The finance market in Australia is in a weird state at the moment. On the one hand we’re doing pretty good economically, with unemployment remaining low and our major trading partners still buying things from us despite our strong dollar. The finance market, specifically credit and lending, on the other hand looks much like it did back during the peak of the global financial crisis with lending rates at record lows. Now it’s not like this is completely unexpected considering that the Eurozone Crisis is still working itself out but favourable economic conditions and low lending rates rarely go hand in hand.
Indeed it’s gotten to the point where the Reserve Bank of Australia doesn’t believe they can effect much more change by lowering the official rate and will likely hold off on any changes until sometime next year. At the same time though banks funding conditions have continued to improve which has led to calls from industry bodies for them to start cutting their rates independent of the RBA. Banks have never been shy to raise rates outside of official RBA decisions but cutting them be something new for all of the major lenders, especially considering the rather turmutuous funding environment we’ve had to endure over the past 5 years.
Now no one would be expecting these cuts to happen now as there’s really no pressure on the market from either direction that would make such a move advantageous. Most industry analysts agree that within the next year however though conditions would be favourable for banks to do this. If this is the case then there’s a pretty simple method for checking to see if banks think that there’ll be a rate cut, whether by them/their competition or the RBA, within the next year. All we have to do is check the current fixed term rates and compare them with the current variable rates on offer and see what the difference is between the various fixed term lengths.
Right now the cheapest variable loan you can secure is about 4.99%, a bargain that we haven’t really seen since the deepest parts of the GFC. Whilst there’s quite a spread between the lowest and highest there’s a pretty good chunk of the market hovering around the 5.25% region so we’ll use that as our baseline for comparison. For a 1 and 2 year fixed loan it’s looking pretty similar with the rates basically remaining the same overall, although there seems to be more lenders willing to lock in at 4.99% for that amount time. It’s only at 3 years do we start to see much change when the average jumps up about 0.25% which is a pretty small increase and is essentially a hedged bet against any unforseen circumstances.
The take away from this is that by and large the banks don’t really expect the funding situation to change dramatically in the next couple years as their loan term loans aren’t really priced with that in mind. There are some examples of lenders offering very attractive rates around the 2 year mark (ones lower than their current variable rates) but they’re most certainly not the majority and consist primarily of smaller, non-bank lenders. Barring any drastic changes (like the Eurozone escalating again) I can’t see any indication that the banks are thinking of moving rates in any meaningful direction for the next couple years, nor do they expect the RBA to do similar.
This doesn’t really mean much unless you’re currently in the market for a new loan or refinancing but if you are then it means that the choice between variable or fixed is essentially moot at this point and you should go with whatever makes you feel the most comfortable. It’s actually a great time to get a home loan thanks to the wide spread stagnation of house prices and cheap funding which are set to continue for at least another year. Of course you probably shouldn’t dive in unless you’ve done the proper due dilligence but if you’ve been on the fence for a while I really can’t think of a better time to buy in the last 5 years.
Well apart from the darkest parts of the GFC, but that had a whole bunch of other issues associated with it.
Kickstarter was one of those services that faced the typical chicken and egg problem of Internet start ups. As a crowd funding platform its success was born out of the exposure it could bring to potential projects and in the beginning that was essentially nothing. As time went on and crowdfunding became more mainstream Kickstarter then became the portal to get projects funded online and since then we’ve seen the projects transform from being mostly single guys in garages to mutli-discplinary teams looking to launch disruptive technology. Whilst I still believe that Kickstarter doesn’t fundamentally change the rules of the funding game the shift of the value judgement from the entity to the wider world is a big one and one that has seen many products come to life that might not have done otherwise.
Of course as the service and the number of projects has grown over the years it was statistically inevitable that things would start to go wrong. Thankfully the majority of the problems faced by Kickstarter campaigns are usually overly ambitious product designers who under estimate the time it will take to get their product to market leading to delays to their initial time frames. There haven’t been that many outright problems either with failed projects never getting any money (and still being publicly accessible after the fact) and there’s only a handful of projects that vanished into the ether, all apparently due to copyright claims.
Still there were a couple high profile cases of projects being showcased that were little more than a concept that someone wanted to create. Now this is the reason why Kickstarter exists, to get projects like that the funding they need to get over that initial hump, however for physical goods having nothing but a couple product renderings can lead to some serious down the road and there were numerous projects that suffered major delays because of this. There were even notable projects that had a prototype but struggled to scale to meet the demand created by their Kickstarter campaign.
Kickstarter, to its credit, has recognised this problem and recently changed the rules, putting it rather bluntly that Kicksater is not a store.
