Friday, December 14, 2012

The Shrinking Part of Time: Part Time Lifers



I was reading an article in the New York Times the other day titled "A Part-Time Life, As Hours Shrink and Shift", and for some reason, it really stuck with me. In the article, it details the life of a part time worker. Usually thinking that they'll get something like 30 hours a week, they sign up for a job at a retail or grocery store and begin working with 20-30 hours a week. Then, all of a sudden, their hours will get reduced to 5 or maybe 10. With an average wage of ~$10 (which they calculate, by the way, by accounting for $8 of salary and $2 of part time benefits) an hour, it's no surprise that single moms can't raise their children-- they're essentially only making $16,000 a year!

The logic around why stores do this is because, simply, it's cheaper for them. Having a bunch of part timers instead of full timers gives them additional flexibility, cost savings in not having to provide full-time benefits, and workers that, incrementally, don't really impact their schedules too much if they decide to leave (finding a replacement for a full-time employee can be much more difficult).

I think the reason why it struck me is that I came from an industry (consulting) where you're paid pretty well, and I think that sometimes people take that for granted. I once was talking to a few of my friends (also consultants) and we were chatting about what our "after" life could be (after we leave consulting, as we always did, because it's like talking about what you'll do when you get out of prison-- you glorify it to be this amazing thing. Whether it actually is glorious or not is a blog for another day...). One of my friends, who was a superior role to mine (manager) was saying that she could never work somewhere that would pay her less than $110K a year. I was aghast. $110K is almost three times the average household income. That's crazy! She was basically claiming that, because she had grown accustomed to the life that she led, she couldn't fathom a way that she would be happy living her life on less money than that. She estimated that $110K was how much she needed to keep her life "stable". Not even "nice" or "enjoyable" but "stable". Granted, consultants have a skewed version of the world (not living in one place for longer than a week at a time and spending a lot of time in airports will do that to ya), but this was crazy.

I left the consulting biz and now I'm going back at school. I won't lie. I do miss making an income and generally not stressing about money all the time (I am very fiscally responsible, I hate having debt). However, I don't know if I need that much to live a comfortable life. Now I'm stuck in this self-analysis game of "Who's the weird one?" (a game I play often). Am I crazy for thinking that I could live comfortably on half of that? Is she the crazy one for thinking she needs that much to be happy? I don't know, and I probably will never know, but it was definitely a wake up call for me to hear that and then read this. Moral of the story? Just be happy for what you've got. You might not think it's enough, but it's probably more than what other people have. Feeling pretty grateful today.

Monday, December 3, 2012

Mary-Gonna-Make-Me-That-Money



Why are we still talking about this Marijuana Business? The Mary Jane roaches, the sweet purple smoke? C'mon, I can be a little gangsta. I listened to a Vanilla Ice album once.

I was watching a segment on MSNBC earlier today and the two talking bobble-heads (not to be mean, but they actually do bobble their heads a lot), and they were appalled at the very idea of legalizing marijuana. Even the Washington Post picked up the story soon after Colorado and Washington legalized marijuana in their state, with the ability to manufacture, process and distribute for medicinal purposes.

I know that everyone has heard the arguments against legalizing marijuana. It's a slippery slope, it's a gateway drug, it breeds an unsavory culture, it could increase the many opportunities for public danger. But what about the upsides? Tax revenue alone could help us in the gigantic financial hole that we're in, means more jobs if you're going to open it up completely like Washington and Colorado did, by regulating it, you're actually taking power away from the large black market that supplies it now, and you're also limiting the... negative international relationships that we're making in for the drug suppliers south of the border. Why not?

I feel like we have bigger problems to deal with as a nation. A fiscal cliff, a eurozone- now-global problem, an unemployment problem and other national drug problems that have a much larger consequence. Maybe it's time we focused on the important things.

Sunday, December 2, 2012

A Myth in a Myth in a Myth...



In "The Myth of Male Decline", there is a discussion about how males are feeling a little.. well, down-trodden. Maybe a little like second class citizens. Women have been making gains in wages, education, leadership positions. However, it's really a relative game, isn't it?

Women may have been making gains in wages, but its because we have a lot more to make up for-- a lot more opportunity to "make up ground". But why does this matter? I mean, in this brave new world of voice-activated phones and vacuum cleaners that clean by themselves, do we really still need to be harping on and on about the rights of women and how we're really "fighting for our rights"? Are the blogs and articles covering the "progress" of women still needed-- this new-age form of bra-burning?

The short answer is yes.

