EQ Journal Archive 10

By Bruce Firestone | Uncategorized

May 14


         Rocket Owl—Full on Products Company        

   Posted on
       Monday 12 December 2011  

(This article originally appeared in Ottawa Business Journal, Dec. 12, 2011: https://www.obj.ca/Opinion/Bruce-Firestone-5444)

These days when it’s often hard to tell whether a tech company is a
hardware or software biz or a services or products studio, there’s no
doubt about Rocket Owl. After spending time with two of its five (now
four) founders, 22-year old President and CEO Graeme Barlow and seasoned
COO, Dr. Jasvinder Obhi, it’s apparent all their eggs are in the
products basket.

Rocket Owl’s 22 Year-Old CEO, Graeme Barlow

The reason? They are Zynga-inspired. Look at just one statistic—there
were 150 million people playing games on Facebook in 2010. Now there’s
360 million and that’s the audience they’re going after.

All their games are on Facebook. “Hands down it’s the place to be,”
says Barlow. “Facebook knows what it’s good at—building networks and
frameworks not apps or games which leaves everything else open to firms
like ours.”

They take zero third party work—i.e., there’s no contract work to
help pay their monthly bills. They concentrate wholly on their own

Rocket Owl opened its doors on December 6th, 2010 and had a soft
launch of their first game ‘Green Space’ on August 1st. Official launch
is December 1st so a planned 24-hour gaming marathon at the Museum of
Aviation for 1,000 guests has to be postponed until April of 2012.

Green Space, as its name suggests, is about an unknown, filthy, toxic
planet where players form social connections with their friends to help
clean it up. It’s a riff on Farmville in the sense that players have to
create a utopia by first clearing their land, then finding clean energy
sources, developing renewable technologies and growing organic produce.

How did they get here? For co-founders Obhi as well as angel
investor/legal counsel/patent attorney Sol Abisar and CTO Hitzel Cruz,
what a long strange trip it’s been. Obhi left JDSU in 2004, took a year
off to build his own home in Rothwell Heights then tried his hand at
consulting before starting and selling a business in 2005 in the bio
metrics field before doing some work with NRCAN in the green sector,
next working for Rod Bryden’s Plasco then entering the alternative
energy sector with his own solar company before meeting Barlow to
develop a web portal for their solar company which naturally led to a
Facebook gaming company called Rocket Owl. Right.

Now there are 14 full-time people working at Rocket Owl plus five
part-timers. They expect to be cashflow positive in the first quarter of
2012. The game itself is a freemium model with pinch points throughout
where opportunities to make micro purchases of tools, costumes, virtual
goods and additional customization present themselves to players for 99

There are no ads at present—i.e., this isn’t an advergame. “Ads are a
turn off to our community,” Barlow says. “Even product placement isn’t
acceptable. But what we can do instead is have sponsored competitions.
Or say you choose to have Nike sponsor your virtual avatar, maybe you
get $10 off a pair of Nike shoes in the real world.” So in this way,
Rocket Owl can make room for a corporate presence without becoming
inauthentic—a death sentence in this biz if you do.

Barlow may be a 22-year old CEO but he comes across as much more
mature than his age suggests. “Silicon Valley has this culture of not
just innovating but sharing ideas which makes the lives of VCs much
easier—they can spot winners faster. Ottawa’s culture right now is way
too secretive—everyone’s always in stealth mode which is not good with
Gen Yers. We need to open up to each other a lot more.”

Right now they’re planning a sequel to Green Space to be called Blue
Space and will be expanding their launch to include the iOS platform as
well. Their marketing plan is all GM, Guerrilla Marketing. They’ll be at
GDC, F8, E3, Tech Crunch Disrupt (SF) and at Apple’s Developer
Conference too.

There’s no chance they can match ad budgets of gorillas in this
space—EA and Zynga. So if you can’t beat ‘em? They’re giving away Zynga
gift coupons for Cityville when players meet certain goals on… Green
Space. So try Green Space to get freebies on a Zynga game. It’s clever
ambush marketing, reaches their niche and it’s cheap. By also giving
away say $200 worth of gift cards on WOW (World of Warcraft, a huge
multiplayer Internet game), Rocket Owl expects to be all over their news
channel with millions of potential views.

Rocket Owl has done Round 1 financing and is working on Round 2
($650,000) which should be wrapped up by the end of November. They plan
to select four different social causes each month to support and
giveback 3 to 10% of their revenues.

“Our differentiated value is, in fact, the industry we’re in. Mobile
web and apps are by far the fastest growing part of the world economy
and who knows, our market could grow to five billion people,” Barlow
adds. His investors and employees are counting on it.

Professor Bruce M. Firestone, Entrepreneur-in-Residence, Telfer
School of Management, University of Ottawa; Founder, Ottawa Senators;
Executive Director, Exploriem.org; Broker, Century 21 Explorer Realty.
Blog: www.eqjournal.org Twitter: www.Twitter.com/ProfBruce

     Prof Bruce @ 9:40 am

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         Letter to Marie Lemay, NCC CEO: December 10, 2011        

   Posted on
       Saturday 10 December 2011  

Marie—many people are grateful that the NCC has a new leader
with vision—you. I read the story in the OC today headlined ‘Cue the
Gondolas’: https://www.ottawacitizen.com/travel/gondolas+puts+calls+ideas+animate+Rideau+Canal/5839093/story.html where the NCC has put out a call for gondolas to animate the Rideau Canal.

You should know that former student of mine, Darcy McCrae, brought a
beautiful $85,000 gondola to the Rideau Canal years ago and was told
almost immediately by armed RCMP sent there on orders from one of your
predecessors at the NCC to get off the Canal immediately; they ruined
his new enterprise. He lost all his money and his investors’ money.

Darcy McCrae, Gondolier, Circa 2003

The story is on my blog at https://www.eqjournal.org/?p=2577 but here’s the bare bones:

Federicos Gondolas

Compare this with the experience of Darcy McRae, who started a
Gondola business on the Rideau Canal. Darcy, a Carleton University
Sprott School of Business grad (2001), bought himself a beautiful, hand
crafted, wooden $85,000 Gondola from California.

He launched in September 2002 in the scenic and historic Rideau
Canal. There is something about Gondolas and Canals that just go
together wouldn’t you agree?

He docked at the Dow’s Lake Pavilion and it was something to see—my
wife Dawn and I were eating one evening that fall in the Westin Hotel in
downtown Ottawa at Daly’s Restaurant. It just happens to overlook the

Miss Canada Lynsey Bennett in Darcy’s Gondola

It was around 10 p.m. and we saw this ghostly shape gracefully move
through the mist to dock at the National Arts Centre—Darcy had earlier
in the evening taken a couple from a restaurant further up the Canal to
the NAC for a show and was coming by to pick them up. What a romantic
way to spend an evening, n’est-ce pas?

Happy Couple (Prof Bruce and Wife) Go For a Trip with Darcy

Well, in Ottawa we have another level of Government that is a state
unto itself—it is called the National Capital Commission (the NCC). What
do you think the NCC did?

They sent an armed RCMP officer in full body armor to give Darcy a
cease-and-desist order that not only banned him from the Canal but also
forced the management of the NCC-controlled Dow’s Lake Pavilion where
Darcy was docking his boat to renege on his contract.

Gondola Blessing

Darcy was left with no clients, no berth and his life savings and his
investors’ money were in jeopardy. Interestingly, the berth next to
Darcy’s was occupied by a boat that provided charters on the Canal but
somehow, rather mysteriously, that was O.K. with the NCC. The reason for
banning Darcy? The NCC had earlier given a monopoly to a major tour
operator whose boats hold 150 personas each. There are no Gondolas on
the Rideau Canal. Thanks, NCC.

Oh yes, Darcy was also banned from the Rideau Canoe Club, the Casino
du Lac Leamy and just about everywhere else he tried to put in. Finally,
in June of 2003, Denis Giacobbi and his family (from
www.fitnessleaders.com and www.fitbug.com) were kind enough to allow
Darcy to use their dock on Mooney’s Bay.

Darcy McCrae at the Helm

Darcy continues to be harassed by Government representatives to this day. P ≡ M ≡ B.

Best regards, Bruce

Dr. Bruce M. Firestone, B.Eng. (Civil), M.Eng.-Sci., PhD.

“Making Each Day Count”

(Ed notes: 1. P ≡ M ≡ B is an equation my wife taught me– at the top
of the socio-economic heap, you cannot distinguish between big Politics, big Media and big Business. They are equivalent (hence, I use the notation: ≡). They’re like the Pigs and Humans in Animal Farm
at the end of George Orwell’s novel– they party together and you look
from one face to the next and you cannot tell the difference. 2. Shortly
thereafter, Darcy went OOB, Out of Business.)

     Prof Bruce @ 6:49 am

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         NHL Conference Revamp        

   Posted on
       Friday 9 December 2011  

Gary Bettman has wanted to revamp the NHL’s conference
structure and playoff format since he first became Commissioner in 1993.
Recently, he got his wish as the BOG approved his proposal with four
teams voting against.

The fact that the two eastern conferences only have seven teams each
while the western ones have eight each is both a problem and an
opportunity. The problem is that it is unfair that, in the east, a
member club’s chances of making the playoffs are 4/7 while in the west
they are 4/8. That is a very significant difference of more than 7
percentage points (57.143 v 50.0).

But it also a great opportunity to add two more teams and bring the
League to 32 member clubs, the same number as the NFL. Where should
those clubs be located? In my opinion, the answer is Canada. In an
article titled ‘Why Not Make it Nine?’, I argue for teams in Quebec and
Hamilton. (See: https://www.eqjournal.org/?p=392.) I also wrote: ‘How to get NHL teams for Québec City and … Hamilton’ (https://www.eqjournal.org/?p=2596)

By adding Quebec and Hamilton, it also gives the NHL an opportunity
to fix an obvious problem that has arisen from the current realignment–
the fact that Florida and Tampa are playing in the northeast instead of
with their natural rivals and geographic partners Washington, Carolina
et al.

So here is my proposal for a four conference, 32-team league. The teams on the move are shown in bold and colour:

I also put it on our server in .doc format so you can download it and change it if you think you can create a better plan: https://www.eqjournal.org/NHL-Conference-Revamp.doc.

Prof Bruce

Postscript: Today’s announcement that majority ownership in Maple
Leaf Sports and Entertainment (MLSE) is being transferred from Ontario
Teachers Pension Plan to the two largest communications companies in
Canada– Rogers and Bell– may make it easier to establish a second team
in the Toronto area. Where there’s change/upheaval, there is also
opportunity. And Rogers/Bell may be somewhat more susceptible to public
pressure as well as their own self interest in this matter than
Teachers, with its low public profile, ever could be.

     Prof Bruce @ 6:41 am

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         Excerpt from Quantum Entity: We Are All One: ‘Worry Dolls’        

   Posted on
       Thursday 8 December 2011  

(Performance artist Nell takes physicist Damien Bell and
friends to her second home on Ambergris Caye to celebrate Damien’s 23rd
birthday. On Day 2, they find themselves at Marco Gonzalez, the site of
Mayan ruins on the south end of the island. Take a few minutes to
pre-read the Foreword from Quantum Entity: https://www.eqjournal.org/?p=2932. Please note: MATURE Themes.)

From Chapter 7 San Pedro Town

Towards the end of the afternoon, they’re all gathered about the
craft hut for an announcement. The girls have covered up (they all went
topless except for Dakota and her friends) for the second time
today—they didn’t play Ultimate semi-nude and won’t be doing some type
of craft that way either.

Gillian says: “We wanted everyone to take something away from today
that will help you remember this day, this beautiful nation and these
wonderful people for a long time to come. So Miss Nell and our team have
brought baskets of Worry Dolls, enough for everyone to create one or
two of their own.

“Anyone know what a worry doll is?”

No one did or at least no one wanted to put her or his knowledge of the subject up against a local like Gillian Boys.

“Worry People are tiny folk art dolls mostly found in Guatemala
Highland Maya culture. If you confess your troubles to your Worry Doll
before you go to sleep each night, they’ll steal them away and you’ll
sleep peacefully and completely.

“Our dolls come from San Juan del Obispo. They’re hand-made using all
natural cotton fibres and textiles made in Guatemala. Your job is to
find a coupla dolls that speak to you and to draw a face on each of them
and give them a name. But once you have given them a name, it’s like
ships, it’s bad luck to change them so be careful.

“We have three types of dyes for you to work with: tanine, vat dyes
and dyes with mordent. We also have lots of non-run, non-NSM inks and
different colored threads of various diameters to choose from so there
you go…

“Any questions?”

“I have one,” says a pensive Nell. “Where do Worry Dolls take our fears after we tell them what’s going on?”

Gillian, normally so totally confident about pretty much everything,
looks stumped for once. “Dunno, Nell. No one has ever asked that
question before as far as I know. I’m not sure who we could ask.”

There is a bunch of milling around as Maya Worry Dolls begin picking
out their people but eventually everyone settles down with one or two
dolls to personalize and decorate.

