cbaxter

Tags: iphone

On a lighter note, I came across this company called cherrypeel today. Essentially, it a social network for voting on upcoming music. The idea (same as reddit, digg, etc) is that popular music filters to the top through voting. This is a great idea (especially since you can tag by genre) and it’s like a breath of fresh air from the Billboard 100. Will be interesting to see if anyone is able to leverage social towards identifying new bands for labels — hit the front page and get signed, etc.

EDIT: Actually, this exists (in a number of forms) — watched a presentation by http://www.thenextbigsound.com/ at Entrepreneurship Idol. Model is great if you can get the scale and keep the community from being gamed.

Tags: web

With so much turmoil in the markets, it is easy to become distracted to the underlying causes of the situation. Cleary, markets are interconnected and there are “many factors at work”, but the bulk of this meltdown can be traced back to aggresive lending, a lack of transparency and a housing bubble that went pop.

For many years now, the mortgage industry has been largely unregulated. With banks developing increasingly risky products (i.e. a no income verified mortage that can gear up to 95%), the amount of money available to a home buyer seemed limitless. With housing prices continuing to climb, this seemed like a no-brainer investment to everyone. In fact, it was a great strategy to live outside of ones means on credit cards and then roll the balances into the mortgage through a refinance - extracting the gains you made that year on home appreciation.

The investment banks thought the same way. They could buy up huge pools of these mortgages (regardless of how they are traunched or diced) and leverage them up to 95%, pocketing the spread against the borrowed purchase proceeds. It was a very profitable stragegy, assuming asset prices continued to rise.

Then the bubble popped. Home prices began to fall at the same time as people found they couldn’t exactly make their re-setting mortgage payments. Defaults on the mortgages crushed the values of the pools of mortgages that the banks were sitting on. Considering they had very little equity invested, the losses started to pile on. You can only lose so many tens of billions of dollars before you go under.

The result on the finance community? We will likely see increased regulation that further caps the risks that banks can take and increases the transparency of their holdings. This will be legislation that we will live with for the next 30 or 40 years and it will likely take bankers 3-5 of those years to figure out how to surpass the legislation and make money again (with the attached risk).

With the shackles of Blogger largely shed, I am empowered to leverage the minds of the open source plugin community to make this humble blog a bit more dynamic. Wordpress has an interface for adding widgets/plugins, whether the blog is on their servers or self-hosted (as this one is). There are thousands of add-ons (even a way to generate an iPhone template for the site).

Two that I’m enjoying:

Lifestream

Here it is called Recent Activity on the main sidebar. As the number of web-services and communication platforms increases, it is harder to aggregate the information in a centralized point. Many platforms provide this feature (Facebook, FriendFeed, Google, etc), but each wants to monopolize the content within a gated community. Lifestream provides a similar service that can be self-hosted and is easily customized.

Disqus

I replaced the standard commenting platform with one that is more customizable and social. A key feature of the system is that you can manage and reply to online comments via email. I believe they are backed by Union Square Ventures (Fred Wilson) and I’ve been meaning to give it a go. So far, it’s been a great change from the stagnant comment management systems that Al Gore invented. 

Earlier today I had the opportunity to sit in on a Q/A session with Gotham Chopra, who was one of the co-founders of Virgin Comics. He’s had some incredible experiences and it was great to hear the entrepreneur’s take on the founding, and subsequent unwinding, of the comic book company.

I am impressed that the pair, who were not too seasoned, were able to bring on Richard Branson as an investor/partner (hence the naming). The story sold on an exposure angle into India (bundled with the Marvel/DC rights into the region). That region is set for retail explosion, with over a billion people and the majority checking the “under 20″ box. As the middle class continues to expand, so will the opportunities - barring any economic atom bomb.

The original vision for the comic venture was for creative content development in India (i.e. finding and growing the Superman or Batman for India). It was interesting to hear how this ambition was sidetracked as the business, which was now funded by Virgin, adopted a more ambitious and corporate driven agenda.

In the end, Virgin revisited their global strategy and discovered it needed to allocate more time to the established franchises (Atlantic, Money, etc). The end result was their exit from the venture and its renaming/rebirth as Liquid Comics. 

It will be interesting to see how the company repositions itself — maybe we will now see the Indian superheroes that were the original vision.

Tags: entrepreneurship

The decision by Goldman Sachs and Morgan Stanley to convert into bank holding companies was one of the final blows to the traditional investment banking model. The massive losses from trading floors (traced to falling home prices and asset-secured holdings) were too much to carry for the stand-alone broker dealers. As the flight to quality continued to constrict liquidity, these banks became short on cash needed to sustain operations — cash that traditional banks could tap from an existing deposits base.

Although currently in turmoil, where will the new investment bank settle? Clearly, new structures and increased regulatory oversight will add sand to the once flowing gears, translating to lower risk and capped leverage requirements. Although stability will be improved, it is likely that profits will never reach those unprecedented levels again.

Looking to advisory, it was often a strong competitive advantage to tap one’s own balance sheet to finance a deal; but in this market, the accompanying conflicts of interest and red tape (not to mention lack of any real capacity) have all but evaporated the advantage. At the end of the cycle it will likely be the boutiques, whose advise is not conflicted or distracted, that will continue to gain market share - although of a smaller pie.

Tags: finance

Dear Blogger,

We had many a fun post, but it is time that I bid you farewell. As the internet has grown more open and innovative, you seem to determined to evolve into the senile old man of the web publishing world. How is this possible? You’re run by smart people and sitting under an umbrella of brilliance, and yet still you drag your feet and drool haphazardly. You’re slow to publish, quick to error and often stumped by the most simple requests. You lose my BlogId when trying to publish images - and return a bX-code that no one can trace. At first I was patient, assuming the glitch temporary, but now it is time to move on.

If you need me, I’ll be with Wordpress.

Tags: blogger, Uncategorized, Wordpress

Tags: finance, funny

Tags: Uncategorized

Today was a bit math heavy compared to the usual. I spent the morning in business decisions class - running simulations on exercises including poker hands and conditional probabilities. For the most part, I can follow along OK. The professor is considerably brilliant and, on a funnier note, is the go-to-guy for McDonald’s when they need to calculate the odds for their various games, like Monopoly.

Kellogg is also hosting the Games 2008 (Third World Congress of the Games Theory Society) conference this week, so I was able to sit in on a panel conference manned for four the most recent Nobel Prize winners. The room just pulsed with brainpower. One of the attendees was John Nash, the game theorist who inspired the movie A Beautiful Mind.

A lot of the conversation was beyond me (I’m not a game theory guru), but it was interesting to see how the mathematics was applied to everyday situations. For example, in GPS systems — if there is an accident, and the GPS routes you around it, then if enough people have that GPS the fastest way to go is through the accident. Need to fix that. They also discussed, more seriously, about applications to elections, license auctions and social demand problems.

Overall, was a pretty fun experience to be a fly on the quant wall.

Tags: Uncategorized