Showing posts with label dragons den. Show all posts
Showing posts with label dragons den. Show all posts

Monday, June 18, 2012

Mark Zuckerberg, Craigslist and energy efficiency - what do they have in common?


Flat hunting in San Francisco has in very recent months become a monstrously competitive experience. You can find a much more creative rendering of this story told by many here.

It's a rather nasty witches' brew that blends a variety of experiences which normal people avoid. It's a little bit like competing on Shark Tank (or Dragons' Den, depending on which side of the Atlantic you are reading this blog) and a beauty pageant. Landlords and agents want to know your assets, income and projected revenues; but they also have to like the way you look (are they planning to live there, too?). It's also a little like online dating blended with job hunting. "Candidate" tenants are required to submit a letter explaining who they are, why they like the flat and why they think they are ideal tenants backed up with "character" references, and oh, yes, mine were called!

There is nothing else in life that has taken this level of sustained effort and cross-checking of my veracity as a responsible adult who can pay the rent every month and on time. I have either paid rent or a mortgage - sometimes both simultaneously - for the best part of two decades. But that seems to matter little.

Some life experiences bestow knowledge upon you that you never wish you'd learned in the first place and will be of little or no use in future. But at least job hunting or mortgage applications will be a piece of cake by comparison.

So why all the hoopla? Well, it didn't help to look in the weeks leading up to the Facebook IPO when  landlords just assumed every prospective tenant was also soon to be a zillionaire Zuckerberg employee. Each week monthly rents seemed to jack up by $100.

Interestingly, properties advertised by agents seemed to be more reasonable than those privately advertised. One lady had a two bedroom flat advertised at $3,000 per month - across the road a very similar, if not in some ways nicer flat, was advertised for $650 less.

I'm sure she got what the ad was asking for: a disgruntled tenant impoverished by ridiculous rent. She even said that the laundry downstairs was coin-operated because she feared tenants might set up their own ad hoc laundry services. Surely tenants paying $3,000 a month have got better things to do and wouldn't need an income from washing other people's dirty clothes?

I know rents are high because housing stock inventories are low -  that's just simple supply and demand. But it in San Francisco, the rental "market" seems particularly sensitive to the fortunes and misfortunes of the economy.

Quality housing stock is hard to find and value for money even harder, especially for privately advertised flats. Oh, and all that genuine fleecing (at least you end up with a roof over your head, right?) while being robbed by Craiglist scams.

Out of the 100s of ads I viewed at least 10% were scams… some were very sophisticated confidence tricks. I was spared falling into one trap only because of an admin oversight. But I engaged with many posters, thinking they were genuine. Watch out Stacy or Stacey Low… we're watching you even if Craigslist doesn't deal responsibly with you and others like you …  one less sophisticated scammer who couldn't spell at all well even wanted money upfront before viewing a flat (that didn't exist, obviously).

Aside from the risk of being scammed or having my credit ID stolen, it was a dispiriting waste of time. Craigslist is a scammers dream.

This example has just appeared in the past hour:

$905 / 2br - 1670ft² - 2 Bedroom 2 Bathroom Single-Family Home For Rent In Cow Hollow -

The last time a 2 bedroom flat was available for $905 in Cow Hollow must have been way before anyone reading this was born.

After several weeks of clicking refresh on my Craigslist search 300 times an hour, I grew accustomed to the language and it appeared that the more adjectives used, the worse the flat.

Adjectives with a completely counter meaning include:

Remodelled = a broken sink has been replaced; or a genuine upgrade in 1984;
Bright = has windows, but otherwise featureless and charmless;
Cute = tiny, possibly with a bedroom without windows;
Charming = possibly pink kitchen and 20 year old carpet; almost certain to have an extraneous random room that you'll never be able to use because it has no windows;
2/3 bed = one bedroom could be a closet or there is most certainly a glass paned French window separating two "bedrooms".

It astonished me that San Franciscans will fork out tonnes of cash for a drab and worn out San Francisco apartment that would not be tolerated by their fellow Americans, who are normally lovers of spacious interiors and large gardens. No laundry in the land that loves the tumble dryer and no parking in the land that loves the car strikes me as odd when such high standards are demanded from all other products and services.

