09/11/10 Buenos Aires, Argentina – “If I have a handful of silver it is because I work and my wife works, and we do not, as some do, sit idling over a gambling table or gossiping on doorsteps never swept, letting the fields grow to weeds and our children go half fed!”
– Pearl S. Buck (from the character Wang Lung in Buck’s novel The Good Earth)
Arriving in Argentina’s capital city after a month-long journey across the United States, we are once again reminded of perhaps the most thrilling aspect of a developing market: that it is, indeed, developing. This, for value-seeking investors and gypsy newsletter writers alike, is a source of excitement one simply wouldn’t be without.
Much has been written on the subject of emerging vs. submerging markets, and with increasingly good reason. According to Goldman Sachs strategist, Timothy Moe, the market value of emerging market stocks is set to quintuple over the coming two decades, reaching some $80 trillion (with a “T”) by 2030. China, by this time, will have eclipsed the United States as the world’s largest market.
“The primary drivers are rapid economic growth and the maturing of equity markets that are at earlier stages of development,” Moe, as quoted in The Financial Times, wrote in a report Friday. “Developed-market institutional asset management pools will need to increase their holdings of emerging-market equities.”
Investors with an eye to the future, therefore, will want to be in the pool when the big money pours in. The ride will be rough, no doubt, but the waterline is most definitely rising. According to figures released by research firm EPFR Global, investors added money to emerging-market equity funds for a 14th straight week last week, even as they pulled $6.87 billion from global stock funds. The driver, it is clear, is the upward and ongoing growth, both registered and forecast, in emerging markets. The IMF expects the emerging economies to grow by 6.4% collectively next year, almost three times faster than developed nations which, reckons the fund, will likely dawdle along at a paltry 2.4%.
How do these nations achieve such veracious growth rates, puzzled politicians in the west want to know. Pearl Buck’s character, Wang Lung, answered the question in the quote above, but for the slow-minded policy wonk, we’ll simplify: They work. Moreover, their toils are of the productive kind – making cars, toothbrushes and belt sanders – as opposed to what the west counts as productivity – counting people, writing laws and tasering grandma at the airport. Put another way, producers outnumber parasites and factory floor hands outnumber Congress floor copouts.
Such a divergence in productivity is, of course, not lost on Mr. Market. Over the past decade the MSCI Emerging Markets Index has more than doubled. During the same period, the MSCI World Index of advanced nations has slumped nearly 21%. This worrying (for developed nations) trend expresses itself in entirely unsurprising forms:
For economists fretting about “unfair trade imbalances” who have their knickers in a knot now, just wait until they see what’s coming down the pipes. When we attended the screening of Addison and Kate’s movie, I.O.U.S.A., in our then home country of Taiwan, we took the opportunity to quiz a few of the local audience members after the screening. One woman, clearly shaken by the movie’s warning against (ironically, unsustainable levels of American debt), winced: “I am scared. I don’t even save 50% of my income!”
Eventually, however, savers turn into spenders. Keeping up with the Changs or the Patels is just as much a part of human nature as is keeping up with the Joneses. At first it’s just a night out at the movies or a new handbag, then, before you know it, Mr. and Mrs. Chang are splashing out on a new ride.
Clearly, the winds of economic change are at the emerging markets’ backs. Yet, despite their uncompromising capacity for – and incredible track record of – growth, many stocks in developing economies trade at very competitive valuations. The MSCI Emerging Market Index is valued at 14.2 times reported profits, according to data compiled by Bloomberg. The MSCI World Index, meanwhile, trades for 15.1 times earnings. That may not seem like much of a difference, but remember that those are very broad measures. Drill down into individual markets and you’ll find that Russia, for example, trades for just 6 times earnings, as does the Middle East’s abandoned wonder, Dubai. Dig further and find individual Chinese, Indian and other emerging market companies, with impressive, double-digit growth rates, solid cash holdings and little debt, trading at even steeper discounts.
The rough and tumble, dog-eat-dog capitalistic initiatives coloring the emerging nations’ economic landscape harkens back to the “good old days” of the world’s developed economies; when entrepreneurial endeavourers were rewarded by the market, rather than punished by the state, when profit was a goal for which to strive in earnest, not a dirty word emblazoning the protest sign of a state-dependant layabout looking to borrow somebody else’s axe to grind.
