A month or so ago, I upgraded our internet to the top TelstraClear plan, WarpSpeed. Telstra claim an excellent 25mbps download speed, faster than a hot buttered cat on a hot barbecue. Thats pretty fast.
However, given my previous experience with Telstras lightspeed plan, I was a little… skeptical. LightSpeed was significantly slower than the actual speed of light (299 792 km / s), and most of the time could have been passed by a granny in a mobility scooter. Going uphill. LightSpeed truly stank. Repeated phone calls to Telstra resulted in… nothing. Promises of improvements, and no changes.
Being somewhat a sucker for punishment, I decided to try the WarpSpeed plan, the fastest on the Telstra block. A few repeated calls to Telstra got things sorted, and I sat back, buckled my seat-belt and…
Its faster. Much faster than LightSpeed. LightSpeed (in case I haven’t made the point) sucked. But, since LightSpeed claimed 15mbps, and generally delivered about 2mbps, how does WarpSpeed compare to its claims?
After about a month of usage, and various speedtests via speedtest.net, I have some definitive data. TelstraClear need to update their advertising, and put a maximum speed on their WarpSpeed plan of…. 15mbps!
So 40% slower than advertised. 40% is a LOT. Thats like a car claiming to have a top-speed of 150km/h actually only going 90km/h.
That has to be false advertising somewhere. Does the Commerce Commission care? But 15mbps is a lot better than 2mbps on the LightSpeed plan so thats a positive.
Note: The speedtest.net tests were done to the closest server by ping (generally christchurch). The actual download speeds were between 2.08mbps! and 15.23mbps. Nothing over that, with an average probably around 10mbps.
Update #1: I tried this afternoon (Saturday at 1:30PM) and achieved 19Mbps. My guess is everyone is at the sevens…
Update #2 (4/2/2012): I had a call from Dion at TelstraClear who left me a lovely message about how Telstra stuffed up the provisioning and my account should now be at the 25mbps speed I’m paying for… It is better, some times, I’ve actually hit 20mbps on occasion. Right now, 10mbps, but tests have put it in the 10-18mbps on average… so much better, only about 20%-50% under advertised speeds. Is that good?
Update #3 (22/5/2012): A solid 10mbps tonight!
Hi guys, am getting a few posts about keyring.co.nz, the cool wellington sun exposure website I developed a while back. Basically works out whether your house gets sun based on terrain and time of the year. It was very cool, and got me through some patches where I was so bored I died (thanks to working at a bank).
Unfortunately, it was pretty resource intensive, and cost a bit to run. Servers are not hugely expensive, but it adds up over the years. And keyring was always a niche sort of product. And my first go at a standalone startup. Maybe I got the pricing wrong, but hardly anyone bought a report. Lots of people used the site, but not much in the way of money was generated.
So we’ve taken keyring down. The end. Which is a bit sad, because I thought keyring was super-cool, but you have to be pragmatic about these things!
Thanks to everyone who used it and sent me messages. Really do appreciate it! Now, busy working on http://www.peoplemine.co.nz, the bestest customer intelligence platform ever. Big business tools for little businesses.
Remember how Climategate was all the rage in the media in 2009. All the anti-climate change zealots grabs on to this like a drowning person grabs on to a life-preserver. The media was publishing all the news about the scandal and everyone was split into 2 camps, the climate change believers, and the non-believers.
It was an outrage. To be fair, both sides were relying on faith. The believers, on faith in the scientific system, and the non-believers on faith in… um… bloggers and um… well, hmm. Bloggers I guess. Which is a bit odd but anyhow. The advantage of believing in the scientific system of course is that we’re surrounded by evidence of its effectiveness. The big flaw in the non-believers argument of course is the “absence of evidence does not constitute evidence of absence”.
So I was wondering the other day, what was the result of all the outrage and pontification and grandstanding and accusal of betrayal and lying and falsifying data? For such an enormous scandal that rocked the scientific world, I seemed to have missed somewhat the results.
To summarise from Wikipedia (you might have to take this on faith!), basically there were a few methodological issues, and the CRU (the climate unit at the centre of the scandal) needed to be a bit more up-front and release data quicker. But essentially, nothing was found to be wrong and nothing was found to be faked. The chief guy who resigned was re-instated. And the vast majority of scientists support the concept that climate-change is being bought about by humans.
But given that there was weeks of media coverage and commentary saying how bad the scandal was, how come there was not weeks of coverage saying how everything is fine, and the scandal was a gross-misrepresentation by misguided people? And, maybe an apology for the weeks of coverage of a bunch of rubbish? And how come all the climate change nay-sayers didn’t go… oops. Yeah, guess we got that wrong.