Looking at the changes the first thing you’d notice is the number of projects that were previously funded that would no longer fly under the new rules. Personally I think its a good thing as requiring an actual prototype means that a project creator will have to have gone through many of the initial hurdles to bring the product to reality and thus won’t be using the Kickstarter funds to do this. It does mean that the barrier to entry for product and hardware categories just went up a few notches but it also means that there’s a much higher likelihood that such products will actually come into existence. The change that puts an end to multiple items is done to ensure another Pen Type-A/Pebble situation doesn’t occur again, although there’s still the potential for that to happen.
I think the changes are overwhelmingly positive and whilst there might be some projects excluded from using Kickstarter as a funding platform there’s still many other crowd funding alternatives that still support projects of that nature. It also helps to make sure people understand the (usually low) risks of using Kickstarter as there’s every chance in the world that the product/service will not be viable and neither Kickstarter nor the project founders are under any obligation to issue refunds for projects that fail after funding. This might be spelt out in no uncertain terms in the fine print when you sign up but anything to make people more aware of what they’re getting themselves into to is a good thing and does wonders for Kickstarter’s reputation.
It hasn’t turned me off the idea, that’s for sure.
I have to admit that I was somewhat sour on the whole Kickstarter idea for quite a long time. Not that I thought it wasn’t viable or anything like that, there are many many projects to prove to the contrary, more that in the age of near instant gratification for nearly anything you can care to dream of the idea of shelling out cash long before a product would ever grace my presence made me…apprehensive. It was also partially due to the fact that I didn’t really need nor want most of the products I saw on Kickstarter, even if they were technically cool. However I’ve recently backed 2 projects that I really wanted to see succeed and both of them I backed at something of a premium level.
The first was the OUYA, the crazy Android games console that could shake up the console market in much the same way that the Nintendo Wii did. Of course it could also easily go the other way as whilst the Kickstarter numbers were impressive they only translate to some 60,000ish consoles which in comparison to any of the 3 current major players is really quite small with most of them selling that number every week for as long as they’re available. As long as the hardware gets delivered to me I will consider it successful as whilst its primary purpose might be gaming it will make a solid media extender for a long time to come thanks to its use of Android as a base operating system.
One that really caught my eye though was Planetary Annihilation. Now game Kickstarters are always fraught with danger as the majority of them will never make their funding goals however whilst Planetary Annihilation didn’t have an explosive day 1 like many high profile projects do it did have consistent funding growth over time. In fact it was only just last week that it reached its seemingly lofty funding goal of $900,000 but it’s steadily been growing ever since. It’s rather contrary to many of the other high profile Kickstarters I’ve seen over the past year or so with many reaching their funding goals early and then staying steady until a last feverish burst before the final deadline. Looking at the way they structured their rewards you can see why this is so.
Most Kickstarters start out with their initial goal and upon getting more funding than they expected will usually try to make an announcement of what they intend to do with the extra funds. Whilst its admirable that many do come up with good ideas it usually comes late in the piece so the stretch goals can’t be used as a carrot for those who were on the edge of funding them or not. Right from the beginning though the guys behind Planetary Annihilation made it clear that they had many additional stretch goals already planned out should they get the requisite funding and, just to make people want to fund them more, kept them secret until previous funding goals had been achieved.
Additionally they continue to add value to the more premium tiers to encourage people to up their pledge level. This means people coming back to check on how the Kickstarter is going will have that little extra incentive to jump up to the next tier and indeed the vast majority of their funding is coming from the $95 and above tiers showing just how effective this can be. Whilst the extra rewards didn’t really mean that much to me (I pledged $250 because I’m one of those crazy collector’s edition nuts) I was definitely happy to see I was getting even more for my money.
With just 11 days to go on this particular project it’ll be interesting to see how many more of the stretch goals the Planetary Annihilation guys can hit before they reach the end of the funding period. In the week since achieving their funding goal they’ve already added on another $200,000 so it’s quite possible that they could hit their next stretch goal without too much trouble. Whether this consistent funding flow builds to a mighty crescendo at the end thought will have to remain to be seen.
I’d definitely recommend backing them though, even if you only spend $20 to get the full game upon release. Some of the guys behind Planetary Annihilation are the same people responsible for Total Annihilation and the first Supreme Commander, two games which took the traditional RTS idea and took it to a truly epic level of scale. If anyone can pull this kind of game off these guys can and I really can’t wait to follow this game from the alpha stages right up to its final release.