So buy the Cash for Clunker economies if it helps you sleep at night…but don’t expect the hard workers in developing economies to share their handful of silver with you if you do.
Joel Bowman
for The Daily Reckoning
This series is supported by RingCentral, the leading business phone system designed for today’s small businesses, entrepreneurs, and mobile professionals. Visit RingCentral.com to learn more.
Finding the right workspace is like dating — the class='blippr-nobr'>Internetclass="blippr-nobr">Internet has made it a lot more complex. In essence, this means more options.
Whereas the traditional office once served as the default choice for effective communication and collaboration between coworkers, today’s businesses can be just as productive by collaborating on the web, with as little as $10 and a Google account. Entrepreneurs operate from coffee shops, kitchen tables, and coworking spaces in addition to the traditional office.
We asked three entrepreneurs with drastically different office strategies for their advice on choosing a workspace. Read on for their tips and add your own in the comments below.
What Kind of Office is Best to Start In?
“When you’re starting out, you should absolutely not be spending money on rent,” says Jason Fried, the founder of web-based software company 37signals. “It’s a huge waste of money.”
After Fried started 37signals, he and the other two employees working for the company at the time shared a room with another business. “Basically we had a corner of a desk,” he jokes. Assuming you can find another company that is willing to share, teaming up on a space saves cash while still providing a place to work away from the distractions of home.
Others see value in setting up their own offices from the get-go. After a brief stint at the virtual office, Anthony Franco chose a house in Denver to set up his company, EffectiveUI. It wasn’t an ideal workspace, but he got a deal on the rent. New employees were often greeted on their first day with an Allen wrench, to be used for assembling their own desks.
“We started at home, but if we were going to handle demand, we needed to have a place where we could come and work,” Franco said. He added that the extra value of being able to work as a team (in person) more than made up for the cost of an office.
While the lease route worked out well for EffectiveUI, there’s a certain amount of risk involved with jumping into your own space too soon.
“Most commercial leases are for three to four years, and so if you’re small and you’re starting out and you’ve got a couple people, you’re making way too much of a commitment,” Fried argues. “You don’t know where you’re going to be in three years.”
Is Coworking Right for Your Business?
One modern compromise between working completely virtually and committing to a lease is working at a coworking space. These office spaces provide a work environment and an alternative to coffee shops for independent workers.
Campbell McKellar discovered the value of coworking spaces when the company she worked for left their expensive traditional office and started working virtually. The move allowed her to work from anywhere, and she chose Maine. “I was trying to do work in a cottage with family members and dogs running around,” she said. “I loved being fully mobile and independent, but I also wanted to have a platform to do my work.”
LooseCubes, the company McKellar founded in May, runs a website that matches independent workers with coworking spaces and spare desks in other companies. Quite appropriately, it’s currently being run out of a coworking space. McKellar says that working from the space has helped her launch.
“Especially if you’re in a creative business, the best way to get ideas is to meet new people,” she says. “You can get stale by talking to the same five people every day.”
Coworking allows McKellar to “unintentionally network” with the other people in the space, to seek advice from other entrepreneurs, and to host meetings and work with her team at a place that isn’t her living room.
On the other hand, coworking has its challenges and might not be a great fit for every company. Coworking spaces can be distracting, and most of them are set up in a way that requires people making phone calls to seek silence in the hallway.
“For us, quiet and privacy is very important,” Fried says. “So, coworking spaces and coffee shops don’t work for us.”
McKellar admits that on days when she’s “under the gun,” she chooses to work at home. And there is a point at which a company outgrows a coworking space. LooseCubes, for instance, plans to move to its own office space sometime in the next three months.
When Should a Company Transition to a Traditional Office?
“We need to be in a room with a whiteboard that isn’t erased every day, where we can have a conference call in an open environment,” McKellar says of her hopes for transitioning to an office space. Before she commits, however, she wants to wait to see how her site’s public launch goes. In the meantime, she’s renting a room at a Manhattan coworking space called New Work City.
All companies should do something along these lines before committing to a lease, Fried says. “You don’t know if you’re going to be successful,” he says. “And if you are, you might need more space than you have right now…You don’t want to lock yourself into anything when you’re getting started. You want to be as flexible as you possibly can.”
