fantasy valuations – if you can’t sell at a profit…

You can’t sell at a profit and make it up in volume. This is just business-common-sense. And this matters because as employees of realistic corporations that are required by reality to sustain themselves, we get frustrated keeping up with the Kardashians. Even the Joneses aren’t keeping up with the Joneses. It’s a scam dude. 37 Signals says it well:

“Now this was all fun and games until somebody promised the Newark schools $100 million in stock based on the fantasy valuation of his under-profiting company. But now it’s real. They’re selling the skin before they shot the bear or peeing their pants to get to the hut or whatever you want to call it. It’s just not good, alright?”

No outrageous profits after seven years and half a billion users

On the flip side, as they say in the trailer “You don’t get to 500 million friends without making a few enemies.” Maybe they are worth 33B. Lord knows as small as our business is, there is no shortage of people hating. I used to take it personally. Not so much these days. It just goes with the territory. It just is.

3 Rules to be a Billionaire

There are three rules to becoming a billionaire in business. First the business rules, then the story: Hugh MacLeod gets even with Shel Israel

  1. Sell at a profit.
    1. You have to sell at a profit. You can’t sell at a loss and make it up in volume. Any fool can reach 10M in sales by simply selling $10 for $1. Granted he will have lost at least 9M, but he will have achieved 10M in revenue! The point is you have to sell at a profit.
  2. Love what you do.
    1. You can’t sustain unless you love what you do. At least in your initial business. Sure you can tough it out for a year. Two years. Three or four. But you can’t sustain 10 to 20 years if you don’t love it. You have to love what you do (at least in your initial business!)
  3. Have a recurring revenue model.
    1. You MUST have a recurring revenue model. It takes too much energy to make a sale no matter what your profit margin is. Your customer must come back to you, and refer business to you, or you won’t make it.

The story of the three rules of becoming a billionaire:

Years ago I heard Ken Jones` speak. Now Ken has never been accused of having a shortage of ego (#heh, forgive me Ken). And I heard him speak at an IABC, or maybe a PRSA function in Houston when he told the story. I remember it as “so I talked to a man who was in the room with these three billionaires and he asked them “what is the secret” and their reply was the three rules.” I probably got that wrong, or paraphrased it poorly, but what I do know is as follows.

I have had 5 dba’s counting my current 13 year old company. 2 were play dbas for home businesses that I can barely remember. 1 dba (1994/95 ish) was real for web design but failed. The next was a corporation with a partner that never made real money and basically failed. (I never said I was a fast learner!) Then this corporation started in 1997 *almost* failed in the recession of 2001 and 2002 because we did not have a recurring revenue model. I learned my lesson. Follow the three rules.

More? Take a class from Ken at U of H for more. But know what you love before you show up because they can’t teach you that. Business is tough; stack the deck in your favor. And don’t believe that crap from wall street. Go sell something. No seriously, go SELL SOMETHING!

I said Georgia

I said Georgia,
Ooh Georgia, no peace I find
Just an old sweet song
Keeps Georgia on my mind

Other arms reach out to me
Other eyes smile tenderly
Still in peaceful dreams I see
The road leads back to you

Ray Charles

the culture of instant gratification that we’ve so come to live by has been neatly swept aside and tethered back

“For once, the culture of instant gratification that we’ve so come to live by has been neatly swept aside and tethered back… for as well as bringing meticulous glamour back to womenswear, Tom Ford is bringing back something even bigger: anticipation. Fed up with the Internet age of public consumption Ford has kept the cards of his women’s line close to his perfectly buttoned-up chest, and in doing so has created something that’s truly exclusive. So exclusive it’s not all over Twitter. So exclusive that we won’t see photographs of the Spring 2011 preview parade, which took place this week, until December. That may be three months in the real world but for the “overexposed” digital universe, that’s decades.”

Fashionising on Tom Ford

in today’s ‘free’ economy

“In today’s ‘free’ economy, we have become so used to getting things at no apparent cost to us, that many people actually start to believe that companies doing work for nothing is sustainable. At the end of the day, the sad fact is that money does need to change hands at some point because the landlord, electric company, grocer, needs to get paid, and, even businesses with apparently low cost business models have to live as well.”

Gaping Void <– click that to see the comic that goes with it.

work smarter and harder

The false axiom “work harder not smarter” came up in conversation today. Which reminded me of this paragraph I did on the book Rework called When to Apply Business Advice:

Sometimes advice is populist, but there is a logical flaw. A company who follows the infamous “work smarter not harder” quickly falls to a company that believes “work smarter AND harder.” Working smarter-not-harder would only work if hard workers were dumb. But we get smarter through experience! So unfortunately, hard workers are typically also smarter than you. Oooops. But we don’t like to admit that. What we want to hear is that the 4 hour work week is a winner.  I certainly wish the global economy worked that way. (But it doesn’t)

You can read the full post at When to Apply Business Advice.

every society has to engird capitalism in a restraining value system

“I guess I’d put it this way. Every society has to engird capitalism in a restraining value system, or else it turns nihilistic and out of control. The Germans have a Christian Democratic set of institutions, enforced by law. The Swedes have their egalitarianism. Since the days of Jonathan Edwards, we have developed a quasi-religious spirituality that informally restrains the excesses of the market. God and Mammon are intertwined.

Many people feel that the values side of this arrangement is dissolving. Both the government and Wall Street are leaping into the void, to bad effect.” – David Brooks, NYT

Houston Private College Loan Repayment Rates

UPDATE: The Chronicle posted a story on 9/7/10: For-profit colleges fighting proposal to cut aid, Feds’ plan to limit loans for programs with high-default rates called unfair. Which lists repayment rates as follows:

  1. Everest institute – 16%
  2. American Intercontinental University – 22 %
  3. Art Institute of Houston – 37%
  4. University of Houston Downtown – 39%
  5. HCC Central – 61%
  6. University of Houston – 64%
  7. UT Austin – 71%

This relates to my previous post on the Chron on student financial aid defaults.

this don’t think manifesto

“This Don’t Think manifesto is pure bullshit, designed to tap in to your growing fear as a human of a loss of identity, of a homogenisation of life, but by adhering to it, you are collaborating, joining the mass of visual noise but contributing nothing. It’s a stroke of marketing genius, selling essentially joke cameras, in as many different forms as the ad team can come up with.”
Dark Daze