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Co-opetition: Airlines, Petrol Companies, Food Services, Home Builders, … Hey Even Yahoo May Do It
Posted on
Saturday 17 May 2008
We already know that one of the most important ways we learn
in business is from our competitors. What do they do that we don’t?
What do they do better than us? What can we do that they can’t?
If you answer these three questions successfully as an entrepreneur,
you are well on your way to finding a niche you can profitably fill and
staying away from the elephants in your industry and, hopefully, you
won’t end up being crushed by the competition.
But there are many forms of co-opetition that benefit an
industry—petrol stations or food services fill all four corners of an
intersection for a reason—they know that they will benefit from the
marketing done by their competitors and business for everyone will be
higher than it otherwise would be. If the line up at Starbucks is too
long, you can go next door to Second Cup and vice versa.
When I was in the development industry, I would rejoice when a
large, well funded office building developer would build next to us—at
least two out of every five clients that they would attract with their
larger marketing budget would come across the street to check out our
office space and we usually ended up signing one of them. And that was
probably one we would not otherwise have signed.
There are many ways that competing airlines, for example, could benefit from co-opetition:
1. If an airline overbooks a flight, they could send the overflow to a
competitor and vice versa and load factors for both would increase.
2. If an aircraft develops mechanical problems, same deal.
3. They could share ground crews or even flight crews if one airline is suddenly busy and another is not…
I was thinking about ultra-light jets—the new form of transportation
that will allow more point to point flights very soon in small, fast
jets that will cost around or maybe less than $1 million. Do they pose a
threat to their large competitors? Probably not…because of potential
co-opetition.
If an ultra light jet company got a request to fly ten people they
couldn’t handle that. So what could they do? Well, instead of just
refusing the order maybe they could get a referral fee by sending them
on to a larger charter company or even a regularly scheduled airline and
make money by not flying.
They could fly into major hubs and transfer passengers for long haul
flights and again benefit from more flights and more referral fees.
Home builders do this all the time. If you have a sub-division with
480 lots and you build around 60 homes a year, it is going to take you
eight years to complete the project. That means your first home buyer is
in a construction zone for eight long, dusty noisy years. Ugh.
But if you bring in a competitor who builds a somewhat different but
complementary product, maybe you could complete the project in five
years—better for your clients and, by laying off the cost of some of
your lots and infrastructure costs onto your competitor, better for your
IRR and ROI.
As of the time of this writing, Yahoo is resisting a takeover by
Microsoft and talking about Google providing some of its paid search.
Yahoo has big traffic—more than 500 million visits to its sites per
month and, perhaps, they can make more money by harnessing Google’s
money machine. Even after sharing the dough with Google, Yahoo may end
up with more moolah. Now that is co-opetition.
Dr. Bruce
May 17, 2008
Prof Bruce @ 3:57 pm
Filed under:
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Rules? There are no rules in entrepreneurship.
New Source of Boostrap Capital: Online Micro Loans
Posted on
Sunday 11 May 2008
I read an article in BusinessWeek recently on a cool site called Prosper.com
that offers loans to regular folks and small businesses with rates from
around 7.6% to probably in the high 20s (as of the date of this
writing: May 10, 2008). The neat thing from a small business owner’s POV
is that the loans are for three years and can NOT be called. Banks,
even when they make term loans, always have weasle words in their loan
agreements that allow them to call the loan with maybe a week’s notice.
And, of course, they call the loan when things are worst for you (e.g.,
you lose your second crop on your urban herb mini farm to thieves,
possibly human but maybe bugs.)
The way the loans work on Prosper.com, investors bid on your loan
offer; the more bids, the lower your interest rate is going to be. If
you have a good credit history, you’ll get your $2,500* for interest
rates in the single digits; if not, it will probably be in the high
teens. Still, it’s better than using your credit card!
Dr. Bruce
* You can read about the mini farm example (where the owner needs an extra $2,500) by clicking here.
ps. I also wrote something called “Is Debt Cheaper than Equity” and I
combined it with the BW article, which you can read in full. Click here.
Prof Bruce @ 4:53 pm
Filed under:
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Development Economics and Entrepreneurship
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Posted on
Sunday 11 May 2008
I have always believed that (most) debt is less expensive than equity but many of my students view equity as ‘free’.
