Which is better?

Would you prefer to have basically no money, but have everybody love you and think you are the most noble person on the face of the earth?
Or, have some money and know that some people think you are a complete and total jerk with no regard for their personal feelings whatsoever?
It’s just a thought exercise. You may not reject the premise that it’s either/or. Just pick one

Value, not Time or Cost…

One of the concepts I want my kids to have is that to be an effective marketer, you need to understand how much value the customer places on a transaction.

It’s not about your cost or your time.

So, the other night, when they were telling me about the “show” they were putting on, they said, “tickets costs 30 cents.”

So, I asked them, “how do I know it’s worth 30 cents? I’ve never seen the show. None of my friends have either.”

So, they agreed to put some “skin in the game” and we agreed on a two-tier pricing model.

I would buy a ticket for 15 cents. Then, after the show, I could pay as much as I wanted…up to 45 cents.

Which they earned

So, How is the Solar Going?

Well, it is still early in the process and it IS winter (full of cloudy days and some snow), but it IS working and, in my mind, that’s

1. very neat
2. great for the environment

Below is a recent daily chart showing solar energy production.

If you are interested, here's the link to get an estimate.
(full disclosure...if you do sign up via this link, we both get some $).

The big short....

On the heels of reading Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the FinancialSystem--and Themselves, my brother in law, Ace, lent me .

let's just get out of the way that I am a huge Lewis fan and this one did not disappoint. I Finally (i think!) understand what a CDO is and what a credit default swap is, though I am not 100% certain I could explain it.

Anyway, what really astounds me is our continual ability to forget that corporations are nothing more than aggregations of people. Just because you work at Morgan Stanley doesn't necessarily mean that you are smarter than everyone else....in fact, often times, it is a liability, as you tend to trust others, thinking they are smarter than average.

If Michael Moore's documentaryCapitalism: A Love Story

Is on ine side of the spectrum and Too Big is on the other, the Big Short is the goldilocks option.

As Ace pointed out, "I am not an anti-Wall St guy, per SE, but it is wrong that places like Goldman Sachs got 100% of the money owed to them at taxpayer expense."

I think the other thing that was so astounding was how everyone was so guilty....not just the consumers who were either stupid or victims or both but also everyone along the way in the lending business...right up to Greenspan.

reading books like this will help us,i hope, not repeat the mistakes of he past. If we do, as a society, at least we will hopefully be on the other side of the bet.

The Invention of Money

When I was in Brazil, Neal told me about a great episode of “This American Life” where they talk about the invention and fiction of money.

The first example was how Brazil stopped their horrific inflation rate using a “trick.”

I bought it and really enjoyed it.

The Invention of Money

$52,000 in 8 Months

Met a guy the other day who paid off $52,000 worth of debt in 8 months. So inspiring.

I loved his passion for helping others. It’s worth the watch and/or sharing his contact information with someone who might need the help.

 

Inch by Inch….

it’s a cinch.

I despise doing taxes.

I’d honestly rather clean up my kids projectile vomiting from the floor than prepare them.

In the past, I’ve said, “Ok, I really hate this job, so I’m just going to do it in a marathon session so I can just get this out the door.”

What happens is that I spend 4 hours doing something I can’t stand and, what’s more, there’s always some information that I don’t have and thus can’t complete it.

This year, I took a different tack. Perhaps because I felt like I couldn’t devote a marathon session to it.

I just said, “ok, I’m going to do an hour every other night for 2 weeks [deadline] and then I’ll be done.”

What happened?

I got it done, still hated it, but the stress level was much lower. It was manageable (or at least more so).

A mental trick perhaps, but for me, it worked.

Finally, Social Mutual Funds…

I have been waiting for this for a LONG time.

Now, you can just say “I trust the financial investments of so-and-so” and you automatically make the investments they make.

It’s your money and you hold onto it, but you let them make the decisions.

I’m going to do this.

Read the full story here.