But no, no such luck. At its heart, the scientific system is about a bunch of humans trying to out-do each other. A bit like the competition for places in the All Blacks squad. Its not perfect, since humans are uniquely flawed, but it is, on its evidence, the best and most effective system we have. Its a difficult position being a climate-change un-believer, because on one hand, you are using all of the results of hundreds of years of the scientific system. But then the scientific system says “oh yeah, you know the global warming thing. We’re doing that…”. And you go, “ah… well, the scientific system is a bunch of frauds, and we don’t believe anything they say…”, while turning on the scientific air-conditioner in your scientific car, driving down a chemically based road, munching on your scientifically produced big-mac… thats an awful lot of hypocrisy for one person!
So Alasdair Thompson put his foot in it. According to the NZ Herald, he said:
In a debate on gender pay equity, Mr Thompson said women deserved to be paid according to their productivity, just like men, and backed equal opportunity.But he said that among many factors affecting work, women could be more likely to put their careers on hold while having children and take more sick leave. He suggested once-a-month “sick problems” could be behind the days off.
The comments about the “once-a-month sick problems” seemed to have created the most outrage. A multitude of comments, from both sexes, generally decrying the comments seem to be the outcome. Which is understandable. I haven’t seen any evidence in my dealings with working with women, and even if there were, they would be impossible to separate from my “take time off to watch the football” days, which I doubt many women do.
But the problem is much worse in my opinion. It goes much further than a simple gender debate about pay equity.
Here’s a quick quiz to illustrate (try and answer honestly based on your gut feeling):
- Person A works 40 hours a week at job XYZ. Person B works 35 hours a week at job XYZ. Should Person A get paid more?
- Person A works 40 hours a week at job XYZ. Person B also works 40 hours a week at job XYZ. Should they get paid the same?
Ah, the ol’ trick question survey!
Did you answer yes to both? Or did you go “this has got to be a trick”!
Ok, heres the same questions, with a twist:
- Person A works 40 hours a week at job XYZ. Person B works 35 hours a week at job XYZ. Person B has been the top producer at the company for several years. Should Person A get paid more?
- Person A works 40 hours a week at job XYZ. Person B also works 40 hours a week at job XYZ. Person A is a stand-out employee, highly productive and crucial to the companies success. Should they get paid the same?
The only difference is that the second survey actually includes a concept of productivity. The real problem, is that Alasdair Thompson and, judging by the comments I’ve seen, and my own experience, still equate productivity with hours spent at work. In my opinion, this is the attitude that needs to be tossed out. We should be outraged that people who are differently productive are treated the same.
But measuring productivity is hard, and probably even more controversial than gender pay differences. And so NZ continues to meander down the productivity stakes…
So this internet thingee huh? Seems kinda cool. Quite like it actually.
One thing I find a bit funny sometimes is how big chains put their shops online. And make it all pretty and so on, and then go “man, internet is super cool. We don’t even need many people to run our online shop. We’re going to make squillions!”. (Squillions is a technical term used when people simultaneously get really excited and try and count both money and numbers of cars/girls(boys)/houses/boats/bling they think they will get because of said squillions. I haven’t researched in depth but my feeling is there is a definite inverse correlation between use of the word ‘squillions’ and actually obtaining aforementioned bling.
And then these shops makes sure that everything costs the consumer significantly more than what it would cost them in the shops themselves, normally due to massive ‘postage’ fees. In fact, some of these online shops charge so much in shipping that I fully expect it to be hand-delivered by Barack Obama and Jesus, hand in hand, singing “Can’t Buy Me Love”…
How do they not get the internet so badly? Amazon got it, everything cheaper. And easier. And a cool online shop in NZ does a similar thing. www.natureshop.co.nz sells icebreaker stuff. To be honest, they sell heaps more than icebreaker stuff, but I get so misty eyed over girding my loins in cast-off sheep hair, I haven’t looked at much else. I even have icebreaker pants. Which I thought sounded kinda naff, but… sigh… they’re great.
So they have cool stuff. But… they get the internet. Their sales are great, and shipping is free. And overnight. And returns are free. And customer service is awesome, just drop them an email. And you don’t have to create another !*$#& *#*! account if you don’t want to.
Now sure, being wizened old cynics like we are, we say “They might say shipping is free, but we’re paying for it somehow!”. And of course, wizened old cynics know a thing or two. I mean, we’ve been there before. And done that. And that other thing.But the prices are the same as in the retail shops (go for the specials page). And you get packages delivered to your door. And you get to unwrap them.
Thats the way internet shopping should be. Let me know if any other online shops do a good job of the internet. Disclaimer, I’ve spent quite a bit of money at natureshop, but get nothing for writing this. Dammit.
A quick one here since I was curiously (enviously) looking at the new macbook pros.
