Silicon Valley isn’t investing in science anymore. Instead, it backs companies that can scale up and become dominant

Silicon Valley isn’t investing in science anymore. Instead, it backs companies that can scale up and become dominant and seizing the customers

All around, technology companies are no longer content to provide the machinery for consumer companies — they are serving the customers themselves.

Tesla, the Californian car company started with venture capital, last week gained the right to sell its electric cars directly to consumers in New Jersey after a battle in which Elon Musk, its founder, compared auto dealers to the Mafia. Spotify, the music streaming service, faces a protest from Universal Music for allowing 45m of its 60m customers to listen to music free.

Facebook is launching a peer-to-peer payments system on its Messenger application, while negotiating with news publishers to host their stories directly, rather than providing links through its news feed. The New York Times may become a supplier of news to a technology-led distributor.

The new companies, instead of building the plumbing for others, like Oracle and SAP in corporate software, they sell products and services directly, exploiting their efficiency and scale.

There is a historical symmetry in this. Microsoft’s oldest rival, the company that refused to confine itself to software, is Apple. Apple, now the world’s most valuable company, as “the canonical full-stack technology company”. It designs its own software and hardware, including computer chips, and operates its own network of retail stores.

Silicon Valley prefers “incrementalist investment” to solving hard scientific problems. But if it works, why fight it?

When It Pays to Think Like a Finance Manager, having NPV in mind

When It Pays to Think Like a Finance Manager, having Net Present Value – NPV in mind

If you want approval for a new project — purchasing new equipment or computer systems, applying for a patent, building a new store — chances are you need your company’s finance department on board. To get the green light, it helps to understand how finance people think.
Most finance managers in both large and small businesses encounter numerous proposals for capital investments and many of the people proposing these investments don’t have a clear picture of what the return will be. They’re essentially asking the company to take the cash it has generated through its business operations and spend it on something with an uncertain future return.
But finance people like me are skeptical even when the proposals do project a return. Here’s why.
Everyone always wants new equipment — new computers or other hot technologies. Do you think they’re going to do a net present value (NPV) analysis that shows they don’t need that computer? Of course not. They figure out how much the new computer system and software will cost and they compare that with the cash flow generated through efficiencies (assuming they know how to analyze returns based on cash flow). If the numbers show a negative NPV, meaning that the proposed investment isn’t justified, they change the assumptions until the NPV turns up positive.

See-Through Solar Is Tomorrow’s Threat to Oil

See-Through Solar Is Tomorrow’s Threat to Oil

The Spark, screens and windows that soak up light could power your home or your phone

Thank you Ubiquitous Energy

Solar energy is the future. The problem is, it’s been the future for a long time. And while progress has been made, using the sun as a primary source of power hasn’t really broken through.

One possible breakthrough, however, is becoming clearer—literally. The engineers at Ubiquitous Energy are developing solar panels that are completely transparent and as thin as a laminate. They can do this by creating see-through solar cells that absorb only the invisible parts of the solar spectrum—ultraviolet and infrared radiation.

Torrent of Cash Exits Eurozone

Torrent of Cash Exits Eurozone
Money is going to dollar, currencies of smaller countries

A major shift in the flow of money around the globe is driving down the euro at a rapid clip, boosting the U.S. dollar and leaving smaller countries to struggle with the consequence of an extraordinary flood.

A wave of cash is leaving the eurozone, where returns on safe assets are infinitesimal, if they are positive at all, and headed to the U.S. and other refuges such as Denmark and Switzerland.




n contrast to inflation, where the general level of prices rises, encouraging consumption and investment, deflation discourages both, as savers hoard cash with the expectation that prices will fall, and their unwillingness to spend causes prices to do just that. The result is a downward spiral in activity, which, if severe enough, can lead to depression, as was seen throughout much of the world in the 1930s.

“The worry is if there’s a widespread decline in activity,” observes Kevin Logan, chief US economist for HSBC. “We’re on the edge of it.”