Dakota and Traian are sitting side by side handicrafting their dolls
together; Dakota is laughing at how bad an artist Traian is. His lame
attempt at decoration leads to a lopsided male worry doll that appears
to be sardonically observing his human familiar. He tells her his doll’s
name is: “Freddie”.

“What kind of name is ‘Freddy’?” she asks.

“It’s F-R-E-D-D-I-E. I named him after Freddy Krueger but changed the spelling of his name cuz he is Freddy Light.”

The cultural reference is completely lost on Dakota who just says: “Huh?”

“Freddy Krueger went around killing teenagers in their dreams using
razors where his fingers shoulda been. He scared them to death or cut
them up, I’m not sure which.”

“And you want your doll to be called Freddie because…?” Dakota is
frowning now thinking that maybe Traian is some kind of mutant.

Traian just laughs: “My guy is an anti-Krueger like matter and
anti-matter? You know, when you mix particles and anti-particles
together they annihilate each other releasing huge amounts of energy,
typically gamma rays that are extremely powerful and deadly to living

Dakota is now smiling back at Traian but not looking him in the eye.
Actually they have a hard time looking each other in the eye because
when they do, the needle moves to red for both of them. It’s a bit
overwhelming really.

Instead, she changes the subject: “So tell me more about what you do.” Traian is happy to oblige.

Earlier as they approached the group on the beach, Dakota spoke with
her best friend Deidre about Traian saying: “Eso le. El Euro americano”
while she pointed with her head at the Euro American.

“Él es muy buen aspecto,” Deidre commented.

“Se le ve como un poco de un diablo”, replied Dakota. She can see
what a devil he is but can’t seem to help herself, she’s powerfully
attracted to him.

Her parents know she’s here with Deidre and her other girlfriends.
Her mother has already spoken with Gillian making her responsible for
this group of highschoolers. Gillian does not have to be told to look
out for these teenagers—she understands the consequences in a place like
Belize if you cross a powerful local family. It makes her nervous but
Nell invites them so they’re here.

Damien has made himself a worry doll—without perhaps realizing it,
his worry doll, who he calls ‘Dooby’, has the same loopy grin on his
face that Damien gets occasionally when the world surprises him on the
upside. But it’s Nell’s doll that freaks him out. She’s also got a male
worry doll but his face is just two tiny black eyes and a large black
circle for a mouth and no other features.

“What name did you give your doll, Nell?”

There’s silence for a minute or so.

“You gonna tell me?”



“It’s Navajo. It means War.”

“Why ‘War’, Nell?”


Nell seems a bit downcast and Dezba, who is a dour looking creature
named after one of the longtime enemies of the Hopi people, certainly
appears to reflect some kind of inner turmoil in her. She wants to
mention something to Damien but can’t ever seem to find the right time
or place to say it to him. Certainly not here, not now with more than 40
people milling about at Marco Gonzalez. Maybe she can get some private
time with D after they explore the nearby ruins tonight.

Cover Art by Janak Alford

Prof Bruce

Copyright. All rights reserved. 2012.


1. More about Worry Dolls: https://www.eqjournal.org/?p=2911.

2. Artpreneur Schedule: https://www.eqjournal.org/?p=2702.

3. ‘Siberian Cedar Medallion’: https://www.eqjournal.org/?p=2694.

4. Update: https://www.eqjournal.org/?p=2685.

5. Russian Dachnik Movement: https://www.eqjournal.org/?p=2527.

6. Foreword from Quantum Entity: https://www.eqjournal.org/?p=2932.

7. Blackfern Group: https://www.eqjournal.org/?p=3076.

8. About the Author: https://www.eqjournal.org/?p=3030.

9. Pine Nut Medallions: https://www.eqjournal.org/?p=2130.

     Prof Bruce @ 6:56 am

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         Quantum Entity, We Are All ONE, Foreword        

   Posted on
       Thursday 8 December 2011  

(Here is the Foreword from Quantum Entity, We Are All
ONE, a novel to be released on June 20th, 2012. It is the first book in a
trilogy. Book 2 is called Quantum Entity, American Spring, Book 3,
Quantum Entity, The Successors.)

When young Damien Bell, physicist and engineer, and his business
partner, the fabulous Ellen Brooks unleash Damien’s twin creations, a
new artificial life-form he calls Quantum Counterparts and she calls
Quantum Entities—because she believes they may in fact be sentient
beings—and the Quantum phone, their delivery system for Quantum
Counterparts, they revolutionize communications and search industries in
their mid 21st century world.

Damien and Ellen and their new company, Quantum Computing Corp,
introduce the era of quantum economics, a condition where scarcity is a
thing of the past. Together they build a great new globe-spanning,
ultra-fast growing tech enterprise that somehow gets away from them.

Damien is distracted from his scientific and startup work by
performance artist and world superstar, Miss Nell, whom he first meets
at Nuit Blanche in Toronto.

Their adventures take them to Four Corners and a mystical place
called Third Mesa in Arizona, Boise and the Salmon River in Idaho,
Phantom Ranch at the bottom of the Grand Canyon, Palos Verdes,
California, the Big Smoke (Toronto), San Pedro Town and Marco Gonzalez
on Ambergris Caye in Belize, then Boston, New York City, Washington DC,
Langley Air Force Base, San Quentin State Prison and finally San
Francisco where their group will, of necessity, transform itself into
the largest protest movement the US has seen in almost 90 years.

What does it take to start, build and then defend a great new
enterprise? How do you extend human rights to a new non-human life-form
when such rights barely apply to people in these troubled days of the
Republic, a time when the United States has fallen from first among
nations to third after Imperial China and the European Union, with the
AU (African Union) closing in on them fast?

Inevitably, they come into conflict with entrenched business and
political interests. Are Quantum Entities truly friends to human beings
or are they, as the US Government maintains, a threat to national


If you would like to purchase an advance copy of the book (e-book or
hard copy, signed by the author and with a bonus– chapter 1 of Book 2)
please visit: brucemfirestone.com.

Covert Art by Eyevero.com; images by prototypeD.org:

(To see high definition version of cover, back cover and spine art, please click on the image above or CLICK HERE.)

Prof Bruce

Copyright. All rights reserved. 2012.

1. More about Worry Dolls: https://www.eqjournal.org/?p=2911.

2. Artpreneur Schedule: https://www.eqjournal.org/?p=2702.

3. ‘Siberian Cedar Medallion’: https://www.eqjournal.org/?p=2694.

4. Update: https://www.eqjournal.org/?p=2685.

5. Russian Dachnik Movement: https://www.eqjournal.org/?p=2527.

6. Blackfern Group: https://www.eqjournal.org/?p=3076.

7. About the Author: https://www.eqjournal.org/?p=3030.

8. Pine Nut Medallions: https://www.eqjournal.org/?p=2130.

9. Miss Buril: https://www.eqjournal.org/?p=2911.

     Prof Bruce @ 6:25 am

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         Miss Buril        

   Posted on
       Wednesday 7 December 2011  

For our recent Xmas party, we decided on a rather unorthodox
gift for every invitee. In addition to making wine together at the Wine
Garden (see: https://thewinegarden.ca
where everyone took home 12 bottles!), having a four course meal,
listening to live music, hearing a mercifully short speech from the host
(moi), people also got their very own Worry Doll.

These are tiny creatures originally from Guatemala, who hide under
your pillow. Each night, you tell her your worries and, by morning,
presto, she’s stolen them away.

Here is my Worry Doll. Her name is Miss Buril:

Now you need to know that you don’t pick out your Doll; she picks you
out. Next, you need to name her but, like ships, you have to be careful
about this because, once you have named her, you can’t change it
because it’s bad luck.

Now you may be wondering why my Doll is called ‘Miss Buril’. That’s
because she is named after my Grade 2/3 teacher who took a shy, skinny,
under-sized kid who was last in his class at everything (he was very
sick as a little kid, nearly died from a bacterial infection* and missed
a year of school) and saw something in him that made him worth saving.

(*It was my friend Dan Pearlman’s father, pediatrician Dr. Pearlman
and my father, the late Professor OJ Firestone, who upon hearing from
the attending physician at the Ottawa Civic Hospital (this was the
1950s, long before the CHEO, Children’s Hospital of Eastern Ontario, era
had begun) to prepare himself for his oldest son’s passing refused to
lose. They took me by air ambulance to Sick Kids in Toronto and told
them to fix me which they did. Thank you, OJ / Dr P.)

Prof Bruce (left) and BFF Daniel Darin in the Dolomites at Age 11

Now most kids who appear to be malnourished, slow or under-developed
just get shuffled off to the back of the classroom to disappear forever
from the fast moving river of life but Miss Buril kept him in class every recess and every
day after school to make sure he could read, write and do arithmetic as
well as solve simple puzzles and do basic problems which everyone else
in the class was already able to do. To understand how far behind he was
at the time, if you showed him a simple picture of say three ducks and a
pig and asked him which one was different, he would not have been able
to tell you that.

With her help and only through her heroic efforts, that kid caught
up, accelerated through the rest of primary and high school then applied
to go to University at 14 and turned 15 his first year at McGill where
he received his civil engineering degree before going on to do a Masters
of Engineering Science at the University of New South Wales and a PhD
in Urban Economics at the Australian National University.

You can purchase your very own Worry Doll from the Hunger Site by visiting: https://www.thehungersite.com/store/site.do?siteId=220. Each item you purchase funds at least 25 cups of food. We bought 40 Dolls and funded 500 cups of food

I will have more to say about Worry Dolls soon– they are a part of my
new novel, Quantum Entity (the first book in a trilogy), and I will
publish a few excerpts here on my blog as we get closer to release date
next year.

Prof Bruce

ps. we may have a few left over. If you would like one, contact Ms.
Theresia Scholtes, Assistant Manager, Exploriem.org (tscholtes @
exploriem.org). Perhaps one of our Worry Dolls is looking for a partner
right now…it could be you!

Follow Theresia on Twitter:


pps. Miss Buril getting ready to do her work:

ppps. Gen Yers enjoying themselves at our Xmas party (and even more at the after-party I suspect):

More photos on Facebook: https://www.facebook.com/media/set/?set=a.2263601150665.105377.1267565414&type=1&l=64ecd3dcfe

     Prof Bruce @ 3:40 pm

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         Occupy But Measure        

   Posted on
       Sunday 27 November 2011  

I woke up this morning thinking that OWS supporters
everywhere might want to find more ways to influence the conversation
beyond sit-ins.

One thing that occurred to me was that they could adapt LEED
(Leadership in Energy and Environmental Design) standards and Corporate
Social Responsibility (CSR) mission statements to their cause.

LEED rates the built environment this way:

Certified 40 – 49 points
Silver 50 – 59 points
Gold 60 – 79 points
Platinum 80 points and above

CSR mission statements don’t normally try to rate or score
corporations. Instead, they try to set out certain goals to influence
their behaviours.

So I combined a bit of both to produce an OWS Advanced Rating System
(OARS)! My thought was to give corporations and other organizations
including governments, NGOs and charities, OARS ratings and then to
track them over time. If their ratings improve, presumably they are
behaving in a more responsible way and vice versa.

I have found that nothing motivates people more than simple grades (unless, of course, it’s money, power, lust or greed).

I suggest we use 20 variables including:

Soft Variables–

Employee Treatment
Supplier Treatment
Customer/Client Treatment
Shareholder Treatment
Acceptance of Diversity
Gender Equality
Support for Families
Health, Wellness, Nutrition and Fitness Education

Hard Variables–

% of waste recycled
% of Inputs bought within 800 km
Days Lost per 1,000 Employees per Annum
Executive Compensation Multiple
Taxes Paid as % of Revenues
CO(2) Production per Employee
Energy Consumption per Employee
CSR Expenditures as % of Revenues
Employee Churn
Employee Training Hours per Annum per Employee
Volunteer Community Work  Hours per Annum per Employee
Number of Employees Mentored %

Let’s give each category a maximum score of 5.0 so a perfect score is 100.0.

And let’s assign levels this way:

Less than 50.0 FAIL, F
60.0 to 69.9 SATISFACTORY, S
70.0 to 79.9 ADEQUATE, Q
80.0 or greater EXEMPLARY, X

OWS could issue these ratings and charge organizations for OARS
Audits and Ratings. These organizations would be enititled to display or
feature OWS Scores on their products, with their services, on their
websites, in their apps or on their social media channels.  The funds
raised would be used by OWS for good works.

I have a spreadsheet in .xls format that you can download from our
server that will actually produce OARS scores for you. It is at: https://www.eqjournal.org/ows-scoring.xls.

All the cells in the spreadsheet are linked so you can fool around
with my assumptions and also try to score enterprises or organizations
where you have the data. I ran a test for an imaginary tech company
called Acme.

