The thing that irks me is that it seems to be a foregone conclusion that tax cuts — especially the Republican version of it — are empirically good.

The Obama folks don’t want to get into this discussion, even though, as I’ll show in about eight paragraphs, they’re right. A tax cut on the middle class, even one financed by the top 5% of income earners, is a significant step in the right direction.

Now, before you conservatives close your entire browser window in disgust, I’ll give you a nod. Categorically, tax cuts should have a stimulating effect on the economy. Go ahead, gloat. Yes, you’re right. When McCain says “a tax increase right now would be bad for our economy”, he’s right. Across the board, if nothing else changes, raising taxes — even if only on the top 5% of wage earners — should have a negative aggregate effect on consumption and saving with an appropriate echo in production.

But the Obama plan doesn’t just raise taxes on “the rich”. It reduces taxes on the other 95% of the population. You can use all the incorrect negative allusions you want, e.g., “socialist”, “redistribution of wealth”, heck, even “unfair”, but it doesn’t change the fact that this is actually a good thing for both (a) more people more of the time, and (b) the economy as a whole.

Why (b), you might be wondering? Because rich people don’t buy more stuff (and therefore spawn more production) when they make more money. That’s the definition of wealth — having everything you need! If someone who takes home $50 million a year suddenly takes home $51 million, will he (sorry ladies, statistically speaking, it’s a dude — that’s another blog post for another day. Don’t kill the messenger!) go out and by 30 new Ford Taurus Sedans? No, he’ll hoard it. He’ll put it in the stock market. He’ll buy some oil futures. Now, yes, if you took Econ 101, you know that this wealth should in theory being put to work in the economy in the form of capital investment — which banks would then loan out to build more factories. But we have a credit crunch, banks aren’t making loans, and it’s a time of historically high inflation (no, it’s not 1979, but it has been over 5% for most of the year — meaning T-Bills are effectively returning a negative rate, but again — sigh — that is another blog post). So, even if those wheels can start turning again, and that extra million dollars gets invested and then spawns some new factories, it will take a while to “trickle-down”.

On the other hand, we have some real problems. In aggregate terms, banks aren’t making loans, and even if you think that this particular problem will subside in a relatively short period of time (and I agree with you — heck, I just purchased some stock in the few banks I think will weather the storm and hold deposits more than our annual GDP in 24 months), trickle-down economics does nothing for the short term. This is aside from the utilitarian aspect that most of us believe government should be about, at least in rhetorical terms. (For those of you that missed that day in philosophy or political science, utilitarianism is the idea that policies should be set up to make the most people the most happy. There are certainly problems with this idea — at some point the pain of the few still isn’t worth it — but I think the generalized version is what public policy should be about. My impression is that most of the population would agree.)

So, instead, we should give money — in the form of a permanent tax break, which will immediately pad their paychecks — to the working poor and the middle class. Rich people hoard extra money, which takes quite awhile to echo into the system. Poor people go out and buy more toilet paper and better food. Middle class folks go out and buy newer cars and replace those nasty incandescent bulbs with Compact Fluorescents (don’t you?!). Both groups buy more Coca-cola and pay off a little credit card debt (another form of saving just as powerful as the rich guy investing that money, I might add — probably more, in fact, because American Express immediately uses that new capital to loan to the Small Biz right down the street and our aforementioned rich guy took his million bucks and bought a position in a hedge fund that holds a crapload of AIG paper). This has an immediate positive effect on job creation, wages, and aggregate prosperity. Oh yeah, and it makes more of the populace happy.

What’s my point? Well, if it’s an equal sum game — if the total tax revenue collected stays the same — then it is absolutely better in the short term (say, 24 months) for a little bit of belt tightening (that’s maxes out at 4.6% — you know, roughly a third of what the average American pays in regressive payroll taxes… again, another blog post) for the folks that make more money than you, your Mom, and your brother. Put together.

Still awake? Ok, here’s the whammy. Taxes change behavior. What, that’s it?

Well, yeah. Want that as a sound bite? Ok, here’s the kicker: Higher taxes on the rich encourage more capital investment.

In other words, if you raise taxes on the top tier of wage earners, you don’t need to trickle that shizzle down. You get new factories right now.

What? What’s that you say? You say today is election day…?

Ok, here ya go:

Given that our aforementioned Richie Rich makes $50 million a year, he is almost certainly in a position of some power at his company. setting aside state taxes for the sake of simplicity, at a 35% tax rate, Rich takes home $32.5 million. Let’s say this is all in salary because he owns the company. Now, what does he do with that hoard of cash? He spends a couple million, he drops $10 million into a hedge fund, he drops another $10 million on his favorite college so his drunk, mostly lazy son named George can get in to school, and he buys a yacht or two.

Now, let’s say the tax rate is 80%. Yeah, that’s jacked up, I know. I’m not suggesting we do that, I’m just making a point here. The typical conservative response to this is “why would anyone ever work?” Well, do you happen to think that Bill Gates and Warren Buffet give two shits about their net worth? I mean, sure, it matters, but do you really think that either of them planned on being the richest guys in the world? No, they just wanted to get laid. Ok, they wanted to get laid by some gorgeous gal way out of their league several times a week while eating caviar, but you get my point. That higher taxes on the rich discourage innovation is a tenuous argument. You don’t need to be a billionaire to pull a gorgeous girl out of the crowd. A million or two will do just fine, thank you.