Some observers distinguish between “good” and “bad” deflation and point to the positive impact of falling oil prices as an example of the first, at least to the extent that the decline puts more money in the hands of consumers and encourages them to boost their spending. The US Federal Reserve has embraced that view, at least in its public pronouncements.

To the extent oil’s price decline is related to demand, it is mostly an effect rather than a cause of deflation.

“The transmission channels [for monetary stimulus] are broken,” says Mark Blyth, a professor of political economy at Brown University. “We’ve been trying to solve a fiscal problem with monetary instruments.” He contends that’s impossible to do with rates at the so-called “zero lower bound,” adding, “If you’re in the middle of a recession, why would anyone borrow?”

The challenge now, however, is to convince companies and consumers that the bank will be aggressive enough to reverse the direction of prices. That conviction is critical, because the actual stimulus provided by QE to the real economy will be more limited than it has been, for example, in the United States.

For one thing, European companies remain more dependent on banks for financing, so the health of the financial sector and its ability to lend is more important than if, like US companies, they relied on capital markets for finance. Yet many experts think eurozone banks remain too weak to do much lending.

“The problem with the eurozone is that there has been very little deleveraging, and it has not fixed its banks,” says Jan Dehn, director of research for Ashmore Research. In addition, ownership rates of homes and securities in the eurozone are much lower than they are in the United States or the United Kingdom, so there isn’t as much of a wealth effect to be gained from pushing up asset prices through bond purchases.


Which sectors of the economy are most threatened by deflation? The list is long, according to Kevin Logan, chief US economist for HSBC.

As he sees it, the first victims are consumers and companies in debt, as deflation increases its value while hurting their ability to service it. Retailers holding inventory also suffer, says Logan, as its value declines. Third, he says, industrial and commercial companies find themselves at risk, as producers of capital goods see their prices fall faster than wages.

That’s already been seen most clearly, he notes, in the oil sector and among suppliers to the industry, such as steel companies and capital goods makers. Caterpillar, for example, recently forecast that its revenues in 2015 would decline by 9% from last year’s because of the decline in oil prices. In addition, says Logan, producers of final products begin to suffer as their inventories become worth less.

Finally, deflation hits banks as they experience loan losses and can’t provide credit even to good borrowers. Logan notes that the same thing can happen in recessions. But with deflation, he says, the effect is “slower and more prolonged.” What can companies themselves do about deflation? Reducing prices may help them become more competitive and gain market share, but margins will suffer, as wages are slower to fall. And so the move ultimately eliminates profits.




Do you know what is common to, Amazon, Subway, Expedia, Zappos,, Wikipedia, iTunes, Dell, and Bing? This list is a sample of companies that have started accepting Bitcoins. Yes, you read it right, the Amazons, Apples and Microsofts of the world are accepting Bitcoins. Bitcoins and other virtual currencies are the cynosure of all eyes – of industry experts, bankers, hackers, consumers, merchants and regulators. Experts believe that the world of virtual currency is at a crossroads. Now, what is virtual currency?

Transaction Cost:

The cost of processing is far lower for virtual currency than any other payment mechanism. One of the main reasons for this is that virtual currencies eliminate the need for intermediaries. As virtual currencies are a form of P2P payment, they bypass banks and other intermediaries and evade the additional processing charges. For instance, in the traditional banking service model, if someone buys a watch using a credit card, the merchant needs to pay the issuer an interchange fee of 1% – 3% plus a flat fee, which is eventually passed on to the consumer as a cost. However, if the same payment were made using virtual currency, the transaction cost would have been <1% of the transaction amount, as there are no intermediaries.

International Cross-Border Remittance Cost:

Virtual currencies are expected to play a big role in the global remittances market. In Q4 2014, the global average cost of remitting about USD 200 was about 7.99%. Post offices are the least expensive, at 5.06%, while banks are the most expensive at 11.75% (Source: The World Bank: Remittance Prices Worldwide). However, using virtual currency, users can remit money directly to their families at a lower cost and faster too. For instance, BitPesa uses a virtual currency like Bitcoin to cut transaction costs. It charges about 3% on cross-border transfers and the money reaches the same day. Players charging lower fees using virtual currencies will eventually put pressure on the existing money transfer operators and banks to reduce their remittance charges too.

