Owen Brunette

In the US we have consistently been the largest single country economy and provided a safe place to invest through world wars, cold wars and crises. We are currently home to 14.3 of the 78.3 trillion global GDP (18%). Dwarfing the next largest, Japan with 4.8 Trillion or 6%.

From the initial European settlements in North America forward, development was funded by states and corporations on the understanding that there was opportunity for agriculture, mining and settlement in the US and that what was needed to realize it was inward investment. America grew up, as a result, with a more positive view on credit and continued its growth with continuous net inflows of capital to the current day.

We borrow from the historical sources of Europe but also Japan, Switzerland and now China. At present if we thought about our government’s flows (i.e. excluding private capital) and mapped it down to the level of families, every family in the US has borrowed $3,000 each from five families in China who have worked all hours to produce the resources we wanted. Additionally we also borrowed from the families of Japan etc. This allowed us to finance government spending, agency purchases of mortgages and the life we currently enjoy.

All too much of that money has gone into financing credit for larger homes and larger SUVs and a lower proportion into education, infrastructure or other key elements of a competitive economy. We are now in a position where the tools of advanced manufacturing and management training are available in any region of the world and where capital is fungible and flows to where it can be best used. This has led to greater global growth and a more equitable distribution of opportunity.

With the more level global playing field though, we can no longer assume that the US is the only opportunity for growth or the rightful home of the world’s capital. The financial collapses have a significant impact because when the recovery occurs it is a global financial system made up of global banks from many homes. Global markets will no longer be run by people who grew up with baseball and are only familiar with our culture. As liquidity returns it will flow more equitably to all corners of the world.

The current stimulus plans will inflate the economy and are an important part of moderating unemployment. There are strong grounds beyond economics for wishing to keep unemployment below 20% and avoiding the wrenching pain on the social fabric that high unemployment causes but the stimulus plans will not make us globally competitive in a rapid timeframe.

We will remain a premium economy, as does Europe, with a strong work ethic but not as strong as Asia’s. Asia will become like us but is starting from a base which learnt its attitudes in a very tough world. Our educated people will continue to have expectations of their lifestyle which are different to those of much of the world. As a result we will get a fair allocation of the capital on a recovery but will not return to the world of the 90s let alone the 50s.

We are still the world’s global reserve currency if we don’t cause alarm by searching for excuses as to why we won’t repay our creditors or race headlong into hyper inflation. The level of debt that we have, and are about to incur, is substantial and paying for it will absorb an increasing proportion of Federal tax revenue so we can’t rely on mindless spending as the main solution.

We make up a very flexible, nimble economy, which will be able to adapt far better than many in Western Europe but we need to focus on building our competitive position and setting realistic expectations for our lifestyles going forward. The days of earning $1 and with the help of mortgages, equity credit lines, loans and cards spending our current average of $1.33 on lifestyle are over, if we like it or not.

Finance credit, debt, economy, global

Bloomberg has announced  a series of actions to assist ex-Wall Street executives start businesses:

• Low-cost incubator office space (160 Varick Street, Beginning March 1, from $200 per person per month; 90 John Street that will open in April etc.)
• A NYC angel investment fund: New York City will create several funds totaling between $9 million and $10 million to make angel investments of $20,000 to $250,000 each.
• An annual international financial services business plan competition
• A “VC Connect” online information portal and VC support services
• FastTrac, a business training program to help emerging and existing entrepreneurs.
• JumpStart NYC, a free job training and placement pilot program
• Incentives for financial services companies locating in lower Manhattan
• The city will work with established and developing exchanges like the New York Mercantile Exchange’s Green Exchange and SecondMarket (Carbon credits etc.)
• An international recruitment campaign attracting commercial banks and insurance companies headquartered in China, India and other developing economies.
• Financial Services Advisory Committee to be led by Deputy Mayor Lieber that will meet regularly through 2009 to maintain a dialogue between City Hall and the industry, as well as within the industry.
• Regulatory advocacy: Bloomberg has tasked Deputy Mayor Lieber and EDC President Pinsky to work with the Financial Services Advisory Committee

More details here.

New York bloomberg, nyc, vc

Why have you joined twitter when you are already on facebook?

Judging by the often overlooked question on the Twitter page, “What are you doing?” the original intention when twitter’s layout was designed was to resolve the presence problem. That is the problem that we want to know what somebody is doing, before we interrupt them. It is why we don’t call people on their cell phone when they are away from their desk in an office environment and is a major barrier to the flow of effective business communication.