Here is what I got:

Variable Score/Rating Measure Standard

Employee Treatment 4.0
Supplier Treatment 1.5
Customer/Client Treatment 5.0
Shareholder Treatment 5.0
Acceptance of Diversity 3.5
Gender Equality 2.5
Support for Families 3.5
Health, Wellness, Nutrition and Fitness Education 3.5

Soft Variable Score 28.5

% of waste recycled 2.8 55% 100%
% of Inputs bought within 800 km 0.8 15% 100%
Days Lost per 1,000 Employees per Annum 2.7 70 150
Executive Compensation Multiple 1.5 17 5
Taxes Paid as % of Revenues 2.4 12% 25%
CO(2) Production per Employee 1.5 16.2 4.7
Energy Consumption per Employee 2.2 312 138.3870968
CSR Expenditures as % of Revenues 1.9 3% 8%
Employee Churn 2.5 8% 4%
Employee Training Hours per Annum per Employee 3.3 80 120
Volunteer Community Work  Hours per Annum per Employee 1.7 40 120
Number of Employees Mentored % 2.5 10% 20%

Hard Variable Score 25.6

Total Variable Score/Rating 54.1

So this company passes but barely with a score of 54.1% despite the
fact that they’re recycling more than half their waste, their employees
are getting two weeks of training and doing one week of volunteer work
in the community plus they have a not bad employee churn rate of 8% and
are spending 3% of their top line on CSR. You can see that Acme would
have to work hard just to get a S, Satisfactory score which I suppose is
as it should be.

The only way to move in a direction of greater equality of
opportunity as well as greater economic and environmental sustainability
is to be able to first measure what it is we want to do and then map
out a direction and a plan to get there. The only way to be sustain this
kind of effort is to make it economically unsustainable to do anything

Prof Bruce

Comment by Sean Buchanan, Schulich School of Business

There are several Social Investment Databases that rate corporations
on various social and environmental dimensions.  I use the
Sustainalytics ‘Canadian Social Investment Database’.  A big one in the
US is the KLD social investment database.  A bunch have popped up in
Europe as well.  

I guess the main issue that I see is that the current spreadsheet
does not address  one of Occupy Wall Street’s main central concerns:
namely, the amount of influence corporations have in policy formation
(through lobbying, campaign financing, etc).  Although most OWS
protesters would probably like to see corporations be more socially and
environmentally responsible, they appear to be more concerned with
broader systemic issues in the economic system like corporate political
influence and the shareholder value model.  The databases I’ve mentioned
also do not address corporate political issues.  Because of this, these
databases would probably be viewed as incomplete by most OWS


Thanks, Sean. Since many companies have to disclose the money they
spend on lobbying or PACs, maybe this shld be a variable in OARS too?
Best, Bruce

Yes, the CSID includes amount of campaign contributions as one of its
criteria.  However, the way in which policy is influenced by
corporations is really difficult to measure in its entirety.  I’ve
attached an article (pls see: https://www.eqjournal.org/Barley_study-2009.pdf)
that outlines all the ways in which corporations influence government
policy in the US.  It is such a complex process that it would be hard to
measure empirically.

Take care,


     Prof Bruce @ 8:28 am

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         What if…        

   Posted on
       Friday 25 November 2011  

(Blogger Graeme Nichols challenged me and 19 other people to
answer the question: ‘What if?’ For example, what if the NCC, the
National Capital Commission, had said ‘yes’ to putting the Palladium on
their lands at Lebreton Flats in downtown Ottawa instead of being
constructed on the suburban Kanata site where Scotiabank Place (as it is
currently called) sits today. What would that alternate universe
look like? Here is my somewhat tongue-in-cheek answer to that question.
It is based on an imaginary conversation between me and the then Chair
of the NCC circa 1987 or 1988. I also give some clues as to how I think
Lebreton Flats should be developed today to make it a people place
rather than just a collection of condo towers which it appears destined
to become.

You can see part of this essay and 19 other ‘what if’ questions on Graeme’s 6th Sens site at: https://www.the6thsens.com/ and follow Graeme as he continues ‘to see Daigle People’ on Twitter at: https://twitter.com/6thSens. The 20 ‘what if’ questions are unofficially part of the 20th Anniversary of the Sens return to play in the National League.)

From the Private Diary of Bruce M. Firestone, Founder of the modern day Ottawa Senators Hockey Club

Circa 1987/1988

I met with the Chair of the NCC today. I wanted to ask her if we
could develop part of the NCC’s lands at Lebreton Flats to construct
what Cyril Leeder has started calling ‘the Palladium’—a new home for the
team we plan to bring back nearly 55 years after they played their last
game in Ottawa in 1933 before moving to St Louis for a year then
folding during the Great Depression.

I expected her to say something like: ‘Bruce, do you want the private answer or the public answer to that question?’

To which I might have responded: ‘Both.’

And she might have said: ‘The private answer is ‘no’. The
NCC has a 200 year plan for Lebreton Flats—to build national structures
of national importance there—perhaps a new War Museum or a new SCC,
Supreme Court of Canada, building. There’s no way we are going to allow
you to build a hockey rink there even a very nice one which I’m sure you
will do. The public answer will be the one we give other
proponents who want to use NCC lands: ‘We’ll study it.’ We don’t like to
say ‘no’ to people (publicly) so we study things until one of two
things happen: a) the proponent gets fed up with our requests to prepare
(and pay for) more studies and consulting reports or b) they die,
whichever comes first.’

Imagine my surprise when instead she said: ‘What a wonderful idea,
Bruce! Imagine a downtown arena, a place where two million guests a year
can come together to celebrate not only a renewed hockey team but Tier 1
Acts from all over the world who will now be able to come to the
National Capital Region—Ottawa, a G8 capital city—for the first time.
This arena, what did you call it… The Palladium… lovely name by the way…
will act as a catalyst for Lebreton Flats, a way to springboard our
whole development! It’ll help make Lebreton Flats into a people place
for not only Ottawans but all Canadians who visit here—more than five
million per year. There’s plenty of room for national monuments and
structures that serve national purposes plus housing and gathering places for events including those held at the Palladium! Super idea!

‘You know, Bruce, confidentially, I must say that the NCC should
never have expropriated Lebreton Flats in the first place. It was a
vibrant community (please see Paul Kitchen’s comment at the end of this
article on what the neighborhood was like before it was destroyed, Ed.)
where the working person could find a reasonably-priced place to live
close to downtown and close to the factories that spanned both sides of
the Quebec-Ontario border. We just knocked those homes down and
displaced thousands of working poor to build… well, nothing for more
than 40 years. Now here you come along with this grand idea.

‘In case you don’t remember what the neighborhood looked like, I’ve got a photo of it around here somewhere. Ah, here it is:

‘What I think we should do is not only provide land for your new
building but let’s do an overall master plan that sets aside a few large
blocks for national facilities but let’s also make sure we do a fine
enough grained plan that we get lot and block sizes that are highly
variegated (large, mediums size, small and very small) so that not only
big developers can play but lots of mid-tier ones will be able to
develop some of the land too. That way, we’ll get something that looks
more like the Byward Market or Granville Island rather than just a bunch
of tall, monolithic condo towers standing incongruously in a field
separated by no-places which become, after dark, unsafe and unsavory
hang-outs for wrong doers.

‘I think I saw a report somewhere—it never saw the light of day since
it preached planning practices that we at the NCC typically eschew—it
was titled ‘Planning at Macro and Micro Scales’. It’s in a file
somewhere*—you should read it if we can ever find it.

‘If we do a highly differentiated plan then we can develop the
property, which by the way in my humble opinion is among the most
important properties in Ottawa which include the old Rockcliffe Airbase,
the Parliamentary Precinct and this one, then it won’t just fill up
with undistinguished towers that might one day look something like this:

‘Instead it might look more like our Byward Market or Granville Island. I just happen to have a photo of each right here:

‘You see the NCC has a habit of putting out RFPs that only the
largest, best capitalized companies can ever hope to respond to. But
you’ve given us the opportunity to open up the process, Bruce, and while
we can’t undo the damage we did 40 years ago to the fabric of Ottawa,
this gives us the best shot to rebuild what was a real community with… well, another real community.’

‘Wow, that’s great news, Jean,’ I said. ‘It might even become a place
a US President would want to visit. Do you think that is even

‘Absolutely,’ Jean said. ‘A future President’s visit might include a
walkabout, a leisurely stroll where he or she might buy some gifts for
their family. I wonder if Presidents carry any cash with them?’

‘Dunno,’ I said.

‘Me neither. But the visit and stroll might look something like this:

‘The President might even do a bit of unscheduled shopping, you never know,’ Jean added.

‘You know if I were to buy a piece of land somewhere to build the
Palladium on, I would want it and the development that would be
generated around it to look a bit like like Granville Island or the
Byward Market or what we are trying to do together here at Lebreton
Flats,’ I said. ‘I would like it to look something like this concept
plan I’ve been working on for a fictitious place we have started calling
‘West Terrace’:

‘Maybe after working on the plan for another twenty years, it might
evolve into something called the Kanata West Concept Plan that would
look like this:

‘Those two plans look like live-work-play-shop kinda places,’ said
Jean. ‘But why do them on a flat treeless plain. You could do that right
here at Lebreton Flats.’

‘Exactly! But, Jean, I have another question for you,’ I said.

‘Sure, shoot, what is it?’ she replied.

‘Well, one of the reasons that the Montreal Forum is downtown and
Maple Leaf Gardens is downtown is that both Montreal and TO have rapid
transit**. Montreal has their Metro and Toronto has its Subway and Go
Trains. We have OC Transpo which with all the goodwill in the world can
only move about 2,500 to 3,000 people per hour on Scott Street versus
the 20,000 pph for the Metro and nearly 30,000 pph for the Subway so
it’ll take more than eight hours (!) to exit 22,500 people by bus out of
the Palladium at Lebreton Flats which is, as anyone can tell you, way
too long.

‘So, Jean, I was wondering if you think the Palladium might also be a catalyst for light rail development in Ottawa?’

‘Now that you mention it, Bruce, I do! No G8 capital should be
without light rail. In fact, I can’t think of one that doesn’t have it
and, furthermore, no great city can be great without a subway, tube,
metro, etc. Umpty-umps, you know, the rich folk, the well-to-do, the mad
car-driving public, most of them won’t take buses but they will switch
to trains. We can build a real community with medium and high density
residential structures that uses public transit. We can build a terminus
right at Lebreton Flats and connect in east—west—and south.

‘Hold on, I’m forgetting something, right?’

‘Yes, Jean a coupla things.’

‘Care to give me a hint?’ she asks.

‘Of course, glad to. We should hook in the Quebec side too—instead of
building more bridges for cars to cross the border why don’t we use the
existing ones we have, the ones that were purpose-built for trains that currently have practically no traffic on them now for light rail!’

‘Nice. I like it,’ Jean says. ‘What was the other thing I forgot?’

‘Well, it’s a good idea of yours to have medium density and high
density residential condos, towns, stacked towns, doubles, maybe even a
few stately singles but what about adding some employment and retail?
I’ve got the entertainment thing covered off with the Palladium. So we
could develop a live-work-shop-play community built in what used to be a
live-work-shop-play neighborhood, albeit 40 years ago.’

‘Splendid, Bruce, splendid. But I have one problem with all this.’

Gulp. ‘What is it?’ I asked.

‘Well, I don’t think the NCC should sell its land.’

‘You know, Jean, you may be right. Why don’t you grant people 69 year
land leases with a one-time renewal of 30 years? That way folks can
build all these nice structures and not have to pay huge amounts to the
NCC upfront—they simply pay an annual land lease which’ll help them with
their cashflow. Now, from the NCC’s point of view and the GOC’s
(Government of Canada’s) POV, you’ll still own the land and, in 99
years, you’ll get to do this all over again! You can fulfill our
national destiny, whatever that may be, a century from now.

‘That sounds interesting. But are there any precedents? You know we
at the NCC never want to be too far out in front of our constituency,’
she said.

“Well, I’ve been advising a co-op out in Kanata which has a long
waiting list of people who need affordable housing. At the same time, I
know a Minister whose parish includes St John’s Anglican Church and
they’ve been thinking of selling their land on March Road. But I told
the Minister and his Vestry to learn something from the Holy Roman
Catholic Church—they’ve been doing land leases for ages.

‘St John’s was thinking of selling their property, about four acres,
for $135,000. But it would be a one-time sale and a lot of their money
would flow (up) to the Anglican Diocese of Ottawa so they wouldn’t be
left with much– they might not even have enough to build the bigger
classroom and meeting hall at St John’s which is the only reason they
are even considering this.

‘So instead I’m advising them to lease the land to something which
one day might be called the Blue Heron Co-op and look kinda like this:

‘The concept is that the co-op won’t have to find a big chunk of
money up front to buy a site– they can pay an annual or monthly land
lease to the Parish (which by the way, under Diocese rules, they can
keep since it is considered rent i.e., not a sale of Church property).
And the Co-op can find that money in their monthly cashflow that comes
from leasing the housing units.

