Subway/Metro/Tube fare barriers are not worth it

Interesting decision: not to install fare barriers at LA’s Metro Rail.

wiredwired

You just walk through, and hopefully you’ll obey the sign requiring a ticket.

It seems that just 5.5% of people do not obey the sign,  but the LA MTA seems to think that this is a problem. They estimate that they lose $5.5m per year from those fare dodgers, and a committee has unanimously agreed to spend $56m on installing faregates at all stations. Doesn’t say a lot for the folk on that committee, but this really poor decision still has time to be voted down by the MTA board.

It’s a poor decision for three reasons:

Firstly, assuming that all of the 5.5% of fare dodgers will pay fares under a faregate system is flawed. Many of them will simply choose not to travel by rail, and others will continue to fare dodge by jumping barriers – it is their “right” after all. Indeed, one commenter on the linked article states (without source) that turnstyles promote more fare evasion, rather than less. I guess once you jump the turnstyle you are less likely to be caught by inspectors.

Secondly, investing $56m to save $5.5m per year is just lousy economics. If you think not then lend me the $56m and I’ll give you $5.5m a year.

Thirdly, this is Los Angeles – a city that is dominated by the car, and one trying to promote train travel. Bringing in barriers will slow adoption, as the, err, barriers to change behaviour are literally much higher. You could wonder where the source of the idea to install barriers came from, and hope that it isn’t a cynical auto or road company.

So in LA at least it isn’t worth it for thse barriers to be there. I’m guessing that London and Paris would not have it so easy, especially with the huge tourist populations, and a more cynical crowd. But then in both places catching a bus sans billet is relatively simple.

Opportunity Acquisition Corp – investing with no information

Want to invest in a buy-out company? How about if you don’t know what industry they are going to be looking for acquisitions in?

Your chance is now. Opportunity Acquisition Corp is  filing an IPO for US$150m, plus warrants potentially for another $112.5m. It’s owned by an outfit called JMP now, and they’ll keep 20% after the IPO. JMP is a small investment bank/asset management company worth about $150m.

What I like about this deal is that is just says everything about how great the US markets are. Even in a huge down market there is the chance to build something new. I’d be tempted to invest if the SEC filing says, for example, that the managers are established vulture capitalists.

What is scary about this deal is everything else. No information means this is essentially a gamble. I’ll be leaving this one aside.

WordPress is dominant

Thinking of starting a blog? WordPress gives yet another reason to blog with them – 3 Gb of storage. This is up from a paltry 50MB, which essentially meant that you had to use photo servers from another site, such as flickr.

WordPress is simple to set up, trivially easy to use, and free. You can use your own domain name for a small fee, and  if you get huge, then WordPress.org provide the same software for your own server. About the only things missing right now are revenue for bigger bloggers from WordPress.com, and decent statistics.

While those stats are being worked on, there is no word about ad revenue.

One model could be to allow bloggers to select whether or not google-like ads appear on their blog, and then revenue share the resulting stream of income. Giving a choice would stop bloggers complaining, while sharing the revenue would encourage the spread of ads.

I’d love to buy Automattic, the company behind wordpress – anyone want in?

Solving the NZ and Australia housing crisis

It takes 18.6 years for the median household to buy the median house in NZ, and that’s excluding rates, taxes and maintenance. That’s via NBR, wo curiously neglect to mention that there is a giant photo of Don Brash on page 2 of the original Household Affordability report, as he is the Chairman of something called the Centre for Resource Management Studies. His commens about the downunder situation are telling:

Australia is perhaps the least densely populated major country in the world, but state governments there have contrived to drive land prices in major urban areas to very high levels

Governments continue to pretend that they are powerless to make housing more affordable or, worse still, implement futile interventions which make the situation worse, as the New Zealand government is proposing for this year

and from the executive summary:

 The housing affordability crisis is most pervasive in Australia and New Zealand…

The least affordable markets are generally in California, Hawaii, the US East Coast, Australia, the United Kingdom, New Zealand and Canada’s province of British Columbia.

