On the rise of China

Again via Disqus, another comment I made on Fred's blog last week, this one in response to a comment by serial entrepreneur, civil engineer, retired U.S. Army officer, and current CEO of a bulletin board company¹, JLM:

Interesting you mention James Kynge. I've blogged about his "China Continental" thesis a few times (Most recently, in the footnote to this post, where I also linked to an FT editorial that had a more bearish take on China's economy). I hope Kynge is right that China is transitioning to an economy fueled by internal demand; that would be good for average Chinese and the rest of the world too.

I have a tough time envisioning China becoming a global military hegemon, for a couple of reasons. The first reason that comes to mind is that the post-war status quo of U.S. Naval hegemony in the Pacific has been pretty good for China and its more advanced neighbors, economically speaking. Why mess with a good thing?

The second reason is that it's a lot easier to project power globally when you are surrounded by oceans on two sides and friendly neighbors to the North and South. China is cursed by geography by comparison. Consider some of its neighbors: Japan, which mopped the floor with China in WWII; Vietnam, which fought China to a standstill, if memory serves, a few decades ago; Russia; Mongolia -- sparsely populated, but a country whose ancestors conquered China and most of the rest of the world; India, the world's most populous democracy (and a country China has fought a war or two with in the past, when India was weaker); Pakistan; Afghanistan. Add to that mix separatist Tibetans in China's southwest and separatist Muslims in China's northeast. I suspect the submarine-building (China still spends a pittance on military procurement, compared to us) is more about keeping the steel mills humming.

A more likely scenario -- and a more ominous one -- if current trends (i.e., certain self-destructive American policies) hold isn't China replacing the U.S. as a global superpower, but the world having no such superpower.

¹One that had an Altman Z"-score in the distress zone, last time I checked. I mentioned this to JLM via e-mail, and he said he penned (keyed?) an in-depth response, but it was eaten up by the aether and I never received it.

On charitable donations for Haiti

It occurs to me that some of my better comments appear on other blogs. Via Disqus (which will be added to my new, much-delayed blogs), here is a comment I made on Fred Wilson's blog on the big outpouring of charitable donations in response to the earthquake in Haiti:

I am curious where all of this money will go. It seems like absolutely enormous amounts of money are being raised for Haiti right now (Whole Foods has its cashiers soliciting donations, for example).

Ideally, Doctors without Borders and other respected charities will get to keep some of these donations for future disasters. There is, in a sense, an inefficient market for charity, and organizations ought to be able to keep some of the surge money they raise for future contingencies (and be honest about that). I remember the controversy after 9/11 when the Red Cross planned to use some of the huge amount of money it raised to build blood banks (if memory serves), but public outcry forced them to spend it all on 9/11, even though government aid was already flooding in. I remember hearing about the challenges the Red Cross had in trying to donate all that money.

Haiti, as a perennial failed state, presents challenges of its own. Once the survivors have been pulled from the rubble, treated and fed; once the dead have been buried -- then what?

The editorial cartoon above, by Peter Brookes, is from the Times Online.

Happiness and social media success

Happy New Year, everyone. Since he-who-shall-remain-nameless still hasn't finished setting up the new Wordpress blogs (partly because, apparently, he is unfamiliar with Disqus, which Cheryl was able to set up on her own blog in a few minutes), I'll keep posting here for a little while longer. One of the nice things about Disqus, incidentally, is that it makes it easy to follow your favorite commenters as well as bloggers. For example, you can follow my comments on Disqus-powered blogs by clicking here: http://disqus.com/daveinhackensack/. The last few comments that come up at that link (in reverse chronological order) I made a little while ago in the comment thread of this post by Fred Wilson¹, The Happiness Project - A New Year's Resolution.

You can click on that link to Fred's blog post for the whole exchange, but I'll summarize and excerpt it here, as it relates to a topic I've blogged about before (e.g., here). After recommending Gretchen Rubin's book "The Happiness Project", Fred wrote about her use of social media to promote it,

I'd like to end with a few words on Gretchen's adoption of blogging and social media during her happiness project. In the second month of her twelve month program, she decides to start a blog. It becomes the Happiness Project blog. She figures out how to set up a TypePad account, she decides to blog six days a week religiously, and she starts using Facebook and Twitter. That's how I met Gretchen. Her husband, who is featured prominently in the book and who I've known for a dedade, emailed me last summer and said "my wife Gretchen is getting totally into this social media stuff and I wonder if you might give her some advice". We met for lunch and I gave her a bunch of advice, but was impressed at how much she had already figured out on her own.

