Ready, Fire, Aim! - Mihail's Public Blog

Wednesday, August 28, 2002

The most successful home entertainment device in history

The New York Times on the rise of the DVD....

"It is the most successful home entertainment device in history," said Warren Lieberfarb, president of Warner Home Video. "In five years, it has gone from zero to 30 million households, and a quarter of those have more than one DVD player. Nothing else has come close to doing that in such a short time, not CD's, not VCR's, not personal computers, not even television itself."

...In 2001, $10.3 billion was spent in the United States to buy copies of films for home use, of which $5.4 billion, or 52 percent, went for DVD's. Adams Media Research estimates that in 2002, $12.4 billion will be spent, with $8.1 billion, or 65 percent, going for DVD's.

"The initial release of the motion picture in movie theaters is becoming, to a large extent, little more than a preview trailer for the subsequent purchase of the DVD," said Martin W. Greenwald, president of Image Entertainment, which produces dozens of pop-music and DVD titles for the retail market.

To Some, You're Simply a Zero...

$5,000 for a five-zero cellphone number? Yikes! Sounds awfully like the dotcom days when cool domain names were in great demand. If I remember correctly was bought for over a million! I paid only $25 for my Verizon three-zero number 3 years back.

I should hold on to mine since prices should go up even further when the cellphone companies allow us to switch providers while keeping the same number.

...among the 32-year-old Mr. Zampolli's most prized possessions is a growing collection of zeros, and not the kind having to do with any bank account. Like many people caught up in the status symbols of the digital age, Mr. Zampolli is obsessed with his cellphone numbers. Each of them -- 12 altogether -- ends neatly in two or three zeros. "I only want good numbers," says Mr. Zampolli, who hails from Milan. "What can I say? I'm addicted."

Telephone numbers ending in "00" or "000" used to be the province of businesses, or of the rich and famous. Companies and individuals alike would compete for them because of the obviously limited supply in any given area code. Many paid dearly to acquire and keep them.

...Some, like Scott Painter, have gone to great lengths to get exactly what they want. A "numbers freak," as he calls himself, the budding Santa Monica, Calif., custom-car maker was fed up with the random digits that fate had dealt him. So one day he dialed the cell number of his dreams -- one containing a total of five zeros -- and was thrilled to hear a voice at the other end.

"A guy picked up, and I just offered him money," says Mr. Painter. "He thought I was kidding, but we agreed on a price. I drove to his office before he could change his mind and paid him in cash." A few hours and $5,000 later, the number was formally transferred to Mr. Painter's name.

A Reuters story published today in the New York Times gives details of why cellphone companies are against the change that will let consumers keep their numbers (scheduled for November 2003):

,,,about 46 percent of U.S. mobile customers would switch to a rival operator in the year after the Federal Communications Commission rule takes effect. That compares to an estimated mobile customer turnover rate of 30 percent for 2002, the researcher said.

Monday, August 26, 2002

Does Amazon make money on each order?

Is Amazon still making money on each order it processes with this second cut in the threshold for free shipping? Getting awfully close to sounding like a dotcom that increases its revenues but loses more money each time it sells something. However, free shipping is definitely an incentive for me since shipping costs seem to be the biggest barrier when I think about buying books online.

"With's 30% off books over $15 and now Free Super Saver Shipping on orders over $25, there may be reasons to shop in the physical world, but price is not one of them," Jeff Bezos, Amazon's founder and chief executive, said in a prepared statement.

...The Internet retailer has used aggressive price-cutting to boost sales and chip away at its quarterly losses. In the second quarter, price cuts and shipping discounts boosted book unit sales 20%, Amazon said in July, when it reported a 21% jump in revenue to $806 million from the year-earlier quarter.

Venti Internet Strategy at Starbucks

A Venti Internet Strategy at Starbucks that makes sense. Always has since it started rolling out WiFi in major cities like SF and NY. I was one of the first subscribers to MobileStar using the WiFi networks in Starbucks locations across the city -- from the Fillmore Street one in Pacific Heights to the one next to Safeway on Market Street -- before Starbucks employees even knew they had it.

Although Schultz was responsible for Starbucks' disastrous foray into dotcoms, he's back now as Chief Global Strategist announcing a new initiative to wire 2000 cafes by year end (in collaboration with HP/Compaq and T-Mobile that acquired MobileStar).

What does Starbucks get? Well, street cred, for one -- it's kind of cool, if you're a Net-obsessed coffee seller, to think that your green-and-white emblem could be the de facto dominant entry in the vocabulary of "warchalking" -- markings left by wireless-access fans for their fellows to indicate the location of "hot spots," a la the pictorial language of hobos.

