWDWLRQHQJLQHEDVHGYLUXVEHFDXVHWKH
ZKROH SRLQW RI XVLQJ D PXWDWLRQ HQJLQH LV WR PDNH WKH YLUXV
XQGHWHFWDEOHVRILQGLQJDQRWKHURQHWRPDWHZLWKLVUDWKHUGLIILFXOW
7KH6&$16OLSYLUXVGHWDLOHGKHUHVROYHVWKLVSUREOHPE\OHDYLQJ
LWVELQDU\'1$LQPHPRU\ZKHQLWVGRQHZLWKLWVZRUN7KHQWKH
QH[WH[DPSOHWRH[HFXWHFDQFKHFNWKDWPHPRU\WRVHHLIWKHUHLVD
SLHFHRI'1$WKHUHWRPDWHZLWK
*(1(B*(71($53URFHGXUH
7KLV URXWLQH VLPSO\ JHWV D ZRUG IURP WKH ELQDU\ '1$ DQG
UHSRUWVLWWRWKHFDOOHULQWKHD[UHJLVWHU7KHFDOOHUFDQWKHQXVHWKDW
JHQHWRPDNHDGHFLVLRQHWF)RUH[DPSOHLQDPXWDWLRQHQJLQH
RQHXVHVDFDOOWR*(1(B*(7LQVWHDGRIWKHXVXDOFDOOWRDUDQGRP
QXPEHU JHQHUDWRU 7KLV URXWLQH ZRUNV LQ FRQMXQFWLRQ ZLWK WKH
*(1(B375VRWKDW\RXFDQFDOOLWDVPDQ\WLPHVDV\RXOLNHDQG
LWZLOOJHWGDWDIURPWKHJHQH<RXVKRXOGEHZDUHKRZHYHUWKDWLW

GRHVORRSDURXQGDQGZLOOUHSRUWGDWDIURPWKHVDPHJHQHWZLFHLI
FDOOHGRIWHQHQRXJK<RXPD\RUPD\QRWZDQWWKDWWRKDSSHQDQG
WKHRQO\ZD\WRWHOOZKDWZLOOKDSSHQLVWRDQDO\]H\RXUFRGHDQG
SLFNWKHVL]HRI\RXUELQDU\'1$SURSHUO\
5$1'B6(('1($53URFHGXUH
7KLVURXWLQHVHHGVWKHSVHXGRUDQGRPQXPEHUJHQHUDWRUZLWK
DUDQGRPQXPEHU,WLVFDOOHGSULRUWRFDOOVWR*(7B5$1'20
7KHVHURXWLQHVDUHPDGHSXEOLFEHFDXVHWKH73(QHHGVWKHPRQFH
ZHKDYHWDNHQLWVUDQGRPQXPEHUJHQHUDWRURXWRILW
*(7B5$1'201($53URFHGXUH
7KLVURXWLQHJHWVDSVHXGRUDQGRPQXPEHUIURPWKHUDQGRP
QXPEHU JHQHUDWRU ,W LV UHSRUWHG DV D ZRUG LQ WKH $; UHJLVWHU
1RUPDOO\\RXVKRXOGQRWKDYHWRFDOOLWIURPDYLUXVEXWWKH73(
QHHGVLWLQRQHSODFH
087B5$7(:25'9DULDEOH
7KLVYDULDEOHFRQWUROVWKHPXWDWLRQUDWHIRUWKHIXQFWLRQ08
7$7(B'1$ 7KH PXWDWLRQ UDWH SHU E\WH LV JLYHQ E\
087B5$7())))+7KXVIRUH[DPSOHLI087B5$7( )))
WKHQWKHPXWDWLRQUDWHLVLQ7KHGHIDXOWYDOXHRI087B5$7(
LV)))EXWLWLVPDGHSXEOLFVR\RXFDQVHWLWWRVRPHWKLQJHOVH
&5266B)5(4:25'9DULDEOH
7KLVYDULDEOHFRQWUROVWKHIUHTXHQF\RIFURVVRYHUZKHQPDWLQJ
7KHFURVVRYHUUDWHLVJLYHQE\&5266B)5(4))))+VRLWZRUNV
MXVW OLNH 087B5$7( 7KH GHIDXOW YDOXH RI &5266B)5(4 LV
))))VRWKDWFURVVRYHUDOZD\VRFFXUVGXULQJVH[XDOUHSURGXFWLRQ
7KLV LV DQ DSSURSULDWH FURVVRYHU UDWH IRU D VLQJOH FKURPRVRPH
V\VWHP EHFDXVH LQ VXFK D V\VWHP VH[XDO UHSURGXFLWRQ ZLWKRXW
FURVVRYHULVQWUHDOO\VH[XDOUHSURGXFWLRQDWDOO
7KH'*0(6RXUFH

7KHIROORZLQJLVWKHVRXUFHOLVWLQJRIWKH'DUZLQLDQ*HQHWLF
0XWDWLRQ(QJLQH,WPD\EHFRPSLOHGWRDQREMHFWILOHXVLQJ7$60
RU0$60DQGWKHQOLQNHGZLWKPXWDWLRQHQJLQHVYLUXVHVHWF
'DUZLQLDQ *HQHWLF 0XWDWLRQ (QJLQH
SXEOLF '1$/2&'1$/(1'(),1(B5$1'20B'1$ 087$7(B'1$ 0$7(B'1$
SXEOLF *(1(B*(7*(1(B375
SXEOLF 5$1'B6(('*(7B5$1'20087B5$7(&5266B)5(4
PRGHO VPDOO
FRGH
7KH IROORZLQQJ YDOXHV 0867 EH VHW XS EHIRUH DQ\ RI WKH SXEOLF IXQFWLRQV
LQ WKLV PRGXOH DUH FDOOHG
'1$/2& ''
"
ORFDWLRQ RI '1$ VWUDQG VHJPHQWRIIVHW
'1$/(1 ':
"
OHQJWK RI '1$ VWUDQG LQ E\WHV
087B5$7(
&5266B)5(4
':
':
))))+ WKH GLYLVRU JLYHV WKH PXWDWLRQ UDWH 3(5 %<7(

))))+
WKH GLYLVRU JLYHV WKH FURVVRYHU UDWH
7KLV SURFHGXUH UHDGV D VLQJOH JHQH IURP WKH '1$ LQ VHTXHQFH $ JHQH KHUH LV
VLPSO\ D VLQJOH ZRUG 7KDW ZRUG LV UHWXUQHG LQ WKH D[ UHJLVWHU DQG DOO RWKHU
UHJLVWHUV DUH SUHVHUYHG 7KLV URXWLQH PDLQWDLQV D SRLQWHU LQWR WKH FKURPRVRPH
*(1(B375 ZKLFK PXVW EH VHW '1$/2& EHIRUH WKH ILUVW FDOO KHUH 7KH SRLQWHU
LV XSGDWHG DXWRPDWLFDOO\ E\ WKLV SURFHGXUH WR SRLQW WR WKH QH[W JHQH ,W
JRHV EDFN WR '1$/2& ZKHQ WKH SRLQWHU SDVVHV '1$/2&'1$/(1 VR \RX KDYH WR PDNH
VXUH \RXU FKURPRVRPH LV ORQJ HQRXJK IRU WKH QXPEHU RI FDOOV \RXUH JRLQJ WR
PDNH RU \RXOO KDYH RQH JHQH DQVZHULQJ WZR TXHVWLRQV HWF 7KDW LV QRW
QHFHVVDULO\ EDG WKRXJK LW KDSSHQV LQ WKH UHDO ZRUOG WRR
*(1(B375
''
"
*(1(B*(7
352&
SXVK
SXVK
SXVK
SXVK
FDOO
SRS
VXE
OHV
PRY
DGG
PRY
DGG
FPS
MF
PRY
PRY
SRS
SRS
SRS
SRS
UHWQ
(1'3
1($5
HV
VDYH UHJLVWHUV
GL
E[
F[
**
RIIVHW UHORFDWLRQ
E[
E[2))6(7 **
GLFV>E[@>*(1(B375@
JHW SRLQWHU WR JHQHV
D[HV>GL@
UHDG RQH ZRUG
GL
XSGDWH *(1(B375
F[:25' 375 FV>E[@>'1$/2&@
F[FV>E[@>'1$/(1@
GLF[
5*
GL:25' 375 FV>E[@>'1$/2&@
:25' 375 FV>E[@>*(1(B375@GL
F[
UHVWRUH UHJLVWHUV
E[
GL
HV
**
5*
*(1(B*(7
7KLV URXWLQH GHILQHV D UDQGRP '1$ VWUDQG ,W VKRXOG EH XVHG LQ WKH HDUO\
VWDJHV RI WKH YLUXV VLQFH ZH QHHG WR EXLOG XS D JRRG SRSXODWLRQ RI YLUXVHV
ZLWK GLIIHUHQW JHQHV WR JHW WKLQJV JRLQJ ULJKW (VVHQWLDOO\ ZKHQ WKLV LV XVHG
WKH YLUXV UHVSRQGV OLNH D VWDQGDUG UDQGRPQXPEHU EDVHG GHFLVLRQ PDNHU HJ
OLNH D VWDQGDUG PXWDWLRQ HQJLQH 7KLV URXWLQH FDQ DOVR EH XVHG WR JHQHUDWH
D PDFURPXWDWLRQ ZKLFK PD\ EH XVHIXO LQ VRPH FLUFXPVWDQFHV
'(),1(B5$1'20B'1$
352&
1($5
SXVK
GV
SXVK
HV
FDOO
'5'
'5' SRS
E[
VXE
E[2))6(7 '5'
FDOO
5$1'20B6(('
PRY
D[FV
PRY
GVD[
PRY
HVD[
PRY
F[>E[@>'1$/(1@
OHV
GL>E[@>'1$/2&@
'5*/3 FDOO
*(7B5$1'20
VWRVE
GHF
F[
M]
'5'
LQLWLDO]H UDQGRP QXPEHU JHQHUDWRU

VHW XS OHQJWK ORFDWLRQ
JHW D UDQGRP E\WH
VDYH LW

PRY
DODK
VWRVE
ORRS
'5*/3
'5' SRS
HV
SRS
GV
UHWQ
'(),1(B5$1'20B'1$
DQG ORRS XQWLO GRQH

(1'3
7KLV URXWLQH LQWURGXFHV FRPSOHWHO\ UDQGRP PXWDWLRQV LQWR WKH YLUDO '1$ EDVHG
RQ WKH PXWDWLRQ UDWH GHILQHG DERYH 1RWH WKDW VLQFH WKH PXWDWLRQ UDWH LV
SXEOLF LW FRXOG EH G\QDPLFDOO\ FKDQJHG E\ WKH YLUXV LWVHOI $OVR QRWH
WKDW WKLV URXWLQH GRHV QRW LPSOHPHQW KRW VSRWV
087$7(B'1$
SXVK
SXVK
FDOO
0'
SRS
VXE
SXVK
SRS
FDOO
PRY
PRY
0'/3 FDOO
FPS
MQF
0'/ FDOO
OHV
DGG
GHF
SXVK
PRY
VKU
PRY
LQF
[RU
VWF
UFO
PRY
[RU
PRY
SRS
0'/ ORRS
SRS
SRS
UHWQ
087$7(B'1$
352&
1($5
GV
HV
VDYH UHJLVWHUV
0'
E[
E[2))6(7 0'
FV
GV
5$1'20B6(('
G[:25' 375 >E[@>087B5$7(@ PXWDWLRQ UDWH LQ G[
F[>E[@>'1$/(1@
'1$ OHQJWK LQ F[
*(7B5$1'20
UDQGRP QXPEHU LQ D[
D[G[
LV D[G["
0'/
QR FDUU\ RQ ZLWKRXW PXWDWLQJ WKLV E\WH
*(7B5$1'20
RN PXWDWH D ELW LQ WKLV E\WH QRZ
VL>E[@>'1$/2&@
FDOFXODWH E\WH DGGUHVV
VLF[
VL
F[
FO
FUHDWH D QXPEHU WR IURP WKH ORZ SDUW
DOFO
RI RXU UDQGRP QXPEHU
FODO
FO
DODO
XVH WKDW WR PDNH D ELW PDVN
DOFO
DKHV>VL@
DKDO
HV>VL@DK
F[
0'/3
HV
GV
JHW SURSHU E\WH IURP '1$

