August, 2013

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Dollars and Dreams

Friday, August 23rd, 2013

I see that Virgin Galactic has announced a 25% increase in the price of their suborbital flights, from $200,000 to $250,000. The close to 600 people who’ve already put down a deposit at the original price will not be assessed for any addition fees; this applies only to latecomers.

What’s interesting to me about this is that as a technology evolves, you’d expect prices to go down, not up. Now whatever else Sir Richard is or isn’t, I think we can all agree that he’s a savvy businessman. When he cut the deal with Rutan, Spaceship One was already flying. And from what I read, it got there for about $25 million. So the budgeting for Spaceship Two was not done in a vacuum.

The revenue from the tickets sold so far is $120 million. I’ve got no idea what it costs to fly Spaceship Two, but I sense that at $200k/ticket, there may be room to make a few bucks, or at least not operate at a desperate loss.

Of course, margins would be better at $250,000. And I think this is an example of an inelastic price; that is, there aren’t a whole lot of people who’d be wiling to plunk down 200 grand, but at 250 would say “No, that’s just too much.” So why not run the price up a bit?

I’m kind of hoping that this is a case where the price is set based on what the market will bear. And I’m also thinking that, once the first few flights take place and don’t end in a smoldering crater, there will be an uptick in demand, from the folks on the sidelines who have the means and desire but also have safety concerns. After all, you didn’t get to the point in life where you can casually drop a quarter of a million on a joy ride without at least a degree of prudence.

So you’re Sir Richard, and you’ve got this unique service that costs $X to provide, where $X is significantly under $250,000. You start at $250,000, and sell all the tickets you can at that price. When sales start getting soft, you drop the price to, say, $195,000, and pick up some marginal customers who were initially priced out. And you keep doing this until you reach $X plus some percentage, the amount you judge to be a worthwhile profit. Or put another way, the percentage below which you don’t want to be bothered with the hassles of running your own space program.

So once he’s flying regularly, I expect the price to drop. How much? Beats the hell out of me. But I’ve said here before, if it gets to the price of a decent car (~$25,000) , I’ll find some way to take the trip, though even at that price, it works out to about $1000 per minute of actual flight time.

A frivolous expense? Perhaps. But I suspect that a jaunt into space would be one of those experience that divides your life into a before and an after. And to me, that’s worth driving a junk car for a few years.

Posted in Money, Space, Travel | Comments Off on Dollars and Dreams

The Demise of the Book, Again

Thursday, August 15th, 2013

A recent blog entry by someone better-known than me forecasts the end of books and bookstores as we know them. Perhaps. But perhaps there’s more to it than that.

The highest-profile evidence of change in the air was surely the demise of the Borders Bookstore chain, but I’m certain you’ve witnessed the end of booksellers closer to home. One sad note for me was reading that Lorem Ipsum Books (great name, no?) in Cambridge was up for sale, with the article I read mentioning that it was historically a labor of love, and never really gained any traction financially. Great place to browse, though.

And I’ll admit that I’m part of the problem. If I told you I never browsed a book in a store and immediately reserved it at the library, I’d be lying. I’m also guilty of supporting the market for used books, at the expense of new ones.

What does it all mean? Well if Mr. Godin is saying that the classic bookstore with its huge stacks of musty volumes, a schoolmarm-ish lady behind the counter, and a big cat sitting on an upholstered chair nearby is on its way out, I’d have to agree. But I’m less willing to believe that twenty years from now paper books will be obscure museum pieces. I love my Kindle. But I also love to hold a paper book in my hand. I don’t think the two are mutually exclusive.

So what might a bookstore look like in 2040? Well, it will be doing a lot of things besides selling books. What? Well, think of the things that avid readers enjoy besides books. I could imagine playhouses, meeting places, hosting traveling museum exhibits or guest speakers, providing classes, and so forth. The local bookstore might be where you go for the recitation portion of a college class, after receiving the lecture portion online. Or pretty much anything else that involves both the mind and physical presence. Will they charge à la carte, or offer memberships? I don’t know. I’ll leave the specifics to the attention of tomorrow’s entrepreneurs, except to say that maintaining the status quo would be suicidal.

Libraries? Same thing. Already, they’re becoming social places, bridging the gap between the online and physical community. In the cities that value them, they’re not going away any time soon. In the places that don’t, it probably doesn’t matter much.

