Everyone says that Facebook fights privacy because they grow by making you and everyone else, very public. And that part is obvious, if they don’t encourage you to be less private they have no network. But there is a countertrend to that and that is post IPO monetization. Now that Facebook got 1 billion people to share their intimate and mostly irrelevant moments they hope to make money by you being so desperate for the attention that you got used to having that you start paying NOT to be private. In order to achieve this Facebook is now making you less popular, or more private against your will.
So the new Facebook, the post IPO “have to meet the next quarter numbers” Facebook, is paradoxically more private, unless you pay of course. But if you don’t pay, less is disclosed about you to others because those who pay increasingly crowd you out. And paradoxically a new privacy will be achieved.
2013 11
Lance Armstrong: To cheat is French, to get caught is American
Published by MartinVarsavsky.net in General with
Lance Armstrong in the prologue of the Tour de France in July 2004 in Liege, Belgium (Photo credit: Wikipedia)
I once saw a Steve Martin movie in which he played a character, an American, who while visiting France got stopped by the police together with a woman who was not his wife. Worried that somehow the story would leak to his wife he tells the policeman: Well, you understand, “to cheat is French” but the policeman smartly replies. “Yes sir, to cheat is French, but to get caught is American”.
As the whole Armstrong confession happened I remembered this phrase and felt that what’s really embarrassing about the Lance Armstrong investigation is that the US government has been the only one to truly fight in a forceful way by stripping its own national hero of his titles. In the meantime the widespread cheating that has been taking place in the Tour de France for years has gone with lesser punishment to European competitors and that is shameful. Here’s a Wikipedia article on doping in the Tour de France. I have a hard time imagining European nations going through the trouble that the US government went through to strip their national heros of their cycling titles. Because as you read the history of doping in the Tour de France you conclude that it’s been incredibly common and that as Armstrong cheated and rightly got stripped of his titles many others should have gone through the same level of scrutiny and public outrage.
2013 6
Something better to do
Published by MartinVarsavsky.net in General with
In Spain there is tremendous unemployment right now, it has gone up from 7% to 26%, so when I interview there I find a great deal of people looking for something to do. But surprisingly as I have started interviewing in the USA I find that here also everyone seems to be looking for something to do. But this is not because they are not doing anything, but because Americans are always looking for something better to do. The good news about this behavior is that it makes for a more efficient labor market. The bad news is that it also accounts for a lot of unhappiness, both at work and in other realms of life. People here wonder not only if they could have a better job but also if they could be eating at a better restaurant, or hanging out with better people, or having a better boyfriend/girlfriend, or a better spouse, or sadly sometimes even better children. The grass is always greener takes a new dimension in the USA. Americans think that Europeans are laid back but having lived as much time in Europe as in America I can also say that sometimes it is good to be content. The American quest for excellence, for self improvement, for always wanting to do better or having something better to do, can take a high emotional toll. Change is good, improvement is good, competition is good, but being happy with what you have is better.
2013 6
Europe is way behind when it comes to WiFi on planes
Published by MartinVarsavsky.net in General with
In Europe, whether you fly privately or commercial, there is no WiFi on the plane. In the USA there is always WiFi on the plane. It is not a luxury. Pay $7 and you are connected.
Ok, clearly I am a fan of WiFi and work at Fon, building the largest WiFi network in the world. Hence what I am going to say may sound like self promotion. But what saves me here is that Fon has nothing to do with providing WiFi on aircrafts and I have nothing to do with Gogo WiFi. So I can say it. Gogo WiFi is a revelation. It makes flying something more humane, less of a trauma. And it is not that I am afraid of flying. I am a pilot, but because I am a pilot I know that a plane is much safer if and when it has Internet. One thing is a pilot with a radar, another thing is a pilot with a radar and weather information as to what is behind the CBs that appear on the radar. Or think of that Air France plane that fell in the middle of the Atlantic Ocean, had no internet and they could not know where it had fallen not even within a 500 mile accuracy. So not only is flying safer when everyone is connected (9/11 could have been possibly or partly prevented) but it is much nicer!
Now when I fly I “connect”, I work, or I chat with my wife Nina, with three out of my five kids (the older ones), with friends. I tweet, I Facebook, I blog (as this post) and I read the news. And I have to fly a lot in the USA these days, every Tuesday Miami NYC, every Thu or Fri back to Miami. And when I do, thanks to WiFi, time flies 🙂
Now can anyone please tell me when Europe will have WiFi on all flights? Or other continents?
2013 3
Social car movers
Published by MartinVarsavsky.net in General with
We have a car in NYC and one in Miami. But it is useless to have a car in Manhattan this time of the year and very useful to have 2 in Miami. So we decided to bring the Q7 to Miami and I had this crazy idea to ask somebody to do it over social media. I posted it on Twitter and Facebook, said that if anyone wanted to drive our car we would pay for gas and $250. This was intended for somebody who wanted to enjoy driving down the East Coast and get to know this part of America. I told them they could take up to a week although the trip itself according to Google Maps is 19 hours of driving. Friends told me that I could get a crook or somebody who could destroy our car but I thought it highly unlikely.
