The Next America

Prosper and Adventure Training Concepts

If you're going to rip people off, you should at least have the courtesy to disappear.

Edited: Brian Jones, CEO of Adventure Training Concepts, may be having some tough financial times which caused him to default on a prosper loan. But he's man enough to face things immediately when confronted. I've changed my opinion to legitimate default and genuinely wish him the best of luck going forward.

Prosper was/is a great idea, but turned out to be unbelievably poorly executed. Their idea of due diligence on borrowers was completely pathetic. They are plagued with massive fraud and unpaid loans. And an occasional loan that appeared low-risk, yet cratered after 4 months. The loan defaulted and eventually sold for about 8 cents on the dollar. Definitely something to consider if you're thinking about doing business.

Considering the other loan I have which is about to default, I'm break even on prosper (15-20 loans). Pretty interesting lessons learned for the opportunity cost of parking $1K for two years. There's a great community at prospers.org.  The company has proven itself both incompetent and completely unable to regain the confidence of lenders, almost all of whom have been burnt badly (even senior prosper employees).

The best part is the information is public with open APIs. So there's lots of third party sites that help you look at your portfolio or that can calculate just how ripped off most lenders have been over the last 3 years.

I feel really bad for many lenders who are in for 100K+ and are taking huge losses. I learned a lot for my minimal investment -- just hope I get the rest of my money back at this point.

7 Weeks Off and a New Job

I am a bad weblogger.

I even got feedback on lack of posting. Always appreciate people noticing my absence.

I got a new job. My job is fairly hard to describe. Its one of those jobs that only exist in large organizations (focused on the unique needs of a specific user base). I went from 70 users to 6000 users. In some ways, the new job is easier (70 was actually 2000; many high-maintenance and legacy issues). But regardless, it's new. I was heavily involved in support for our achievement of CMMI Level 4 in November. A big deal, and very successful. My focus has now turned to a PDM initiative and mainframe finances for 2006 (we blew up our old model before crafting the new one).

I'm back. At least twice a week.

ConvergeSouth Day 1

I decided to trek to Greensboro for this conference. Mainly since my parents live there anyway so its an easily combined and low-cost trip (frequent flyer ticket, no hotel, no car -- cheaper than being home).

Day 1 was interesting. NC A&T University has come a long, long way in the last 15 years. Apparently they've doubled in size, and there are lots of nice, new buildings to prove it.

The first session I attended was "Voices of Iraq" which had a local reporter who had done a semi-independent trip to Iraq to seek out local troops while visiting her husband in the Middle East. The other panelist was a young lady who ran a joint weblog with her husband in Iraq. I found it interesting that use of "alternate" email providers is widespread in Iraq. Probably because an army email address attached to a unit would have severe delivery problems as units trek from area to area. Contrast with the Navy which has blocked all the big webmail providers from their network and many of the smaller ones. They still believe that censorship is a possibility.

The other thing of note is where are the active duty webloggers not in Iraq? On the staffs and at training commands? My theory is that people are smart enough not to identify themselves as such -- either they're nonpolitical or they don't advertise where they work. At root, being in Iraq is a fascinating thing to share with your family in friends. Wearing unusual clothes to work in a government office building isn't.

The second session I attended was "Katrina & the Internet". Definitely some interesting stuff -- but not a lot of new ideas. Here are mine: After power is lost for a day or two, how do you keep grassroots information flow intact? What if each shelter had their own weblog -- people would add an entry tagged "Evacuee" with their current information -- existing search engines would handle the rest. One installation of movable type could have solved a big problem. Clearly, FEMA's problems with distributing trailers and contacting evacuees could be greatly mitigated with technology.

The final session was about business models. Chris Nolan of <a href="http://www.spot-on.com/">Spot-On</a> just went live with an interesting niche -- syndicating proven, talented news and sports writers to newspapers. Certainly some potential there -- a local paper could "rent" their own Iraq reporter, be exclusive for 500 miles, and have them go track down some local stories. You don't need a traditional syndication service for that. Spot-On could offer newspapers a bundle of content to pick and choose from -- giving each a unique feel (newspapers might always go with certain topics or columnists) at a low price. Some of the "alternative news" services do this well. As for newspapers (Phil Meyer) -- bye, bye. There are no good solutions at the profit margins they are accustomed to. I'm suspecting the end result is free papers published 2-3 times/week with much less news content. There has got to be an opportunity to combine citizen journalism, classifieds, advertising, and moderated discussion into an online environemnt to fill the niche.