Wellington comes in at 56th equal (or 50th) least affordable market, after Taranga, Auckland, Christchurch and Hamilton. Indeed:

New Zealand is the only surveyed nation in which all of its markets are rated “severely unaffordable.”

Meanwhile, over here in West Australia, there are Mandurah (6th worst in the world) and Rockingham (24th), which are closer to where I’m currently working than Perth itself (19th). That’s got to relate back to local planning laws, as well as the mining-related boom.
The report points to larger scale migration between cities, and notes that

A Sydney resident can save nearly $650,000 by moving to Adelaide, the equivalent of 13 years median income in Adelaide

And the solution? Again – let’s quote the report:

It is necessary to restore housing affordability to sustain the quality of life. Governments committed to a better future need to focus on (1) Allowing housing to be built on low-cost land in the urban fringe and (2) Removing unreasonable infrastructure charges on home buyers. In this process, governments can be aided by monitoring and publishing performance indicators, especially the Median Multiple.

Apple is clueless about international people

International people are those who travel a lot, or live between two different countries. This tends to happen a lot in Europe, and is just generally more and more common with the cheap price of travel these days. Indeed there were over 800m international tourist arrivals in 2006 – clearly not a trivial market.

Steve Jobs clearly doesn’t get out much, and the reason I say that is that Apple and Apple products are generally lousy at dealing with us international folk. Let’s examine why:

First, those DVD regions. Apple uses DVD drives that are impossible to unlock – you get 5 shots at changing the region and that’s it. Many of those drives have extra securty that stos you ripping DVD’s. Hence the DVD drives in all of my macs are essentially useless, as I have DVD’s from pretty much every region. I can’t rip them, so I put those DVD’s into folders so I don’t carry around plastic cases, which means I am equally clueless which region each DVD is from. If I can buy a $50 DVD player that can play anything, I’d expect my $4000 macbook pro to do the same. It doesn’t. Yes- I need to rip all my DVD’s for once and for all.

Secondly, the iPhone is tied to local providers. There is clearly huge demand for unlocked iPhones, something which any European could tell you as their market has been open for years. Instead Apple locked the iPhone to particular local providers, as Apple get significant revenue from them.

Next – the international roaming costs are prohibitively exensive – for making and receiving calls, for my foreign friends calling a NZ number from the USA when I am down the street and most of all, for data. At the moment international roaming (for data) is not viable on the iPhone, which renders it pretty pointless for global travellers.

Finally, Apple has split their company into country-based entities. While I think it is great that NZ finally gets Apple swag (except for the iPhone) at a similar time and price to the USA, I feel they Apple has a way to go towards treating customers as people, not as people with countries. Witness my email inbox from Apple from the last day:

my email

4 identical emails about the MacBook Air – one from Apple-USA, 2 from Apple-Asia and one from Apple-Europe. As someone that has used online Apple stores and iTunes in several locations, I am getting US, Australia, NZ and UK/South Africa directed emails.

Those emails went to three different email addresses.

I’ve had to use those different email addresses for my Apple dealings as each email address defaults to a particular country, and you cannot easily move countries. That’s really painful, as I’d love to buy things from, say, the Apple USA iTunes store that are not available in NZ, and I also want to buy things from the Australian store using my NZ credit card. I can kludge my way through the second, but the only way to buy from iTunes USA is to have a US-based credit card, or to pick up those iTunes gift cards next time you are in a USA Apple store.

So – what should Apple do for us internationals?

1: First and foremost, please move to DVD drives that are region free, or easy to hack. Let grey-market DVD-rippers provide the input to what we really want – iTunes that rips DVDs without the pain.

2: Offer the iPhone at two prices (as in Germany) – one tied to a carrier and one completely unlocked. Let us vote with our wallets, and support us if we want to roam the world swapping sim cards as we go.

