WSJ Data on Financial Decline since 2016 Election

Make no mistake, say “pro business” and then create “market uncertainty” and you get a LOT less job creation. Wall Street Journal last weekend. Data is data. Constrict capital and people like me can’t create jobs even if we want to.

Drop in Liquidity for Business 2017
post election drop in cash flow

The headline? It’s incorrect. Ask anyone – what happens when people lose access to capital? #duh

Sci-Hub.io – the Pirate Bay of Academic Research. Theft or not?

Sci-Hub.io free academic papers

I recently posted a link on facebook to Sci-Hub.io. Known as the Pirate Bay of the science world created 2011 by neuroscientist Alexandra Elbakyan. jstor-intrinic-motivationAfter posting the article link to FB there was one single response. A response that seemed to imply the pirate site was childish theft. That it was an “I want everything for free” attitude. It’s hard to argue otherwise.  Us and our first world problems.

  1. Theft? Yes. – Yes I agree that the current economic structure in academics does in fact technically make this theft. So hey, Professor Elbakyan is having an American Tea Party in St. Petersberg.
  2. Further I believe it is our current economic structure that is broken. Oh, and that JSTOR is run by boneheads who couldn’t solve a problem creatively if their lives depended on it. As we say in programming – “garbage in, garbage out.”

Screen Shot 2016-02-15 at 6.43.31 PM

Taken from a behavioral perspective, if you recall, before the itunes store made buying songs easy, everyone downloaded them for free. Before the kindle made downloading books electronically cheap and convenient, everyone downloaded them for free. Make it convenient or someone else will make it really convenient!

First, what is sci-hub.io ? From the article “Researcher illegally shares millions of science papers free online to spread knowledge” by FIONA MACDONALD:

A researcher in Russia has made more than 48 million journal articles – almost every single peer-reviewed paper every published – freely available online. And she’s now refusing to shut the site down, despite a court injunction and a lawsuit from Elsevier, one of the world’s biggest publishers.

For those of you who aren’t already using it, the site in question is Sci-Hub, and it’s sort of like a Pirate Bay of the science world. It was established in 2011 by neuroscientist Alexandra Elbakyan, who was frustrated that she couldn’t afford to access the articles needed for her research…

Maybe I had a knee jerk reaction of vindication seeing this research become freely available after the tragedy of Aaron Schwartz’ suicide in 2013 from overzealous persecution for accessing JSTOR documents from the MIT network.  I’m seriously wondering if JSTOR is trying to make sure Martin Shkreli quits dominating the “evil capitalist stories” the media likes to write.

And to be clear, I walk the talk. Our company’s product is Tendenci – the Open Source Membership Management Software (on github too) and most of my photography is creative commons attribution

Creative Commons Capital Photo by eschipul
Creative Commons Capital Photo by eschipul

as seen used in this publication below fully within copyright laws with attribution. We can play nicely together.

CC by Ca

JSTOR’s purpose after all is to;

JSTOR was founded to be a shared digital archive serving the scholarly community. We understand the value of the scholarship and other material on the platform and that the future accessibility of this content is essential. Libraries around the world rely on us and contribute Archive Capital Fees to JSTOR for preservation activities.

To understand a Russian academics perspective, this data I found on the Internet for free, says that the overall average monthly income in Russia in 2005 was a NET total of $263 per month. Now that $25 JSTOR article for which the author was paid nothing by JSTOR is 10% of that Russian student’s monthly income.

That kind of changes your perspective a bit, huh?

I can and do understand why people would immediately view sci-hub.io as theft. Except for academics this just isn’t a black and white issue. There are a few differences.

I can’t afford to pay $45 for every research paper I want to read knowing the research was funded by federal grants, underwritten by the University and the authors were not compensated.

Why not bring the economics down to the level of the app store?

How does JSTOR add value if they don’t pay the authors and didn’t write the content? Their answer is “peer review and legitimacy,” but those can now be conveyed on the internet. Aren’t there other solutions?

Why can’t we sign a peer review article with a blockchain?  It’s not just jstor but modern academics that haven’t kept up. Being a non-profit doesn’t mean you get to ignore everything that is going on with economics via externalities.

I’ll leave those thoughts for y’all to ponder. As for me I discovered a fully legal work around for when I wanted an academic article years ago. And here it is:

JSTOR pricing for an article free in other places on the net.
JSTOR pricing for an article free in other places on the net.

How to get 95% of the academic articles you want on the Internet for free with google.

Problem: writing a research paper for a national PR Magazine on “Intrinsic Motivation and Extrinsic Incentives”. Solution:

  1. Search google scholar. https://scholar.google.com/ – Yes google scholar and NOT google. This will lead you to academic research on the subject for sale at some relatively high price on a site like jstor. This was my search Intrinsic Motivation and Extrinsic Incentives http://bit.ly/1Od1fRR
  2. COPY a large amount of text from the abstract or the preview they show you on overview page on JSTOR (or any of the academic pay-or-no-knowledge-for-you sites,) Highlight it.  Copy it verbatim.
  3. Now go back to www.google.com (not google scholar, but regular google this time.)
  4. Paste that monster block of text into google.com and odds are you will find a link to a PDF version of the article on someone’s server available for free.
  5. That led me to about 5 links to academic servers with the full pdf available for download at no cost. Example:
    http://www3.grips.ac.jp/~esp/wp-content/uploads/2014/12/2015.-1.-28-Sawada_on_Rice_Planting_14_11_27.pdf

And the bottom line is the TOPIC I was interested in in a peer reviewed science journal as recent at 2014 was downloaded within 5 minutes. It takes me longer to print it than find it. Not that sci-hub.io probably couldn’t do it even faster. And that is a good thing for the globe. Now back to reading….

… In our study area, despite the potential of infestation of opportunistic behaviors by workers, a fixed wage (FW) contract has been dominant for rice planting since the 1960s. To account for this puzzle of a seemingly-inefficient contractual arrangement, we adopt a hybrid experimental method of framed field experiments by randomly assigning three distinct labor contracts, i.e., FW, individual piece rate (IPR), and group piece rate (GPR) contracts and artefactual filed experiments to elicit social preference parameters. Through the analyses of individual workers’ performance data from framed field experiments and data on social preferences elicited by artefactual field experiments, Three main empirical findings emerge. First……

Life can be complex. But I got what I wanted, I didn’t use it because after scanning it it wasn’t the article I was looking for. It sent unused, I didn’t pay for it, but I also threw it away, but mainly I acquired it and came to that decision faster than I could have typed in my credit card number to buy it from JSTOR.

Incentives and Social Preference
Incentives and Social Preference

In this case the economics didn’t match the need. I solved it for myself, and sci-hub is apparently solving it for millions. Open our minds and find a better optimum solution. We can and should do this.

things changed between triple crowns

The digital divide is not only between the digital natives and the elders, between the digitally enhanced and the not, between the glassholes and the blind, but also over time. There is a time we cannot imagine anymore and those from the past could not imagine accurately the future. Hence our (my?) love of Steampunk, historical visions of the future (past).

american-pharoah-vs-secretariat-crowds

The big divide occurred when a third “item to be carried at all times” was introduced, an idea that I cannot properly attribute as it has sunk into our consciousness so deeply the origin is now a mystery.  The third item? The first two “items to be carried at all times” being (1) something of value (cash) and (2) a method of accessing something of value (key, credit card, secret code). Every human has had these two on their person at all times without fail since the great leap forward, to quote Guns, Germs and Steel.

Within 25 years it has changed entirely. Now we all have a third item. (3) Our communicator from Star Trek. We all carry a mobile device.

More importantly, these devices don’t just facilitate communication; they change how we interact at a systemic experiential level. We didn’t just watch American Pharoah (sic) win the Triple Crown, we recorded every second of American Pharoah trotting around Belmont Park. Because…

“If you don’t have a pic, it didn’t happen.” – anonymous

Further irony? Here in meta-meta-meta-land, I took a picture of the HD TV of people taking video and pictures as American Pharoah’s victorious Triple Crown bid was broadcast into my living room. Then combined it with an image from google image search on my mobile device while waiting at a restaurant. To capture the right image I used a Tivo (now a generic word like Kleenex) to rewind and jump forward prior to the start of the race for half of this cell-phone-crowd-picture I first posted on Instagram.

