A backseat economist’s view on how the Oil Bubble will burst June 23, 2008
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I’ve been thinking a lot about oil lately, not surprisingly. I’m convinced its price is approaching bubble status but based on the reasons for its rise, it may not have quite reached the point of popping. Some analysis has almost 50% of oil’s price increase solely based on the depreciation of the dollar, so this among other reasons, there are fundamental reasons for a price rise independent of speculation. This said, bubbles are believed to be psychological creations and a seminal event typically causes it to burst with consumer and investment sentiment turning on a dime. I’m looking for this event now.
I remember the moment the Internet Bubble of the late 90’s burst. It started with an unlikely player — Microsoft. When a finding-of-fact came against them in their anti-trust case, it sparked a sell-off in the NASDAQ that didn’t stop for a couple of years. Microsoft wasn’t a high-flying dot-com, but being tied to technology in general, investors ran for the hills when it appeared that technology stocks may take a hit from a wounded Microsoft. In the weeks following, the NASDAQ dropped 50% and my friends in the VC and investment community told me the party was over. They were leaving San Francisco and going home to New York. One nice effect was rent in SF dropped with all of these NY ex-pats packing up and going home.
So what will be “the event” to cause the Oil Bubble to burst? As seen with the dot-com bubble, it won’t necessarily be something directly tied to the oil industry (or its supply and demand) but will be something on the periphery that will cause sentiment to change. Some possible candidates:
- an Enron / Bear Stearns style collapse of an energy trading company due to oil futures bought on credit (can happen with just a modest decrease in oil prices as futures can be bought with only 5% down)
- a report showing a major consumer sentiment shift in willingness to change their lifestyles to avoid oil (this doesn’t have to be an actual drop in demand, just a willingness to)
- impending political change in US that will result in an obvious shift in the current energy policies (read: no more Bush / Cheney cronies in charge)
- Chinese currency revaluation / signs of a slowing economy / oil subsidies reduced (hard to see it happen on a large enough scale but if the Chinese have to pay more for oil, their demand may appear to be decreased — again an actual decrease in demand doesn’t have to happen, just an appearance to let markets be bound by market forces, not the government)
My sentiment about oil has already changed, as I sold my meager investment in energy stocks. It will be very interesting to see how oil prices change over the next 6-12 months and what may cause the bottom to fall out. As with all bubbles, you don’t know for sure you’re in one until it bursts. And then with 20-20 hindsight, you wonder how it got so big in the first-place.
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Apple Store is Genius May 30, 2008
Posted by geoffwolfe in : Off Topic , add a commentI will admit I thought the Apple Store was a bad idea when they first opened. I saw them going into high-end shopping centers like the store in Walnut Creek, CA located next door to a Tiffany store. How could a traditionally low-margin business justify expensive-as-hell retail locations? I figured Apple expected these to be just cost-of-sale demo centers / brand-builders and never expect the stores to be profitable. Again, I admit I was wrong. When Apple choses a location, they do so with the requirement that it be profitable within a year.
“It was very simple. The Mac faithful will drive to a destination, right? They’ll drive somewhere special just to do that. But people who own Windows - we want to convert them to Mac. They will not drive somewhere special. They don’t think they want a Mac. They will not take the risk of a 20-minute drive in case they don’t like it. But if we put our store in a mall or on a street that they’re walking by, and we reduce that risk from a 20-minute drive to 20 footsteps, then they’re more likely to go in because there’s really no risk. So we decided to put our stores in high-traffic locations. And it works.” - Steve Jobs
The aspect of the stores I believe to be the smartest thing they did is the Genius Bar. I’ve had nothing but excellent experiences with the support I’ve needed with my MacBook and iPhone. I’m not one to run to technical support when I first have a problem but will dig into it myself until I exhaust all options in the guides or online. My MacBook’s keyboard cover cracked and they fixed it at no cost. My iPhone had some problem with the audio and they fixed it on the spot. The people staffing the bar are not the clueless types you likely find at big-box retailers, but are “geeks” (in a complimentary way) who really know their stuff.
What makes the bar genius is that customer and technical support for most other consumer products sucks. The shift to online and off-shore support to cut costs leaves the consumer feeling isolated (for the record, this is true for Apple online/phone support too). Ever try Linksys support? You know what I mean. The Genius Bar gives consumers an outlet (lifeboat) to go and see someone in person and explain the problem first-hand without the barrier of impersonality and communication. Sure, the stores and bar can be crowded, but you can make an appointment online, often for the same day.