When Marissa Mayer of Yahoo gets public uproar and an internet-wide controversy for deciding to  continue working throughout her pregnancy, there is still a worthwhile reason to keep the conversation going.

As a person who's currently going to a business school with an overwhelming majority of men, after being a consultant (another male-dominated society), sometimes its a little disheartening. If you're too aggressive, trying to compete in an atmosphere that's mostly men being ultra-competitive and aggressive, then sometimes you're just seen as "mean", "unproductive", "uncooperative", "not a team player". If you're more friendly, trying to make sure that you still retain a bit of yourself in the hurricane of what you're "supposed to be", you're seen as "weak", people take advantage of you, question your ability to lead. In the middle of all of this, everyone keeps telling you to "be yourself", "stay true to what you believe". Well, it's hard!

Especially during this recruiting season, when you're doing so much questioning about who you are, and what you potentially want to do for the next large chunk of your life this strange balance of character traits can begin to weigh on you. Despite what they say, I have to admit that I'm a little disappointed in the lies of the companies that are most interested in us-- potentially, the incoming ranks of their company. All companies say that they want you to be yourself. But some industries, some firms are definitely looking for a specific type of person-- they call it "cultural fit". I understand that, coming from consulting, where the fit is the difference between a successful project or a failure. But where is this line drawn?

Be yourself, but have the following characteristics. Everyone goes through it, but for women the added layer of "how to be a successful business woman", it gets a little more complicated. It's usually easier to make decisions when you can look at how it's been done in the past. With women, we don't have a lot of options to do that. Until we have more examples, more representations, it's worthwhile for us to keep the conversation going.

Saturday, December 1, 2012

Don't Hate Me Because I'm Google-ful




Just when the Best Buys of the world thought that the travesty was over--- when they took the break to take a breath and wipe their brows, thinking that the showrooming phase was over....

They were wrong. Dun dun DUN!

Apple was recently rewarded for their EasyPay solution (allowing consumers to scan things in stores and buy them through their phones through an internet connection). This, in my opinion, seems not just like another one of those cases where Apple just like suing people for the fun of it (just kidding--though let's be honest, it makes sense for them to protect their turf that way, and who's to say that it isn't ALSO fun? Could definitely be part of it). I know, all the Appleheads out there right now are wetting themselves, celebrating the ways that Apple does all things in a miraculous way. But Apple isn't doing anything particularly new here, in fact, it's really taking a page from eBay's book when they acquired Red Laser or maybe even Google's book since they host a plethora of barcode scanning apps such as ShopSavvy and ScanLife and may be even *gasp* have been ahead of the game in incorporating it through Google Goggles (PS- Google Goggles might be one of the sexiest apps concepts I've ever heard of. Google basically said "Anyone can build a barcode scanner, we're going to build something that can recognize bar codes, print ads and OBJECTS. Take that!")

It's okay. Everyone wants to be like Google. Apple just announced a "Blue Sky" initiative allowing their employees to take on pet engineering projects... which sounds an awful lot like Google's "20% Free Time", one of their most productive, innovative management ideas to date.

Everyone likes to bring up the Google Wallet product, since it hasn't been an instant winner. At the IGNITION conference, Chris Haylen (Vice President and General Manager of Payments for Intuit) claimed that Google Wallet wasn't successful because their whole strategy was geared under their advertising agenda.  Another popular hypothesis is that they simply don't have the infrastructure to support their solution. Sure, some other companies, like eBay, are celebrating their recent successes in mobile transaction volume, but Google's got something special.


I mean, at least they're not RIM. It's a sad day when you get p0wned by Yahoo.


Finally, even with Google's not so awesome products, we still own it. As seen by this awesome ad.


Friday, November 30, 2012

Students Cheat. Yup They Do.




I know, I know, it's appalling that kids are still cheating nowadays. (Isn't that what the interwebs was supposed to solve?) Well... kids are definitely still doing it according to this article in The New Yorker. It talks about a cheating ring at Stuyvesant (read: hoity-toity, very prestigious high school) in New York City that involved 140 students. At the center of the maelstrom is Nayeem Ahsan, a 16 year old kid from Bangledeshi immigrant parents.

Being first generation, he talks about the pressures that are out there for him to do well. Even after getting into a super prestigious school, there is continual pressure for him to do well at said prestigious school so that he can go to a good college. Once in a good college, he hopes to get a prestigious education so that he can land a prestigious job and .... well, make lots of money.

