Tech Bubble 2.0

2007/03/28 at 16:35

A couple of weeks ago, Rafe Colburn pondered whether we’re in ‘Boom 2.0‘. I now have conclusive evidence that we are indeed in a boom, in the form of a short article from the Austin Business Journal: Inc. has raised $600,000 from angel investors.
The company will use the funding for marketing and technical development. is a Web site devoted to curly hair. Board members include entrepreneur Tim Wall, Dr. Philip Sanger and NEA Venture Partner James Treybig, who founded Tandem Computers.
“Companies like NaturallyCurly have been able to see opportunities that have gone unnoticed by high-tech nerds like me,” Treybig says. “The movement to communities like NaturallyCurly is the foundation for the future of advertising.” was founded nine years ago. The Web site provides articles, product information, salon recommendations and tips for curly-haired people. The site has registered members from around the world and nearly 10,000 visitors daily, according to the company. Last year, founders Michelle Breyer and Gretchen Heber also launched for children with curls. has been nominated this year for the Ernst & Young Entrepreneur of the Year award in Austin.

I just wish I could figure out a way to cash in on the insanity. I’d create a site for bald guys, but we just don’t use very many hair products. No retail or ad profit there.

The $5 Coke

2006/12/13 at 21:26

A New York Times Magazine article ponders why the ‘hidden fee’ economy works–why, for instance, consumers put up with hotels charging outrageous sums for items in the mini-bar.
The article summarizes the explanation theorized by some economists. But I’ve long felt that a big factor in the case of hotel fees and other travel-related fees is the expense account. Consumers are more willing to pay an unreasonable charge if the company foots the bill than if they had to pay it themselves.
The effect of expense accounts may not explain the ‘hidden fee economy’ as a whole, but it’s bound to play a big role in the travel-related sector.
As a side note, on the few business trips I’ve made over the years, I was so outraged by the fees that I refused whenever possible to incur them, even though my company paid the bills. Maybe if I traveled regularly, I wouldn’t be so diligent. Who knows.

Cry me a f*cking river

2006/12/04 at 14:19

Every time I hear a news report about the problems of General Motors or Ford, I get pissed off. Their current problems are all their own damn fault. I heard years ago that pretty much ALL of their profits came from high-margin, cheaper-to-build, gas-guzzling trucks and SUVs. So, now that the price of gasoline has inevitably gone up and consumers are buying fewer of their profitable vehicles, these companies are in poor economic shape. Shocking! Who could have predicted such an event!
My astounding observation is corroborated by The Truth About Cars:

We’re looking at two strategies here. Toyota: build affordable transportation for the masses at a quality level that slightly exceeds expectations relative to price. GM et al: build oversized, under-engineered and fuel inefficient cars for people who don’t care about money while palming off sub-standard cars on mainstream customers. Is it any wonder that the truck-crazed domestic manufacturers lost mission critical market share to the transplants?

Gas prices on the decline!

2006/10/19 at 12:05

Gas prices on the decline!

I paid only $2.059 for gas yesterday in San Antonio. Thought I’d photograph the sign for posterity

The lending bubble

2006/08/24 at 11:13

I’ve been concerned about the U.S. housing bubble for a couple of years now. The Big Picture blog has a post that explains the U.S. housing situation quite thoroughly yet in a way that an economic layman like me can understand. Here’s a simple to understand bullet list of some aspects of the current situation:

  • 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000;
  • 43% of first-time home buyers in 2005 put no money down;
  • 15.2% of 2005 buyers owe at least 10% more than their home is worth (negative equity);
  • 10% of all home owners with mortgages have no equity in their homes (zero equity);
  • $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.

When we decided to ‘upgrade’ houses in 2003, we decided how much we could comfortably spend each month on mortgage, insurance and taxes, correlated that to a home price range, and got a fixed rate 30 mortgage at a very good rate (6%)for a house in that range (and not at the top end, like I’d expected!).
The house we bought is relatively well built, in an area that’s still experiencing big growth (won’t start to suffer suburban blight soon), is one of the less expensive homes in the neighborhood, is right around the median home price for Austin, and had a very good price per square foot for Austin. We also put some of our equity from the last home as downpayment on this one (though not much). So, barring an unforeseen family economic crisis, I think we made a very conservative and sensible purchase.