Here is to history and a wonderful victory for American Pharoah winning the triple crown after a 17 year drought. And here is to the amazing human which adapts and evolves in front of our eyes in real time. We don’t have hover-boards, but the revolution is here and indeed it will be televised; on periscope.tv.

Now get out there and record something and post it to prove it happened and let your devices consume you. Because that is the future. It’s your destiny kid.

Car Dealership Franchise Contracts are Socialist Monopolies. Duh.

Order Button

Order Button
Order button on the Tesla Motors Web Site
Car Dealership Franchise Agreements are Government Sponsored Monopolies. Oh please. Stop that 2k tax per car per family. Yes, I said it. For that matter so is the NFL, the NBA, the NHL, etc…. so let’s just call a Spade a Spade. (And speaking of “Spades“, while not a gambler myself, the last time I checked the casino industry was more open to competition than car dealerships. Go figure.)

If you want to save about 2k per car purchase – check the link on car dealership monopolies … It’s about time the monopoly of dealerships was seriously threatened with…. um….. CAPITALISM. FREEDOM. APPLE PIE. THE AMERICAN WAY. So why do we have socialized / monopoly car franchises? History and cronyism my friends. No. Other. Reason.

Free Enterprise is a good thing folks. I recognize the need for regulation (the tragedy of the commons) to protect our commons (no Benzene in the rivers for example – that’s a good regulation.)

But can’t we let competition keep up with technology? Why can’t I buy a car direct from the manufacturer? Name one rational reason besides protectionist laws from the stone age? (with apologies to my friends who might still be at UCS or ReyRey).

I work on the Internet. The speed of innovation is so radically fast and the threats to your business model are constant. And our business is 17 years old because WE ADAPT. Yes, people who can’t adapt that fast leave the company, but…. you know, it’s called competition for a reason. Adapt or die unfortunately.

So it will be interesting to see which manufacturer invalidates all of it’s franchise agreements with the dealerships first by allowing direct sales. Because whoever does it first, those dealerships will sell the MOST cars.

Yes, at first the dealers will be upset, and then, it’ll be alright. Everythings gonna be alright. And dealers know they make most of their profit from Parts and Service anyway. (OK, and Used Cars & F&I but we can’t fix it all at once I guess.)

http://beta.slashdot.org/story/207413

Irish too often spurn Diaspora advice?

Via Irish Central

“I think Irish people, generally, are a little wary of emigrants. Emigration is so much part of Irish life. We speak very well of people who go away and do well. But we get a little concerned when those people come back and tell us how things could have been done better. As Richard Harris tells Tom Berenger in [the film version of] The Field, “Go home, Yank. Go home.” There’s an element of that in Irish life. And I think official Ireland – and by that I mean not the agencies but Dublin, be it government or public sector – is struggling to figure out the next leg of this Diaspora thing.”

He stated there was a European bias in Ireland that militated against the American Irish contribution.

“Official Ireland is very European focused. They’ve been working as part of the ECC and then the EU since 1973. This may sound politically incorrect, but the vast majority of the Irish Diaspora that can have any influence on the situation is in the United States, and to some degree in the U.K. So you’ve got a bit of a challenge in that you’ve got public sector, European-focused official Ireland trying to figure out what to do about private sector, U.S.-based ex-pats, and official Ireland seems to me a lot more focused on how to control this as distinct from how to enable it.”

Speaking about the Diaspora initiative launched by the government he stated “I think the Irish agencies abroad have for many years been very effective at leveraging the Diaspora – long before we even called it the Diaspora. They’ve always been thoughtful, smart and creative at figuring out ways that they can use relationships to help Irish companies, to find investment for Ireland.

how to buy a used car in 2012 ish

###DRAFT###

But if I don’t hit publish it will just sit there forever. so you get a half baked version. Sorry.

———————-

On buying a car, a few notes from a guy who used to teach dealerships how to use their computer system to maximize profit. There are some honest dealers out there. When you are buying used this number goes down significantly. So this is mostly about buying a used car and focused on the younger reader who might not have experience buying cars.

How car dealerships make money:

First note that dealerships make money and move money between four boxes to maximize profit.

  1. Sale of the new car versus the dealers cost.
  2. Buying your trade-in vehicle and selling it on the used car lot for more
  3. Financing your vehicle (bank offers 5%, dealer charges 6.5% so they profit 1.5% on the financing)
  4. Insurance and after market options. (extended warranties, rims, upgraded sound system, etc).

If the goal is to make $3k on the sale, they really don’t care if they sell it to you below invoice price as long as they make it up in one of the other three areas. Hence cutting deals like “OK, I’ll get you to 5.5% interest, which is below myst cost (white lie here) if you will promise to purchase one of the warranties which are a great deal regardless.” etc….

How car dealerships lose money:

In defense of the car guys, people are trying to rob them constantly. From stealing cars. Car jackings on a test drive. Porters swapping out RIMS on a new Tahoe with similar but cheaper rims. Used car guys paying their wholesaler too much for used cars and taking a kick back because they know they are leaving in a month. The guy who paints the emblems gold with “14 carat gold” is really using gold pain that will fleck off in six months and the dealer has to pay for it again. The finance companies changing how they loan money for the dealer to have cars on their lot (called floor-plans). Manufacturers playing favorites and giving the “hot car of the year” to one dealer more than another out of favoritism. People kiting checks. Etc… In other words, it is a rough and street smart type of business and they have to be a little rough just to survive.

So yes, I’m asking that you have a little bit of sympathy for the plight of the car dealers of the world.

That said, let’s have some sympathy for you too and talk about the best way to navigate through the used car buying process, shall we?

Insurance:

Have your insurance already. If you qualify, I really like USAA if at ALL possible for insurance. Switching away would be penny wise and pound foolish (just gonna have to trust the old man on this one.) If you must, raise your deductible, but stay with USAA. USAA is the ONLY customer owned insurance company I know of.  They don’t try to be the cheapest, but they are usually competitive. And even if you are paying more it is worth it to not get hosed.

In the world of insurance, I ask you “how can that duck advertise so much?” and  “Where does the lizard get all that money to advertise?” The caveman? The hands people? All of them. They can advertise that much because they make it difficult to get your claims paid. Or by just not paying claims.

Back to your trip to the dealership. You will need a copy of your insurance and your driver’s license to test drive a car. They will either photocopy or take your driver’s license during the test drive. Don’t get mad. The problem is people would go in for test drives and steal the cars. Or worse, the sales person might be car jacked and injured. They have a right to protect themselves and their employees so don’t give the dealer a hard time about photocopying your license. It’s for their safety.

Oh, and they also add you to their system for follow up calls while you are out on your test drive. Such is life. But they are loaning you a big expensive machine so some collateral seems fair to me.

Getting a Car Note:

BE PRE-APPROVED for your loan before you walk on the lot. Period.

Call or go online and apply to be pre-approved for a car loan. This is step 1. Allow a couple days for this to go through. State your income correctly as they will ask for your last two or three paycheck stubs (see last email to get the intuit link). If your compensation varies due to commission or bonuses bring last year’s W-2. If last year’s W-2 is higher use that. If you just got a raise, bring your recent paycheck stubs as those will calculate to your new pay rate.

Your next goal is to pick a car and get a fair drive out cash price without showing any other cards yet (cards being trade-ins, warranties, add-on rims, etc…)

Credit checks. As few as possible.

Credit checks are bad for your credit (oh the irony). The the dealer will eventually run your credit to determine if you actually work at said company because they want to beat your preapproved rate. But don’t allow this until you have a final “cash” price for the vehicle. Think of a credit check like an X-ray. One isn’t such a bad deal. But if you had to get 50 xrays in one day you’d turn into the green hulk dude.

The risk to your credit is if three dealerships all pull your credit then it hurts your credit rating because it looks like you are trying to buy three cars and over extend yourself. Then nobody is going to give you a good deal or take you seriously. When preapproved for your car note you can tell the dealer specifically to NOT run your credit until you have picked out a car and negotiated the final sale price. Your goal is to negotiate a cash drive out price without letting the dealer look at your trade in or pull your credit rating.