And this is one strategy centered on selling coffee -- a pretty important part of Starbucks's business that analysts worried the company had somehow forgotten about two years ago. The company thinks offering wireless access could bring in revenue by attracting more paying customers outside of the morning hours in which Starbucks does the bulk of its business. Even Mr. Schultz is saying the right things, noting that "this service is a natural extension of the Starbucks coffeehouse experience, which has always been about making connections with the people and information that are important to us over a cup of coffee."

However, the one problem MobileStar had was that it was having to install very expensive T-1 lines in each cafe rather than the chaper and more easily had DSL connections that smaller WISPs like Surf and Sip use. Rafe Needleman this morning was concerned about such WISP's future in Bye-Bye Wi-Fi Small Fry but I'm not sure that's the case. Of course, there will probably be some significant consolidation, a fact that is probably not lost on Surf and Sip's Rick Ehrlinspiel.

Saturday, August 24, 2002

But is it art?

The quilts are coming. To a museum near you. This trend is picking up momentum maybe coincidentally just as museum budgets are beginning to get slashed: It's High Season for Blankets, But Patrons Ask: Is It Art? The fact is that it is much cheaper to mount and transport an exhibit of quilts than Abstract Expressionists. That combined with the fact that these exhibits are more accessible to a whole new (large) audience makes for a pretty compelling business case. And museums are businesses after all -- not for profit businesses.

But here's a question: Is it art? Curators and auctioneers are quick to point out that this is legitimate stuff, with its own masterworks and history. Plus, they say, quilts are great for attendance, pulling in a lot of people who wouldn't otherwise set foot in a museum. But many everyday museum-goers say they're surprised to see the usual fare replaced by beaux-arts blankies: This stuff's not art, they say -- it's crafts.

...After all, adherents argue, if mosaics and collages are art, why not quilts? "They're highly refined objects that often address important historical themes," says Nancy Druckman, director of Sotheby's folk-art department. Also, the nation has 20 million quilters -- a hefty, built-in audience for any one of these displays.

...Still, some visitors hoping for Brancusi are disappointed to find batting. Dallas teacher Michelle Woodall was thinking about hitting the Houston museum as part of her junior high class's upcoming field trip to the Johnson Space Center. But when she saw the fall exhibition schedule, she nixed the plan. "Quilts that keep you warm, in an art museum?" she says. "I'd lose all my credibility."

Why can't art be practical? The kilims I started acquiring (not for hanging on my walls but to cover my hardwood floors in my Alamo Square apartment) are just as close to art (and as beautiful) as my favorite Rothko at the SFMOMA.

Subscriptions the only way

Even though I'd made a note to myself on Outlook about when my films were due back at Blockbuster, I was one day late in returning them. I'd suspected that would happen. And it did. The worst part was the fact that I didn't even have the time this week to watch either of the two films. So even though Blockbuster's increased the number of days for which you get to keep the rentals, it still doesn't work for me.

Is that true for most people? Netflix at 700,000 strong and growing rapidly (in January the SF Chronicle reported they had 500,000 subscribers) seems to suggest a strong yes:

[The founder of Netflix] Hastings paid a $40 late fee to Blockbuster for a copy of "Apollo 13" that he had forgotten to return.

"It was my fault. I had the movie out for a month, but it really started me thinking about how aggravating late fees were," he said. "It made me not want to rent any more movies."

Netflix, though, started with the traditional rental model, with customers paying for a limited period and subject to late fees because "we were afraid the $20 a month subscription was too radical for consumers," he said. "That turned out to be an error in judgment."

Netflix switched to the subscription plan two years ago.

So are subscriptions the way to go for everything or almost everything? So that we pay a fixed price for unlimited use. Like email or cable TV. Hmmm, maybe they are.

My internet access is a subscription. As is my Wall Street Journal online. As was my Surf and Sip wireless broadband connection around the city. As is my daily hard disk backup from Connected. As is my Verizon "I can't hear you now" cellphone and my AT&T digital cable. As are all my magazines (in fact I rarely ever pick anything up on the newstand).

My latest subscription? $2.99 per month for the Blogging Network. A steal (if I may say so myself).


Thursday, August 22, 2002

The Egalitarian Web

Overture is "embracing the enemy -- by pitching its paid-listings service on Google, its archrival." Overture's service works this way. When anyone types in "computer" into a search engine powered by Overture, Dell Computer shows up first according to the Wall Street Journal story [via Silicon Alley Reporter Daily]. Of course, the big difference between Overture and Google is that Google makes it clear which listings are sponsored and not results of the actual search.

According to the Overture Web site, Dell pays 64 cents to Overture every time someone clicks on Dell's listing on the results page. Dell's link is above Gateway Inc.'s link -- as Gateway pays 63 cents every time someone clicks on its ad.