‘So say the Co-op builds 145 badly needed affordable townhouse and
apartments there. Let’s also assume that co-op members each pay $40 per
unit per month towards this land lease (some will pay nothing at all
since some will pay more in a cross subsidization plan where some units
are rented closer to market value and some are way below that). Finally
let’s stipulate that the lease is for 69 years (we’ll ignore for now the
30 year renewal option they might get) and that there is no inflation
clause in the land lease (although we do intend to put one in– the CPI
less a bit).

‘So if we do the calculation, St John’s would get more than $4.8
million over the next 69 years and still own the land at the end of the

‘Wow, that’s a lot better than a one time payment of $135,000,’ Jean said.

‘Exactly. And most organizations are just like regular folks– if they
have the money, they’ll spend it. So here you have a renewal spigot of
cash and an asset that will only increase in value– land,’ I said.

‘So basically you are recommending that St John’s and the NCC behave more like the Catholic Church?’

‘Well, I’m just talking about how they deal with their land
portfolio. But the Church of St Peter has a planning cycle that
stretches over two millennia and by leasing their land rather than
selling it, they can continue where other institutions might falter and
fade away. The largest rentier in England is the House of Windsor (i.e.,
the Queen). It’s her land interests and the cash they bring her (it
used to be tax free before Betty voluntarily and foolishly (at least
from the point of view of continuity) gave that up) that, to a great
degree, account for the longevity of their House. So let’s look at the
NCC’s mandate the same way, OK?’

‘Bruce, you’ve got a deal!’

Prof Bruce
Dr. Bruce M. Firestone, B.Eng. (Civil), M.Eng.-Sci., PhD.

“Making Each Day Count”

* You can read Planning at Macro and Micro Scales here: https://www.eqjournal.org/?p=456.

** This article should be read in conjunction with:
Why Scotiabank Place Is Where It Is (Part 2): https://www.eqjournal.org/?p=441 and
Why Scotiabank Place is Where it Is: https://www.eqjournal.org/?p=261.

Note: There are many other ‘what if’ questions that could have been asked. A couple that occur to me include:

1. What if Liberal Premier David Peterson had never called that
Ontario election in 1990 two and a half years early that led to NDP
leader Bob Rae becoming Premier?

2. What if Premier Bob Rae hadn’t reneged on the Province’s three
promises to: a) come to Palm Beach to campaign for a team, b) to build
the Palladium Interchange on the 417 while private money paid for the
team and the new building but not public infrastructure and c) to fast
track zoning approvals for the Palladium lands (instead of suing us and
taking the matter before the OMB, Ontario Municipal Board)?

But Graeme missed the biggest ‘What If’ question in the Sens short
history, the mother of them all. I didn’t tell him what it is because
it’s a secret. But check back later, maybe I’ll share it with you after

OK, I’m back (it’s a few days later). Some other what-ifs:

3. What if Scotty Bowman who was then living in Buffalo and out of
the National League had accepted our offer to become the Sens first ever

4. What if the NHL had approved getting rid of the two line offside
rule when we first suggested it in 1993! After Randy Sexton took me to
see a US College hockey game at St Lawrence College in upstate New York,
I thought that we could make the ice ‘bigger’ at the NHL level without
actually increasing the ice surface (or decreasing valuable seating.)

I likened a defenceman coming out from behind his own net to hit a
forward at the opposition’s blueline as hockey’s equivalent to the long
bomb in football– not completed all that often but exciting as heck for
fans. It would also prevent immobile, hulking defencemen from clogging
up the ice.

I mean if we’d never changed the rules, there would still be a rover
playing at the National League level. With skaters getting bigger and
faster, it would make the game a kludge-fest. I felt that the NHL could
learn from the NFL who change their rules as often as they need to not
only because players are getting better but also because coaches are so
good at adapting that they can devise systems that are practically

Nevertheless, we only got six votes in favour. Most members of the
BOG (Board of Governors) voted against on the advice of their GMs. It
would take a lock-out and another ‘generation’ would pass before the
League would take this and other steps to bring the game into a new era.

5. But the biggest ‘what if’ of them all? What if Prof Bruce had
accepted Ogden’s Doug Logan’s offer to relocate the franchise to
Anaheim? Doug and I were on the witness stand together in the summer of

We were being cross examined by the ‘Perry Mason’ of OMB lawyers, Tom
Lederer, who was a Toronto-based gunslinger hired by NDP Bob Rae’s
government to derail the Sens by opposing the construction of the
Palladium in Kanata. Their vain hope was that somehow, by nixing the
Sens, the franchise would miraculously reappear in Hamilton’s Copps
Colisuem where the NDP had more political support than Ottawa.

On the 2nd day, Doug got PO’d by the line of questioning being taken
by Lederer and during one break offered on behalf of then Ogden
President and CEO, Richard Ablon, a $20 million leasing inducement to
relocate the Sens to Orange County to play in the then nearing
completion arena there.

They had no prime tenant there and viewed the ridiculous reaction to
the franchise award in Ontario (Hall of Famer Phil Esposito who was
fronting the Tampa Bay Lightning franchise told me about the
congratulatory call he received from the Governor of the State of
Florida for bringing a NHL team there while we got a lawsuit from our
Premier) as reason enough to blow town.

I said: “Doug, we didn’t bring back the Senators to play in
California” and the hearing, which we eventually won, endured for 13

A year and a half later, I was on the NHL’s expansion committee when
the CEO of the Disney Company, Mike Eisner, came in the room wearing a
Goofy hockey jersey– the NHL’s Mighty Ducks of Anaheim (now just the
Ducks) were born a short while later.

If we had accepted Ogden’s offer there would have been: no Ducks/no
Sens/no Disney involvement with the NHL/no Palladium/no Kanata West
Concept Plan/no mini boom in Kanata (for example, Wal-Mart told
constructor PCL to pull their building permit but not begin construction
of their store at Kanata Centrum until the Palladium itself got
going)/no boom in VC funding of tech (a VC told me they only like to
invest in Tier 1 cities/how do they know what cities are Tier 1/they let
major league sports do that for them).

What if…

Postscript: comment by Paul Kitchen, Hockey Historian, November 2011.

Hey Bruce—what a great piece of future-think. When SBP is ready for
demolition at the end if its economic life maybe the Flats will still be
available! There will be lots of room there, judging by the NCC’s
current pace.

I have a soft spot for the Flats. I can tell you about every street
and every backyard there. I was a garbage man for the City and in those
days (when service was service) we hauled cans from backyards and took
them in again.

Broad Street, Duke, Lett, Ottawa. Our crew of four would stop at a
greasy spoon on Duke on our morning break. We sat in a row on stools
along the counter. I was the rookie on the crew. Everyone would order
the same: ” Pepsi and a hotdog, please.”

Waiting for the truck to return from the dump, I would sit on the
sidewalk, probably Lett Street. A woman would come out of her house with
a cup of water for me. The people there were nice and they treated our
crew with respect.

Charlie was our top loader. He was portly and dressed in overalls and
always had a battered fedora. We tossed the cans up to him and he would
empty them so that a good heap would be piled up before we threw the
tarpaulin over the load and battened it down.

One day on Duke Street, a funeral procession was going by. Up top of
the load, Charlie removed his fedora and stood at attention. We all
followed his example, ramrod stiff.

There was an LCBO on Albert Street. D’Arcy, the driver, would buy
cheep wine there. When the truck went down into Bradings Hole, where
Library and Archives now stands, we would sit on the grassy slope and
drink the cheepo stuff. Weren’t those the days?

Best regards,


Postscript 2: comment by Jim McAuley, November 2011

Hi  Bruce,

What a wonderful piece.  If only!

I have a few reminisces about The Flats.  My Dad was Alderman for
Dalhousie Ward from 1948 to 1968.  The ward included The Flats.  I
remember as a young boy going into corner stores to make sure my Dad’s
election signs were not covered up by others during election campaigns.

Another memory.  

It was a Saturday afternoon.  I was at the Grads Pool Room on
Somerset at Rochester Street.  A bunch of the guys decided we should go
to Ottawa House on the Hull (Quebec) side.  We all piled into infamous
Woody Latimer’s car.  

At the edge of the Flats was a Supertest service station.  Woody
pulled up to the pumps and said: “Fill er up.”  The attendant did so.  
Woody handed him $2.  The guys says: “You asked me to fill it up.”  
Woody says, “No.  I asked for $2.”  Woody put the pedal to the metal and
we took off for an afternoon at the Ottawa House.    


     Prof Bruce @ 11:37 am

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         Real Estate Investing Made Simple        

   Posted on
       Saturday 19 November 2011  

I met with a couple in their early 40s last week and they
asked me to lay out a program for them so that in addition to building
their portfolio of financial assets, they could create a real estate
portfolio as well. They agreed that the latter would not include a ‘flip this house/as-seen-on-TV’ approach–they would take a longer view.

Simple real estate investing is based on four elements, I told them:

1. Buy a home (townhome or condo) as your principal residence and pay off your mortgage.

2. Buy some residential rental property with 5% down.

3. Buy some commercial rental property with 25% down.

4. Buy some land with 50% down.

Own Your Own Home

They already own their own home on which, in Canada, no capital gains
taxes are levied when they sell at a profit so this is a good start.
Next, I want them to pay off their mortgage because this will create for
them ‘unearned rent’ which is also tax free.

Unearned rent is a British term and is a bit difficult to understand
but, nevertheless, very real. Let’s say you own a $300,000 principal
residence and you think: ‘Ah ha, if we move out and rent it, we’ll earn
extra income.’ This is a bad idea.

Say, you do move out and rent it for $2,000 per mth. Your income goes
up by $24,000 per year but if you are in a 40% tax bracket, you only
net $14,400 (I am simplifying calculations here) but wait! You have to
live somewhere. So you go out and rent something just as nice as the
principal home you just leased out which, lo and behold, costs you
$2,000 per month (in non tax deductible) rent. So you are paying $24,000
per year in after tax rent and receiving just $14,400 in rent (also
after tax) which means you are $9,600 worse off than if you had
just stayed in your original home. This is the ‘rent’ that you collect
from yourself (aka, unearned rent) by just staying in your own home in
the first place!

I realize that it looks kinda fishy but it is very real. You are, in fact, collecting an extra $9,600 in untaxed income* every year
you live in your own home once your mortgage is paid off. Don’t believe
me? I have lotsa clients in their 40s, 50s, 60s, 70s and older who,
after paying off their mortgages (lucky them), suddenly ‘feel’ richer. I
explain that they really are.

(* Governments in Australia, the UK and Switzerland have at one time
or another thought about taxing this unearned rent but civil unrest has
prevented them from doing it so far or, where they actually did it, to
repeal the laws soon after.)

Buy Some Residential Rentals

I am not actually that keen on residential rentals. The cap rates are
often bad, the Residential Tenancy Act (RTA) of Ontario makes it harder
to get rid of horrible tenants and you generally have to re-lease the
place and make it move-in ready once per year which costs you money in
terms of maintenance and lost rent due to vacancy. But it forms part of
your portfolio because, if I didn’t include it, my clients would do it
anyway and just not tell me so I might as well give them a few pointers
so they can avoid the worst pitfalls.

So here are some:

a) Get a property manager who carefully vets tenants. You are far
better off to leave the place vacant than to rent to a bad tenant. If
you do have a poor tenant, an experienced property manger will know how
to navigate the RTA process to evict them.

b) Don’t ever buy a property that doesn’t cashflow. The idea that you
can make up for monthly cashflow deficiencies by capital appreciation
is flawed. It will crater your IRR, Internal rate of Return.

c) Buy low/sell high. You make money in real estate when you buy not
when you sell. So if you get in a competitive situation and get carried
away and pay too much for that cool triplex or duplex, you’re sunk.

d) Try to use all the leverage you can– financial institutions in
Canada will still lend to people with good credit (i.e., good Beacon
Scores) with just 5% down. So rather than buy one res unit with 25%
down, buy five of the suckers with 5% down on each.

e) If you own five units and one becomes vacant, your vacancy rate
has jumped from 0 to 20% but if you only own one unit and it becomes
vacant, your vacancy rate has leaped from 0 to 100% which is bad.

f) By using lotsa leverage, you actually will have way more cashflow
and way more forced savings and way more wealth effect provided you live
in a stable economic environment (like, say, Ottawa and not Arizona,
Nevada or California) and provided you followed my earlier rule–buy low.

g) You or your property manager should visit each of your rentals,
once per month. Tell your tenants in advance (some jurisdictions require
you do this in writing) that you will visit once per month to collect
rent personally, to inspect the unit every time you visit and to fix any
problems immediately. Don’t be lazy, do it. If prospective tenants
don’t want this, no problem. They can rent somewhere else. Friends of
mine owned a 5-bedroom home near Algonquin College in Ottawa that they
rented out to students for $500 per room per month. They visited every
month bringing dinner with them (kids are always hungry). They developed
nice relationships with their tenants, monitored the condition of the
place, never lost a single month’s room rent and even helped them with
homework and personal problems when warranted.