[...]

So let's all buy her book , get a bit happier, and show that social media can put an author at the top of Amazon's bestseller list.

In response, I wrote (in part),

Social media success in this case would have something to do with having the access and support of prominent bloggers such as you and your wife. This reminds me of a discussion I had with Andy Swan in a comment thread on this blog a month ago, in your post about "The Fall and Rise of Media". Back then I noted,

There are still velvet ropes; it's just that top tier bloggers (including multimedia stars such as Breitbart or Godin) have their own velvet ropes now. The average person starting a blog today doesn't have much more voice than he did when his broadcasting options were limited to writing letters to the editor of newspapers, calling into talk radio, or going on public access TV.

Gretchen Rubin got past the velvet ropes of your blog (and signed on the Gotham Gal [Fred's wife, who blogs under that pseudonym] as a legitimate affiliate) in part apparently because you've known* her husband for ten years. Not exactly social media success ex nihilo.

*Edited as per Fred's correction.

Fred retorted that he wasn't exactly friends with Mr. Rubin; he had just known him for ten years. And that Gretchen Rubin's social media success would have happened without his help. Perhaps so, but then Cheryl shared some background with me on who Gretchen Rubin was. As I noted in Fred's comment thread,

BTW, Hackensack Gal informs me Gretchen Rubin appears on Slate (owned by social media start-up The Washington Post Co.), is a former prominent attorney (including a stint as Supreme Court clerk for Justice O'Connor), and daughter-in-law of former Goldman Sachs chief, former U.S. Treasury Secretary, and former Citigroup consigliere Robert Rubin. Again, there's nothing wrong with any of that, but it supports my initial impression that this wasn't an example of social media success ex nihilo

¹Fred's not just a user of Disqus but an investor in it, via his Union Square Ventures.

Business is business

This was a pleasant surprise. Fred Wilson's resident bouncer, conspiracy theorist, and occasional target of my disapproving comments Kid Mercury signs on as an affiliate of ShortScreen.com. Welcome aboard, Kid.

A Cat Post

Since I had the $20 digital camera with me on Saturday, and Cheryl hadn't seen her cats in couple of weeks, I snapped a few shots of them. Since a cat site is ranked among the top 800 websites in America according to Alexa, I figure it can't hurt to post the pics here.

The first two pics are of the blue gray male cat, Buster Catlett¹ Johnson. His pics didn't come out too well, partly because he wouldn't sit still and partly because I was using a $20 camera. This cat happens to be blind. Unlike some non-blind human actors who ham up their characters' blindness (e.g., the actor² who played Jody Foster's character's blind friend in Contact), it's not immediately obvious that Buster is blind. He "looks" at you if you address him, and he navigates pretty well, including walking up and down stairs. Apparently, he has memorized the layout of my mother's place. Oddly, there's not even a false step when he gets to the top or bottom of the stairs; it's almost as if he knows how many steps there were. Also, his eyes appear fairly healthy and normal (though if you look closely, you notice his pupils are a little dilated).

Incidentally, some woman recently got a book published about her blind cat, but her cat looks pretty dreadful (it was born with no eyes and had them sewn up). She also targeted her book to adults. I think a book about a blind cat would work better as a children's book. I just need to find an illustrator and some time and I'll be in business.






This photo is of the female cat, Buster's sister Polly. This came out better because she was at eye level on a cat condo, and perched up there, was less inclined to move around. She isn't blind. The only thing that she can do that Buster can't do in terms of moving around is that she can jump. Buster gets to the same places by climbing.



¹That middle name, "Catlett" is a new addition. I had Cheryl read this exchange from a comment thread on Fred Wilson's blog between me and a fellow who "would give an appendage on the left side" of his body to have ever met "George Catlett Marshall". I never knew that was George Marshall's middle name. Cheryl decided it would make a good middle name for a cat.

²William Fichtner, same actor who played Van Zant in Heat:

Neil McCauley: What am I doing? I'm talking to an empty telephone.

