Monthly Archives: December 2010

when the supply side starts to dry up

With the rise of the mobile app economy, rumblings of a bubble are discussed widely. Enormous numbers of risk takers, some who gamble, and some who plan are entering the economy, but all of them want the success levels of the next ‘angry birds’, ‘instagram’, or ‘tap tap tap camera+’.  

As this article on the American Express blog points out, shedding tears for a VC maybe a little like shedding them for a wall street banker. They’re gonna be just fine… But American Express are more interested in the macro level conditions for entrepreneurs. Does the drop in returns indicate a market correction? Is this perhaps a diagnosis of a healthy trend in some way, say more money getting distributed to more more places of investment. Or is it troubling sign that the quality of investments being made is rapidly getting poorer? And if so, what methods will bend the curve back up? 

Cambridge Associates recently released statistics that show the poor financial performance of venture capital (VC) firms in recent years.  The consulting firm’s analysis shows that rates of return are down substantially from their double-digit annual numbers of the 1990s.  As of June 30, 2010, five-year returns to limited partners (LP) were a paltry 4.27 percent and 10-year returns were negative 4.15 percent. 

 

Because most venture capitalists are wealthy, you shouldn’t worry that poor financial returns are imposing true hardship on them.  But you should be concerned that their poor earnings are harming the ecosystem for developing high growth startup companies in the United States…

via Venture Capitalists Failure to Make Money is a Problem for Entrepreneurs : Money :: American Express OPEN Forum.

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powers of ten

These shots of snowflakes at 100x magnification, remind of the Eames rendering of powers of ten, back when much of it was only a hypothesis. beautiful. Even when they are waist deep.  

…If you’ve ever wondered what snowflakes truly look like, spend a few moments with these images from the Electron Microscopy Unit of the Beltsville Agricultural Research Center in Beltsville, Maryland.

At the EMU, where other areas of focus include crop pathogens and livestock diseases, “studying the structure of snow is vital to several areas of science as well as to activities that affect our daily lives.”

That’s no doubt true. But for the rest of us, snow’s structure is just beautiful. Enjoy!

via Snowflakes Under an Electron Microscope | Wired Science | Wired.com.

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do as a I say, not as i do

This ironic article from the NYT on wifi brownouts, and blackouts, amongst the technologically elite. It begs the question why such an embarrassing situation wouldn’t be one to attend to? Does the temporary embarrassment get in the way of recognizing, why the problem, is a problem? 

…Internet entrepreneurs climb on stage at technology conferences and praise a world in which everyone is perpetually connected to the Web.

But down in the audience, where people are busy typing and transmitting this wisdom, getting a Wi-Fi connection is often downright impossible.

“I’ve been to 50 events where the organizer gets on stage and says, ‘It will work,’ ” said Jason Calacanis, chief executive of Mahalo, a Web search company. “It never does.”

Last month in San Francisco at the Web 2.0 Summit, where about 1,000 people heard such luminaries as Mark Zuckerberg of Facebook, Julius Genachowski, chairman of the Federal Communications Commission, and Eric E. Schmidt of Google talk about the digital future, the Wi-Fi slowed or stalled at times.

Earlier this year, Steven P. Jobs, Apple’s chief executive, had to ask the audience at his company’s developer conference to turn off their laptops and phones after his introduction of the iPhone 4 was derailed because of an overloaded Wi-Fi network.

via Wi-Fi Overload at High-Tech Meetings – NYTimes.com.

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the myth of Perfect Choice

The Economist examines the tyranny of choice in everyday life. More choice,would seem like an innovator’s best friend. promising fewer mistakes. Or ways to compensate for uncertainty of the value you are creating.

Taken in a marketplace context, which is often the first moment of truth for any design concept, there is often more noise than signal. All of which makes it hard for consumers to ever be sure they got what they came for. 

…wheel a trolley down the aisle of any modern Western hypermarket, and the choice of all sorts is dazzling. The average American supermarket now carries a 48,750 item, according to the Food Marketing Institute, more than five times the number in 1975. Britain’s Tesco stocks 91 different shampoos, 93 varieties of toothpaste and 115 of houshold cleaner…

…Over the past decade behavioural scientists have come up with some intriguing insights. In one landmark experiment, conducted in an upmarket grocery store in California, researchers set up a sampling table with a display of jams. In the first test they offered a tempting array of 24 different jams to taste; on a different day they displayed just six. Shoppers who took part in the sampling were rewarded with a discount voucher to buy any jam of the same brand in the store. It turned out that more shoppers stopped at the display when there were 24 jams. But when it came to buying afterwards, fully 30% of those who stopped at the six-jam table went on to purchase a pot, against merely 3% of those who were faced with the selection of 24.