Let’s suppose you start a computer consulting business or a herb garden business
or whatever and you need some micro capital to start the new
enterprise. I have done quite a bit of thinking about how to start a new
business without much capital and what sources one might turn to in the absence of a big balance in your personal savings account. I wrote a bit about it on my blog to. See:
More about Self Capitalization.
I even wrote about how one might colonize the moon using bootstrap capital!
Let’s return to your mini farm business where, in the example I use,
you need $7,500 to start it. The mini herb garden business, under
certain assumptions produces cashflow of $4,500 per year and a return of
58% p.a. (This is an IRR.)
Now let’s say you are like me and know nothing about farming so you
decide to bring in a partner who does and you are going to give her,
say, 1/3 of the business and she is going to put up 1/3 of the startup
capital or $2,500. You can not only use the extra expertise but also the
extra dough and since it is equity, there are no interest or monthly
repayments. Phew, you say.
Maybe she is a great partner but let’s assume as in many
partnerships, this is your idea, your baby and you are the one with the
most enthusiasm. So after giving you a few tips that you probably could
have found on the Internet yourself (like how to grow herbs organically,
without pesticides, and not let the bugs eat them all either), she kind
of loses interest and you end up doing most of the planning, planting,
weeding harvesting and sales.
You become a bit resentful because you have to give her 1/3 of the
annual profits ($1,500) and it is bugging you that she is getting a heck
of a return ($1,500 each and every year on her $2,500 investment) and
not putting in her fair share of the work.
Her ROI is obviously the same as yours: 58% p.a. (Don’t make the
mistake of thinking the ROI is $1,500/$2,500 or 60% p.a. Be a bit more
rigorous and use the IRR as a lifecycle approach to analyzing projects.
Click here to get the spreadsheet in .xls format and you can fool around with it on your PC.)
Now let’s say you had to borrow this extra amount on a credit card
instead of getting it for ‘free’ from your partner. Many credit cards
charge you 14% to 28% p.a. depending on your creditworthiness (which is
what Banks determine using your beacon score). Even at 28%, you are borrowing for much less than the cost of your equity which is 58%!
So the advantages of debt are:
1. It is usually cheaper than equity.
2. You don’t have to put up with a partner.
3. Decision making is fast: your Board of Directors meets in a closet (i.e., you meet with yourself).
The advantages of a partner are:
1. If there is a problem in the business, you may have an extra pair
of hands around to help you deal with it (if the partner doesn’t throw
up her hands and bug out on you).
2. You have access to what you hope will be patient capital.
3. You hope she brings expertise that you don’t have to the table.
Most partnerships end up badly and you will have to buy her out, let
her buy you out, sell the business or shut it down. Now if in the above
example, your partner likes the returns she is getting and say she puts a
11 cap rate (capitalization rate) on her share of the annual profits,
then it will cost you a LOT to buy her out. Here is how it works:
Cap Rate = NOI/S.P.
where, NOI is Net Operating Income and S.P. is Selling Price.
Obviously,
S.P. = NOI/Cap Rate.
Therefore you are going to have to pay her:
S.P.(your partner’s share of the business) = $1,500/0.11 or $13,636.36.
You have turned a $2,500 problem into a $13,636.36 problem in a hurry.
So:
a) don’t have a partner to begin with if you can avoid it;
b) use debt or bootstrap capital to fund your business because it will probably be cheaper in the end;
c) understand that there is a higher risk with debt.
Debt is like the hare and the tortoise running around a track. Debt
is the hare. You are the tortoise. If you take on debt (especially bad
debt like credit card debt), your tortoise better be relentless and get
around the track because he is working all the time to pay off the debt
as soon as he can. Once the hare catches you (in a foreclosure or power
of sale or bankruptcy), you are probably dead.
Maybe instead of ending up borrowing the extra $2,500 from a credit
card, you could have got a loan from Farmers Credit or a government
grant program to grow more food locally or even got a pre-order from
Whole Foods or a high end Natural Food shop in your area that included a
downpayment on the first herb order that just happened to equal $2,500.
The latter has an interest cost equal to zero and also gives you a
secure feeling that once you start producing herbs, you will have
customers!
Dr. Bruce
Prof Bruce @ 4:42 pm
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Bootstrap Entrepreneurs– Case Studies
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Development Economics and Entrepreneurship
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Pre-selling, Finding New Clients, Keeping Existing Ones
Posted on
Sunday 4 May 2008
The title of this essay is in French because I just didn’t
know how to say it politely in English. Last night, I had the privilege
of attending the 16th Governor General’s Awards for the Performing Arts
honouring outstanding Canadian performers.