Nayeem's argument is that studying was pointless because studying was more was not going to make much of a difference. Sure, maybe it could help, but "there are things I'm bound not to know". His argument, therefore, was that studying, when compared to outright cheating, was more effective because his end goal was high scores, and cheating gave him more incremental value per unit.

When I first read this article, I was angry. Angry because I've grown up around kids like Nayeem my whole life-- kids who have been told the "right" from the "wrong", but seemed so disillusioned or so disoriented that they didn't seem to believe it. Scarier still, I worry that these kids did believe it, but just didn't care-- the ends justify the means, right? As a hard worker myself, I've been told I'm smart. Sure, I'm probably smarter than your average bear, but I'm by no means a genius. I work really hard to learn the things I learn and I put a lot of time into these things. People who cheat make my work incrementally worth less because they get the same results with less time. It makes the whole "market of smartness" worse off through false inflation.

But then I started thinking about it more. And I get it. I still don't agree with what this kid did, but I understand it because this type of behavior still goes on. It even happens at school now. There are simply too many things to do and too little time. There inevitably will be people who have prioritized, say, recruiting, over classes because our main goal right now is getting a job. These people sometimes will take fewer classes or easier ones to compensate for the lack of time, sometimes they won't. Those that won't usually have to a.) accept that they're not going to do as well as what they're used to or, b.) they cheat.

I argue though that the true crux of the problem though isn't that it's inherently wrong (which it is though, by the way), not that it's "ruining it for the rest of us" (which it also is, by the way), but that it's really more of an indication of the type of students that we're creating. By placing so much pressure on our students, their perspective of what's "most important" gets skewed. As it becomes more and more disoriented, they begin to simply try to get by, instead of doing what they know they should be doing. On one hand, we're creating highly effective people in the skills of prioritizing, organizing and coordinating. It takes a lot of work to cheat I'd imagine (you'd need to find someone who knew the answers, etc.). On the other though, we're creating a whole new generation of "super achievers" that can't accept that they can't do everything and that they need to prioritize. Is that a generation that we want to empower with prestigious jobs and schooling? I'm not so sure.

Thursday, November 29, 2012

TechnicalogiVentures (Bar & Grill)



I'm the bartender. My bar is a simple one named, somewhat non-sensical word. That's how you know I'm legit. I sit, I watch, wipe some cups, give knowing smirks when required of me.

Across the room, PayPal is a little gun-shy-- coming off of a small dating rut from the PayPal Here and layoffs, she's definitely ready to get back in the game with record mobile sales this holiday season thus far. Google and Apple are peacocking (look this up if you don't know what this means, it's a real thing...and hilarious that it's a real thing), sidled up by the bar in their hoodies and wayfarer sunglasses. Google is proudly showing off their new functionality for Google+, the fact that Barack Obama used Google Hangout (true story) and their general awesomeness high after finishing a year where they got big props for their Hurricane Sandy Emergency System (unfortunate cause, but fantastic response) and their winning (?) battles against their many legal suits. Maybe their Google Wallet hasn't been perfect, but they're tweaking it--adding new functionalities like P2P payments (much to PayPal's smugness). Apple released the iPhone5 to the delight of Appleheads everywhere....and to the sadness of the Apple Maps maker (really? You were "Surprised by the popularity of the maps function"?) / happiness of AOL's Mapquest (yes this still exists). Nevertheless, they still pin their iPad Mini's to their shirts, and play with their drinks while chatting with their "its complicated" significant other, Intel.

Microsoft is still in the dating game. Known for being one of the most exclusive bachelorettes (c'mon, I have to be gender neutral), Microsoft has long been a powerhouse and is warily testing out the waters with its new Surface tablet to complaints about it being too highly priced but also to cheers of it being filled with potential in bridging the gap between work and play.

I mostly console Groupon as he sits, hunched over his whiskey sour at the bar. He's had a bit of a rough year. His IPO didn't really work out like planned. Launched late last year, it was too be a match made in heaven--I mean, it seemed so good at first! IPO was The One, it was going to change the way that he could business, and for good reason! In the increasingly saturated market of e-couponing/ e-offers, Groupon is probably wishing they took Google's offer now that it's clear their business model needs a re-tweaking. Groupon has been reduced from eligible newbie to disheveled hipster-type, with his CEO under fire for plunging stock prices going so far to say that he would fire himself if he ever thought he was the wrong man for the job.

I just don't know how to help the guy honestly. I mean, if Restaurant.com is even getting in on the local deals business with their Double Deals, it seems like the whole world just wants to be single and try to make it on their own. Restaurant.com has a compelling story on his own, since he can leverage his existing market share that he's achieved through his restaurant coupons, but that just means (unfortunately) just more competition to pile on-- on top of the Gilt City, LivingSocial, HomeRun and LifeBookers of the world.