Niche Site Followup

Newport Squash is now #10 in Google (from #175 prior to my post).

Dartmouth Indoor Tennis is now #97 on Google (from nonexistant). However, my weblog post is #7 so visitors can still find it from the first page.

Niche Sites Missing from Google

Occasionally, I come across a website that desperately needs more google juice. It seems very difficult for some niche websites to achieve any visibility using the current google algorithms.

For example, the Newport Squash Club at www.nptsquash.com (I am captain of their Red D-League team) ranks #175 when searching for "Newport Squash".

The Dartmouth Indoor Tennis Club at www.dartmouthindoortennis.com is virtually impossible to find on google. (Outside Top 200 for "dartmouth indoor tennis", also unfindable with quoted "dartmouth indoor tennis club", website can barely be found as an auxiliary link from a map request after it is located with "dartmouth tennis 02787"). They are severely hurt by the college with the same name.

Not only is the site not up there -- but there are no links to the sites either. In both cases, a new member would never find the website. And thus, by current convention, assume that the organization is either completely antiquated or has no interest in new members. Neither of which is true. Both organizations did the right thing by designing a website -- and then didn't arrange the key links needed from subject matter websites to make them locatable.

Yet, my few hundred hits per week weblog should rapidly rocket them to a reasonable google ranking. I'll followup in a week or two to show the impact of a single mention in a nothing weblog on google visibility.

Blogbridge Returns

I've been bummed about my favorite weblog reader for a while. Blogbridge is by the far the best one I've tried (others used for extended periods were RSS Reader and SharpReader), with the best feature being its synchronization between multiple reading platforms (hurrah, get to read weblogs on weekends now).

I started using the "weekly builds" for the better synchronization. And then in 1.4, Blogbridge broke. Probably because I subscribe to lots of weblogs, several of which are graphically intensive. But regardless, Blogbridge would hang during the initial feedscan. On both my computers. Some weblog was sending it over the edge.

I stopped reading. I tried fighting the bug, reading before it hung. I even reinstalled 1.0 (the last "stable" version), losing my read marks. But in the recently available 1.9, the bug is crushed.

Try Blogbridge if you're looking for a non-Outlook, non-web based reader. Best of the competitors, and it is continually improving, unlike several. And it's open source.

Slingbox

I am intrigued by Slingbox. Copyfight has a good analysis of the uproar it has created.

It is one of those devices that seem almost guaranteed to have trouble with firewalls on both ends. Walter Mossberg agrees.

I'm not sure where I would use one. Though I do spend evenings in hotel rooms without NESN, wishing for a Red Sox fix. I suspect my wife would begin to object when I started changing the channels. To a certain extent, it may be before our time since we view media as 1 or 2 tuners per TV rather than 2 or 3 tuners per house. The next generation of high-end AV amplifiers may revolutionize home wiring as "auxiliary TVs" become slaves to the master stack of tuners (with access to the home video archive via Tivo, access to premium content, etc.). Of course, high-end AV houses haven't realized that Picture in Picture is their problem to solve yet either, and that's been obvious for almost a decade.

The illegal uses are very enticing. Why not put up a bank of them and rent out HBO for $1/hour? Or big Pay per View events. Or automatically rip shows to BitTorrent. But these things didn't need Slingbox to occur.

I came up with a novel business plan a few months ago, where one of the primary sales channels would be repurposing for illegal use. The only question is whether it is intentionally hard or intentionally easy to hack to Slingbox.

Edit: Thanks for the comment Charlie. It's true that Slingbox has its own tuner (thus you can change channels). Unfortunately, most of what I would want to see is on digital cable and requires a cable box to decrypt.

iGo

I am strangely compelled by the business model of Radio Shack's iGo product line.

Sell relatively cheap AC/DC adapters. Then sell item-specific tips at $10/each. A very elegant and very pricy solution to the collection of wall worts in my briefcase.

I have:
A01 (wife's old and new cellphones, car MP3 player).

I am getting
A29 (new Blackberry)
B01 (iPod mini)

My only wish is that they had non-product specific listings. I have some portable speakers from the 90s that would be worth buying a tip for.

The New Niche of Catalogs

I don't shop from catalogs anymore in the traditional sense (open catalog, see something, buy by phone/mail). But a lot of my online shopping is "catalog-driven". Catalogs have become nothing more than a powerful advertising and traffic generation tool for online retailers. I prefer to buy through the web -- its more accurate, the "nearby" items are frequently helpful, I can assemble an order over an hour while doing other things. I used to discount the effectiveness of online chat -- but I even find that helpful where human contact is necessary since email has never proven effective in these transactions (too much cycle time), and I don't mind being on hold or having delays if I can do other things. And they can chat with four or five people at a time using macros and scripted replys.