The idea behind Kickstarter is a great one: you’ve got an idea and you’ve got the fixins of a potential business going but the financial barrier of bringing it to market are keeping you from seeing it through. So you whip up a project on there, promise people rewards or (more commonly) the actual product you’re intending to sell and then wait for backers to pledge some cash to you. For the backers as well its great as if the project doesn’t get fully funded then no one has to donate any money, so your potential risk exposure is limited. Of course Kickstarter take their slice of the action, to the tune of 5% (plus another 3~5% for the payment processing) so everyone comes out a winner.
It’s a disruptive service, there’s no denying that. There are many products that wouldn’t have made it through a traditional venture capital process that have become wild successes thanks to Kickstarter. This of course gets people thinking about how those traditional systems are no longer needed, I mean who needs venture capitalists when I can get my customers to fund my project? Well whilst I’d love to believe that all we need for funding is crowdsourcing tools like Kickstarter I can’t help but notice the pattern of most of the successful endeavours on there.
They’re all done by people who were already successful in the traditional business world.
Take for instance the latest poster child for the success of Kickstarter: The Double Fine Adventure. For gamers the Double Fine name (and the man behind it, Tim Schafer) is a recognizable one, having worked on such cult classics as The Secret of Monkey Island, Grim Fandango and releasing others such as Psychonauts and Brutal Legend. Needless to say he’s quite well known and made his name in the traditional game developer/publisher world. Kickstarter has allowed him to cut the publishers out of this particular project, putting more cash in his pocket and allowing him total control of it, but could someone without that kind of brand recognition pull off the same level of success?
The answer is no.
For all the successes that are seen through Kickstarter only 44 percent of them will ever actually get the funding they require. Indeed in the Video Games category the highest funded game (there are a lot of projects in there that aren’t exactly games) before the Double Fine Adventure managed about $72,000. Sure it’s nothing to sneeze at, it was almost 6 times what they needed, but it does show the disparity between relative nobodies attempting a to crowdfund a project and when a well known person attempts the same thing. Sure there are the few breakout successes, but for the majority of large funding successes you’ll usually see someone who’s already known in that area involved somehow.
Now I don’t believe this is a bad thing, it’s just the way the process works. Nothing has really changed here, except the judgement call is shifted from the venture capitalists to the wider public, and as such many of the same factors influence if, when and how you get funded. Name recognition is a massive part of that, I mean just take a look at things like Color that managed to pull in a massive $41 million in funding before it had even got a viable product off the ground just because of the team of people that were behind the idea. Kickstarter doesn’t change this process at all, it’s just made it more visible to everyone.
Does this mean I think you should keep away from Kickstarter? Hell no, if you’ve got a potential product idea and want to see if there’s some kind of market for it Kickstarter projects, even if they’re not successful, are a great way of seeing just how much demand is out there. If your idea resonates with the wider market then you’re guaranteed a whole bunch of free publicity, much more than what you’d get if you just approached a bank for a business loan. Just be aware of what Kickstarter does and does not do differently to traditional ways of doing business and don’t get caught up in the hype that so often surrounds it.
It seems that whenever I mention NASA and the US congress together I’ve never really got anything positive to say. Indeed my last 3 posts tagged congress are all critical of the government’s involvementin NASA’s affairs and how their constant medlinghas caused nothing but harm. Still I recognise that without congress’ involvement there wouldn’t be a NASA at all and that whilst I may lament the organisation being used as a part of pork barrell politics it at least keeps their budget from being drastically slashed. Today I was hoping to write about some of the more positive news that had come out of the US congress but unfortunately the relationship hasn’t changed one bit.
About 4 days ago saw the passing of a bill in congress that saw some funding approved for NASA. Now usually this would be something to celebrate but in true congressional style they’ve managed to bollocks it up once again:
The House Science and Technology Committee approved H.R. 5781 with strong bipartisan support July 22, sending forward a bill that authorizes only a small fraction of the $3.3 billion NASA sought to invest in a commercial crew transportation system over the next three years. The bill authorized $150 million through 2013 for commercial crew and another $300 million in the form of government-backed loans or loan guarantees. The measure also would continue much of the work being done under NASA’s Constellation program, a 5-year-old effort to build new rockets and spacecraft optimized for lunar missions that President Barack Obama targeted for termination in his 2011 spending proposal delivered to Congress in February.
Now whilst I’m excited at the fact that they’re adding another space shuttle flight to the manifest (as that means I’ll definitely be able to go and see it next year) the rest of the bill shows a complete disregard for Obama’s vision for spacethat was laid down at the start of this year. The idea of replacing all of NASA’s routine activities with cheaper commercial solutions was a sound idea, especially when companies like SpaceX are proving just how capable they are. $3.3 billion would have bought at a rough guess about 30 fully stacked Falcon 9 rockets with Dragon capsules on top, more than enough to tide NASA over for several years. $150 million would probably cover the cost of a single rocket and little more, meaning that all you’d really get would be one demonstration flight.