Maybe this is the time for the couponers to look at some of the non-central players that are also here. There's Visa who's hanging out casually shooting pool-- with their new e-commerce authentication system (driven by real-time risk analysis) its a true signal they're looking forward to more e-business and on-the-go quick payments. Since Groupon has also moved into that space, it could always be a good partnership-- sipping wine in front of a fireplace, discussing a right-time, right-place offers/payment solution.

Or maybe look at other relationships for inspiration. Amazon Payments just inked a deal with FailSafe Payments for merchant processing. Maybe not the sexiest relationship-- I mean, Failsafe is no Italian supermodel. But it's a stable one-- they have complementary interests, AND it provides substance to the relationship. Amazon gets more of that processing pie, FailSafe gets a little more big-name branding. That one might just work out.

I heard there might be some new eligible bachelors/bachelorettes coming on the scene-- a crowd-sourced fraud detection system, NCR and Ingenico are strong on the prepaid payments front (always an overlooked watering hole) and Square cut their pilot with New York Taxis short, so maybe they're looking.

Not everyone can be lucky in love. So don't give up hope yet, you lonely and looking. You'll find someone.

Until then, I'll be here to lend a sympathetic ear, talk it out. Maybe give out some hugs. Let me fill up your cup.

Update: Poor Groupon. Google just acquired a Incentive Targeting, and Mason finally caved to an interview with BusinessInsider yesterday, which people are dissecting as we speak. Poor PayPal! Visa has been seen about town with Bank of America and RBS to tout V.Me.

Wednesday, November 28, 2012

The Effect (?) of Financial Markets on Music



I wish I could say that I was some uber-genius who spent my entire day looking at macro market trends and determining what the next big value stock pitch or internet technology trend was going to be. In fact, I am usually running around, counseling undergrads about their lives, discussing my complete clueless-ness with my own classmates and trying to keep up on homework while balancing extracurriculars and work.

And then, I think strange things that distract me sometimes. Is there a correlation between the financial markets and music? How could we measure this? What would it mean? What would I assume? How could I look for a pattern?

My hypothesis is that there is, I imagine that the easiest way to measure this is by BPM (beats per minute) and that I hypothesize that while music overall has gotten faster (higher BPM), music is slower in downturn-y times.

Let's see what happens.

So I found some background information around the economy.


Key Take-Aways: Oil usually increases in price when the economy is in a recession/about to go into a recession. During the recession, these high oil prices will begin to trend back down to more "normal" levels. Recessions in the US were in 1973-'75, 1980, 1981-1983, 1991, 2001 and 2008-2010.


And then I got a little more information and found out about bear markets...

Key Take-Aways: Bear markets! These happened in 1905-1920, 1931-1944, 1965-1980, 2000-2005 (no information is given after 2005).

Then I looked up GDP growth in the US on Google-- GOD I LOVE GOOGLE.



Key Take-Aways:GDP growth is where you would expect it to be-- with the dips and mountains in all the right places...

Then I got a little excited with the Google tool and added in Asia, Europe and Latin America (red, orange and green respectively).

 Yup, that made sense too.

So then I tried to put together my own knowledge of music history based on the interwebs research, which goes a little something like this: In the beginning, there was vaudeville and Oscar Hammerstein in the early 1920s. This was the age where blues and jazz emerged into a brand new world. By the 1930s, the party had gone into full swing (har har har) with big band swing. 1940s saw the emergence of bluegrass and country, along with the beginning of "Appalachian folk music" (seems very probable that this could be one of the muses of our current-day "indie rock". Appalachian folk music was significant because it really increased BPMs and probably heavily influenced the be-bop movement also in the 40s that held some of the records for BPMs (could hit 300). 1950s slowed things down a bit with gospel/soul music with some greats like Mahlia Jackson, but also gave us some of my favorite songs from Dinah Washington and Aretha Franklin. This age was also the emergence of Doo-wop (which was fantastic) and we saw songs like Frankie Lymon's "Why Do Fools Fall In Love". 1960s was about freedom and experimentation, where we saw a brief stint of "psychadelic" rock that transitioned into what we now refer to as "rock" (The Beatles, The Who, Rolling Stones, etc.". 1970s was about love and peace yet we got heavy metal during this time from the likes of Led Zeppelin and Black Sabbath, as well as a stronger emergence of punk rock, which began to emerge in the 1960s.