The catalogs I receive:
Computer catalogs -- mostly ineffective. I occasionally use the latest Dell catalog when someone asks my geek opinion on an upcoming purchase. I flip through mainstream retailers to get an idea of new things on the market but I drift to my normal retailers (buy.com, Amazon) for purchase.

Big Box Catalogs -- The Home Depot catalog generates ideas and discussions. But most big things are very expensive to ship and many things aren't available at local Home Depots. Target doesn't get much traction.

Specialty Retailers -- Pretty effective. I can flip through a paper catalog pretty quickly. If its in an unfamiliar marketspace (skilled trades), I find many things that I wouldn't know to search for online. Levenger is good for high-end office. Very low cost retailers like Harbor Freight Tools can provoke action with a sale. Household retailers like Frontgate are good for gifts (I would shortcircuit them online but much of their best stuff is exclusive or hard to search for). A lot of companies are losing money sending me kitchen gadget catalogs (probably fooled by substantial purchases around my wedding a few years ago). I think specialty book catalogs are effective (provide value from selectivity) but I don't end up buying many books. Crutchfield does an excellent job -- their high-end customer service and, more importantly, the assiduous bundling of the right accessories and documentation, make them well worth a premium price.

The best catalogs (and niche websites) do not have lots of choices. Professionals have determined the best handful of value propositions and present them. Even better, online you can have a "narrow" front-end (accessible via site organization) with a "broad" back-end (accessible via search) to cover both groups of customers.

Velocity of Currency in Peerflix

So as I mentioned earlier, my transition to Peerflix has gone very well. I'm fat on movies and light one monthly fee.

But I noticed a fundamental problem. In economics, its called the velocity of currency. It is a basic principle that describes the impact of currency on an economy. Essentially, with fractional banking (where banks are required to keep on reserve a fraction of assets to ensure they can redeem), currency cycles through the economy between financial institutions and users until all of it is "consumed" by the fractions.

Example:
Set the "reserve rate" at 5%.
$1 million enters the economy.
In cycle 1, I buy a machine tool for 1M. The seller puts the money in the bank. The bank loans out $1 million - 5%=950K
In cycle 2, someone else buys a machine tool for 950K. The bank loans out 902.5K.
So in the end $1 million of currency  = $20 million in the bank and $20 million of real goods that were bought and sold.

In Peerflix, there is no "reserve rate". Because PeerBux (which buy movies -- 3 equals a new release) are separate from the $1 transaction fee. Most users have a queue of movies they wish to buy and Peerbux are transferred instantly upon agreement to "sell" a CD. Therefore, 3 Peerbux injected into the system may cause 100 transfers, are only slowed by the emails looking for seller confirmation, and will only stop if someone is hoarding them (unusual behavior).

But why would people have Peerbux? I received 3 for signing up (the one free movie is given as 3 Peerbux). But new ones cost $9/each ($8 in bulk). So Peerbux = $27/DVD. I can buy almost anything used from Amazon for $16-21. No point in buying Peerbux -- just buy from Amazon, watch, and then sell them. This makes perfect since from an individual perspective but it is disaster from an economic perspective.

Why? Because no one will ever buy my flix, since they're waiting for someone else to buy theirs. We're all waiting for someone else to bring currency into the economy. Which was the whole problem preceding the American revolution with mercantilism.

So how do you resolve this? The proper amount of currency in an economy is a tricky question, and has to do with how you fight inflation. Since Peerflix controls prices, inflation isn't an issue. However, user participation will suffer if good new movies aren't available, which must be purchased with  the proceeds of the Peerbux.  Also there is no trade out of the economy (movies can be brought in at any time) which prevents arbitrage. One solution would be to bundle Peerbux with the trade credits. But that would drive the price of trade credits up, creating problems with the low price that is Peerflix's main selling point. You could give them away for free, but that could cause loss of consumer confidence.

The best solution had actually been executed when I checked their site today. They should be priced at slightly (5%-10%) less than their true value. This encourages people to buy a movie via Peerflix rather than from Amazon. What you lose on the 5%, you gain back in the transaction fees (at least $2 for each transaction -- probably far more). The new price? $5/each or $3.30 in bulk. Which may be even too low. Now users have little motivation to find a high-demand movie at a good price.