Back to my 80% world (which, incidentally, has happened in US history — and during a period of great economic growth, I might add. One might even call it a [baby] “boom”). In this world, Richie Rich gets his corporation to buy that yacht he wants, and the company holds sales meetings on it. The company also uses it to reward employees, which makes them work with more enthusiasm, creativity, and tenacity (all great, with no real loss to Rich’s happiness). He gets the corporation to donate a bunch of money to the school of Georgie’s choice. Of course, the board of directors cuts the endowment a bit, so George has to wait-list and go to junior college for a couple of years, but heck, when he runs for president in another 30 years, that will help him understand his constituents better (again, no real loss to Rich).

In short, Rich takes home less money. He still wants (and will) avoid paying taxes any way possible, so he funnels what he can out of the company, lives a little less high on the hog, pays more taxes in sheer dollars, but pays far, far less than the $40 million implied because he changes his behavior. He lowers his own salary. This leave more money in company coffers, which leads to all kinds of social goodness — the company has more money for salaries and dividends (which Rich gets some of as a shareholder). The CEO as egomaniac factor is reduced (c’mon, high salaries make men more proud. Higher salaries still make them arrogant!). Rich even pushes the company for more social activism, even if it is based mostly on the plight of poor Georgie stuck in junior college.

Oh, and then there’s the core point that I haven’t cycled back to, yet — more money in company coffers means they invest in more production. They build factories, hire more smart people, buy technology, and put money into basic research. All good stuff that yields direct economic growth. Directly, not via some sort of “packaged asset” issued by Lehman Brothers to the hedge fund Rich started back when he took home more than the GDP of most African countries.

Taxes change behavior. Rich guys have control over their own salary. The behavior — how much they pay themselves in the form of wages — will change if taxes rise.

Couple this idea with lower taxes for the average consumer (who, again, immediately consumes with those dollars), a pay down of the national debt (gotta fight that inflation at some point, somehow!), and government investment in infrastructure that private industry won’t readily subsidize (this means everything from national defense to bridges that go nowhere — and all of the completely reasonable things in between, like basic research, high speed rail, and renewable energy), and the Dow might never drop below 10,000 again. Imagine that.

Now, I’m not telling you who to vote for (although I’ll happily do so if you ask), but I am suggesting this: McCain’s rhetoric on what will help the economy is dead wrong. Trickle-down economics via maintaining fiscally imprudent tax breaks for the rich will not improve the economic situation. That is not a sound policy towards maintaining a healthy economy. It will lead to a weaker dollar, higher inflation, and more unemployment.

Oh, and just in case you want to point out that the 1980s under Reagan rocked, let me remind you that the top income tax rate through most of the 80s was 50%. If we let the Bush tax cut expire, the top rate rises from 35% to 39.6%.

Some items worthy of consideration:

Philips Sonicare Advance (A-Series) Replacement Brush Head, Standard

Emergen-C Vitamin C Fizzy Drink Mix, 1000 mg, Super Orange, 0.3 Ounce Packets (Pack of 36)

Unfortunately, they completely missed the boat on a truly obvious candidate for automated purchase:

Trojan Pleasure Pack

:-)

(It’s a thinly veiled ad for google products, but it is food for thought about (a) market opportunities for your own pursuit, and (b) what some google engineers are probably working on.)

• Today, only the largest companies can afford to hire consultants and experts. In the future, even small companies will be able to purchase on-demand expertise and other services via the Internet.
• Today, marketing intelligence are costly reports describing data many months or years old. In the future, small businesses will have access to real-time data on market conditions.
• Today, only the largest companies can run expensive experiments with their advertising campaigns. In the future, even small business will be able to run carefully controlled marketing experiments that will enable them to better reach their potential customers.
• Today, only large companies can sell products in many countries. Tomorrow, businesses of any size can use online services and outsourced logistics to buy and sell in every corner of the globe.

I probed a little further on this, and he proposed the idea that giving back is part of success, that the incoming opportunities will be reduced or otherwise tend to stagnate if one hordes their resources. He quoted the metric of 10%, citing that his four hours was based on the assumption that he should be working a 40 hour work week. (Like all entrepreneurs I know, including myself, he’s a workaholic, and works day and night.) Donating money or the resources of your business are both alternate paths to reach this state of cosmic balance.

While I tend to agree, I found myself thinking about how I lead my life, run my business, treat my employees, and serve my customers. I proposed that I give back every day by pushing employees to grow, going beyond the call of duty for customers, and coaching strangers in bettering themselves.

My friend proposed that the act of demarcating the 10% was important. “The act of ‘being cool’ is something you should do anyway. That’s just a function of life. It isn’t charity.”

I’m not sure about that. I think that, actually, my business would do better and that I’d have significantly less stress if I was, well, more of an a$$4ole. Just yesterday (on a Friday night when I was supposed to be sipping a cocktail), I took on the duty of considering a biweekly payment plan for a tenant. I give up late fees all the time. I’ve loaned money interest-free more times than I can count. The people around me who I have led by example, inspired by my confidence, and pushed by my faith (in them) have earned literally millions of dollars just by having known me.

Furthermore, I’ve turned my charity inward, employing friends and family in jobs for which they are not qualified (in hope, sometimes not misplaced, that they would step up to the plate). I spend time with folks from my youth who lack the ability to move themselves forward in achievement or socioeconomics, even though that means, often, that the extent of our conversation is limited to the nuances of Star Wars. I often hold my tongue in those situations, in fact, refusing the urge to correct the misconceptions about everything from basic economics to race relations. You can’t help someone if you’re just contrary. You have to teach them how to think critically and push them to embrace objectivity.

But I digress. On this point, you see, I’m torn. I want to give back, but I believe it would come at the cost of these other charitable practices I engage in every day. Most entrepreneurs insulate themselves in gated communities, elite clubs, and stay (or make) friends only with peers within their socioeconomic and education strata. They trade in the YMCA for the Country Club and embrace the close-mindedness that comes with it.