Note: this is probably where you will get your first “Turn Over.” This simply means the sales person brings in a new face who tells you the exact same thing because psychology tells us that we are likely to do it if a new voice says the same thing. Expect this. And it will be a very very like-able Finance and Insurance professional who makes Brangelina look like they work community theater. Or the opposite – the folks type who gosh shucks just wants to take care of you. They’ll ask about your dog while they are printing forms and they will always have a picture of their family facing the customer. Think about it. Most of us have pictures of our family on our desk that face US. Hmmmmm.

As for credit checks, I should mention one possible exception here for luxury car buyers or industrial buyers (like F350s or Fleet Vans). If you are looking at a used BMW it doesn’t hurt for the dealer to see that the Mercedes dealership pulled your credit yesterday. But stop there.

The dealer will not want to negotiate a final sale price before running your credit as that tells them how much he might be able to make on the back end (finance and insurance). Stick to your guns. THEN and only then can they run your credit to see if they can do a better deal than USAA. And some credit unions can. But you have the upper hand by being preapproved.

You will probably have had a second turn over at this point. Three very likeable folks “on your side just trying to help you.” And they actually are trying to help you. They just want to make the most possible money doing it because that is how they eat and provide for their families. But the really good ones? They aren’t worried about feeding their families, they are trying to maximize profit because it is how they keep score. Competition drives them.

On credit ratings – few people actually lie about their credit ratings so a seasoned car guy will respond to “my credit it perfect” and leave it alone because usually when folks say that, they are telling the truth. On the other hand, don’t lie. If you have some bumps run your own credit report BEFORE going to the dealership and give them a copy with an explanation. Sure they’ll have to run their own, but they will match and you have established trust. And avoided an extra credit pull until you are ready.

At this point you have your insurance and you are preapproved. Yea! Next:

The Trade In.

When you arrive on the lot one of the first things they will ask is if you have a trade in “so we can have the guys in the back appraise it.” You can risk it, or just say “no, I’m giving that to my friend.” Then after you negotiate a cash price for the car you can say “you know, just for grins, what would you give me for my car?”  Be sure to spend $100 having it detailed (not washed, I said DETAILED) before going to the dealer. It should be spotless if you want the best price. It might not work, but having a filthy car definitely won’t work.

And don’t be dishonest to them either. If you know it has a bad oil leak, don’t just fill it up and wipe off the excess right before having it appraised. That makes you, well, let’s call it what it is. You would be at a minimum a liar and an attempted thief. This happens to dealers a LOT and then whoever buys the car beats them up for selling them a lemon when their mechanic had no way of knowing it leaked oil after long road trips. How could they? Only the person trading the car in knows that. Don’t fix it, but tell them because their cost to repair it is significantly less than yours and they will appreciate your honesty. And that just might get you a better deal (yes really.)

Despite my advice above I usually just detail my trade-in and let them appraise it right away. I tell them I have no more than one hour to be on the dealers lot and I stick to it and leave no matter what. I might come back, but I leave in one hour no matter what. And I also make sure that I know the trade in price and private sale price from Edmunds. If you aren’t sure what options your car has sometimes you can look that up by VIN number.

The dealer will come back with a offer for your trade in which you can cross check with the trade in value on http://www.edmunds.com/  If they are close to the trade in value I usually trade it in because selling a car is a pain. And it involves inviting strangers to your house from Craig’s list which sucks. But hey, if they low-ball you on the trade in push back. And if that doesn’t work then just say “nah, I’ll sell it myself on a consignment lot.” You won’t get quite as much as trade in, but more than the low ball offer they throw at you. And they will probably throw low because they are not used to anyone negotiating the cash price before anything else.

Choice of Vehicle:

Buy a reliable make of car that is popular. Popular cars means more of them wind up in the junk yards over time which means you can usually find used parts. Hence a Toyota Camry, Ford F-150 or Honda Civic are all good options. A Delorean on the other hand would be a terrible idea as used flux capacitors are rare. Very rare.

I am partial to Hondas and Mercedes personally. Although Mercedes is expensive to repair, they last forever. I haven’t had a car payment in three years.

Finding your car. Be picky? Pay the price.

Now to find the car. You need to buy a car with four seats as two seater cars have higher insurance. Red and Yellow cars have higher insurance. Tan cars are invisible and unsafe in my opinion as people pull out in front of you. So that leaves the other colors like Maroon, Silver, Black, White, etc…. Sorry kid – it’s a used car. It takes you from point A to point B. Period. You can’t pick a color so much as avoid those three “bad” colors – Red, Yellow, (expensive) and Tan (invisible – lots of accidents.) if you are trying to get the best deal.

This morning we looked up a 2005 Toyota Camry and the dealer has it listed at $9,991 + Tax Title and License (figure another 1k)

http://www.edmunds.com/inventory/used/vin.html?vin=4T1BE32K45U079954&radius=50&make=Toyota&model=Camry&year=2005&defaultType=&mode=&invtype=USED

Then we flipped it around and I said “hey, if I were trading this car in what is this 2005 Toyota Camry worth?” This generates three prices.

  1. Wholesale/Trade-in (selling to a wholesaler or an auction house),
  2. Private Party (person to person sale) or
  3. Dealer Retail.

In this case those numbers are: http://www.edmunds.com/toyota/camry/2005/tmv-appraise-results.html

Have the numbers before you get to the dealership and have the iphone ready to look up prices. Or a regular phone to text your friend the VIN number so they can be at their computer and do the lookup for you. In this case Edmunds tells us the the dealer probably paid about 5k for the car. And they should probably be selling it at $6,500 but will likely list at $7,500 to give themselves a bigger buffer.

Customized True Market Value Prices

Trade-In Private Party Dealer Retail
National Base Price $6,455 $7,429 $8,528
Optional Equipment $0 $0 $0
Color Adjustment - Red $10 $11 $13
Regional Adjustment - for Zip Code 77002 $3 $4 $4
Mileage Adjustment - 100,000 miles $-177 $-177 $-177
Condition Adjustment - Average $-1,458 $-1,646 $-1,834
Total $4,833 $5,621 $6,534

OK, so now we know the dealer is asking 10k for a car he paid $4833 for. Even if you negotiate them down 3k, they are still going to make 2K and talk you into some protection policy ($900), ask you to pay for extras they “already installed on the car” like VIN etching on the windows or gold paint on the front hood ornament ($450) and underbody protection ($300). Refuse all of these. All. Tell them your brother is a mechanic (one of mine is) and leave off the part about him living in Florida.

These prices are dated, but the cost to the dealer for the “warranty insurance” is probably $150, the VIN etching is just a scam, but cost is maybe $100 to the dealer and gold paint on the hood ornament probably cost them $50 to $100. Same for pin-stripes.

Other thoughts

1) USAA – If you are preapproved for a loan you have the upper hand. And it is probably better to just say you don’t have a trade in car. That just gives them another variable to mess with you. Being preapproved by USAA is key.

2) Have print outs in your hand for at minimum of three (3) of the type of car you want to purchase. Also have print outs of the trade in value. It is OK to pay dealer retail, that is about a 1k profit and that is fair for what they go through. But getting hit up for 5k extra puts you “upside down” on the car and you can never sell it. Then it dies and you are making car payments on a car that doesn’t exist.

3) They will not want to talk “interest rate” but rather “payment.” Then they will say you are saving $50 a month on your payments when in fact USAA approved you for a 4 year loan and they just moved you to a six year loan and didn’t tell you.

4) Extended warranties. Don’t buy it. If you really want one you can buy them on the Internet for a fraction of what the dealer will want to sell it to you for.

5) Don’t worry about location. A dealer in Dallas has zero chance of selling you a car, right? So if a Dallas car dealer has an old car on his lot and it costs $250 to have it shipped, that dealer would settle for a lower margin Internet deal gladly. Thus frequently the best priced cars are from alternate cities. If you are in Houston call down to Rosenberg and check their prices.