Status indication, even from your phone, is already available on facebook but in practice that isn’t what Twitter is being used for. Twitter is being used for water cooler conversation. It is a business social environment with minimal profile information. Like linkedIn it has no photo sharing or cluttered graphics resulting in a more business acceptable presence. As a result it has attracted a more professionally chattering classes demographic.

Lifeblogging, the logging in diary fashion of what you are doing,  is uncompelling for others and the popular accounts are in reality supplying a little relationship building chatter such as Jeff Pulver’s discussions of the Miami sunrise, together with short form URLs which push their or other’s material. So maybe this is the long awaited push media. Maybe we accept push media from a friend or somebody we chose to follow.

Is it just an inefficient version of Digg? Possibly. Or maybe the network building features on delicious. As such, Twitter is very inefficient. I can’t quickly see a list of Scoble’s links for the day. Or a ranking of links from CES this week. So, if it is so inefficient, why are people using it?

While for most people spending too much time at the water cooler is an indication that they need a different role, for some it is an important element of their work. Journalists want to know what the current topics of chatter are and PR people need to create awareness and chatter in a forum where journalists spend time. But what about the general users of Twitter?

I think the answer may be in the prominence given to the number of followers. It is feeding into the need for social affirmation by giving people a ranking. Telling people they are influential or even that they have authority.  It has in many ways become a game where people compete to have the highest number of followers or the highest ranking on Twitter ranking sites. The high score seeking is a driving attraction. We are told when every new follower begins following and bad news is overlooked as they leave without any direct indication on the site.

That isn’t the end to the bad news. Many of the accounts are silent, but worse, many people subscribed to a large group, were overwhelmed, and never logged in again.  If you read the 2000th page of Scoble’s followers exactly 50% haven’t published in the last month and half of those haven’t published in the last six months. The unanswered question is how many of the silent accounts are inactive. Significantly there is no last login date shown.

The other issue is that many may not be reading those they follow. Anybody following more than 200 people isn’t reading the content. The accounts with large numbers of followers inevitably make up a large proportion of the following. Could it be that other than the PR world and journalists others are not really reading twitter? That they are self selecting out and that is why we see so many bloggers and marketing people left. Well, there are readers. With some of the short link sites used on twitter it is possible to track the number of clicks on the short URL and the click through ratio of these links is often as much as 10% of followers.

One possible benefit of Twitter is that people are more effectively selecting who they follow based on the chatter and as a result getting more effective results than on Digg or delicious. This is difficult to judge. A lot of focus around Twitter is on the most followed accounts. It is noticeable that the most followed accounts, not driven by external fame, have extremely short bios. This is probably because the short bio does not cause anybody to self select out and a high proportion follow. Some of the most followed such as the Digg Nation team have acquired their followers as a fun club ranking tool rather than for, or as, a result of any tweets they have communicated over the site.

Twitter needs to become more compelling to read. A user interface where the regular columnists are in sections as they would be in print. A ranking can be included and preferably driven by ones self selected network. Then twitter becomes an index to the short form, shall I call them headlines? which lead one to occasional reading of links into more in depth discussion on a blog or at an established media site.

I was struck by a recent tweet in response to another: “Was that really a necessary tweet?”. Well I’m not sure I have ever seen a necessary tweet. Or rather, I haven’t seen an important tweet but I have enjoyed many frivolous tweets. It is indeed more entertaining than delicious. It is water cooler conversation and occasionally one needs to turn away from ones work and have some social context. The clicks generated by the 10% of followers have a value but readers with things to do will only spend occasional time at the water cooler and if that time is too occasional they won’t play this game.  For that reason the site needs to continue to evolve to be more readable or be replaced.

The real question is “How should it evolve or where should we go?“

Marketing, Technology digg, presence, twitter

I have noticed a reasonable number of recent web sites which are syndicating content and republishing it on twitter or allowing it to be searched on their site. Often without publishing any kind of license or terms which would indicate that they had rights to the material.

Given the recent experiences that people have had with Getty Images you have to worry that the site operators are exposing themselves regardless of the use of a RSS feed to retrieve the data or the fact that the data was available for free in the original context. While linking to content has been held to be acceptable by some courts, hosting the content in your database and presenting it is likely to be argued to be an infringing use.

