"Billionaire" (or why you're still poor)

Maybe I'm just a sucker for an acoustic guitar and a reggae beat, but I actually enjoy "Billionaire" by Travie McCoy. Its lyrics reminded me of the 15 minutes of MTV I've seen in the past 5 years wherein an Oakland resident complained about being poor...as she pulled out her rhinestone-studded flip phone. Poor thing probably only had basic cable.

I wanna be a billionaire so fuckin' bad.
Buy all of the things I never had.

Give away a few Mercedes like here lady have this

Yeah can’t forget about me stupid
Everywhere I go Imma have my own theme music

I’ll probably take whatevers left and just split it up
So everybody that I love can have a couple bucks

Which brings you back to where you started: paycheck-to-paycheck, windfall-to-windfall.

How the Web 2.0 crowd tore the internet a new one

I hate the term web 2.0, but I didn't realize why until I heard the mid-level corporate drones' (they grouplearn these things together at conferences) formulaic explanation of it: "social." They couldn't be more wrong.

The motivation for seeing it as social is a combination of bubble poster children Facebook, Myspace, and Twitter. What they neglected to look at is the beginning of the trend with Google. Expand that list a little and you'll get Google, YouTube, Flickr, Digg, Last.fm, and Pandora. Yes, some of them have thriving communities, but at the same time, some have downright toxic communities. What they actually have in common isn't "social," it's a focus on user experience and a blatant disregard for profits. That's it. What made Google so great was that it wasn't Yahoo's bloated, traffic-driven portal; it did one thing and it did it well.

The key is that none of the ideas were particularly new: personal home pages, search engines, and streaming media all existed in the late 90s, only now, a combination of dedicated engineers, improved technologies, a focus on usability, and someone else's money made it possible for some flavor of these to enter the public conscious.

So what's an established company to do? The conference you're overpaying for keeps claiming the future is in "social." Unfortunately, I'm answerless, here. A bit like Mp3s, Web 2.0 opened a Pandora's box of consumer expectations. People have come to expect a quality experience with few ads, and this simply isn't something most companies can afford to offer. The good news is that most of the obvious changes are already done and most of the displaced web 1.0 products are already deprecated. That said, this newfound focus on the user is fundamentally a disruptive market force, and while simply slapping a tag cloud or user accounts (with avatars!) on your product will make you more "social," it won't change the nature of the product.

Pastiche of Success

This is the first part of a two part series, but don't think of them so much as sequential, but as loosely related observations, or maybe corollaries.

I don't think I ever said this directly (it seemed so obvious only an executive would appreciate it): build a product people actually want. This is an anonymized snapshot of a company that successfully failed to do just that--though not quite.

It supposedly started out with a focus on its product, though in hindsight, that might just be a generous interpretation of the good old days. It soon found its business model to be less than profitable, and rather than simply folding, it entered survival mode...and never left it. It found profit, but at the expense of becoming aimless and fragmented, pursuing any random, but profitable, quasi-relevant venture it came across, and clearly a market follower without the focus or resources to follow through.

This is really a no-man's land for a small company. One on side, it's competing with large companies and their massive resources, while on the other, its competing with the new ideas and revolutionary spirit of startups. There are really just a few directions for the company to go: down the same path, happy to take a profit in anything too dirty for other companies. It could rally around its core product, though it's probably a futile market. Or it could try to move into something different.

I doubt that the management will do anything particularly interesting; there's more talk of markets, profits, and exits, rather than, as I said before, making a product people actually like. In short, it's essentially a pastiche of success--a corporate wallflower; it shows up--to almost everything--but doesn't bother to actually dance.

Priorities

The Accidental Slumlord

While they have a few -luxuries—Bill has a 33-year-old Chevy camper and a satellite dish that gets 250 channels; Will has a $380 Sony PlayStation 3—there's clearly little slack in their finances.

What the House healthcare bill could mean for you

The America's Affordable Health Choices Act (which thankfully isn't a PATRIOT ACT-style backronym) just made it through the House by a narrow margin. Now the big question: what could it do for you?

Most importantly, not deliver on its name. Consumer Reports took a look at what contributes to healthcare costs in America, and the bill (at least according to the summaries I read) does little to address them. The bulk of the bill seems to focus on regulating insurance companies and insuring the uninsured via a publicly owned insurance company.

The proposed regulations force insurance companies to insure more people and at rates that disregard medical history and other factors. Insurance companies are far from the corporate villains public healthcare advocates paint them as, making a profit margin of only 7% or so, so paying for these changes isn't simply a matter of cutting into profits; insurance companies will likely pass the added expense onto their healthier customers. As a nothing more than a guess, I'd say premiums will go up around 10% for most people, but down for people with various medical conditions.

To get closer to universal healthcare, the bill would create a publicly owned insurer and a regulated marketplace for the uninsured to shop for insurance (because going to Google is too hard). To fund the semi-universal coverage, the income of anyone richer than wealthy would be taxed a few extra percent each year. Ironically, according to the Congressional Budget Office the public option panacea I've been reading about would actually have higher premiums than private insurers. Keeping it in the bill is nothing more than an ideological victory for hyper-liberals.

All is not lost, though. The incidental benefit to insuring some of the uninsured is that it would free emergency rooms from dealing with minor problems better suited to a G.P. Hospitals are notoriously expensive, and a level of triage for the uninsured would cut hospital expenses.

In short, the bill does little to address the largest contributors to high healthcare costs--doctors and hospitals--and instead shuffles some of the costs around in a way that appeases various interests with no concrete goal for the sake of claiming involvement in "healthcare reform."

The problem with progressive taxes

With job security running low, the recently unemployed are going to get struck with an irony. Despite the good intentions of progressive taxation--have the rich help out the poor--it's going to slap the middle class with a painful lesson at the worst possible time.

Basically, progressive taxation only works if people have stable incomes. Take two people, one makes $30,000 per year, one makes $60,000 every other year. At the end of every two years, the two will have the same net income, but former will have been taxed (Federal income tax) $8,165 while the latter was taxed $11,187 because he looked richer than he really is. Ordinarily, this isn't a problem--jobs are fairly stable and my example was contrived--but in a deep recession, people will find themselves with unemployment and juicy severance packages one year, but almost nothing the next, and they'll pay more taxes than they ever have at a time when they can afford it the least.

This isn't the first time wealth redistribution programs have backfired. As cutoffs for the Alternative Minimum Tax crept effectively lower, people not ordinarily considered rich started to be affected. At the end of the dot-com boom of the late '90's, many in the Silicon Valley middle class found themselves rich on paper. Through a few bad trades and a tumbling NASDAQ, some not only saw their money disappear, but a high tax bill because the money they never really had made them technically rich.

None of this happens with a flat tax. Every dollar made is taxed the same, regardless of when it was made or how many dollars came before it.

Pitching a startup

A friend sent me a link with five steps to selling a product Billy Mays style, but they seemed to apply to more than just infomercial wares; they were all great for pitching startups.

1. It must solve a problem.
2. It must have mass appeal.
3. It must be unique.
4. It must offer instant gratification.
5. It must be demonstrable.

When you pitch a startup, you're pitching both an investment and a product. If you can't quickly convince people of its value as both, you're on your own.