WRJJOH WKH ELW ZH ZDQW WR PXWDWH
DQG SXW LW EDFN
ORRS XQWLO ZKROH '1$ VWUDQG GRQH
(1'3
7KLV URXWLQH GRHV WKH PDWLQJ RI WKH '1$ UHVLGHQW LQ WKLV SURJUDP DQG DQRWKHU
VWUDQG ORFDWHG DW (66, LQ PHPRU\ 7KH UHVXOW LV XVHG WR UHSODFH WKH VWUDQG
RI '1$ FXUUHQWO\ LQ PHPRU\ 7KLV PDWLQJ URXWLQH DOORZV RQH FURVVRYHU WR RFFXU
DW WKH UDWH GHWHUPLQHG E\ &5266B)5(4
0$7(B'1$
352&
1($5
SXVK
GV
SXVK
HV
SXVK
FV
SRS
GV
FDOO
0$7(
0$7( SRS
E[
FDOO
*(7B5$1'20
FPS
D[>E[@>&5266B)5(4@
VKRXOG ZH DOORZ FURVVRYHU"
MQF
0$7(B(;
MXPS LI QR
FDOO
*(7B5$1'20
PRY
F[>E[@>'1$/(1@
OHQJWK RI '1$
[RU
G[G[
GLY
F[
G[ UDQGRP ORFDWLRQ WR GR FURVVRYHU
OGV
GL>E[@>'1$/2&@
DGG
GLG[
GL ORFDWLRQ WR FURVV
DGG
VLG[
SXVK
GV
SXVK
HV
SRS
GV
SRS
HV
PRY
F[>'1$/(1@
FDOF OHQJWK RI JHQH LQ PHPRU\ WR PRYH
VXE
F[G[
0$7(/ PRY
DKHV>GL@
H[FKDQJH E\WHV LQ WKH WZR FKURPRVRPHV
PRYVE
WR GR WKH FURVVRYHU
PRY
GV>VL@DK
ORRS
0$7(/
GR WUDQVIHU XQWLO DOO GRQH
UHS
PRYVE
GR WKH WUDQVIHU
0$7(B(;SRS
HV
SRS
GV
UHWQ
0$7(B'1$
(1'3
/LQHDU &RQJUXHQWLDO 3VHXGR5DQGRP 1XPEHU *HQHUDWRU
7KLV LV QRW WKH EHVW UDQGRP QXPEHU JHQHUDWRU EXW LW GRHV WKH MRE
7KH JHQHUDWRU LV GHILQHG E\ WKH HTXDWLRQ


;1 $ ;1 & PRG 0

ZKHUH WKH FRQVWDQWV DUH GHILQHG DV

0
(48

ODUJH SULPH
$
(48
0
&
(48

ODUJH SULPH
5$1'B6(('
':

; LQLWLDOL]HG E\ 5$1'20B6(('
6HW 5$1'B6((' XS ZLWK D UDQGRP QXPEHU WR VHHG WKH SVHXGRUDQGRP QXPEHU
JHQHUDWRU 7KLV URXWLQH VKRXOG SUHVHUYH DOO UHJLVWHUV LW PXVW EH WRWDOO\
UHORFDWDEOH
5$1'20B6(('
352&
1($5
SXVK
VL
SXVK
GV
SXVK
G[
SXVK
F[
SXVK
E[
SXVK
D[
FDOO
56
56
SRS
E[
VXE
E[2))6(7 56
[RU
D[D[
PRY
GVD[
PRY
VL&+
ORGVZ
PRY
DKDO
LQ
DO+
[RU
G[G[
PRY
F[0
GLY
F[
PRY
:25' 375 FV>E[@>5$1'B6(('@G[
SRS
D[
SRS
E[
SRS
F[
SRS
G[
SRS
GV
SRS
VL
UHWQ
5$1'20B6(('
(1'3
&UHDWH D SVHXGRUDQGRP QXPEHU DQG SXW LW LQ D[ 7KLV URXWLQH PXVW SUHVHUYH
DOO UHJLVWHUV H[FHSW D[
*(7B5$1'20
352&
1($5
SXVK
E[
SXVK
F[
SXVK
G[
FDOO
*5
*5
SRS
E[
VXE
E[2))6(7 *5
PRY
D[:25' 375 FV>E[@>5$1'B6(('@
PRY
F[$
PXOWLSO\
PXO
F[
DGG
D[&
DGG
DGF
G[
PRY
F[0
GLY
F[
GLYLGH
PRY
D[G[
UHPDLQGHU LQ D[
PRY
FV:25' 375 >E[@>5$1'B6(('@D[ DQG VDYH IRU QH[W URXQG
SRS
G[
SRS
F[
SRS
E[
UHWQ
*(7B5$1'20
(1'3
(1'
7KH6&$16OLS9LUXV
6&$16OLSLVDVLPSOH&20ILOHLQIHFWLQJYLUXVWRGHPRQVWUDWH
WKH'*0(ZLWK,WZRUNVLQFRQMXQFWLRQZLWKERWKWKH'*0(DQG
WKH73(DQGLVZULWWHQOLNHDQRUGLQDU\PXWDWLQJYLUXV,WXVHVD
E\WH ELQDU\ '1$ VWULQJ IRU WKH PXWDWLRQ HQJLQH ZLWK WKH
GHIDXOWPXWDWLRQDQGFURVVRYHUUDWHV6H[XDOUHSURGXFWLRQFDQEH
WXUQHGRQRURII

:KHQ6&$16OLSLVORDGHGLQWRPHPRU\LWUHORFDWHVLWVHOIWRD
VHJPHQWGV+ZKLFKLVDERYHZKHUHWKH&20ILOHLVORDGHG
7KLVUHORFDWLRQLVKHOSIXOLQFRGLQJWKHYLUXVEHFDXVHPRVWRILWWKHQ
ZRUNVIURPIL[HGRIIVHWV,IWKHYLUXVGLGQRWUHORFDWHRIIVHWVZRXOG
KDYHWREHDGMXVWHGWKURXJKRXWWKHFRGHEHFDXVHWKH73(JHQHUDWHV
YDULDEOHOHQJWK GHFU\SWLRQ URXWLQHV ZKLFK VLW DW WKH VWDUW RI WKH
YLUXV6RRQVWDUWXSWKHYLUXVLVGHFU\SWHGE\WKH73(JHQHUDWHG
GHFU\SWRUDQGWKHQLWLPPHGLDWHO\UHORFDWHV
2QFH UHORFDWHG WKH YLUXV VHDUFKHV IRU DQRWKHU SURJUDP WR
LQIHFW,WVHDUFKHVRQO\WKHFXUUHQWGLUHFWRU\IRURWKHU&20ILOHV
6LQFHWKHYLUXVH[LVWVRQGLVNRQO\LQDQHQFU\SWHGVWDWHLWPXVW
KDYHDVQHDN\ZD\RIILQGLQJRWKHUFRSLHVRILWVHOIVRWKDWLWGRHV
QRWUHLQIHFWWKHVDPHILOHDJDLQDQGDJDLQ7KLVLVDFFRPSOLVKHGE\
ORRNLQJDWWKHWLPHVWDPSRQWKHILOH,I7,0(PRG WKHQWKH
ILOHLVDVVXPHGWREHDOUHDG\LQIHFWHG7KDWPHDQVRQHRXWRI
ILOHVZLOOQRWJHWLQIHFWHGEXWRXWRIZLOODQGWKHUHZRXOGEH
QR UHDVRQ IRU DQDQWLYLUXVSURJUDPWRWKLQNVXFKDFRQGLWLRQLV
VRPHKRZVXVSLFLRXV2QFHWKHYLUXVLQIHFWVDILOHLWPRGLILHV7,0(
WRIXOILOOWKLVFRQGLWLRQVRWKDWLWLVPHW
2QFHDQLQIHFWDEOHILOHKDVEHHQORFDWHG6&$16OLSFDOOVWKH
'*0( EHIRUH LW DFWXDOO\ LQIHFWV 6&$16OLS NHHSV DQ LQWHUQDO
YDULDEOHWRGHWHUPLQHLIWKLVLVWKHILUVWWLPHLWLVEHLQJUXQ,IVRLW
FUHDWHVDUDQGRPELQDU\'1$VHTXHQFH2WKHUZLVHLWPXWDWHVWKH
'1$VHTXHQFHLWDOUHDG\KDV1H[WLWORRNVLQPHPRU\DWORFDWLRQ
)(WRVHHLIWKHUHLVDQRWKHUELQDU\'1$VHTXHQFHVLWWLQJ
WKHUH,IWKHUHLVLWPDWHVZLWKWKDWVHTXHQFH7KHQRIFRXUVHLW
SXWVLWVRZQ'1$LQWKDWORFDWLRQ7KHYLUXVGHWHUPLQHVZKHWKHU
WKHUHLVD'1$VHTXHQFHDWWKDWORFDWLRQE\SXWWLQJWZR,'E\WHV
LQIURQWRILW+,IWKDW,'LVIRXQGDWORFDWLRQ)(
WKHQZKDWIROORZVLVDVVXPHGWREHD'1$VHTXHQFH,IQR'1$LV
IRXQGWKHQWKHYLUXVVNLSVWKHPDWLQJSURFHVV
$IWHU PDQLSXODWLRQ RI WKH '1$ WKH 73( LV FDOOHG DQG DQ
HQFU\SWHGYHUVLRQRIWKHYLUXVZKLFKKDVWKHQHZ'1$LVFUHDWHG
)RUPRUHLQIRUPDWLRQRQWKHLQVDQGRXWVRIKRZDPXWDWLQJYLUXVZRUNVVHH
&RPSXWHU9LUXV'HYHORSPHQWV4XDUWHUO\9RO1R6SULQJ

LQPHPRU\DQGVDYHGWRGLVN7KHYLUXVFRGHDOZD\VVLWVDWWKH
EHJLQQLQJRID&20ILOHEHIRUHWKHKRVWVFRGH
2QFHWKHYLUXVKDVLQIHFWHGDILOHLWUHORFDWHVWKHKRVWSURJUDP
LWZDVDWWDFKHGWRWRRIIVHW+DQGDOORZVLWWRH[HFXWH
6RXUFHIRU6&$16OLS
7KHIROORZLQJLVWKHVRXUFHIRU6&$16OLS<RXFDQDVVHPEOH
LWWRDQREMHFWILOHXVLQJ7$60<RXOOQHHGWRPRGLI\LWDELWLQ
RUGHUWRXVH0$607REXLOG6/,3&20VHHWKHODVWVHFWLRQRI
WKLVDSSHQGL[3XWWLQJLW$OO7RJHWKHU
7KH 6&$16OLS 9LUXV
$ VPDOO PXWDWLRQHQJLQH EDVHG &20 LQIHFWRU ZKLFK HQFU\SWV ERWK WKH
YLUXV DQG WKH &20 ILOH $ UHDO EHDU IRU GLVLQIHFWRUV
7KLV YLUXV XVHV D PRGLILHG 7ULGHQW 3RO\PRUSKLF (QJLQH LQ FRPELQDWLRQ ZLWK WKH
'DUZLQLDQ *HQHWLF 0XWDWLRQ (QJLQH ,W ZLOO VQHDN DURXQG VFDQQHUV 7KLV YHUVLRQ
HPSOR\V ERWK PXWDWLRQ DQG VH[XDO UHSURGXFWLRQ ZLWK FURVVRYHU
7KLV 9LUXV IRU UHVHDUFK SXUSRVHV RQO\ 3OHDVH GR QRW UHOHDVH
3OHDVH H[HFXWH LW RQO\ RQ D FDUHIXOO\ FRQWUROOHG V\VWHP DQG RQO\
LI \RX NQRZ ZKDW \RXUH GRLQJ
PRGHO VPDOO
7LQ\ PRGHO WR FUHDWH D &20 ILOH
FRGH
H[WUQ
H[WUQ
H[WUQ
H[WUQ
H[WUQ
'7$ GHILQLWLRQV
'7$
(48
)6,=(
(48
)1$0(
(48
25*
FU\SWQHDU
PXWDWLRQ HQJLQH IXQFWLRQ
KRVWQHDU
KRVW SURJUDP
'(),1(B5$1'20B'1$1($5087$7(B'1$1($50$7(B'1$1($5
'1$/2&':25''1$/(1:25'
*(1(B*(71($5*(1(B375':25'
+
'7$$+
'7$(+
'LVN WUDQVIHU DUHD