For example twitter content has the copyright retained by the original individual authors but people still pull it down from Twitter via RSS and use it. Some of the content is actually being republished from news services via RSS to Twitter services and the rights owner, a news agency, could easily come after anybody in the chain using it as part of their business. Many RSS terms only permit personal use, or use on a personal web site, not commercial use. A clearer problem with using personal use licensed RSS feeds are the  bargain hunting applications and staffing companies who are scanning the RSS syndication of craigslist and republishing it beyond the published personal use license and would appear to be putthing themselves at risk of legal action as a result.

Most rights holders aren’t going to mind but by building web sites around content you don’t own and which is being received from an RSS feed you are running a greater risk of the content not belonging to the person creating the subscription. As a result you are exposing yourself to future legal action in some countries and in other jurisdictions you need to respond to take down notices about user submissions promptly. If you ever have money worth pursuing you could even find yourself involved in the same kind of potential defenses as YouTube have experienced.

IP copyright, craigslist, IP, legal, licensing, rss, twitter

A quote from a paper prepared for presentation at the American Economic Association meetings in San Francisco this coming Saturday, January 3, 2009 by Carmen M. Reinhart, University of Maryland. NBER and CEPR and Kenneth S. Rogoff Harvard University and NBER:

Broadly speaking, financial crises are protracted affairs. More often than not, the aftermath of severe financial crises share three characteristics.

First, asset market collapses are deep and prolonged. Real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over a downturn of about three and a half years.

Second, the aftermath of banking crises is associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on average over four years. Output falls (from peak to trough) an average of over 9 percent, although the duration of the downturn, averaging roughly two years, is considerably shorter than for unemployment.

Third, the real value of government debt tends to explode, rising an average of 86 percent in the major post–World War II episodes.

Finance economics, Finance, markets, wallstreet

I’m glad to see a bit more variety in the ventures wanting to present at this month’s NY Tech. We still have over half the ventures being related to the social web which I think is representative of the software related startups in town at the moment. Of course most software ventures are more general. Everything from stock control to trading software and it would be good to see a broader range getting in front of the VCs who attend. I was particularly heartened to see TrialX wanting to present. They are “a healthcare information technology startup that is developing a groundbreaking technology to automatically match patients to clinical trials of new treatments.”

I care about this, not because there is anything wrong with social media, but because there are opportunities for technology startups which New York is uniquely positioned to take advantage of. This is not so much in the technologies which are created in relative business isolation purely from an idea but those which are created by lighting fires under elements of the major industries of New York: advertising, publishing, pharma, health and financial services. There are many ventures in these fields which require expertise or integration into business relationships and a New York venture is in a better position to realize success than a startup in the pure technology space of The Bay Area.

In many cases these ventures also have clearer real business models even if they can’t achieve the same number of eyeballs by next Monday. At the moment I would take a plan leading to cash rather than eyeballs every time.

New York, Technology newyork startups nytech ventures

A former NYU lecturer, Jack Sandler Bloom, has published a community around a Business Strategy course. The course is an effective start (currently two classes) of a business strategy course. His vision is of a broader educational platform where participants can make available for free, educational materials. He also offers a marking and feedback process for a charge. The two current classes are of good quality offering very interesting content.

At present the content is little more than a video blog and a lot is needed to realize the goal of large scale distribution of free educational content. Several other organizations have tried. At one time CompuServe started CompuServe University and a number of national education departments make a modest amount of material available for free.

As young potential students and parents start to understand how much material is available for free and the extent to which many so called universities in the US are just teaching commoditized courses from the major educational publishers the model of paying exorbitant fees has to come into question. The social network of like minded people is something which is available online at little or no cost and accreditations in varies certification forms are available at much lower cost.

The remaining niches retained by universities are brand and the ability to sanction grants and low rate loans. The micro lending platforms could easily tie in to certification agencies as a way of providing loans to finance the team people are able to spend educating themselves. The university brands themselves are extremely over vallued but this has been a factor in education for centuries. The openness provided by technology will slowly undermine it just as the invention of printing and the translation of the bible into lay languages greatly undermined the authority of the church.

There are bigger questions about the effect of the certification style training as a substitute for education and the effect it has on stifling creativity or even thought. Moving to greater certification and a closer link to people’s future earnings through commercial loans does hamper the ability to provide a rounded eduction for the good of the individual themselves.

Society education lending strategy universities