In 1980s we were introduced to Ladies Love Cool James, also known as LLCoolJ, along with NWA and the beginnings of hip-hop and "gangster rap". The 90s were filled with hair metal (a new branch of the rock family tree), so we saw Nirvana's "Nevermind' album, along with the Notorious B.I.G. The early 2000s especially were inundated with bubblegum pop with the likes of Britney Spears, Backstreet Boys and N'Sync, but it also began to lead into some more "alternative rock" with The Hives and The White Stripes, which gradually became "indie rock" with Franz Ferdinand and Modest Mouse. Starting in 2010, we've seen a heavy emphasis in dance music, particularly with a lot of latin flavors, which has emerged as a  mix of "dance pop" (Cascada, Pitbull, Ke$ha), "dubstep" like Skillrex and a re-emergence of "house" or "dance" music. Although house music actually originated in Chicago (what what!) in the 1980s, it re-emerged in a strong way in the (later half of) the first decade of the 21st century. (I would say 2008-ish onward.) I think it's safe to say that the world is now a better place because of the contributions of David Guetta, Afrojack, Deadmau5 and Kaskade.

I found the average BPMs of these popular genres of each of these decades and plotted them, but I needed to account for some decades where multiple "popular genres" emerged, hence there's BPM 2s and 3s...The outliers here: 200 in 1940 was be-bop (one of the highest ever), 120 was bluegrass, whereas 75 was country music. Additionally, the 85, 90 and 120 BPM blips in 1970 were heavy metal, outlaw country and punk rock.


At first glance, it kind of makes sense. Although BPM did not tick up as quickly as I thought it would, the slowest BPMs were actually always interbellum times. The highest BPMs, similarly, always occurred right after a financial downturn, which is not to say that downturns always resulted in low BPMs. Music tended to fragment (split to have many different emerging genres) during the 1940s and 1970s-- strong bear markets. In the 1940s, we had an ending war, soldiers coming home and inflating the once-low unemployment rate, an economy under stress and a recovery from a mini recession in 1937.  The 1970s was also a time where the nation was torn. Although the Paris Peace Accords stopped US participation in the Vietnam War in 1973, our society was still torn. The 70s was a time when a President and a Vice President resigned under threat of impeachment, and the US economy entered the worst recession that it had seen in 40 years in 1974.

 I looked at it and wasn't satisfied so I looked at some more data....and looked at GDP vs. personal consumption expenditures to see if that would give me additional data.


And then found this research paper ("Trends in BPM in Popular Music") that had a more accurate method of determining average BPM. This paper consolidated the top songs from each decade (instead of musical genres) and allowed me to determine a more accurate BPM.(Red dots are average BPM per decade.)


And if we cut this to pair it up with the Google charts:



Looking at the average BPM per decade (green dots), it seems as though there could be an indicative story here. Although low growth rate resulted in big changes in BPM 1981, I think the jury is still out as to the amount of direct correlation here.

Regardless, interesting to look at...and this is what I do during my days when I get bored.

I know...I'm a weirdo.

Tuesday, November 27, 2012

The Rise (& Fall?) of Empires: PayPal





As much as it hurts me to say it, I think we may be at the end of an era. Once a behemoth, PayPal is now struggling to stay pertinent, relevant and useful. Now, PayPal sits at a turning point. Its move forward strategies will undoubtedly hold the key to its success and potentially, its existence.

PayPal: Oh PayPal! How I love you! Your quirky start-up attitude, even as you grew into a tech adolescent. Your awkward stage when you grappled with the acquisition of multiple subsidiary companies by your motherland (eBay)-- some of which were incredibly successful (Bill Me Later, StubHub, RedLaser) and some of which are still percolating to produce a return (the much hyped Zong). You even remained stable in the midst of the selling off of your brother-from-a-different-mother, Skype (sold to Microsoft in late 2009).