6) Dealers hate old cars on their lot because they are paying interest (it’s called “Floorplanning”. When I traded in a Tahoe and bought a Honda Civic I literally walked up to the first salesperson I saw and said “show me the three oldest four door Honda civics on your lot regardless of color. And I have exactly one hour before I need to leave.” I bought the second oldest and it was a pretty quick car deal.

7) On a used car it is common practice for you to take it to your own mechanic and pay them $50 to look over the car and tell you if they see anything wrong with it. You yourself can look for stuff like “orange peel” paint jobs which means body work. Bolts under the hood that are not painted (the fender was replaced – new cars paint it all at once.)

8) CarFax is cheesy as hell, http://www.carfax.com/entry.cfx but it does give you the history of the car. When we bought used we usually did pay to get the history of the car (although back then you had to mail off for it). We bought a lemon that the salesman said was “the dealer’s wife’s car” when in fact it was a lease car out of Florida that never worked right and leaked on you when it rained. We made such a stink they took it back.

9) Used cars in the South are worth more than used cars from the Northeast. This is because of salt to remove snow and ice from the roads in the North which causes cars in the northeast to rust faster. Not as much of an issue these days, but still. On the flip side buying a pickup truck from North of the Mason Dixon line will be cheaper than buying one in Texas. Thus a lot of dealers will buy wholesale pickup trucks at auction in the North and have them shipped to the south. That $500 shipping cost is small compared to the 2k bump in price the vehicle will get, and you won’t know the history (see Carfax above).

7) New cars have something called “Hold Back.” which is basically a kick back of 1k to the dealer. So if you ask to see the invoice, which you are free to ask, they will show you that they paid 26k. They say “But you gotta give us a little!?” so you agree to $500 over invoice. So they are up 1.5k and send you to F&I (Finance and Insurance) and work you for the “pre-added accessorie, the interest rate spread, the extended warranty that doesn’t cover anything, etc.

Back to the beginning. Four buckets. Sale price. Trade in. Financing. And add-ons. If you can negotiate those individually you will do better. If you try to negotiate them all at once, it’s like trying to win against a carny. The game is rigged in their favor.

Your goal is to get a fair deal. Be civilized. Give them some margin because the dealership is a business too, but don’t let them charge you 10k for a car they paid 5k for because you will be upside down on your car note forever. Negotiate for a fair deal.

being on track with your life

(This is a cross post. Please comment on “being on track with your life” on the chron blog here.)

From a post on CNN about an unemployed iReporter:
schipulmug.jpg

“I’m still fortunate to have a roof over my head and make do with what I can but I miss having a decent job and being on track with my life.” – sbeasia

I don’t mean to sound jaded, but does “being on track with my life” qualify as expectation or entitlement? I hear that from many people, frequently they are employed but have some other expectation. They can’t articulate WHERE they are “supposed” to be. But they can complain they aren’t “there” and look at you solve it. Solve what?

Here’s the thing. Lament the loss of a job and work hard to find or create a new one. The CNN ireporter sbeasia is clearly doing that. But “being on track with my life” is an illusion. You might as well say “keeping up with the Joneses.” YOU CAN’T.

Reality is all of us with very rare exception are bumbling along and making due with circumstances. None of us are “on track with our life” as far as I can tell. And the few I have seen accomplish all of their “goals” are generally dissatisfied and hungry still. And someone somewhere is still richer, has a better job, has a beautiful house, has 2.5 kids, drives a Ferrari. Someone somewhere is more “on track with their life” because as humans our perception of what we want is always more than what we have.

I am not “on track with my life” and I’m OK with that. I’m in Texas because the Army stationed my Dad in San Antonio years ago. They left and I stayed. I went to a school mostly to play an obscure sport. I’m in Houston because I met a girl at school who was from Houston and we moved down here after college. That is all just bouncing around based on circumstance.

houston tunnels - curve in the roadI didn’t even intend to start a company. That was sort of an accident as well. Yes really. Oh, and the reality of running a company is NOTHING like the perception. Inspector Clouseau is one of my heroes because he embraces this reality. From wikipedia:

Regardless of his rather limited ability, he successfully solves his cases and finds the correct culprits, even if this success is achieved entirely by accident. As such, he is even promoted to Chief Inspector over the course of the series, and is regarded by many other characters who presumably have not met him as France’s greatest detective; those characters he actually encounters, nevertheless, are quick to realise his incompetence and limitations. He is immensely egocentric and pompous; despite his many failings, he is seemingly convinced that he is a brilliant police officer destined to succeed and rise through the ranks of the Sûreté.”

That is completely me. If I solve a case half the time it’s just by luck. Or as the Inspector would say, “I knew that” after the house fell down around him. “That is not my dog” indeed!

None of us are entitled to a particular station in life any more than Clouseau was entitled to be a Chief Inspector. If you achieve some perceived “station”, or get lucky and win lotto, then good for you. But you aren’t entitled to it. And EVERYONE feels like they “aren’t far enough along.” Particularly during the Great Recession. You are not alone, although that doesn’t help much. Changing the toxic internal dialog however just might help.

The problem isn’t that things are tight and you need to cut back on cable and get a roommate. Or that you aren’t “on track with your life” and can’t afford $60 a month for cigarettes or a $500 car payment. The problem is entitlement. And it’s worse than that because it is entitlement that will forever be unrequited. It is entitlement to a carrot on a stick that will ALWAYS be held out in front of us.

I am definitely not “on track with my life” but at least I realize that is society creating false expectations. But I still work Saturday’s. Clouseau might not have the right theory, but he is present and solves the case anyway. So be present.

If you are thinking “I’m not on track with my  life” then go create something. And quit letting Mother Culture tell you how you should act and where you should “be”.

“(Mother Culture) is not a real entity, just as Mother Nature isn’t. I believe that’s why he chose the name. Mother culture refers to the voice in your head that tells you how to think and act ‘normal’ in your society. It is TV ads and movies and fairy tales and laws and school lessions that all are based on the same underlying values. It is reinforced by everybody around you buying into the program without ever really knowing there is a program.

Mother culture is a subtle influence and much of it is not explicitly said. It is a bias on how you observe the world, the tint in your ski goggles when the world looks slightly yellow.

You aren’t a puppet. You are a free man. And freedom doesn’t look like the beautiful people on TV. You aren’t at your “proper” “station in life” because it is an illusion. Be present.

(This is a cross post. Please comment on “being on track with your life” on the chron blog here.)

14 years and a big year at that

This is a cross post. Please comment on the original post on the official Schipul Web Design Company Blog here.

September 1, 2011 is the 14th anniversary of starting the company. 14 years. Considering I was unable to hold a single job for more than 2 years before this (if you exclude teaching on and off at a gym in college) this is impressive for me to stay focused for 14 years. But my job has changed. Years ago I realized that the company had grown to the point that I, me personally, was no longer the one building web sites. Rather my job transformed into growing people. And I enjoy and try very hard to surround myself with brilliant, hard working people with positive attitudes. Turns out they make great employees and they challenge me to grow at the same time.

14 is kind of an awkward age. I think if you are married there isn’t even a recommended gift from de beers given it isn’t a multiple of 5. (Wait. Sheesh, I just looked it up. 14 years is traditionally ivory? What the heck? Do NOT send me any ivory people. Really. Elephants look better with their tusks IMHO.)

And this is my second blog post on blog.schipul.com. I have submitted other posts, but as I was reminded when I mentioned to Katie that I was writing this post, apparently “snark” isn’t appropriate on blog.schipul.com.  I must reserve that for my own blog or the Chron. Thus my previous posts were rejected by Katie for official publication. Hopefully this one makes the cut!

Back to the 14 year thing. Obviously I am incredibly grateful to my family and friends who helped me start the business. There truly is no such thing as a self-made-man, woman, entrepreneur, whatever. We ALL get a TON of help in both sweat equity, money, advice, support and every other type of help imaginable. Nobody can do it alone. The media likes to tell the story of a modern day Galt charging forward solo against the odds. It doesn’t work that way. It takes a network of support to start a business. And I had that network 14 years ago and I still have it now. And as I have said many times, the biggest supporter I have ever had is my wife Rachel. If Rachel had not gone back to work in 1997 when I quit my job the company wouldn’t exist at all.

