Bits & Bytes
Retirement Advice with a Nobel Touch
Not many web startups have a pedigree like that of Financial Engines Inc. in Palo Alto, Calif. Among the three-year-old company's founders are Joseph A. Grundfest, who once sat on the Securities & Exchange Commission, and William F. Sharpe, winner of a Nobel prize in economics. The company is using Sharpe's ideas about evaluating investment risks and allocating assets so that people can meet their retirement goals. Netizens can try his analysis out at financialengines.com, which launched in June.
The site is simple to use. You sign up for free, type in your retirement goals, and then enter your existing investment portfolio. The software lets you know the probability that you'll achieve your goals. Then the company's business model clicks in. People who pay $14.95 quarterly get advice on how to handle their 401(k) funds. If you change your goals or the economy goes haywire, you can quickly size up the effect on your investments. How is this different from other investment sites? The others rarely give advice. Plus, says Sharpe, "they predict you'll get a 9% return every year. Sorry, it doesn't work that way." We're sorry, too.By Steve Hamm; Edited by Peter ElstromReturn to top
The Site That's Greasing Palms to Pull in Surfers
It's a dilemma plaguing E-Commerce sites everywhere. How do you persuade customers to register on your site, much less use their real names and addresses? PalmCentral.com, an independent consolidator of software programs and accessories for 3Com Corp.'s Palm organizer, has a solution. It's promising to give everyone who registers at its site $50 in cash when it completes its initial public offering in a year or so. And registered users might get to buy a few shares in the company at the IPO price.
Good incentive. The site had been getting an average of 833 registered users per week before the $50 promise. The week after the company announced the plan on June 23, 2,000 new users came knocking. PalmCentral CEO Chad Roberts hopes to have 100,000 members registered by yearend. That would provide the critical mass he says the company needs to file for its IPO. Will he spend more than $5 million on the promotion? It's a dilemma he says he hopes to have to face. For now, PalmCentral says it's reserving the right to set a limit on the number of sign-ups once they've hit the 100,000 mark.By Janet Rae-Dupree; Edited by Peter ElstromReturn to top
How Huge Is the Payoff from Info Tech?
What has the technology industry done for the U.S. Economy lately? For 48 pages of answers, check out the latest Commerce Dept. study, The Emerging Digital Economy II.
The report, which can be found at www.ecommerce.gov, shows that companies such as computer makers and software developers generated more than a third of the growth in the nation's gross domestic product from 1995 through 1998. Part of that came from job creation: Tech companies added more than twice as many jobs a year as other industries. In addition, those who work in technology make an average of 12.6% more money than those in other areas.
Moreover, the tech industry has a highly unusual characteristic: The prices for its goods and services tend to go down every year. That has helped hold down U.S. inflation--by seven-tenths of a percentage point in 1996 and 1997, according to the study. Will the economic benefits continue to mount? Stay tuned. Commerce says that it will keep on studying the issue.By Laura Cohn; Edited by Peter ElstromReturn to top