Van Zant: I don't understand.

Neil McCauley: 'Cause there is a dead man on the other end of this fuckin' line

From foursquare to FIVEsquare

In a recent post ("Blogging like it's 1999") we mentioned Fred Wilson's portfolio company Foursquare. One of Fred's regular commenters, entrepreneur and investor Andy Swan, also mentioned it on his blog. This was his take (Introducing FIVEsquare):

By now you’ve probably heard of foursquare, the mobile internet sensation that has everyone talking, and VC’s opening their checkbooks.

But just like 7 minute abs and 6 hour power crushed their competition, we are here today to bring an even more effective product to the world.

Introducing, FIVEsquare…. the “mobile meets local” web pi app of the future. It is to local-mobile-apps what dippin’ dots is to ice cream, if you catch my drift.

So how does FIVEsquare work?

Because FIVEsquare is common-sense based, it requires no download, no install and no login. There are several ways to make FIVEsquare work for you:

One to One communication: When you want to know where a friend is on FIVEsquare, you simply pull your phone out of your pocket and either dial their phone number (VOICEsquare), or send them a SMS message (TEXTsquare) with the following message “Hey, where are you?” Unlike foursquare, if you are leaving where you are at and going somewhere else, you can tell your friend where you are going, and what time you can meet there (PREDICTsquare)

One-to-Many Location notification: Let’s say you want to tell all of your friends where you’re at or where you’re going. With FIVEsquare, you simply send out a message on twitter (TWITsquare) something like this “I’m going to the saloon around 7:00 if anyone wants to meet up!”. Let FIVEsquare do the rest. Before you know it, individual friends will be meeting you places or using VOICEsquare to get more details and let you know where they are going!

Friend Nearby Alerts: FIVEsquare utilizes “visual recognition technology” to alert you whenever your friend is in the same location as you. To utilize this service (SEEsquare), simply put your phone into your pocket when you walk into a location, look around and see if there is anyone in there that you recognize. Another FIVEsquare miracle!

Badges and Titles: With FIVEsquare, you don’t have to go into a place a certain number of times or compete with others for rewards and titles. Simply decide (CLAIMsquare) what you want to be for this location (King, Mayor, Lord, Peasant, Dictator, etc) and claim it! Then, tell people that you are the ____ of _____ and they will give you just as much respect as anyone is getting on foursquare!

Locations: While foursquare only works in select cities, FIVEsquare already works world-wide. Any location, anytime. That’s our promise to you.

So…what are you waiting for? Whether you want to invite friends to join you somewhere via VOICEsquare, figure out where your friends are via SEEsquare, or increase your prestige via CLAIMsquare, you’re in business with our new startup. Get out there and start using FIVEsquare to improve your social life today!

p.s. To help spread the word about FIVEsquare, please use the #fivesquare tag and let your friends know that you connected to them via fivesquare. We’ll be running a beta-test in Louisville this evening.

Blogging like it's 1999

One of the reasons I like reading venture capitalist Fred Wilson's blog is that it reminds me of 1999. Remember when the economy was booming, unemployment was at ~4%, the stock market was hitting new highs, and Internet businesses were focused more on gaining users than generating revenues? That last part, at least, is still the case with some of the ventures Fred writes about, and it makes me a little nostalgic for the good old days. Here was Fred blogging about one of his portfolio companies, Foursquare yesterday:

I was having breakfast at Pastis with a friend today. The "mayor" of that restaurant, Mark Ghuneim, walks in and goes to the bar to order his morning coffee to go. I said to my friend, "watch this, he's going to pull out his phone and then look up and and try to locate me in this restaurant". My friend, who is not on foursquare, says to me "how do you know?" I said "trust me". Sure enough, Mark starts looking around the restaurant and spots us and comes over and has a ten minute conversation about web music stuff (and foursquare).

When I checked in this morning at Pastis, I added a shout that said "getting a demo of a hot new web music service". The CEO of Targetspot, Eyal Goldwerger, saw that on his phone and jumped in a subway to come down and see the demo too. Sadly, we had left by the time he got there.