And it totally worked! Many people volunteered and I chose this computer programmer who inspired confidence in me over email and via his LinkedIn profile. It all went great and the car just made it to our garage in Miami.
It is not that we saved much money, there are professional services that do this work, ship your car on a train or truck. But I like the sharing economy. That’s what Fon is. For Randall who brought the car it was a great trip he said. He stopped along the way to visit friends and relatives. He loved the Q7. And for us it was so much easier than dealing with a company, filling out the paperwork and legal stuff that normally accompanies all these things. Pick up, drop off.
Is there a business here of moving cars instead of renting cars for those who want to drop a car far from where they rented it? For car rental companies it’s all about drop off charges. Maybe that’s the next, albeit smaller AirBnB, or ZipCar.
After writing this post I came across Spanish company Amovens, founded by Diego Hidalgo, what they do is not exactly shipping your cars through social means but car pooling. Also Socialcar which is like a car rental company among individuals.
2013 23
Fon teams up with KPN to offer WiFi all over the Netherlands!
Published by MartinVarsavsky.net in Fon with
KPN (Photo credit: Wikipedia)
I am pleased to announced that Fon has teamed up with the largest telecom operator in the Netherlands, KPN to bring WiFi to all the Dutch people in a similar way as we do in neighboring Belgium with Belgacom and in the UK with BT. Soon many Dutch customers of KPN will be able to roam in Fon’s 7.8 million hotspots around the world for free and Foneros (Fon members) will be able to do so in the Netherlands. Personally I can’t wait to go to Amsterdam, one of my favorite cities in the world and connect to Fon everywhere. For those currently in our network (including our telco partners’ subscribers at Belgacom in Belgium, BT in the UK, MTS in Russia, Oi in Brazil, Netia in Poland, SFR in France, SoftBank in Japan and ZON in Portugal), it will provide them with more WiFi access in the Netherlands, one of the most advanced economies in the world. I take the opportunity with this announcement to thank the early Foneros of the Netherlands who have been helping the Fon community grow since 2006 and to the teams at KPN and Fon who are working so hard to make this happen.
This is the first of several deals we will announce in 2013. Stay tuned.
2013 7
So What’s Wrong With The States?
Published by MartinVarsavsky.net in USA with
The USA is a great nation for entrepreneurship and innovation, it has the best science in the world, the most creativity in the arts, it is the number one economy in the world, it has an energy unrivaled by other nations and we have chosen to move to this great nation with our family. So everything that follows must be seen as friendly criticism from a person who loves this country.
Now most of my friends in the USA agree on what is great about this nation. But when I speak to some American friends they seem to be unaware of the shortcomings of the USA compared to others, and this is what I would like to focus on. Here are some quick examples.
The USA ranks 38th in life expectancy which is shocking considering that it has the best medical science in the world. And this generation is the first one that will live less than the previous generation. The average American is expected to live two years less than, say, the average Spaniard. This is partly because the USA has a medical system that leaves 50 million people uninsured and many others under-insured or worried about losing their insurance (my wife Nina, for example, can’t get medical insurance to have our next baby because pregnancy is considered a pre-existing condition and we moved to USA when she was already pregnant). It is also partly because the USA is the nation with the highest percentage of its population obese, over 30%. The WHO studied overall level of health and concluded that Americans rank 72 in the world. Family structure is also weak as the USA has the highest divorce rates in the world. Moreover inequality is on the rise: as this Wikipedia article argues, the top earning 1 percent of households gained about 275% over a period between 1979 and 2007, compared to a gain of just under 40% for the 60 percent in the middle of America’s income distribution.
The USA has a legal system that is extremely expensive and unreliable and tends to favor those with resources to pay for it. The USA spends almost half of what the whole world spends in the military and since WWII (in which the USA did an amazing job), other military interventions have been of dubious value for such a huge investment, especially Iraq and Afghanistan. The USA leads all developed countries in executions by death penalty, it has a love for guns that makes its murder rate unusually high for a developed nation, it has the highest incarceration rates of the developed world mostly focused on one ethnic group, African Americans. The USA has more people in jail or parole than Madrid has people. And while the USA has most of the best ranked universities in the world, according to PISA scores the USA ranks very poorly compared to other developed nations. The USA is also the largest polluter in the world together with China but a leader on a per capita basis. The American lifestyle is great but not scalable to the world as a whole. Replicating this lifestyle on a global basis will lead to extreme competition over resources and high environmental damage.