I just did a quick comparison of the price of a reasonably fully specced macbook pro, and a maxxed out dell alienware, and a more standard dell XPS 15 on their respective US websites, and the comparison was interesting:
|CPU||CPU:2.13ghz quad core i7||2.2ghz i7 (win)||2.2ghz i7|
|HDD||500gb Sata 2 7200rpm||500gb Sata 7200||500gb Sata 7200|
|Vid Card||ati radeon 5730(1gb)||ati 6750m(1gb) and onboard (win)||nvidia 525m(1gb)|
So, the macbook is cheaper than the alienware. But the XPS 15 is much cheaper than both.
From what I understand, the macbook is 1/2kg lighter than the XPS15, which is intended much more as a desktop replacement than an actual portable. But anyway, if you’re buying a macbook, you need to justify another $1000US.
That wouldn’t be too much of an issue for me I don’t think, since $1000US is probably about 1c per hour I spend on my mac. I’ve never been happier with a laptop than my mac (owned dells and toshibas previously) and I find it stupidly productive. The OS is worth probably another say $500 to me, because I like unix, and the level of ‘proper’! software support, and weight is pretty important as well. And the simple magnetic power cord has saved my ass more than … a lot, because I like to leave my mac dangling on the edge of tables, tipping precariously with the power cord rigged as a trip wire to trap the unwary. Most often me.
But there you have it, a mac versus dell comparison!
Disclaimer, happy (mostly) macbook user, and apple stockholder.
According to my guesstimates, Ecoya, our beloved smelly marketing company should be running very quickly out of money, with the cupboard looking pretty bare around about now-ish…
Nothing specific, I’m just musing out loud…
I’ve had a few comments about my Xero valuation, a lot of which could be summed up by the words… “so what?”. In particular, people are asking if $3.55 means they should sell the family home, and load up on Xero stock (currently at $1.47). So understandably enough, theres a little bit of confusion around the value of Xero.
So what does $3.55 mean? It means that if everything I predicted comes to pass, then yes, you should load up on Xero. But hold on there Flash, you have to have some idea of the likelihood of predicting all that correctly. Which is 0%. Some bits are going to be wrong.
so we’re down to probabilities. Xero is worth ($3.55 x probability of sunny scenario + $X x prob of scenario X + $Y x prob of scenario Y + …) where all the probs sum to 1.
Lets look at a simple case, the sunny side versus the complete failure of the company.
($3.55 . 60% + $0.47 . 40% )
So, 60% chance of being valued at $3.55 versus a 40% chance of going broke, and selling assets at the net tangible asset value ($0.47).
($3.55 * 33% + $1.77 * 33% + 0.47*33%)
33% chance of sunny side or a 33% chance of being worth half that (because of lower customers/revenue growth) or a 33% chance of going broke.
In summary, depending on what you think the probabilities are will change your view of the current price. If you’re way bullish on Xero taking over the world, the current price is cheap. My take is that there is a lot of uncertainty around Xero, which will be reduced as each earnings release comes out. So for me, I would only have a small, speculative stake, waiting to add or reduce as those earnings releases come out.
Don’t sell your house in other words
So now we get to it, the guestimation. I’ve put in some educated *cough* numbers. You can tell these figures are 100% bang on the money because they have 2 decimal places attached. Sure fire way to ensure accuracy!
The actual live spreadsheet is up on google docs, so feel free to have a play (only change the numbers in blue). If you think I’ve made mistakes (which I probably have, this is hard and I have a cold), let me know in comments, and I’ll sort it out. Also, if you want me to change any of the numbers, tell me why and we’ll let everyone fight it out.
So some comments on what I tried to do:
- Note that the 2014 revenue and customer numbers are about the high-end of Xeros ‘potential customers’ from Rod Drurys AGM presentation
- The breakeven point is placed at second half 2011 (more or less – the march 2011 EBIT figure is close) so assumes Xero hits their predictions exactly
-  Intuit have yearly revenue of around $500millionUSD from QuickBooks. Note:Intuit is not SaaS but this seems a nice figure in 7 years
-  The operating margin for these kinds of companies seems to end around 25% so am letting Xero max out reasonably early
|Revenue from operations ||$526,022||$438,352||$292,234||$146,117||$66,417||$25,545||$9,123||$2,851||$959||$134|
|Guesstimate – Operating revenue growth rate||20.00%||50.00%||100.00%||120.00%||160.00%||180.00%||220.00%||197.29%||615.67%|
|Average customers @$29 – this is just an interest number||1,511,557||1,259,631||839,754||419,877||190,853||73,405||26,216||8,193||2,756||385|
|Average customers @$40||1,095,879||913,232||608,822||304,411||138,369||53,219||19,007||5,940||1,998||279|
|Guesstimate – operating margin ||25.00%||25.00%||18.00%||15.00%||12.00%||4.00%||-20.00%||-296.39%||-703.96%||-3,216.42%|
|Net operating loss at beginning of year||$0.00||$0.00||$0.00||-$12,343.81||-$20,313.84||-$21,335.64||-$19,511.00||-$11,061.00||-$4,310.00|
|Taxable income after tax write-off||$131,505.45||$109,587.88||$52,602.18||$9,573.76||0%||0%||0%||0%||0%||0%|
|Effective tax rate||30.00%||30.00%||30.00%||13.10%|
|Company tax rate||30%|
So there it is, the first table of guesses for Xero, the 500million company! Let me know what you think.