3: Use your market power to demand reasonable data and voice roaming prices for your customers. If not then make it easy to use one of the third party solutions that are out there, or, again, just unlock that iPhones so that we can swap sim cards.

4: Move to being one firm, with single Apple and iTunes stores. The iTunes UK debacle should be a lesson that splitting by country is a thing of the past. Get global licenses for media as a matter of course. Be like Amazon – let me order from anywhere, use a credit card from anywhere and deliver to anywhere. Again like Amazon, be clever about where you deliver from, depending upon where I want the goods.

5: Above all, please keep making those fantastic products, and keep releasing them simultaneously across the world.

Set WiFi free

Over on Kiwiblog DPF guiltily confesses to using someone elses open Wireless connection for some internet time, and a trivial amount of data. There are several things wrong with this picture:

1: It isn’t normal to find open wireless connections in NZ. The reason for this, of course, is that we pay for MB usage, unlike in the USA where things are typically uncapped.

The implications of this are manifold, but the first is that if you open your laptop in any reasonable dense area in the USA the you are bound to find several open connections to borrow. The second is that if you surf in pretty much any US based cafe, then you are surfing for free, and the third is that the sheer volume of stuff you download for free means that Apple through iTunes can reasonably expect people to use GB’s of bandwidth to rent movies. Te reverse is true n NZ, and as a result the internet is not pervasive nor that useful.

2:  David felt guilty about using the open connection. To me, unless you crank up the P2P programs or hit pr0n sites, you should not feel guilty about using a free wifi port instead of getting raped by mobile data charges. But you should make sure that you are playing the game fairly by having an open connection at home.
3:  We are miles away from mesh networks – to me these are the logical future, where we wirelessly connect to each other to send local traffic and reduce our dependence on the telco lines to the house. We’ll still need huge pipes conneced to the global internet, but this will reduce last mile costs. Until we have critical mass of wifi ports open, and until we get rid of any ideas that you can charge money for wifi, then we are not on the path to maximising our bandwidth for least infrastructure cost.

$15 billion upside on housing

There is a guy on Wall street, John ‘JP’ Paulson, that made big bets against the housing market by  taking  the other side of those dodgy mortgage backed securities – the ones that crashed to worthless recently. (Basically he bought default insurance really cheaply)

His relatively small funds were up $15 billion n 2007, and his net worth up from about $100m to $3-4 billion.  Not a bad year.

Meanwhile this year seems to be starting off with a thud rather than a bang. Shorting is your friend in these times.

wsj

What’s in store for Lance in 2008? A manifesto

No new years predictions from me, as I can barely predict what I’ll be doing in a few months time, let alone markets and industries.This year though I am trying to spend more time starting and nurturing businesses, while continuing to consult, in both NZ and Australia.

For now I’m still helping out at BHP Billiton’s Kwinana Nickel Refinery, near Perth, and will do so until the end of February. Our project ‘officially’ finishes in 2.5 weeks, and without releasing privileged information I can say that we have been amazed at the results. I’ll write sometime soon about what I believe the the keys are for a successful turnaround; suffice to say that it starts with a great management team.

After that it’s monkey suit time – off to Norway to do the Berkiebeiner – a crazy thing on cross country skis. This is following a similar escapade at the Wisconsin Berkebeiner a couple of years back.

When I come back I hope to split my time 50/50+ between Perth and NZ, and between three activities – consulting, being a director and starting up new businesses.

Consulting

I’ll be continuing off and on with some existing clients, but also looking for Wellington, Auckland and Perth based consulting and investment opportunities, starting in late March.

I’m best at helping out in three situations – companies and units that are growing really quickly and want to maximise growth and revenue while holding it all together, companies looking to exit and that want to increase value beforehand and then find the right buyer, and bigger companies is in need of a turnaround in performance. I really enjoy these situations as results can come very quickly and the management teams have the proverbial burning platform for change. As a consultant nothing is better than great clients getting fantastic results.

