Paul Krugman in the NYTimes

But Washington isn’t just confused about the short run; it’s also confused about the long run. For while debt can be a problem, the way our politicians and pundits think about debt is all wrong, and exaggerates the problem’s size.

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

I am speechless. Debt that does not have to be paid back and if – it has to be paid back to ourselves? This is dangerous.

Forrester on social/lifestyle apps:

He believes that the current crop of trendy social businesses like the location-based, check-in social network, Foursquare, are “nonsense” — and they will eventually be swept away in a new “post-social era”. This is because these services require more time of users… time that users cannot give.

Colony says that people in the Western world are “using social” more than they are volunteering, praying, using the phone, emailing and exercising. In fact we are using social just a little bit less than shopping and childcare.

“We believe social is running out of hours. We’ve reached the limit of hours that people can give to social,” he says.

 

I agree, as I mentioned earlier, that we do not have space nor time to check-in to 3 – 4 different apps. I still struggle with seeing Facebook take this one. Mobile is about simplicity and ease of use. I’d argue Facebook is not good in either.

In the past few weeks I have been playing around with a number of interesting new mobile apps on my iPhone. I have started calling them “Lifestyle apps” for a number of reasons. First of all they are primarily mobile and as such I have them always with me – ready to be used when I whip up my iPhone. Second, they have a very basic and simple use  case – they collect information about how, were and with whom I spend my time. Third, they are inherently social – I can share the above mentioned information with my friends, family and anyone else who cares. They may have different approaches to how they do this but one way or another they know more about my lifestyle than anyone else. So what are they?

OINK
This is a little new app from a company called Milk, started by entrepreneur and investor Kevin Rose. The main idea of Oink is to allow you to rate anything, anywhere. You go around places and Oink stuff. Slowly you build up credibility in certain areas (I am going after hamburgers and coffee) and with the amount of Oinks growing, your opinion matters more and more in rankings of products, services, etc… I guess what the creators are trying to build is a universal ranking system for any experience by mining the user generated Oinks (sounds dirty). The app is beautiful and rather easy to use. There is not much content in it yet (in Europe) so I wouldn’t go there looking for recommendations just yet. But the experience is great and I think they are on to something.

Path
If there was a contest for the most beautiful app on the iPhone (now that I think about it, there probably is) I’d vote for Path. The user experience and design on the new 2.0 version of Path for iPhone are amazing. The core job of Path is to track your life via different types of content you share with the app. At any point in time you can open the app and take a picture, share your location, say who you are with, just write a note and other things. This content is placed on a simple timeline with date and time tags that track you better than the FBI. The idea attracts me because it is much more personal in a sense that you are collecting this information for yourself as a kind of journal. You could in theory go to the app in 20 years and track where you have been and scroll through your encounters and experiences. I don’t see any rankings, recommendations or algorithms that would hint at a business model for the company which actually makes me feel better about the app.

Foursquare
I guess most people have heard of Foursquare by now. If not, know just that it is the first successful location based app that won the contest for THE check-in app against Gowalla (acquired last week by Facebook). This app takes a different approach to your lifestyle than the others – it is about gamefication. You check-in at different locations, score points for various things (100th hamburger joint in 100 days,…), leave tips about them and share with friends. The point I guess is to be the go to place for location. What attracts most people is who leads in the rankings of most check-ins and points, which to be honest is not that big with me. I do check the app for interesting tips when I am traveling though.

Instagram
The last of the apps I will mention may seem more of a photography app than lifestyle. But don’t be fooled – Instagram is one of the most popular iPhone apps because it combines a classy design, artsy feel and easy to use user interface. Taking a picture with it and making it look great is very easy and many people use it as a consequence. But most people don’t realize that an important part of Instagram is the fact that you share your location (if you want) when taking a picture and that you are sharing it on Facebook, Twitter and others. As such Instagram has a trail of where you have been and what did you experience in the form of a beautiful stream of pictures shared on social networks.

So why did I just spend a lot of your time with a simple description of these apps?

Once you start using them you will realize that there isn’t space for 4 of them and trust me there are a lot more of them on the App Store. I felt ridiculous at dinner today, checking in with 4 of them, taking pictures with each and writing different statuses. And I don’t think people want to take a picture, write some text and share their location with each service in the same way. They want a specific simple experience of tracking their lifestyle and sharing it with friends. So I think we will experience a boom of these lifestyle apps in the near term after which there will be consolidation in the market and we will have a few winners and a lot of losers (Gowalla was maybe the first to go, though being acquired by Facebook isn’t bad I guess).  What I do find interesting is the different approaches the four I mentioned have to tackling the same problem. Will the less complex single use case apps like Instagram beat the more sophisticated ones like Path or Oink?

