Groupon doesn't care a ton since they have boatloads of money, and they'll feel like they HAVE to take a shot since "China's a huge and growing market, blah blah blah" but it'll really be chalked up as a fat expense with not much benefit if any to the company.
Here's why China's different:
China, by and large, doesn't live for rampant consumerism. Walk the streets of Beijing or Shanghai (the 2 cities where this is most likely to matter in China) and you'll see that most shops are convenience stores and dingy eateries trying to eke out a living selling 2RMB ice cream pops and water, NOT "skydiving lessons! pottery classes! cosmetic dental procedures! maybe if i can drive some loss leader business in and call it an advertising cost, it'll be a good long run investment!"
Beijing and China are big cities, but most of the citizenry inhabit a tiny subset of the city. People go YEARS without venturing beyond a 1 mile radius of where they live. They rarely travel to other parts of the city to "try a new restaurant" or "hey, let's do pilates". For most people in China, everything they need is already there, so a groupon for something across town isn't appealing (most stuff on groupon isn't in close proximity to my house).
That said, even though most people are like this, even if some small %age of the population cares, (small %age) * (shit ton of people) == possibly profitable for Groupon.
China does have a lot of money and growing consumerism, but the gini coefficient is absurd. The median monthly income in Beijing is < 600 RMB (<USD$1000). People who have money can buy whatever they want and are relatively price insensitive.
Gift certificate and coupons aren't widely used in China. They exist, but they haven't been a fixture in the consumer landscape the way they have been in the US. Prices in China are a suggestion, and aren't even always written. The price for a widget is a function of how much the vendor likes you, the time of day, if the shop has to pay rent soon, and only sometimes, the actual cost to produce it.
I'm not going to speculate on counterfeit coupons as a problem, but I can't imagine that will help the cause.
This will fail because the intersection of businesses who want to use groupon + consumers who care about groupon is smaller than you'd guess for a huge population, buying and travel habits aren't conducive to the groupon model, there will be distrust of the brand and discount mechanism.
yep. i like betting on myself better than betting on most other people.
its sort of an "all your eggs in one basket" strategy, but if you're going to put all your eggs in any particular basket and you're good at what you do, you're as good a bet as any (and you can make sure your investment manager isn't slacking)
1. a lot of people argue for things without backing it up.
2. it depends what you mean by "risk". arguments claiming bond allocation in your portfolio are less "risky" describe risk as "volatility of returns", which in finance are measured over shorter intervals than 40 years.
patrick is specifically accepting short term volatility in return for the higher EV of returns.
the marketplace prices debt instruments (especially US treasury issued) over the long term with cheaper expectations for returns specifically because it has lower variance of returns.
So why not move even further up the risk chain to all Emerging Markets or invest at greater then 100% equity by using leverage? Fact is, adding a small amount of fixed income investments smooths investment returns and has very little effect on total return whether you accept standard deviation variance as a measure of "risk" or not.
I've tried a few other services for my properties, but the UI tends to be really sloppy for other "apply online" web services. You need to make it easy for me to use and inviting for my potential tenants.
One thing that would make me almost certain to try it is if you could bundle an affordable credit check into the application process. Any plans for something like that?
I'd be interested in helping beta test this if you have a need for that.
We agree. We've looked at some very poor web services in this area.
How do you think our UI handles? We're aiming to make it simple. Thanks for your offer -- we'll definitely take you up on it.
We have plans to add affordable credit checks in the process. For the time being, we're letting people attach credit reports to their applications as a stopgap solution.
I know trading isn't a popular topic, but I consider quantitative finance my one man startup.
I have to wear a lot of hats, am constantly learning new things, get frequent feedback that I have to use to refine my product, can't do everything so I have to choose what things I'm going to spend effort on and what things can be suboptimal. Release early and release often and I'm playing against better funded often slower moving incumbents.
Do you mean you have your own funds and trading algos? What kind of strategies do you follow? I assume 'traditional' HFT is out of reach for a one-man show, no? I've thought for a while now that there must be opportunities in niche markets that aren't profitable enough for big players to get into, but that someone with knowledge of the industry can exploit. I'd love to hear some details on what you do, and what kind of money you make!
I have my own trading algos, but I do not trade my own funds.
I have a single investor, so you could imagine that he's the web startup equivalent of an angel or venture capitalist. He's extremely knowledgeable about markets, and we keep open lines of communication about what I'm doing. He trusts that I'm a good founder and that I'm doing my best to capitalize on market opportunities, but he never tells me what to do. However, if I want his advice or access to his resources, he's happy to share.
It isn't HFT in the traditional sense (or maybe not any sense), but I do tend to prefer opportunities that are quantitative in nature and spend a lot of time programming.
Right now I'm making laughably small amounts of money (non-negative, but insufficient to support me), but I'm hoping that that will change soon. Again, very much like a startup -- I take a hit on the salary and stability because I want increased exposure to the success upside. And like a startup, my investor(s) win if I win.
However, I've recently seen an opportunity to join another such "startup" (currently 2 guys) and I'm considering that, which might be the death of my own little trading startup.
Thanks. I have a few more questions if you don't mind :)
"Right now I'm making laughably small amounts of money (non-negative, but insufficient to support me)"
Is this because of lack of volume (i.e., fund too small), or because of algo quality issues? Do you try to compete with the big boys heads-on (in generic stock trading) or do you specialize, trying to add market knowledge to your model?