Expectations have been inflated to such an extent that people think the perfect choice exists

The researchers repeated the experiment with chocolate as well as student essay topics and found similar results. Too much choice, concluded Sheena Iyengar of Columbia University and Mark Lepper of Stanford, is demotivating…

via The tyranny of choice: You choose | The Economist.

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the myth of Perfect Choice

Over the past decade behavioural scientists have come up with some intriguing insights. In one landmark experiment, conducted in an upmarket grocery store in California, researchers set up a sampling table with a display of jams. In the first test they offered a tempting array of 24 different jams to taste; on a different day they displayed just six. Shoppers who took part in the sampling were rewarded with a discount voucher to buy any jam of the same brand in the store. It turned out that more shoppers stopped at the display when there were 24 jams. But when it came to buying afterwards, fully 30% of those who stopped at the six-jam table went on to purchase a pot, against merely 3% of those who were faced with the selection of 24.

Expectations have been inflated to such an extent that people think the perfect choice exists

The researchers repeated the experiment with chocolate as well as student essay topics and found similar results. Too much choice, concluded Sheena Iyengar of Columbia University and Mark Lepper of Stanford, is demotivating.

via The tyranny of choice: You choose | The Economist.

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scale, in the absence of profit

The economist looks on with a mixture of admiration and uneasiness on the fortunes of Jack Ma, while sketching up a backdrop about the rising tide of internet services in China. 

…until the mid-1990s the growth of the internet went all but unreported in China’s news media. So getting started was hard for Mr Ma. But now he sees opportunities everywhere.

China has millions of small entrepreneurs but a primitive financial system. To boost traffic through his websites, Mr Ma set up an online payments system, Alipay, in 2004. Its growth was greatly helped by the ban that China imposed, until recently, on its American rival, PayPal. Alipay says it now has 470m users worldwide and that more than 500,000 Chinese merchants accept it. In some Chinese cities people can use it to pay their utility bills.

Mr Ma has also started a service called Ali-loan. He does not lend money, but works with banks, which typically have no idea if a small borrower is creditworthy. Mr Ma, in contrast, has a trove of data revealing whether small firms pay their bills on time. He can also bundle together firms that know each other, so that a seller can help guarantee a bank loan to a regular customer. According to Alibaba the proportion of Ali-loan’s lending that goes bad is a trifling 0.35%, which suggests that the service could be expanded fast.

The firm faces several obstacles. First, the Chinese internet market is cut-throat and evolving fast. Baidu, the country’s leading search engine, has not yet attacked Alibaba head on, but one day it might. Second, talent is in short supply. Wages for the best engineers and managers are soaring.

Third, in its rush to grow, Alibaba has neglected to make much profit. Its main services are free, with sellers paying only for extras such as being bumped to the top of a list of search results. Mr Ma says this is deliberate: size will eventually bring rewards. But investors will not wait for ever…

via Alibaba: China’s king of e-commerce | The Economist.

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what would elon do?

Era’s of change are often defined by leaders who make an organization do new things – or better yet do things differently. One sign that such a leader is in demand is when people routinely ask “what would so and so do?” – in this case. As to invoke leadership where the vacancy exists. This article from the LA Times, asks plainly and loudly if NASA can learn to change its ways. 

Early this month, Hawthorne-based rocket venture SpaceX launched an unmanned version of its Dragon capsule into orbit, took it for a few spins around Earth and then brought it home with a splashdown in the Pacific Ocean.

The total cost — including design, manufacture, testing and launch of the company’s Falcon 9 rocket and the capsule — was about $800 million.

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In the world of government spaceflight, that’s almost a rounding error. And the ability of SpaceX to do so much with so little money is raising serious questions about NASA.

The agency that once stood for American technical wizardry is starting to lose its luster. Inside NASA, some employees have taken to wearing T-shirts emblazoned with the letters “WWED,” which stands for “What Would Elon Do?” — a reference to SpaceX founder and Chief Executive Elon Musk, the Internet tycoon who invested his own fortune in pursuit of his dream of sending humans into space.

Aerospace industry executives, NASA contractors and employees all warn that unless the storied agency can become leaner and more efficient in an era of shrinking federal budgets, it could find itself becoming a historical footnote…

via NASA facing competition from private space ventures – latimes.com.

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