I don’t. Every tenant I have lives in a bigger and better house than I do. Every client I have works less. And every friend I have likes me in spite of whatever financial success I happen to enjoy, not because of it.

Most of all, I feel torn because I feel that in order to participate in charity more traditionally/officially, I’d have to be that much more harsh in my daily life.

(pause)

In writing this, I’ve come to a conclusion. However, before I share it, what do you think? Is it either/or? If it is not, and doing official charity work requires giving up my daily give-back routine, is it worth it?

Do you give back? How?

And finally, what would you do?

Using Google for shared calendar, address book, and email is the avenue I’ve been exploring. I also considered installing Kolab, an open source groupware solution, but that seemed to me analogous to installing my own Exchange server on a hosted Windows box. The only benefit there would be the presumption that an open source solution like this would have support for a wide variety of products, including my Thunderbird and Blackberry requirements.

Here’s what I’ve found works in favor of the big G.

Pros of Using Google as a Groupware Platform

• Calendar Sync to Blackberry is solid. I can only sync on calendar at a time, so I still have the problem of merging my personal gmail account with my newer google apps account (hereafter referred to as “corporate”), but that strikes me as a relatively small problem since my schedule planning is typically only a few weeks out at the most. I can also display my own personal calendar by “sharing” it with my corporate self and then sync it down that way. I now have both calendars on my Blackberry happily syncing both ways. I do wonder if there’s a limit to the number of calendars I can share…
• Mail is a no-brainer. Imap support means that, aside from the 5-10 minute lag, thunderbird and blackberry work just fine with both the personal and the corporate account. On the merging side of the equation, I’m still waiting for the corporate account to finish fetching my 50K messages from the personal account via POP (it’s google fetching from google, so it’s obviously throttled heavily), but I can continue to work from both accounts for the next few days.

Cons of Using Google as a GroupWare Platform

• They claim ownership to you data. Sure, “do no evil” is a great edict, and sure, they’ve done nothing major (although I suppose the “caving” to China’s censorship demands is arguable) to violate the public trust, but the details in the Terms of Use are pretty alarming if you’re developing any sort of intellectual property, which I happen to do every day.
• Contacts are a mess. Aside from my earlier complaints, I’ve been trying out Zindus for Thunderbird-to-Google sync, and while I’m very impressed on their development speed (the Google Contacts API was only published 45 days ago or so), the plugin still needs some work. I attempted to move my contacts from plaxo over to my corporate gmail account, since the plaxo data set should contain all the data from my legacy personal mail account plus data from plaxo itself, linkedin, and my mobile phone contact list (via blackberry –> outlook –> plaxo manually). However, I ran into a number of issues with the Zindus merge:
  • The Plaxo export to Thunderbird felt a little off. I did it at about 4am last night, so I can’t recall what was wrong with it, but I ended up tossing the Thunderbird LDIF from plaxo and merging with Outlook 2007 instead. Then I imported from there from within Thunderbird. That’s fine, but it’s worth mentioning.
  • The Thunderbird-Google sync halts when google denies a contact. So my plaxo data, which contains duplicates all over the place (a single contact might be represented as a record from the old gmail account, linkedin, and plaxo, and all contain the identical primary email, which google denies and Zindus pushes back on the user. So, basically, I’ll need to manually clean up my contact list in thunderbird before pushing it upstream. Good thing I have administrative help now.
  • Zindus does not “match up” contacts from my mobile phone. These contacts are generally an abbreviated name (i.e., a nickname, like “johnnyf” instead of “Johnny Fuery”) and a single number. The location of the number varies with regard to specific field (mobile, business, home, etc.), largely because I’ve migrated phone contacts several times over the years. Only 1% contain an email address at all. It would seem that Zindus relies on that email address for keying, becaues after attempting a dozen or so syncs, which all halted at various points in the process because of Google denying the contact add based on a duplicate primary email, the contacts that originated in my Blackberry are now duplicated a dozen times over.
  • Google won’t let me delete more than 20 contacts at a time. So starting over is going to be a major pain in the you-know-where. I now have 3500 contacts in my corporate gmail account when I started with 1900 or so in plaxo.
• The Google Apps “shared address book” is actually only intra-domain, so I can’t share my “personal” contacts. In other words, it ain’t a shared address book. I know the 8 people with accounts on my domain already and they’re IN my personal address book.
• The workaround would be to sync multiple Thunderbird installations via Zindus against the same “personal” address book. One could conceivably setup a Google account solely for contacts, configure Thunderbird + Zindus to sync against this single account, and voila — group contacts. The scalability of this model is cause for concern, however. I’ve yet to try it on more than two desks with my personal account. Zindus does authenticate against both my personal and corporate accounts, by the way.

At this point, I need quite a few utilities to make this work.

Market Opportunities

Please let me know (via the now-working Contact Form or a comment below) if you’re interested in these. Most of these I foresee being donationware and/or ad supported, but I’d also be interested in the economic value to you.

• Google “Delete all contacts” script. Go to a web page, enter you gmail login data, click a button, and flush your account. Google probably has some throttling on it, so it would probably be a “we’ll email you a confirmation in a few minutes” type of experience.
• Google contact migrator. Move contacts from an old account into a new one. See previous item for proposed interface.
• Improvements on the Zindus tool. I’d rather not write my own, but minimally, it should key against more than just the email address (the FAQ says it does, but my experience indicates otherwise) and provide a preference for skipping past problematic records. Problematic records should be outputted in a summary or log of some kind so they can be handled manually. A re-sync should not create still more duplicates (keying against more than just an email address would satisfy this).
• Thunderbird (Lightning)-Google Sync remains unanswered. GCalDaemon can do it, but it’s an awful lot of code sitting on clients for that one feature, and I’ve yet to be able to get it to work with a non-personal (Google Apps based) calendar.