ILOH VL]H ORFDWLRQ LQ ILOH VHDUFK
ILOH QDPH ORFDWLRQ LQ ILOH VHDUFK
+

7KH YLUXV VWDUWV KHUH
9,567$57
*(7/2&
FDOO
SRS
VXE
SXVK
PRY
DGG
PRY
PRY
PRY
UHS
PRY
SXVK
PRY
SXVK
UHWI
*(7/2&
VL
VL
VL
D[GV
D[+
HVD[
GL+
F[2))6(7 +267 +
PRYVE
GVD[
GV
D[2))6(7 ),1'B),/(
D[
KHUHV ZKHUH YLUXV VWDUWV

XSSHU VHJPHQW GV+
PRYH YLUXV WKHUH
VHW GV WR KLJK VHJPHQW
MXPS WR KLJK VHJPHQW
1RZ LWV WLPH WR ILQG D YLDEOH ILOH WR LQIHFW :H ZLOO ORRN IRU DQ\ &20 ILOH
DQG VHH LI WKH YLUXV LV WKHUH DOUHDG\
),1'B),/(
SRS
VL
PRY
>+2672)6@VL
QHHG WKLV LQ KLJK PHPRU\
[RU
G[G[
PRYH GWD KLJK
PRY
DK$+
GRQW WUDVK SDUDPHWHUV
LQW
+
ZKLFK WKH KRVW H[SHFWV
PRY
G[2))6(7 &20),/(
PRY
FK)+
VHDUFK IRU DQ\ ILOH
PRY
DK(+
'26 VHDUFK ILUVW
LQW
+
&+(&.B),/(
MQF
1;7
MPS
$//'21(
QR &20 ILOHV WR LQIHFW
1;7
PRY
G[)1$0(
ILUVW RSHQ WKH ILOH
PRY
D['+
UZ DFFHVV RSHQ ILOH
LQW
+

MF
PRY
PRY
LQW
PRY
[RU
1(;7B),/(
E[D[
D[+
+
D[F[
D[G[
GDWH [RU WLPH PRG IRU LQIHFWHG ILOH

[RU
G[G[
PRY
F[
GLY
F[
FPS
G[
MQ]
,1)(&7B),/(
PRY
DK(+
LQW
+
1(;7B),/(
&20),/(
+2672)6
PRY
LQW
MPS
DK)+
+
6+257 &+(&.B),/(
'%
':
SXW ILOH KDQGOH LQ E[

JHW ILOH DWWULEXWH
QRW JR LQIHFW
FORVH ILOH LI LQIHFWHG
ORRN IRU DQRWKHU ILOH
&20

DQG JR FKHFN LW RXW
:KHQ ZH JHW KHUH ZHYH RSHQHG D ILOH VXFFHVVIXOO\ DQG UHDG LW LQWR PHPRU\
,Q WKH KLJK VHJPHQW WKH ILOH LV VHW XS H[DFWO\ DV LW ZLOO ORRN ZKHQ LQIHFWHG
7KXV WR LQIHFW ZH MXVW UHZULWH WKH ILOH IURP WKH VWDUW XVLQJ WKH LPDJH
LQ WKH KLJK VHJPHQW
,1)(&7B),/(
SXVK
E[
VDYH ILOH KDQGOH
087$7(
+,'(B*(1(
'1$B02'B
'1$B02',),('
PRY
PRY
PRY
PRY
PRY
PRY
PRY
PRY
PRY
RU
M]
FDOO
MPS
FDOO
SXVK
PRY
PRY
[RU
PRY
DGG
FPS
MQH
FDOO
MPS
[RU
PRY
VWRVZ
PRY
PRY
UHS
SRS
[RU
PRY
SRS
SXVK
PRY
PRY
PRY
SXVK
PRY
LQW
D[2))6(7 '1$
:25' 375 >'1$/2&@D[
:25' 375 >*(1(B375@D[
D[FV
:25' 375 >'1$/2&@D[
:25' 375 >*(1(B375@D[
D['1$B/(1*7+
>'1$/(1@D[
DO>),567@
DODO
087$7(
'(),1(B5$1'20B'1$
6+257 '1$B02',),('
087$7(B'1$
HV
D[)(+
HVD[
VLVL
D[HV>VL@
VL
D[*(1(B,'
+,'(B*(1(
0$7(B'1$
6+257 '1$B02'B
GLGL
D[*(1(B,'
SRS
DGG
PRY
PRY
PRY
PRY
PRY
DGG
PRY
PRY
PRY
FDOO
SRS
F[
F[2))6(7 +267 +
G[+
ESG[
GL
VL
D[GV
D[+
HVD[
EO
D[+
FU\SW
E[
SXVK
SXVK
G[
F[
[RU
PRY
PRY
LQW
F[F[
G[F[
D[+
+
VL2))6(7 '1$
F['1$B/(1*7+
PRYVE
HV
DODO
>),567@DO
E[
E[
G[2))6(7 +267
GL)6,=(
F[FV>GL@
F[
DK)+
+
VHW XS DGGUHVV RI '1$

IRU '*0(
ILUVW LQIHFWLRQ"
QR PXWDWH WKH JHQH
\HV GHILQH WKH '1$
HVVL
$ YLGHR
FRGH WR WHOO D JHQH LV

KLGLQJ KHUH LQ UDP
LI VR PDWH
DQG JR RQ
QR JHQH WKHUH VR
HQG RI YLUXV
JHW ILOH VL]H
'26 UHDG IXQFWLRQ
UHDG KRVW LQ
VL]H RI FRGH WR HQFU\SW
GVG[ FRGH WR HQFU\SW
ZKHUH H[HFXWLRQ EHJLQV
VHW XS ZRUN VHJ IRU WSH
VPDOO PRGHO
UHVHW ILOH SRLQWHU
F[
G[
GL)6,=(
F[FV>GL@
DGG KRVW VL]H WR VL]H WR ZULWH
DK+
+
ZULWH YLUXVKRVW WR ILOH
SXVK
SRS
FV
GV
PRY
LQW
SXVK
PRY
[RU
PRY
[RU
GLY
PXO
DGG
SRS
[RU
PRY
PRY
LQW
(;,7B(55
SRS
SRS
PRY
DGG
PRY
LQW

D[+
+
G[
D[F[
D[G[
F[
G[G[
F[
F[
D[
G[
D[G[
F[D[
D[+
+
PRY
LQW
DK(+
+
7KH LQIHFWLRQ SURFHVV

GRZQ VR WKDW LWV FRGH
$//'21(
PRY
VXE
PRY
PRY
PRY
SXVK
PRY
PRY
LQW
PRY
PRY
DGG
SXVK
PRY
VXE
UHS
UHWI
*(1(B,'
),567
'1$B/(1*7+
'1$

GV FV
JHW GDWH WLPH RQ ILOH
IL[ LW
DQG VDYH LW
FORVH WKH ILOH
LV QRZ FRPSOHWH 7KLV URXWLQH PRYHV WKH KRVW SURJUDP

VWDUWV DW RIIVHW + DQG WKHQ WUDQVIHUV FRQWURO WR LW
E[>+2672)6@
E[+
D[VV
GVD[
HVD[
D[
G[+
DK$+
+
GL+
VL2))6(7 +267
VLE[
GL
F[VS
F[VL
PRYVE
(48
'%
(48
'%
+

+
'1$B/(1*7+ GXS
(1'
UHODWLYH RIIVHW RI SURJUDP

E[ VL]H RI GHFU\SW URXWLQH
VHW GV HV WR ORZ VHJPHQW DJDLQ
SUHS IRU UHWI WR KRVW
UHVWRUH GWD WR RULJLQDO YDOXH
IRU FRPSDWLELOLW\
SUHS PRYH KRVW EDFN WR ORZ VHJ
PRYH FRGH GRQW WUDVK VWDFN
PRYH FRGH
DQG UHWXUQ WR KRVW
DOORZ YLUXV WR VHH JHQH LQ UDP
LI WKLV LV WKH VW JHQ
OHQJWK RI '1$ IRU WKLV YLUXV
'1$ IRU WKLV YLUXV
9,567$57
7KH7ULGHQW3RO\PRUSKLF(QJLQH
7KH7ULGHQW3RO\PRUSKLF(QJLQHLVQRUPDOO\VXSSOLHGDVDQ
REMHFWILOHZKLFK\RXOLQNLQWRDYLUXV,WKDVWKHIROORZLQJH[WHUQDOV
ZKLFKPD\EHXVHGLQDYLUXV
51'B,1,71($53URFHGXUH

7KLVURXWLQHLQLWLDOL]HVWKH73(VUDQGRPQXPEHUJHQHUDWRU
6LQFHWKHJHQHUDWRUKDVEHHQUHPRYHGIURP73(DQGSXWLQWRWKH
'*0(WKLVURXWLQHLVQRWDYDLODEOHLQWKHPRGLILHG73(2%-
51'B*(71($53URFHGXUH
7KLV URXWLQH JHWV D UDQGRP QXPEHU LQ D[ IURP WKH 73(V
UDQGRPQXPEHUJHQHUDWRU$JDLQLWLVQRWDYDLODEOHLQWKHPRGLILHG
73(
&5<371($53URFHGXUH
7KLVLVWKHPDLQHQFU\SWLRQURXWLQHIRUWKHHQJLQH:KHQFDOOHGLW
WDNHV WKH XQHQFU\SWHG YLUXV HQFU\SWV LW DQG SODFHV D UDQGRPO\
JHQHUDWHGGHFU\SWLRQURXWLQHDWWKHVWDUWRIWKHHQFU\SWHGYLUXV7KLV
LVWKHPRVWFRPSOH[URXWLQHLQWKHHQJLQHDQGLWKDVVHYHUDOLQSXW
DQGRXWSXWSDUDPHWHUVDVIROORZV
,13876
HV 7KHZRUNVHJPHQWZKHUHWKH73(ZLOOVWRUHLQWHUQDOGDWDDQG
WKHHQFU\SWHGYLUXVDQGLWVGHFU\SWRU
GVG[ $SRLQWHUWRWKHFRGHWRHQFU\SW
F[ 7KHQXPEHURIE\WHVWRHQFU\SW8VXDOO\WKHVL]HRIWKHYLUXV
ZLWKWKH73(DQG'*0(RUYLUXVKRVW
ES 7KHRIIVHWZKHUHWKHGHFU\SWURXWLQHZLOOEHH[HFXWHG,QWKH
FDVHRI6&$16OLSWKLVZLOOEH+
VL 7KHGLVWDQFHEHWZHHQWKHHQFU\SWRUDQGWKHHQFU\SWHGFRGH
1RUPDOO\
D[ )ODJV %LW PXVW EH VHW LI GVFV ZKHQ WKH GHFU\SWRU ZLOO
H[HFXWH7KDWLVQRUPDOO\WKHFDVHIRU(;(V,I%LWLVVHWWKH
73(ZLOOSXWUDQGRPQRQIXQFWLRQDOLQVWUXFWLRQVLQWRWKHGHFU\S
WRU ,I %LW LV VHW WKH 73( ZLOO SXW UDQGRP QRQIXQFWLRQDO
LQVWUXFWLRQVEHIRUHWKHGHFU\SWRU,IELWLVVHWWKHGHFU\SWRUZLOO
SUHVHUYHWKHFRQWHQWVRIWKHD[UHJLVWHU
2873876
GVG[ $SRLQWHUWRWKHGHFU\SWRUSOXVWKHHQFU\SWHGFRGH1RU
PDOO\WKLVLVZKDW\RXDGGWRWKHILOHEHLQJLQIHFWHG
F[ 7KHOHQJWKRIWKHGHFU\SWRUSOXVWKHHQFU\SWHGFRGH
GL 7KHOHQJWKRIWKHGHFU\SWRUE\LWVHOI

