About Me 0118: Making Money Now

A version of this column is scheduled to be published in The Washington Times, Monday, July 11, 2011.

Follow the Money No. 74: Charlie Chaplin’s suit?

The geopolitical question of the hour: is there a tripwire that will tie together a series of regional crises bringing on another 2007-08 worldwide economic disaster?

Lehman Brothers’ collapse dramatized how enhanced interconnections can tumble through the new world economy with domino effect. But if the world finance mavim know a seminal interrelation of our several bubbling crises, they are not telling us. Meanwhile, the minitheaters percolate:

Europe –There’s growing consensus Greece’s economic collapse is leading to a restructuring of the European Union’s finances with more than 20% of the world’s gross product. Shooting the messenger – the growing attacks on rating agencies which, indeed, are feeding debilitating increases in the cost of debt – doesn’t solve the problem nor do complicated if band-aid solutions. Nor, does it seem likely to this observer, creation of a Eurobond market to absorb growing debt would automatically bring about inspired, problem-solving central European fiscal and monetary direction. [It didn’t with creation of the Euro “common currency”.]

The U.S. – However much the Obama Administration’s stimulus program staved off an even worse crisis – to be argued until the end of the economists’ time, not soon contrary to John Maynard Keynes hopeful prediction the profession would die out – it has run out its string. Public opinion demands curbing deficit spending. But how against pressures of “special interests” [yours’ always are, mine are heaven blessed] is a conundrum taxing the American political system. It‘s a time when parliamentary government – with its ability to bring down a cabinet’s failed strategy instantaneously – is envied. Instead, more than a year’s political mudslinging appears inevitably producing near paralysis. Meanwhile despite widespread denials – including fudging with inventions like “core inflation” – higher prices could couple with stubborn underdemployment/unemployment and an unresolved housing bubble for increasing misery.

China – The cracks, long seen by the few who questioned sustainability of the miracle of “the world’s factory”, are widening. Beijing central planners – despite their rationale only rapid growth could legitimate “Communism with Chinese characteristics” by providing jobs and stability -- have curbed unlimited infrastructure expansion which with now slowing exports was the engine of growth. “Creative accounting” takes on new meaning for government banks hiding “non-performing loans” in new set-aside organs now making their own bad loans. Beijing’s inability to “feed” local Party hacks leads them to “squeeze” workers and farmers in turn leading to growing violence. Inflation, especially food where most Chinese live, grows despite monetary devices borrowed from Western systems largely ineffective on what still is a Soviet skeleton.

Japan – The world’s third largest economic power drifts, mysteriously bereft of political leadership, caricatured in its inability to address the destruction of the earthquake-tsunami with characteristic “Yamato Damishi” [fortitude]. In Japan’s hot, muggy summer, only 19 of 54 reactors are operating in the face of anti-nuclear sentiment. With more to shut down, cutbacks of 15% already haunt large electricity customers and boosts expensive fossil fuel imports. Consumer confidence falls to record lows, ominous for Japan’s rapidly ageing population. Government debt, already the world's highest ratio at 200% of GDP, will rise as Tokyo borrows $100 billion to rebuild and GDP shrinks. Luckily, Tokyo borrows at home at floor-scraping 1.5%. But, Japan, too, has its echo of the American argument: Economy Minister Kaoru Yosano opposes Tokyo selling itself bonds as the Fed and Treasury have done, warning resulting higher finance charges would hit Japanese banks.

But how does it all connect? We saw how Japan’s disaster put a crimp in the manufacturing supply chain from Shanghai to Detroit. But, for example, what call have German and other European banks on their U.S. colleagues if Greece defaults? Japan, which has been lending the world $175 billion annually in investment capital, is out of that business. Nobody wants to talk about the impact on Spain [20% of the EU GDP] if Greece [3% of the EU GDP], followed by Portugal and perhaps Ireland, “goes”. What will that do to Latin America where Spanish banks have invested heavily as the Brazilian boom simultaneously now threatens to go “bust”? Australia’s roaring dollar is already feeling Chinese cutbacks as will all commodities producers, perhaps even the Mideast petrosheikhs.

In one of his serio-comic sequences, Charlie Chaplin’s little tramp starts pulling a thread from his crumpled suit. Before long, his whole miserable costume dissolves. Is there that kind of loose thread here?

sws-07-08-11

When Lisa Bettany's skating partner accidentally dropped her on the ice eight years ago, the Canadian figure skater had no idea that the back-breaking fall would ultimately lead to a lucrative new career as a developer of iPhone apps.