I guess my question is, do you have purely statistical models or do you try to model process-based, with information from outside the exchange feed?
How do you handle this technically? Do you have direct access to a broker API? Don't the fees kill you on that?
note: i can't sign any NDAs or anything, i invest in a lot of companies, etc. so please don't think that any idea you send is really that important…
Not that he's wrong, but just an example of how he comes off as abrasive. The "so please don't think that any idea you send is really that important" just serves to belittle everyone else's ideas (while his ideas are "killer").
The startup community generally embraces the "execution is really important" mantra, so just stop it at "i can't sign any NDAs or anything, i invest in a lot of companies"
From his perspective, it's much better to filter out the people who are sensitive about such things right away, by being 'abrasive', than to spend a bunch of time talking to people nicely only to find out they're incompatible with his style later.
He does come off as abrasive but I can understand why he worded it that way. Lately people with "great ideas" are coming out of the woodwork like rabid animals. He's probably just tired of it.
Its fun to look back and enumerate the reasons for success or failure, but dumb luck is just such a huge part of this game as well.
Marc had a vision, stuck to his guns, and the competitor "won". If Wesabe had won Techcrunch 40, we'd be reading an article about Mint's failure due to shoddy data accuracy and how Wesabe succeeded by "build[ing] tools that would eventually help people change their financial behavior for the better, which I believed required people to more closely work with and understand their data."
A startup can't implement every feature perfectly, and will ultimately have to make choices without knowing which was the "right" one.
I firmly agree with Marc on the issue that to be truly effective personal finance requires people to work more closely with their data. I have been working on a web project of my own for my own personal finance use, as neither Mint, Wesabe, or other web based product do what I needed. The most common response from people I show it to is that it looks really helpful but that they don't have the discipline to organize their finances enough to be useful.
Mint definitely got the "no user thought required" down and this path has brought them [some] financial success. Is their overly simplified view of a complex process actually useful? The consensus for mass market web based personal finance systems so far seems to be
- Users don't care about privacy.
- Users don't care about data accuracy
- Users don't care about digging into their data at all.
- Users will pay for pretty graphs/charts with questionably-useful automatic analysis that is unlikely to make a significant difference in their financial situation.
What is the best thing to do in this case? Just give users what they want? Sell illusions because reality is too hard to deal with? I know there are some people who do care, how do you find them?
I'm surprised the winning of TC40 isn't cited more strongly - That's where I first heard about Mint. You can argue that they wouldn't have won had they not done many of the other things right, but what's the adoption curve of Mint like before and after that event?
It was huge for them. My point, though, was that we made our own mistakes. If we had had a better user experience before TC40, they either wouldn't have made such an impression at the event or wouldn't have overtaken us so quickly.
Very nice article - many lessons learned and I think you're on the mark there, TC40 gave Mint social proof - if they can win within their own community then it must be ok.
I wonder if personal financial software is a tougher market for adoption than business financial software is.
It seems to me that many of Wesabe's features are also relevant to small businesses who are already used to making more input decisions and "wrestling" with their financial software and who might be more willing to adopt if benefits exceed costs.
I am working on a financial system that is directed more toward business than individuals (however still relevant to individuals) and I am looking for a co-founder. If you're interested Marc, I'm @blusie on twitter.
Groupon doesn't care a ton since they have boatloads of money, and they'll feel like they HAVE to take a shot since "China's a huge and growing market, blah blah blah" but it'll really be chalked up as a fat expense with not much benefit if any to the company.
Here's why China's different:
China, by and large, doesn't live for rampant consumerism. Walk the streets of Beijing or Shanghai (the 2 cities where this is most likely to matter in China) and you'll see that most shops are convenience stores and dingy eateries trying to eke out a living selling 2RMB ice cream pops and water, NOT "skydiving lessons! pottery classes! cosmetic dental procedures! maybe if i can drive some loss leader business in and call it an advertising cost, it'll be a good long run investment!"
Beijing and China are big cities, but most of the citizenry inhabit a tiny subset of the city. People go YEARS without venturing beyond a 1 mile radius of where they live. They rarely travel to other parts of the city to "try a new restaurant" or "hey, let's do pilates". For most people in China, everything they need is already there, so a groupon for something across town isn't appealing (most stuff on groupon isn't in close proximity to my house).
That said, even though most people are like this, even if some small %age of the population cares, (small %age) * (shit ton of people) == possibly profitable for Groupon.
China does have a lot of money and growing consumerism, but the gini coefficient is absurd. The median monthly income in Beijing is < 600 RMB (<USD$1000). People who have money can buy whatever they want and are relatively price insensitive.
Gift certificate and coupons aren't widely used in China. They exist, but they haven't been a fixture in the consumer landscape the way they have been in the US. Prices in China are a suggestion, and aren't even always written. The price for a widget is a function of how much the vendor likes you, the time of day, if the shop has to pay rent soon, and only sometimes, the actual cost to produce it.
I'm not going to speculate on counterfeit coupons as a problem, but I can't imagine that will help the cause.
This will fail because the intersection of businesses who want to use groupon + consumers who care about groupon is smaller than you'd guess for a huge population, buying and travel habits aren't conducive to the groupon model, there will be distrust of the brand and discount mechanism.