For some people, this means staying virtual for as long as possible. For others like McKellar, it means launching from a coworking space. For Fried’s 37signals, which is based in Chicago but has employees in 11 cities, it meant working from a variety of shared office spaces for about ten years before finally opting for an office of its own in August.
But how do you know when it’s time to make the switch?
One obvious factor is space: “We were only able to rent five or six desks in our last office,” Fried says. “We had nine people in Chicago. We were out of desks at six. So everyone couldn’t come in at the same time, and that was problem.”
Another factor is work environment. If the space you are working in is interfering with your work, it might also be time to opt for an environment you can control. “We work very quietly,” explains Fried. “So our whole thing is be as quiet as possible, don’t talk throughout the day, just have a very quiet setting like a library…You can’t impose those kinds of rules on another company, especially if it’s the other company’s space.”
What are the Benefits of a Traditional Office?
For EffectiveUI, the traditional office was always a great fit. Having grown from a couple of founders to 100 employees since 2005, the company long ago left its house-office behind. They now work from a 12,000-square-foot office space.
But both spaces fulfilled the same requirements: “Whiteboarding, talking with each other and eating lunch together: It’s part of the team culture,” Franco says.
The more traditional office, however, has given him some additional perks. “We have clients come to visit us. We’re able to brand the building and the space, and when people come they can see we’re a real business,” he says.
A lot of people associate traditional offices with being trapped in a cubicle, but Franco maintains that it doesn’t have to be that way. “Just get creative and make it fun, but also give everyone a place to go,” he says.
Can I Have an Untraditional Traditional Office?
Fried thinks of his new office as more of a home base than a traditional office. Employees are free to work at home whenever they want, and half of the company still works in other cities.
“We feel that a combination of both is the best route,” Fried says. “Because we all do want to get together occasionally, and sometimes small teams of five or six people want to get together for a while.”
The home base strategy combines the benefits of virtual and traditional workspaces. When people want to work from another city or find they work better in their pajamas, they can stay home. When they need to collaborate or want to get out of the house, they have a great place to work.
“Our office is highly customized for the way we work,” says Fried. For instance, it has soundproof walls, phone booths for people to make uninterrupted calls, and rooms for small teams.
Most employees who work from Chicago come into the new office about three or four days a week. “We want people to work wherever they work best,” Fried says.
What are your tips for choosing a workspace? Add them in the comments below.
Series supported by RingCentralThis series is supported by RingCentralclass="blippr-nobr">RingCentral. Power your business with a phone system designed to meet the needs of today’s small businesses, entrepreneurs, and mobile professionals. With RingCentral, you can take control of your phone system anywhere — using your existing phones, smartphones, or PCs. Sign up today for a special 60-day free trial.
More Startup Resources from Mashable:
- 8 Funding Contests to Kick Start Your Big Idea/> - HOW TO: Run Your Business Online with $10 and a Google Account/> - 5 Startup Tips From the Father of Gmail and FriendFeed/> - 6 Ways to Recruit Talent for Startups/> - 10 Essential Tips for Building Your Small Biz Team
Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, francisblack
For more Business coverage:
class="f-el">class="cov-twit">Follow Mashable Businessclass="s-el">class="cov-rss">Subscribe to the Business channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad
You'll never believe this one, but it appears Keith Olbermann isn't the biggest fan of Fox News. But in case there was any doubt, on last night's Countdown he made it clear again, going after what he sees as the network blatantly ...
"Katy Perry fans will still be able to view the video on You Tube," says a show rep.
'The Big Bang Theory' is no stranger to sexy sci-fi starlets, having scored geektastic cameos from Katee Sackhoff and Summer Glau in seasons past (wit.
robert shumakeYou'll never believe this one, but it appears Keith Olbermann isn't the biggest fan of Fox News. But in case there was any doubt, on last night's Countdown he made it clear again, going after what he sees as the network blatantly ...
"Katy Perry fans will still be able to view the video on You Tube," says a show rep.
'The Big Bang Theory' is no stranger to sexy sci-fi starlets, having scored geektastic cameos from Katee Sackhoff and Summer Glau in seasons past (wit.
09/11/10 Buenos Aires, Argentina – “If I have a handful of silver it is because I work and my wife works, and we do not, as some do, sit idling over a gambling table or gossiping on doorsteps never swept, letting the fields grow to weeds and our children go half fed!”
– Pearl S. Buck (from the character Wang Lung in Buck’s novel The Good Earth)
Arriving in Argentina’s capital city after a month-long journey across the United States, we are once again reminded of perhaps the most thrilling aspect of a developing market: that it is, indeed, developing. This, for value-seeking investors and gypsy newsletter writers alike, is a source of excitement one simply wouldn’t be without.
Much has been written on the subject of emerging vs. submerging markets, and with increasingly good reason. According to Goldman Sachs strategist, Timothy Moe, the market value of emerging market stocks is set to quintuple over the coming two decades, reaching some $80 trillion (with a “T”) by 2030. China, by this time, will have eclipsed the United States as the world’s largest market.
“The primary drivers are rapid economic growth and the maturing of equity markets that are at earlier stages of development,” Moe, as quoted in The Financial Times, wrote in a report Friday. “Developed-market institutional asset management pools will need to increase their holdings of emerging-market equities.”
Investors with an eye to the future, therefore, will want to be in the pool when the big money pours in. The ride will be rough, no doubt, but the waterline is most definitely rising. According to figures released by research firm EPFR Global, investors added money to emerging-market equity funds for a 14th straight week last week, even as they pulled $6.87 billion from global stock funds. The driver, it is clear, is the upward and ongoing growth, both registered and forecast, in emerging markets. The IMF expects the emerging economies to grow by 6.4% collectively next year, almost three times faster than developed nations which, reckons the fund, will likely dawdle along at a paltry 2.4%.
How do these nations achieve such veracious growth rates, puzzled politicians in the west want to know. Pearl Buck’s character, Wang Lung, answered the question in the quote above, but for the slow-minded policy wonk, we’ll simplify: They work. Moreover, their toils are of the productive kind – making cars, toothbrushes and belt sanders – as opposed to what the west counts as productivity – counting people, writing laws and tasering grandma at the airport. Put another way, producers outnumber parasites and factory floor hands outnumber Congress floor copouts.
Such a divergence in productivity is, of course, not lost on Mr. Market. Over the past decade the MSCI Emerging Markets Index has more than doubled. During the same period, the MSCI World Index of advanced nations has slumped nearly 21%. This worrying (for developed nations) trend expresses itself in entirely unsurprising forms:
For economists fretting about “unfair trade imbalances” who have their knickers in a knot now, just wait until they see what’s coming down the pipes. When we attended the screening of Addison and Kate’s movie, I.O.U.S.A., in our then home country of Taiwan, we took the opportunity to quiz a few of the local audience members after the screening. One woman, clearly shaken by the movie’s warning against (ironically, unsustainable levels of American debt), winced: “I am scared. I don’t even save 50% of my income!”
Eventually, however, savers turn into spenders. Keeping up with the Changs or the Patels is just as much a part of human nature as is keeping up with the Joneses. At first it’s just a night out at the movies or a new handbag, then, before you know it, Mr. and Mrs. Chang are splashing out on a new ride.
Clearly, the winds of economic change are at the emerging markets’ backs. Yet, despite their uncompromising capacity for – and incredible track record of – growth, many stocks in developing economies trade at very competitive valuations. The MSCI Emerging Market Index is valued at 14.2 times reported profits, according to data compiled by Bloomberg. The MSCI World Index, meanwhile, trades for 15.1 times earnings. That may not seem like much of a difference, but remember that those are very broad measures. Drill down into individual markets and you’ll find that Russia, for example, trades for just 6 times earnings, as does the Middle East’s abandoned wonder, Dubai. Dig further and find individual Chinese, Indian and other emerging market companies, with impressive, double-digit growth rates, solid cash holdings and little debt, trading at even steeper discounts.
The rough and tumble, dog-eat-dog capitalistic initiatives coloring the emerging nations’ economic landscape harkens back to the “good old days” of the world’s developed economies; when entrepreneurial endeavourers were rewarded by the market, rather than punished by the state, when profit was a goal for which to strive in earnest, not a dirty word emblazoning the protest sign of a state-dependant layabout looking to borrow somebody else’s axe to grind.
So buy the Cash for Clunker economies if it helps you sleep at night…but don’t expect the hard workers in developing economies to share their handful of silver with you if you do.
Joel Bowman
for The Daily Reckoning
This series is supported by RingCentral, the leading business phone system designed for today’s small businesses, entrepreneurs, and mobile professionals. Visit RingCentral.com to learn more.
Finding the right workspace is like dating — the class='blippr-nobr'>Internetclass="blippr-nobr">Internet has made it a lot more complex. In essence, this means more options.
Whereas the traditional office once served as the default choice for effective communication and collaboration between coworkers, today’s businesses can be just as productive by collaborating on the web, with as little as $10 and a Google account. Entrepreneurs operate from coffee shops, kitchen tables, and coworking spaces in addition to the traditional office.
We asked three entrepreneurs with drastically different office strategies for their advice on choosing a workspace. Read on for their tips and add your own in the comments below.
What Kind of Office is Best to Start In?
“When you’re starting out, you should absolutely not be spending money on rent,” says Jason Fried, the founder of web-based software company 37signals. “It’s a huge waste of money.”
After Fried started 37signals, he and the other two employees working for the company at the time shared a room with another business. “Basically we had a corner of a desk,” he jokes. Assuming you can find another company that is willing to share, teaming up on a space saves cash while still providing a place to work away from the distractions of home.
Others see value in setting up their own offices from the get-go. After a brief stint at the virtual office, Anthony Franco chose a house in Denver to set up his company, EffectiveUI. It wasn’t an ideal workspace, but he got a deal on the rent. New employees were often greeted on their first day with an Allen wrench, to be used for assembling their own desks.
“We started at home, but if we were going to handle demand, we needed to have a place where we could come and work,” Franco said. He added that the extra value of being able to work as a team (in person) more than made up for the cost of an office.
While the lease route worked out well for EffectiveUI, there’s a certain amount of risk involved with jumping into your own space too soon.
“Most commercial leases are for three to four years, and so if you’re small and you’re starting out and you’ve got a couple people, you’re making way too much of a commitment,” Fried argues. “You don’t know where you’re going to be in three years.”
Is Coworking Right for Your Business?
One modern compromise between working completely virtually and committing to a lease is working at a coworking space. These office spaces provide a work environment and an alternative to coffee shops for independent workers.
Campbell McKellar discovered the value of coworking spaces when the company she worked for left their expensive traditional office and started working virtually. The move allowed her to work from anywhere, and she chose Maine. “I was trying to do work in a cottage with family members and dogs running around,” she said. “I loved being fully mobile and independent, but I also wanted to have a platform to do my work.”
LooseCubes, the company McKellar founded in May, runs a website that matches independent workers with coworking spaces and spare desks in other companies. Quite appropriately, it’s currently being run out of a coworking space. McKellar says that working from the space has helped her launch.
“Especially if you’re in a creative business, the best way to get ideas is to meet new people,” she says. “You can get stale by talking to the same five people every day.”
Coworking allows McKellar to “unintentionally network” with the other people in the space, to seek advice from other entrepreneurs, and to host meetings and work with her team at a place that isn’t her living room.
On the other hand, coworking has its challenges and might not be a great fit for every company. Coworking spaces can be distracting, and most of them are set up in a way that requires people making phone calls to seek silence in the hallway.
“For us, quiet and privacy is very important,” Fried says. “So, coworking spaces and coffee shops don’t work for us.”
McKellar admits that on days when she’s “under the gun,” she chooses to work at home. And there is a point at which a company outgrows a coworking space. LooseCubes, for instance, plans to move to its own office space sometime in the next three months.
When Should a Company Transition to a Traditional Office?
“We need to be in a room with a whiteboard that isn’t erased every day, where we can have a conference call in an open environment,” McKellar says of her hopes for transitioning to an office space. Before she commits, however, she wants to wait to see how her site’s public launch goes. In the meantime, she’s renting a room at a Manhattan coworking space called New Work City.
All companies should do something along these lines before committing to a lease, Fried says. “You don’t know if you’re going to be successful,” he says. “And if you are, you might need more space than you have right now…You don’t want to lock yourself into anything when you’re getting started. You want to be as flexible as you possibly can.”
For some people, this means staying virtual for as long as possible. For others like McKellar, it means launching from a coworking space. For Fried’s 37signals, which is based in Chicago but has employees in 11 cities, it meant working from a variety of shared office spaces for about ten years before finally opting for an office of its own in August.
But how do you know when it’s time to make the switch?
One obvious factor is space: “We were only able to rent five or six desks in our last office,” Fried says. “We had nine people in Chicago. We were out of desks at six. So everyone couldn’t come in at the same time, and that was problem.”
Another factor is work environment. If the space you are working in is interfering with your work, it might also be time to opt for an environment you can control. “We work very quietly,” explains Fried. “So our whole thing is be as quiet as possible, don’t talk throughout the day, just have a very quiet setting like a library…You can’t impose those kinds of rules on another company, especially if it’s the other company’s space.”
What are the Benefits of a Traditional Office?
For EffectiveUI, the traditional office was always a great fit. Having grown from a couple of founders to 100 employees since 2005, the company long ago left its house-office behind. They now work from a 12,000-square-foot office space.
But both spaces fulfilled the same requirements: “Whiteboarding, talking with each other and eating lunch together: It’s part of the team culture,” Franco says.
The more traditional office, however, has given him some additional perks. “We have clients come to visit us. We’re able to brand the building and the space, and when people come they can see we’re a real business,” he says.
A lot of people associate traditional offices with being trapped in a cubicle, but Franco maintains that it doesn’t have to be that way. “Just get creative and make it fun, but also give everyone a place to go,” he says.
Can I Have an Untraditional Traditional Office?
Fried thinks of his new office as more of a home base than a traditional office. Employees are free to work at home whenever they want, and half of the company still works in other cities.
“We feel that a combination of both is the best route,” Fried says. “Because we all do want to get together occasionally, and sometimes small teams of five or six people want to get together for a while.”
The home base strategy combines the benefits of virtual and traditional workspaces. When people want to work from another city or find they work better in their pajamas, they can stay home. When they need to collaborate or want to get out of the house, they have a great place to work.
“Our office is highly customized for the way we work,” says Fried. For instance, it has soundproof walls, phone booths for people to make uninterrupted calls, and rooms for small teams.
Most employees who work from Chicago come into the new office about three or four days a week. “We want people to work wherever they work best,” Fried says.
What are your tips for choosing a workspace? Add them in the comments below.
Series supported by RingCentralThis series is supported by RingCentralclass="blippr-nobr">RingCentral. Power your business with a phone system designed to meet the needs of today’s small businesses, entrepreneurs, and mobile professionals. With RingCentral, you can take control of your phone system anywhere — using your existing phones, smartphones, or PCs. Sign up today for a special 60-day free trial.
More Startup Resources from Mashable:
- 8 Funding Contests to Kick Start Your Big Idea/> - HOW TO: Run Your Business Online with $10 and a Google Account/> - 5 Startup Tips From the Father of Gmail and FriendFeed/> - 6 Ways to Recruit Talent for Startups/> - 10 Essential Tips for Building Your Small Biz Team
Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, francisblack
For more Business coverage:
class="f-el">class="cov-twit">Follow Mashable Businessclass="s-el">class="cov-rss">Subscribe to the Business channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad
robert shumakeYou'll never believe this one, but it appears Keith Olbermann isn't the biggest fan of Fox News. But in case there was any doubt, on last night's Countdown he made it clear again, going after what he sees as the network blatantly ...
"Katy Perry fans will still be able to view the video on You Tube," says a show rep.
'The Big Bang Theory' is no stranger to sexy sci-fi starlets, having scored geektastic cameos from Katee Sackhoff and Summer Glau in seasons past (wit.
robert shumakeYou'll never believe this one, but it appears Keith Olbermann isn't the biggest fan of Fox News. But in case there was any doubt, on last night's Countdown he made it clear again, going after what he sees as the network blatantly ...
"Katy Perry fans will still be able to view the video on You Tube," says a show rep.
'The Big Bang Theory' is no stranger to sexy sci-fi starlets, having scored geektastic cameos from Katee Sackhoff and Summer Glau in seasons past (wit.