So went off to the Xero AGM the other day. For those who don’t know, Xero is a online accounting system, SaaS stuff, and generally most excellent. Its basically the most interesting company on the NZ stockmarket, given that it is operating in a global market, and with massive potential for growth.
Its an awesome example of … dreaming big from NZ. This is the kind of thinking that NZ needs. So I have super-high expectations for Xero.
But… what is Xero worth? Someone asked me whether Xero was a good buy and I went… hmm. I love the story, but do I love it at this price?
So I thought I would do an investigation and attempt a valuation on Xero, to answer this question and to practice. This is part 1, which is a super simple look at the business of Xero, and perform a basic sanity check valuation.
Summary of Xero: SaaS accounting business, revenue from user subscriptions per month.
- 20,000 -number of current subscribers. The annual report says 17,000 but I vaguely remember the 20,000 figure from the AGM.
- $40 – average revenue per month per user (ARPU). Probably pretty generous, since I imagine a lot of users are on the lowest price point ($29/month).
- $1.59 - current share price
- 83,455,000 – Weighted average shares
- $130,000,000 -current market capitalisation, probably a little on the low side
So thats pretty basic. 20,000 subscribers, each paying $40 per month, so $800,000 per month revenue. This value is forward looking so, if we stop customer growth from now on, this is how much revenue would be received. So what does that mean?
To work this out, remember that $40 today is worth more than $40 in a month, because of inflation and opportunity cost. So to work out the present value of the monthly income from subscribers, we need a discount rate. This number is a bit arbitrary, and can be calculated a lot of different ways, but its meant to reflect the risk free rate, ie, if you stuck the money in the bank (and the bank didnt go bust!), plus a bit because stocks and companies are risky. So, I’m going for a risk free rate of 5.5% and a extra risk bit of 4.5%. Which all is obviously a complicated way of saying 10%!
I’m going to look at a subscriber staying with Xero for 5 years. Why five? Simply because 5 years is quite a long time in internet world. I might look at a 10 year period too, just to see. So, lets work out how much those future cashflows are worth to us now:
Present value of 1 person paying us $40/month for 5 years: $1,898.30
which is obviously less than $40*12*5 ($2400) which reflects the discount rate.
So each current subscriber, assuming they stay with Xero for 5 years, is worth $1900 to Xero. Now, if we look at Xeros market capitalisation, $130 million, and divide that by the number of subscribers (20,000) we get a market cap per subscriber of : $6500
Therefore, if you bought the whole company now, you’d be paying $6500 in order to get $1900 back over 5 years.
Which is completely whacked out, padded-cell, rubber spoon, straight-jacketed, 2 eggs short of a dozen nuts. So, whats wrong here? Why is Xero priced so much higher? Answer: growth and estimated market, and… risk.
But this is a warning sign. When the current valuation per subscriber is so much off the revenue that subscriber will generate… theres potentially an issue here. Bear in mind valuing early stage companies is … hard.
Let me know if I got anything wrong, which is highly likely, and any questions/thoughts. In part 2 (and maybe 3-10!) I’ll go through a more detailed evaluation of Xero.
Present value calculation is : =PV(0.83% (ie, 10%/12),60 months,$40/mth, beginning)
I received a pair of vibram five fingers (VFF) KSOs for my birthday. Although my birthday is not technically for another little bit, I received them early, which I guess makes them not a birthday present but more of a “hey you’re great” present, which I should probably received almost every day. Almost. I have my not-quite-great-but-still-pretty-awesome days.
So, what are they? And how well do they work?
VFFs are gloves for your feet. The marketing spiel says theyre intended to get you “back to nature”, and be close to “barefoot running” etc etc puke. They’re basically thin rubber soles with a fabric upper, and space for each toe, just like a glove. They’re very minimalist, and, like a bikini or lingerie, you definitely don’t get a discount because theres less stuff in them.
Putting them on
Putting them on is a little tricky the first time. But my technique is, put your foot in, aim to get your big toe in the big toe space, and then scrunch up until all your toes are in place. I know! Scrunch is not a real verb, but it basically means flexing your toes and moving them further into the shoe. Scrunch!
The trick with these shoes is covered in ChiRunning: A Revolutionary Approach to Effortless, Injury-Free Running
and in two seconds its landing on the ball of your foot, not your heel. This is weird to start with, and will give you immensely sore calves for a few weeks. “Pain is weakness leaving your body”. Unless your hand is inside a blender and its on.