Work-life balance

2006/08/18 at 15:09

A few months ago, Apple was criticized for the working conditions in its iPod factory in China. So, Apple made an investigation–good for them (and good for PR)–and put the investigation’s findings on its web site. This caught my eye (emphasis added):

We found no instances of forced overtime and employees confirmed in interviews that they could decline overtime requests without penalty. We did, however, find that employees worked longer hours than permitted by our Code of Conduct, which limits normal workweeks to 60 hours and requires at least one day off each week. We reviewed seven months of records from multiple shifts of different productions lines and found that the weekly limit was exceeded 35% of the time and employees worked more than six consecutive days 25% of the time. Although our Code of Conduct allows overtime limit exceptions in unusual circumstances, we believe in the importance of a healthy work-life balance and found these percentages to be excessive.

So, working more than 6 days a week and more than 60 hours per week jeopardizes an employee’s ‘work-life balance”? Wow.

Amazing grace

2006/08/13 at 21:35

A while back, I wrote about an experience I had in the grocery store. But this grocery-store story is amazing.

Money, money, money, continued

2006/07/31 at 21:23

Over at slacktivist, Fred has another post about wealth (see my earlier post). While reading the comments to Fred’s latest post, I was reminded of an experience I had a couple of years ago.
One evening, I stopped on my way home from work at the local grocery store to grab a couple of items. As I was waiting to check out, I noticed that the couple at the register were doing something I didn’t immediately recognize. I started to pay attention and realized that they were checking the balance on their EBT card. The cashier told them their balance was less than three dollars. Then the woman dug in her purse and came up with two or three dollars. They ended up putting back part of their intended $5 purchase and paying with the couple of dollars that they had on them. It suddenly dawned on me that this was all the money they had to their names.
We’ve certainly had to budget carefully and do with less to make it from paycheck to paycheck sometimes. After doing the checkbook, I’ve said to Katie numerous times, “We’re broke until payday”, but, I realize, not broke like the couple in H.E.B. I have little idea what this couple’s life is like. It makes me grateful for the blessings that I have and I try to keep in mind how fortunate I am.

The wastefulness of fund raising

2006/07/24 at 11:53

I’ve recently started reading several good economics blogs. Via one of those blogs, I ran across this post about the economics of charity races:

Charity runs where participants solicit friends, family and colleagues for donations have always perplexed me. . . The puzzle is the wastefulness of the training effort. Those soliciting me for sponsorship have cited upwards of 40 hours spent training for the event; we can view this training time as being pure waste from the charity’s perspective. An alternative arrangement where race participants instead devote their training time to providing volunteer work for the charity, followed by a parade of volunteers rather than a race, would seem to satisfy the criteria listed above: costly and verifiable effort coupled with publicity. And, the hours of wasteful training would be converted into useful work.

This analysis reminds me of my own thoughts regarding fundraisers for school and other groups. Children and their parents spend vast amounts of time peddling stuff that people may or may not want in order to earn the group a margin of the money collected (to be fair, it seems the margins vary widely from one campaign to another).
As such a parent, I don’t really see that my child is gaining any particularly useful experiences from the endeavor (not compared to the experiences of spending time with the actual organization for which they’re collecting money), and I think that I could just donate more money than the profit margin on the goods that my kid sells and save everyone a lot of hassle.
One of my favorite fund raising events of the last few years was when the local high school band was raising money to participate in a parade across the country. They sold band booster signs to put in your yard. In reality, you got a sign in return for a donation. Yes, the band members had to spend time raising the money, but I assume the cost of the signs was small compared to the donation being requested ($20 or $25, as I recall), so the profit margin was high. They were not exactly just begging for handouts, they got free advertising with every sale, and they weren’t trying to sell people something that they didn’t really want or need.
Don’t get me started about Girl Scout cookies.

Profiting from disaster

2006/07/17 at 12:47

According to the Wall Street Journal, some companies rushed to grant stock options to executives in the days after the September 11 attacks. The company’s stock price had fallen after the attacks and the options were pegged to the current stock price. When the stocks recovered, the executives would profit. Just slimy.