In the early days, huge thanks to Paul Bieniawski, Scott Pederson and Javier Avellan as well. Starting a company is like moving apartments when you are young; everyone says they are your friend, but suddenly they are busy and can’t help on that particular Saturday. Rachel, Paul, Scott and Javier freed up the time to help me and were truly paid in pizza and beer (yes really). Our first server was built on the floor of Scott’s kitchen using left over alpha hardware and a case, motherboard and CPU purchased on Harwin. (Tip for future entrepreneurs – NEVER use “alpha” hardware. Uuuugh, that server was rough. But it got the job done.)

Employees – the team – the heart of the company. I appreciate Jennifer, Rodney, Aaron, Jenny, Katie, Eloy, Kerry, Lyndia and the entire team. We definitely would NOT be celebrating 14 years without all of them. And that’s not even listing some of our former employees who made huge contributions, helped the company move forward and then went on to follow their own path. Their impact was felt and moved the ship forward. And a special shout out to Ellen M, my very first employee, who is awesome despite having gone to t.u.

Clients – we are here to serve our clients and without clients we wouldn’t exist. Saying thank you to our clients, letting them know we understand we work for them, and that we appreciate them, can’t be repeated often enough. So if you are a client reading this - THANK YOU!

I have a lot of history of the company to write. Forgive me if I am missing something and I’ll try to get it all organized by the time we hit 15 years.

So if I didn’t write a blog post at year 10, if I didn’t write one at year 11, 12 or 13, why now? Because 2011 is different for us. We have not had a year this transformative in the company’s history since 2001 when we shut down network consulting services and started programming codebase (now called Tendenci.) In fact our theme this year is “Go Big or Go Home” which I borrowed from Aaron’s team goals. That Aaron is a wise man.

“Go Big or Go Home” is definitely not a typical theme for a conservative businessman running a company during a recession. But in 2011 we effectively “doubled down” as they say. Instead of running from a recession, we charged into it and reinvested while cutting costs and reinventing our products. Go big or go home in 2011 means this year we:

  1. Tendenci – Finished the rewrite of Tendenci version 5 on the Amazon server cloud. The rewrite started in January of 2009 and we had a few clients moved onto the new version in 2010. But only in 2011 has our dedicated team of programmers started to really build the recurring revenue and functionality to rival Tendenci 4. I can’t speak highly enough of the team. Writing software ALWAYS takes longer than you want and costs more. That has been the case for us with the rewrite of Tendenci. But it IS done and live on client sites like Discovery Green in and ThinkLA. We look forward to converting our other 400 clients to the latest version over the next few years.
  2.  SchipulCon 2011! – We had our first Tendenci user conference in 2007. We tried to do it again in 2008 but Hurricane Ike had other ideas and instead we cancelled and had a giant party. I know, a dot-com kind of thing to do, but if you remember the time after Ike we all needed a bit of healing and beer heals.  In 2009 we renamed it SchipulCon and had a great event at our long time client the Houston Zoo. Well, you guessed it, we are DOING IT AGAIN! Please check out our speakers and register for SchipulCon October 6,7, 2011 at client Norris Conference Center at CityCentre in Houston.
  3. Silicon Valley – we opened an office in Silicon Valley in March of this year led by April Kyle. We are learning to speak Californian and finding they aren’t so different from us! West coaster? Give us at call in the valley at 408-430-3137!
  4. Business Processes – kind of boring to talk about, but we have completely reengineered our internal processes from accounting procedures to better utilization of SugarCRM and switching time tracking and moving our email to the cloud. It hasn’t been completely smooth, but it is building a foundation for us to continue our growth unimpeded. Thank you to the team for moving with the cheese in 2011 as we grow! And it helps our clients by improving our efficiency which allows us to reinvest in YOU!
  5. Tendenci self-signup – by the end of 2011 smaller organizations will be able to self signup for a much lower cost Tendenci site for their organization. We have lowered our costs by moving into the cloud and we are passing those savings on to our clients to enable more and more small associations to take advantage of our technology at an affordable price. (Special shout-out to former employee Glenbot who has moved on to a VC backed firm. Without Glen’s contributions to Tendenci 5 over the last few years we wouldn’t be this close. Thanks Glen. I appreciate the beautiful code dude.)

And to our competitors who told our clients we had “stagnated” and had “stopped updating Tendenci,” … um…. ooops, meet T5 baby! Rockin the cloud for a bigger and better future. Two and a half years of serious double-down and rebuilding was hard to endure, but we are near the finish line to the ultimate benefit of our clients.

And the team has done all of that in the fourth year of a recession. Call us crazy, but we figured there would never be a good time to do any of these changes, so why not do them all at once? Why not Go Big or Go Home in 2011?! And we are doing it. And I couldn’t be more proud of our employees or more grateful to our clients and everyone who has helped us not only this year, but every year for the last 14 years.

Please join us for SchipulCon and get some brain candy. We are here to serve you. We are reinvesting to serve you better. And as always, we are appreciative of Houston and the community and friends that have supported us for so long. Thank you!

Ed

This is a cross post. Please comment on the original post on the official Schipul Web Design Company Blog here.

those who remain determined “mouse-avores” starve

“IV. At the same time, living systems adapt themselves to changes in their environment they learn, grow, develop, evolve. When the mouse population in a region suddenly declines because of an epidemic, the predators who adapt to a new prey survive; those who remain determined snake bit“mouse-avores” starve. Life events affect us and change us, and we can see these changes reflected in the nevertheless familiar faces of our friends. The ability of living systems to adapt and self-organize allows them to defy the second law of thermodynamics, which insists that everything runs down and returns to a state of disorganization and homogeneity. Not so for living systems! They continuously reorganize themselves into ever more complex patterns and interrelationships.”

Molly Young Brown, Patterns, Flows and Interrelationships

tantrum

“We don’t need to tell the rest of the world that anytime people in Congress start throwing a tantrum that we’re not going to pay our bills.” – Warren Buffett

The Rule of Consistency and Why You Are Being Played

You are being played to keep you on the corporate teet photo of a photo of a foxand make sure you don’t rise up. You have been convinced to do what you are told at a level that you no longer even realize it. Yes. You.

There is no one “the man” that is keeping us down. It’s the entire empire. The one that tells the black man he has to argue with another black man about “whose parents were worse and whose childhood was worse.” (see original and “you ain’t never been on probation“)  The “man” that tells the country kids about the working man blues. The one that sings Narcocorrido to our youth on both sides of the border.

Humans are persuaded by a variety of means. This author gives us the six laws of persuasion. Reciprocation, Commitment, Social Proof, Liking, Authority and Scarcity.

Example: Most people are aware of the power of reciprocity, which is why they are so eager to give you a cookie when you go into a furniture store or buy you a free coke at the car dealership. Once we say yes, we owe them. The fact that we don’t OWE them enough to buy a 30k car is besides the point, there is nothing else we can give them to repay the favor when we are in their offices. So a free coke and a free cookie really do increase sales.

You, we, us – we are being played. NoLogo indeed.

Men, ask yourself, are you still a sexist pig?

This is a cross post. Please comment on “Men, ask yourself, are you still a sexist pig?” on Chron.com.

Yup, I’m calling the men out on subtle sexism. A lot of men, probably me too when I was younger, have a problem with their women making more than them. Rachel, my wife, made more than me for YEARS after we first got married. This was in the early 90s and I would argue that we have made a lot of progress reducing sexism over the last 20 years, although certainly it still exists.

So here we are in 2011. And if you ask a guy “would it bother you if your significant other made more money than you?” they will, based on my small sample survey, still say “YES!” It bugs them. They feel that men SHOULD make more than women. No particular reason, just because. If you follow the first question up with “Do you consider yourself sexist?” They say “NO!” – but they are. And I’ve wanted to say this to them, but I just didn’t have the data and really I have other battles to fight. Then I saw this editorial in Sunday’s Houston Chronicle.

Scott Burns: A bad decade for jobs — especially for men

Hey, guys, I’ve got to confirm some tough news: Women have become the new men. While the Atlantic Monthly went a bit overboard last year in an article titled “The End of Men,” the economic statistics aren’t encouraging.