So it takes a bit of getting used to. But persevere, because it is worth it!
So you’re running on the ball of your foot, and you’ve got your VFFs, and … it pretty much feels like you’re running barefoot. More or less. Its a bit warmer, and you’ve got a bit of protection, but it really is pretty good. You can feel everything you run over, and your lower legs do much more work balancing and adjusting, particularly when you land on sharp stuff. Its really quite different, and really fun.
Landing on sharp stuff
Since most of the time I run in the hills, theres always sharp stuff like rocks and roots and bear traps (actually no bear traps) to land on. In most cases, you instantly adjust your weight so these painful encounters don’t worry you too much. In some cases however, you definitely feel the minimalist side of the VFFs, which is one of the two downsides of these shoes. Most of the time, its not a problem, and certainly not enough to not recommend them. But sometimes, it does bloody hurt.
The other ‘downside’ is only a downside if you mind skidding/sliding down slippery banks in the mud. I don’t, its great fun, so not much of a downside for me! But traction is much less for the VFFs (I like saying VFFs!) than for a normal off-road running shoe like the Asics Trabuco or similar. In some cases, its a bit of a 2 steps forward, 1 back, but its been raining and the ground here is soft, slippery (fun!) clay.
They’re really cool, and I will probably not buy another pair of running shoes. They look kinda funky, so might not be for the image conscious, unless you’re so cool, the image-conscious want to be like you. Or you’re so uncool, you’ve gone full circle and are actually really cool.
But it is really fun to run in these things, once you’ve got through the obligatory few weeks of calf pain while you harden the hell up. You run around jumping on narrow things and can actually balance because you feel exactly where you land, they’re light as hell so it feels like you can run faster, and generally they’re a good thing. Anecdotally, I haven’t had knee pain since wearing them, which I usually got a bit of when running. Im not saying these things are responsible, but… just saying right?
Summary of the summary
5 stars. Out of 5. Minus a little for me landing on a damn sharp root. Which hurt. But it still rounds up to 5.
I’ve just been talking to a number of people about my new found enthusiasm for options trading, and trying to explain the main concepts behind it. So I decided to start a new blog focussed solely on options (and stocks and valuations), which hopefully people will find interesting, and will keep my thoughts together.
The new blog is: options4newbies.wordpress.com
Its a quick and hopefully informative romp through my intro to options, and how I went about trading US options from New Zealand (which doesn’t have an options market, and even if it did, it would be hard to recommend…).
Let me know what you think!
So theres a lot of noise around about the iPad, and how great it is, and how it will kill amazons Kindle Wireless Reading Device (6
Which it may do, I’m not too sure. The basic kindle is a lot cheaper than the iPad, and probably has scope to get much cheaper again, and Apple is after netbooks/low cost notebooks, and probably isn’t supremely concerned about the kindle.
There is a much more interesting fight happening, which no-one seems to be say much about.
In… the…. red… corner, we have the tag-team from heaven, the e-ink on the brink, the best from the West (Cupertino, CA and Seattle), the electric duo, the Mighty (brown) Kindle, and the Fabulous (and absorbent) iPad. Who would have thought they could ever team up? In the same corner, backing each other through thick and thin? Best mates 4eva, Jobs and Bezos. I’m not sure why Jobs just smacked Bezos with his shiny new iPad, but I’m sure theyve got each others backs.
And… in the blue corner… the boyz from the wood, the oldest team in wrestling, the Gutenberg Goliaths, the Publishing companies.
Lets… get… ready… toooo ruuuummmmbbble!
So, on one hand, we have the e-readers and e-books in general, and their associated e-stores. Theres a secondary fight there, but its not too relevant at this point. But the publishers… hmm. What are they offering now? Are they not in exactly the same place as the music publishers? So theres no shipping, no packaging, no printing, no up-front capital costs. Just some editing, and publicity.
Now the iPad will force this decision on more and more people. Paper or electrons? And if electrons, how much do you want to pay? And why do authors need publishers anymore? Previously, they needed someone to actually make books, and ship them all around the world, and bill bookshops etc etc. There was a whole logistical chain that a given author didnt want to deal with. But ebooks…?
So the publishers are on thin ice here. They are trying to maintain margins when more people are switching to ebooks. And people just aren’t willing to pay that much for a collection of ordered electrons. Its the The Innovator’s Dilemma repeated again. Except its too late for the publishers, they should have been the ones doing Amazon, or having a chunk of skin in that game. So the book market will slowly shift to the ebook readers. Both Amazon and Apple will benefit, and the old-time publishers will die. There will be a battle for mindspace between Apple and Amazon, but it will be about who gets the greater share of an increased revenue pool (thoughtfully contributed by existing book publishers). All books will be in all stores unless one of the publishers sign an exclusivity deal, which would be extremely hard to argue was in anyones best interests.
