In search of the next big idea

[Book rec] Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business

2010-08-12T17:53:00.000-05:00

Really enjoyed this book. Shows evolution of Crowdsourcing starting with Open Source Software movement, specialization of labor in industrial age, and changing ways in which people devote their free time ("spare cycles"). Provides countless case studies of different uses of Crowdsourcing: content generation, voting, funding, etc. Ends with interesting look into the future of the workforce and how the new generation of employees will put pressure on the modern day definition of the Corporation.

Innovations in International Money Transfer

2010-07-25T13:26:00.001-05:00

In preparation for a move to London, I've been researching different options for foreign exchange and international money transfers. Banks tend to be the most expensive, charging 2-3% for foreign exchange, plus additional costs for the actual money transfer (usually through wire transfer).

My cousin from Australia recommended Oanda as the lowest cost foreign exchange service. She and her husband had moved to Palo Alto, while she was doing graduate work at Stanford and needed an affordable way to move money between the US and Australia, while converting between AUD and USD. I signed up for an account after confirming that Oanda's costs were very low - a $25 flat fee plus 0.03% of the total balance.

I soon determined that there would be additional costs for transferring the money from my US bank to Oanda and from Oanda to my UK bank. Both transfers needed to be completed by wiretransfer, costing $20 to transfer from our Wells Fargo checking account (US) to Oanda and 25GBP to tranfer from Oanda to our Barclays current account (UK). So in reality, a single transfer with Oanda would cost $82.50 plus 0.03% of the balance.

While contemplating whether this was a good value, I remembered that a former BCG colleague, Iker Marcaide, was starting an international money transfer business called peerTransfer, intended to be a lower cost way of transferring money abroad. After visiting his company's website, I learned that he has created an innovative peer network to eliminate wire international transfers by "[taking] money from some users and [giving] it to other users within the same country."


Source: http://www.peertransfer.com/our-innovation

As described on peerTransfer's website,

John gives peerTransfer money in US and receives it in his UK bank account while Laura gives peerTransfer money in UK and receives it in her US bank account.
So the money does not travel internationally and Laura and John are able to save a lot of money in fees. peerTransfer acts a middleman guaranteeing the funds and doing all the matching so that John and Laura don’t have to worry about anything.

peerTransfer's fee structure is opposite to Oanda - it has a lower flat fee ($4.95 for transfers of less than $3000 or free for transfers over $3000), but a higher variable fee (1% of the balance). This fee structures makes peerTransfer more economical for individuals who are transferring smaller amounts of money (less than $11,750).

They are still in beta testing mode, but fortunately Iker was kind enough to allow me to be a tester! Using his service to transfer $5000 to the UK was extremely quick and painless. According to peerTransfer, I saved over 100GBP versus normal bank transfers and according to my calculations, $50 versus Oanda.

Congratulations Iker on such an innovative business idea. I wish you and perTransfer the best of luck!

The fall of cable TV

2010-07-24T16:35:00.004-05:00

Ever since I got my first cable subscription from Comcast I have awaited the day when I would be able to cancel it! From horrible customer service to exorbitant prices and annoying contracts, it seems like people are always complaining about their cable provider (though I hear more complaints about Comcast AKA Xfinity specifically).

Fortunately the end of our dependence on cable for quality television may be coming to an end. With the introduction of Internet TVs and the ability to connect to the internet through many video gaming consoles and blu-ray players, consumers will soon be signing up for online TV subscriptions from companies like Hulu.

This excites me for a couple reasons. First, in the short-term, a move to internet TV should save consumers money since most online content is free or deeply discounted compared to the typical monthly cable bill. Second, the increasing availability of content online will drive more consumers to "get connected" to the internet. Both trends which I would argue have positive effects for society.

A big question remains as to how the media industry will adapt to the changing channels of distribution. As the balance of power shifts from traditional cable companies to online content providers, how will the cable companies react? In early 2009, Comcast announced the purchase of major news network NBC. This deal enables Comcast to move upstream along the value chain to control content production in addition to their existing distribution channels. For online companies like Hulu that distribute TV content owned by Media companies, this could be a major threat. Meanwhile, other online companies such as YouTube may find themselves in a better position as they control the content (provided by users) and the distribution.

In the long run, some people have conjectured that online TV will become more like cable TV, expecting increases in cost and the frequency of commercial programming. I would argue that costs will need to remain low in order to encourage consumer adoption - otherwise what is the point of switching? A similar argument can probably be made regarding commercials. If the frequency of commercials increases, people will prefer to pay more for cable and DVRs again to eliminate or fast forward through commercials.

What I believe most industry observers could agree on is that the industry is undergoing a major disruption and only time will tell what the result will be for consumers.

Sources & further reading:

"The Hulu Plus Subscription: $10 a Month to Kill Your Cable"
http://gizmodo.com/5521657/the-hulu-plus-subscription-10-a-month-to-kill-your-cable

"Subscription Hulu: Beginning of the End for Cable, Satellite TV?"
http://www.wired.com/epicenter/2010/06/subscription-hulu/

"Internet-Ready TVs Usher Web Into Living Room"
http://online.wsj.com/article/SB123111603391052641.html

"Hulu Plus"
http://www.hulu.com/plus

"Get the Best of the Web Right on Your TV"
http://www.samsung.com/us/internetTV/