Directorships

I’m currently a director (and substantial investor) in two companies, and am looking for more, especially in Wellington.
The first company is Auckland-based Texmate NZ, which has been around for a while, and is run by a couple of friends of mine from university days. Texmate NZ spent a number of years as the R&D back end to a US parent company, but have recently split and now market directly to most of the world.

Their products are paradigm shifting controllers for equipment – paradigm shifting as they are a whole lot cheaper and more flexible than traditional offerings. Their challenge is to ramp up sales worldwide, so if you know anyone in technical sales then drop me a line. They also have a small factory, and it is really refreshing to be involved in a company that actually makes and sell things you can touch.
The second company, Lingopal, is a Perth based mobile app start-up, and we are on the cusp of receiving venture funding. More on that when appropriate.

New Businesses

Finally I’ve a few start-up ideas bubbling away, but will need time, along with financial and physical help in getting them going. Nothing public yet, but at least one proposal is in the financial space and I’d love to do something in the tangible product and/or web space.

The risk

I’ve turned down a couple of tremendous career options in order to give myself time to invest in these smaller opportunities, so it’s really going to be an interesting year. However to me the risk would be not trying – I’d always wonder what could have been.

Feeding the Apple swag addiction

The master speaks, and Lance reaches for his wallet to feed his insatiable addiction for all things Apple. At least it is a better addiction than Methadone/P/ice or other ilicit drugs. Probably just as expensive though.

MacBook air: ordered, but not with the tiny solid state drive which costs AU$1400 more. I’ll use this in some upcoming travel, but really I am struggling to justify this on logical grounds. It’s definitely, as Juha says, a second mac – not the primary computer that I’ll connect to a huge 30 inch screen. I will say that I have yet to use my DVD drive on this MacBook Pro for anything other than installing software, and that happens only every few months.

Apple TV: Awaiting to upgrade software when I am reunited with mine, so it will become useful – right now it is a gleaming cute white…elephant.

(Microsoft) Mac Office: Ordered, really for the speed. I’l still use Parallels for most of my spreadsheeting.

Time Capsule: While I had it on my shipping cart, I removed it at check out as I have no real use for it at the moment – I already have the WiFi extreme (highly recommended) and a 500GB backup drive.

Apple Stock: I doubled up on this a few days ago (along with eBay), so my purchases would have an impact on my portfolio.

Its amazing though, living here in Perth, how the internet is just so much more useful with high speed and almost limitless bandwidth. Bring on the iTunes with movie rentals – the ultimate way for me to feed my Apple addiction – and a nice earner for Apple as Jim mentions. However the Apple downloadable movies will be painful to useless in NZ, as Rod points out that we have a real infrastructure fight on our hands.

Indeed I am dreading returning to the inadequacies of broadband in NZ. I’m not kidding – it’s close to being so bad that I’ll find another country to live.

msn.nzherald.co.nz launches

So msn and APN have linked up. But to tell the impact you have to dig a little. The msn.co.nz page is unchanged:

msn.co.nz

The msn news page has better news than before:

msn.co.nz news

But the links give it away – here’s the one beneath the main news picture:

msn.co.nz

Indeed that news page is the NZHerald news page with a differnt brand.  It’s a simple as shoving msn.co.nz at the top of the nzherald page. Here are the two politics pages

nzherald  msn.nzheraldc

So – NZHerald gets more traffic, pure and simple. MSN gets some real news on their rather sparse website. Stuff is still ahead in UB’s, (498k vs 456k last week) but NZHerald with this move has a Page View lead. For now.

It seems to be a great deal by APN.

For a start they increased their saleable page views. Secondly they help msn get revenue (details unknown) by selling ads on a site that otherwise struggles – the front page of msn has sister company Seek ads only right now. Finally they have taken out a potential  (though not so strong) competitor in the news space. Well done chaps.