Usually, alas, the pitches I hear are from folks without a great deal of any of these. My typical response is “write a business plan and get back to me”.

Well, someone did. Here’s my review (with sensitive items removed, of course) of it. You don’t need to read the business plan to understand my criticisms. For what it’s worth, I’m looking forward to seeing the revision of this one.

–

Seeing this for the first time, I have the following questions:

How do you make your money? I get the basic premise — (proprietary items removed) – but where is the value?

The only place I can guess on value is… (proprietary items removed)

But you never say that.

The “how does your company make money” question needs to be answered right up front, before any graphs, projections, etc. I’m also skeptical that the value of [your customer's purchase is what you imply]. I’m not saying it isn’t — I don’t know what I’m talking about — but if I’m wondering, so will another investor.

This is business. Ultimately, despite the fact that you’re currently selling to investors, you’ll need to sell to the people that will pay for your service. The investor needs to understand not only who these people are (you say that), but why they care. “Care” meaning want your service, that is. This is a new product, something you say many times, so you’re going to need to educate your consumers on the product — how are you going to do that? A good start to answering that question is communicating the new product and why its compelling very concisely and quickly to an investor.

Basically, you need an elevator pitch, which then is presented at the beginning of your business plan as an “at a glance” i.e., “Executive Summary” It’s not so very different from hitting on a hot chick: it takes practice, it takes confidence, and it damn well takes you having a clear vision of what exactly is going to appeal to her. For an investor, that means your business model. (She already knows what you want, and even if she’s wrong, you can’t change those assumptions in 30 seconds.)

Everything else is secondary, but while I’m thinking about it:

• I wouldn’t go into such detail on sales projections and such unless you have individual investors asking for it. Venture Capitalists don’t care, because it’s all smoke anyway. The time-to-profitability graph is what matters here, not the results of the dart throw you took at 3am the night before your pitch. If they even get to that part, they’ve been sold on the model — now they just want to know the execution details.
• Everyone knows you need to spend some money on office space, computers and a fax machine, so I wouldn’t bother. Include a figure for “office expenses”, yes, but use a nice round number and call it a day. The technology infrastructure required to run a digital sales system that can handle XX million transactions a day? Yeah, include that. Your phone lines, not so much.
• Don’t include specific salary figures. Your rich uncle doesn’t want to pay you that much (”greedy bastard!”) and a VC will wonder why you’re so cheap (”first time entrepreneur with no experience”). Either way, it doesn’t add a whole lot of value and it might detract a lot.

From a tech perspective, as a software architect, I’ll need to be able to draw some basic conclusions about what the Information Technology application is supposed to do from your business plan. Software development starts with Business Requirements, which in turn correspond to Functional Requirements that dictate Technical Requirements and finally a Technical Specification. You can skip certain aspects of this process (you kinda have to in a startup), but the basic logic flow is the same. If we skip the BRD (biz req doc), it’s gonna be because the Business Plan and related collateral is so friggin’ good that your software architect can extrapolate what is needed from it. The other shortcuts in the process are going to be because I rock and hire IT staff that rocks — stuff that also costs additional money, because rock stars are more expensive.

Lastly, without a prototype, you need mock-ups. That should be included as a cost in your initial angel pitch. It costs some of that angel investment to build and support the sales process for the next step — getting a VC round. On this point, don’t kid yourself –100% of your time for the next 3-5 years is going to be wrapped up in trying to get your next round of funding. The other 100% of your time is going to be actually getting your business moving. And yes, you’re minimum workweek is going to be 80+ hours for the foreseeable future.

One last peripheral question… do you know who your competitors are? I don’t think that a detailed answer belongs in your business plan, but you should be prepared to answer those questions, especially regarding how you’re different and why you’re going to make more money.

One of my loan broker friends has been working 14-16 hour days six hours a week making deals happen over the last two months. His income is on track to return to the level it was back in the middle of the housing boom.

Another friend of mine who works the property side (i.e., he’s a real estate broker) who was just asking me if I had any tech work for him three months ago just hesitated when I called him and asked if he could spare a few days of time this month. Apparently his active buyer count is almost “back to the level [he's] used to”.

This colloquial “word on the street” experience tells me that we may have hit bottom. If REO supplies are dwindling, that has a stabilizing effect on market prices, making traditional sales more attractive. The general sentiment that there are good deals to be had, that it’s a buyer’s market, and that those with cash on the sidelines should be investing now (go ask your shoe shiner or hair stylist if it’s a good time to buy) means that demand is returning, which means that (in economics jargon) price has reached it’s equilibrium point. In common parlance, that means that we done hit bottom, yo.

Now, I’m not at all suggesting that it’s a good or bad time to buy. I’m an investor. That means, in my mind, it’s pretty much always a good time to buy. But most people don’t have that mindset, and for you, I’m suggesting that the end is in sight, so if you’re bargain hunting, it’s time to get off your arse.

Mind you, my sampling wasn’t exactly huge, but when CNN reports that the U.S. housing market bottomed out sometime around March 2008 next Christmas, just remember that you read it here first.
As for economy as a whole, your guess is as good as mine. A one-point jump in unemployment could easily derail this “recovery” just as its starting.

But for California housing, at least, barring external shocks, I think things are looking up.