Apple has gone against the group-think, MBA-concept, that there is always a race to the bottom for margins in the consumer electronic/computer space and there is nothing you can do to fight it. Using the Apple Store, they have justified the higher margins they charge for their products and made a profit on the vehicle itself. It’s not the first time that Apple went against the grain when it comes to sales strategy. When they opened iTunes, they offered songs for a flat 99 cents — no bundling, no tiered (discriminatory) pricing. This goes against the conventional wisdom for pricing where you should attempt to claim all levels of a consumer’s likeliness to pay for something.
Apple is a great case study in how a company should keep its head down on its core principles and strategy and throw out the MBAs who say they are wrong. At MessageDance, we have the same belief with a focus on what we believe our users will want; we will go against the social media early adopters who are ga-ga about life-streaming aggregators but don’t see the value of a service for mainstream social media users who need to simplify the way they share their stuff in the first place.
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Brown Sugar by Leggs April 16, 2008
Posted by geoffwolfe in : Off Topic , add a commentToo many funny things to point out in this photo I just took at 7-11 to write while I’m driving.
Sent from my iPhone
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Worst consumer electronic product ever made March 31, 2008
Posted by geoffwolfe in : Off Topic , add a commentThe Linksys WRE54G had great promise but it fails miserably. I have one working after hours of effort. A second one (the same release and firmware) just refuses to work. In fact, it destroys my network setup and I have to reset everything when ever it is turned on. Just search the web for similar sentiment and you’ll see what a bomb this thing is!
Sent from my iPhone
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YouTube Share isn’t playing nice March 26, 2008
Posted by geoffwolfe in : Off Topic , add a commentThere’s a problem with the YouTube Share feature where videos never make it to your destination. At MessageDance, you can share a video directly from YouTube.com and have it go to your (and your friends’) social network sites including Twitter. We’ve noticed a problem where some videos that have been sent never show up.
Thinking at first it was our issue, we’ve found that the message doesn’t reach our servers at all. Through trial and error, it seems that there is some limit to the amount of text you can put in the “Message” section of the Share feature — somewhere around 80 to 100 characters — but it’s not consistent. Now you’re share-aware.
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Sometimes it really is this easy March 7, 2008
Posted by geoffwolfe in : Off Topic , add a commentCreate a blog entry with MessageDance by email — just as this post was done. Send in pictures too.
It will be released soon. Just giving it a test now.
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The Twitter Demographic February 21, 2008
Posted by geoffwolfe in : Off Topic , add a commentI was checking out the US presidential candidates presence on various social media. Barack Obama and Hillary Clinton both have Twitter, MySpace, and Facebook accounts. I don’t think John McCain is on any of them as the ones I found are likely spoof accounts.
As a candidate, you can have your young, hip staff create these sites for you, but the staff can’t make them popular. Clinton’s Facebook profile has 120,000 supporters while Obama’s has 600,000. Definitely a good following for both. Obama’s substantial lead is an indication of his appeal to the Facebook demographic (not sure what this really is anymore but let’s say it’s primarily 21-34 year olds — which I am not a member, sadly). His lead over Clinton gets very interesting when looking at Twitter.
Hillary Clinton has only 473 followers on Twitter. I’m pretty sure this is her official Twitter profile as it is the most popular Clinton one and the tweets seem official (albeit boring as hell). Now looking at Barack Obama’s, he has 6,661 followers (some are pretty interesting)! Clearly, a domination in this demographic. Which leads of course to, what is the “Twitter demographic”? Lonely, Prius-driving, 20-somethings (Barack’s base!) is a popular consensus, but Twitter is becoming pretty mainstream pretty fast. I don’t have an empirical stereotypical profile for the demographic, but it is clearly somehow favored to Obama.
The gap between Clinton and Obama on Twitter really deserves some analysis. One thing I noticed is that if you follow Obama, he’ll follow you back. Clinton doesn’t do this, so maybe Barack’s approach has some appeal for people to tell others that they can have him follow them too. Also, his tweets are inspiring and informative, while Hillary’s sound like a to-do list.