Then a turning point happened, mobile payments spread onto the scene quickly. The geekers and the gawkers were beside themselves with the possibilities-- oh the countless opportunities!!-- that bluetooth, RFID (and its cousin/child NFC) held. Pay and go stickers were all the rage. You watched as your brethren, Bling Nation, attempted to make the sticker play by tying it to users' PayPal accounts. By 2011, Bling Nation had ceased operations. I understand what you must have been feeling-- everyone you thought would be around with you into the future were slowly falling by the wayside. Maybe you were a little gun-shy after that-- totally understandable! As your parent company publicly said that they didn't see the future in NFC, you steadfastly continued moving forward.
You were still cautious, curious even, as you proceeded. You needed something that would allow you to make that quick branch between physical and digital-- a way to capitalize on consumers in their pockets and in the store so that they could access you wherever they were. So you struck a deal with Discover to leverage their terminals to access the PayPal system so that you could get in on some of that easy terminal money. You were smart and accepted you were wrong in underestimating the volumes behind mobile payments. Now, you could have the best of both worlds! You can still have mobile capabilities and leverage an existing players' terminals-- it was genius! Not to be stopped in your slow, very humble expansion (maybe you're just trying to fly under the radar), you quickly established your own terminals in Australia, with fees that would be "on par" or with a "slight premium".

Your Future is still uncertain, but one thing is for sure, it's a good thing that you didn't bail out completely of the mobile payments game, considering you hit record mobile transaction volumes during the December 2011 holiday shopping season. However, be careful my dear friend! Customers seemed to be pretty surprised by the ease of use of your new terminal systems in Australia, but few customers knew it existed (it was rolled out in small businesses) and even fewer were using the check-in features that you had built into the system. Beyond low consumer awareness, you're playing with fire with those potential "slight premium" fees! In a world where we've already seen the cannibalization that results from Square (to your PayPal Here), the Google Wallet (to your traditional web-based payment model) and the hype around Apple Payments occurring through Bluetooth (poor Bump! What happened?!)

I wish you the best as you go forward into the great unknown. But be careful! In order to maintain your supremacy-- your "tech titan" card that gets you into that special club where Google shoots pool and Apple watches games on the big screen--you have to put more work into being a leader. Although your attempts so far have been strong in terms of thinking, you have been overly cautious in not wanting to have a "first mover" mentality. Your Pay Here happened after Square, but I won't fault you for that! Lots of folks decided to jump on the bandwagon after Jack Dorsey took the hit for market testing that crazy idea. But Google beat you to the punch in introducing a wallet! I know, I know, you don't believe in the wonders of the wallet, but bottom line is that Google made it into physical stores before you. How could this be? Play to your strengths my dear friend, push hard in the online space, but begin to branch into those physical locations before Google takes all of the physical footprint. Your direct relationship with merchants, particularly with the smaller ones (which, by the way, account for the greatest volume of transactions), should be your advantage. Making it easier for them might require more investment on your part, but it doesn't mean that it won't pay off in the end. After all, PayPal is "The Safer, Easier Way to Pay".

Saturday, November 10, 2012

"FORWARD!" He Says



 

PIMCO forecasts global growth of 1.75 percent in the year through September 2013, weighed down by a euro-zone recession and a slowing pace of expansion in China. Repeatedly, they have been been warning that all of the political/fiscal hoopla that has been going on has much more far-reaching consequences than what people are expecting. With all of the fiscal theater that is going on, the US is contributing to a larger pool of volatility and uncertainty—in such a fragile state, it’s quite possible that not only will politicians spook investors, not get much work done and ultimately do what amounts to twiddling their thumbs and we slowly lumber toward a financial sinkhole (to the tune of $600B), but it also (from a macro perspective) increases the probability that the US could get downgraded.  Granted, they said this before we (as a country) knew who are new president is going to be, but with the nosedive of stocks that occurred after Obama was elected, I think it’s clear to say that the Republicans are not the only people in this country that are reeling from election results (or, on the flip side, it shows us just how integrally political parties are intertwined with our financial market system). 

So what? What does this mean? I don’t want to make this post all about “How I Love Thee PIMCO, Let Me Count the Ways”, but it does ring true that several of the publications that I’ve read from PIMCO signal to me (as a personal investor) that we’re quick-approaching a cross-roads. 

In Bill Gross’ investment outlook for November, he talks about Flavor Flav, genies, Obama, Romney and Chris Berman from ESPN (yeah, he's that awesome). But he also hits on a metric that I had never really thought of before when I thought about the economy- the net national savings. I’ll be honest—I didn’t know what this was—(he does a good job explaining it in his outlook) but it basically means “the extent to which the US (corporations, government, households) are saving in order to offset the depreciation that comes from our existing investments”. (Un)surprisingly (?), it has been decreasing for a long time now—with a few bumps but overall downward trending since the 1970s. This means that, overall, we’re making less real return on our investments than what you would think. The government has released a lot of funding to improve the economy, and although this has elevated asset prices (yay! The stock market is improving!) it isn’t actually improving our overall economic outlook.