Yes, the USA is great nation. I am happy to be here teaching at Columbia– this country probably has the most educated elite in the entire world. It has incredible business creativity and it is home to the Apples and Googles of this world and in this sense, they are an example for the whole world to follow. It also has individuals who are among the most driven in the world and who want to succeed and do as much as they can. But it has a number of very important issues to address, many of which were not part of the 2012 presidential debates (climate change for example) and which seem to rarely be part of the conversation with many of my American friends.
This article was also published in LinkedIn. You can follow Martin by clicking below:
As the USA edges closer to the “fiscal cliff”, an automatic mechanism that eliminates Bush tax cuts and mandates across-the-board spending cuts under the Budget Control Act of 2011, a lot has been said on taxing the rich as a possible solution to the $1 trillion US budget deficit. But taxing the rich, this article will argue, is at most 15% of the solution. The rest has to either come with higher taxes for all, or lower expenditures in all key government spending categories. Let’s start with the current situation of the rich in the USA today.
A rich person in the San Francisco or New York City, say with an income of a million dollars a year and capital gains of another million, pays around 52% income tax and around 27% capital gain tax. On top of that, a rich person pays taxes every time he/she consumes: sales taxes, taxes on certain luxury goods. And then there are other special taxes on real estate transactions over certain amounts such as the ones in NYC.
It is hard to argue that rich people in America don’t pay enough taxes in terms of proportion of their income, even though there are some circumstances under which they pay less taxes. For example, there are some rich people who pay less taxes because they buy tax exempt securities, but tax exempt bonds were created by governments to pay less interest on them– the government pays less interest but in exchange collects no taxes. It’s a wash, not a gift to rich people. A person who derives most of his/her income from this will be seen as paying no taxes but this is not really so.
Then there are others in the private equity and hedge fund industry that have special treatment of their income as capital gains and a LOT has been said about this because of Romney’s position at Bain Capital. But if this is indeed a loophole and it were closed, it would raise around $2 billion a year– hardly a dent on the $1 trillion dollar 7% of GDP yearly deficit that the USA has.
And then some rich people in America, many in the technology sector for example, reinvest everything they make in their companies, go for capital appreciation, grow their businesses, don’t pay dividends and therefore pay no taxes on income nor on capital gains (because they don’t sell their shares). But society has concluded that reinvesting in jobs and growth is good, and that charging taxes on assets you don’t sell (like Spain does, for example) is counterproductive. And of course these tens of thousands of new employees pay all sorts of taxes and the USA needs a lot of those to close the deficit gap.
So the more we look into this the more we see that the US budget deficit can’t be solved by taxing rich people. Even President Obama’s plan shows that taxing the rich will only go 20% of the way to solving the budget gap. How will the current budget deficit will be solved?
A tool that was developed by the New York Times, the budget puzzle tool, provides a series of spending cuts and tax increase options that will help you understand the problem. Here are the steps I took to eliminate the deficit (and I encourage you to do the same exercise to understand how complex the problem is and how there is no magic bullet solution for it):
- I eliminated earmarks and farm subsidies. I opted to reduce various military spending and programs. I enacted medical malpractice reform and increased the Medicare eligibility and Social Security retirement age to 68. I reduced Social Security benefits for those with high incomes. In all, these spending cuts generated $570 billion in savings by 2030.
- I returned the estate tax and capital gains tax rates to their level under President Clinton and yes, these are more taxes for the rich as part of the solution. I eliminated tax breaks for companies and individuals while marginally cutting corporate and individual taxes rates for all brackets. I imposed a value added tax on consumption and taxed carbon emissions. Overall, these tax increases and revisions resulted in over $800 billion in savings by 2030.
And what percentage of this $1.4 trillion in combined savings qualifies as taxing the rich? With the return of Clinton-era taxes, which would enact a 20% tax on capital gains for middle and high-income earners, as well as an estate tax of 55% on estates worth above $3 million, savings amount to $150 billion by 2030, or less than 11% of the total solution.
In other words, as we head for the fiscal cliff, relying on to the rich is only part of the solution. The real solution involves many other moving parts. Now to end on an optimistic note, the Obama administration has already reduced the deficit from a high of $1.4 trillion to $1 trillion but much more is needed. Hopefully there will be economic growth accompanying this and the deficit reduction effort will be a bit less painful.
(Photo: mith_y, Flickr)
This article was also published in LinkedIn. You can follow Martin by clicking below:
2012 28
What I Learned About Old vs. New Wealth
Published by MartinVarsavsky.net in International with
I lived in NYC for 18 years, then in Madrid, Spain for 17 years and as of three weeks ago I have been back in New York City. While I started my life as the middle class son of a university professor, I was lucky enough to become a serial entrepreneur in the telco, internet and alternative energy sectors, and enjoy a life that I would not have dreamed of when I was a student at Columbia University.