If I were an aspiring intern on the Obama campaign, I’d do a quick research study to find out why he is dramatically more appealing to the Twitter crowd than Clinton. Take the results to the campaign leadership (go over your boss’ head if you have to) and outline a targeted campaign for volunteers and votes. You will be guaranteed a plum position in an Obama administration. And when you figure out the Twitter demographic and get your promotion, please send me the research results so I can target the same people. Thanks and you’re welcome.
The Killer App of 2008 January 4, 2008
Posted by geoffwolfe in : Off Topic , 1 comment so farI wrote before that I believe email is still the killer app. When email is used in the context of social media, serving as a communication platform across social networks, it becomes even clearer that email’s value to a social-society goes through the roof. There is some buzz today about social network aggregators being the killer app of 2008. At MessageDance, we are using email as the tool to not aggregate conversations from multiple social networks, but instead, spread a singular conversation to all social networks. The end goal of social network aggregation — negating the complexity of a presence on multiple sites — is realized by social email — realized by MessageDance.
An earlier post of mine talked about how and why people are on several social networks. Some data points collated by Ujwal Tickoo really illustrates in bare numbers how the same person can be very active on several social networks.
- 20% of MySpace members are also Facebook Members
- 64% of Facebook members also belong to MySpace. (MySpace has nearly 3x the unique visitors of Facebook and a few years head start.)
- Bebo, Hi5 and Friendster all share more than 49% of their members with MySpace
- LinkedIn shares 42% of its members with Facebook and 32% with MySpace
So, I feel our opportunity for 2008 is incredible: email (killer app) + social networking (essential app) + simplification (killer app : better than aggregation) = MessageDance.
Does Social Networking Mean Business? October 26, 2007
Posted by geoffwolfe in : Off Topic , add a commentI belong to a discussion group for professional services execs (my former, salaried life) where the latest discussion was about how social networking can be used as a business tool. There is general agreement that LinkedIn is very valuable for networking for jobs and recruits, while the jury is still out about the relevance of Facebook. In fact, most people comment (including the few who actually use both) that there is a distinct line between the functionality of the two. Personal stuff goes on Facebook and that stuff doesn’t belong on LinkedIn. Further comments about the business irrelevance of Facebook center around the tools of trade being cell phones and email (and the merging of them by blackberry et al). There is certainly an effort by some businesses to encourage their workers to use the more “social” of SNs (and the banning by others).
Seems to me that SNs are natural for business since it is all about your “networking” that get sales, hire people, and effectively manage people. I think there can’t be an all encompassing user profile that serves business and personal life (especially since people don’t always want one to know the other), so people will either maintain two “lifes” on two sites or people will have two different profiles on one site. I guess the real winner in SN will be the site that can get people to have both on one.
Twitter username - a new domain name frenzy? August 13, 2007
Posted by geoffwolfe in : Off Topic , add a commentSomething occured to me today about Twitter that will be interesting to see if it comes to pass (I now know I’m not the first to think about this). Many companies, bloggers, jokesters, have created Twitter accounts to get their message out in micro format (check out CNN’s), and it’s pretty clear that the username is going to be important for other people to find them. Much like the race to get your domain name before a squatter did, a company’s foresight and clout may be questioned if they don’t get http://twitter.com/google (I assume someone is squatting since Google has a few similar offerings). Will we see lawsuits over trademark violations if someone is using someone else’s registered TM? Will there be a market for reselling Twitter usernames?
I started registering domain names a decade ago, but I didn’t think about generic names like business.com as being the ones with real resale value. The types of names I registered were made-up words for companies I might some day start. I actually got an unsolicited offer to sell one of my names for $2,000 to a startup security company, but of course I tried to negotiate for more. After a couple of weeks of back-and-forth email negotiations, their marketing VP decided it wasn’t really needed afterall (it was the name of one of their products). And no, I haven’t gotten any offers for it since.
I spent about 30 minutes checking to see what names are still available in Twitter. There are a few big company’s names untaken but most are snatched up (most with no tweet activity on them). Most generic names are taken as well. It would take some effort to create a bank of them for yourself as they need a unique email address for each username. Of course, we’re not talking about a quasi-public name service like ICANN managing domain names; this is a private company managing their own user-base, so Twitter can just shut you off if there is an issue. If (when) Twitter becomes more of a public good, it will be interesting to see how they manage this.