D[ 7KHOHQJWKRIWKHHQFU\SWHGFRGHE\LWVHOI
73(B%277201($53URFHGXUH
7KLVLVVLPSO\DODEHOWKDWLGHQWLILHVWKHERWWRPRIWKH7ULGHQW
HQJLQHLQPHPRU\
73(B7231($53URFHGXUH
$QGWKLVLVDODEHOWRLGHQWLI\WKHWRSRIWKHHQJLQHLQPHPRU\
+(;/LVWLQJRIWKH0RGLILHG7ULGHQW3RO\
PRUSKLF(QJLQH
7KHIROORZLQJ+(;OLVWLQJFDQEHWXUQHGLQWRDELQDU\REMHFW
ILOH73(2%-XVLQJWKH/2$'%$6SURJUDPZKLFKLPPHGLDWHO\
IROORZVLW1RWHWKDWDOORIWKHELQDU\ILOHVIRUWKHSURJUDPVLQWKLV
$SSHQGL[DUHLQFOXGHGRQWKH3URJUDP'LVN
('
&)'&&
)((
)('(&%('$
)(&
$&))
$$&)'
()()
$)()'$
&%&'
$$$'$%'%
%)('((&
&)(((())$'
'%$$()&(&
(('%()%(
))&)&&)(
&))&)&
%'((&
)&$)(%%'
'(%&&$('('
(%$%''(($)
&%)$$&(($
(('$(()(
%$$%&&$&%(
%%&$)&&&%%&&(
(%)%%$&
$())&&'($'(
%$%()(%$&)(&$$()%()
&&))')&')&(
'&&)&%&&&&%(
(%'$$'%)$($
))&&&)&($%
'%(%)&$
'&$)&&)%(%$)
$%&)&'()&
)&($$&$%&(
)&()'(%(

%'%)(&()&
&%($%%()$$(
'&'&$$%&
&%&$
%&(%))$()&
$%$$(%%&$%((&
%$%&)%($$)&%
&(((((()&)&&
'(%$)&$$&&%'
($$($%&%(%$
)(%(&('&))%)&)
($)&)&)&
'%($$)&$$&)%
&%)$$%$$%&)&)
&)&($$%($$&
)&)&%$(%('%$(%
(%()&%()&$$
$$%&%&$$&)&%$$%%
($%((%%&))$%%)
(%%$$($%)'%%
(%&('%&(%'%&'%
$(%'(%(%)&%
%'&&'%&)&)&
&&)&&)&)(&&()%$
'))&%($'
(&)'()'
)($()%&))(()
$$($&(
((%((&
%('())'%&'$%
%%)&$('($
'$$)&$%&
&%(%()(&$%(((
($$&(('$$&'&
'$$%&'&'%
&$$''&&%%
&&)
$&&&''
%&&(&$'&&&%
&'&'&(&()&
')&$&$&&&
(&$&'))$'
)&'$%
'&
$&&$
&&&)&(&))%
&&&&&&
&&&&)
&&$&&&())
&&&&&)
&&$&&&&
&'%$%'((
%)(&$$%&%(()'
$)(&$%&$$(()())((
%(%%&&$$)&%&
&('))%)$()&%%$%&(
'('))(()%)&%(''(
()'&)&%($$$&(%$
)'(%(&&(($%&$
%&()$&&&()
($%&('&(($
($%$&('(%&())%(
)'$%&)&&$)($$&$&
&$$$&$&('(%$&
($$&'$%&)
&($$&$%&$$&
&)%&()&$

)&)&()'&)
()&&&&(&
$$$()$&(')(
%(()%&%&&'(%
&$((&'(%(%&$
')&(%$%
('(''$''()(&()%'&
)((((((($&(
$&%%%%%%%%%)(
)))$)&'
&)&%&
%('
(&)
$''
)$

))
7KH/2$'%$6SURJUDPLVJLYHQE\WKHIROORZLQJ*:%$6,&
SURJUDP
35,176RXUFHILOH
,13876)1$0(
35,17'HVWLQDWLRQILOH
,1387')1$0(
23(16)1$0()25,1387$6
23(1')1$0()255$1'20$6/(1
),(/'$62
(
/,1(&7
,)(2)7+(1*272
/,1(,13876
/,1(&7 /,1(&7
*268%
*272
,)( 7+(1*272
35,177UDQVODWLRQFRPSOHWH
&/26(
&/26(
(1'
5(07+,668%5287,1('(&20326(621(/,1(2)7+(+(;),/(
+ /()76
+ 5,*+7+
*268%
&2817 ;
&680 &2817
+ /()76
+ 5,*+7+
*268%
$''5 ;
&680 &680$''5?$''5$1'
+ /()76
+ 5,*+7+
,)+!7+(1*272
)25- 72&2817
+ /()76 -
+ 5,*+7+
*268%
&680 &680;
/6(72 &
387$''5-
1(;7-
+ /()76 &2817
+ 5,*+7+

*268%
&680 &680;
,)&680$1' 7+(15(7851
35,17&KHFNVXPHUURULQOLQH/,1(&7
(
*272
5(07+,668%5287,1(&219(576$+(;675,1*,1+72$%<7(LQ&
*268%
& &+5;
5(7851
5(07+,668%5287,1(&219(576$+(;675,1*,1+72$1,17(*(5
,1;
;
,)/(1+ 7+(15(7851
< $6&+
,)<!7+(1< <
; ;<
+ 5,*+7+/(1+
*272
3XWWLQJLW$OO7RJHWKHU
7REXLOGWKH6&$16OLSYLUXVDVD&20ILOH\RXQHHGRQHRWKHU
DVVHPEOHUILOH+267$60DVIROORZV
PRGHOVPDOO
FRGH

7KHKRVWSURJUDPVWDUWVKHUH7KLVRQHLVDGXPP\WKDWMXVW
UHWXUQVFRQWUROWR'26
SXEOLF+267
GEGXS
+267
PRYD[&+7HUPLQDWH
LQW+
+267B(1'
(1'
7KLV SURJUDP LV VLPSO\ WKH KRVW SURJUDP ZKLFK WKH DVVHPEOHG
6&$16OLSZLOOEHDWWDFKHGWR,WGRHVQRWKLQJEXWUHWXUQWR'26
7RDVVHPEOHDQGOLQNHYHU\WKLQJSURSHUO\H[HFXWHWKHIROORZLQJ
VHTXHQFHRIFRPPDQGV
WDVPKRVW
WDVPVFDQVOLS
WDVPGJPH
WOLQNPWVFDQVOLSGJPHWSHKRVW

2Q WKH 3URJUDP 'LVN WKDW JRHV ZLWK WKLV ERRN D FRXSOH RI
SURJUDPV67$5783DQG6(48(1&(DUHLQFOXGHGWRDXWRPDW
LFDOO\F\FOHWKHYLUXVWKURXJKJHQHUDWLRQDIWHUJHQHUDWLRQDQGUXQ
LWDJDLQVW6&$1WRJHWLWWRHYROYHLQWRDEHWWHUDQGEHWWHU6&$1
6OLSSHU<RXFDQHDVLO\PRGLI\WKHVHSURJUDPVWRZRUNZLWKDQ\
VFDQQHUZKLFKZLOOJHQHUDWHDWH[WILOHOLVWLQJRIZKDWLWILQGV
6HOHFWHG5HIHUHQFHV
2ULJLQV
&KDUOHV7KD[WRQ:DOWHU%UDGOH\DQG5RJHU2OVHQ7KH0\V
WHU\RI/LIHV2ULJLQ5HDVVHVVLQJ&XUUHQW7KHRULHV3KLORVRSKLFDO
/LEUDU\1HZ<RUN,6%17KLVLVDFULWLFDO
ORRN DW WKH RULJLQ RI OLIH RQ HDUWK ZLWK D JRRG DQDO\VLV RI WKH
LQIRUPDWLRQDO IDFWRUV WKDW DUH VR LPSRUWDQW WR D SURSHU XQGHU
VWDQGLQJRIOLIH,WLVPRGHUDWHO\WHFKQLFDOEXWYHU\UHDGDEOHDQG
YHU\FDUHIXOO\GRFXPHQWHG
5REHUW6KDSLUR2ULJLQV$6NHSWLFV*XLGHWRWKH2ULJLQRI/LIH
RQ(DUWK6XPPLW%RRNV1HZ<RUN,6%1
$Q H[FHOOHQW LQWURGXFWLRQ WR VRPH RI WKH FXUUHQW UHVHDUFK DQG
SUREOHPVIDFLQJWKHVWXG\RIWKHRULJLQRIOLIHRQHDUWK1RWYHU\
WHFKQLFDO\HWZHOOZULWWHQ
$ * &DLUQV6PLWK 6HYHQ &OXHV WR WKH 2ULJLQ RI /LIH $
6FLHQWLILF 'HWHFWLYH 6WRU\ &DPEULGJH 8QLYHUVLW\ 3UHVV &DP
EULGJH,6%1'LVFXVVHVWKHSUREOHPVZLWK
SUHVHQWRULJLQVUHVHDUFK&DLUQV6PLWKDGYRFDWHVD JHQHWLFWDNH
RYHU IURPFOD\FRPSRXQGV7KRXJK,TXHVWLRQWKHYDOXHRIWKLV
VROXWLRQ WKH GLVFXVVLRQ RI SUREOHPV LQ FODVVLFDO H[SODQDWLRQV LV
ZRUWKUHDGLQJ$IDLUERRNQRWWRRWHFKQLFDO
)UDQFLV&ULFN/LIH,WVHOI,WV2ULJLQDQG1DWXUH6LPRQDQG
6FKXVWHU1HZ<RUN,6%1&ULFNFRPHVRXW