I couldn't imagine paying half the equivalent of £2000 for something half as shabby in London. But then I joined the dots. In the US, even in California, where the record on energy efficiency is outstanding thanks to Gov Jerry Brown and his first term administration, there is little in the way of energy efficiency incentives for consumers, unless it comes through their utility company.

The price of natural gas in the UK alone is enough to make people switch to energy efficient boilers. But it's all burn, baby, burn in the US now, thanks to the low price of natural gas which quite possibly could be the only thing that has prevented the country from economic collapse.

What's more, in the UK, landlords are required by law to have boilers, gas stoves and any other gas appliances checked each year by a plumber - and not just any plumber, but one who is certified. Every five years, electric wiring systems are also required to be checked by approved electricians.

Perhaps building safety codes in the US were always better than those in the UK which is just now playing catch up. Once upon a time in the UK, students in particular seemed to poison themselves with carbon monoxide from gas fires all too regularly… I know I once had a near miss thanks to a gas fire installed without ventilation.

But in the hunt for a home, it concerned me when landlords either didn't know when the boiler was installed (I once asked if it had been checked - that was another alien from another planet moment).
Some didn't even know where the boiler was or wouldn't show us.

One elderly lady said her "furnace" was installed in 1923… when the building was constructed, I presume.

EU directives on energy labelling are not without their flaws. But at least it gives some reassurance that a) it won't cost you an arm and a leg to stay warm in San Francisco's winter that arrives around July; b) it won't cost you your life because it was installed 100 years ago.

But in the SF Fire Department's catalogue of mishaps that start fires that rip through the chimney-like wooden stud walls of San Francisco's "Victorians" I guess furnace fire can't be that high up.

One good unintended consequence of improved energy efficiency mandates for tenanted buildings would be general upgrades too - once you rip out a boiler/stove/fridge, etc you might as well remodel.

San Francisco tenants might then feel that they were getting at least something close to what they are paying for. 

While an intimate knowledge of every type of architectural style in San Francisco may be wasted overall, I did get to meet some diamonds in the Craigslist rough - some really very wonderful San Franciscans, and one who finally and refreshingly used nouns, rather than adjectives, to describe the qualities of their property.


 






Saturday, January 14, 2012

Britain's entrepreneurs need some X Factor to escape the Dragon's Den


Napoleon is said to have disparaged Britain's fitness for war by describing the country as a "nation of shopkeepers…". The phrase is attributed to the economist Adam Smith as Britain began to boom at the start of the industrial revolution.
But as the UK's manufacturing economy has withered over the past 30 years, the populist assertion that Britain is a nation of people that likes to shop (consume) rather than make products that are of use in attempting to assert economic dominance rings more true than ever.
Good news for UK manufacturing results in headlines like: UK manufacturing output increases more than expected.
But is it all bad news? A report from PwC in 2008 claimed that although manufacturing had declined in the UK, the sector had created high levels of productivity.
In 2008, the UK was still the 6th-largest manufacturer in the world by value of output, as ranked by the UN Council for Trade and Development. 2006 was a record year for UK exports, and according to a 2008 report by BERR (the UK Department for Business Enterprise and Regulatory Reform) 25% of UK exports in 2006 were high-tech goods, compared with 22% in the USA, 15% in France and 11% in Germany. And perhaps most strikingly, over the past two decades Britain’s Manufacturing sector has delivered greater productivity gains than Britain’s Services sector.
 
But that report came out in 2008 - and that is ancient history since the financial crisis has changed the economic rules of engagement for good. 


Napoleon, however, is said to have had great admiration for America.