Truth is, the gals we like to impress so much with our manliness have wiped us out when it comes to the game of Bringing Home the Bacon. That’s not hyperbole. In the first decade of this century, U.S. Labor Department figures show that women have gained 2,119,000 jobs. During the same period, men gained a piddling 54,000 jobs.

This is the kind of score you’d have if the Yankees played against a Little League team, or the Dallas Mavericks played against a very small high school.

Basically, we guys never had the ball. Women got 97.5 percent of all the new jobs created between 2000 and 2010.

versus

In the 1990s, men won 46 percent of the 18.4 million new jobs created. In the 1980s, men won 41 percent of the 19.5 million jobs created.

and apparently this is particularly true for cities like Houston.

One group of women out-earns their male competition. Researcher James Chung of Reach Advisors found that unmarried women under age 30 and without children who lived in large cities made more money than their male counterparts. Specifically, he found that this group of women earned more in 147 of 150 major cities, with the premium reaching as high as 17 percent in New York

and this one has gotta sting a bit if you still think “he-man-caveman-should-make-more-money-than-girl

“One way in which college-educated married men have gained financially is that they increasingly are likely to be married to the highest-income wives.” Now men can go to college in hopes their B.A. or B.S. degree will lead to a coveted “MR.” degree.

At my son’s recent High School graduation honors ceremony, there were probably 20 women to 3 guys who achieved the highest honors in the senior class. The guys have checked out. But somehow they don’t think this is going to relate to the real world when they get a job later. And the men are really insecure about this, and I have written about insecurity and the dangers that go with it in the past.

If America is a meritocracy, if business works like it should, then women SHOULD be making more than men. Because they are EARNING it. And if men have issues with this, let’s call it what it is; insecurity and sexism. So ask yourself, are you still a sexist pig?

This is a cross post. Please comment on “Men, ask yourself, are you still a sexist pig?” on Chron.com.

 

Boomers and Millennials – 3 Reasons the USA Will Recover Our Sanity

A few things to consider when observing the needs of benefit programs (Social Security, Medicare, Unemployment, etc) for Americans. I believe the current strain on the system may be particularly bad at the moment, which means it will improve for future generations. The added stress is temporary. Here’s why.

strengthThree one-time events have occurred over the last 70 years that have led to American families being more spread out than ever before. And more politically polarized. So instead of Social Security being supplemental income for our parents who move back into the house when they retire, it is now expected to support two households. One in Connecticut or wherever your parents live. And another household must pay its way entirely, hopefully through employment, in a different city. This is just a theory, but here goes:

First – The American Interstate Highway System

The Interstate System has been called the Greatest Public Works Project in History.  From the day President Dwight D. Eisenhower signed the Federal-Aid Highway Act of 1956, the Interstate System has been a part of our culture—as construction projects, as transportation in our daily lives, and as an integral part of the American way of life.  Every citizen has been touched by it, if not directly as motorists, then indirectly because every item we buy has been on the Interstate System at some point.  President Eisenhower considered it one of the most important achievements of his two terms in office, and historians agree.

And for the PR people out there, don’t forget that Edward Bernays’ work with Mack Trucks was a precursor. Bernays, always humble, states “One single idea changed the economics of a country.”

Second – Indoor Air Conditioning

Air conditioning is largely credited with the migration of Americans from the North to the South. From a book review Salon on AC. Note – some of the article is behind a pay-wall but this OTB review of the salon article on air conditioning has more quotes from the book “Losing Our Cool: Uncomfortable Truths About Our Air-Conditioned World

But as science writer Stan Cox argues in his new book, “Losing Our Cool: Uncomfortable Truths About Our Air-Conditioned World (and Finding New Ways to Get Through the Summer),” the dizzying rise of air conditioning comes at a steep personal and societal price. We stay inside longer, exercise less, and get sick more often — and the electricity used to power all that A.C. is helping push the fast-forward button on global warming. The invention has also changed American politics: Love it or hate it, refrigerated cooling has been a major boon to the Republican Party. The advent of A.C. helped launch the massive Southern and Western population growth that’s transformed our electoral map in the last half century.

It was only in 1947 that “Mass-produced, low-cost window air conditioners become possible.” Figure 10 years for adoption and you’re looking at late 50s and 60s for things to be livable in a city like Houston. And another source on the role of AC in the South. Basically New Yorkers invented air conditioning and then used it to get the heck out of Dodge.

The Interstate Highway system and AC making the South livable created a virtual land rush with youth moving south and families spreading out across the country. And the migration, like the Sooners, was largely a one-time-event. Sure people will continue to move around, but not like they did over the last 50 years. It just makes more sense for humans to stay near our support network. It takes a gold-rush to lure us to new territories. Then we settle down.

Third – The Baby Boomers in Power

They have brought us many great things. Boomers invented the Web, DNA fingerprinting, lithium-ion batteries, the artificial heart and much more. Yet this is also a generation that has been fighting with itself for as long as I have been alive. Even the Wikipedia page on baby boomers is covered with conditional statements because they can’t agree. From Wikipedia:

In general, baby boomers are associated with a rejection or redefinition of traditional values; however, many commentators have disputed the extent of that rejection, noting the widespread continuity of values with older and younger generations. In Europe and North America boomers are widely associated with privilege, as many grew up in a time of affluence.[2] As a group, they were the healthiest, and wealthiest generation to that time, and amongst the first to grow up genuinely expecting the world to improve with time.[3]

So they are known for rejection but the commentators on the Boomer wikipedia article reject that they are known for rejection. Very meta. My point here is at this moment in time the baby boomers are running the country. And they grew up in a time of great social change.

Boomers grew up at a time of dramatic social change. In the United States, that social change marked the generation with a strong cultural cleavage, between the proponents of social change and the more conservative. Some analysts believe this cleavage played out politically since the time of the Vietnam War to the mid-2000s, to some extent defining the political landscape and division in the country. – NABBW

Boomers are in charge and they don’t like each other. Period. They are polarized. Is America becoming more polarized right and left and screaming at each other? Or is it just this one group? I believe the divisions in our country are not as great as portrayed in the media and it is more an inner-generational rift than an inter-generational rift. I just don’t hear the vitriol when two Gen-X-ers are talking. Their beliefs on most issues simply aren’t anywhere near the country-is-being-torn-apart feeling of the 60s and 70s.

The Boomers have made what we have in this country today possible. I appreciate that as I type this on the laptop they invented for me. But they have also buried us in debt and polarized the two party system George Washington, our only Independent President, hated. Like a good coach I am saying I loved seeing the points on the board, but you are fouling out. This is a generation that needs to do better. But they can’t because people don’t think and act as generations. They do so on beliefs and it is unlikely, possible but unlikely, people in their 50+ years will change their ideology. Rather than agree they will take their ball and go home, the future be damned. Thus we literally have to wait them out to save the country.

The Good News is the Future Will Be Better

The ramifications of these three one-time events is that we are spread out across the country without immediate family nearby. And we are screaming at each other because of ideological differences. Yet give it 20 years, yes I realize that is a long time, but when time goes by I predict it will get better. Specifically:

  1. Stabilization of the American extended family. Humans naturally stay with their tribe. Fewer children will move to far off states which means more family in the same location. We need this support network. When you lose your job, as so many have these last few years, it is much easier to move into the guest room if your extended family is in the same state, or (gasp!) the same part of town.
  2. Reduced costs to society for entitlement programs – when family is nearby, Social Security and Medicaid aren’t expected to fully support an entire household. They are needed to supplement the income of an elderly parent who is supported by their nearby family as well.
  3. Reduced political rhetoric and infighting among Americans. As the boomers age out, the Millennial generation will move into power. The Millennials are a diverse group, but they are not divided like the boomers. Diversity does not equal divisiveness and I am quite optimistic about the Millennials long term. Perhaps “entitled” and “soft” like the doughboys currently, but the Millennials will emerge strong leaders as they enter the real world and mature past the overly-protective cocoons they grew up in. I have seen this growth in our employees. They can and will step up. And we as a country will be saved by these kids.

