Local Food 365 presentation

Carlton Jackson and part of the Local Food 365 team explain why they believe in the idea of local food and how they plan to bring urban farming to Cleveland and Northeast Ohio with their startup.
A presentation from Cleveland Startup Weekend 2009.
recorded by Daniel J. McKeown / pacificpelican.us

link to video

The long-predicted housing disaster unfolds

This article in the Telegraph about the credit crunch that began last year (and has begun to engulf major investment banks and the U.S. Treasury) makes a note of the loss of confidence in Fannie Mae and Freddie Mac. For those of us who have been following this housing market bubble with the kind of acid skepticism that it deserves, finding out that we were right in believing that housing couldn’t out-pace income indefinitely can only bring so much clarity about what’s next for the markets–none of it, probably, any good.

With that in mind, here is what I wrote about Fannie Mae and Freddie Mac [.doc file] in a grad school paper in 2004. I had to frame the issue in the terms of the business ethics course I was writing it for, but for what it’s worth I was quite in a hurry then to pour cold water on these badly designed market inflation machines.

Like most scams, this housing credit disaster has unwound only when the market dipped. It should have been a sign that the end of the bubble was near when a Bear Stearns hedge fund collapsed in June 2007–clearly foreshadowing the near-collapse and pending sellout to JP Morgan Chase for considerably less than the firm’s recent market capitalization that has developed this month. What is Bear Sterns at this point, anyway, but an enormous ill-managed hedge fund itself?

The fact that the Federal Reserve is involved in trying to help bail out Stearns is another embarrassment to and encroachment upon America’s supposedly free markets. Why are those companies not on Wall Street expected to bear the brunt of their mistakes while those on Wall Street and in Greenwich, who have created a risk-management disaster, are to be bailed out? Maybe if there had been some semblance of regulation on hedge funds and other areas of the finanical sector, none of this would have happened–but that wasn’t encouraged in any substantive way by partisan hack charlatan Alan Greenspan, or his already low-rated successor.

When you hear people say, ‘this might be a good time to buy a house, now that the market is down,’ I’d let them know that there’s no hurry. The credit crunch that began in 2007 is likely to continue for a while.

Webshots sold to American Greetings for $45 million

Webshots, a photo sharing site that I’ve mentioned in posts before, including one earlier today, has been sold by CNET for $45 million to Ohio-based American Greetings.

The Webshots site has a large user base, a popular site blog, and an enormous archive of photos.

Lots of gifts can already be ordered from the site using the images, such as e-cards, so this acquisition seems like a natural move for American Greetings, who are probably best known for their paper greeting cards.

Techcrunch misunderstands basic finance

As few exciting new startups emerge in the web 2.0 landscape, the flaws of a blog like Michael Arrington’s Techcrunch become more and more apparent.

Toward that issue, yesterday Dave Winer wrote:

‘Nelson Minar says he likes TechCrunch, but they’re not journalists so be careful what you say to a TC reporter at a party.’

That’s fine, but I’ll go one further–I don’t like Techcrunch, and furthermore, it’s a reminder that attending one of those insular web 2.0 bashes brings with it the constant danger of some moron coming up to you and talking business. How unrefined.

But my real problem is that their writers are often stupid, the staffers more so than Arrington. Duncan Riley sounds on the blog like a combative idiot and Nick Gonzalez’s work makes me think he’s a lousy writer. It’s too much work to recount all of their dimwitted mistakes of reasoning and logic, and their shameless hype of Microsoft products.

But unfortunately the site’s new writer, a refugee from a collapsed business magazine, is really going to fit in.

For example, today we have this moronic line of thought from Eric Schonfeld, who was writing about CNET:

‘If a stock buyback manages to jack up the market cap, a takeover could be averted.’

I’m not sure how stupid the market is, but here’s my guess–less so than Schonfeld thinks. Spending cash from the corporate treasury to buy up shares should, if proportions hold through the market’s reaction, jack up the price of the shares a bit. But the putting aside of the purchased shares into the company’s treasury stock will lead to reduced number of publicly available shares.

Market cap is, after all, price times number of shares.

Apparently Mr Schonfeld could be gamed this way; but I think the market is rather too smart for that.

In fact, the economic (though not the accounting) effect from stock buybacks is actually closest to the economic effect of issuing dividends. (I had to argue this one out with an accounting professor, but think it through–stock buybacks are the preferred method of dividend-type transactions [i.e. returning capital to investors] for some large traders because the money will be automatically reinvested in the same company instead of run through capital gains because of dividend payments.)

Yes, CNET is trading at what seems like a low total valuation of a little more than a billion, and it could become a target for corporate takeover or private equity. And if Facebook is really worth $15 billion like Microsoft seems to believe, then couldn’t a company with a suite of popular niche sites including Gamespot, Webshots, and Chow.com be worth more than a tenth of that?