Bonus Points and Avoiding Sibling Rivalry

Image by Getty Images via Daylife

The NFO rightly felt that redeeming bonus points for lost privileges sent the wrong message, i.e. If you have enough ‘money,’ you can buy yourself out of punishments.

So, the system has been modified and updated.

There is a base level of expected behavior that I have for each of my kids.

If the child goes “above and beyond” the call of duty (entirely subjective) by me, I will award a number of bonus points (between 1 and 5).

If the child behaves in an inappropriate manner, the child is “fined” and loses bonus points, again determined by me.

Each child keeps track of his running tally.

Now, here’s the beauty of the system.

Bonus points are not redeemed for prizes, rather they are the means through which sibling disagreements are resolved.

For example, Tonka and Paco were both playing with the paints. They both decided…at the same time, of course, that they wanted the pink colored paint.

Instead of serving as the negotiator between the two of them, I simply let the market decide by establishing an auction.

Each child may bid up to his/her maximum number of bonus points (which will be deducted, of course) for the right to the disputed item.

The best part…and the key lesson here…is that I want my kids to understand that at a certain point, even if they have the money and can afford it, they should know that it is just not worth it to do so.

In the case of the paint, Tonka had 47 bonus points and Paco had 21 (they accumulate at the same rate, but Paco is fined more often).

I instructed them to begin the bidding at 1 (since we’d never want to overpay, would we?)

Well, at 9 bonus points, Paco decided that it wasn’t worth it to spend 10, so he let Tonka have it.

She then had 38 bonus points and Paco still had 21.

Peaceful resolution.

And, it’s worked two other times  as well.

It’s far from scientific, since there are times where, after a series of fines, I might be inclined to award a higher than average number of points to Paco to balance his self-esteem or to “age adjust” and award Tonka fewer than I would Paco for the same type of “above and beyond behavior” (e.g. “the playroom looks messy, I will clean it up”), but so far it seems to be working.

 

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Thoughts on Starting a Business...

While I am FAR from a success story, I am closing in on 11 months of profitable operations.

A number of people have asked me my opinion on how to best get an operation rolling.

I figured I'd blog it here and invite others to share their experiences and comments.

From my perspective, the three most important things you need to do when starting a business are:

1. Sell
2. Sell
3. Sell

As my Poppy used to say, "it all starts with the sale, everything flows from there." This is always true, but particularly important when getting started.

I've been asked about logos, setting up an LLC, business credit cards, etc. These things are important, but they are secondary. When starting a business, it's important to remember what Peter Drucker said:

"The purpose of business is to create and keep a customer."

In other words, prove that your business can do that. I just think that time is your most important asset and time-t0-revenue your most important benchmark of success. The first few customers, I believe, are going to go with you because they believe in YOU, not because they are impressed by your logo, website, or stationery.

The time spent on doing those things is an opportunity cost that is quite large in not being spent in pursuing opportunities.

I am not saying all of the trappings of business aren't important, what I am saying is that they can wait...or at least they can wait to be perfected.

Yes, you need a business card, but go to www.moocards.com or anywhere else and do a basic one.

As my friend, Rob Lederer once advised me, "Do. Refine as you go."

Once you see that your business has some legs and momentum, you will be able to take a deep breath and address the other issues.

I said that if I made it from May to December and it looked like things were moving, I would then form an LLC, which I did.

Same for a business bank account.

(I had a business credit card already, but that's a pretty quick process.)

So, if you find yourself starting a new business or unemployed and looking to do some consulting, go hard after your first client or two, then worry about the operations and infrastructure.

Just one man's opinion here...

Thoughts?

Bank Brain Drain?

Image by Getty Images via Daylife

My dad tells me that the top executives are leaving the big banks because they are not receiving their monster annual bonuses.

As a result, some are decrying the "brain drain."

My dad points out..."let's see, these are the people who made a ton of money by driving the entire economic system into the ground and we're calling it a 'brain drain?'"

Heh.

Maybe we need some less smart people in charge of our banks?