LQIDYRURIDQH[WUDWHUUHVWULDORULJLQRIOLIH1RWDEOHEHFDXVHLWV
DXWKRUZDVLQVWUXPHQWDOLQXQUDYHOOLQJWKHP\VWHULHVRI'1$PRUH
VRWKDQIRUWKHDXWKRUVDQVZHUV
)UHG +R\OH DQG &KDQGUD :LFNUDPDVLQJKH (YROXWLRQ IURP
6SDFH-0'HQW 6RQV/RQGRQ,6%1$
ORRNDWSUREOHPVZLWKWKHRULJLQRIOLIHDQGDSURSRVDOWKDWHDUWK
ZDV SRSXODWHG IURP VSDFH 0RUH UDGLFDO WKDQ &ULFN $OWKRXJK ,
GLVDJUHHZLWKWKHFRQFOXVLRQVRIWKLVERRNLWUDLVHGDPDMRUURZLQ
WKHODVWGHFDGH,WVYDOXHLVFKLHIO\WRVKRZ\RXKRZIDUSHRSOHZLOO
JRWRWU\WRUHVROYHWKHSUREOHPVRIDELRJHQHVLV
(YROXWLRQ
3KLOOLS(-RKQVRQ'DUZLQRQ7ULDO5HJQHU\*DWHZD\:DVK
LQJWRQ'&,6%1$%HUNHOH\ODZ\HUVORRN
DWHYROXWLRQZHLJKLQJWKHHYLGHQFHDQGFXWWLQJWKURXJKWKHVRSK
LVWU\RIWKHVXEMHFW
0LFKDHO 'HQWRQ (YROXWLRQ $ 7KHRU\ LQ &ULVLV $GOHU DQG
$GOHU%HWKHVGD0DU\ODQG,6%1$YHU\
EURDGFULWLFDOORRNDWHYROXWLRQ7KLVERRNDURXVHGDORWRIFRQWUR
YHUV\ LQ WKH V ,W LV PRUH WHFKQLFDO WKDQ -RKQVRQ EXW YHU\
UHDGDEOH
6WHSKHQ-D\*RXOG7KH3DQGDV7KXPE0RUH5HIOHFWLRQVLQ
1DWXUDO +LVWRU\ : : 1RUWRQ 1HZ <RUN ,6%1
*RXOGKDVZULWWHQPDQ\UHDGDEOHDQGSRSXODUERRNVDERXW
HYROXWLRQDQGWKLVLVMXVWRQHRIWKHP+HVWHHUVFOHDURIFUHDWLRQ
LVPZKLOHKDUGO\GHIHQGLQJWKHIDLWKRIHYROXWLRQLVPDKDUGWKLQJ
WRGRLQWRGD\VFOLPDWH$QG\RXFDQILQGKLVERRNVLQPRVWXVHG
ERRNVWRUHV
5LFKDUG'DZNLQV7KH%OLQG:DWFKPDNHU/RQJPDQ*URXS
(VVH[(QJODQG,6%1$ERRNDERXWZK\
ZHVKRXOGDFFHSWHYROXWLRQQRPDWWHUZKDW$OWKRXJKVRPHZKDW
QDwYH'DZNLQVDUJXHVIRUHYROXWLRQDVRSSRVHGWRFUHDWLRQHWF
6HOHFWHG5HIHUHQFHV

ZKLOH QRW XQDZDUH RI WKH SKLORVRSKLFDO LPSOLFDWLRQV RI ZKDW KH

VD\V
3DXO 6 0RRUKHDG 0DUWLQ 0 .DSODQ (GV 0DWKHPDWLFDO
&KDOOHQJHVWRWKH1HR'DUZLQLDQ,QWHUSUHWDWLRQRI(YROXWLRQ7KH
:LVWDU,QVWLWXWH6\PSRVLXP0RQRJUDSK1R7KH:LVWDU,QVWL
WXWH3UHVV3KLODGHOSKLD7KLVGRFXPHQWVWKHILUVWUHDOFRQIOLFW
ZKLFK'DUZLQLVPIDFHGZLWKWKHLQIRUPDWLRQDJH
1RUPDQ 0DFEHWK 'DUZLQ 5HWULHG $Q $SSHDO WR 5HDVRQ
*DPELW %RVWRQ ,6%1 7KLV LV DQ ROG EXW
LQWHUHVWLQJERRNRQ'DUZLQLVP,WLVHVVHQWLDOO\-RKQVRQVSUHGH
FHVVRU
%LRFKHPLVWU\DQG%LRORJ\
5REHUW ( *ODVV *HQH )XQFWLRQ ( &ROL DQG LWV +HULWDEOH
(OHPHQWV &URRP +HOP /RQGRQ,6%1$
JUDQGWRXURIWKH(&ROL)DLUO\WHFKQLFDOEXWLQYDOXDEOHLI\RX
ZDQWWROHDUQMXVWKRZFRPSOH[HYHQDVLPSOHOLYLQJRUJDQLVPLV
%HQMDPLQ/HZLQ*HQHV-RKQ:LOH\1HZ<RUN,6%1
$W\SLFDOWH[WERRNRQJHQHWLFVWHFKQLFDO\HWUHDG
DEOH
$UWLILFLDO/LIH
&KULVWRSKHU*/DQJWRQ(G$UWLILFLDO/LIH7KH3URFHHGLQJV
RIDQ,QWHUGLVFLSOLQDU\:RUNVKRSRQWKH6\QWKHVLVDQG6LPXODWLRQ
RI /LYLQJ 6\VWHPV +HOG 6HSWHPEHU LQ /RV $ODPRV 1HZ
0H[LFR9ROXPH9,6DWD)H,QVWLWXWH6WXGLHVLQWKH6FLHQFHVRI
&RPSOH[LW\ $GGLVRQ :HVOH\ 5HGZRRG &LW\ &DOLIRUQLD
,6%17KLVZDVWKHEHJLQQLQJRI$UWLILFLDO/LIHDV
D VFLHQWLILF GLVFLSOLQH D SDJH ERRN FUDPPHG ZLWK RULJLQDO
UHVHDUFKSDSHUV6RPHDUHH[FHOOHQWRWKHUVDUHZHOO
&KULVWRSKHU/DQJWRQ&KDUOHV7D\ORU-')DUPHU6WHHQ5DV
PXVVHQ(GV$UWLILFLDO/LIH,,3URFHHGLQJVRIWKH:RUNVKRSRQ
$UWLILFDO /LIH +HOG )HEUXDU\ LQ 6DQWD )H 1HZ 0H[LFR

9ROXPH;6DQWD)H,QVWLWXWH6WXGLHVLQWKH6FLHQFHVRI&RPSOH[LW\
$GGLVRQ:HVOH\5HGZRRG&LW\&DOLIRUQLD,6%1
$QRWKHUSDJHVRIRULJLQDOUHVHDUFKSDSHUV
6WHYHQ /HY\ $UWLILFLDO /LIH 7KH 4XHVW IRU D 1HZ &UHDWLRQ
3DQWKHRQ%RRNV1HZ<RUN,6%1;7KLVLV
DJUDQGVXUYH\DQGDSRSXODUKLVWRU\RIWKHILHOGIURPFRQFHSWLRQ
WKURXJKWKHILUVW\HDUVRIWKHV/HY\LVVRPHZKDWRIDIDQDWLF
LQWKHHW\PRORJLFDOVHQVHRIWKHZRUGEXWKHVYHU\UHDGDEOHDQG
PDNHVKLVFKDUDFWHUVFRPHDOLYH
(OZ\Q%HUOHNDPS-RKQ&RQZD\DQG5LFKDUG*X\:LQQLQJ
:D\VIRU<RXU0DWKHPDWLFDO3OD\V9RO$FDGHPLF3UHVV1HZ
<RUN,6%1,I\RXOLNH&RQZD\VJDPHRI
/LIHWKHQWKLVZLOOJLYH\RXORDGVRILQVLJKWVLQWRZKDWFDQEHGRQH
ZLWKLW,WVHGXFDWLRQDOIURPWKHVWDQGSRLQWRIVHHLQJMXVWKRZPXFK
FDQEHGRQHZLWKVXFKDVLPSOHV\VWHP
+DQV0RUDYHF0LQG&KLOGUHQ7KH)XWXUHRI5RERWDQG+X
PDQ ,QWHOOLJHQFH +DUYDUG 8QLYHUVLW\ 3UHVV &DPEULGJH
0DVV,6%1$FRQWURYHUVLDOYLVLRQRIZKHUH
DUWLILFLDOOLIHPD\OHDG
3KLORVRSK\
.DUO 3RSSHU &RQMHFWXUHV DQG 5HIXWDWLRQV 7KH *URZWK RI
6FLHQWLILF.QRZOHGJH%DVLF%RRNV1HZ<RUN7KHFODVVLF
3RSSHUDQGKLVYLHZVRIWKHSKLORVRSK\RIVFLHQFH<RXPD\DOVR
ZDQWWRFKHFNRXWKLV/RJLFRI6FLHQWLILF'LVFRYHU\
7KRPDV.XKQ7KH6WUXFWXUHRI6FLHQWLILF5HYROXWLRQV8QL
YHUVLW\RI&KLFDJR3UHVV&KLFDJR3RSSHUDQG.XKQDUHWZR
JLDQWVLQWKHSKLORVRSK\RI6FLHQFH%HWZHHQWKHWZR\RXOOJHWD
JRRGLQWURGXFWLRQWRPRGHUQWKLQNLQJDERXWZKDWVFLHQFHFDQDQG
FDQQRWGR
+DQV 5HJQHOO $QFLHQW 9LHZV RQ WKH 1DWXUH RI /LIH &:.
*OHHUXS /XQG 6ZHGHQ $ JRRG LQWURGXFWLRQ WR DQFLHQW
6HOHFWHG5HIHUHQFHV

LGHDVDERXWOLIH2IFRXUVH\RXFDQDOZD\VORRNXSWKHFODVVLFV
OLNH$ULVWRWOHV'H$QLPDWRR
&RPSXWHU9LUXVHV
0DUN /XGZLJ 7KH /LWWOH %ODFN %RRN RI &RPSXWHU 9LUXVHV
$PHULFDQ (DJOH 3XEOLFDWLRQV 7XFVRQ $UL]RQD ,6%1
$EDVLFLQWURGXFWLRQWRWKHWHFKQRORJ\RIFRPSXWHU
YLUXVHVLQFOXGLQJZRUNLQJH[DPSOHV
&RPSXWHU 9LUXV 'HYHORSPHQWV 4XDUWHUO\ $PHULFDQ (DJOH
3XEOLFDWLRQV 7XFVRQ $UL]RQD ,661 7KLV MRXUQDO
WDNHVXSZKHUH7KH/LWWOH%ODFN%RRNOHIWRIIZLWKPRUHLQGHSWK
VWXGLHVRIYLUXVWHFKQRORJ\
,QGH[
$
A-type world283
Abiogenesis287
by random processes252
directed256, 276
Adaptability39, 41, 43
AIDS12, 290
AL research, outlawing290
AL Researchers as creationists130
Alchemy126, 156
Algorithm, size of95
Algorithmic information94, 102
Alive, actually1
Amino acid34, 238
Amoeba, predicting behavior of81
Animal, multi-cellular110
Anthropic principle117
Anti-virus50, 196, 292
Aquinas, Thomas64
Archaeopteryx232
Archetype of life199, 276, 280
Aristotle62 - 64, 102
Arsenic42
Astrology73
Atomism61, 66, 296

cracks in74
failure of84
in AL69
Atoms, in greek philosophy61
AUTOEXEC.BAT261
Automaton, Minimal108, 113
Self-Reproducing27
Autonomy121, 159
Averroes64
%
B-type world283
Baggage, philosophical305
Beginning of life167
Beringer, Dr. Johann B. A.162
Bible, and life60
Big bang157
Biochemistry277, 313
Biology, beginning of73
BIOS171
Biosphere40
Blind Watchmaker161, 224
Boltzmanns constant98
Bootstrapped abiogenesis259
Boundary condition311
Brain232
Breeding236
Brick249
Bristles237
Bubonic Plague12
Bugs221
Burks, Arthur23
Byl automaton29, 30, 91, 107, 285
Byl, John29, 113
,QGH[
&
C-type world283
cost of284
Cairns-Smith, A. G.272
Calculations, impossible78
Calculus156
Calculus test83
Candle flame15
Cat, Schrodingers67
Catastrophe theory14, 77
Causality principle71
Cellular automata35, 307
Chambers, Robert143
CHECKB130
CHECKB230
Chemical evolution251, 258
Chemistry of life313
Chiasma48, 208
Chicken Pox12
Chromosome34, 48, 316
Clay chemistry278
Clockmakers22, 87
Closed system40
Codd, E. F.26
Coefficient, evolvability46
Coin toss98
Companion-101253, 267, 274, 324
Computer viruses, as AL128
Computer, quantum78
Computerized money290
Configurational work278
Constructor, Universal24
Contest, virus writing319
Controversy241
Conway, John20
COPIER261 - 262

