Sunday, December 15, 2013

Sunday reflections - vol 3 - Fever dreams

Amazon’s Jeff Bazos is known for his “fever dreams”. His ideas are so outrageous they are born in his delirium. I don’t blame him. Running a very small enterprise myself, I know the preoccupation that comes with wanting to improve quality, responsiveness and cut costs. In his case, it’s the “last mile” problem. In an e-commerce business where a consumer orders one CD how do you get it across to them at their doorstep in the most cost efficient way? His fever dreams even included having bike couriers store them in their apartments before the last mile. Of course, there was the cost of pilferage by the dishonest ones, which had to be factored in. So soon there will be drones and robot couriers. It’s going to be a mad scramble to get the consumer the product. Is e-Commerce more efficient? It sounds like it is more dangerous and is fraught with many unknowns on what could happen if our product crazy world goes on LSD ordering things online setting off a spiral of credit card debts, drones, people madly rushing around on bikes, and robots working the warehouses which are housed in unsafe and unsanitary locations, maybe. What happens after Jeff Bazos when there is no one to have his fevered dreams? Anyway, I am sure I dramatise. There will be a start-up that comes up with ways to rationalise and optimise delivery, I am sure, so e-Commerce can continue, to grow, thrive and fascinate!

As you can tell, I love reading, writing and thinking wild thoughts on Sunday mornings. I think I am entitled to my own delirious dreams. So here is what I keep thinking of as a solution to our housing problem. In Toronto, for eg, we have a housing bubble. No one can afford to buy a house and, rents being so high, accumulate the equity to buy. So how do we optimise the space and energy we use to allow people the breathing room to save up and buy? With all this reading about exchanges – Obamacare and the 250 recently spawned financial exchanges nipping at the heels of the newly acquired NYSE by ICE (Intercontinental Exchange), I am thinking why not we build a housing exchange. It would have on it, people who are looking to buy, people who want to sell or improve their properties, mortgagors who would like to lend more safe cash for collateral and insurance companies that secure the loans. Of course you would need dealer networks on it too. Potential buyers and sellers could do any combination of things. Those who are borderline and are fearful of losing their shirt on their investment, could buy short, ie hedge their exposure by shorting futures on the index – ie betting on their decline in value. If prices fell, short will gain in value reducing the homeowner’s loss. They could further shore it up with insurance that uses the futures market. Those who cannot afford to buy but may qualify for a small mortgage could pay to improve homes of existing homeowners (ie basement apartments for eg) in exchange for staying there for just the cost of utilities to allow them a window to save for their purchase after paying interest on the cost of the home improvement. This may not seem like a fair exchange to the homeowner. However think about the “paying it forward” equity and the reduction in carbon footprint it means. Also think of the growing divide between rich and poor and the dire consequences for the economy of this growing inequity? For heaven’s sake I have a 1000 square feet basement, which we do not use, which walks onto the backyard and is a beautiful space. I would gladly enter into such an agreement if it means it will also help someone save up for their home?

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