But Bettany, 29, not only got back on her feet but took advantage of her seven-year recovery to master photography, start a blog, and, two years ago, partner with an international team of six developers to create Camera+, the top-ranked camera app in Apple's iTunes store. The app, which gives iPhone and iPod Touch users the ability to enhance, edit and share photos via Flickr, Facebook, and Twitter, has been downloaded more than 3 million times since it launched in June 2010. The 99-cent app, designed to turn iPhones into high-quality digital cameras, has generated close to $2 million for Bettany and her partners in less than a year. That's after Apple's 30% cut.

As the app's leading web evangelist, Bettany has earned roughly $400,000 so far thanks to the 20% revenue share she negotiated with the app's developers. The former linguistics grad student who once struggled to pay the bills as a freelance journalist and photographer is now literally making money while she sleeps.

"I'm so used to being poor," says Bettany, whose Mom was paying her rent until the royalty checks starting arriving last August. "Now my bank calls me up all the time and asks, 'What's all this money?'"

Bettany's apps-to-riches story is becoming increasingly common. With Apple recently celebrating the 10 billionth download to its iTunes store, creative young software developers are rushing to cash in on the latest digital business trend. With low development costs, a worldwide customer base and instant distribution, the creator of a successful app can hit it big without raising venture capital, hiring a sales force or recruiting a pricey management team.

John Casasanta, co-founder and chief of tap tap tap, the three-year-old company that developed and owns the Camera+ app, says he gives his developers a share of the app's revenues instead of a guaranteed salary in order to lower the costs associated with developing the apps and pump out more apps in less time. This arrangement also allows the company to grow through cash flow, not venture capital.

"We've found this model to be extremely effective for us because it helps everyone involved do their best work," Casasanta says.

Bettany is not your typical geek. A woman, a social networker and the self-described "face of the app," her elfin good looks, whimsical how-to videos and intimate knowledge of apps and iPhones (her father, a professor, introduced her to Apple when she was two) have helped her stand out in a sea of largely anonymous tech bloggers. When her blog, MostlyLisa.com, began to gain traction several years ago, she was invited to be a guest on tech podcasts such as MacBreakWeekly and This Week in Tech. Lisa was the host and producer of the TWiTnetwork's weekly photography show, Mostly Photo, and hosted a popular gadget show in Canada called "Get Connected" which ran on Spike, BNN and CTV.

Bettany's photos, tips and inspirational story have led thousands of followers to join her on Twitter and Facebook. In 2008, Casasanta spotted her Twitter Avatar (a wacky photo of Bettany wearing a Viking helmet) and invited her to join the team of developers that was building Camera+ figuring that her zany sense of humor and in-depth knowledge of photography and the iPhone would help his developers create a more popular app. After a year of 12-hour days and nightly brainstorming sessions with developers all over the world, Camera+ was born.

"It's really a team effort," says Bettany, who responds to roughly 200 messages a day from the app's users and doubles as Agent Sophia in The Heist, a popular iPhone game created by tap tap tap's sister company, MacHeist. "We each put in as much effort as we can to earn our share."

Here are Bettany's three tips for other entrepreneurs looking to make it big in apps:

1. Be prepared to adjust your pricing. No matter how great your app may be, nobody's going to buy it if it's too expensive and gets buried in a sea of cheaper, more popular tools. The Camera+ app originally sold for $2.99, with the idea that iPhone users would pay more for a premium app. When sales failed to take off, the price tag was cut to 99 cents and the app shot up to No.2 in the iTunes ranking. Photo contests and buzz from tech blogs have helped, too.

2. Turn your fans into evangelists. Bettany uses her blog to offer tips and tricks on how to use Camera+ to create great photos and encourages fans to download the latest free upgrade. When iPhone users socialize their photos, it also builds buzz for Camera+.

3. Find developers who complement your skills. Bettany credits her app’s success to partnering with a talented and creative development team that spans the globe from Austria to New Zealand to San Francisco. Development sessions take place overnight on iChat and Skype, and everybody gets a say in how the app gets built. "We certainly have arguments [over which features to add]," she says, "but we're all passionate about creating great apps."

This post originally appeared at Entrepreneur.

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