The European Central Bank (ECB) believes that Europe’s economy would improve if there were just more money floating around Europe, especially in the form of bank loans made to companies. In an attempt to boost the European money supply and increase bank credit the ECB is now offering four-year loans to European banks at an interest rate of only 0.15 percent provided that the money is lent to European companies. The first such sales were last Thursday and proved disappointing as banks took only 83 billion euros (7 billion) in such loans, even at those fire sale rates. The problem is that…

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Maybe the U.S. economy, a weakling for the last six years, is finally starting to flex some muscle. We’re referring to the return of King Dollar.
For those who haven’t been paying attention, the greenback is in the midst of a rally not seen since the 1990s. It’s racing past the euro, the yen and other currencies. Investors worldwide are buying the equivalent of stock in America, Inc.
If the rise in the dollar’s valuation is sustainable, it’s welcome news for the stock market, for fighting inflation and for U.S. growth prospects.
Ronald Reagan said it best: A strong dollar is a sign of a…

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Scotland votes no

 

No 2,001,926 (55%)

Yes: 1,617,989 (45%)

Turnout: 84.6%

I don’t write much about politics on this blog but I’m making an exception today because it’s great that Scotland has voted to stay part of the United Kingdom. We have enjoyed remarkable political stability as a single country but as separate countries we could have found ourselves in turbulent times. The risks to Scotland centred around financial uncertainties and the balance of the two to three party system would have tilted uncomfortably to the right in the rest of the UK. Much better the devil we know.

Also worthy of note is the peaceful way this debate has played out. I imagine many parts of the world are looking on wishing that their governments would allow a similarly threatening debate to play out without violence.

Hopefully attention can now turn to building the future in a similarly constructive manner.



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The spread of negative bond rates throughout Europe brings to a close the “crisis is over” period. On Wednesday, Germany auctioned off 2-year bunds at a record low -0.07%. That followed Tuesday’s negative rate tender in Denmark, that country’s first since the euro crisis “ended” in 2012. Anyone who pays even the slightest attention to the fate of the euro has seen the same spread of negative rates once more throughout Switzerland, the euro’s foil through much of that period. Not only have Swiss rates turned markedly lower, interest rate swap spreads have compressed back to similar levels…

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Monetary Policy: The Federal Reserve said Wednesday the economy isn’t as strong as it believed just two months ago, and that it’s not likely to raise interest rates soon. It’s as close to an admission of failure as you’ll ever get.
Fed Chairwoman Janet Yellen was admirably blunt in assessing the economy’s weakness: “There are still too many people who want jobs but cannot find them, too many who are working part time but would prefer full-time work, and too many who are not searching for a job but would be if the labor market were stronger,” she said.
Yep. That pretty much sums it up.
As the…

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I just read this on a great post about the paradoxical traits of entrepreneurs:

Creating something from nothing and watching other people use it, love it, and share it is simultaneously the most empowering and humbling feeling. The satisfaction that comes from watching numbers climb as you tweak and improve your product is indescribable. The exhilarating triumph you feel each time you solve an unsolvable problem is your very own version of winning the lottery. And the relief that floods over you when a risky decision pays off mirrors a brush with death and results in similar feelings of invincibility and extreme gratefulness.

In short, the highs are HIGH.

The lows are, of course, low, but for many it’s the highs that make it, or make being an entrepreneur so addictive. If you’re into rapid learning and seeking new experiences there are few options like it.

The article goes on to list paradoxical traits that successful entrepreneurs exhibit – e.g. stubborn yet flexible and both big picture and detail oriented. For anyone thinking of being an entrepreneur it’s a good list to evaluate yourself against.



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While many economists and market watchers have failed to notice, we have entered a new chapter in the short and checkered history of central banking. This paradigm shift, as yet unaddressed in the textbooks, changes the basic policy tools that have traditionally defined the sphere of macroeconomic decision-making.
The job of a central banker is supposed to be the calibration of interest rates to achieve the optimal rate of growth for any particular economic environment. It is hoped that successful decisions, which involve perfectly timed moves to raise rates when the economy overheats and…

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Tuesday the Senate Finance Committee held a hearing, “Retirement Savings 2.0-Updating Savings Policy for the Modern Economy.” The hearing comes on the heels of a recent Federal Reserve report, “2013 Survey of Consumer Finances,” which detailed the current state of retirement-account balances.The average balance in an American retirement account has risen 10 percent in the last three years. The median balance actually rose even more, up 25 percent, to ,000.However, those with retirement accounts have dropped below 50 percent. Only about 40 percent of Americans in the bottom half income…

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Commerce is moving mobile and mobile is moving towards apps. M-commerce apps are, therefore, the way forward. We have investments in a couple (Top10 for hotels and Stylect for shoes) and I expect we will do more going forward. We are taking a serious look at another one right now.

However, maintaining user engagement can be challenging in m-commerce. Becoming part of their users’ daily routine, one of their ‘home screen apps’, if you will, is difficult because the customers of most m-commerce apps don’t purchase that often. Top10 and Stylect have lots of engaged users, but nobody is booking hotels or buying shoes every day.

Notifications are one of the most obvious tools for improving engagement, but they need to be used carefully. New research from Kahuna published on Andrew Chen’s blog found that only 12% of users engage with “ecommerce and retail” notifications, implying that up to 88% of users find them annoying. “Utility and financial services” notifications top the chart with 40% engagement, perhaps reflecting their daily usage patterns.

The trick for m-commerce apps is to use notifications sparingly and doing the work to make sure they are timely and relevant to the user. Unfortunately that means work – there’s no quick and easy way to use notifications to drive a sustained improvement in engagement.

The Kahuna research makes three recommendations:

Find the appropriate cadence: Users may not want to hear about shoes every day, but once a week might be the sweet spot. Look at the stats and see what works.