But both anecdotes are examples of why foursquare has such potential. It seems like such a simple and whimsical service. You just checkin to places via your phone. But the data that it creates and the way it is published out to your social graph is powerful. I expect we'll see a lot more of this sort of thing as the user base on foursquare hits six figures and hopefully seven figures in the coming months.

A commenter of his named Greg responded:

I don't think Foursquare is going to grow. Fred, your position is unique -- you're a micro-celebrity, people want to see you because they want to grovel for your money. The average person, though, has only 10-20 friends, and random people aren't checking to see them at all hours of the day. Checking in, then, quickly becomes a lonely and pointless experience; the virtual badges get old fast, there are no great anecdotes of people visiting you, and the deals businesses offer for mayors are sparse and easily gamed.

Foursquare is a case-study in the tech industry hype-machine. Because it's useful for micro-celebrities, you have exactly those people hyping it up: MG Siegler, yourself, etc.

Greg makes a similar point to the one I speculated about in this post, Social Media: the new Public Access TV?.

Star

A comment on Fred Wilson's blog about Jim Carroll's recent passing reminded me of the Cult song that was featured on the film version of Carroll's The Basketball Diaries. I didn't know there was a video for the song, but here it is, via YouTube. The silver-clad model is supposed to evoke the Lady Liberty, I suppose, but she reminds me a little of the robot from Metropolis.

Hell's Kitchen isn't a DMZ

Last Friday, Cheryl and I went to see The Cult at Terminal 5, in Hell's Kitchen, and then went out for burgers afterwords at Five Napkin Burger, in the same neighborhood. Great show¹, great burger².

Twenty years ago The Cult mentioned this neighborhood in their song "New York City", describing it as "a DMZ", a "Disneyland trash can", and, "a crazy place". That was back in the pre-Giuliani days though. Hell's Kitchen is pretty gentrified these days.

¹Before the show, venture capitalist Fred Wilson mentioned in a comment thread that Terminal 5 was "too up and down", i.e., that it's got steep staircases. True, but not really an issue if you stay on one level, as we did. With a bar and bathrooms on that level, there wasn't any need to wander up and down.

²Coincidentally, when Binging for "Five Napkin Burger" while writing this, I found this post by Fred's wife, where she gave the place a thumbs up.

Social Media: The New Public Access TV?

This analogy came to mind earlier this week when reading a post on Fred Wilson's blog about Virginia Heffernan's article in the Sunday New York Times about users leaving Facebook, The Medium - Facebook Exodus. Wilson, a venture capitalist investor in social media (e.g., Twitter), disagreed with Heffernan's column, and noted that the number of subscribers to both Facebook and Twitter are still rising. In the comment thread of Fred's post, I wrote something along these lines:

I don't get the enthusiasm about Facebook or Twitter either. Is the drop off rate analogous to that of blogging? I.e., anyone can start, and lots of folks do, and the prospect of connecting and sharing your thoughts with countless people over the Internet is enticing. And then most people find out that no one is listening to them.

It seems that active (i.e., roughly daily) blogging is becoming mostly the province of a relative handful of professional bloggers or bloggers who (like Fred) see a value in blogging related to their business. Might the same be happening with Facebook and Twitter?

Public Access television, too, gave regular folks a chance to broadcast their content. For a small handful of them, it led to bigger and better things (I can only think of two, both one, which happens to be food-related, off the top of my head -- Rachel Ray² and Isa Chandra Moskowitz¹, of the Post Punk Kitchen -- but I wouldn't be surprised if there are a few others). But for everyone else, the deafening silence mocking them from the aether caused them to drop off.

I'm reading a book now (The Social Network Business Plan) by an angel investor in social media named David Silver, who has a take on this that seems to be orthogonal to those of Wilson and Heffernan. Silver is enthusiastic about social media, but not about general purpose sites such as Facebook and Twitter. He writes,

You can forget about the sustainability of MySpace, Facebook, and other general-purpose online social networks. They aren't sustainable businesses. Their business model, based on advertising, is not demonstrably economically justifiable. Very few of their members look at the ads, and billions of dollars are being wasted trying to reach them. These social networks will continue to attract younger people who, ironically, lack spending power.

Silver's thesis, in a nutshell, is that the real revenue opportunities are in communities geared toward a particular product, service, or interest. E.g., a community that rates airlines on service, reliability, cleanliness of their planes, etc. Airlines might pay for access to anonymized conversations from this forum, to use as a means of quality control.