I caught a posting from the google blog earlier today that Google’s legal big shot posted on the topic. In short, he basically says that the internet is fun place, it’s fun because it’s based on open standards, google’s all about open standards, and Microsoft is bad mmmmmmKay. Actually, you can skip all the prefacing. He’s pretty bold with the damning rhetorical questions, asking “Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?” (You can read the full article here.)

Now, I like Google as much as the next guy, and I had fun beating up on Microsoft in the late 90s, too, even as jumped up a socioeconomic quintile by servicing Microsoft products. But the notion that poor little Google is worried about big, bad Microsoft coming in and peeing in the collective bowl of Cheerios is a pretty big stretch, even if Google really could claim that it has never done any evil (Can it?). Google has $15 billion in cash, a market cap of $150 billion or so, and commands between 56% and over 77% of the internet search marketplace depending on who you ask. Oh, and if that weren’t enough, what verb do you use every day to describe the action of performing a text-based search on the internet?

No, sorry Google, but as much as I respect every single person I know that collects a paycheck from you (damn that’s impressive), as much as I trust the details of my life to you (email, desktop search, docs… oh wow do I feel vulnerable now), and as little as I use any of those other search engines, I’m gonna have to go ahead and side with Mr. Ballmer on this one.

Someone needs to check Google’s power. No matter how good your king is, there is something inherently questionable about monarchy isn’t there? Unbridled, unchecked power, even if laced with good intentions, even if executed extraordinarily well, even if absolutely magnanimous, is very, very dangerous. Kings have spoiled kids. And corporations have to answer to finicky shareholders. It’s not right when the president consolidates power away from the people, and it’s not right when any one single company has the power to control the internet.

And if Microsoft can’t become a worth competitor, I’m not sure who can. So, c’mon, Redmond! Get your act together, harness Jerry and the Yahoo boys, and start releasing some great products! You’ve got a lot of catching up to do…

“[If a craftsman cannot find a buyer for his goods,] is he to leave his calling and sit idle in the market-place?”

Not at all; he will find people there who, seeing the want, undertake the office of salesmen. In wellordered states they are commonly those who are the weakest in bodily strength, and therefore of little use for any other purpose; their duty is to be in the market, and to give money in exchange for goods to those who desire to sell and to take money from those who desire to buy.”

Ironic, especially since we place such a high value on the ability to sell in modern capitalism. That and the fact that pretty much every salesperson I know is relatively athletic!

No, this isn’t an homage to Ms. Mary J. Blige, it’s an alternative to the phone company’s directory service. I started paying my own mobile phone bill last summer (off the corporate-sponsored plan, and yes, do I ever miss it), and have been struck by how many hidden charges there are. I’ve tried calling AT&T three times since my last billing cycle about some random $20 charge I don’t recognize, and have yet to get through. I imagine that’s one of their strategies, though, seeing as how at some point, it isn’t worth my time.

The answer? Why, Google, of course. Printing all that money with adwords let’s them do an awful lot of really cool things. Put 1-800-GOOG-411 into your phone and use it next time instead of the $1.50 a pop your we-can’t-even-have-an-offshore-employee-answer-your-call-and-we-own-the-damn-lines phone company charges you.

Inflation is Up

The CPI (Consumer Price Index) for the 12 month window ending 11/2007 rose 4.3%. Check out the numbers for yourself at the government’s CPI site.

If you are leveraged to the hilt, this is good for you, because you can pay off your debts with inflated dollars (why do you think the powers that be don’t stress too much when the dollar weakens? Hmmm).

If you’re not, well, there’s a reason you’re feeling pinched. Wages haven’t kept up. (Actually, you’re probably feeling pinched anyway — the energy index was 21.4% for the same time frame — a number that effects an individual much more drastically as they slide down the socioeconomic scale because it represents a larger chunk of their income. In other words, this effects the working and middle classes the most.)

Still, there is some benefit to this…
Mortgage Rates Are Down

Folks with good credit are locking in 30-year rates below 6% again this month. Considering a 4.3% inflation rate and the ~2% you’ll get back in income tax incentives (assuming, of course, that you <ahem> work for a living :-) ), you get to borrow that money for free.

Read that last sentence again. Go on, I’ll wait. For Free. Think about it. Then tell me again why real estate is a bad investment. Because I can’t seem to remember how borrowing a half million bucks interest-free and reinvesting it at any positive rate of return is a bad idea. Anyone? Bueller?

Description:
A small (handheld or slightly larget) device that can tell where metal is in the walls of your home. It’s tuned to ignore [most] nails and other metal fastening devices, like picture hangers and staples. You walk around your home following some basic directions presented on an LCD screen. The device is emitting some low-level radiation that allows it to pick up conducitive materials with reasonable accuracy. It then assembles a schematic for the wiring in your house. This would be plugged in to your PC or network (via USB or ethernet) and upload the raw data to a web-based service that crunches the numbers and assembles pretty graphics.

Pricing:
$400-$600 retail. Sold at Lowe’s, Home Depot, and Sears.

Value:
Troubleshooting electrical problems in your house would be a cinch. You’d be more willing to cut into your walls to add desired items, too, because you could go into the job with a keen awareness of just how big a mess you’re going to make.

There’s also the commercial angle (probably where something like this would start). Sell the unit to electricians only at a higher price and let them offer web-based schematics to all their clients for free. The web site and software would be paid for via the add-on services and monetization methods (below).

Add-ons:
Specific recommendations could be provided once data is gathered. This could be with an eye towards environmental ends (replacing something could save XX tons of carbon, for instance), financial savings (e.g., save $300 on energy this year by spending $250 now), or even simply safety (because plugging in 17 appliances and a hairdryer on your tired, old wiring could start a fire).