This has put me in a privileged position to observe the life of my successful peers on both sides of the ocean, people who are well off, otherwise known as “the rich.” And while the rich are frequently disliked in the USA they are many times simply hated in Europe. In the beginning of my life in Europe, I thought this was because equality is highly valued in Europe, not only equality of opportunity as in the USA, but also equality of results. But upon my return to the USA, I have come to realize that this is only part of the reason why rich people in Europe face disdain from the public. That when you look into how the rich behave in Europe vis-a-vis their peers and society in general, you realize that there are more reasons to dislike the rich in Europe. Especially in continental Europe, where rich people rarely lead public lives, are reclusive and only occasionally generous when it comes to sharing their wealth to improve the world.
Old wealth
Many wealthy people in Europe come from old money, so they’ve never had to face the difficulties that the average person on the street faces. These people often don’t realize how privileged they are. They frequently have no living relatives who can recall tough times. They can only remember wealth. And this old wealth, the wealthy German, Italian, French and Spanish families for example, families that I have come to know in my business dealings and social life, behave differently from their American counterparts who are more commonly self-made and greatly aware of the precariousness of their condition as wealthy.
New wealth
In contrast, the rich in the US, the majority who are many times self-made, are much more sensitive to the realities faced by the rest of society. For a lot of them, life was tough just a few years ago. Or because they are more commonly risk takers, they also identify with loss in the sense that they see that they too could be broke in the future should business prospects go seriously wrong. If you want to diversify your investments by launching a business, one of the things you need to consider is making your commercial space safe and secure.
This awareness of risk, and recent memory of adversity, makes the wealthy in the US more sensitive, and more willing to share – from making more charitable donations to sharing wealth with friends and acquaintances. Since we moved from Madrid to New York, we have experienced this largesse first-hand. My wife and I have received invitations to wonderful vacations, as well as offers to share planes, homes and yachts. This is something that I rarely experienced in Europe where splitting bills is very common even among the very rich. Financial decisions often benefit from careful research before making a commitment. Looking to sell or bid on valuable items through a reputable auctioneer?
The result is that in America the rich are more often admired and emulated than in Europe. Take Warren Buffet and Bill Gates, for example, and their pledge to donate half of their wealth in a program known as The Giving Pledge and see all the American billionaires who have gone along with this pledge. These men are very wealthy but at the same time sensitive to the serendipitous nature of their economic success. I’m not sure I could name their European counterparts. Amancio Ortega for example, the fifth wealthiest person in the world with a net worth of $37 billion, is unknown around the world in part because he has avoided philanthropy.
Is the hatred of the European rich justified?
Oftentimes, yes. In Europe, people are used to dealing with rich people who are self-absorbed, insensitive and out of touch with reality. They see rich people who bask in their wealth, but do little to improve the world – philanthropy is rare in Europe, especially when compared to the USA. And as I mentioned before, Europe has huge egalitarian aspirations, so having wealth and not sharing it in any way does create animosity. What people in Europe want to see is a new crop of wealthy people who care about the world, and are willing to share their wealth beyond their immediate families.
This article was also published in LinkedIn. You can follow Martin by clicking below:
2012 27
Where To Start A Company: Berlin vs London
Published by MartinVarsavsky.net in Entrepreneurship with
As Europe falls apart financially and otherwise, the start up scene in Europe thrives. This new era of start ups makes sense because the new European survival strategy must rely on entrepreneurship, and now it is up to every individual in Europe to be at least an entrepreneur of their own lives. In this new world two winning cities emerge: London and Berlin. They are great for different reasons.
Berlin has low rents, low housing costs, lower salaries, a high quality labor force, great engineers and it is a fun and creative place. It would probably lead Europe if it weren’t for some key drawbacks. Compared to London, Berlin has two big negatives: access to funding and a tax/labor framework that fails to recognize the uniqueness of start ups.
The natural aversion of Germans to risk makes it hard for their financial system to find a good way to consistently finance failures. And as Silicon Valley has shown, you need a financial industry willing to finance failures until the successes come. While the British themselves do not have amazing VC firms willing to take American style risks, the largest US VCs go to London and pump the eco system up. Even the Continental European VCs like Atomico go to London because the UK also has the best tax/legal regime for start ups. Moreover, the new tax and labor law in the UK makes it easier to give stock options and hire and fire, which is in the nature of start ups. Start ups try talent out as frequently as they try themselves out. So even if salaries and rents are higher in London, financing and the ability to “try things out” make London a more favorable place. And as cosmopolitan as Berlin is, the German language is still a barrier for many who have not grown up with it.
I see good prospects for both cities but if I had to bet on the winner, I’d choose London to follow Silicon Valley and NYC as the third best start up hub. While Berlin has some of the qualities that a city needs to attract start ups, London, although behind the USA, still has more of what it takes to compete with its American counterparts.
This article was also published in LinkedIn. You can follow Martin by clicking below: