The two (relatively) important things that happened last week:
In the small town of Yancheng in the Jiangsu province, a rumour spread last week that a small bank had turned down a customer’s request to withdraw 200,000 yuan (about $32,200). This turned into hundreds of customers queuing at the doors to withdraw their savings, ignoring all assurances from the People’s Bank of China that their money was safe.
It’s interesting because the Chinese banking system is so heavily biased in favour of borrowers. If you save money in a Chinese bank, you earn almost nothing. So there’s almost no reason to keep your money in the bank other than security – and the minute that’s threatened, you’re taking it out.
Also, that bias also means that the Chinese tend to visit “shadow bankers” to deposit their money, where they can earn higher returns than in the regulated sector. Shadow bankers, being illegal in nature, are not backed by the Reserve Bank. So when they crash, they crash properly. Which they have been doing. Which probably explains why the Chinese are a bit irrational when there’s even the slightest hint that their savings are threatened.
2. Facebook bought Oculus… And there were death threats.
Last week, Facebook announced that it was buying Oculus VR*, a tech-startup that used Kickstarter to develop its augmented reality headset for video games.
*stands for Virtual Reality.
Facebook has big plans. Mark Zuckerberg:
“Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the globe or consulting with a doctor face-to-face – just by putting on goggles in your own home.”
Which makes me think that Facebook is unhappy with its current revenue stream being mostly advertising. I’d guess that they’re hoping to turn Facebook into a Google-like megalith that is all-things-tech with many revenue streams. The fact that Oculus will function independently within Facebook seems to indicate that diversification.
But the announcement has upset all those gamers that initially funded Oculus on Kickstarter. That campaign had a target of $250,000; and actually raised $2.5 million when it completed on 1 September 2012. There were 9,522 people that backed it.
To be clear, that was the original funding that got Oculus VR to where it is – being bought out by Facebook for $2 billion. Sadly for those initial 9,522, they’ll just have to content themselves with their signed limited edition posters, t-shirts and sincere thank-yous from the Oculus team.
Or, you know, they could also not be contented and get mad. After all, any other Angel investor would get equity upside. They didn’t. But 21 year-old Oculus Rift creator, Palmer Luckey*, did.
In his own words:
“We expected a negative reaction from people in the short term, we did not expect to be getting so many death threats and harassing phonecalls that extended to our families. We know we will prove ourselves with actions and not words, but that kind of sh*t is unwarranted, especially since it is impacting people who have nothing to do with Oculus.”
Perhaps that’s what comes from making educated guesses when one is only 21. Because the death threats probably have little to do with whether the sell-out will be good for Oculus, and everything to do with who it won’t be good for.
My guess is that kickstarter campaigns need to start including some equity participation rights. After all – if you stand up cash for the original product, you feel invested. Not so?