There’s certainly an angle where the uploaded data gets sold to local vendors (privacy and permission rights would have to be observed, of course). I’m certain there’s a long list of electricians that would like to get a list of 20 leads monthly that have knob-and-tube electrical wiring or are still running with old-school fuses. The list of homeowners generated, too, would be extremely valuable as a marketing tool, even without the schematic details. (Homeowners who dabble in home improvement and have disposable income… yum! Not to mention the fact that we can make certain conclusions about their net worth based on their physical address.)

Cool Geek Factor:

• Mash up the data with Google Maps/Earth.
• Scanning for metal through sheetrock while ignoring other materials and packing it into a consumer device is a non-trivial engineering problem.
• Hello? Adobe Flex based graphs of your home’s wiring? Yeah!

She spends a significant amount of time doing this. I had to remind her the other day that time is money.

My mom is a teacher. She doesn’t bring home a killing, and this is far better than when I was growing up, when a little help from Uncle Sam sometimes was needed to put food on the table. Scarcity of dollars trained her (and me) to be thrifty to a level that most Americans can’t conceive of.

But I’m here to tell you that this isn’t how to make money. You don’t save money, you make it. Or, perhaps more accurately and less sound bite-ish, you must always be considering what economists call opportunity cost.

Let’s suppose, for the sake of discussion, that I make $50 an hour (sorry, this ain’t John Chow, I’m not sharing!). I went to the gym last night and played basketball for four hours. So, from a certain point of view, my workout last night cost me $200. Not including time in my vehicle to get there, the gas used on the way, or the membership costs associated with the facility. Those four hours were hours I could’ve been billing, and I wasn’t. Talk about an expensive exercise regimen, eh?

So when my mom spends an extra 15 minutes of her time to save a few pennies in water and electricity, from a purely financial perspective, she’s making somewhere in the neighborhood of one to three dollars per hour. Since, as a teacher in California, she makes somewhere around $20 an hour, that’s not a sound business decision. She should spend the dollar in energy and work an extra hour every week, because she’ll come out ahead.

Think about where you’re spending your time. This is especially true of independent professionals, like me. Sorting my mail and doing my laundry is probably close to the absolute worse thing I could be doing with my time. Ditto with dishes and household chores. Now, if you happen to get some secondary benefit out of an activity (like basketball fulfills for me, cooking does for my cousin, and playing Windows solitaire does for good ol’ Mom), then by all means, feel free.

Just remember to consider how much it’s really costing you.

I was also struck by the fact that I wanted to buy half of them.

So, before you curse the 14 Chia Pets (see video below) you received this year, ask yourself, “why does this [lame] product exist?” and then consider your own entrepreneurship. Because, if you have been stuck in product development, trying to decide on the perfect widget, pushing your creative juices into the best possible mousetrap design, I urge you to take a look at the commercials on cable television.

Because the best ideas, the truly disruptive technologies, the amazingly insightful products — most of them fail the first time. You don’t need to build a whole new breed of mousetrap to forge your path to fame and fortune. You just need to build it. With few exceptions, no product you’ve ever considered hasn’t been built before. And, in fact, you’ll probably do better if you copy someone else’s idea and instead make an incremental improvement. Or sell an equally good replica for less. Or sell it using an alternative sales channel. Better yet, all three. You don’t need to be original to employ the perfect business model.

Now, I’m a technologist, so I can note most of the precursors to modern technology devices that are making a killing. Before you used a Blackberry or a Treo, Apple’s Newton and the Go Technologies palm computer died premature deaths. Before you heard about iPod, Creative was making ridiculously lame flash based devices that cost too much and played too little. Before you gave all of your personal data to Google, Excite, Lycos, and Infoseek all burned through hundreds of millions of dollars vying for your search traffic. And before you put all of this into a Excel spreadsheet, Visicalc was selling millions of Apple IIs.

In the spirit of debate, I have a challenge for you. Post a comment on an original technology product currently for sale and I’ll note an older product that did the same thing and died.

As for our Chia pet, the hard part isn’t the pottery or the seed. The hard part is coming up with a better jingle. Chuh-chuh-chuh-chia!

I think I said crazier things and had wilder thoughts at the end of that little marathon than I’ve ever had under the influence of ethanol. And I’ve got plenty of good stories on that topic. :-)

So, as I sit in a hotel room wondering when my caffeine-induced trembles will wear off, I contemplate the things I’ve learned in the past two weeks.

• One can do amazing things and accomplish an impressive amount in an unbelievably short time given the right amount an type of pressure and incentives.
• Some version of Law & Order is always on, no matter what time you climb into bed.
• We all have weird sensibilities. I don’t blink when it comes to spending $4 on coffee, but paying $10 a day to get internet at my hotel just bothers me. And it doesn’t much matter if I’m getting reimbursed for the fee or not. Somehow it would bother me less if it went straight to my hotel bill, though. (If your career is in hospitality management, take note!)
• Clients that are patient with you when you’re busy handling other commitments are a dream. Treasure them, love them, treat them well. Those relationships are worth more than I could ever convey.
• Caffeine does give you a buzz if you have enough of it. The double Red Bull high, as a matter of fact, almost makes the lights seem brighter. I’m definitely going to have to detox next week…
• No matter where you are, no matter how independent, or brilliant, no matter your state of well-being, no matter your position, there’s always someone who will raise your eyebrows. It might be because you wonder how they obtained their power, it might be because they’re rude, selfish, and cruel, or it might just be because they want to have sex with you. Whatever the assuredly varying stimuli, it’s important to always maintain your professionalism, even if you’ve worked 80 out of the last 92 hours. (Oops.)
• When your blog posting frequency gets sparse, readership starts to disappear. Even if you’re a Smart Guy.
• Radically dramatic fatigue and a common goal is very much a bonding experience.
• Self-made rich guys are usually pretty cool. Even if there’s a little slavedriver in ‘em.