What interesting times we all live in!
PS. Has anyone tried to download ebooks via bittorrent? An ebook is going to be… tiny compared to music.
So early this year, John Key kicked off a summit to generate ideas to improve NZ. Not too much came from it, mainly a cycle-way. Its taken me a while, but heres my big idea:
Make all our cars electric.
Ok, its not a guaranteed success, but… heres some quick numbers:
2.5 million passenger vehicles in new zealand, travelling on average 12500kms/year, using (on average), 10 litres of petrol per hundred kilometres, at $1.69/litre… equals: 2.5mill*125*10*1.69=
so, every year NZ spends around $5 billion NZD in fuel.
So, the big idea is… spend it on something that has a big payback. Electrify the car fleet. All of them.
Heres a super-quick cost/benefit, based on made up numbers:
1. Remove our dependency on foreign fuel, release about $5 billion in overseas spending
2. Spend the $5 billion on upgrading our electricity network, R+D into new/better ways of generating electricity. We need to do this anyway, since our electricity demands will continue to increase. No coal plants, but green-tech.
3. Centralise pollution to the electricity generation centers, rather than the impossible to police distributed pollution centers that are cars.
4. Reduce our greenhouse gas emissions, actually achieving something re: kyoto, instead of some random “spend money to make ourselves feel better” emissions trading scheme or some other nonsense.
5. Sell our new-found expertise in green-tech, electrification, R+D to other places. Actually kick start some R+D, and niche expertise that is actually worth something.
6. Continue to save $5 billion. Per year.
So what would it take? A lot of leadership, and some capital spending. We need:
1. Infrastructure. Electricity generation would need to be increased a lot. However, we need to do this anyway to cope with increased demand. So we have to answer the question.
2. More infrastructure, electricity outlets. Probably in service stations.
3. A selection of electric vehicles.
4. Increases in petrol tax to pay for subsidies to change to electric vehicles.
5. R+D funds in the identified areas.
6. A million other things… I know.
This is the kind of big thinking I want to see from New Zealand. Not just a cycle-way (although I love the cycle-way!), but someone with the guts to have a ‘big idea’, think it through, and to do it.
What do you think? Is this crazy? Problems? Greg for Prime Minister?
I finally bought a shiny new iphone 3gs, firmly cementing my apple fan boy status, to go my my macbook pro and multiple mac minis, and ipods.
I like apple products. The main reason I like them is you get a feeling that somewhere, someone actually cared about the users experience. Truly cared. We love you Steve!
To the Iphone! The iphone (is it IPhone, iphone, iPhone…?) is a nice piece of kit. My major concern, that I wouldnt be able to type on it as fast as on my treo 600 (with keyboard) proved to be groundless. The keyboard works really well, like the entire phone.
So its the greatest thing since sliced bread. Even makes phone calls.
But the astonishing thing about the iphone for me is the the appstore. Buying games, music, getting pod-casts. Really, really easy, and cheap.
I have bought 3 games for the iphone. I hardly ever buy games, because I don’t play them that much, and they’re pretty expensive. So 3 games for me is a lot. Except, under the covers, something fundamental about the game (and software) industry has changed, through my shiny new iphone.
My 3 games cost me in total, $6.47. And… these games are … good. Nice graphics, gameplay, more or less what you’d expect on a console. $6.47 in total, less than I pay in parking in a week.
So, we have high quality games, selling for mm, over an order of magnitude difference. Why buy a PSP? or a Nintendo DS?
PSP – $328 average game costs $30-$80
Nintendo DS – $257 average game costs $40-$60
Sure, the games you get on a PSP/DS might be better. But… I don’t care. I rarely play games, almost never complete them, and only use them while waiting for flights (or pretending I’m not on a phone call when picked up by the cops for driving and talking! just kidding!). And I think there are many more people like me.
So the iPhone is great. But… I think sneakily, under the covers of the iPod (which is destined to die very soon), apple have scored a massive, major, world-changing win. iTunes, and the integration with the iPhone. People will start very soon to expect to pay $2.59NZ for a quality game. This I believe is the true game-changing power of the iPhone, and I think its an astonishing testament to apples vision. I know, I sound like I have “I (heart) SJ 4eva” tatooed on my chest. But when you think about the scope of the vision, that started with MacOSX, and the IPod, then iTunes, then the iPhone, all in order to make the apple products, and the app-store the easiest, cheapest way to get applications, redefining an acceptable price for software in the process, taking on Nokia and Sony and Nintendo and Microsoft and Dell and HP in spaces that those companies thought they owned, and had a massive head start in? whew. Thats ballsy. Will see what happens with google.
So my question is, why would you buy a blackberry/HTC/android phone when the iphone is the same price?
disclaimer: I own apple stock
I recently ordered some books from Amazon.
