Mortgage insurance company PMI says that there’s a “51.3% likelihood” that housing prices in Santa Clara will drop over the next two years. They say they arrived at that figure by comparing wages in Silicon Valley to housing and mortgage prices.
Let’s set aside for the moment how they were able to compute the risk with 3 digits of precision. PMI’s business is covering lenders when mortgage holders default on their loans. How likely is it that they would predict a booming market, with little chance of homeowners defaulting?
Many years ago, I taught an undergraduate Digital Systems class at MIT. While teaching was an incredibly demanding, it was rewarding to teach such bright, motivated students. I was happy to recommend two of my students to grad school: Colin Angle and Helen Greiner.
Colin joined Prof. Rodney Brooks in the Mobot Lab. There he designed the insect-like Genghis, Hannibal and Atilla robots. These robots could navigate autonomously and react to their environment, much like real insects. These principles were later used in NASA’s Mars Exploration Rovers.
After graduating, Colin, Helen, and Rod Brooks founded iRobot in 1990. Colin became CEO, and Helen became President. For several years, the company sold academic and toy robots. They finally hit a home run with the Roomba robotic vacuum cleaner in 2002. To date, they have sold over 1.2 million of these small disc-shaped robots. They also designed the very successful PackBot robot for the military, just in time for the Afghanistan and Iraq conflicts.
While the company’s revenues have steadily increased, they only turned a small profit in 2004. This week, iRobot announced plans to issue an initial public offering, in which they hope to raise $115M. Good for them.