Ideas for July 21

I’ve been listening a lot to James Altucher’s podcasts recently. He talks a lot about using your idea muscle as part of the daily practice of becoming healthier physically, emotionally, spiritually, and mentally. And I think he’s right. So I decided to brainstorm idedas based on a word of the day. These aren’t necessarily good ideas, they are just ideas. I’ll revisit them if they percolate in my unconscious. Today’s word: fiduciary create a flippa review site to go over attractive and unattractive flippa website listings create hedge fund to trade iron condors cash management idea for strippers tax return reviews Adsense partnership early retirement/IRR website passive income book tax lien fund 401k vs regular investing article alternative investments podcast/website I kind of lucked out here in that the word of the day was a financial term and I already had lots of ideas in this space. Still, the last few ideas took me a few minutes.

Homo creatus

I’ve been having this idea recently that our species, Homo sapiens – the thinking man, is misnamed. Instead, Homo creatus – the creating man is more appropriate. Now before any biology geeks jump down my throat, I am sure that creatus is not the proper Latin or Greek or whatever. Fine, have it your way. The point is that more than thinking, creating new things is the defining characteristic of our species. Now that we aren’t living in the 18th century and some of our conceit has worn off, we know that animals think to varying degrees. We know that chimpanzees have a theory of mind. Chimp A will not sound an alarm to Chimp B if Chimp A knows Chimp B already knows about it. That’s a lot of thinking and knowing! So what really separates us from our near-cousin primates and other higher animals generally? My contention is that our drive to create is our truly defining talent. Side note: I’ll let the theologians and atheists argue about whether we were created in our Creator’s image as creators or if we created a Creator because we create. I can hear the objections already though. “I’m not creative.” “Not everyone is like that.” Nonsense! It took me a long time to realize that everyone creates things in their own ways. My wife is creative in the traditional sense. She’s a writer and she literally dreams sci-fi. She will wake up in the morning and tell me whole story lines she dreamed in the night. For me, that’s never going to happen. I don’t invent new completely new things like she does. But I create in my own way. I create business systems and ways of explaining things to people that they can understand easily. Everyone creates something. Even the proto-typical Joe Sixpack creates rituals around his favorite sports teams. These creations are how we express ourselves. And they are as individual as we are. What do you create in your life?

What is Your Great Going?

I remember watching a talk given by the Blue Zones guy about cultures that have unusually long lifespans. He said there were certain commonalities among them that helped to explain how many people over the age of 100 continued to live in these areas. The one bit that really stuck with me was the “ikidai” in the Okinawan community. I can still picture the image he put on the screen of a man who was 102 or 103 dressed in a gi and choking a fellow martial artist. It looked like a Judo match to me. As it happens, I studied Japanese in high school for a bit, and I know that the roots of the word, “ikidai” mean “great going.” As in, what is your great reason to keep on living? For me, my great going has always been personal freedom. As far as I can tell, I’ve had a problem with people telling me what to do since I was a child. I have continued to look for ways to free myself of the systems of control that are prevalent in every society. And that’s been fairly effective as a great going for the past decade or so. But now that I am married and a new father, I have found that, cliched as it is, my daughter has become my great going. I want to show her the world and help her learn how she can live a life of freedom. So that’s my reason for getting out of bed and working hard to develop my business systems. What’s your great going?

The E-Myth Revisited and Opportunity Cost

One of my favorite podcasters, Jake Desyllas of The Voluntary Life, tweeted this today: E Myth Revisited by @MichaelEGerber is one of the books every small business entrepreneur should read. My review: https://t.co/EkACaTjq5p — Jake Desyllas (@thevoluntary) June 10, 2014 To which I responded that one of the big issues that Gerber doesn’t address is opportunity cost.http://nealmcspadden.com/wp-admin/post-new.php Let’s do a little recap. In E-Myth Revisited, Michael Gerber talks about creating an extremely systematized business that can be replicated and run by the least skilled workers possible. In order to get to that optimal set of processes, the business owner has to experiment a lot. In the book he talks about Sarah’s pie shop, and the trials she goes through to make her business successful. But I always thought the discussion in the book was fairly limited. Even something that looks fairly simple like a pie shop can have infinite permutations. Sarah talks about learning to bake pies with her grandmother or aunt (I don’t remember which off the top of my head), and I always thought that the experience she describes could make a business model. What if customers came into the shop and instead of finding the usual counter and glass cases they entered grandma’s kitchen? The customer could become part of the experience of making pies the way Sarah developed her love for this baking. The customer could have the option of baking with Sarah and her staff to create a custom, ultimately personalized product that would create a bond between the customer and the store or, in a more conventional manner, buy a pie off the shelves lining the walls. Would this work? Would the pie shop be more profitable this way than as a regular pie shop? I have no idea, and that’s the point. These things need to be tested in order to be known. But with testing, comes costs. In this example, there would be a very large outlay of cash to move the store around to different configurations and different moods. And then, as Bastiat said, there is the unseen. How much profit is given up by doing this test? For a small operation, if you guess wrongly you can go broke very quickly. That’s what I mean when I say Gerber doesn’t address this issue. How is the entrepreneur to know which way to go? In the end, I guess it just comes down to the vision of the entrepreneur. Some will be successful and some will fail. You may be able to increase your profitability following Gerber’s techniques, but if your basic vision is wrong nothing will fix that except you.

Giving to Charity is Stupid

File this one under barbequed sacred cow. I think giving to charity is dumb. And harmful to the people you think you are helping 99% of the time. So before you get out your pitchfork, let’s examine what the point of charity is: helping people. But helping them to do what? There are cases where if a person does not receive help right this second, he or she is going to die. Great, give that person food, water, shelter, or whatever and feel good about it. That’s your 1%. The other 99% of the time, giving people things does not solve their problems. There are all kinds of problems with formal charities like corruption, how much money actually goes towards the cause it purports to help, and so on. But even if all that were perfect, giving to charity would still be stupid. Let’s take poverty as a classic example. We have a great deal of experience with giving poor people housing, food, and so on. Does it help them to get out of poverty? In the vast majority of instances, the answer is no. It may solve the immediate issue at hand, but it actually harms that person’s ability to care for him or herself – in other words, it  harms the ability to grow wealth. And wealth is really the key to all charitable situations. Why do people need help? It’s because they don’t have enough wealth to live in some degree of comfort. Remember that the natural state of humanity is wandering the savannah. No houses, no easy to get food, no clothes, nothing. Every single thing that we have now that makes our lives pretty easy to survive has come from the building of wealth. So, the real question is not, “How can we give the homeless a place to stay?” Instead the real question is, “How can I help this homeless person develop his own wealth – and thus not be homeless any more?” Fortunately, over the past couple of thousand years, humanity has found the answer in markets. The markets tell us that if we create value for someone else, that person will trade us money for that value. The trick, of course, is to create so much value so cheaply that the money we get pays for the creating and then some. This is called profit. So how do we help people profit? One of the most exciting developments in this area is microfinance. These are small loans made to individual entrepreneurs who are trying to raise capital in order to start or expand their businesses. Side note: one broker in this area, Kiva, is a total scam. More on this in another post. By lending money for business development instead of giving it no-strings-attached, we are making sure that the borrower is at least attempting to serve his fellow man and provide value to the world. Imagine a world in which every man, woman, and child was really concerned with what they […]