Substantial Volatility: Virtual currencies are subject to significant fluctuation. The total value of virtual currencies in circulation and the number of merchants or businesses using them are still small. Hence even a small activity or trade can affect the price movement, which makes virtual currencies highly volatile.  There have been instances of the Bitcoin exchange rate falling alarmingly – by more than 50% – in one day.

Security Risk: Critics of virtual currency pinpoint that since the identities of
parties involved in a transaction are not recognizable and transactions are not traceable, they can be misused for unlawful or criminal activities like:

  • Money laundering or terror financing

Virtual currency transactions are vulnerable to money laundering/terror financing risks, thanks to payer and payee anonymity compounded by the lack of an authorized monitoring authority. This increases the possibility of virtual currencies being used for suspicious activities. For instance, Liberty Reserve‘s CTO was operating an unlicensed money transmitting business which processed more than $16 billion through the firm’s digital currency system.  He leveraged his technical expertise and created a virtual currency business which was used extensively by criminals across the world.

  • Hacking or fraud/theft

Virtual currencies definitely run the risk of being targeted by hackers using various methods to steal Bitcoins and other virtual currencies from user accounts. Over the past few years, there have been quite a few cases of hacking of virtual currency accounts. For instance, in March 2014, 650,000 Bitcoins were looted from Mt. Gox, and as recently as January 2015, hackers looted around 19,000 Bitcoins worth about $5 million from the Bitstamp exchange.

Financial services industry keeps
a close watch on virtual currency development

As virtual currencies gain both popularity and controversy, banks and financial services firms are monitoring the steps taken by the issuers of virtual currency as well as the guidelines of various governments and policymakers to see what opportunity it holds for them.

Global banks like Bank of America, JPMC, Citi, Wells Fargo, etc. have published reports on how Bitcoin could impact the global payment industry. Banks are also keen to understand whether virtual currency can become an investment opportunity like Commodities, Exchange Traded Funds, or Derivatives. Although banks did open accounts for firms accepting Bitcoins or any other virtual currency, but they were forced by regulators to close Bitcoin-related accounts. For instance, U.S. officials ordered a Wells Fargo account used by Mt. Gox to be shut down.

Banks and financial services firms are still in observer mode on virtual currencies, but analysts do predict that virtual currencies, specifically Bitcoin could emerge as a serious competitor to banks.


Adoption of virtual currencies by merchants will rise as they realize good savings, and consumers will pick virtual currencies once they see their myriad benefits.  Banks, regulators and governments are also waking up and paying attention to the virtual currency concept. Regulators and governments need to further step-up their efforts to create new regulatory regimes for virtual currencies. It is equally vital for banks and financial services firms to study this space and see how it can impact the payment industry, look at engaging with interested parties, and launch new products and services. Given the benefits and challenges of virtual currencies, it’s too early to write them off or say how quickly they will attract mainstream adoption. The ideal scenario is one of harmonious co-existence virtual and other currencies, where the limitations of one become the strength of the other. For instance, if there is no anonymity in virtual currency transactions, the chances of money laundering, terror financing and volatility reduce. The current banking system can support this payment method by servicing the businesses dealing in virtual currencies. Virtual currencies are definitely at a crossroads and the road ahead is going to be a fascinating one. Only time will tell whether virtual currencies are gold 2.0 or just a mirage.

maltaway_malta_balatti boardmember_bitcoin

A 3-D View of a Chart That Predicts The Economic Future: The Yield Curve

A 3-D View of a Chart That Predicts The Economic Future: The Yield Curve
The yield curve shows how much it costs the federal government to borrow money for a given amount of time, revealing the relationship between long- and short-term interest rates.

It is, inherently, a forecast for what the economy holds in the future — how much inflation there will be, for example, and how healthy growth will be over the years ahead — all embodied in the price of money today, tomorrow and many years from now.

maltaway_balatti_boardmember_yield curve3D