In the current situation, this should be a bad move, the NZ dollar is buying $0.64US, the amazon shipping charges are a significant component of the price, so why would I do that?
I bought 4 books that were recommended on the fourhourworkweek.com blog, from amazon, 56.73USD + $24.95 shipping. So, $132 NZD + how ever long it takes to get here.
I ordered on the 28th June, and it arrived on the 9th of July.
If I had bought those books in NZ from fishpond.co.nz (a NZ online bookshop), it would have cost:
Rules of thumb: $50.58, 6-10 days
8 weeks to optimum health $34, 3-5 weeks
Science of influence $73, 10-12 days
Vagabonding $31, 24hours
Fishpond give free shipping on orders over $50, so ignoring that, total is: 188.58. And it probably would have taken significantly longer.
So its no contest. Amazon wins, from the other side of the world, hands down. Faster, and significantly cheaper. It really is an amazing service.
I’ve just noticed today that Russell Creedy, CEO of Restaurant Brands has bought 45,000 shares in the company he runs. This brings his total shareholding to… well… 45,000.
I think highly of senior management who take positions in the companies they run, and think this is a great move by Russell. Obviously, 45000 is not a lot of shares, and I will be watching to see if such purchases continue. At the moment, only the Chairman of Restaurant Brands, Mr Danny Diab (a director), and now Mr Creedy own shares in the company, and only Mr Diab has a shareholding of significance.
But a good move from the CEO, perhaps coming on the back of some criticism at the AGM.
I’ve been looking a bit at Fisher and Paykal Healthcare recently, an innovative company from NZ specialising in breathing related medical products. Ive always been interested in this company, and it has been a darling of the NZ sharemarket.
Its recently dropped in price, so I thought I would have a quick glance at its financials. When I look at a company, I quickly work out whether its making cash. Not net profit, but free cash flow. So, at the end of the year, does its bank account have more money than at the start, which can then be used for paying off debt, lavish parties etc. The theory is, so long as the company is spinning off cash, things arent going to go too far wrong.
Now, I was a bit surprised to find the FPH results. FPH makes a ‘reasonable’ amount of money from operations, 44 million in 2008 (2009 results not out yet). But they spent a chunk of that on capital expenditure, ie, expenditure that the company needs to make to continue operations, plant and equipment upgrades etc. So, you take that out of the money they make from operations. And then… they paid out 60+million in dividends. Now, if you only make 40 something million, and then spend 10-20 million on capital expenditure, and then spend another 60+ million on dividends, um, you’re left with a kinda sizable deficit.
So, where does that money come from? From borrowings. FPH does not appear to be able to afford their dividend payout, and this can be seen in the increasing size of their debt. Its not clear why their dividend policy is the way it is, but it doesnt seem sustainable, particularly if banks start being a bit more conservative in their lending policy.
Thoughts? Are FPH on the verge of profitting massively from their patents and innovative technology? Am I being way too bearish on a cool kiwi company?
2009 update: The 2008-09 FPH annual report shows the same trend. 62million cash from operating, minus 22 million of property/plant/intangible spending and 66million of dividends, leaves -26million in free cash flow, funded by… 37 million of new borrowings.
We just got started with kiva.org which is a charity site aimed at microloans for people and groups in the 3rd world. You sign up, choose a entrepreneur who has a business idea to make some cash, send them a portion of the cash, and as soon as other investors join you and donate enough, the loan gets sent to that person. They go away, and make regular loan repayments. In the end, you… get your money back (theoretically!) and do it all again. Theres no interest involved.
I just really like the concept, and kiva is super simple. We made our first donation to a group of woman in Africa who wanted to buy food for a restaurant selling food to workers. That was about the scope of the business plan, but we decided on them mainly because they looked like what I imagined Precious Ramotswe (of Alexander McCall Smiths Number 1 Womens Detective Agency). Hardly the basis of successful investment, but then again, I invested in Telecom because I thought it couldn’t fall past $4.00. I’m betting on the African women before Telecom getting past $4 anytime soon.
So check it out if you have an entrepreneurial bent, mixed with a splurge of social responsibility, coupled with just a cool idea in action!
Rowan has asked a pretty pertinent question, following the scrapping of the Section 92a of the copyright amendment act.
For those not up on the play, 92a basically said that people could have internet suspended if they were accused, presumably by music/movie companies, of infringing on their copyright. The ‘accusing’ word got a lot of people rightly worked up, and considering how ridiculous the clause was, it got a long way before being stopped. Judith Tizard, who in a fit of , well, not sure really, I guess just a fit, was the champion of the amendment, got this completely wrong. And so, after a lengthy process, the clause has been scrapped.
So Rowan asks… now what?