I’m still alive, guys… do keep reading. I’ll be back and better than ever after I get through a three-day caffeine withdrawal headache…

I was supposed to go home the other day (the new “home”), but, well, sometimes these things don’t work out perfectly.

At any rate, I found myself in Oakland this morning, in the old pickup truck I purchased a couple of years back to haul around lumber and weedwhackers, debating on which train station to leave my vehicle parked at for the day while I tubed into the city. The three nearby station choices were all in urban areas with a measurable crime rate (no gated communities here folks), so I opted for the station closest to the city.

Now, I’ve parked my car — the nice one, too, not the old pickup truck — in questionable areas before for weeks at a time. Never this questionable, to be sure, but it certainly is a risk I’ve taken before, and leaving my old truck parked in a bad neighborhood for 10 hours hardly seemed a large risk.

Shame on me for not respecting the ‘hood.

I got back to my vehicle at about 9pm (see, I told you I worked harder than you! ;-), found I had gotten ticketed (street cleaning, $70), groaned, examined the previously missed signage, and proceeded to turn the key.

Nothing happened. No engine clicking, no radio, no lights, nothing. It was immediately indicative of a completely dead battery. Now, this didn’t make sense, because I replaced that battery a couple of months ago.

Sighing, I got out of the car and opened the hood. I discovered that my hood no longer closed properly and that my battery was missing. Yes, that’s right folks, someone pulled a David Copperfield on my 500 amps of sulphuric acid.

Now, there’s a business tip hiding here somewhere, and since this is the first post I’ve danced across my keyboard in a week, I figure it’s high time I kicked down some knowledge, so here it goes.

There are many times in both business and life when the world just, well, craps on you. You wake up with sun shining down upon you, no one peed in your Cheerios, and you get 5 minutes of peace with a good cup of coffee before anything stressful starts. Heck, you might even wake up next to someone you love to boot.

And then something bad happens anyway. Your train ticket decides not to work just long enough for you to miss your train. Your manager expresses disappointment even as you brought in the biggest single sale in the history of the company. The chick in front of you at the lunch counter snags your special order oven-roast turkey sandwich and you’re stuck eating yesterday’s tuna fish. Or, heck, someone steals your car battery and you, no matter how much of a big shot Smart Guy you are, have to swallow hard and call for help. Fancy that.

The lesson is that your perceptions shape you. They shape your business, your view of achievement, and ultimately, the amount of achievement you can attain. More than that — and I need to take my own advice as much as anyone — they shape your life and your world.

It would have been extremely easy for me to take a Henny Penny attitude (as in, “the sky is falling”), whine about my being away from home, not being able to sleep in my own bed, the pains of getting home at 10pm at night only to start all over again barely 8 hours later, complain about my project and the flaws in its planning…

And so on. All of which does nothing except make one feel worse and prevent progression. An hour of whining and a night of self-questioning (thinking “why me?”) represent time not getting rest, time not left for family and friends, and time not coming up with that next idea that will increase your income by 50%.

It’s only $100 for a new battery. And I’ve been around that “stranded in the wrong part of town” block before, too, so I had a plan of action for getting myself out of the situation planned and initiated in 90 seconds. And, again, it’s only a stinkin’ battery. Besides, I had several someones I could call, a comfortable bed awaits me in a few moments, and there’s food in my belly. Certainly enough to foster gratitude. And certainly reason enough to not spend time sweating the small stuff and instead stay focused on the goals at hand. The ones that actually matter.

That being said, of course, I do hope that when I bring my truck a new battery tomorrow, I still have a radio and a catalytic converter. :-)

Pay is $80-100 an hour. Low end for W-2; higher end for 1099 (since you pay your own payroll taxes, of course). The ideal candidate, in addition to being a JavaScript Jedi, has the people skills to chameleon themselves nicely into an existing development team and can provide support, both in matters technical and soft, to his or her peers. In other words, you have to know how to communicate with both Star Trek jargon and the everyday business folk.

It’s a good gig at a solid company whose name you’d recognize. I’d take it myself, but I’m booked solid for the time being and on-site in SF is a commitment I can’t make right now.

It’s a contract, so the standard stuff applies — you’re on your own when it comes to having a legal right to work in the United States, etc.

And no, I don’t have a direct financial interest on the backside (although I may ask for a kickback if it works out). This post is simply a favor on both ends.

Any goal that you have that is worth working for and toward requires a lifestyle change.

Think about this for a moment. You say you want to lose twenty pounds? Get healthier? Make a million dollars? Be a better friend?

What have you done today to meet that goal? You won’t lose those extra pounds by doing what you’ve always done. No difference in results occur if there’s not change in the habits that generate those results.

If you’re interested in losing weight and getting healthier, go to the gym. No, not before work tomorrow morning. Not after work tomorrow night. Not after you put the kids to bed. Go now. You have time to read my blog, right? Then you have time to make a change. Go do 3 sets of ten pull-ups, run hard enough to hurt your lungs for 20 minutes, and stretch for ten full minutes. Repeat three times a week and you’ll be 90% of the way there.

Until when? Until forever. If you want to be fit, if you want to be trim, if you want to feel athletic, you have to be an athlete all the time. Work out harder than you ever have for two weeks, and your body will change more in that short time than you can possibly imagine. You will literally get results overnight if you give it your all.

