Friday, February 03, 2006
With the end of the housing boom comes the first signs of the housing bust. DataQuick just reported that Bay Area default notices (the precursor to foreclosure) sent in Q4 2005 were up 11% from 2004.
While an 11% rise may seem relatively small, that doesn't tell the sequential story. In fact, earlier this year, default notices were still dropping. For 2005 as a whole, default notices dropped 13%. That means that the 11% rise represents a much larger sequential increase.
As my 3 year-old-son is fond of saying (in imitation of his dad), "Soon the blood will flow."
Thursday, February 02, 2006
About a year ago, I was at a dinner honoring Steve Jobs. At my table was a prominent venture capitalist (I'll leave it to the reader to guess which one I'm talking about) whom I had met several times before.
"Man," he said, "Steve looks OLD. It's just sad. Especially because we're the same age. That means I'm OLD."
I had the same reaction today when I saw a video with Marc Andreesen. Remember Marc, the boy wonder who co-founded Netscape? It seems like only yesterday that Marc was the original dot com poster child.
He's now bald. While the photo in the story I read was too small, I think you'll get the impact from looking at this picture.
Holy crap. And if Marc is old, then I am old.
Guess I'll have to start wearing my trousers rolled now!
Tuesday, January 31, 2006
Malcolm Gladwell's most recent New Yorker article uses the example of pit bulls to argue that racial profiling doesn't work, and that there are better methods of screening out troublemakers.
Steve Sailer then points out the irony in Gladwell's article...that its message of trying to look beyond first impressions seems to directly contradict Gladwell's own bestseller, Blink, which argues for the value of thin slicing and rapid decisionmaking.
He then argues that opposing racial profiling is a matter of political correctness, not science, given the clear evidence of different crime rates for different races:
"In total, blacks had the highest incarceration rate at 7.2 times the
[nonHispanic] white rate, followed by Hispanics, at 2.9 times the white rate.
[American] Indians and Pacific Islanders were imprisoned at about twice the
white rate, and Asians at only 22 percent of the white rate."
In other words, Asian-Americans are incarcerated only 1/33rd as much as blacks. So, if you are cruising in a squad car, which group of teenagers on the corner are you going to pay more attention to: blacks or Asians?
Far be it from me to be politically correct, but it seems to me that both stances are exaggerations, and that we can learn more from a moderate position.
Racial profiling does work. Even if we assume that police racism is epidemic, and that half of all black men are unjustly imprisoned (I'm not arguing this, just assuming it to prove a point, so please don't start flaming me yet), it is still the case that blacks are correctly incarcerated 16 times as often as Asian-Americans.
And if incarceration is in fact a good proxy for lawbreaking, that means that the probability that a given group of black teenagers is 16 times as likely to be trouble as the corresponding group of Asian-American teenagers.
However, this analysis ignores two things: the absolute rate of incarceration, and the costs of improper profiling.
According to the Department of Justice, in 2002, 0.6% of white men were behind bars, versus 5% of black men (presumably this means that about 0.11% of Asian-American men were behind bars).
Even with a worst case scenario assumption that 5% of black men are criminals (again, I don't believe this, I'm just assuming this for the sake of argument), racial profiling would misidentify law-abiding citizens as criminals 95% of the time.
In other words, for every time that racial profiling correctly fingers the black guy, there are 19 cases where an innocent man gets hassled.
As a society, we should decide whether or not the benefits of racial profiling are worth that price. I don't know what the answer should be, but I do know that simply arguing about the validity of racial profiling is a waste of time.
A tip of the hat to Ben Casnocha for alerting me to Steve's article.
One of my favorite marketing tactics is what I call Reeses Peanut Butter Cup Marketing. This consists of the principle: two great tastes that go great together.
When I ran across this press release, I just had to laugh and admire the chutzpah:
AdultPokerParty.com will combine the Internet's two biggest moneymakers: porn and poker. If it sold Viagra as well, it would be unstoppable.
In all seriousness, questions of morality aside, I do admire the kind of creativity that powers the adult industry. Alas, I'm afraid that I just don't have the aptitude for that sort of thing.
Monday, January 30, 2006
These days, whenever a VC asks me what problem needs to be solved, I refer to the issue of feed overload. There is too much data, coming in way too quickly. And other people agree.
The problem is, I think this is a tough nut to crack.
Most of my own thought experiments in this area rely on using some sort of filtering to prioritize. However, these filtering solutions are likely to result in preference being given to the most popular "buzz" topics. And my contention is that the value in consuming feeds is in finding information most others don't have.
Do any of you bright entrepreneurs out there have a good solution?
The WSJ is taking note of the Web 2.0 book with this piece on the return of the 20something CEO. There's nothing particularly mindblowing about the piece, but there is an interesting tidbit about HBS halfway through:
"Out of 880 Harvard Business School graduates in 2000, 44 enrolled or recently graduated students created start-ups getting $29 million in first-round financing. In 2002, only 11 of 917 did the same, getting only $4.4 million."
First of all, this just goes to show you that as usual, HBS students are a good contrary indicator. You should do the opposite of what they're doing!
Second, I can't believe that the $29 million is right. It sounds way too low.
Just among my friends from that year, I can confirm at least $40 million in first round funding.
Which just goes to show how crazy things were back then!