Make it personal: Don’t send the same notifications to every user. It’s much better to send users personalised sale notifications for shoes on their wish lists than to send everybody a 10% off coupon for a retailer who wants to do a blanket promotion.

Get the timing right: users engage more with notifications at times when they use the app, so figure out when that is and send notifications then. Urgent notifications are different. If a pair of shoes from my wishlist has gone on sale then I should know about it now, before they sell out. Don’t make the mistake of waking people up though (see below).

The best practice book for m-commerce is still being written. A small number of companies are making it work, e.g. Amazon and Uber, but e-tailers with less frequent purchase patterns are still figuring it out. I’m excited for Forward Partners to watch and help them do that.

Below this are some examples of well and badly executed notifications along with customer responses on social media. They are from Andrew Chen’s post. If you are involved with m-commerce you should go read it…


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The Wealth Building Home Loan (WBHL), a new approach to home finance, was unveiled at the American Mortgage Conference on September 8. In developing the WBHL, my colleague Stephen Oliner and I were informed by long-forgotten standards set by a federal agency that is now celebrating its 80th anniversary. In 1934 the Federal Housing Administration (FHA) created what it called “a straight, broad, highway to debt-free home ownership” which protected home buyers with such features as 20 percent down payments, fully amortizing loan terms of 15-25 years, a full review of a borrower’s household…

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Everyone knows that inequality in the United States has risen in recent decades. And anyone who has looked at any data - or an earlier post from my Brookings colleague Gary Burtless - also knows that most of this rise is explained by the pulling away of the rich from everyone else.
The implications of this particular kind of inequality are quite profound. In recent history, concerns about equality have been, at heart, concerns about the poor. Egalitarian political philosophers have tended to adopt a version of John Rawls’ ‘difference principle’ - that inequalities are acceptable to the…

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Social recruitment business Branchout raised $49m and grew to 33m users. Today Techrunch is reporting that they are in a firesale situation.

I think there are two lessons here:

  1. Growth without engagement is fragile. Branchout did an amazing job of attracting users to the service, but they used spammy tactics and too few of those users became active. Rapid growth without a user story that resonates widely spells danger for investors, particularly when acquisition methods are on the edge.
  2. Platform dependency is a killer. Branchout collapsed when Facebook banned the Wall Post method they were using and many other companies which depended on a single platform have suffered the same fate (Google’s algorithm changes have claimed many casualties). Caveat: dependency can be ok when there is a clear alignment of interests between the platform and the startup. In this case there was no alignment. Branchout was hurting the Facebook experience rather than helping it.

Of these two lessons avoiding platform dependency is the easier for investors to observe. Growth’s intoxicating promise is that the business can be MUCH MUCH bigger tomorrow and that makes it easy to suspend disbelief when areas of the business aren’t working (yet…). Fortune generally favours the brave. In venture capital that usually means those that make risky investments, but in cases like this it means having the courage to stand aside.



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Bipartisanship in Washington is not quite dead. Republicans and Democrats both praised the Department of Energy’s approval of two new liquid natural gas export projects. With Russian gas exports to Europe slowing, and Russia solidifying its hold on eastern Ukraine, more approvals should be in the pipeline. But bureaucratic red tape from the Federal Energy Regulatory Commission and the Environmental Protection Agency result in two dozen pending applications for natural gas exports, some from 2011.
America has enough gas for itself and for export. About a third of natural gas in North Dakota…

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Hard as it may be to believe, in 1700 India accounted for 24 percent of the world’s ouput, versus 3 percent for England. According to Niall Ferguson’s 2002 book Empire, England also had an economy that was half the size of France’s.
But thanks to the Glorious Revolution that led to the Dutch royal family taking control of England, the once sagging country was lucky enough to “import” Dutch monetary policy; specifically its gold standard. And with the pound suddenly credible to investors thanks to its gold definition, the economic situation in England changed for the better in very rapid…

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Dag Kittlaus, founder of Siri, wrote on Techcrunch yesterday to predict that A Cambrian explosion in AI is coming. He notes that there has been “massive uptake of assistant services spurred by Apple’s Siri, Google’s Now and Microsoft’s Cortana” but says these services are still in their infancy. The missing piece is an ecosystem of services that work with these assistants. That would enable the Holy Grail of an assistant that intelligently finds and uses whatever apps or services we need for a given task – just like in the movie Her from earlier this year.

Need a babysitter for tomorrow night in a new location? The assistant should know the age of your kids, find a service that matches your price profile and then make a reservation, maybe asking you to confirm first.

I have just been looking for a babysitting service in a new location, and it wasn’t easy, so that that sounds very exciting, and I very much look forward to it becoming a reality.

However, it’s not clear to me how the discovery process will work. Healthy ecosystems have some way for quality to float to the top. Examples include ranking or voting systems as we see in Product Hunt and Stack Overflow, algorithms that incorporate user signals e.g. Page Rank, and manual system that takes user feedback as a core input e.g. the app stores.

The whole point of assistant services is that they choose services for us. In the babysitting example above I don’t want the assistant to come back with three options and make me choose, I want one option that I’m happy with. Before I trust the assistant I might want to hear about second and third options to make sure I’m getting the best, but I imagine I would stop bothering with that pretty quickly.

However, if assistant systems make the choice for us then user signals are limited to feedback given on the service. New services, by definition have little if any feedback, making it unlikely that assistants will recommend them and that innovation would suffer. That’s one nightmare scenario. The other is that the assistants only recommend services which have a relationship with whoever wrote the assistant – i.e. Siri only recommends services that have built a relationship with Apple.

In my view app store owners already have too much influence over which apps we use, and that runs counter to the original promise of an open internet. My fear is that assistants, wonderful though they will be, will worsen this problem.



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