h) When I owned a rental property in a tough neighborhood, I co-opted
the locals including teens by hosting a FREE BBQ and blocko (short for
block party) every summer. I gave all the kids (some of whom were gang
members no doubt) free burgers and flying discs and told them if they
needed anything to let me know. In the years I owned the place, I had
zero graffiti and vandalism– local guys looked out for it for sure. The
few hundred bucks it cost was way less expensive than higher insurance
premiums. (Note: you can often get a permit to close a street for a
blocko from your local municipality. They’re usually free. You can
invite everyone in the area by the simple expedient of a flyer drop (in
some neighborhoods like the one we were in, websites/mobile
apps/email/facebook/twitter/linkedin/online invitations aren’t gonna
work). Free food and beverage with some music and games (we liked
Ultimate played on the street and Paddle Tennis) will bring people out
for sure. But don’t serve any alcohol– this leads to fights and opens
you up to huge liability.)  

i) You can add an in-home residential apartment to your principal
residence. This has the useful advantage that you don’t have to travel
very far to keep an eye on the place plus part of your mortgage (if you
still have one) becomes tax deductible since you are earning income from
your place. In Canada, your principal residence is still capital gains
tax exempt as long as the apartment is contained within the original
footprint of the building, i.e., in the basement or attic say. There has
been government support for the cost of doing this in the form of CMHC
grants/loans (up to $25,000) but most of the in-home apartments that
I’ve seen added over the years make financial sense even without soft
loans or grants. Also, many cities and towns (e.g., Ottawa) have
legalized these. Ottawa’s zoning by-laws were relaxed last decade to
permit in-home apartments pretty much anywhere except for the Village of
Rockcliffe Park where Ottawa’s upper crust live. We developed some
innovative plans for new homes built with ready-made in-law (separate)
suites. I lived in one of those when I was at UCSC many years ago and
one of the granny flat plans we developed is a riff on that cool little
place, located I still remember, at 1011 and ½ Seabright Avenue in
Santa Cruz, Calif. If you would like to see some of our work, let me
know via @ProfBruce or @Quantum_Entity.

j) If you build or buy a duplex/triplex/multiplex, make sure you
sound, smell and fire separate your units and they comply with building
code, health code and fire and safety code. If you are purchasing an
existing building, make sure you have a building inspector that knows
these codes and can provide you with advice and costs estimates to make
your units legal. If you discover any surprises, it’s best to find these
out during your conditional period when you can either abandon the deal
or ask for a price abatement from the Seller. Fire separation is
improved by adding an extra layer of drywall. If you add it so that
sheet boundaries do not line up, you will improve not only fire
protection, you will limit sound transmission and smells between units.
There are lots of simple, inexpensive things that you can do that not
only improve safety for your tenants, they make their lives more
enjoyable. By not venting one unit into another one, for example,
automatically reduced sound, smell and fire issues…

k) Res real estate returns come in three pieces: monthly cashflow
(aka cash on cash return) from rental and other income (like parking
revenues) exceeding expenses, forced savings (every month you pay your
mortgage, actually, where your tenant pays your mortgage, you end up
paying a bit of the principal off) and wealth effect (which comes from
capital appreciation– i.e, when you sell for more than you paid).

Almost no one I know can save their way to wealth but many can invest
their way there. (See my fictional story about an imaginary world
called Grassel made up of Grasshoppers, Squirrels and Ants plus Mensa
Ants: https://www.eqjournal.org/?p=2760.)

My pals who owned the home near AC made about $400 per month in free
cashflow in the three years they owned their place. (The students all
accepted 12 month leases even if they were from away so they would be
sure to have place to live when they came back each Fall.)

Their mortgage was paid down by $18,000 during that period (remember,
it’s really the students paying off their mortgage for them) and they
made a capital gain (the wealth effect) of about $38,000 on the sale
after all expenses were paid (eg., legal and REALTOR fees on completion
of the transaction).

They originally financed 85% of the purchase price, so the cash they put down was around $40k of their own money.

Thus over three years, they made $14,400 from their monthly free
cashflow (cash on cash), $18,000 from paydown of their mortgage and
$38,000 from capital appreciation. This represents a tidy $70,400
(before tax) profit/gain in three years on an initial investment of
$40,000. Try to match that by investing the same $40,000 in the stock
market (at the same level of risk) or by buying GICs or T-Bills which
pay 0.5% to 2.5% p.a. There’s just no comparison.

But what’s also interesting is that they don’t have $70,400 at the
end of three years– they have $70,400 (assuming they did not spend their
free monthly cashflow) plus their original equity of $40,000. So they
actually have $110,400 of cash in hand (less whatever taxes they owe on
the money they made– part of which are incomes taxes and part of which
are presumably less onerous capital gains taxes.)

Now let’s assume through some kinda modern miracle, my friends managed to save
the same amount during those three years that they made by investing in
their rental property. They woulda saved it by deferring gratification
except here’s the thing– people don’t like deferring gratification so they woulda probably spent
the dough. I mean most people who have a few bucks saved can’t resist
the opportunity to buy a new iPad 7 or iPhone 40 or new hybrid car or
take a neat vacation to the DR or whatever so even good savers are
generally broke from time to time. If you read my Grassel story, you’ll
see that the Mensa Ants, who are really good investors, own just about
everything while savers have much less and Grasshoppers (who spend
everything they make) have zip, de nada.

Buy Some Commercial Property

Most small scale real estate investors think they can’t buy
commercial. ‘We don’t understand commercial,’ they’ll say. ‘It’s too big
for us.’ ‘That’s just for Banks, Pen Funds, REITs, Publicly Traded
Behemoths and Insurance Companies.’

Nothing could be further from the truth. There is lotsa commercial real estate dominated by the little guy including:

a) mini storage,
b) small retail plazas,
c) office and industrial condos,
d) Travel Apartments,
e) land development.

Over the last three decades, we’ve built and owned all of these!

Here’s a 10,000 sf plaza we built in Dunrobin, ON:

Dunrobin Village Plaza

We also developed Blue Heron Storage in Kanata, a suburb of Ottawa,  
Presidential Executive Travel Apartments (in Bells Corners and at
Holland Cross), office and industrial condos on Auriga Drive and
Thruston Drive in Ottawa and we did numerous land development projects
including Robertson Mews and Briarbrook.

Here is a photo of one of the storage buidlings we built, owned and
managed under the ‘Blue Heron Storage’ banner (whose tag line was ‘Outta Site‘):

Storage Building in Kanata

People are right about one thing– you do have to stay outta the way
of the big guys cuz they can kill you. The COC (Cost of Capital) for a
Pen Fund or Insurance Co. today is about 1.5% while for most small
investors in commercial it is anywhere from 5% to as much as 12% or even
15%. If you give your competitors that kind of advantage, they’ll kill
you. So small investors cannot invest in mega shopping malls or major
office buildings even if they had the equity to do it.

But don’t tell me you can’t buy a $229,000 industrial condo to diversify your r.e. portfolio, you certainly can.

Here’s an elevation of an industrial condo that one of my sons,
Matthew Firestone, and his partner, Awbar Myint, are developing in the
east end of Ottawa for occupancy in November or December 2012. Architect
is Richard Chmiel. Builder is Taplen Construction.

What you’ll find in commercial is:

a) There is no RTA so if a Tenant acts up, you distrain them. Poof, they’re gone in no time and you re-rent the place.

b) Go for three to five year leases so you don’t have to re-rent and fix up the place every year.

c) Make sure you have a good team around you– a deal making lawyer
(as opposed to a deal killing one), an accountant who can do more than
count (i.e., s/he can help you structure your affairs to be tax
efficient and creditor proof), a REALTOR who actually knows commercial
and a Mortgage Broker (this is essential for res r.e. as well). You can
do your own property management here if you care to since it tends to be
far less intensive than the res kind.

d) Cap rates in commercial tend to be better (less competition from
know-nothing, overly eager, dumb ‘civilian’ buyers of res r.e. who tend
to buy high/sell low).


In addition to building,owning and managing some mini storage units
for our own account, I am or have been an adviser to a few including
Cosmic Storage, Public Storage, Carleton Place Mini Storage and others.
Recently, one of them was gonna construct a car/boat/RV storage barn on
his site. I looked at the economics with him which were not bad but not
great either.

Basically, he was gonna build an unheated garage 50 feet by 80 feet
which could hold at capacity 20 vehicles of assorted sizes–
cars/boats/RVs. The building has one large door (12 feet wide by 14 feet
high) at each end. Ceiling height is a clear 18 feet. The vehicles are
packed in like sardines leaving just enough room for a skinny driver to
exit the last column of vehicles. Once they are parked, they are there
for the season (six months from November to April).

People pay depending on size– cars are $55 per mth, boats are $65 and RVs are $85. They have to buy and stay the season.

Off season revenues are less– far fewer people park indoors in Canada
during the summer. So let’s assume, he gets 55% of his winter season
revenues during the summer. (This is being generous.)

His cost to construct including hard, soft, financing, building
permit costs as well as development charges for his 4,000 sq ft building
is $185,500 or $46.38 per sq ft. I have also included the value of the
land in this figure. His revenues for the year less operating costs and
property taxes are $9,672. This is his NOI, Net Operating Income.

Cap rates (aka capitalization rates) are calculated by dividing NOI
by SP, Selling Price. Let’s assume his SP is his cost to construct plus
the value of his land which is $185,500.

Thus, Cap Rate = $9,672/$185,500 or 5.2%.

Cap rates are notional, rules of thumb widely used in the real estate
industry basically because they are easy to calculate. But they do not
take into account anything other than cash on cash returns missing out
on forced savings and the wealth effect.

So to really calculate the ROI, Return on Investment, you have to use IRR, Internal rate of Return.

For this example, his IRR turns out to be 9.6% p.a. It’s higher than
his cap rate which is what you would expect once you factor in that over
the first five years of a 25 year mortgage, his tenants have paid off
($17,078.62) of his principal for him (all my calculations are shown
below in ADDENDUM 1. you can also download my spreadsheets in .xls
format from our server so you can fool around with them on your own. The
links are also included below.) In addition, I have assumed that the
value of his property increases by 2% p.a. which is conservative for
Ottawa where property values have tended to increase fairly secularly
over many decades at anywhere from 2 to 3.5% p.a. in almost all sectors.

Much of the increase in ROI from cap rate (5.2%) to IRR (9.6%) comes
from the increase in value of his property. Remember my advice above– I
am not comfortable relying on ever increasing selling prices to bail you
out of a poor cash-on-cash return.

So whether you rely on cap rates or go to the extra trouble of
calculating IRRs (which you should do), I would not advise you to
proceed with this project as it is proposed. The returns are too skinny–
you can test the sensitivity of the results to say changes in
construction costs or increases in vacancy rates. That’s easy to do
since all the cells in my spreadsheets are linked. I change one thing
and, presto, Excel spits out a whole new set of answers.

So let’s see what happens when we change one variable at a time.
Let’s suppose that construction costs jump from $25 to $35 per sq ft. Now you are losing more than $2,000 per year operating this vehicle storage barn which means you are paying people so they can park their fancy cars/boats and RVs in your building. This is BAD.

Your cap rate has fallen below your cost of capital (ugh)– it’s 4.2%
while you are paying 4.5% on your mortgage. Your IRR is 6.1% which is
horrible for a private investor. Still you are being rescued by the fact
that you can presumably sell the sucker after five years to another
sucker at a price higher than you paid to build it in the first place
and you paid off some of your mortgage too.

I tried one more case– Case 3 where vacancy rates in the summer
season got to 70% (up from 45%). His cap rate drops to 4.4% and his IRR
to 6.7%. All of these cases can be downloaded from our server using the
links provided below in ADDENDUM 1.

OK, so this project is a big NO GO, right? Wrong. Let’s try it again
but this time, let’s add some differentiated value (‘pixie dust’).

We are still gonna use the barn for its intended purpose during the
winter season– storing vehicles. But in the Spring, let’s kick them all

What to do, what to do? Hmm, I know! I remembered something that
happened years ago when my wife and I were visiting Stratford, Ontario
to see a few plays. Well one Saturday morning, late in the Fall season,
we drove around the countryside. About an hour northeast of Stratford
and about the same driving time northwest of Toronto, we came over a low
ridge and, at the confluence of two undistinguished two-lane highways,
we saw several thousand cars parked in what looked like a farmer’s

We stopped. What would bring 1,000s of folks to a field at 0830 on a
Saturday? A Mennonite market garden selling produce-fresh fruits,
vegetables, canned goods, honey, maple syrup and a myriad of other
products including Mennonite furniture, wagons and handicrafts. There
were also many non Mennonite stalls although many of these appeared to
be selling nothing more than trash and trinkets.

Being a garrulous type of person, I stopped people and asked why they
came and how often– the answers clearly pointed to a strong desire to
a) buy local, b) know where their food was coming from, c) buy organic,
d) support the Mennonites, e) satisfy a quest for adventure. Now this
occurred in the 1990s long before it became fashionable to do anything
like this.