So my comment, and partial answer is: The landscape has changed forever. This cannot be legislated against. If I want to download your song/movie/et al that you spent ages and millions making and its on the web, I can. For free. You can argue about right and wrong, but you might as well argue against the sun coming up.
The thing that can be legislated against is me downloading your song, then using it in a commercial enterprise. This is already covered by copyright law. If it can be established that I am making money by unlawfully leveraging your IP, sue my sorry ass.
But if I am playing your song/movie, and giving it to my mates and they’re giving it to their mates, that is the nature of the landscape. There are winners and losers, I suspect more winners than losers, but thats another story. This is the reality. You cannot legislate against reality. Oh look, the sun is up.
So what does this mean? Whats the solution? There are a million examples of highly profitable industries being buried by technology changes. Artists need to ensure that people want to pay for the add-ons only they can provide. Movies need to generate revenue from cinemas. Like, well, you know, they used to, profitably, before the advent of the video player. Musicians sell concerts, and meta data type add-ons. And industry companies sell convenience, eg, ITunes store.
The industry has changed. In some senses, its just gone back about 50 years in terms of how to raise money from being an artist. In others, like being able to reach billions more people, the future is here. The world for artists therefore, should be a much bigger, better place. Interested in comments…!
One thing you often see in business is a new company produces a product, which is great, but because its the first, its not the best thing since sliced bread.
A bit of time passes, then… another company brings out a competing product, with some better features. The first company responds and the arms race begins!
After a while, all the consumers have their needs met, and so new features are not very compelling to the marketplace. So the companies start competing on other things, customer service and the like, and finally, in the death throes of the market, on price. The product has become a commodity.
Like web browsers. Sure, web browsers have mainly been ‘free’ (unless you count IE!), and netscape/MS/mozilla/apple/google et al, have been competing on features. A new ‘better’, more secure, faster, etc way to browse.
I contend, no one really cares anymore. The browser is a commodity. In the past few months, I have used, IE 6, IE 7, Safari 3, Safari 4, Firefox 2 and 3, and Google Chrome. Now the IEs arent fabulous, but its not going to kill me. Everything else? Pretty much indistinguishable. I flip with wanton promiscuity between Firefox and Safari, and scarcely know I’ve changed. Everything kinda works. I don’t care anymore. Does anyone?
Browser market is dead.
Phew, a busy few weeks, finishing up last contract for a cool startup, some time in Rarotonga which is a fabulous little island in the pacific, hooning around like a crazy man (well, a crazy man who doesnt go over 40kmh) on a little scooter, getting up at the crack of dawn to throw coconuts at crazy annoying roosters, and other island enjoyments. Then, house hunting and shifting in very short order. Fortunately, we have eliminated most of our heavy furniture by donating it to various charities, and the look of relief on the movers faces was touching.
Now, everything is back working. Except me, which is fabulous!
One thing I have been doing in my ‘spare’ time is investigating my share investments. I have a reasonable amount invested in shares, mostly bought on whims like “it just dropped 20%, must be a good time to buy!” (note, just because it dropped 20% doesn’t mean it can’t drop another 50%), and “I like what they’re doing” (which doesn’t mean anyone else does). And of course, Telecom. Why Greg, why?
So, I have been doing some fundamental analysis on the financial reports. Which is fun in a super-geeky, don’t tell anyone you want to impress, kind of way. I’ve found it pretty educational, and have recently invested in Restaurant Brands (RBD.NZ) and Michael Hill (MHI.NZ), so you can follow how I do! It is however, quite hard work on the NZ stock market, simply because to get the information, you need to sift through years of annual reports. So I wonder, how many people following the NZ market actually do this? Does your investment advisor?
ok, so heres a little test.
You know how bacteria are dumb, and ants are smarter than bacteria, mice are smarter than ants, cats are smarter than mice, and dolphins and whales are meant to be even cleverer, and chimps and apes are pretty up there on the whole smarts thing right?
And right at the top of the heap is humans. The very top. Except that stupid guy and the drunk slapper you met at the pub the other night. Except them. But humans… we’re at the top. The peak of the intelligence scale. We’re all that. And a bit more.
Ok. Given that you’re so smart, heres a thought test….
Can you imagine, seriously imagine, something, smarter than you are? Not just a little bit smarter, like nerdy geeky guys, but a whole lot smarter? Like so smart, you can’t even begin to understand. You are to it, as cows are to us. That sort of difference.
Go on. Try.
keep trying. What would it be like?
And you can’t. Bet you. I can’t. I can imagine that such a thing would exist, but I can’t imagine how it would be. So, if such a thing were to turn up, what would we do?How would it be for us? To no longer be top of the heap, just somewhere a bit further down, with a vague realisation that there is something much greater out there, but not really having enough intelligence to work out much about it.
But… of course, no such thing will turn up. We’re the top of the heap, the pinnacle. Yessiree, its great to be us. The top of the heap….
We are, arent we?