Saturday, February 25, 2006

Bursting the Housing Bubble: Foreclosures Rise 45%

Bursting the Housing Bubble: Foreclosures Rise 45%
Foreclosures increased 45% from January 2005 to January 2006. Note this simply marks a return to the long-term average.

Of course, if housing prices were to fall to their long-term average (based on the relationship to rents, to income, or any other such metric), we'd be looking at a 20-30% decline in prices.

Thursday, February 23, 2006

VC Insanity, Part Deux

VC Insanity, Part Deux

Epinions called, and its wants is business model back.

PowerReviews Seals $6.25M Series A For Product Reviewing Service

By Clancy Nolan
2/23/2006 – With
$6.25 million from two well-known venture capital firms, PowerReviews has
launched a Web-based portal for consumer reviews of products ranging from shoes
to housewares.

Tuesday, February 21, 2006

It's Official: The VCs Have Gone Insane Again

It's Official: The VCs Have Gone Insane Again

The following appeared in VentureWire:
Index Ventures Dresses Up Stardoll.com In Dollars

By Marie Cannizzaro
2/17/2006 –
Stardoll.com, a Swedish Web site that allows users to dress up their favorite
celebrities, has secured $4 million in Series A funding led by Index Ventures.
Angels also participated in the round.

Cue the Prince song, 1999.

The Price of Parenthood

The Price of Parenthood

AllThingsFinancial is running an interview with WSJ financial columnist Jonathan Clements (thanks to Ramit Sethi for the link).

It's a pretty good read that emphasizes the right things ("Financial success has very little to do with your ability to pick winning investments."), but what stuck out for me was the last paragraph:
I have two children, and I am not swapping them for all the money in the world.
Still, you have to be realistic: If you have kids, it’s much harder to retire. I
regularly receive emails from people who boast that they retired in their 40s.
What do these folks have in common? No, they aren’t brilliant investors and, no,
they didn’t luck out by signing on with some successful start-up company.
Instead, the defining characteristic of these folks is that they never had
children.

Do you remember the old Fox show, Married With Children? Reading those lines made me think of the clink of the jail cell slamming shut in the show's theme music.

I can speak from experience: Jonathan is absolutely correct. My guess is that my kids cost me on the order of $60,000 a year!

Monday, February 20, 2006

I Can't Get No....Satisfaction

I Can't Get No....Satisfaction

The ever-entertaining Seth Godin wrote recently about our society's "culture of dissatisfaction."
The problem with this emerging culture, aside from the fact that we're unhappy
all the time, is that it doesn't give marketers a chance to build products for
the long haul, to invest in the processes and products and even operating
systems that pay off over time. The problem is that when brands fizz out so
fast, it's hard to invest in anything except building the next hot brand.

As I've written before, I think this dissatisfaction is the result of focusing on the wrong motivators. Extrinsic motivations like being rich, famous, and good-looking are like the proverbial Chinese food that tastes great going down but leaves you hungry half-an-hour later. (By the way, I'm Chinese, and I have to say that I've never run into this issue--is there any truth to this stereotype?)

The rise of the Internet has made feeding these obsessions easier than ever before. Instant billionaires. The fame of suddenly becoming an A-list blogger, or the next Turkish stud. Validation of your looks on HotOrNot.

And because these extrinsic motivators actually make people less happy, the sad fact is that the Internet is helping to make some people unhappier.

In contrast, the intrinsic motivators of personal growth, caring relationships, and contributing to the community are largely ignored, even though they drive happiness, satisfaction, and productivity.

Marketers who recognize and tap into intrinsic motivators may not get the buzz, but in the end, they will drive sustainable, beneficial business.

Ugly Criminals

Ugly Criminals
BoingBoing picked up on a study that shows that unattractive individuals commit more crime than people who are average or good looking.

Forget racial profiling, what will happen when the police start to apply ugliness profiling? Will "driving while butt-ugly" become the new "driving while black?"

Thank goodness that, like Ray Lane, I'm so damn good looking.

Efficiency vs. Fairness

Efficiency vs. Fairness

One of the tough tradeoffs we're asked to make is efficiency versus fairness.

Malcolm Gladwell's latest article for the New Yorker makes the point that homelessness, like many other problems, follows a power-curve distribution, rather than a normal distribution.

In other words, instead of a bell curve, which indicates that we should focus on helping the fat part of the curve, most of the costs and benefits of treating homelessness comes from focusing on a very small number of hard-core homeless.
Culhane’s database suggested that New York City had a quarter of a million
people who were homeless at some point in the previous half decade —which was a
surprisingly high number. But only about twenty-five hundred were chronically
homeless.

It turns out, furthermore, that this group costs the health-care and
social-services systems far more than anyone had ever anticipated. Culhane
estimates that in New York at least sixty-two million dollars was being spent
annually to shelter just those twenty-five hundred hard-core homeless.

In fact, these facts suggest that it would be far cheaper to simply *give* free apartments to the hardcore homeless, than to run our system of soup kitchens and emergency care.

The problem is that even though this solution is more efficient, it doesn't seem fair.

Why should the worst offenders get the best treatment?

I'm torn, because fairness is a value that I hold very dear. Most Americans have no problem with people making obscene quantities of money, as long as it is done fairly. It's the cheaters that we hate.

And in some sense, the most efficient solution to the homeless problem actually rewards the "cheaters."

What do you think?

The Anti-Housing Bubble Bubble

The Anti-Housing Bubble Bubble
Isn't it amazing how quickly the conventional wisdom can turn from "there is no housing bubble" to "the bubble is collapsing?"

Bay Area home sales fell 20% year-over-year in January, reaching a five-year low.

As we all know, the first stage in the price collapse is the decrease in transaction volume.
In one indication, she said, there are currently more homes on the market
in San Francisco than at any time in the past five years. It's normal for the
inventory of for-sale homes to rise at this time of year, but ``the difference
now is they're staying on the market longer.''

The number of houses for sale in Santa Clara County has increased
steadily since the beginning of the year, with about 1,820 houses on the market
last week. That's up from last February, when only about 1,120 were available --
an unusually small number.

As my three-year-old son is fond of saying, "Soon the blood will flow."