Why is this important to me? Well, what if, hypothetically, you were in business school and you knew that you had left a lucrative job in order to define and pursue your dreams. If the economy is not setting itself up for sustainable growth and improvement over time (for a while now, it’s just that I haven’t caught it because I wasn’t an enlightened business school student)—you’re a little worried.  Across the hallways at Booth, I’m already hearing the screams of students—even louder than those of i-bankers the day that UBS announced their massive layouts. As they rush past me, clutching their name badges and the tear sheets about all of their “dream” and “safety” companies, their thoughts are clear on their faces-- Forget about the instability in the world economy! This is beginning to affect me for real now—I might not get a job! I echo their fear. The nation is in a highly perilous state. Politicking has done us no good, and now that we have signed on for another four years of Obama, there are high hopes that this means change. “FORWARD!” he had promised. We’ll have to wait and see. In the event that I can’t find a job, maybe I can volunteer for the next election campaign—the economy may go to hell but it seems like politics stop for no one.

Monday, October 22, 2012

Educating the System








Okay, so I have a little bit of a biased interest here. Let me caveat. But, I was recently presented with a question of how the future of education was going to work. With all of the MOOCs out there, sponsored by MIT, Stanford and Georgia Tech, it's a valid question. As a soon-to-be full time MBA student, I have a lot of concerns, clearly-- will the amount of money that I'm about to invest in my education (probably close to $120-160K for two years) pay off? Will it allow me to [fill in blank here]? 

So let's think about it. From this student's perspective, I have always been raised in a household where there was no such thing as too much education. It went without saying that I would graduate high school with good grades, go to a good college (preferably on scholarship, since my family couldn't really afford higher education...Strangely though, even though we couldn't afford it, it was never a question that I would go. I sometimes wonder if I hadn't gotten a scholarship, what my family would've done), work for a few years and then go back to get in an advanced degree in something (preferably business, medicine or law). So far, so good. I understood this plan at a young age and pursued it--not because I wasn't creative enough to think of something else and just wanted to take the path of least resistance, but because I recognized the value early on. At least, I recognized the value of high school and college. I've had colleagues and friends debate with me over the value of an MBA, and their concerns are valid. There's not much you learn at b-school that you wouldn't learn out of a book, you're really just doing it for the network, if you're doing it to be an entrepreneur just take the $120K and put it toward your start up...the list goes on and on. Regardless, I see that there is value for me, and that is a discussion for another time.

For the schools themselves, these are tough times. The public ones are getting slaughtered on budget cuts, the private ones are scrambling to make sure the alumni stay happy and the funds keep flowing in. Often times, this leads schools to continue bumping up tuition. The average 4 year university increased tuition by 15% between 2008 and 2010, whereas the average top 20 MBA has increased by 5.7%-- outpacing the increase in graduating salaries and national inflation. The average class size is going up-- even at the top institutions that try to keep class sizes small for the sake of a "more intimate learning experience" in order to meet the increasing demand. Once they get through their 2 years, many students, especially those outside of the top 20 or even the top 10 are struggling to find jobs due to the bad economy. From an employer's perspective,  they can choose from the cream of the crop-- they now have the power to demand that their new hires have both experience and a great education, because the supply is so out of whack with the demand. Therefore, the new graduates that have fantastic credentials but may be lacking (just slightly) in the experience department with 2-4 years are getting shown the door. From a student's perspective, they're saddled with heavy debt, unable to find jobs and invested in what they thought were safe choices by doing "practical" concentrations like Finance or Accounting. In summary, things aren't looking so good for the students either.  

But what about the professors? There are waves of students that have decided that their path would lie in an advanced degree-- a PhD that could (should?) give them a way-one ticket to face the other direction in the lecture hall. Entry-level tenure tracks start at $54K a year, and this is all most students can hope for after dedicating 4 years of their lives to essentially educating themselves on how to educate. The American Association of University Professors estimates that the ratio of openings to new doctorates is 1:4. According to the Survey of Earned Doctorates (SED), half of all PhD recipients in the humanities are over age 35 and have foregone many things that normal 35 year olds have done-- stable paychecks, buying homes, starting families. Looking at the big picture-scape, The Economist reports that there really is a minimal financial gain between a Master's degree and a PhD, which insinuates that all PhD holders are hoping to teach/research. In my specific case, I'm really looking at the quantitative fields, Finance, Business & Economics, etc., but even these "hard subjects" have complicated minutiae. Some claim that Accounting is supposedly better than a doctorate in Finance, while others argue that it's really a progression issue-- it is much more rare to go from Finance to Economics but not the other way around.