Bonus Points and Inflation

The punishment for negative behavior on the part of Tonka or Paco is the loss of a privilege.

Usually, this is dessert or no TV or something like that.

I thought that we needed an equal system where they would be incentivized for positive behavior.

So, while I expect them to do certain things like, playing with Gianni, clearing their plates, or cleaning up their room, when they go "above and beyond," I give them 'bonus points.'

I also set a price where 2 bonus points could "buy back" a lost privilege.

So, we had a market.  (We haven't gotten into swaps, options, and derivatives...yet. And there is NO bailout coming either)

Anyway, the system has been working quite well..until the other day.

I walk into the kitchen and the NFO says to me, "Paco earned a bonus point today."

"What?" I asked, "I am the only one who can give out bonus points. What did he do?"

"He cleared his plate from the table without being asked," she responded.

"Uh, he's supposed to do that."

"Well, I gave him a bonus point."

Now, I was stuck. What to do?

As the Central Banker in the bonus point currency, it seemed to me that the NFO's action was tantamount to printing money, thereby causing inflation and a devaluing of the currency. 

Some have argued that her bonus points could be construed as 'counterfeit,' need to be seized, and I suppose, she could be prosecuted (though I don't see a jury of her peers convicting her. Well, maybe they'd convict her of questionable judgment for marrying me, but I digress.)

So, what do we do to stop this rogue behavior?

• Raise prices to 3 bonus points?
• Strip them of the bonus points?
• Put an asterisk by them?
  

Just when you thought it was safe...

Image by Getty Images via Daylifeto flush the toilet water...

We had another backup. You'll recall the first.

Now my trusty contractor, Jorge, told me that I'd have to snake and video the main sewer line ($800. Yep, you read that right).

I'd been trying everything. Root killer (per Steve's comment on the previous post) and it backed up again.

So, being a "pull the band-aid off fast" kind of guy, I said, let's just get in there and find out what's going on.

I have the video (no, it's not on You Tube yet, it's just backed up water), but they determined that the root problem was....actually on the main sewer line!!!

Celestial choirs were singing because that meant...it's not my problem!!

It's all of Washington DC taxpayer's problem. Yea, baby!

The Washington Suburban Sanitary Commission is responsible for keeping their own lines clean and we had evidence that it was their fault. (Had it not been, I was looking at a $8k digging up of my front lawn and replacing the pipe-ouch).

And then, it got even better...I got a note from WSSC saying I may be eligible for reimbursement. Sweet.

Justice :-)

On Trickle Down Economics....

Image via WikipediaImage via WikipediaI drove by a "Trabajadores" pick-up station today.  It was about 11am and there were about 20 men looking for work.

Now, I don't know much about the day-laborer industry, but my instincts say that if you aren't picked up by noon (in late October, especially), that it probably doesn't look good for that day's prospects.

I wondered about the people who hire day laborers-contractors, I suppose.

Now, I've spoken with a few contractors recently and all have told me that people are holding off on big purchases. Makes sense, of course.

So, the economic issues are "trickling down" to the unskilled labor market.

Which led me to the inverse question: if bad economic situations "trickle down" to the lowest economic denominator, wouldn't it be the case that a good economic situation would do the same?

Maybe I'm missing something, but if the wealthiest people are making more money, they are making home improvements (in this case), they are hiring contractors, who then hire day laborers, no?

Security vs.Volatility...

Image via WikipediaLet me start off by saying this is not a 'gloating' post of any kind. Like all of you, my portfolio has taken a big beating over the past few weeks.

But, something did dawn on me as I watched the number shrink.

Back in May when I left MSFT, the NFO's concerns around going the entrepreneurial route were around 'security.' (of a paycheck, at least).

Partly in response to that, I began to build up cash reserves since the nature of working for yourself is that you are more likely to have feast/famine periods. 

The responsible thing was to have cash on hand.

So, here's the ironic twist. In a move to address the perceived volatility of my new career, I started saving and not investing in 401k, etc.