Today, Americans are proud to declare themselves a nation of entrepreneurs, and that this spirit is what has made the country the greatest economy in the world since the second world war. The respected Kaufmann Foundation supports this position by claiming that entrepreneurs are the real drivers of the economy.
So what can the UK learn? Tech City aims to become the "digital capital of Europe" and has attracted Cisco, Vodafone, Intel and Google, which has committed to funding an innovation incubator. But news that Facebook would prefer to expand its offices in the West End of London than be sitting next to its rivals on Silicon Roundabout should not have come as a surprise.
Companies are clustered in Silicon Valley, but rivals do not make good neighbours: Google has separate campus in Mountain View and Facebook is in Palo Alto. When was the last time you saw a Sainsbury's right next to Tesco's in the UK? Or for those listening in American, when was the last time you saw a CVS next to a Walgreens?
The reason why tech companies have coalesced in Silicon Valley is because of capital and intellectual resources. The VC capital that doesn't come out of Sandhill Road is negligible on a global scale, while Stanford University continues to generate world-changing heroes of the startup world.
Californian gold fever has struck even further afield. The Skolkovo Innovation hub in Moscow which aims to foment the same kind entrepreneurial spirit in Russia.
But Silicon Valley has a real X-factor that's impossible to replicate: it is a complex ecosystem which turns so many Silicon Valley startups into global household names.
Tech City has one ingredient right - its location in Tower Hamlets puts it in a position for cheap rents for startups, but within walking distance of access to the UK's greatest concentration of capital in the City. Although Wellington, the largest VC firm in the UK is located in Mayfair, close to many other PE companies and hedge funds.
But the brain power factor is missing. The UK's centres of clean tech academic excellence are at least a tube or train ride away at Imperial College London or the Cavendish Laboratory at the University of Cambridge. Another downside of Tech City is that it will be focused on trying to find the next Google or Facebook.
James Caan, formerly the nice guy on Dragon's Den, has started a column in the Evening Standard to offering advice to budding entrepreneurs. But in the UK in general, there seems to be a focus more on services, than actually making things or even designing widgets that the world wants but are made elsewhere. And Dragon's Den investors lack the vision (and capital) of their US VC counterparts.
Sir Richard Branson is probably the most successful British visionary entrepreneur of our time. But he hasn't really started companies that make things - most of his companies sell services - with the possible exception of support for algal biofuels which could potentially have a huge impact on the world.
James Dyson is the only other household name who springs to mind who does actually design products, not just sells services. In this list of Britain's top 100 entrepreneurs, how many of them are in the manufacturing sector? As the Economist points out, successful economies of the future should be making products and creating services with global market value, ie we must start making things China wants, and fast.
The UK's coalition government makes a hue and cry about how to Get Britain Working again. Cutting benefits is a short cut to the streets, however. It's not a fast track to entrepreneurial wealth.
Coalition policies are loaded in the wrong direction and someone with a grain of good sense - Vince Cable? - needs to force the Chancellor into decisive action to encourage SMEs. Cutting corporate tax isn't enough… how about tax benefits for investments rather than cutting upfront costs. George Osborne's policies take with one hand, but don't give those savings back to society in the most useful way. Where is his evidence that straight cuts in corporation tax lead to direct investment?
Germany, on the other hand has weathered the economic crisis precisely because of the policies it legislated (and values it espoused in avoiding debt).
Instead of mocking poor ideas on Dragon's Den and lionising forgettable X-Factor stars, why not introduce some real competition into the UK?
The CleanTech Open in the US showcases some of the best energy industry innovations in the world and although its competitors are not household names, it gives entrepreneurs something to aim for - with access to mentoring, networks and potential capital.
How about also looking at the better elements of the US tax code, such as the 48c manufacturing tax credit, which stimulated investment in new factories to make equipment for the solar and wind industries?
One simple way to emulate the US is by changing the laws on bankruptcy. Once a company has gone bust in the UK, it's very hard for that entrepreneur to start over again. We need to eliminate some of the downsides to taking risks and remove the stigma of failure.
Thomas Alva Edison, still America's most beloved inventor, famously said of failure: I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.
But he wouldn't have been allowed to fail his way to success without the financial support of John Pierpont Morgan.
The UK shouldn't need a war to force the issue as Germany did. But shouldn't the summer's riots be a warning shot that if left unattended, even Britain's shopkeepers might have to bring down the shutters on their failing businesses.