I’ve been carrying the idea around with me ever since and I suggested
it to my friends at Cosmic Storage– set up a flea market in their barn
building each summer. This is the kinda thing that suits the owners of a
place with a name like ‘Cosmic’ Storage. They’ve got a marketing
program that says each customer receives FREE an organic garden plot the
exact same size as any storage unit they rent. Rented a 10×20? You
qualify for a garden plot of the same size.

If you look at my friend’s logo, you kinda get the right idea about the place, viz:

Being Cosmic

So let’s turn the place into a ‘Whole Earth’ farmer’s market every
summer. But what does that do to the economics of the new build? A Whole
Lot, it turns out.

They’ll have room for about 26, 10×10 stalls in their 4,000 sq ft
barn. The season is May to October which means 26 weekends. The place’ll
be open Saturday and Sunday during the shoulder seasons and probably
Thursday to Sunday in high season. I assumed that they would get $185
per stall per weekend (or week) and have a vacancy rate of 30%. What
does this to to NOI, Cap Rate and IRR? Magic!

NOI jumps from $9,672 per annum to $74,861. Cap Rate goes from to
5.2% to 40.4% and IRR from 9.6% p.a. to a whopping 142.1% p.a. Wow.

Now that’s a REAL business.

Also, the number of years it takes to recover the cost of the new
build (including its land cost) drops from an ugly 19.2 years to just


I’ve always liked the Executive Travel Apartment biz. We ran PETA for
many years– Presidential Executive Travel Apartments. We owned 16
units– 8 at Holland Cross and 8 at Robertson Mews. We rented them out
through Facilities Managers, Recruiters and HR working at (mostly) local
tech companies. They would bring in new hires for assignments ranging
from 1 or 2 months to indefinite and rather than putting them up (often
with family in tow) at local hotels at a cost of $300+ per day, they
would rent from PETA which had 1, 2 and 3 bedroom fully furnished suites
ready-to-go at $100 per day.

Later on, we used them for NHL players who were traded to Ottawa.
It’s a lot nicer to live in a Travel Apartment for a few months than a
hotel room.

The units all had lock boxes (which could be reprogrammed after a
guest left) on them so people could arrive at all hours of the night and
just let themselves in. We provided weekly maid service (at an extra
charge). By adding furniture and the basics (like soap!) plus having
cable TV and phone service on (today, you would obviously add Internet),
we jumped the rents we could charge for the units from $1,200 per month
to $3,000 per month.

Damage to the units was low, collections were a breeze and it was a mostly fun biz to be in.

And, oh by the way, PETA was not subject to the RTA.

The only downside that we experienced was that vacancies tended to be
higher (in the range of 6 to 8%) than typical res rentals (1 to 3% in
Ottawa). When you are renting for short periods like a month to three
months instead of a more typical one year term, you are bound to get
higher vacancies if only because as one person or family leaves say
mid-month, the next group may not come in until the beginning of the
following month.

(A former student of mine got into this biz a few years ago and she
discovered a new way to finance her investment that I thought was very
clever. You can read about her in the ADDENDUM at the end of this

Buy Some Land

My two boys own some land in Kanata that they use as a parking lot.
But it doesn’t make much money. It’s just a place holder– an interim

It forms part of your holdings cuz they ain’t making any more of it.
So this is the one area where it may be OK to lose money every month.

Here’s an example. Clients of ours bought a residential building lot
in rural Kanata three and a half years ago for $70k. They put 50% down
and got a bank loan for the balance. So every month, they HAD to pay
their Bank, right? (Banks have a nasty habit of insisting on this

So every month, they are paying off a bit of their mortgage– remember this is a form of forced savings.

Bill and Cathy (not their real names) paid off about 2/3 of their
mortgage in the last three years. Where did that money go? To their
Bank? Not really, it went into the land!

Thank goodness it didn’t go into their savings account cuz we know
what woulda happened to it if it did– they’d a spent it on stuff. Nope,
it’s in the land.

We just sold their lot for $135k which means after paying REALTOR and
legal fees when it closes in January 2012, they’ll have around $127k
less the $12k they still owe on their mortgage. So they’ll have about
$115k in cash on hand in the early part of January from a $35k
investment they made three years ago. Not too shabby.

There’s just no way they coulda saved $115,000 in three years.

I’ll tell you another story. A friend of mine, an elder now in his
late 80s wanted to start a pharma biz way back in the day. But like most
(all!) entrepreneurs, he had NO money. So he went to the ‘real estate
store’ (that’s what he calls it). He went to a bunch of Brokerages and
befriended some Agents.

He asked them to show him their worst properties, the most
neglected, the boggiest, wettest pieces of garbage they had in their
inventory (i.e., listed for sale). Not, you must agree, your typical
r.e. client ‘ask’ is it?

Over the next three years, he bought 3,000 acres of land in and
around Ottawa (for as little as 150 bucks an acre) getting as much as
90% STB (Seller Take Back) mortgages from the owners (who were super
keen to dump these unwanted properties that they’d do almost anything)
so he only had to come up with 10% which he borrowed from his brother, a
well-to-do veterinarian and a CDN war hero to boot.

Three years later, at age 32, he went into his Bank and got himself a
$500,000 LOC (Line of Credit). ‘Collateral?’ they asked him. ‘Sure!
Lots! I’m a big shooter! I’m an enormous landowner!’

He even told them he had an interim use– he leased out some of his
lands to farmers and ranchers (true) and even owned some cattle and
sheep himself.

Now the latter wasn’t entirely true* so when the Bank Manager asked to see some of his land and
some of his herd, he was stumped but only for a minute or two. He
subsequently trucked in a bunch of cattle and sheep (borrowed them). You
gotta laugh– ranchers traditionally don’t pasture sheep and cattle
together but the city slicker of a Bank Manager didn’t know that. He was
impressed by the young man, his herd and his extensive landholdings so
he approved the loan.

(* Please don’t do this. It’s OK to tell the smart truth but never a lie).

His pharma distribution biz did exceptionally well and he sold it decades later and retired to the life of a country gentleman.

Now there is an epilogue to this story that is worth telling.
Whatever happened to those useless 3,000 acres? The City expanded and
they became worth millions more, some of which I subsequently sold for

Prof Bruce

Warning: shameless self-promotion follows–

ps. While I was thinking about writing this last story, we decided to
build a new website (naturally to be called TheLandStore.org). We also
grabbed the Twitter handle that goes with it (@TheLandStore) which,
these days, you also need to do. The former is your inventory, the
latter is your newsfeed. Facebook accepts the Twitter API so when you
tweet out something using, say, @TheLandStore, it’ll also appear in your
newsfeed on FB and FB pages and plenty of other places too (including
this blog for example) if you know how to really use Twitter. In this
way, you can create timely (hopefully interesting) content for multiple
sites from ONE platform. (You can learn more about that from: Twitter
Nation, https://www.eqjournal.org/?p=2080.)

We haven’t got the full biz model figured out for TheLandStore.org
yet but you can be sure it’ll be a riff on what Mr. ‘Pharma’ did.

pps. This article is written for non technical readers. For help with
analytic tools and to gain much more depth, here are some additional
readings for you (if you get through all of these, I’ll give you your
own PhD, ‘Piled Higher and Deeper’):

Why Invest in Real Estate: https://www.eqjournalblog.com/?p=434

IRR, Internal Rate of Return: https://www.eqjournal.org/?p=2462

Value Proposition of a Commercial Realtor: https://www.eqjournal.org/?p=255

Why You Need a Professional Commercial REALTOR: https://www.eqjournal.org/?p=80

An Alternative to Multi Res Real Estate Investing: https://www.eqjournal.org/?p=276

Six Reasons to Call Your Independent Mortgage Agent: https://www.eqjournal.org/?p=397

Why Use Mortgage Brokers? https://www.eqjournal.org/?p=34

Why Real Estate is a Unique Asset Class: https://www.eqjournal.org/?p=1350

If I were King (or Queen) of Exxon, I would… https://www.eqjournal.org/?p=1311

What is the Biggest Industry in the World? https://www.eqjournal.org/?p=47

Highest and Best Use: https://www.eqjournal.org/?p=2155

Advanced Spreadsheet Use—For the Product Manager: https://www.eqjournal.org/?p=1714

Revenue Sources for Commercial Landlords: https://www.eqjournal.org/?p=1106

Build Leverage into your Business Models: https://www.eqjournal.org/?p=2469

What You Need to Think about Before You Purchase a Home: https://www.eqjournal.org/?p=984

Creditor Proofing: https://www.eqjournal.org/?p=526

Calculate the Real Rate of Return: https://www.eqjournal.org/?p=419

Sub-Prime Blame: https://www.eqjournal.org/?p=169

Student Buys Her Own Home with Just $4,500: https://www.eqjournal.org/?p=1017

What You Need to Think about Before You Purchase a Home: https://www.eqjournal.org/?p=984

Buyer Agency: https://www.eqjournal.org/?p=257

Value Proposition for a Residential REALTOR: https://www.eqjournal.org/?p=73

Urban versus Suburban: https://www.eqjournal.org/?p=467

Truth/Smart Truth: https://www.eqjournal.org/?p=51

Truth/Smart Truth and Charlie Crist, Governor of Florida: https://www.eqjournal.org/?p=76

Engineering Ethics: https://www.eqjournal.org/?p=755

It’s How You Say It! https://www.eqjournal.org/?p=122


Spreadsheets for Calculating Cap Rates and IRRs for Vehicle Storage Buildings

You can see the numbers I used for the base case below but you can
also download it and the spreadsheets for the other variations of the
base case from our server (in .xls format) using these links:





Nov. 20, 2011 Car/Boat/RV Storage Revisted
Base Case

Building 50 ft 80 ft 4000 sq ft
Vehicle Storage 200 sq ft/vehicle
Number Vehicles 20
RVs $85 per mth 5 $425
Boats $65 per mth 5 $325
Cars $55 per mth 10 $550
Revenues $1,300 per mth
Season November to April 6 mths
Revenues $7,800 per season
Off Season Revenues May to October 55% $4,290
Total Revenues $12,090 per yr
Operating Costs & Property Taxes 20% ($2,418)
NOI (Net Operating Income) $9,672 per yr

Cost to Build (Unheated)

Construction $25 per sq ft $100,000
Soft Costs 11% $11,000
Financing 10% $2,500 3 mths
Bldg Permit $10.50 per sq ft $42,000.00
Land $30,000.00
Total Cost $185,500 $46.38 19.2 yrs to recover building cost

Cap Rate (NOI/SP) 5.2% p.a.

IRR 25% equity

0 ($46,375)
1 $289.55
2 $289.55
3 $289.55
4 $289.55
5 $71,785.77

IRR 9.6% p.a.

SP (Selling Price) 2.00% increase in value each year
SP (Selling Price) $204,806.99 Year 5
Less REALTOR and Legal Fees ($11,264.38) 5.50%
Net SP $193,542.60

Mortgage $139,125.00 4.5% 25 yrs
Mortgage ($9,382.45) per yr

Principal $139,125.00
Principal Repaid
1 ($3,121.83)
2 ($3,262.31)
3 ($3,409.12)
4 ($3,562.53)
5 ($3,722.84)
Total Principal Repaid ($17,078.62)
Mortgage Balance $122,046.38


Executive Travel Apartments—Reducing your Capital Requirements

A student recently introduced me a new form of Bootstrap Capital, or
at least, one I hadn’t considered before. It seems obvious to me now but
I think it takes some creativity to apply it to any business model.

She is in the Executive Travel Apartment (ETA) business—those are
extended stay suites that executives use and many prefer to a long stay
in a hotel room.

It is a very capital intensive business: she needs equity to buy her
units, renovate them and furnish them. She can reduce her capital needs
by mortgaging the units using high LTV (Loan to Value) ratios and
leasing (or leasing to own) the furniture she needs for each unit. Still
her equity requirements are non-trivial.

She came up with a very inventive method of expanding her budding
empire without having to bring in a partner or sell her soul to finance

A form of bootstrapping is to lower the level of capital you require in the first place.

She can charge about $3,500 to $4,500 per month for her ETAs, about
$120 to $150 per night for a one, two or three bedroom unit which is
fully furnished, the Internet and TV work, the VOiP phones are on and
there is a starter kit (soap, salt and pepper, bread, milk, etc.) on
hand. Just let yourself in using the lockbox combination, and relax,
you’re home.

Because these are ETAs, she comes under the Innkeepers Act and not
the RTA (Residential Tenancy Act) so she is much less likely to have
trouble with her tenants than a typical residential tenancy where
delinquency is high, collections are tough and getting rid of them
(evicting them) is even tougher.

A typical unit can cost her $200,000 or more to buy (with anywhere
from 5% to 25% equity required), $20,000 to renovate and another $10k or
so to furnish. So each unit can easily consume $70 or $80k of equity.
Other ETA operators solve this problem by selling the units to investors
and keeping management in their hands plus a share of ownership.