Which means that, had I been employed in a full-time salaried position, we would have lost MORE because I wouldn't have had as much cash on hand (as I would have been investing all along)

Makes me think about security and volatility in a whole new way. What seems 'secure' or 'volatile' may not always be that way...

The $23,000 11 year old...

Image via Wikipedia I'd heard horror stories of the *great business practice* of the RIAA suing their customers, but it had never hit home...until last week.

Was talking to a good friend, Rachel W. who told me the following story.

Despite warning her 11 year old not to download music illegally online, one night a babysitter came over and introduced the 11 year old to Limewire.

In the digital age equivalence of peer-pressure she said, "yeah, it's illegal, but everyone does it."

Well, fast forward a few months and Rachel W. gets a note from Verizon. Her IP address has been identified and the RIAA is coming after her.

Her husband is a lawyer, but from all looks of it, she's got no out.

They get sent to a website, where they fork over $1000 PER SONG.

Yes, that's right, the 11 year old downloaded 23 songs.

And as if that isn't bad enough, she knew of people in her suit whose kids had downloaded hundreds of songs, but paid the same amount.

Needless to say, she's irritated and wants revenge.

She just doesn't know what to do.

Oh, and she's $23,000 worse off for it.

BTW, Joe Biden is one of the RIAA's top-voting Senators and proposed a $1bn bill to monitor P2P ('filesharing') networks to catch people like Rachel W's 11 year old daughter.

A Sewage Story...

Image via Wikipedia Nothing better than having your main sewer line back up and the basement of your house begin to back up with putrid water.

Yep, so it was.

Not pretty, particulary $600 later after the Roto-Rooter guy [Rema from Burma], (who admittedly worked his butt off snaking the drain) showed me the roots that had gotten into the drain.

The good news, the problem was solved.

The bad news, it's a band-aid on a larger problem.

I'm told that once roots get into the drain, you're looking at only a matter of time before the pipes are totally gone...which requires replacing them (digging up the yard, etc.). Won't be pretty or
cheap.



Anyway, further evidence that owning a home is a never-ending money pit.

Raise the price of water…

Image by kevindooley via Flickr

The winning “World’s Best Presentations” kawasaki presentation was entitled

THIRST

View SlideShare presentation or Upload your own. (tags: design crisis)

It’s a powerful statement of how safe drinking water is become increasingly scarce.

I saw it and thought “ok, what can I do?”

Then, I was reminded of a review I saw in Popular Mechanics about a grey-water toilet system called Aqus (it takes the water you use in your sink and repurposes it for your toilet)

I thought “great, I’ll get one.”

Then, I saw the price tag $279, which is $10 more than I spent on water for my whole house for the first 7 months of the year.

It’s hard to think that a system on one toilet is going to reduce water costs by 50%. It’s not.

So, the question becomes: how much is saving water for others worth it to me?

Crass, but true.

On the other hand, if the price of water goes up (like oil/gas), well, at some point, it’s worth it.

The free market strikes again..

 

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Keeping Your Blogger's Voice

Image via Wikipedia A longtime reader of this blog and the IgnitingTheRevolution blog told me that some of my posts over on ITR were "starting too get a bit too commercial."

In his opinion, they were too focused on positioning myself as a consultant. Not as a value-added blogger.

Now, I don't know if there's any connection, but I noticed that my readership in the first week of September dropped from the end of August.

Seemed counter-intuitive, since I figured people were on vacation and now they are back at work and reading.

Though it could be that people were not working as hard in August and thus had more time to read blogs, etc., and now, they are "doing their real jobs."

Either way, it sent me a strong message...and a good one.

Sharpen the saw time.

Blog on what I am passionate about. Stick to my voice. Do what I love to do.

The rest will follow.

Thanks for keeping me honest, guys.

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An ounce of prevention…

One of the things about home maintenance and management is that this adage proves true time and time again.

Just flushed the water heater (recommended once a year).