That’s my two cents anyway. It gets better. It’ll just take a while. Hang in there y’all.

 

Jason Calacanis on Scurvy

“Hey wait. You’re the captain of the ship. We can talk about what direction we’re going. But we’re going in a direction. And if there’s a debate about what direction we’re going, it’s my ship, I’m gonna pick at the end of the day. I’m gonna take everyone’s input. But there’s gonna come a point when the ship has to go. Because there’s only a certain number of lemons. And you’re gonna get scurvy and we’re all gonna lose our teeth. And it’s gonna get f*cking crazy. And people are gonna lose their minds. We need to keep the ship moving. You can get your own ship.” - Jason Calacanis

and

“What gets you out of bed in the morning to win? You have to have some love for the game.” - Jason Calacanis

 

So ya, I respect the dude. Passionate? Yes. Overly honest? Yes. Respect? Yes.

2011 tech bLubble & developers as your audience.

No tech bubble this time? Arrington’s thoughts on 2011 versus 2010 in Silicon Valley. Then a few comments of my own after the jump.

Fruit Loop

From techcrunch blubble:

A perfectly reasonable 2000 tech startup business decision – spend $10 million on a massive advertising campaign that may bring in $500k in revenue. The “branding” value makes up the difference, and those few new customers will continue to spend money and tell their friends! Grab territory while it’s there to be grabbed, the thinking went. We’ll figure out the business later. Money was so easy to come by, it made sense to some.

and

In the most innocent cases Company A would buy a bunch of ads or whatever from Company B. Maybe a $5 million deal over 24 months. Company B would then buy a bunch of stuff from Company A. Say $4 million over 18 months. As long as the deals weren’t mirrors and they were separate and binding contracts the accountants were high fiving everyone.

versus the 2011 Blubble:

2011 Blubble: Drag blubbering angel investors into Series A rounds valuing your company at $6 million instead of $4 million. Hire engineers, lots of them, as many as you can. Don’t hire non-engineers or other overhead people unless you absolutely have to (thus the dearth of VP Biz Devs around). Your APIs are your sales team!

I’m not in Silicon Valley today, although we have an office there, I am not the one in the coffee shops on a daily basis and I don’t understand “the game.” I do think the author makes a good point about 2011 not being the same type of tech bubble as 2010. The investors have matured to the point that triangular deals aren’t a source of revenue and people actually care about revenue. As a small business I care much more about profit than revenue. Profit is your future cash which controls your growth. If you aren’t profitable you die in short order. Thus we grew 12% last year profitably. Not an easy task in this economy.

The post also highlights one of the biggest challenges with tech companies. Salaries will KILL YOU. It’s not the rent. It’s not the insurance, although health insurance is approaching the deathly-expensive-zone. It is salaries. You can’t cut billable employees as they generate profit. Programmers build your product. Sales hunts and drives profit. The one thing you generally don’t want to be is admin as that is the first thing that gets cut. But if you can automate any of it, you are better off.

Two common methods of automating and outsourcing something that historically has been done in house.

  1. APIs. As Arrington says, if other companies program to your API you don’t need sales. But you need to convince those developers to spend their valuable time working with your API and that isn’t easy.
  2. Open Source. If programmers on the Internet extend your product to meet the needs of more customers then you are more likely to sell more. But you need to convince those developers to spend their valuable time adding new modules to your products.

Think about that. If you are going to automate to increase profits you have to change your business model to include remote developers as a primary audience. Or at least one strong constituency that your messaging goes to. Maybe all of those events we have sponsored in the past will pay off as I have thought of them mostly as “supporting the community” rather than seeking an ROI from a sponsorship. Hmmm.

Hopefully we can explore that more at SchipulCon with a few leaders in the open source community. More on that as it approaches.

 

 

buy gold – thanks t.u. – pay more for electonics – higher interest rates – oh my

silver and goldTurns out Glenn Beck was right; buy gold. Because Gold is now over $1500/ounce!

Radio and TV host Glenn Beck likes to talk about the potential collapse of the American economy. He also likes to talk about buying gold as a hedge against the unknown.

Thanks in part to UT Austin buying 1 billion dollars worth of physical gold bars.

In one of the most remarkable turn of events in Gold history, the University of Texas endowment fund managers announced they have taken delivery of $1 Billion Dollars worth of physical Gold!

UT took delivery of 6,643 actual bars of Gold Bullion, or 664,300 ounces– a quite unusual transaction for any university, one that may set a trend for soaring physical Gold demand in 2011. Note that the investment was not in a Gold ETF or individual Gold mining shares or in Gold futures– but in real, physical Gold Bars.

And expect to pay more for electronics.

The most important industrial use of gold is in the manufacture of electronics. Solid state electronic devices use very low voltages and currents which are easily interrupted by corrosion or tarnish at the contact points. Gold is the highly efficient conductor that can carry these tiny currents and remain free of corrosion… Gold is used in many places in the standard desktop or laptop computer. The rapid and accurate transmission of digital information through the computer and from one component to another requires an efficient and reliable conductor. Gold meets these requirements better than any other metal.

And all of it timed at the same time S&P received an open letter to downgrade US debt.

He acknowledges the turmoil it would create, punishing Treasury bonds and causing interest rates to spike. In Weiss’s view, however, leaving the AAA-rating untouched could ultimately prove far worse. It gives Congress a free pass to add to the public debt and encourages investors to buy Treasury notes and bonds, whose low yields, he believes, don’t compensate for the dangers.

“Worst of all,” Weiss writes, “by continuing to reaffirm America’s triple-A rating, you help create a false sense of security overall–the recipe for a possible meltdown in the market for U.S. sovereign debts.”

which S&P then did

The closing bell on the New York Stock Exchange sounded at the end of a jittery day of trading. Stocks had plunged at the outset, when one of the nation’s largest bond-rating agencies, Standard & Poor’s, downgraded its long-term outlook on U.S. Treasury debt from stable to negative.

S&P said there’s a — quote — “significant risk that Democrats and Republicans cannot agree on spending and deficits until after the 2012 election.” The agency said, “We see the path to agreement as challenging, because the gap between the parties remains wide.”

OK, for those following at home. Your elected officials are squabbling and trying to get reelected instead of running the country. And that raises interest rates. Which makes it even LESS LIKELY that people will be able to sell or buy homes, start businesses, etc, etc. Or that a lot of my unemployed friends will get jobs. Which just sucks.

Not sure what happens next. But I am pretty sure this isn’t good for our business or for job creation. Keep on keepin on I guess…

 

 

 

on suicide and entrepreneurship

Because entreneurship is so misunderstood and suicide is such a sensitive subject I felt the need for a few disclaimers when I did this blog post on Governor Rick Perry’s business tax increases in Texas. I was very careful with my wording to be as respectful as possible, yet be honest about the visceral reaction I had when I read about the tragedy in Austin. I will let that post stand for itself and add nothing further.

Yet in the process of writing that post I did a bunch of research on entrepreneurship and suicide and those notes turned into this post. It is not particularly well organized. Sorry, they were just notes so here goes…

First – I don’t agree with suicide. And nobody can make the case for murder. But we have all heard the stories about business men jumping out of windows after the crash of 1929. And more recently the son who had the courage to testify against his father the crook took his own life. So you can’t argue it’s just the “guilty capitalists” who lose.

And there is apparently a correlation between entrepreneurship and suicide as well. You have to be crazy to start a business to begin with (only partially kidding) so this isn’t surprising. The book For Entrepreneurs Who Considered Suicide When Business Got Tough! tells a story to prevent business owners from making that mistake.

The anchorwoman says, “like many of the three million entrepreneurs who have committed suicide, John Dough was depressed by failed business alliances and naysayers who criticized him for quitting his corporate job to pursue his dream.”

This article on the collateral damage of economic recessions clarifies the statistics.

Unknown to many, people who commits suicide in the wake of economic recessions and financial crises are not individuals with pre-existing mental illnesses.  They are commonly middle-aged men on the verge of debt and bankruptcy.

Add to that most entrepreneurs are men. And (sadly) men are four times more likely to commit suicide. This was news to me as I thought the stereotype was of a young woman. From wikipedia on the epidemiology of suicide regarding gender.