Copying information226
Cosmos146
Cracks, in atomism74
CRC173
Creation, second, viruses as164
supernatural145
theory of140
Creationists, old versus new140
Creative evolution216, 297
Creator, AL researcher as126
Creator, intelligent130
invoking192
of virus159
Crick, Francis271, 279
Cross-over208
Crystal30, 42
Crystal growth19
Crystal, salt80
Cult126
Cyclical boundary condition311
Cytochrome C238
'
Darwin139, 143
Darwin on Trial149, 231
Darwins hypothesis195, 214, 250,
294 - 295, 300
Darwins hypothesis for viruses196
Darwin, Charles1, 148
Darwinian Genetic Mutation Engine
see DGME
Darwinism136
Dawkins, Richard150, 161, 242
De Anima63
Dead end, evolutionary251, 263
Decryption218
Deduction, formal method of36
,QGH[
Democritus61
Derivative334 - 335
Determinism, Newtonian76
DGME218, 245, 299, 343, 347
Differential equations333
Digestion39
Directed abiogenesis256
Directed panspermia272
DISKCOPY261
Distribution, population184
DNA12, 33, 48, 110, 152, 154,
240, 271, 277, 313
of E. Coli274
as information storage94
DOS119, 279
as a virus261
Double helix275, 314
Downs syndrome245
Dragon, philosophical300
DRAM171
Duck, mechanical22
(
E. Coli239 - 240, 273, 280, 299
Eem DOS 5-Voorde327
Ego69
Einstein, Albert8, 76, 144, 304
Electrodynamics8, 144
Emergent behavior22, 33, 53, 123,
180
and viruses37
as vacuous concept87
representation dependence36
strong85, 296
weak86
Empedocles62
Encryption47, 218

Entropy40, 43, 97, 223

and specificity101
at creation of universe147
definition98
Epicurus61
Equation, population176
Ethidium Bromide275
Euclidean universe141
Eukaryote240
EVO_V0185, 190
Evolution10, 22, 45, 126
as mathematics136
as omnipotent force164
fact of153, 167
in any self-reproducing system156
Lamarkian163
molecular139
of viruses170, 190
rate of241
second-order phenomenon45
social139
theory of135, 153, 195, 294
vacuous13
Eye234
)
Falsifiability136, 295
of evolution151
Fertility factor177
First International Virus Writing Contest319
Fish42
Fission, nuclear290
Fitness198
criterion201
function198, 206, 236
Forms, theory of63
Fossil record144, 231
,QGH[
Fruit flies237
Fundamentalism, philosophical192
*
Galileo141
Gaps240
Gas, specifying state of97
Gene316
Gene space201, 212, 217
General relativity8, 74, 144
GENESIS285
Genesis of the Species140
Genetic Algorithm163, 209, 224
Genetic change, accidental48
pre-programmed48
Genetic code313, 315
redundancy316
Genetic homeostasis237
GENFILE256
Genotype12, 34, 155, 191
Geocentricity141
Goldschmidt, Richard235
Good virus3, 5
Gould, Stephen Jay232
Gradualism231, 234
Gravitation8
Newtons law75, 304
Newtonian144
+
Hamiltonian operator67
Hamsters151
Hard disk259
Harmony theory62
Hegel9
Heisenberg, Uncertainty principle75
Helix313

Hemoglobin241
Heuristic scanner221, 258
Hieroglyphics6
Huxley, Julian150, 242
Hydrogen259
Hydrogen bond313
,
IBM291
Iguana121
Implications, philosophical297
Improbability242
Incalculability76
Incompleteness of fossil record232
Inertia, genetic237
INFECT routine31
Information
and Computers104
and self-reproduction105
content285
content, genetic223
in life216
inside computer103
storage medium259
algorithmic94, 226
definition92
Intelligent creator130
Interference pattern85
Intermediate forms234
Interrupt 2171
Intervention, intelligent192
Johnson, Phillip149, 153, 231, 295

Juggernaut289
,QGH[
KILROY virus261
Kind, and form65
Kuhn, Thomas84
/
Laboratory297, 304
LAMARK virus163
Langton automaton29, 111, 129,
160, 308
Langton, Christopher26, 113
Law, anti-virus294
Levy, Steven289
Life
after death60
animal121
as presence of substance62
Carbon-based124
chemistry of313
Game of20, 24, 308
Harmony theory62
holiness of59
what is it?13
Lineage231
LITTLE virus322
LOAD.BAS358
Long-range order212
Lucretius61
Lung235
Lyell, Charles142
0
Machine14
self-reproducing110
Macintosh computer279
Macro-mutation204, 244

Magnetic domains259
Magnetic media173
Mariner11
Mars11
MASM324
Maxwells equations144, 148
McAfee Associates220
MDV-1275
Mesmerism156
Messenger RNA315
Metabolism22, 39
Viral42
Metaphysical considerations13
Mice151
Micro-mutations204
limits205
Miller, Stanley277
MINI-42 virus253 - 254, 275
MINI-MEM virus330
MINIMAL automaton108
Miracle301
quest for287
Mivart, St. George140
Modification, intelligent189
Molecule, self-reproducing251
Moth, peppered153, 246
Mule19
Mutation engine168, 218
Mutation mechanisms170
Mutation rate175, 182, 221, 266
Mutation,
beneficial46, 181 - 182
effect of178
lethal45
neutral46, 187
sterile190
unobserved191
Mysticism, platonic64
,QGH[
Myth295
Mythology, greek61
1
Naked gene275
Natural law300
Natural philosopher8
Neo-darwinian evolution198
Netural, philosophically304
Newton301
Newtons law of gravitation304
Newtons laws156
Newton, Isaac73, 141, 157
Newtonian mechanics66, 75, 136
Nihilistic attitude291
Nuclear fission290
Nuclear proliferation289
Nucleotide241, 313
2
Organism
carbon-based58, 117
one-celled79
Orgel, Leslie275
Origin of life127
popular view271
Origin of the Species139
OS/253
Oxygen259
3
Paradigm296
Parallel computer35

Parasite163
Parity checking171
PATTERN260
Patterson, Colin150
PC279
Penrose, Roger68
Phase space225
Phenotype12, 34, 155, 191
Philolaus62
Philosophical
dragon300
soap-box131
truism197
Philosophically neutral304
Philosophy, Platonic64
Photosynthesis39
Physical law, design behind131
Physics, hiding complexity in129
taking advantage of129
PI_K188
PICO-7253, 275
as dead end263
PICO-8266
Pigeon232
Plato62
Polymorphism47
Population
dynamics20
equations176, 182
explosion177
Positivism301
Potential energy249
Prey-predator system225
Price, George McCready140
Principles of Geology142
Prokaryote239 - 240
Proteins34, 277, 315
Psuche62
,QGH[
Psychic experience302
Psychology69
Punctuated equilibrium232
Pythagorean number magic62
4
Q Replicase275
Quantitative analysis192
Quantum
computer78
field theory14, 81
gravity68, 74, 147
interference pattern85
mechanics66, 74, 81, 157
mechanics, and hidden variables76
mechanics, tentative nature of78
uncertainty124
5
Radioactive decay85
Random
guess199
mutations217
number generator96, 219, 257
search269
Ray, Thomas225
Reactive evolution216, 224, 246,
297
Reality, knowable74
Redundancy of genetic code316
Relativity299
Replicase275
Reproduction
rate49
physics-driven91
sexual208
Revolution

information136
scientific84
RFGEN253
Ribosomal RNA315
Ribosome315
RNA275, 277, 290, 315
Rock, information content of102
Rotationally invariant310
Rule One109, 127
Rule Two113, 119, 128, 161
6
Sagan, Carl146
Saltation243, 248
SCAN program220
SCAN-Slip219, 244, 246,
297, 299, 350
Scanner, evading298
Schrodinger equation66
Schrodinger, Erwin67
Science fiction4
Science
analytic147
limited147
Scientific method195
SELECT program202, 204, 208
Selection process198
Selection, limitations on204, 236
Self-mutating virus47
Self-reproduction22
SEQUENCE360
Sexual reproduction208
implementation209
tradeoffs211
Shapiro, Robert273
Silva Mind Control302
,QGH[
Simplicity of natural law72

Simulating machine, universal128
Slave13
Soap-box, philosophical131, 296
Solzhenitsyn, Alexander2
Spacemen279
Specificity96
Specificity and entropy101
Spontaneous generation of viruses165
SRA_LAB27, 162, 285, 311
SRA_LAB, CRYSTAL configuration30
Stasis232
Statistical
fluctuations100
improbability242
Stochastic population equations339
STOMPER-101 virus268, 325
Stormbringer324
Supernaturalism296
Survival of the fittest47, 151
as tautology153, 198
Symmetry, rotational114
Synthesis of biochemicals258
SYS261
7
T4 Cells290
TASM324
Tautology107, 198
Thaxton, Charles272, 277
Theory of evolution, principle
behind216
Thermodynamic work277
Thermodynamics, Second Law39, 98
Tierra225
TIMID virus168, 191, 253
TPE219, 300, 343, 355

Transfer RNA315
Transition rules
corners115
Langton116
Transitional fossils232
Trident Polymorphic Engine
see TPE
Truth6
Turing machine24, 36, 88
8
Uncertainty, quantum14, 75
Unified field theory8
Universal simulating machine128
Universe, design or chance?160
9
Vaucanson, Jacques22
Victory, of atomism66
Video-Shift virus328
Virus writing contest253, 267
Virus
bacterial275
benign292
COMPANION-101253, 267, 324
COPIER261 - 262
Eem DOS 5-Voorde327
evolved159
INTRUDER31, 43, 49
INTRUDER II50
Jerusalem43 - 44
Joshi3
KILROY261
LITTLE322
Macintosh279
MINI-42253
MINI-MEM330
,QGH[
OS/238, 53
PC279
Polymorphic47
SCAN-Slip219, 244, 297, 350
STOMPER-101268, 325
TIMID253
Video-Shift328
Viruses
as phenomenon305
biological41
Black Book31
DOS270
Rule Two119
Vitalism257
Von Neumann, John23
Voo-doo10
:
War195
Water259
drop of80
Wing234
Wistar Institute240
Word processor43
Work, configurational278

Compu
ter Viruses,
Artificial
Life
and
Evolution
WARNING
7KLVERRNFRQWDLQVFRPSOHWHVRXUFH
FRGH IRU HYROYLQJ FRPSXWHU YLUXVHV
ZKLFK DUH FDSDEOH RI HYDGLQJ HYHU\
NQRZQ PHDQV RI SDVVLYH GHWHFWLRQ
<RXFDQEHKHOGOHJDOO\OLDEOHIRUWKH
PLVXVHRIWKHVHYLUXVHVHYHQLIVXFK
PLVXVH LV XQLQWHQWLRQDO 'R QRW DW
WHPSW WR H[HFXWH DQ\ RI WKH FRGH LQ
WKLVERRNXQOHVV\RXDUHZHOOYHUVHG
LQORZOHYHOSURJUDPPLQJDQG\RXDUH
ZRUNLQJRQDFDUHIXOO\FRQWUROOHGDQG
LVRODWHGFRPSXWHUV\VWHP
Computer
Viruses,
Artificial Life
and
Evolution
Mark A. Ludwig
Order from www.ameaglepubs.com today!
Dr. Ludwig is back in black!