In the same vein, if you want to be rich, you need to think, act, plan, and react like a wealthy person. You need to do this today, tomorrow, and forever. This is not a goal. Sure, you can pat yourself on the back and take your wife out to a nice restaurant when you reach specific milestones. You should, in fact. But the skills that it takes to get wealthy are not so much about specific targets or even specific strategies. It’s about getting your head in the game. Now.

This doesn’t mean diving into the shallow end headfirst. This does mean doing something, right this minute, to change your life. Start with a list of the goals and build lifestyle habits from there, whether that means flossing every day (I need to slap my own wrist on that one), playing more catch with your nephew, saving for retirement, or doing 100 push-ups.

Then start. Now. Changing your lifestyle means changing your habits.

Push. Grow. Change. Achieve.

There were some interesting things I observed about the group, however, aside from the obvious fact that everyone was a little older, a little grayer, a little fatter, and lot more chill. Well, except for me, of course. One friend joked that I looked 14 when I started at the company back in the day. I retorted that I was 14 then. :-)

So, aside from the big changes that everyone except me seemed to have had — getting married, having children, working less — I saw the following tidbits:

• The google representation was surprising, impressive, and overwhelmingly positive. One fellow who was a former peer of mine (we both managed people, we both were single, we both were smarter than the average bear, and we both reported to the same douche-bag) pointed out that, “if you’re gonna work for a big company, you can’t do much better.” Another colleague said that, unlike most other fast-growing companies that become large and successful in a short period of time, “it’s run really well. Micromanaging is kept to a minimum, engineers have the freedom to do their jobs right and well, and the reporting structure is conducive to getting things done instead of sitting in meetings.”
• When I say the representation was surprising, it’s not just the positive words. Of the 50-60 people present, I’d say over a dozen were now google employees.
• One of the smartest engineers I’ve ever known said he was intimidated for the first couple of months he worked there. “I’m just an engineer. There are a ton of computer science PhDs running around tossing around theories with their own set of jargon.”
• Another 20% or so had been through more startups through founding them and/or seeking out extremely early stage (think garages and spare bedrooms). And it wasn’t just the top brass — there were people who had been up, down, and sideways through the quagmire of the dot.com bust and beyond. It seems entrepreneurship is less about cast and more about drive. Of course, it never hurts to live in Silicon Valley, have a technical background, a prestigious degree, and have been involved in a startup that went public a couple of years back. Still, it was inspiring to see people in the midst of making the world a different place than the one that was given them. And a lot of them have.
• About three quarters were doing the same thing they’d always been doing. Slightly more responsibility, perhaps, slightly more prestige and dollars, and slightly more experience. But otherwise the same. Yes, there is some overlap with the groups noted above. For these, the biggest changes were appearance, family, and perhaps a calmer outlook on life. The acceptance and pleasure of maturity, I suppose.
• About 5% were doing something completely different. I count myself in that group. One other fellow, about 50, is more or less retired (love that guy — wish I’d had the opportunity to be mentored by him more).
• Another thing that struck me is how marketable everyone is. There wasn’t a single person in the room who felt disenfranchised, down on their luck, or otherwise negative about the opportunities available.
• Finally, I noticed that I have changed quite a bit. There were people who I had previously found intimidating who were now just other entrepreneurs. Other people, just like me, who could make a good wage by working, had some good ideas, and made some intelligent choices. Where once I was taken aback by pedigree, by wealth, and by age, I was now the cool guy in the room, saying hello to everyone, proud of my place in the world, and unapologetic about what I’ve done, what I’m doing, and who I have become. I’m not sure if the same was true back when I was that awkward teenager running the support team. :-)
• Everyone seems to be aware of the big successes. Most everyone asked me about real estate, for instance, just as I knew (at least) the basic business models on all of the new businesses my peers had founded.

Of course, the very nature of reunions does mean that those with the most to hide don’t show up. There were quite a few absentees, like that weird network guy who beat his wife, the VP with the lazy eye and the golden parachute, the CEO many blamed for the company’s failure, and a few others I’m forgetting apparently couldn’t make it.

Lessons for Today

Talk to everyone. Don’t be shy about your ideas. Ask lots of questions. Do the exploring you need to do so that you can have and convey the confidence you’ll need to succeed. Buy people beer. Listen well. Respond positively. Learn.

Be a nice guy. Be “real”. There wasn’t a person in the room who didn’t remember me. And despite my then-status as a padawan at best, including the unassuredness of my youth, my mixed leadership skills, my lack of pedigree, and my sometimes inappropriate remarks, everyone remembered me as passionate, dedicated, and genuine.

You can’t fake any of those, no matter how good your social skills.

Oh, yeah, there’s one more: the google-bot will one day be the master of us all. Let’s just hope it still abides by “don’t be evil” when it becomes sentient and controls every computer system on the planet. :-)

So, in broad terms, there are only 5 legitimate ways of making money. This is irrespective of methods that are illegal, of course. You’re also free to seek out and marry a wealthy older mate, but that’s outside my scope of expertise. :-)

1. Employment. Go work for “the man”. It doesn’t matter if you’re flipping burgers or performing open-heart surgery — if you trade time for dollars, you’re still here.
2. Business. Employ others, create value, and re-sell at a profit. Be “the man”.
3. Creativity. Write the great American novel or compose the next Thriller.
4. Investment. Take your earnings from the other methods and buy appreciating assets, like stocks, bonds, and real estate.
5. Leverage or “other people’s money” (OPM). Borrow lots and lots of money and reinvest it at a higher rate of return than the amount you’re paying in interest. This is, in essence, the business model of traditional banking (the term “savings and loan” is a direct description of this practice).

Now, ideally, you’ll employ all five on your way to riches. I highly recommend putting effort into all of these (save for employment, perhaps, because most of us have that one covered).

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