The Honourees for 2008 included: famed pianist Anton Kuerti, comic
Eugene Levy, dancer and choreographer Brian MacDonald, playwright John
Murrell, aboriginal filmographer Alanis Obomsawin, Montreal rocker
Michel (Pag) Pagliaro, fundraiser extraordinaire Eric Charman and
Kingston band, The Tragically Hip (the 2008 National Arts Centre Award
winner).
My beef was that unbelievable performances by Pagliaro and the Hip,
cool short videos about each of the award winners (except Eugene Levy
but more on that later), a dance by Cyrstal Pite
that was one of the greatest performances I have ever witnessed (she
has the strength of a man, moves like a hip hop artist on steroids but
with much, much more poise and control, illustrates completely new,
never before seen choreography, has an unbelievable CV for such a young
person, runs her own dance company and is incredibly beautiful as well)
and much more, may never be seen again.
Huh, why is that? Well, for one, the CBC decided not to record the
show for later rebroadcast due to cutbacks within that organization. But
maybe more importantly, because no one was recording it for Veoh,
YouTube or whatever.
You know, the only way these outstanding performances could have been
kept for posterity would have been if someone (please) had bootlegged
in a video camera and uploaded them to the Internet or if the organizers
of the event would take on entrenched interests and do it themselves.
But it is almost impossible to do.
A few years ago, I wanted to do a video of a lecture I give—the 25
Steps to Entrepreneurial Success. I thought: “Wouldn’t it be cool to use
a few film clips from Hollywood shows that the students might find
funny and educational at the same time?” Well, it didn’t take very long
to find out that it is impossible to do that even in an entirely
non-commercial, educational film.
I wanted to use Ben Affleck’s short speech in the film, Boiler Room,
called ABC—Always Be Closing or, as he calls it in the film, Don’t Pitch
the B_tch. It’s funny, rude, poignant and, if taken the right way,
reinforces the idea that entrepreneurs have to be able to sell—sell
their ideas to funders and to employees, sell their products and
services to clients and customers, even sell to suppliers (to get
supplier credit, for example). If you can’t sell, you can’t be an
entrepreneur. (I am not suggesting that you should sell worthless stock
to vulnerable people, BTW.)
To get permission to use a film clip, you need the permission of the
copyright holder (usually a studio), the producer or producers, the
director and each of the actors in the clip (in this clip there is Mr.
Affleck and about 15 young men learning to sell). That is a difficult
job, no doubt. But it gets worse—you also need to the permission of the
person or persons who penned the score (there is music in practically
every scene in a Hollywood film) and, wait for it, every musician who
played during that clip. You just couldn’t do it. These people would be
scattered all over the globe, some of them might be dead and then you
would have to find their heirs and assigns and get them to agree too.
Last night, every award winner had a short film done on them except
Eugene Levy. Why? I don’t know but I suspect the above may have
something to do with it. How about some scenes from his hilarious days
with SCTV (Second City TV)? None to be seen, you only got reference to
it by Eugene’s introducer, funny man Martin Short. How about something
G-rated from American Pie? Nope.
That is why so much of what you see on Veoh and YouTube is
bootlegged—there is no legal way to do anything. In my view, the music
industry, the film industry, the creative industry, well, they are all
crazy.
Long, long before iTunes and Napster (in 1995!), Andres del Castillo (from the band Eight Seconds—Kiss You (When you’re Dangerous))
and I suggested to Dr. Michael Cowpland, when he ran Corel Corporation
at its peak, he start a service called the SoundBox. Andres had created a
wonderful series of copyright-free music CDs for Corel that creators
could use to make all sorts of content. Mike was too busy at the time to
take us up on the thought that this could also be an online service and
could include other tunes as well but we might have created Napster or
iTunes in Canada well before anyone else thought of it.
The Music Industry has decided to sue its customers instead of taking
advantage of new media. Surely to Heaven, the industry could have
thought of another business model—after all, these are incredibly
bright, incredibly well paid executives and the only thing they could
come up with is to sue Granny because her 11 year old granddaughter is
upstairs illegally downloading tunes for personal use?
En bas to all of them.