So isn't there any light at the end of this tunnel? Any opportunity at all for someone who wants to make a difference, give back to their community and contribute to the norm of thinking? Well, the future for doctorates is a crowded one. The World Future Society claims that doctoral degrees hit an all time high in 2008, after rising for 6 straight years. Interestingly enough, the non-science and engineering (humanities) doctorates have decreased-- perhaps as a reaction to the "hard skill"-based economy that the recession has created. In the most telling article, The Chronicle of Higher Education performed a survey of doctoral candidates across California, and the results were slightly bleak. On the upside, a lot of the anxiety that comes from receiving a doctoral degree is what you can do with it afterwards, and many schools such as Berkeley and UC Davis are focusing on preparing their doctoral candidates to enter a fierce job market through workshops, seminars, guest speakers and a lot of hands on career guidance. 

The doctoral predicament is interesting because I think it perfectly highlights the many ways that the US has failed in their structuring of the educational system. Contrary to other countries like China, where the government more or less tells their population what their lives will be like after entrance exams, the US is almost a promised land where students can choose based on their passions, interests, strengths. Unfortunately, many people out there want to go into academia, but there simply aren't enough positions for all of those that would like to contribute back to their communities. As a result, you get a group of highly educated people who've sacrificed a lot for their profession unemployed. The "lucky" ones are paid a pittance and rarely receive the job stability they desire to the decreasing trend of tenureship.What kind of society can we be? What can we hope for in the future if we don't reward those that will teach the future? I guess only time will tell.

Payments Predators and More



The landscape for All-Things-Tech, which is, awkwardly acronym-ed to be ATT (no comment) has been alive and kicking this week!! More than anything, maybe it’s because of the cold, these technology firms have been getting mighty comfortable with each other. Maybe too comfortable.
The real question I ask is, are they being friendly? Are they just trying to keep up? Or are they being predatory? Let’s see the breakdown:
 
·         Groupon recently announced that they were going to move into the Payments business with the launch of their new payments platform: Groupon Payments
o   Predatory: Groupon’s value proposition is simple—they pledge to match the lowest cost option for any merchant to accept credit cards will deliver overnight credit card deposits daily. Although the reasoning behind this move is not a surprise (they process a lot of payments, yo!), Groupon’s size and experience is what will set it apart in terms of its ability to scale and provide valuable customer service. Groupon will be partnering with hardware developer ROAM (who has created readers for others in this competitive industry) to develop an audio jack reader (a la Square) as well as a case based reader (a la Verifone’s PayWare). By offering processing at a discount, Groupon is gunning for bigger processors (First Data) and alternative folks (Square). Its true test will be whether consumers trust a company known as a consumer product brand to handle their sensitive payment information.
·         Facebook jumps in on couponing through Offers, adds additional rider on when it will allow people to use their “free” Offers service
o   Keeping Up/Predatory: Facebook jumping into Offers this past May is really not that surprising (other than the fact of why it took them so long). Adding a rider on their “free” offers service requiring merchants who want to be featured to buy advertising….well that’s a little different. In terms of advertising, Facebook like advertising not only because it makes up approximately all percent of their revenue, but also because they like to gather that data on their users…just like Google. The true test for Facebook will be to see whether merchants are willing to pay for the right to be featured, or if, since they have to pay anyway, they’ll just move to the Google shop down the street.
·         Microsoft completes release of additional details on “Surface”, Apple releases a “special event invitation” to discuss iPad Mini
o   Predatory: Microsoft wants to get in on the tablet game, which is predatory. Apple is trying to simultaneously defend its position among the tablet market (currently the majority of the tablet market, despite its high cost hardware) and move into the tablet market that as defined with Samsung’s 7” (which was taken off shelves due to Apple’s angry lawsuit-ing, even though the judge ultimately ruled for Samsung. Needless to say, Apple is appealing)
o   Friendly/Predatory: This one is another one of those halfers because MasterCard is being relatively friendly with the telcos in that I don’t think that MasterCard wants to get into the telco business. MasterCard has already launched an NFC payment app with Singapore’s Starhub and Everything Everywhere in the UK and Deutsche Telekom in Europe. In this case, MasterCard is simply leveraging more partnerships and NTT Docomo is leveraging MasterCard’s network. That being said, MasterCard really wants to undercut the potential opportunities through its established, NFC-based PayPass service. MPesas and Google Wallets around the world are getting nervous because, although MasterCard is a friendly for NTT Docomo, MasterCard is not a friendly for other mobile payments players in the emerging markets.