What do you think? Do you track your life in an app?

One more thing: I found really surprising is that I did not use Facebook to check-in, take a picture or write a status update. For me Facebook is not a mobile app. It is too cluttered, crude, generic and confusing. Maybe it is just me but I don’t use it to create content, I just feed it from the other apps. Should that worry Mark Zuckerberg? Maybe, maybe not – he always said Facebook is a platform for sharing and connecting.

Harry McCracken of Technologizer.com fame has an interesting post up on how he switched to the iPad2 as his primary computer. He writes:

And it was one specific thing about the iPad that made it so useful on the trip: I could use it for ten hours at a pop without worrying about plugging it in.

I can’t overemphasize how important this is to my particular workdays. Even when I’m not traveling, I spend a lot of time bopping around San Francisco and the Bay Area, attending conferences, visiting tech companies, working out of hotel lobbies, and generally having spotty access to power outlets. With the Air, or almost any other portable computer I’ve ever used, I’m lucky to get three or four hours of life out of a charge, and therefore have to bring my power brick and obsess about plugging in whenever possible. It’s an enormous hassle, and sometimes I simply run out of juice.

I wrote a post about my vacation in Spain and how the iPad2 became the most important device on that trip a few weeks back and I think McCracken’s post just confirms it. It is not processor speed, hard disk capacity or screen size that makes or breaks a digital device. It is whether you can use it at all or not. The iPad2′s amazing battery life and durability makes it a computer that you really can have with you and use all the time with out the fear of running out of juice. There is a prolific saying: “The best camera is the one you’ve got with you.” I think most of you will agree – the same goes for computers.

Clare Cook from UK’s University of Central Lancashire is writing a book about “social media for journalists” and has interviewed me about Piano.

Read the full article here.

Today I am leaving my twenties behind and am embarking on the next stage of my life. It does feel odd. My father used to say that most people who achieved something in their life did so in their twenties. Thank god that pressure is gone now.

I will spend the day working on stuff for Piano from my home and I’ll maybe find some time to reflect a little bit. While I would have wanted to achieve more before I turned thirty, I am thankful for the family I have, the friends that have accompanied me throughout life and of course my wonderful Cosmic Girl.

One interesting data point – it didn’t hurt.

In June I wrote a post about the dilemma Android smartphone manufacturers face. I said:

What the incumbents that went into bed with Google did not realize is that Google does not care about their profits. They only care about getting as many Android phones into as many consumer hands as possible. While the manufacturers earn their money by selling phones, Google earns it from the use of the very same phones. And as suddenly all manufacturers are selling phones with the same software on it – the only remaining differentiator is price. And so with more and more manufacturers joining the fray the average selling prices of Android phones fell off a cliff. And that is precisely what Google wanted – competition on price. This allows consumers to get Android phones almost for free and again increases Android’s platform share compared to iOS. More users on Google’s platform – more revenue for Google. That puts a lot of pressure on the ASPs and profit margins of the manufacturers – hey that is competition.

I think we are beginning to see this effect on the results and forecasts of some of those smartphone manufacturers. Today HTC announced a cut to its forecast for the fourth quarter revenue estimates by 25%. I repeat – by 25%! That is a lot I think. I took a quick look at the numbers of HTC and built two charts. The first one is HTCs quarterly revenue and Gross Profit.

What you can see in the chart is the divergence of Sales from Gross Profit which means that while over time HTC is selling more phones it is doing so at the cost of lower profit per phone. I did not dive too deep into this but I think the reason for the lower profit per phone is a simple economics one. To sell more phones in a market where HTCs product is not that well differentiated and the supply of Android phones is exploding you can really only compete on price. With that in mind I present the second chart – HTCs gross margin evolution.

I know that this is just a rehash of the previous chart but it illustrates how basic economics work. When the market for any product becomes highly competitive and has little differentiated competitors the pressure on the markets profitability increases. This was my prediction from June and why I said that Nokia has better chances with Microsofts Windows Phone 7. Rest assured if WP7 would spread the same way Android did the same would occur with the manufacturers of WP7 phones. For now though great WP7 phones are scarce and there is a window of opportunity for manufacturers to get a piece of the early profitable pie.