Keeping the Constellation program alive is something I can’t really support unless it gets a whole bucket load of new funding. Right now many of NASA’s other activities like robotic space exploration and science have suffered because the Constellation program is using resources that were once planned for them. The program’s vision was too ambitious for the amount of funding it was given and unless new money is brought in to complete it NASA will continue to suffer under its burden. You know that this is all done in the name of pork barrelling when the bill will “prohibit NASA from laying off civil servants for at least six months following the bill’s enactment”.
Most often the criticisms I see laid at the commercial alternatives to NASA’s own launch systems is that they don’t have the experience nor do they meet the safety ratings required for NASA’s human program. The first is somewhat valid as whilst companies like United Launch Alliance have a vast wealth of launch experience they have never actually launched people into space on one of their rockets. On the other hand however the requirements for man ratingare well known and SpaceX’s Falcon 9 conforms to all required specifications. ULA has also has specifications for man rated versions of their ATLAS-V and DELTA-V rockets so the notion that commercial space alternatives aren’t up to the task is plainly false.
The bill makes even less sense when you consider some of the most recent developments coming out of the commercial space industry. SpaceX just recently announced their plans for some new launch systems and boy are they impressive:
For the transition from Earth to Mars, however, SpaceX believes nuclear thermal is the preferred propulsion means for the piloted aspect of the mission, while solar-electric power could be used to transport supplies.
The U.S. government “should take the lead on nuclear and commercial industry should take the lead on building heavy-lift launch vehicles,” Markusic says. “Low-level propulsion technology research and development should be government-led, with a transition to flight development in 2025.”
A growth development, dubbed Falcon X Heavy, would employ nine engines clustered in three cores. Collectively these would generate 10.8 million lb. of thrust at liftoff and boost 125,000 kg. to orbit. The ultimate launch vehicle, the Falcon XX, stands as tall as the Saturn V, is configured with six engines in a single core and is designed to lift 140,000 kg. to LEO.
SpaceX’s new rockets are simply staggering in their specifications. The Falcon X Heavy already outpaces the Saturn V (the biggest rocket in history) and the Falcon XX is nipping at the heels of the planned Ares V. They’ve nailed the point that the private industry should be responsible for the more routine activities of getting into space as NASA has no real need to do this when cheaper, viable alternatives are available. Interestingly enough this is the first I’ve heard anyone talk about nuclear thermal propulsionin quite a long time and realistically I’ve always seen it as the next logical step in rocket technology once chemical propulsion reached its limits. Whether or not SpaceX’s push to get NASA to develop such technology gets off the ground is another matter however and it might be another decade before it sees any traction.
I’ve always been disillusioned with the US congress when it comes to meddling in NASA’s affairs and these recent developments haven’t done anything to help that. The private space sector is really starting to pick up steam and it just makes sense for NASA to drop their current launch systems in favor of cheaper alternatives. This will allow them to get back to their roots of pioneering in space rather than getting caught up in the routine activities that can be easily offloaded to someone else. With Elon Musk’s plan to retire to Mars I’m sure we’ll be seeing a lot more progress from the private sector in the decades to come and right now it looks likely that they’ll become the ones to inspire the next generation. Maybe then congress will wake up and let NASA do what they do best.
Today I started my new job. Along with the typical first day awkwardness there was also the information overload that I always seem to get. There’s just so many new things to remember, and I know that I’ve already forgotten at least half of my new work mate’s names. Still my new work place is a great example of what I used to believe was just an executive speak term, but it seems it can actually exist.
Way back in the good old days you’d always hear of companies down sizing workforces due to automation or a down market. Over time the word downsizing became something of a black word and managers sought to conjure up a couple euphemisms so that they could speak about firing a large portion of their workforce and make it sound like a positive thing. Enter the term right sizing where management could say that they weren’t particularly looking to down size, no they were just trying to find the most optimal size for the organisation. Most people would hear that and think that everything was going to be OK, only to get hit just as hard. It seems in recent times that employers are now more direct with their employees and don’t try to beat around the bush anymore, which is probably for the best.
Austrade however is a great example of what I would class a right sized organisation. The total workforce is about 1000 employees worldwide with an infrastructure to match. In terms of technical progression they’re far and away the most advanced of any I’ve worked for, even if I do disagree with some of their choices. There are two major factors at play in this:
Overall my first impressions are extremely good and I’m looking forward to the challenges that face me ahead. My direct manager has some big plans that he wants to get done, and they’ve already put me to work on achieving their goals.
It’s nice to feel wanted and useful on your first day 🙂