A Google spokesperson is quoted as saying:

"Yes, we are aware that Overture runs ads on Google's site promoting its products and services," he said. "We don't see a conflict with this particular campaign."

Wednesday, August 21, 2002

SFPD dead last in solving violent crime

The SFPD is dead last in solving violent crime according to a chart in today's San Francisco Chronicle. What kind of a city are we living (OK, dying) in? :)

This is a city that has its business owners using billboards to convey their displeasure with the state of the city -- homeslessness, filth and now an inept police department?


Davos in NYC

As I was reading some other articles on Salon, I came across this one about the World Economic Forum meeting held in NYC this past February. Usually attendees are a who's who of politics and capitalism brought together to address various global issues. This year for the first time were included:

forty "social entrepreneurs," individuals who have chosen to apply themselves not to increasing their personal wealth but to alleviating social problems -- AIDS in Africa, orphans in India -- that have traditionally been left to woollier, not-for-profit types. Social entrepreneurialism is in vogue right now: if you are in business school, this is what you want to do, just as three years ago you wanted to start a dot-com.

Hmm. I just hope that in the end these noprofits don't end up anywhere close to the dotcoms.

I didn't know that the World Economic Forum was founded in 1971 by Klaus Schwab as a regional European conference that is now a nonprofit funded by 1,000 of the most prominent corporations in the world.

Deja vu

Stopped by for a Deloitte-sponsored conference this morning on "Building Successful Early-Stage Companies". This was my first such event in over a year since the dotcom implosion and I'm so glad. Do organizers and/or panelists really believe that they can tell entrepreneurs how to be successful?

I got to the Sofitel Hotel across from Oracle, three hours after it started and an hour before it was to end. As I entered the packed, very large conference room, one panelist was using her spot -- on the panel about CEOs and Boards or something -- to promote her startup. I walked out.

Before I could leave I ran into several old faces from my previous lives in the lobby. Azhar Khan who founded Cubus that was acquired by Bidcom that was acquired by Citadon. Hmm, did I get that all correct? Ravi Chirovulu who seems to be one of those rare VCs who'll tell an entrepreneur like it is rather than keeping him/her hanging. Chris Gulker who was our incredible wise and supportive friend at Apple and is now at Ventanis. Shankar Hemmady who regaled us with stories about bozo dotcom CEOs who will never get a job in the Valley again. And, yes, he named names!

Precedent for highrises

The Aaron Betsky proposal isn't so out of the ordinary for San Francisco. The SF Chronicle just had an article yesterday about Park Merced which houses some 7,000 people (or 1% of San Francisco's population). of the biggest apartment developments west of the Mississippi, complete with 11 13-story towers and 1,800 townhouses spread across 144 acres just south of San Francisco State University. Built by Metropolitan Life Insurance in the late 40s, the development was one of several large-scale communities aimed at creating starter homes for returning World War II veterans

I had no idea Park Merced even existed. So we have a precedent. The fact is, if we're going to make San Francisco attractive to nonprofits and technology startups, housing costs must be brought under control.

Highrises around Golden Gate Park?

A friend Joe Gillach was talking about an Aaron Betsky proposal -- probably when he was curator of architecture at the SFMOMA -- to ring Golden Gate Park with highrises. What a spectacular idea a la Central Park. It would definitely solve the obscene housing shortage and bring rents down to a reasonable level. $1400 for a nice, large studio is not reasonable in this economy!

The houses the saved the world

I started going to open houses a few weekends ago. In San Francisco it is almost a masochistic sport to check out (and marvel) at real estate prices. When you're surrounded by water on many sides there's a limited inventory. That, and local politics, which seem to be totally anti-development and anti-homeownership, and you have a bubble. OK, most people don't call it that but it sure feels artificial and I was delighted to find the Economist cover story on why:

In this economic recovery, however, homes have done much more than shelter people from wind and rain. They have helped to shelter the whole world economy from deep recession.

...House prices cannot continue rising at their current pace [9% this past year!]. A sudden reversal in prices would harm the recovery, but the news on that is good: a sudden reversal is unlikely unless interest rates were to rise sharply. With little evidence of increasing inflationary pressures, rates are likely to be raised slowly. If so, prices are more likely to flatten off rather than collapse. But to maintain the current pace of growth in spending, consumers will need to pile up ever bigger debts. If mortgages remain cheap in relation to income, consumers will be tempted to maintain their borrowing. But homebuyers may be underestimating the true cost of doing so. Interest rates are low only because inflation is low; real interest costs remain quite high. Initial mortgage payments are lower, but borrowers can no longer rely on inflation to erode future payments. This burden of debt could therefore squeeze future consumer spending. That need not tip America back into recession, but it does suggest a weaker recovery over the next couple of years than many expect. Mortgage refinancing has allowed consumers to maintain their spending despite rising unemployment. But such spending has literally been borrowed from the future.

