The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning.
It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate.
> The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning.
That's easier said than done. More often than not, when young, fast-growing companies try to enter new markets quickly in this fashion, it doesn't have the intended outcome.
> It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate.
It's even easier to look at what markets Homejoy could apply its technology to, extrapolate to the point where they dominate most if not all of those markets, and say, well, this would be worth $x. Even though this is not at all likely.
Typically the expansion markets have worse economics or other operational problems. That's why they wer not the 'model' or tier 1 market to begin with. It does seem a stretch to put a huge valuation on a business with so much value 'on the come'. The exception (that perhaps proves the rule) seems to be Amazon.
> but its a personal vanity project no one is demanding.
I'm not sure about that. It seems about 10,000 people are demanding it, as of noon Pacific time.
> Kickstarter being used by well funded celebrities who just want to minimize their risk to zero seems wrong to me. It should be for startups and good ideas that can't get funding elsewhere.
Ah, but these are not exclusive! Celebrities bringing their mass appeal to make more people aware of Kickstarter is exactly what will make it so that smaller players have a higher future chance of being funded through the platform.
The whole "those useless business people..." mentality may pop up in large corporations where roles are siloed off strictly and contact between groups is minimal, but if it's popping up in your startup it speaks to a failure to build a culture of mutual respect and transparency.
Short term, paying with FB for physical goods (eg. in restaurants, bars) is an unlikely outcome because carrier billing involves giving up an enormous percentage of the transaction to the carriers.
In the U.S., carrier billing typically involves yielding a 40 - 50% margin to the carriers. In Europe, the percentages are lower -- carrier billing is a more mature market there -- but they still top out around 20 - 30%. In developing markets, margins can go as high as 75 - 80%.
I don't know what sort of relationship FB has built with the carriers and what sort of percentage merchants using the billing system will ultimately end up with -- after all, both FB and the carriers will take a cut -- but I would be surprised if it isn't in line with the current percentages charged for carrier billing.
For virtual goods, carrier billing service providers claim the frictionless nature of the transaction and the reach (6 billion mobile subscribers globally) make up for the small margins.
Long term, of course, things could very well turn out differently.
Google also allows carrier billing in Play (theoretically; it failed when I tried to use it), but considering that Google's whole cut is 30% they'd be losing money on every transaction if they pay 40% to the carrier.
Wow those are high! If the whole "paying with your phone" concept catches on perhaps carriers will offer more competitive rates and more than make up the loss on volume of transactions. The current state of retail credit card processing with the signatures and receipts does seem out-dated. Would be so much easier to just wave my phone across some reader. Or just leave the phone in my pocket and use NFC somehow.
Typically, though not always, the businesses that are torn down the hardest by the sharks have poor fundamentals and little traction.
Five percent equity taken from these businesses is unlikely to ever amount to anything of significant value, although naturally the entrepreneurs presenting their businesses may feel otherwise.
And if your business is in so poor of a state that it gets mocked and humiliated, there seems to be little downside to just re-incorporating if you truly believe in your idea. In this case, wouldn't ABC get nothing?
I understand that in the real world, legal ramifications and damage to one's reputation mean this rarely happens -- but is ABC really going to make a stink?
I would imagine re-incorporating just to screw ABC out of an equity or royalty agreement would be a pretty easy way to end up in a courtroom explaining how what you didn't wasn't some sort of fraud.
"A billion customers in the world... are waiting for a $2 pair of eyeglasses, a $10 solar lantern and a $100 house."
Interestingly, this article doesn't even touch upon the real challenge: It's not in mass producing these items at low cost; it's in gaining widespread distribution to those one billion customers -- across different countries and cultures, to thousands of groups of people each motivated by different things.
Motivation is key. It's hard to figure out what motivates people, and it differs enormously across cultures. You could have the most effective $100 house around, and you could even have a way of distributing the physical product to hundreds of thousands of people living in poverty. But what happens when no one wants to live in your house -- because, as it turns out, your house is foreign, not cozy; it just doesn't feel like home.
Does that seem like a silly example? It's not. The poor are not as easy to figure out as some people think. Understanding their motivations -- immersing yourself in their cultures and understanding what they really want, what really drives them to make certain decisions -- is the key to good design.
And, unfortunately, it's an aspect of good design that's not easily scalable.
Obviously, there are pockets where you can start and grow from. But saying that a billion people are waiting for $100 houses -- as if the only issue is designing that damn thing to get the price down! -- strikes me as not being the best way to begin a dialogue on poverty alleviation.
By 2050 it's estimated that over 50% of the world's population will live in "chabolas" - i.e. in semi-urban shanty towns with no formal infrastructure, yet still very close to major city centers. So distribution is increasingly less of a problem than you would assume, simply because population centers are concentrating at a very quick rate.
It's an antique method of thinking about these things, but one way to conceptualize "third-world" countries is that they lack a middle class. However, these aren't entirely "urban poor" people either. The movement to these poor slums also has a large degree of private innovation and some leap-frogging that brings millions of these new urban dwellers into a "pseudo-middle-class". They have cell phones, they organize informal water and electricity for their dwellings, improve them, and basically begin to see an slowly improving standard of living.
So, there really is a billion people who aren't well off, but not too-badly off to not afford a $2 pair of eyeglasses. They're working, and moving up socially, and this new class of people need affordable products. There's an enormous, growing market for this stuff.
By 2050 it's estimated that over 50% of the world's population will live in "chabolas" - i.e. in semi-urban shanty towns with no formal infrastructure, yet still very close to major city centers. So distribution is increasingly less of a problem than you would assume, simply because population centers are concentrating at a very quick rate.
Yes, I was only stating facts, and I really want to point out that if we want to understand what the world will be like in the near future, we have to understand what rapid urbanization and "mega cities" will entail - massive urban populations living in slums (chabolas or favelas, there are several terms).
Usually in these areas I just cite United Nations estimates - here are the facts from the UN:
For people who want to know the other "downside" of this massive urbanization, then here's a GREAT link to an article. This website also a ton of forward-thinking articles about economic trends with larger implications:
Not dubious. Just replace "chabolas" with "cities". The move to cities worldwide is well documented and not showing any signs of slowing down. http://en.wikipedia.org/wiki/Urbanization and lots more in Google.
The poor are as easy to figure out as any other human being, they are not different from us. These are people laboring away in sweat shops and farms for 2 hours a day in hope for a better life. How is motivation a problem here?
The problem is that the current economic system is one of exploitation.
Apple would be spending half its cash pile to acquire a domestic company.
Nearly two-thirds (62%) of the company's sales are international [1]; furthermore, I would guess that much of the company's growth is in international markets, especially in Asia.
Unless Apple is seeking to improve its operational expertise in running carriers in order to buy up carriers throughout the world, this acquisition would be a very curious one.
There are plenty of reasons Apple won't buy a carrier (I think namely because it wouldn't be approved without concessions that Steve Jobs would never live with), but money isn't one of them. Interest rates are very near zero and Apple isn't exactly a credit risk. Not to mention Apple's stock value...
If you are acquiring a 39+ billion dollar company, money is a factor.
Considering Apple's capital structure, interest rates aren't really a key consideration here. "Apple's stock value" reflects the fact that they invest in relatively high return projects and that investors expect them to continue to do so. This type of acquisition would not be satisfactory.
It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate.