Japan's Edge over American Industry

As I’ve mentioned before, investing in stocks in high school allowed me to take my dream trip to Japan. I went for a variety of reasons, but mainly to expose myself to something non-western. One of the things I was extremely impressed by was the efficiency, honesty, and collectivism.

On a trip from Hiroshima to Tokyo I left my CD case on the Shinkansen Bullet Train. A trip back to the lost and found revealed walls of small belongings from battered umbrellas to McDonald toys. I was amazed to find out that when you leave something in a public place you “expect” to get it back.

Another thing Americans have to pick up quickly is efficiency. Go up a busy escalator like the one at Akasaka Mitsuke station and you’ll notice everybody stands to the right leaving an empty clearing all the way up. Stupid me decides to stand in this clearing only to be bumped into by somebody rushing up the escalator. I realized they did this to allow people in a rush get to their destinations on time! If you look at any busy escalator in America you’ll see people standing willy nilly with those in a hurry stuck behind a wall of people.

It was in that very moment I realized why the Japanese car industry was able to hammer Ford and General motors so easily. From early childhood every Japanese born child is taught to be honest, loyal, and efficient. You get your things back when you leave them lying around because people are looking out for the group, not themselves. Likewise, things get done quickly and efficiently because you’re not working for Mr. Big Boss or even yourself, you’re working for EVERYBODY.

Why Google is So Successful

This morning I read that Google’s revenues doubled during the 3rd quarter of 2006. Those impressive gains made me sit down and think about why Google has been so successful. Was it a search algorithm that provided users with relevant information, their spam free search index, the clutter free home page? I have concluded Google is successful because it encourages expression and exchange of ideas among staff members and put together a competent workforce. I’ve listed a few of the reasons I think Google is so attractive to top talent.

Fringe Benefits
Google provides workers with flexible work hours and free meals prepared by some of the world’s top chefs! Some Googleplexes include on site gyms, child care, and volley ball nets!

The 20% Rule
The 20% rule appeals to ambitious and passionate programmers and web developers. The 20% allows employees to use up to 20% of their work week to pursue a project they feel passionate about. It could be almost anything!

Competent Workforce that Gets Along
If you’ve ever read blogs by Googlers you’ll notice they’re very happy with their work environment. They like and respect the people they work with and I’ve yet to see a Googler blog about the moron they hired six months ago to run their department. Because the people that get hired know what they’re doing and get along with others, projects are finished at a remarkable pace.

Stuff Happens
One of the main frustrations programmers and web developers have is the amount of time it takes to implement a good idea. When somebody at google has the next big idea they don’t have to fight their way through an army of lawyers, fill out a trees worth of paper work, or have to hurl their ideas over a castle wall guarded by a moat and memo eating crocodiles. Good ideas go straight to the top and get worked on immediately! Googlers are encouraged to think big and aren’t discouraged or put down when they come up with crazy ideas like “what if we created a free service that allowed people all over the world to view detailed 3-D images of major cities and satellite images of the rest of the world?”

Niniane Wang summed up why I think Google has been performing so well in one sentence: “I interview on average two candidates a week, sometimes for my team and sometimes for Google at large. I look for people that I want to work with – candidates who have strong coding skills and computer science knowledge, are pleasant to interact with, and can get things done.”

The Console Wars and your Wallet

(Note: Your sensei Johnny is a huge Nintendo fan; information may be more biased than usual.)

Nintendo Ticker Symbol: NTDOY.PK

I told my little cousin I would give him $500 to invest if he came up with some stocks. He had 5 companies on his list and the top three were Nintendo, Sony, and Microsoft. I asked him why he allocated half his money to Nintendo and he said “because everybody at school used to think PS2 was better than Gamecube and now everybody thinks the Wii will be better than the PS3.”

As you can see, the Console Wars are in full swing and I predict Nintendo taking market share away from Sony and Microsoft and expanding the video game market to include people from other generations and demographics. Nintendo has already had massive success with innovative and strange new titles such as Brain Age and a game that teaches office workers business English.

Sony and Microsoft have banked their success on upgraded graphics cards and powerful processors while Nintendo has recognized the demand for new and innovative game play and responded. The Wiimote, introduced earlier this year is designed to look like a television remote, and allows players to manipulate game elements simply by moving the control.

I wish I could say there was going to be a winner in the console wars but, I can say there is going to be a loser. Nintendo will likely gain enough market share to be in the Sony and Microsoft league, however, Sony is going to lose a great deal of market share to Nintendo and possibly Microsoft because Sony has made no real improvements to it’s console, aside from the impromptu dual shake controller, and token graphics enhancements.

PlayStation and X-Box are also significantly more expensive systems. The Wii will be debuting at $249.99 including a game while the X-Box 360 sells for $299.99 and the PS3 sells for an arm and a leg plus $399 or more! The price of the PS3 alone is going to be enough for PS2 owners to look elsewhere for their gaming fix.

Unconventional Investing Ideas: Prosper.com Loans

Ever since I applied for my first credit card and read the interest terms I admired the people who ran Visa, Mastercard, and America Express. I thought “they make people pay them money to buy things they didn’t even make! Wow!!”

Having a lot of money makes it easy to make money. To quote Al Bundy “money likes money”. Prosper.com allows me to live my dream of collecting money for doing almost nothing by allowing normal people like you and me to lend money to people who need it for an agreed on interest rate.

You have complete control over who you lend your money to. Prosper displays credit scores on a scale from F – A and their debt / income ratio. You can also break up your risk and loan small amounts of money to several people instead of lending one big chunk of money to a single person. If somebody defaults, collection services are hired on your behalf to recover your investment.

Prosper.com's Diagram Explaining how Lending and Borrowing Works

Starbucks "Infills" Markets

Today I read that Starbucks wants to "infill" which means putting 2 Starbucks on every corner. The hub of my city already has two Starbucks locations, one next to Best Buy and Barnes and Noble, the other a block or two a way on the corner of a busy intersection.

As the parking lot and building where the second Starbucks was being built I thought "they have to be closing the old one down right?" Apparently I was wrong, and when I started putting things together it made sense to me.

The old Starbucks had enough problems keeping up with the morning rush from the adjacent office complex. The crowds only get worse as moviegoers from the Edwards Cinema across the street meet up for coffee. A second Starbucks would be able to siphon off excess traffic and provide a calmer atmosphere for the crowd shy.

After the "new" Starbucks was finished I noticed the new one had a jam packed drive thru. I thought "is the "old" Starbucks going to survive?" I rushed over to the "old" Starbucks only to find it just as crowded as it always had been. Maybe this "infill" idea is going to work?

One thing Starbucks should be worried about is backlash. I don't think "infilling" is great for every community. There will definitely be some sort of opposition in certain communities that feel Starbucks is taking over their neighborhood.

That said, I'm thinking about Starbucks stock. The P/E is kinda high for my tastes (Currently 53.57) but I do think Starbucks will continue to grow rapidly over the next year.

At $8 a Share, is Ford a Bargain?

After Ford stock fell yesterday I seriously considered buying some. I’m always looking for value in everything I buy and seeing Ford under $8 a share is really tempting. I preach to people all the time that if they want a vehicle that delivers great value and won’t break down on them to get a Japanese car by Honda, Toyota, or Subaru. So why would I buy Ford Stock, even if it is so low?

The answer is optimism. I’m hopeful that American car manufacturers will finally understand that the SUV driving, Hummer buying, buy American no matter what crowd is only one slice of America. I’m hopeful that after Ford and GM took a beating from the Japanese car makers like Toyota and Honda they will get their act together and start making cars with excellent gas mileage.

We’re also seeing change. Ford’s restructuring effort is reported to cut as much as $5 billion dollars in operating costs including cutting a lot of white collar office workers. The light at the end of the very long, completely dark corner is that Ford will be profitable again in 2009. My gamble on Ford is going to be a long one. I’ll keep you all in formed.

Unconventional Investment Idea: Second Life Real Estate

If you're looking for an investment off the beaten path I've got one for you. I recently discovered an MMORPG called Second Life. Apparently people all over the world are buying and selling digital real estate in the Second Life universe. I’ve read reports of personal assets worth as much as $250,000 and yes, some property moguls are making serious cash! Second Life supports an economy with a GDP of at least $180,000,000 and processes transactions worth as much as $600,000 real American Dollars.

Players make money by selling game enhancements like in game language translators or renting out premium apartments in mountain villages to other players for Linden Dollars, the official currency of Second Life. Players take profits by exchanging their digital Linden Dollars for real money on the Linden Dollar Exchange. The Linden Dollar Exchange is a literal currency exchange that floats Linden Dollars against American Dollars.

Second Life Currency Exchange
CNN's Article on the Second Life Economy
Article on Taxing Virtual Assets