In this brand new book, Dr. Ludwig explores the fascinating world of email viruses in a way nobody
else dares! Here you will learn about how these viruses work and what they can and cannot do from a
veteran hacker and virus researcher. Why settle for the vague generalities of other books when you
can have page after page of carefully explained code and a fascinating variety of live viruses to
experiment with on your own computer or check your antivirus software with? In this book you'll
learn the basics of viruses that reproduce through email, and then go on to explore how antivirus
programs catch them and how wiley viruses evade the antivirus programs. You'll learn about
polymorphic and evolving viruses. You'll learn how viruse writers use exploits - bugs in programs
like Outlook Express - to get their code to execute without your consent. You'll learn about logic
bombs and the social engineering side of viruses - not the social engineering of old time hackers, but
the tried and true scientific method behind turning a replicating program into a virus that infects
millions of computers.Yet Dr. Ludwig doesn't stop here. He faces the sobering possibilities of email
viruses that lie just around the corner . . . viruses that could literally change the history of the human
race, for better or worse.Admittedly this would be a dangerous book in thewrong hands.Yet it would
be more dangerous if it didn't get into the right hands. The next major virus attack could see millions
of computers wiped clean in a matter of hours. With this book, you'll have a fighting chance to spot
the trouble coming and avoid it, while the multitudes that are dependent on a canned program to keep
them out of trouble will get taken out. In short, this is an utterly fascinating book.You'll never look at
computer viruses the same way again after reading it.
ISBN 0-929408-33-0, 232 pages, $16.95
The world of hacking changes continuously. Yesterday's hacks are today's rusty locks that no
longer work. The security guys are constantly fixing holes, and the hackers are constantly
changing their tricks. This new fourth edition of the Happy Hacker - just released in December,
2001 - will keep you up to date on the world of hacking. It's classicMeinel at her best, leading you
through the tunnels and back doors of the internet that is accessible to the beginner, yet
entertaining and educational to the advanced hacker. With major new sections on exploring and
hacking websites, and hacker war, and updates to cover the latest Windows operating systems,
the Happy Hacker is bigger and better than ever!
ISBN 0-929408-34-9, 464 pages $34.95
Computer Viruses,
Artificial Life,
And Evolution
by Dr. Mark A. Ludwig
In Computer Viruses, Artificial Life and
Evolution, Dr. Ludwig, a physicist by trade,
explores the world of computer viruses, looking at
them as a form of artificial life. This is the starting
point for an original and thoughtful introduction to the
whole question of What is life? Ludwig realizes that no glib answer will
do if someone is going to come out and say that the virus in your computer is
alive, and you should respect it rather than kill it. So he surveys this very basic
question in great depth. He discusses the mechanical requirements for life. Yet he
also introduces the reader to the deeper philosophical questions about life, ranging
from Aristotle to modern quantum theory and information theory. This tour will
leave you with a deeper appreciation of both the certainties and the mysteries about
what life is.
Next, Ludwig digs into abiogenesis and evolution.Whyarevirusessoimportant
to these two fields? Because operating systems were not designed with viruses in
mind, Ludwig demonstrates that computer viruses can teach us important things
that other artifical life experiments do not.
While the author demonstrates that computer viruses can and do evolve, his over
all evaluation of evolution suggests that present day theories leave much to be
desired. Why shouldnt a proper theory of evolution give useful predictions in any
worldwecaretoapplyitto?Virusesorwetbiology,itshouldworkforboth.Ludwig
is pessimistic about what wet biology has produced: the philosophical
commitments of Darwinism seem to be poisoning it from within. He further
suggests that Artificial life holds the promise of . . . a real theory of evolution . . .
Any theory we formulate ought to explain the whole gamut of worlds, ranging from
those which couldnt evolve anything to those which evolve as much as possible.
But will AL live up to this challenge, or will it become little more than
mathematical storytelling?
373 page book, $26.95

If, as any other human being, you are interested in discovering who you are, where
you come from and where you are going to, you should seriously consider reading
this book. Dare yourself to put aside all those evolution fairy-tales you were told at
school, and decide to deeply investigate the truth about life. Come with Ludwig in
his journey. This exciting adventure will leave in you an ever-lasting impression.
A.S.C.
Visit www.ameaglepubs.com for this great book today!
The Giant Black Book

of Computer Viruses
by Dr. Mark A. Ludwig
This is a fully revised 1998 edition of Mark

Ludwigs classic work on computer viruses, newly updated
to reflect the rapidly changing world of computers, with lots
of new and excitingmaterial!
It is the only technical introduction to computer viruses
available anywhere at any price. Most books on computer
viruses teach you little more than how to buy an anti-virus program and, if youre
lucky, how to use it. Not so with The Giant Black Book. It isnt a book that talks down to you,
telling you why you shouldnt be allowed to understand viruses for your own good. It isnt a
book that spoon-feeds you like you were some idiot with an IQ of 60 when it comes to
computers. Nothing is held back. This book fully explains every major type of virus and antivirus program, and includes complete source code for all of them!
Learn about replication techniques in the first part of the book, starting with simple
overwriting viruses and companion viruses. Then go on to discuss parasitic viruses for COM
and EXE files and memory resident viruses, including viruses which use advanced memory
control structure manipulation. Then youll tour boot sector viruses ranging from simple
varieties that are safe to play with up to some of the most successful viruses known, including
multi-partite viruses. Then youll learn how to program viruses for the 32-bit Windows
environment (and how to write assembly language programs forWindows). Next, youll study
viruses for Unix and Linux, as well as the infamous macro viruses and source code viruses.
Finally, a discussion of network-saavy viruses completes the picture.
The second part of the book will give you a solid introduction to the battle between viruses
and anti-virus programs. It will teach you how virus detectors work and what techniques they
use. Youll get a detailed introduction to stealth techniques used by viruses, including
Windows-based techniques. Next, there is a tour of retaliating viruses which attack anti-virus
programs, and polymorphic viruses. Finally, youll get to experiment with the awesome power
of genetic viruses, including some of Ludwigs latest, surprising results!.
The third part of the book deals with common payloads for viruses. It includes a thorough
discussion of destructive logic bombs (including hostile Java applets), as well as how to break
the security of Unix and set up an account with super user privileges. Then youll learn how to
build a virus that causes every program it touches to compromise Windows security! Also
covered is the beneficial virus named KOH that will secure your hard disk for you, so that
no one can access it without your secret password.
If you need first hand knowledge about viruses - and truly there is no substitute for first hand
knowledge - then this is the book for you. And if you want to experiment with live viruses,
perhaps to test out that new anti-virus package you just bought, The Giant Black Book gives
you the tools you need to do it! Best of all, the companion disk is now included with the book at
no extra charge!
Come to www.ameaglepubs.com to get this great book!
Outlaws of the Wild West

The Collection
CD-ROM
Here is the most incredible
collection of computer viruses, virus
tools, mutation engines, trojan horses,
and malicious software on the planet!
The software on this CD-ROM is
responsible for having caused literally
billions of dollars worth of damage in the
past ten years. People have lost their jobs
over it. People have gone to jail for writing
it. Governments and big corporations have
been confounded by it. Our advertising for this
CD has been banned in more magazines than you can
imagine - even the likes of Soldier of Fortune!
If you need viruses or malicious software - or information about it - for any
sane reason, this CD is for you! With it you can test your anti-virus software or
perfect the software youre developing. You can build test viruses that your
software has never seen before to see if it can handle them. You can read what
virus writers have written about how easy or hard your software is to defeat, or
find out what a particular virus does. You can trace the history of a virus, or look
up in-the-field comments about how an anti-virus program is working or choking
up. You can study the source code of a particular virus or assemble it. You can
look at samples of live viruses collected from all over the world. See how ten
samples differ, even though your scanner says theyre all the same thing. In short,
this CD puts you in charge!
On it, you get a fantastic virus collection, consisting of 804 major families, and
10,000 individual and different viruses for PCs, Macs, Unix boxes, Amigas and
others. You get 2700 files containing new viruses that arent properly identified
by most scanners. You get 30 megabytes of source code and disassemblies of
viruses, mutation engines, virus creation kits like theVirus Creation Lab, trojans,
trojan generating programs and source listings. Then add electronic newsletters
about viruses, text files and databases on viruses, tools for handling viruses, and
anti-virus software. For icing on the cake, we threw in all ofAmerican Eagles old
publications which are now out of print, including The Little Black Book of
Computer Viruses, Computer Virus Developments Quarterly, Underground
Technology Review and the Tech Notes. What you end up with is an absolutely
fantastic collection of material about viruses - over 444 megabytes, now
available at a reduced price!
PC Compatible CD-ROM, $49.95

Visit www.ameaglepubs.com today to get this amazing CD!
The
Hackers
Companion
CD-ROM
ions
icat
if
mod
ner
n
Sca
Gener
ate cr
edit c
ard #
s
Crack passwords
ID
ller
Ca
Here is a fantastic source for all kinds of

underground technical information thats hard to
come by. It doesnt contain any viruses, but if you
want to know how to compromise a Unix machine
or a BBS, if you want to know how the phone
company gets ripped off, or learn how to build a
red box, this CD has it all. It contains all kinds of
computer, telephone and general hacking
information that will teach you how to use the
system in ways you never imagined possible. It
even includes a video of Dutch hackers breaking
into a classified US military computer under the
assumed name of Dan Quayle! This CD is a
contemporary classic and, again, an endangered
species!
PC Compatible CD-ROM, $29.95
G
ol
d/
Bl
ac
How
k/
Re
to get
d/
e internet!
Bl caught
Hacking th
ue
Satelite hacking
bo
Hackin
xe
g vario
s!
us oper
ating sy
stems
War dialers!
Network ha
cking
d
frau
ATM
Steal passwords
Sending anonymous e-mail
Social security numbers
Forged e-mail
!
BSes
for B
s
ocol
prot
Cellular protocols
h
Leec
g
tappin
Phone
PKZip
hacking
Visit www.ameaglepubs.com for this great CD!

Puter Viruses, Artificial Life and Evolution

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Puter Viruses, Artificial Life and Evolution

Загружено:

Авторское право:

Доступные форматы

Compu

American Eagle Publications, Inc.