In the United States, males are four times more likely to die by suicide than females.

And then lets throw in race and add another bit of trivia I was unaware of:

In 2003, in the United States, whites were nearly 2.5 times more likely to kill themselves than were blacks or Hispanics.

Oh that’s just great. Sheesh, nobody mentioned THAT when we were in college being told that white males had it easy. e.g. “The Pinto is a great economical car that you can afford and we should mention IT HAS A HIGHER LIKELIHOOD OF BLOWING UP!”

And the correlation between failed businesses and suicide isn’t specific to the United States. In fact apparently we do a better job of accepting failure than other countries like Japan. From this post called “Japan: To Fix Your Economy, Honor Your Failed Entrepreneurs” by Vivek Wadhwa

In any country, innovation and economic growth come from startup ventures.  But most Japanese don’t want to take the risk of starting a business.  Indeed, the social stigma and financial repercussion of failure are so great that the founders of failed businesses become social outcasts; no one will work with them again or fund them; and all too often they end up committing suicide.

Entrepreneurs are crazy enough to think that “sure, 90+ percent of start-ups fail, but I’ll be in that minority that makes it!”

As a young man I remember talking to a friend and my point was “if you are considering suicide, why not just up and go on an adventure? If you are working the fishing boats in Alaska you are alive and enjoying life, right? If things are so bad, just leave?” That logic worked for me in my formative years. As I have gotten older I have learned to be more sympathetic on a very complex subject. This recent post by Jenny really highlights the correlation between mental illness and suicide. You can watch the coming out video here.

Money problems are common for entrepreneurs. We are like that. If we have a nest egg we risk it again and keep attacking. This isn’t rational, I get that. But the country need us. We create jobs. We create the economic growth that generates the wealth that pays the taxes so we can educate the kids. If you want public sector employees you need private sector jobs to pay for them.

Entrepreneurs are risk takers. I don’t know why. Me? Well, 13 years ago I had two investors lined up for 10k each (sounds funny in hind sight) and one client doing 1200/month. The client fired me, he was also one of the investors so I lost one investor. Ethically I had to tell the other investor and they backed out. Three young kids at home, the youngest 2 years old, my spouse was not working and I had 7k. And I quit to start a company. That’s not “business minded entrepreneurship.” That is just PLAIN STUPID. I have NO idea what I was thinking or why my wife put up with it. She got a job and it eventually worked out. Miraculously I am still married. My point is that just isn’t rational behavior. It isn’t. And I am the one that did it. Why? I really don’t know. And I was 100% positive that I would be successful. And for the record, “I” did NOT do it, but with a TON of help from family and friends and the Houston community WE did do it. We are still here and proud to serve our clients. THANK YOU!

See what I did there? I told the creation story (all true) and the success story (where we are now) but I left off the part about being screwed over by a former business partner, losing a best friend, finding a trusted employee stealing from you and having to fire them. I left off being sued because a water pipe broke in our building and we flooded another suite (no fault of ours, but we got sued anyway). I left off the part about former sales-people stealing leads for billion dollar companies and feeding them to their friends for a kick back. I left off the part about the second mortgages. I left off the part about almost going out of business in 2001. I left off the part about oil companies and financial companies stealing employees right after you get them trained. I left off the heart wrenching loss you feel when you lose a major client. I left all of that off that last paragraph.

I left all of that off because that is what mother culture tells you. If you listen to the stories it goes “Jeff Bezos rode across the country, wrote a business plan while his wife drove, and is now worth billions.” – I don’t know Jeff but I bet if you KNEW Jeff he would tell you it wasn’t that easy. I may not know Jeff, but I bet he worked his ass off and has earned everything he has. (side note- I have met him several times and he was very nice and gracious every time.)

So if you are an entrepreneur reading this, realize a few things. You are different. Not better nor worse than other people. But different. The biggest audience that has to accept it when you fail, as we mostly do, is you. Let it go. Just let it go. You didn’t care when everyone told you that you couldn’t start a business so please don’t care what they think now. If you accept it, it will be OK. Accept the failure and embrace the lessons you learned. Get help and get back on the bike. The rest of the country and the planet needs you to go back to risk taking and creating jobs! Seriously – we need you.

OK, now quit with the negative thinking and go make some jobs. Yes. You. You may be feeling down but I’m pretty darn sure you aren’t out of ideas for great products. Go. Go invent something amazing. Go!

 

 

 

radiation + north pacific gyre = bad

I don’t think we are even close to fully understanding the Nuclear crisis unfolding in Japan. Just read this on CNN:

Radiation in water rushing into sea tests millions of times over limit
Tokyo (CNN) — Another attempt by Japanese officials to stop the leaking of highly radioactive water from a nuclear reactor into the ocean failed Tuesday, the country’s Nuclear and Industrial Safety Agency said.

Both the utility and Japan’s nuclear safety agency say they don’t know how much water is leaking into the sea from reactor No. 2. But engineers have had to pour nearly 200 tons of water a day into the No. 2 reactor vessel to keep it cool, and regulators say they believe the leak originates there

Earlier Tuesday, Edano apologized for the decision to intentionally dump 11,500 tons of radioactive water into the sea — all part of the effort to curb the flow of the more toxic liquid spotted days ago rushing from outside the No. 2 unit.

Yup, they don’t know how much water is going into the ocean. Although I’d guess it is about the same amount as has been dumped into the reactor from helicopters and fire hoses.

Here is the problem for those of us in the states. The North Pacific Gyre is the largest ecosystem in the world and it circles between Asia and the West Coast of the US of A. So when you hear “don’t know how much water is leaking into the sea” and “had to pour nearly 200 tons of water a day into the No. 2 reactor vessel” and “intentionally dump 11,500 tons of radioactive water into the sea” it starts to become our problem very quickly.

We have some experience recently on trying to take the pee out of the pool. The use of chemical dispersant apparently helped. As did microbes that eat oil (who knew?). The problem with Radiation in the water is a bit different for a number of reasons.

  1. Currents. The Deepwater Horizon was in the Gulf of Mexico which has a loop current, but for the most part the oil didn’t make it even to Florida. The Pacific also has a loop current but the loop goes between Asia and the United States quite efficiently.
  2. You can’t see radiation in the water. You can’t fly a plane over the ocean and see a sheen like you can with oil. You can detect radiation, but only people with the right equipment. Thus citizen journalism and distributed responses aren’t possible from civilians.
  3. You can’t control fish. They swim where they want to swim. And many swim all over the world. So beyond the currents dispersing the radiation, you have radioactive fish. Does Pike’s Place Market put in a Geiger counter? How long till Amazon is sold out?
  4. Japan makes a lot of stuff. We like to buy stuff. But we prefer if it is radiation free. Not sure how the economics on this play out.
  5. Japan makes a lot of pharmaceuticals. Will consumers continue to trust these products? From wikipedia:
    1. In 2006, the Japanese pharmaceutical market was the second largest individual market in the world. With sales of $60 billion it constitutes approximately 11% of the world market.[2]
  6. China makes a lot of steel. We buy it. They unfortunately share an ocean with Japan. And even more unfortunately a tremendous amount of water is used in the steel manufacturing process. Is the source freshwater or ocean water? And if ocean water then how does this play out in the steel market.
  7. Culture. In Japan shame is handled quietly according to everything I have read. As Gladwell explains, a culture of deference can be deadly in a crisis. So what little we know coming out of the crisis right now is suspect. It is not that the facts they are telling the world aren’t true. It is the “what are they not telling us” that scares me.

And now I guess we should all check the WSJ to see when Berkshire Hathaway buys the leading non-Japanese manufacturer of Geiger counters. Because sadly the ones from Japan might be detecting themselves.

What do I think will happen?

I don’t really know. What I hope is that given the majority of the planet is ocean, that the amazing creature that is our living ocean will be able to absorb the radiation and disperse it to safe levels. What I hope is despite the folly of man, nature will once again protect us. That is what I hope. And I continue to pray for Japan. Both for the victims of the Tsunami and now as victims of a nuclear disaster.