But that’s an assumption I’m not ready to make. For now, we’ll have to wait for the news–preferably from a reputable source.

update 11:26 p.m. PT: The announcement is that Webshots is being sold for $45 million. No buybacks have been announced, and the minutia of stock buyback accounting is really peripheral to my denunciation of Techcrunch’s shoddy argument that some (hypothetical) balance sheet maneuvering (that Techcrunch was speculating about but was not subsequently announced) will change the underlying takeover value perceived of CNET. In fact, at its size, CNET.com has long seemed to me to be a very possible target for a larger internet brand–and now that Webshots is being sold to American Greetings, CNET has no Flickr competitor but it does have some targeted sites and a San Francisco location, two things a Yahoo looking to rejuvenate itself might be drawn to.

Blame the accountants!! Even in scandal, Dell peddles "world-class" PR

Maybe it’s hard to spin the financial fraud and subsequent need to restate results over the last few years that Dell has faced due to an internal audit spurred by an SEC investigation, but Don Carty has to try a little harder than this:

‘”All of us are very proud of Dell. We believe we’re a world-class company, and we’re not terribly proud that we found one element of our company that wasn’t world class,” Carty said. “None of us at Dell like this.”‘

How much of the business is your accounting department? Those fraudulent results were reviewed by banks, investors and insurance companies and affected the perception that Dell was the clear leader in personal computers.

That’s not world class.

Now they lag HP, and as I thought might happen a major financial scandal has enveloped Dell–a major one anyway in seriousness if not with the kind of numbers that will threaten the company’s immediate solvency.

So sure. Claim it’s not really a big deal, and look for a scapegoat. Don’t blame the hard-charging corporate culture led by Mr. Dell and the “made-to-order” cult that the company had succeeded in getting into the business school texts. Don’t blame a mediocre product in an ultra-competitive market for Windows machines. Don’t blame the chronic unrealistic expectations of continued 15% growth for all tech companies on the stock market.

No. Blame the accountants. Without Michael Dell even sitting in on the conference call. That’ll work.

Except there’s one problem:

Carty is Dell’s chief financial office (CFO). The “one element of our company that wasn’t world-class,” according to him, was the one his position oversees.

They are still good at PR down there in Austin, even if they can’t pull down the growth numbers they’re supposed to anymore. They managed to spin business school professors and Tom Friedman, so why won’t they manage to spin their way out of this?

They’ll probably find a way. But I don’t know–here’s what MarketWatch says:

‘However, the company may not be out of the woods in the eyes of the Securities and Exchange Commission. Dell warned that despite the conclusion of the company’s internal review, “the SEC’s investigation is ongoing, and there can be no assurance that there will not be additional issues or matters arising from that investigation.”‘

The lonely madness of the Twitter user


New competitors like Yappd (which so far really isn’t much to speak of at all, by the way) and Pownce are moving fast on Twitter’s market.

After getting a new round of funding in the last month, however, Twitter has started going down again in the last day or two. Sometimes it will work through an app but not through the front page, sometimes nothing loads, it’s all very unpredictable. I am not very pleased about this, as I had started using the service again more.

For now, I’m this close to stopping. But I like Twitter–the bird logos are great for any aviary enthusiast such as myself and the name and constant short sharing of random thoughts, sometimes with people you know and often with others–these are custom designed for someone with my personality.

It could be said that Twitter is a time waster, but that’s not too serious a concern for anyone who could throw off 140 words of the top of his head easily and is using the 140 character text entry field that Twitter allows. It’s very convenient to post to Twitter, and messages have to be short, so normally all I would do would be just pop open a chat window in Gmail or open a widget in Netvibes, type in my quip, and go back to reading my email or checking my feeds.

Once the site stops working, though, the time wasting factor kicks in with a vengeance. I’m checking my profile page to see if it has my latest update. I’m wondering if my hordes of Gmail filters are failing to properly direct tweets from friends when the tweets just aren’t coming in by IM. I log into Facebook to see if tweets are being added to my mini-feed. I go to my web page and it loads slowly as the Twitter updates widget chokes.

None of this should really matter, but for a Twitter addict this can seem a maddening process. The economy of the Twitter message length–the text-messaging-friendly 140 character limit–also imbues those short messages with their own elevated importance in the fevered mind of the Twitter user.

I’ve been using Pownce and Jaiku a bit, and I like them fine, but instead of looking for a real replacement for Twitter I should reach back to my old posts and bring back the idea of being a Qwittr.

Pownce has some really nice features, but what it needs right away is a first-party blog widget and Facebook app, and customized home pages. (Maybe for the pro package at least? Might interest a lot more people.)

It doesn’t seem like many people use Jaiku as their main updates service anymore but it is able to accept RSS feeds from the user’s other sites and that feature seems to have become the key part of Jaiku’s formula–many people, for example, send their Twitter feed to Jaiku so people following them on either get the message, but on the Jaiku feed you might also see the user’s recent Last.fm listens and del.icio.us bookmarks or blog entries. The ongoing stream of the user’s content works much the way a tumbleblog does in practice for many–and an additional feature on Jaiku is the ability to comment and follow others.