¹I don't know if Rachel Ray's public access shows are available online, but ICM's are. Here is the first episode of her Brooklyn-based public access show with her pal Terry Romero (HT: Cheryl). ICM has since moved out to Portland, OR, where she has become something of a local celeb there, appearing on the local morning show. She's also published a few vegan cookbooks.



²My crack research staff informs me that Rachel Ray's first shows were on a local TV station, not public access.

Three Books for Entrepreneurs

From venture capitalist Fred Wilson's blog:

Books For Entrepreneurs

Last week an entrepreneur named Stephen who reads this blog regularly asked me for recommendations that budding entrepreneurs should read. I gave him a list and then forwarded it to my friends Brad Feld and Jerry Colonna who I knew would appreciate the list.

That led to this post by Brad where he lists his top three book suggestions for entrepreneurs. Go read that post. It's great.

As I was reading Brad's post, I realized that I should have shared my list with everyone, not just Stephen.

So here it is:

Kavalier and Clay

Atlas Shrugged


The Prince (Machiavelli)

any and all of shakespeare's tragedies and histories

Brad's suggestion of Zen and the Art of Motorcyle Maintenance is a great one and I'll include that in the future when asked this question.

The point of this list is that there is way more insight to be gained from stories than from business books. And these are some amazing stories.

I was surprised to see Michael Chabon's novel The Amazing Adventures of Kavalier and Clay recommended in this context, but I thought it was an impressive novel. About two thirds of the way through, Chabon throws in a brilliant twist that sends the narrative in an unexpected, and ultimately quite moving, direction for the next forty pages or so. Worth reading.

News from Alloy Steel

The company (OTC BB: AYSI.OB) filed this 8-K earlier today:

Mill Commissioning

The company advises that the new ARCOPLATE manufacturing plant specifically designed to produce extra thick (up to 20/11mm) and super alloy wear plate has been commissioned and has commenced production.

The new mill is the only one in the world capable of producing a bi-metallic fused super alloy wear plate in a thickness of application of up to 20 mm (just over ¾ of an inch) in a single continuous casting operation.

The conventional method used to produce a hard surface overlay is by a welding method which can only achieve a weld surface which at best is ¼ inch or 6mm thick in a single pass and is flawed with major quality technical limitations.

The new AYSI new technology has overcome all the known technical difficulties and is capable of fusing 20mm or super wear resistant alloy onto a ½ inch or 12mm steel backing plate.

This is a significant technological breakthrough which should see this plate be specified consistently in new mining projects and become the norm for replacements in upgrades for existing mining operations.

Mr. G Kostecki C. E. O. of the company is very encouraged with the strong interest being shown by all the major producers who have seen the test samples and the technical reports and predicts a large future demand for the product.

Mr. Kostecki was responsible for the technical innovation and development of the new process and alloy formulation.

These reports have been carried out by independent laboratories.

Whether any of the demand predicted above will be apparent in the 10-Q Alloy Steel is going to file next week remains to be seen, but this is good news. More generally, the surge in Chinese steel production and the recovery of iron ore prices has been good news for Alloy Steel's mining company customers (how sustainable Chinese demand will be remains to be seen).

I picked up a few more shares of Alloy Steel at .325 on Tuesday, when the stock dipped about 20% on no news. Still keeping most of my powder dry for investing in another asset class though.

Incidentally, a couple of weeks ago, I mentioned Alloy Steel in a comment thread on Fred Wilson's blog, in response to a comment by Mark Cuban about how he'd be more interested in investing in a Rearden Steel¹ than the next social media start-up. That was a brain cramp on my part: Even if Cuban could buy all of Alloy Steel, it wouldn't be a big enough investment to be worth his time. Plus, Cuban (wisely) likes to invest where he has an information advantage², so unless he has connections in the wear plate or mining industries, he probably wouldn't seriously consider investing in this sort of company.

¹An allusion to Hank Readen's company in Atlas Shrugged.

²Writer, entrepreneur, and angel investor Tim Ferriss seconded Cuban's point in a post last fall. Ferriss wrote that he feels more comfortable investing in tech companies where he has some inside knowledge and connections than swimming with the sharks in the stock market.