The lesson which consumers—and also many over-sanguine economists—have to learn is that spending cannot outpace income for ever. House prices have saved America and the world from a deep downturn, but they do not remove the need for consumers to take care over their balance sheets. Homes are only as sound as their foundations.

Tuesday, August 20, 2002

Feel Like Staying on the Couch?

Wall Street Journal on the DVDs by mail trend that's catching everyone's attention (including Blockbuster) now that Netflix has not only survived but managed to go public and doing well. I was using them last year but canceled because the cost of my AT&T digital cable service plus my Netflix subscription seemed too high (mostly thanks to AT&T's high costs).

Netflix, one of the largest providers, claims nearly 700,000 dues-paying members and says it plans to add 20% more by year end. Rival DVD Avenue is growing so fast, "we literally have had to run to Wal-Mart to buy DVDs," its president said.

But then I rented Gosford Park and the Royal Tenenbaums (one of the best movies I've seen in a theater this year!) and it cost me $8 or $9 to rent them from Blockbuster. Ugh. And that's before I pay late fees on them since I invariably forget to return them on time. A few bucks more and I could be Netflixing.

Monday, August 19, 2002

Venture funding plummets

Rafe pointed to a article I'd missed, from July 30, 2002:

A mere $5.7 billion was handed out to start-up companies in the second quarter of this year, the lowest amount since 1998, according to a new survey.

And Red Herring stalwart Julie Landry wrote:

As capital has become more scarce, access to it has increased in 2001, only $37 billion in venture capital was raised, and the IPO market netted just $3.2 billion, according to Thomson Financial, a research firm. By contrast, in 1999 and 2000, startups raised $156 billion in venture capital--more than the total of the prior ten years--and $39 billion through IPOs.

What's Next

He's back! Rafe Needleman's What's Next hit my email box today. It was wonderful not only because Rafe's got a new publication supporting him but also because he mentioned Chris Gulker, an old friend from Apple who I'd lost touch with, and his new company Ventanis that makes the financials of venture-funded companies transparent to their backers. I tracked down Chris' phone number and caught up with him sounding very enthusiastic and excited about Ventanis' prospects.

I'll miss the name Catch of the Day and pitching Rafe at Red Herring during the dotcom days when he referred to me in his column on Electrifier as a "bright, likeable fellow"...Heck, yes! :)

Sunday, August 18, 2002

Newsweek on blogs

Newsweek article on Living in the Blog-osphere. [via]

Party goes on

It was a late night last night. At the spur of the moment on Friday I started calling a few friends about going out for dinner to the Mission -- to the best Pakistani restaurant in San Francisco named Pakwan.

The Mission was quite possibly ground zero for dotcom partying and dining in the city. People headed there since it was the "edgy" neighborhood in town that initially housed only local taquerias. Soon hip and trendy bars and restaurants opened, parking became next to non-existent with lines of cars parked along the center of Valencia St (it was mildly amusing to watch the DP&T descend with hordes of tow trucks...and the line of cars would be gone).

I don't make it down there as often any more. Which is why I was surprised at how happening the neighborhood still is. Pakwan was packed. A bar I'd never been to called Skylark was packed. The streets were busy. So much for the dotcom implosion and the high rate of unemployment in this city. Doesn't stop people from drinking!

Saturday, August 17, 2002

Rich get richer, poor get poorer?

The Rich Get Rich and Poor Get Poorer. Or Do They? New York Times on the facts behind the economic inequality in the world today.

In 1970, global income distribution peaked at about $1,000 in today's dollars, a common measure of poverty ($2 a day in 1985 dollars). In 1998, by contrast, the largest number of people earned about $8,000 — a standard of living equivalent to Portugal's.

"That's what I call a new world middle class," says Professor Sala-i-Martin. It is mostly made up of the top 40 percent of Chinese and Indians, and the effect of their economic rise is big.

[But] Fully 95 percent of the world's "one-dollar poor" live in Africa, and in many countries they make up the vast majority of the population. That poverty, not the rising wealth of Asian countries, is the global economy's real problem.

San Francisco Plan C

Been very curious this past year about the growth of this city and the development of its architecture. It's such an amazing city but also such a disaster. Homelessness, urban blight, expensive housing, and barely any vision from the politicians.

We used to have our office at 580 California Street -- the building designed by the Pritzker-winning Philip Johnson that is rumored to be only half as tall as he'd designed it according to a friend. Supposedly since it is so hard to get things approved in this city. Thus, the 12 blank statues on the roof are meant to be a snide commentary on the SF Board of Supervisors. Must get the real story on this from one of the new San Francisco books I just picked up at William Stout.

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