She came up with another way—what if she went to residential
landlords and told them: “I will lease some (or all) of your units for
repackaging as ETAs.” From a Landlord’s POV, that takes him or her out
of the purview of the RTA and he or she now only has to manage one
tenant (the ETA operator). The ETA operator worries about furnishing the
units, renting them out, managing and maintaining them, etc.

In the buy scenario described above, she will need $80,000 in equity
per door. If she rents each unit out for $4,000 per month and has a
mortgage at 6% with a 20 year amortization period, she will be left with
a NOI (Net Operating Income) after deducting a vacancy allowance,
marketing costs, admin and contingencies of about $1,077 per unit per

If she sublets units from a cooperative Landlord at $1,400 monthly,
she is left with less—just $766.49 per month per unit. This is because
she is paying less on her mortgage than she is in rent to the Landlord.

But in the first case, she needs $80k of equity; in the second case, she only needs $30k.

Now her simple ROE (Return on Equity) is 16.2% p.a. when she buys her
own units versus a whopping 30.7% when she rents them instead. (See the
spreadsheet below.)

Now this model ignores the wealth effect of owning your own units
(the annual paydown of your mortgage principal, in effect, by your
tenants) and real estate inflation (that goes solely to the equity

If I took those factors into account, the ROEs would probably be a
lot closer*. But that doesn’t matter if she can’t afford to expand her
business because the equity demands of the first model are too high for
her to handle.

So the obvious choice is to do both—own some units and sublet some.
As her cashflow improves, she should probably be buying relatively more
of her units.

But at least initially, from her POV, her capital requirements have
dropped from the $70 to $80k per door range to $10 to $30k per door and
her ability to grow the business faster has just taken a quantum leap

Another client recently showed me how he could acquire inventory for
his retail store at a negative cost to him—other retailers are paying
him to feature their products and services in his outlet store. They pay
him a monthly fee for this plus they give him a percentage of each of
their products or services that he sells for them on consignment.

We are now busy applying this philosophy to other types of businesses with great effect.

* If we take into account the wealth effect and the impact of real
estate inflation, the two rates of return (this time measured using the
IRR instead of the simple ROE ratio) are, in fact, closer. In the ‘buy’
scenario, the return increases from 16.2% p.a. to 22.8% while for the
‘sub let’ scenario, the return remains that same at 30.7%.

The latter doesn’t change because, in this model, I have assumed that
when she sells the business at the end of year 7 (an arbitrary time
line, I might add), she realizes exactly what she put in initially for
renovations and furnishings. Of course, in reality what she gets for the
business would depend on what she and a Buyer agree to which could be
greater or less than this amount. Nevertheless, in order not to bias the
comparative analysis, it seemed reasonable to make this assumption.

You can examine the spreadsheet below or download it in .xls format
from my server at: https://www.ottawarealestatenews.ca/ETAs.xls.


Buy the Units

Cost per Unit $200,000
Equity ($50,000) 25%
Mortgage $150,000 75%
Interest 6% p.a.
Amortization 20 years
Monthly Payment ($1,089.81) to Lender
Renovations ($20,000)
Furniture ($10,000)
Interest 10% p.a.
Amortization 7 years
Monthly Payment ($513.51)
Total Cost ($1,603.32)
Monthly Rent $4,000
Marketing ($320) 8%
Vacancy ($480) 12%
Other ($240) 6%
Contingencies ($280) 7%
NOI $1,077 per month
Equity ($80,000)
ROE 16.2% per annum
0 ($80,000.00)
1 $ 12,920.15
2 $ 12,920.15
3 $ 12,920.15
4 $ 12,920.15
5 $ 12,920.15
6 $ 12,920.15
7 $ 167,186.31 $ 12,920.15 $ 124,266.15 $30,000
IRR 22.8% p.a. Assumes the business is sold
and the sale price of the biz
R.E. Inflation 2.75% equals the investment in
Selling Price $ 241,825.90 furniture and renovations.
Agency Fees ($12,091.29) 5%
Legal Fees/Closing Costs ($1,105.00)
Net $ 228,629.60
Principal Repaid
1 ($5,436.91)
2 ($5,763.13)
3 ($6,108.91)
4 ($6,475.45)
5 ($6,863.98)
6 ($7,275.81)
7 ($7,712.36)
Total Principal Repaid ($45,636.55)
Mortgage Balance Due $104,363.45
Net to Seller $ 124,266.15 on completion

SubLet the Units

Cost per Unit 0
Equity 0
Mortgage 0
Monthly Payment ($1,400) to Landlord
Renovations ($20,000)
Furniture ($10,000)
Interest 10% p.a.
Amortization 7 years
Monthly Payment ($513.51)
Total Cost ($1,913.51)
Monthly Rent $4,000
Marketing ($320) 8%
Vacancy ($480) 12%
Other ($240) 6%
Contingencies ($280) 7%
NOI $766.49 per month
Equity ($30,000)
ROE 30.7% per annum
0 ($30,000)
1 $9,197.84
2 $9,197.84
3 $9,197.84
4 $9,197.84
5 $9,197.84
6 $9,197.84
7 $39,197.84 $9,197.84 $30,000
IRR 30.7% per annum Assumes the business is sold
and the sale price of the biz
equals the investment in
E&OE. furniture and renovations.


Great read Prof Bruce. I love the fact that you are sharing all of
the details related to these real estate deals, including the
calculations used to prove the numbers. Really educational and
informative for both beginner and advanced real estate investors who
have no experience in these particular areas of real estate investment.
Thanks for sharing.  

Brent Mondoux
Chief Executive Officer, N-VisionIT Interactive

     Prof Bruce @ 7:34 am

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         S3 Growing at Exponential Rate        

   Posted on
       Wednesday 16 November 2011  

(This article originally appeared in Ottawa Business Journal, Nov. 14, 2011: https://www.obj.ca/Opinion/Bruce-Firestone-5444)

I recently interviewed tall, charismatic 30-year old Select Start
Studios’ CEO, Tariq Zaid in their cool headquarters in an old stone
building fronting onto Rideau Street in downtown Ottawa. They’ve just
remodeled the studio so that it can fit up to 25 highly-skilled,
highly-paid app developers in an open space filled with natural light,
top end workstations and a play area for any downtime they get which is
dominated by a large screen TV. They’ll soon be out of room having gone
from three employees to 19 with revenue growth over the last year of
600% on their way to $10 million in sales within two years. Employees
enjoy profit-sharing and everyone gets to keep an Apple Mac Book Pro
(even if they leave which few do). They have Boot Camp, Knowledge
Transfer and Hacking Days where developers can pursue their own projects
some of which get spun out of S3 into their own standalone businesses
like Adaptiv which produces mobile solutions for hospitals using the

When asked why they use the iPad, Adaptiv CEO Eric Skinner says: “Not
for the reason you might expect. The wonderful industrial design of the
device allows for easy cleaning and disinfection which, for hospitals,
is a really big deal.”

I ask Tariq what the pixie dust is in their business model and he
replies: “We take a strategic, design-oriented approach to every project
we work on for clients. We focus exclusively on the mobile space which
is the fastest growing part of the world economy, developing for both
Android and iOS which make up 90% of the market. We’ll also do work with
Windows Phone 7 and Blackberry.”

But further questioning unearths a more fundamental truth—their
corporate culture is really their key weapon. They are not afraid to
push the envelope, experiment and even fail. They tried to launch some
of their own products: first, a server technology for mobile
multi-player games; next they pivoted and released AppNotify—a product
that competed directly with Silicon Valley-based Urban Airship who
crushed them. Instead of being downcast over these failures, they used
them as learning experiences which shape their corporate culture to this
day—they now use their IP as a platform for their clients’ custom work.
Clients doubly benefit since S3 also knows what not to do which forms
part of the strategic planing they do for and with each customer.

They’ve also learned how to be better marketers in the process which
helps their clients grow faster which obviously helps S3 grow faster.
Like Shopify’s Guru Program or Apple’s Genius Bar, S3 goes one step
further —they are always thinking not only about how to help their
clients but also their clients’ clients too.

As a result, they end up being embedded in their clients’ biz
ecosystems so they become harder to dislodge or knock off and grow much
faster as well.

Their clients include well known names like Avaya, PWC, Yellow Pages
Group, Ottawa Hospital and Entrust as well as lesser known startups such
as Arrived (GetArrived.com) and Getaround. The latter is a P2P
marketplace for car sharing that won Tech Crunch Disrupt NYC. The former
is a system that sits on top of foursquare to organize soft plans—say
you think you’re going to be in Toronto next month and want to hook up
with someone who also thinks they’re going to be there around the same
time, the app will send a request/notify if you both happen to be in the
vicinity at the same time. It kind of reminds me of the Lunar
Society—that famous group of 18th Century Midlands industrialists who,
in the absence of streetlamps, could only meet when the moon was full on
a clear night.

Tariq and his team including co-founders Adam McNamara and Josh
Tessier are not afraid to try to build their own products again and
expect half their sales to come from this within two years with the
balance from custom apps for third party clients.

They are experimenting with augmented reality apps which I think will
be the next great frontier as the Internet becomes an always-on overlay
on RL, Real Life. Think about holding up your smart phone to the scene
before you and seeing an overlay of local news on the geography around
you. They are working on some apps that are beyond fantastical and plan
to announce soon of them soon.

I recommended that Tariq read Neal Stephenson’s Snow Crash– not
Neal’s best novel but nevertheless it brilliantly describes the
evolution of the Internet which Stephenson calls the Metaverse. It is
one of the most influential books in the field and is even more
remarkable for when it was written—1989 and 1990 before the Internet
became the sociological and technological phenomenon it has, beginning
with the release of browsers in the 1992-1994 period. Stephenson deals
with augmented reality in that book.

S3 plans to have a biz dev presence in LA, SV, Austin, NYC and Boston
but keep its HQ in Ottawa. When asked if they can build a great company
from a northern shelf city like Ottawa, Tariq says: “Sure. It’s a
vibrant startup community here with lots of top-tier talent that you
can’t find anywhere else. Most importantly, they’re like-minded
individuals who share a common purpose and culture—plus we’re in the
right place. The Byward Market is where this new tech community wants to

Later he adds: “We would not be where we are today without IRAP
grants and other forms of Government support which were very helpful in
terms of commercializing our first products. SR&ED tax credits are
way too valuable to us to even think about moving our HQ to the States.”

People used to be in either the hardware biz or the software biz.
Then maybe they were in the services biz. Now they might be in the
product or app business. The fact is tech boundaries are blurring and
consumers and enterprise clients appear to be benefiting.

Professor Bruce M. Firestone, Entrepreneur-in-Residence, Telfer
School of Management, University of Ottawa; Founder, Ottawa Senators;
Executive Director, Exploriem.org; Broker, Century 21 Explorer Realty.
Blog: www.eqjournal.org Twitter: www.Twitter.com/ProfBruce

     Prof Bruce @ 7:25 pm

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         Lifetime Fitness v Peak Fitness        

   Posted on
       Saturday 12 November 2011  

Building Your Personal Brand

Is there any doubt that good looking, fit people in great clothes
make more money*? Let’s think about that for a minute—what do, for
example, Brad Pitt, Will Smith and Tom Cruise have that most of the rest
of us don’t? $20 million+ per film! They are also into peak fitness.

(* I actually tried to quantify this in an earlier post: https://www.eqjournal.org/?p=92.)

Now looking good is what these guys do for a living. And they work
hard at it—carefully planned nutrition, unbelievable, peak fitness
workout programs, sufficient sleep, managed sports, weekly or daily
massage/ facials, yoga practice, taking naps, avoidance of drugs (legal
as well as illegal) and excessive alcohol as well as relief from stress
are all a big part of this formula.

They’ll have personal trainers, nutritionists, massage therapists,
hair dressers, agents, personal managers, yogis, clothiers, personal
assistants, makeup artists, schedulers, money managers, nannies,
housekeepers, pool maintenance people, gardeners, professional cooks,
housekeepers, maintenance personnel, security people, chauffeurs,
private planes, pilots and stewards and stewardesses, studio execs,
psychologists, dieticians, psychiatrists, doctors, plastic surgeons,
publicists and various hangers-on whose job it is to make these people
look good and their lives easier. And, by and large, they do.

A typical day in the life of a star might consist of: a 2 hour and 15
minute workout in the morning/ then a nutritionist-prepared meal/ plus
another 60 to 75 minute workout in the afternoon/ 6-days per week. This
is a peak fitness regime.

Now I am not recommending that you try to do what these famous folks
do on a budget that is likely to be 1/10th of one percent of theirs. But
doing some lifetime fitness (finding a fitness routine that you can do
at a low level of intensity ‘forever’), getting a decent hair cut,
wearing some nice clothes, eating properly, not drinking too much,
staying away from drugs and getting enough sleep will almost certainly
help you be more successful (and more creative).