Yappd I cannot say very good things about. I just heard about it and decided to try it, and have just found that it does not allow perma-links for individual notes. This is not a good feature, and its lack of widgets and overall Twitter-copy feel did not seem to cover much new territory. Maybe it will add some new features and take off but for now it’s definitely back in the pack.

Yappd doesn’t even allow their vaunted add-a-picture feature for web-based updates, only via email or SMS. Overall it doesn’t seem like a fully developed offering. The pictures are supposed to be their big differentiator, but then recently people like Dave Winer have started using Twitter as a “coral reef” for Flickr photos anyway, so not much at all makes Yappd stand out at the end of the day now. I’ve been looking at some of the debate about whether the market spewing out such lackluster lookalikes is a sign of a financial bubble in the web 2.0 space, and I personally still think it is.

But the latest tulip over-valuation has to come some time, cyclically speaking. The new social and economic phenomenon symbolized by Twitter, however, is generating much discussion on the future of media and telecommunications and gaining broader notice.

My take on all the talk about how shortening the message to 140 characters makes one concise is a very skeptical one, however. People who congratulate themselves for all their great writing just become more appreciative of each of their own words. Yes, in some ways Twitter seems to symbolize the isolation and narcissism that gnaws at the guts of so many titans of tech culture and their copious followers and wannabes.  And it symbolizes a backlash against blogging, yes, the same way tumbleblogging does–for many seem to be relieved of the pressure of producing so many words or managing that sidebar.  And it can symbolize the lonely challenge of the pioneer–many tech early adopters have jumped on Twitter but haven’t yet had many of their friends join in.

Those are all fascinating angles, but I think what Twitter symbolizes is the re-learning of basic PC tasks going on with the techie set because of the popularity of mobile devices from iPhones to Blackberries, Treos and other cell phones to PSPs. Twitter scales blogging back ten years, just as most of those devices take the user interface back about that long.

Why web 2.0 is a bubble, and why the deflation will be gradual

I think I went a bit too hard on Mahalo in my earlier post. Not that I take back anything I said–I can’t make any sense out of their business plan.

I’ll take a wait-and-see approach though. And if I think that taking on Google sounds grotesquely grandiose, I think the “human-powered search” idea might still carve out a profitable niche.

And singling out Mahalo doesn’t really get to the point exactly. A lot of the trendy new companies have no visible business plan. So many web 2.0 startups are flooding into the market, and though the bubble will probably get as big as the bubble 1.0 eventually it will take a long time and it won’t deflate nearly as quickly because this bubble has few companies twisting in the wind of the public markets. Most of them are owned privately and, seeing Google and Facebook as models, plan a long gestation period during which they are funded by private equity. The problem is that few of these companies will ever be profitable and eventually the people providing the funding will bail out. But these decisions will be made in boardrooms on a case by case basis, not at shareholder meetings or bankruptcy courts, so the deflation period might be so slow that one day five years from now everyone might look around and say, what happened to all those second rate startups?

Those venture capitalists on Sand Hill Road used to be seen as the colossus of the private equity market. Now the power of hedge funds and private equity buyout groups puts them in the shade–to the point that the notable startup funder of the moment isn’t even in the Silicon Valley–it’s called Union Square Ventures but it’s in New York.

So it seems to me that these private equities, flush with cash from other investments, are funding way more Internet startups–especially in social networking and search–than makes sense. But their deep pockets and lack of need to respond to shareholder demands or file quarterly reports means that a lot of these sucker’s bets won’t be called for a while.

Ok another insignificant search engine changes hands

Here’s a news.com post about the acquisition of the distributed online search engine Grub by Wikia.com:

‘Grub was acquired from LookSmart under the open-source project Wikia. The platform, now available for downloading and testing, is built on users donating their personal computer power. It’s meant to operate through open protocol and community collaborative added functions combined with the wiki.

Last year, Wales claimed that Internet search as we know it is broken. Grub is one of his attempts to gather open-source technologies to organize free content on the Web.’

Well actually I think that Google and Technorati have gotten better rather than worse–and even Live search can be usable.  The only thing really broken about search is that people still use Wikipedia and Yahoo and Ask.

I’d say you’re better off letting your computer help the University of California find aliens than trying to help Jimmy Wales beat Google.  Anyway the first is more likely to happen.

Wordcamp 2007

The 2nd annual Wordcamp event is happening in San Francisco this weekend. Jessica and I are planning to attend.

Some are voicing their concerns about WordPress upgradability and security issues over the last year, which is a matter that needs to be addressed.

What I’m interested in is how WordPress will deal with the range of competitive threats in the self-hosted blog/CMS market, all the way from Gelato self-hosted tumbleblogs to an upcoming open source Movable Type version to new versions of smaller competitors like B2Evolution.