WKH\GR5LJKWQRZWKHZKROHVFLHQWLILF V\VWHP VHHPVWRSUR

D SRLQW RI FRQWHQWLRQ WKH\ QDWXUDOO\ GHIHQG WKHLU SKLORVRSKLFDO

UHVSHFWWKHP RUJRWRZDUZLWKWKHP ZKHQZHILQGWKHP7KDWLV

ZKLFK PLPLFV OLYLQJ RUJDQLVPV DQG WULYLDO UHSURGXFWLRQ ZKLFK

ZKLFK SHUIRUP DOO WKH IXQFWLRQV RI FHOO PHWDEROLVP LQFOXGLQJ

HPHUJHQW EHKDYLRU DQG WKHUHIRUH TXDOLILHV DV OLIH ZKLOH DQRWKHU

3UDFWLFDOO\ VSHDNLQJ 'DUZLQLDQ HYROXWLRQ FDQ RQO\ RSHUDWH

7KHWKRXJKWWKDWDFDUERQEDVHGRUJDQLVP OLIH LVMXVWDOLWWOH

JUDWHG $ULVWRWHOLDQ DQG &KULVWLDQ WKRXJKW :LWK WKH UHYLYDO RI

ZKROH 7KH VHFRQGDVVXPSWLRQLVWKDWWKHODZVRIQDWXUHDUHLQ

 'DYLG%RKP +LGGHQYDULDEOHVLQWKH4XDQWXP7KHRU\ '5%DWHV(G

PHDVXUHPHQWV RU ,QHHGDELJJHUFRPSXWHU DOOSUDFWLFDOFRQ

6 N%OQ  

ULWKPV DQG HQWURS\ DUH XVHOHVV ZLWKRXW VRPH VXEMHFWLYH SKLOR

, XVH WKH QRWDWLRQ IRU LQIRUPDWLRQ FRQWHQW EHFDXVH , GR QRW

(DFK  VHTXHQFH FDXVHVWKHVKHDWKWREHH[WHQGHGRQHXQLW

VR5XOH2QHKROGV ,1675 ! 0$&+

68QVSHFLILHG OQ 

66SHFLILHG OQ 

7KLVLVDKXJHQXPEHUFRPSDUHGWR ,1675 VR5XOH7ZR

V\PPHWU\ *HQHUDOO\ VSHDNLQJ ZH FDQ PDNH VRPH VHQVH RI

LQJ ZKHWKHU RU QRW VRPHWKLQJ LV VHOIUHSURGXFLQJ  $IWHU DOO

PDGH SDUW RI D FRVPLF ZRUOG YLHZ *HRFHQWULFLW\ LV D FODVVLF

 'DYLG.XEULQ 1HZWRQDQGWKH&\FOLFDO&RVPRV -RXUQDORIWKH+LVWRU\RI

SOLQHV &HUWDLQO\ E\ WKH PLG WK FHQWXU\ PRVW VFLHQWLILFDOO\

 &DUO6DJDQ&RVPRV 5DQGRP+RXVH1HZ<RUN S

3URSHUO\ XQGHUVWRRG WKRXJK WKHUH LV QR VKDPH LQ D OLPLWHG

RI YLFWRU\ DIWHU YLFWRU\ ZKHUH XQGHUVWDQGLQJ DGGHG WR XQGHU

$QG \HW &ROLQ 3DWWHUVRQ D VHQLRU SDOHRQWRORJLVW DW WKH %ULWLVK

7KH FRPPLWWHG HYROXWLRQLVW FRXOG DOZD\V FRPH EDFN ZLWK WKH

7KH PXWDWLRQ PHFKDQLVP LV VLPSO\ VRPHWKLQJ WKDW FDXVHV

,IWKHjnz +H[ DIWHUWKHFDOOWRFIND_FILEPXWDWHVWRVRPHWKLQJ

  M] MD MQR' MJH SXVKES [RUD[::) FPF 

G3MGW M 13M 1 3MM3M 13M 1 3

7KHFDVHZKHUH9MFDQUHSURGXFH M! LVPRUHLQWHUHVWLQJ$W

)LUVW ZH PXVW GHILQH RXU WKRXJKW H[SHULPHQW D OLWWOH EHWWHU

*LYHQ WKHVH DVVXPSWLRQV ZH KDYH HQRXJK LQIRUPDWLRQ WR VROYH

1RWLFH WKDW WKH SRSXODWLRQ RI 9 VHHPVWRVDWXUDWHDIWHUDERXW

,IZHFDQUXOHRXWRSWLRQV  DQG  WKHQZHFDQUXOHHYROXWLRQ

YLUXVHVWRFRQWDLQDERXW[3 333 FRSLHVRI9

VXSSRVHWKHWRWDOYLUXVSRSXODWLRQ37ZDV DKXJHQXPEHU ,I

 0DUN /XGZLJ 'HVLJQLQJ D 0XWDWLRQ (QJLQH  &RPSXWHU 9LUXV

 6HHIRUH[DPSOH&KULVWRSKHU/DQJWRQ /LIHDWWKH(GJHRI&KDRV $UWLILFLDO

VRPH WLPH DV LQ )LJXUH  7KHIRVVLOUHFRUGRXJKWWREHOLNH

KLJKO\ LQIRUPDWLRQGULYHQ SURFHVV 7KH FKDQFHV RI VHOHFWLQJ D

DQFHVWRU" 7\SLFDO WKRXJK GHEDWDEOH FDOFXODWLRQV VXJJHVW 

VFDQQHUWKDWGLG 6HH)LJXUH $SRSXODWLRQLQ5HJLRQ$FRXOG

VKRRWLQJ D VSDUN WKURXJK WKHP WKHQ WKHLU LQIRUPDWLRQ FRQWHQW

K\SRWKHVLVUHTXLUHVHLWKHU D DFUHDWLYHHYROXWLRQRU E DZRUOG

1RZREYLRXVO\LQWKHUHDOZRUOGWKHUHDUH SUHIHUUHG FRPEL

)XUWKHUPRUH &203$1,21 LV DERXW WKH VPDOOHVW YLUXV

 )UDQFLV&ULFN/LIH,WVHOI 6LPRQ 6FKXVWHU1HZ<RUN S

0ROHFXODU%LRORJ\  SS

7KD[WRQ HW DO LQ WKHLU ERRN7KH0\VWHU\RI/LIHV2ULJLQ

61HZ6WDWHV  OQ  OQ  

FRXUVHZLWKWKHHDUWK$KRVWLOH RUMXVWVHOILVK LQWHOOLJHQFHVXSHULRU

WRWDO HUDGLFDWLRQ E\ RQWKHIO\ VFDQQHUV ZKLFK DOORZ WKH XVHU WR

7KH IROORZLQJ YLUXV GXEEHG /,77/( ZDV LQFOXGHG LQ WKH

7LQ\ PRGHO WR FUHDWH D &20 ILOH

'LVN WUDQVIHU DUHD

ILUVW RSHQ WKH ILOH

WKH\GR5LJKWQRZWKHZKROHVFLHQWLILF V\VWHP VHHPVWRSUR

D SRLQW RI FRQWHQWLRQ WKH\ QDWXUDOO\ GHIHQG WKHLU SKLORVRSKLFDO

UHVSHFWWKHPRUJRWRZDUZLWKWKHPZKHQZHILQGWKHP7KDWLV

ZKLFK PLPLFV OLYLQJ RUJDQLVPV DQG WULYLDO UHSURGXFWLRQ ZKLFK

ZKLFK SHUIRUP DOO WKH IXQFWLRQV RI FHOO PHWDEROLVP LQFOXGLQJ

HPHUJHQW EHKDYLRU DQG WKHUHIRUH TXDOLILHV DV OLIH ZKLOH DQRWKHU

3UDFWLFDOO\ VSHDNLQJ 'DUZLQLDQ HYROXWLRQ FDQ RQO\ RSHUDWH

7KHWKRXJKWWKDWDFDUERQEDVHGRUJDQLVPOLIHLVMXVWDOLWWOH

JUDWHG $ULVWRWHOLDQ DQG &KULVWLDQ WKRXJKW :LWK WKH UHYLYDO RI

ZKROH 7KH VHFRQGDVVXPSWLRQLVWKDWWKHODZVRIQDWXUHDUHLQ

'DYLG%RKP +LGGHQYDULDEOHVLQWKH4XDQWXP7KHRU\ '5%DWHV(G

PHDVXUHPHQWV RU ,QHHGDELJJHUFRPSXWHU DOOSUDFWLFDOFRQ

6 N%OQ

ULWKPV DQG HQWURS\ DUH XVHOHVV ZLWKRXW VRPH VXEMHFWLYH SKLOR

(DFK VHTXHQFH FDXVHVWKHVKHDWKWREHH[WHQGHGRQHXQLW

VR5XOH2QHKROGV,1675!0$&+

68QVSHFLILHG OQ

66SHFLILHG OQ

7KLVLVDKXJHQXPEHUFRPSDUHGWR,1675 VR5XOH7ZR

V\PPHWU\ *HQHUDOO\ VSHDNLQJ ZH FDQ PDNH VRPH VHQVH RI

LQJ ZKHWKHU RU QRW VRPHWKLQJ LV VHOIUHSURGXFLQJ $IWHU DOO

PDGH SDUW RI D FRVPLF ZRUOG YLHZ *HRFHQWULFLW\ LV D FODVVLF

'DYLG.XEULQ 1HZWRQDQGWKH&\FOLFDO&RVPRV -RXUQDORIWKH+LVWRU\RI

SOLQHV &HUWDLQO\ E\ WKH PLG WK FHQWXU\ PRVW VFLHQWLILFDOO\

&DUO6DJDQ&RVPRV5DQGRP+RXVH1HZ<RUNS

3URSHUO\ XQGHUVWRRG WKRXJK WKHUH LV QR VKDPH LQ D OLPLWHG

RI YLFWRU\ DIWHU YLFWRU\ ZKHUH XQGHUVWDQGLQJ DGGHG WR XQGHU

$QG \HW &ROLQ 3DWWHUVRQ D VHQLRU SDOHRQWRORJLVW DW WKH %ULWLVK

,IWKHjnz+H[DIWHUWKHFDOOWRFIND_FILEPXWDWHVWRVRPHWKLQJ

M] MD MQR' MJH SXVKES [RUD[::) FPF

G3MGW M13M13MM3M 13M13

7KHFDVHZKHUH9MFDQUHSURGXFHM!LVPRUHLQWHUHVWLQJ$W

)LUVW ZH PXVW GHILQH RXU WKRXJKW H[SHULPHQW D OLWWOH EHWWHU

*LYHQ WKHVH DVVXPSWLRQV ZH KDYH HQRXJK LQIRUPDWLRQ WR VROYH

1RWLFH WKDW WKH SRSXODWLRQ RI 9 VHHPVWRVDWXUDWHDIWHUDERXW

,IZHFDQUXOHRXWRSWLRQVDQGWKHQZHFDQUXOHHYROXWLRQ

YLUXVHVWRFRQWDLQDERXW[3333 FRSLHVRI9

VXSSRVHWKHWRWDOYLUXVSRSXODWLRQ37ZDVDKXJHQXPEHU,I

0DUN /XGZLJ 'HVLJQLQJ D 0XWDWLRQ (QJLQH &RPSXWHU 9LUXV

6HHIRUH[DPSOH&KULVWRSKHU/DQJWRQ /LIHDWWKH(GJHRI&KDRV $UWLILFLDO

VRPH WLPH DV LQ )LJXUH 7KHIRVVLOUHFRUGRXJKWWREHOLNH

KLJKO\ LQIRUPDWLRQGULYHQ SURFHVV 7KH FKDQFHV RI VHOHFWLQJ D

DQFHVWRU" 7\SLFDO WKRXJK GHEDWDEOH FDOFXODWLRQV VXJJHVW

VFDQQHUWKDWGLG6HH)LJXUH$SRSXODWLRQLQ5HJLRQ$FRXOG

VKRRWLQJ D VSDUN WKURXJK WKHP WKHQ WKHLU LQIRUPDWLRQ FRQWHQW

K\SRWKHVLVUHTXLUHVHLWKHUDDFUHDWLYHHYROXWLRQRUEDZRUOG

1RZREYLRXVO\LQWKHUHDOZRUOGWKHUHDUH SUHIHUUHG FRPEL

)XUWKHUPRUH &203$1,21 LV DERXW WKH VPDOOHVW YLUXV

)UDQFLV&ULFN/LIH,WVHOI6LPRQ 6FKXVWHU1HZ<RUNS

0ROHFXODU%LRORJ\SS

7KD[WRQ HW DO LQ WKHLU ERRN7KH0\VWHU\RI/LIHV2ULJLQ

61HZ6WDWHV OQOQ

FRXUVHZLWKWKHHDUWK$KRVWLOHRUMXVWVHOILVKLQWHOOLJHQFHVXSHULRU

WRWDO HUDGLFDWLRQ E\ RQWKHIO\ VFDQQHUV ZKLFK DOORZ WKH XVHU WR

7KH IROORZLQJ YLUXV GXEEHG /,77/( ZDV LQFOXGHG LQ WKH

7LQ\ PRGHO WR FUHDWH D &20 ILOH

'LVN WUDQVIHU DUHD

ILUVW RSHQ WKH ILOH

JHW ILOH VL]H

D[:25' 375 >9,567$57@

VHH LI LQIHFWHG DOUHDG\

'26 UHDG IXQFWLRQ

HOVH FORVH WKH ILOH

DQG JR FKHFN LW RXW

VL 2))6(7 +267 KHUH

ORRN IRU DQRWKHU ILOH

DGMXVW VL]H RI ILOH

LV QRZ FRPSOHWH 7KLV URXWLQH PRYHV WKH KRVW SURJUDP

VHW GV HV WR ORZ VHJPHQW DJDLQ

7HUPLQDWH HUURU FRGH

7KH &203$1,21 9LUXV ZDV MXGJHG WKH *UDQG 3UL]H

*HW ,QW DGGUHVV DQG VDYH

,I LWV QRW DQ H[HFXWH

6HW ,QW KDQGOHU

E\WH SWU HV>GL@9

6HWXS UHJV WR FRS\ ILOHQDPH

/RDG ILOHQDPH LQWR 1HZB)QDPH

1HZ QDPH FKDUDFWHU

&UHDWH ILOH ZLWK RULJLQDO

:ULWH YLUXV WR LW