Here is the list of sports* I have participated in since I was a kid
(note, we had no TV until I was 12): soccer/ cricket/ football/ hockey/
skateboarding/ skiing/ broomball/ judo/ sailing/ swimming/ canoeing/
kayaking/ rafting/ hiking/ biking/ tennis/ body surfing/ snorkeling/
paddle tennis/ cross country skiing/ squash/ racket ball/ ultimate/ hang
gliding/ windsurfing/ whitewater rafting/ mountain climbing/ Dragonboat
racing/ running (10k)/ yoga. I’ve probably forgotten a few.

(* The fact that many schools in Canada downplay sports and fitness
is a shame. We should follow the Australian example where sports and
fitness are priorities for kids right up there with the 3 Rs. The
Aussies invest in sports at all levels and it pays off not only in elite
performance (Oz is in the top five nations on the planet in terms of
their achievements at the Summer Olympics) but it spreads throughout
their population to include even weekend warriors… If we did nothing
other than get Canuks to exercise a bit, cut down somewhat on their
calorie intake, throw away their cigs, knock off the drugs and drink
less, we could cut our healthcare costs by 30% and extend lifetimes and
boost productivity and creativity hugely, I am sure.

We need to be more innovative to keep up with the rest of the world!
When I was 20, we had maybe 3 billion people on this planet with about
20% of them participating in a recognizably modern economy which means
it was me competing with 600 million others. Today, a 20 year old, is
competing with 7 billion of whom perhaps ¾ participate in a modern
economy. Which means, Gen Y, your odds are 1 in 5+ billion. Of course,
that also means, you can sell to 5+ billion people too so there is both
more competition and opportunity…)

The point is sports has been a big part of my life and a lifesaver at
times. In my 3rd year at McGill University when I was 18 and while I
was studying engineering, I experienced feelings that winter that were
new to me. I would wake up every morning feeling OK but within a few
minutes, I noticed that a blackness would close in on me, kinda wall me
in. I had no idea what it was and each day I would wake hoping it would
be gone. It lasted weeks. I couldn’t figure out what was wrong with me.

Of course today we know what it is—it’s depression. The dark, cold of
a Montreal winter and the oppressive workload of engineering were the
cause. But I had no idea what was affecting me and, even if I had known,
I would not have told anyone because it would have been considered a
weakness by society in that era.

Today, young people can get assistance from Kids Help Phone (https://www.kidshelpphone.ca/teens/home/splash.aspx)
or just by going on the Internet, they can find a lot of resources. I
had none. I was living on my own and had been since I was 15.

I couldn’t shake it until one day, back in Ottawa that February, my
pals and I went to the ODR in Rockcliffe Park and played pickup hockey
from 10 am to 10 pm. By the end of the day, I was sitting in the warmup
shack, my face red, huffing and puffing, thoroughly wrung out. The next
day…presto, the darkness lifted. And so began a lifetime fitness routine
for moi to keep from ever feeling that way again.

So lifetime fitness is not about intensely training for a marathon,
once, and then hating running for the rest of your life. It’s about
doing something, finding something that you can manage, that you like
doing and that you can keep doing for decades.

Kids today if they are careful about their nutrition, weight and
fitness as well as avoiding cigarettes, drugs and (excessive amounts of)
alcohol can expect to live a long time. The fastest growing demographic
in Canada? The over 100s*.

(* One of the key characters in my new novel, Quantum Entity due out
next year, is Angelo Keller, 103 years old when we first meet him. He’s a
bit of a devil, very with it, always lining up one VC play or another
and wielding his great power and wealth with surgical precision.)

I have many friends who are elders—in their 60s, 70s, 80s, 90s and
100s. I will soon join them (I’ll be 60 in December). Guess what? Your
career may be MUCH longer than you think—you could be working into your
70s, 80s, even longer. And you should!

My late father, Professor O.J. Firestone, told me: “Never retire. You
may change what you do but don’t just sit around at home watching TV!
How much golf do you want to play anyway? Human beings are meant to

I’ve already had eight careers including:

Operations Research Engineer in Australia/ Public Servant with
the Bureau of Management Consulting, Supply and Services Canada/ Real
Estate Developer/ Hockey Guy with the Ottawa Senators/ Architecture
& Biz Prof/ Real Estate and Mortgage Broker/ Executive Director of a
Not for Profit/ Novelist.

I might even have another one soon—playwright. (I’m thinking of
writing a three Act play although my (saint of a) wife is shaking her
head at me.)

My Uncle Freddie (a MD from Long Island who served with Eisenhower in
the European Theatre during WWII and one of my personal heroes) told me
to take* one 81 mg tablet of ASA (basically, coated baby aspirin) per
day from age 40 on. Heart attack runs in the male half of our family. So
Freddie felt ASA could help us with that and other adverse health

(* Nothing in this blog post should be considered advice on health matters. It’s just a report on Prof Bruce’s experiences.)

In my 30s and 40s, I found running—basically 10k’s. Every decade, I
would set goals. During my 30s, my goal was—to run 10k under 40 minutes before
I turned 40. When I was 39, I ran in the Terry Fox 10k. As I turned for
the finish line, I could see in the distance the humongous race clock
counting up: 39:14, 39:32, 39:47…

I crossed at 40:14 and realized right away that this was as fast as I
would ever run, my all-time Personal Best. So I set new goals for my
40s. I started Dragonboat racing…

But when I turned 50, my doctor told me to quit Dragonboating! Racing
Dragonboats is a 2 minute 15 second end-to-end sprint. Your heart rate
easily climbs to 195 bps (and over 200 in the mad last dash to the
finish line) as you push hundreds of kg of water with your paddle. My
doctor asked me: “Do you want to live to be 60, Bruce? Want to see your
grandkids? Then you gotta quit.”

I loved Dragonboating*—the team building, the camaraderie, the fact
that middle-aged people can compete with youngsters via better teamwork/
coordination/ race strategy. But for a guy with a heart murmur since
his teen years, 200 bps can be a killer.

(* For more about our experiences dragonboating, please see: https://www.dramatispersonae.org/Red_Pine_Year_2000.htm and https://www.eqjournal.org/?p=1155.)

Red Pine Camp Dragonboat Team

Same for hockey. So after breaking two ribs in a supposedly
non-contact men’s recreation league, I was out of luck in my 50s. What
to do?

Enter yoga. My wife got me into it (she’s been doing it since she was
a girl of 18). I thought yoga was for women and sure enough, my first
class was 14 girls and moi. The instructor told the class to fold into
impossible positions and hold them infinitely long and, of course, the
girls could all do it and I couldn’t. Plus they had the clothes and the
look. Talk about fish out of water. I was bad.

But I kept at it and now I can do handstands (against a wall, mind
you) and all sorts of stuff that I haven’t been able to do since I was
on the gym team and in the Cadet Corps at Ashbury College at age 11.

(Hey, if you’re interested, I did a short YouTube video about ‘Yoga Moments’ with Cyclepathic’s Angella Goran: https://www.youtube.com/watch?v=83LfVsSDZ6Y).

I think I can keep going with Yoga into my 80s, maybe longer. That is, if I get there.

Anyway, lifetime fitness will help you in lots of ways. For example,
do you want to be more creative? Well, 20 minutes after going for a run
(or doing Yoga), you will be! I wrote about how to become more creative
here: https://www.eqjournal.org/?p=2504.  

About yoga—the Sens started it in 2007, just after me. It builds core
strength/ improves flexibility/ reduces injury/ promotes healing
through breath/ builds long lean muscles/ reduces back pain and back
problems/ improves focus and concentration/ reduces moment of inertia
(you can turn faster)/ reduces stress, tension and depression—all good
things for a hockey player or for you! The Sens went to the Stanley Cup
finals that year and had the fewest injuries (e.g. hamstrings) in team

Again, I hate to admit it but in our society, image/ branding/
personal branding is BIG. Marshall McLuhan said it best: “The Medium is
the Message.” And you are the medium of your own image.

CEOs tend to be tall males who LOOK the part. That’s the reason why
Uncle Walt (Disney) sat behind a screen to listen to women audition for
the singing voice of Snow White– he did not want to be influenced by the
way the candidates looked or dressed. It’s also why some investors back
companies with shorter CEOs or female-headed businesses—they are
working on the assumption that those people had to work harder to get
where they are and presumably also tend to add more value!

But don’t do it for the money, don’t do it for your image. Do it so
you can be more positive, more productive and more creative—MAKE EACH

Prof Bruce
Blog: https://www.eqjournal.org
Twitter: https://twitter.com/ProfBruce
“Making Each Day Count”

Nov. 2011

     Prof Bruce @ 11:15 am

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         Heavy Versus Hard Slapshots        

   Posted on
       Thursday 3 November 2011  

Why Some NHL Players have Shots that are Heavier and Harder to Stop

Former NHLer Al MacInnis had a secret weapon—in addition to having a
very hard shot (around 100 miles per hour), Al was able to put a lot of
spin on it too. Goalies around the National League used to say Al’s shot
wasn’t just hard, it was heavy. Now what did they mean by that and is
there a way players can score more goals using Al McKinnis’ technique?

Heavy v Hard Shot

Basically, by putting a lot of spin on the puck, MacInnis added
angular momentum (and torque) to his shot. Al would specially shape his
sticks before every game (as all NHL players do) and this would help him
get off those well known hard, heavy shots.

Basically, angular momentum, for a body that rotates around an axis
(e.g., a puck) is related to the mass of the object, the velocity and
the distance of the mass to the axis (its radius).    

For an object with a fixed mass (the puck) that is rotating about a
fixed symmetry axis (its centre), the angular momentum is expressed as
the product of the moment of inertia of the object and its angular
velocity vector, viz:


is the moment of inertia of the object,

(pronounced ‘omega’) is the angular velocity (the rate at which the puck rotates).

The moment of inertia of the body (i.e., the puck) is then defined as:


m is its mass,

and r is its perpendicular distance from the axis of rotation (the radius of the puck).

So the faster a puck spins (the higher omega is), the higher its
angular momentum is. Obviously, the mass of the puck and its radius do
not change.

When people calculate momentum of a puck, they usually only calculate it as:



m is its mass,

and v is its velocity.

That is, they ignore angular momentum.

By shaping his sticks, Al could put a heck of a lot of spin on the
puck (former Sens player, Alexei Yashin did this too). So the total
momentum of their shots should be measured as the sum of angular
momentum and momentum from translation. When goalies say someone has a
‘heavy shot’, they probably mean some players just seem to have a shot
that is harder to stop even though it may not register as a faster shot
on a speed gun than some other player’s shot. The goalies are right.

There are two further points to make:

a) a shot that is spinning faster will not only have larger total
momentum than one moving at the same speed (in terms of translation
velocity) but with less spin on it but the ‘heavy’ shot will elude a
goalie’s glove more frequently or literally spin off his body or pads
more easily and into the net because it is spinning faster;

b)     also, think about a modern bullet that spins compared to a
musket ball that doesn’t. A spinning bullet has much, much greater
impact than a musket ball and a lot more penetrating power too.

So if a player wants to score more goals, follow Al MacInnis’ example!

Prof Bruce


Let’s see if we can try a sample calculation. Suppose a puck weighs
5.5 to 6 ounces (156 to 170 grams), is 1″ thick (2.52 cm) and 3″ in
diameter (76.2 mm).

Now let’s says a NHL player slaps the pucks at 90 mph. That is 132 fps.

So momentum in translation is .359 lbs x 132 fps or 47.388 ft-lbs/sec.

Angular momentum is a bit more complicated. First assume an Al
MacInnis clone is able to impart spin on the puck equal to an amazing
Rafa Nadal tennis shot: 4,500 rpm or 75 revolutions per second. This has
to be converted to radians per second (since radians have no units). To
do this we multiply by [2 x Pi]. So now we have spin of 471.24 radians
per second.

Angular momentum is thus: .359 lbs x (.25 ft/2)**2 x 471.24 or 2.645
ft-lbs-ft/sec. You will notice that the units for angular momentum and
momentum for translation are not the same and are thus not additive. I
suspect this is either because there is a flaw in this calculation or I
have not corrected for the difference in English units between lbs
(force) and lbs (mass).

I will leave this for a clever student to fix for moi. But it appears
that angular momentum is a significant factor in the overall momentum

ps. you should also know that angular momentum (and momentum as well)
is a conserved quantity: a system’s angular momentum stays constant
unless an external torque acts on it. Torque is the rate at which
angular momentum is transferred in or out of the system. Torque is a
quantity which all gear heads understand (and most (young) NHLers like
fast cars and faster girls) and you can easily imagine that a puck
carrying more torque will, in fact, help a NHL player score more goals
and probably get a bigger paycheck, a faster car and a pretty girl to go
with it too…

pps. thanks to Wikipedia.org for some of the above equations.


I have thought about this a lot and have always been told I have a heavy shot … when I used to play.

There may be other elements than angular velocity … Spin and Wobble …
spin would likely account for most of the “heaviness” but forceful
wobble would create another axis of force.

Perhaps related to spin and wobble … area of impact … if the puck hits flat verses side verses edge. (Please see below.)

Puck Impact


Ian Graham [ian @ thecodefactory.ca]

     Prof Bruce @ 2:37 pm

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