A similar problem that results from this is sales. While you can keep your sales growing by lowering prices you will not be able to win a price race to the bottom. Eventually your prices will be low and your sales we still fall because of over supply. That is what I think we are seeing in HTCs sales forecast cut. Not only did Apple release the iPhone 4S but more direct competitors like Samsung, LG and Motorola are releasing more and more new phones putting pressure on everyones sales numbers.

In conclusion one can see why Apple keeps its software tight and tries to do its own thing. While they may loose market share to the onslaught of millions of Android phones their margins seem to be protected. They simply have a better answer to the question why you should buy an iPhone over an Android phone than price – It is simply different.

Note1: I will try to do a similar post on Apple’s margins just to show the difference.
Note2: For HTC’s 2011 Q4 Revenue I used their forecast of about 104 million and the margin of the previous quarter. 

Fred Wilson over at http://www.avc.com wrote an interesting post on sustainability. It made me think a lot about my experiences, the MBA and how to build companies and cultures that are sustainable. It also connected with a number of things I read online recently. I am reposting my comment here as a post.

Seeing your post Fred – it kind of clicked for me and connected 2 other articles that I read in the past week. I read Nassim Talebs article in The New York Times about the solution to the issues of our financial system and today’s HBR post by Ron Johnson about retail. I put forward the following simple thesis – a sustainable business is a business that puts focus on the value delivered to the customer while an unsustainable one is focused on the value extracted from the customer.

Case in point – Ron Johnson mentions that retail should be built around helping the customer make sound purchasing decisions. The purpose of retail is connecting the customer with the right product. If this is achieved the customer will come back to be connected again. Anyone can carry items like Macs (as demonstrated by other retailers) but few can help the customer buy the right one.

The other connection my head made when thinking about this is Talebs cancel the bonuses article. At first I was wondering how else would you motivate high performing people without bonuses but then it hit me. The current compensation structures at leading investment banks and hedge funds do not motivate the bankers to help their customers make fair valued transactions. They motivate to make big transactions. What if you actually think this product is not really good for the specific customer? What if your customer shouldn’t acquire the company you are investigating? If you still opt for the sale or transaction significant value to the customer is lost but you get your bonus. We need to find a value for the customer based compensation system.

 

What do you guys think?

I just returned from my two and a half week holiday in Spain. I’ll maybe post more details eventually (I still got a backlog from China, meh) but we basically planned a bit of surfing and a bit of sightseeing. It ended up being most of the time surfing and my body will be recovering a few days from the strain.

I would like to point out one thing. Our constant companion for the whole trip was the Cosmic Girls iPad2 (3G, 64GB). I can’t over-emphasize how great this device was. As in London earlier this summer, we bought a prepaid data sim card for the iPad (12 €, 500 MB) and used the thing all the time. The number one used app was Maps but we also looked up plenty of information on the thing wherever we went. Whether it was surfing conditions, info on sights, restaurant recommendations or different surf schools – there was an app for everything – and if not – we still had Google.

Now why would you use an iPad over an iPhone or Android Phone?

Well reason number one is battery life. The iPad2 can go through 2-3 days of heavy (and I mean heavy, lots of 3G use, video, routing on maps using GPS) use and charges really quickly. This made it the go to device for all of our information hunger.

Reason number two is the screen size. The screen allows you to display maps in all their beauty and get a sense of a large area. If you are planning your time and trying to figure out what to see first, where are the restaurants you want to go to – the screen real-estate helps a lot. Also reading information on it is much more comfortable than on my iPhone 4.

I haven’t bought an iPad yet just because I am a power user and felt that most of the things I do require a keyboard and laptop power. Indeed I worked a few days and my MacBook Pro was very helpful. But the iPad won me over with some of the use cases I mentioned above in addition to being a great email and surfing portable. I’ll still probably wait for version 3 though.

I am an avid reader of technology and general news online. I tend to go through a routine of checking Twitter, top general and financial news (FT.com) and plenty of tech news sites. After Joshua Topolsky left Engadget.com, a site I respect for high standards in tech reporting and great writing, I was curious as what he has up his sleeve. A few months ago he announced on his temporary website thisismynext.com (now points to the new project) that he is starting a new tech site from scratch with the backing of SB nation and VOX.

Now The Verge is up and running and I included it in my reading routine. What I really like about  what Joshua and his crew are doing is that they are sticking to the core of what they are passionate about – tech news and community. They are focusing on it from day one – the site has great design, lots of in depth content and analysis as well as multimedia. There is a feature where the community can gather around different topics and clubs which encourages conversation. This is a place to follow if you are into tech and gadgets.