But what about the paper books themselves? Dated anachronism, or timeless store of value? Ebooks offer immediacy, ease of transportation, and democracy of access – freedom of the press is no longer limited to those who own one. In contrast, the traditional edition offers tangibility, reliability, resistance to alteration after the fact (1984, anyone?), and resilience against theft – which would you rather lose, your iPad or that dog-eared copy of 50 Shades?

Set your WABAC machine to the beginning of the twentieth century. We’re all riding around on horses and bicycles. You pick up the newspaper and read this editorial:

Exciting technological breakthroughs over the last several years have made the automobile even better and more reliable that it already was. Despite the initial expense, traveling by car is faster, more comfortable, and far more practical in bad weather than any other means of transportation. At first the auto appealed only to the mechanically-inclined, but in just a few more years, the bicycle will be gone completely from the public scene, except for the occasional die-hard. And once the last of them pass on, the only bikes will be in junkyards and museums.

There were over 100 million bicycles manufactured worldwide in 2012.

Ebook versus the Dead Tree edition? It’s a big world. There’s room for both.

Posted in Philosophy, Technology, Writing | Comments Off on The Demise of the Book, Again

First World Problems

Monday, August 12th, 2013

We had the good fortune last weekend to enjoy a well-performed rendition of Fiddle On The Roof at a local playhouse. (If you’re unfamiliar with the show, go here, read, and come back.) Mostly, Fiddler is about cultural change, told through the vehicle of the protagonist’s daughters choosing to marry for love, rather than accepting arranged marriages. But the back story resonated with me as well, that of an small village living in abject poverty, eventually being displaced by a decree from the Tzar.

Which got me thinking about a phrase that’s been getting some traction lately: “First World Problems”. If you’re reading this, you’re almost certainly one of the global one percenters; you live in a heated home, you’re more at risk for obesity than malnutrition, and its unlikely that you’ll be evicted by the Tzar any time soon¹.

But you’ve got first-world problems, instead. Examples:

When you travel with your children, you carry so much ‘kid equipment’ that you had to trade in your sedan for a mini-van.

With 400 channels of cable, there are three shows you’d like to watch tonight, but your DVR can only record two simultaneously.

Jet lag.

Etc.

As annoying as these may be, they don’t include things like roving gangs of marauders killing you, raping your wife, and enslaving your children.

Does this make your first-world problems trivial? Of course not.

Well… actually, maybe it does.

Agreed, they may not seem trivial. But a bit of time reflecting on the way things once were, or perhaps could someday again be, helps breed sanity in dealing with the affairs of day-to-day life². I highly recommend it.

1- OTOH…
2- HT to Nevil Shute

Posted in Life, Philosophy | Comments Off on First World Problems

Life in the 21st Century

Monday, August 5th, 2013

I’d known about Heritage Gardens‘ Driving Our Dreams exhibit for a few months, but it wasn’t until yesterday that a house guest provided the excuse to head over for a look.

I’ve always had a weak spot for examining what the future looked like from the past. Give me a 1950’s Popular Mechanics magazine with an article about life in the 21stcentury and you’ll keep me busy for hours. So an opportunity to wander among spaceships like these

was not to be missed.

Doubtlessly these were built to attract attention. And they do. Whether that transforms into a desire to buy is less certain, at least to me. There is a claim that when Chevrolet sells a handful of $100,000+ Corvette ZR1 coupes, it drives sales of Cavaliers and Cruzes. Maybe. Or maybe not.

But as I walked among these glimpses of the past’s future, I couldn’t help but think that at that time we enjoyed a sense of optimism that somehow dissipated over the last two generations. These cars broadcast the idea that we’d be going faster, and in more comfort, and (possibly this last one is just me) to more interesting places.

Contrast that with the Toyota Prius. And without in any way diminishing the technical and business achievement of commercializing that drive system (and dominating that market segment), I don’t think anyone would look at one and think in terms of grandeur. Efficiency, sure. But not grandeur.

Ignore for a moment the question of which is more practical, or has a smaller environmental footprint, or would be easier to park. Think instead of which is more likely to quicken your pulse. This?

Or this?

This?

Or this?

In general, our present direction may be inevitable, given the vagarities of the economy, fuel prices, highway congestion, and so forth. But when the dust settles, I don’t mind paying a few bucks more to make the experience of getting from point A to point B more than, well, just getting from point A to point B. And I wonder whether, as this century unfolds, the auto makers, regulators, and so forth will share that desire.

And then I see something like this, from Scion, of all places, and realize there’s hope.

Posted in Philosophy, Technology, Travel | Comments Off on Life in the 21st Century