The National Arts Centre Orchestra performed last night as well. It’s
a very good outfit. They were terrific in support of other performers.
Their work with rock-legend Pag was cool. But if you wanted to showcase
their work along with Pag to the world, well, you couldn’t do it
(legally) for all the reasons I go into above.
But if you could, I’ll bet we could find a new revenue model that would work just fine…
Why should Google get ALL the money? What if we had a two minute
video of Crystal Pite up there on the Internet right now*? What if the
SoundBox was where you went for tunes (I admit it, the name sucks)? We
could have been Google!
(* Interestingly, Crystal says she misses the fact that, unlike
writers say, she will not have any artifacts when her career as a dancer
is over. Her performances are, in her words, ephemeral and disappear
when she stops performing. But if we go in a new direction taking
advantage of new media, she will have lots of artifacts of her work on
the Internet: ones that will produce revenue for her too long after her
body is no longer capable of the things that she does now.)
Somehow wrap ads in a non intrusive way around your music or videos
or photos or power points or web pages, whatever. There will be plenty
of money to go around—share it with the artists, the creators, maybe
even the viewers…
When you buy a CD, you know that the artists are getting maybe 10
cents to a dollar out of the 20 bucks you fork over. I am sure that
creators could do a whole lot better if we torched the middlemen in the
deal.
I am hoping to run a national video case study competition for
entrepreneurs later on this year. One of the preconditions of entering
the competition is that when you upload your videos to our site, you
upload on an unlimited creative commons license—it will be completely in
the public domain. Professors around the world would then be able to
access a video case study library (eventually numbering a few hundred or
even thousand video case studies—students these days seem to better
relate to and learn from video than purely depending on the written
word) and use it to educate their students. Other creators could take
snippets of these videos and use them in their own mashups. Whatever
they want to do, we will live with it. Unlimited creativity would be
encouraged.
Think that is too far out? Well, last night, I heard some great work
by Bach, Mendelssohn and other composers. What if their work had never
entered the public domain?
To heck with patents, copyright, trademarks and the whole restraint
of trade panoply of lawyers and court enforced orders. I am sorry but
charging $30 for a lifesaving prescription of drugs in West Africa when
generic drug makers can produce the same thing for pennies makes no
sense to me. The idea that we are encouraging inventors and creators by
giving them monopoly rights on things like drugs, music, films, photos,
whatever is baloney in my view.
Ideas should be free.
And don’t tell me that the makers of a drug that ‘cures’ male
impotence (and maybe kills you with a heart attack) need patent
protection for 17 to 22 years. Come on.
Do you think that creators do things in isolation? Einstein was
unimaginably brilliant; the idea that energy and matter are related by
the speed of light squared is really strange when you think about it for
a few seconds but it is even stranger that someone could figure it out
in the first place. But if Einstein hadn’t, there were others who were
close and it might have been just a few months longer before someone
else would have got it right. We all stand on the shoulders of others
who went before us and humanity would be much better off if we
recognized this in a new code of law. When you make criminals out of
millions of kids, your laws are wrong, just plain worng.
What if the screw cap were not in the public domain? Or the theory of
electro-magnetism? Or the founders of the Internet had decided to keep
the protocols that run the web, proprietary? The TRILLIONS of dollars of
value that the Internet has already created would be diminished and not
by a few percentages—it would be incinerated and the world would be a
much poorer place, not only in dollar terms but in terms of quality of
life.
I would much rather have YouTube or Veoh or GoFish on my TV than the
crap that the cable companies and networks serve us—billions of channels
by billions of creators. And much more value would get created for
everyone; the problem is that the value might get shifted around a
bit—from big business to creators and that is what they and their legal
teams are afraid of.
Dr. Bruce
Post Script:
Interestingly, it is Indie Rocker, Mel C (formerly with the Spice
Girls) who allowed dozens of cameras, camcorders and cell phones at her
recent show in Ottawa May 6th, 2008.
Instead of ejecting anyone who happened to have a video camera, she
is quoted (Ottawa Citizen May 7th, 2008) as saying: “Now I don’t know
what to feel. Should I feel like they’re bootlegging me or should I feel
like they’re promoting me?”
Obviously, they are doing both but I think she is right—it is far
more likely that she will sell more concert tickets if she allows this
type of freedom at her events to continue. She has adapted her business
model.
I completely understand the contradictions in the above essay but
such is life—it isn’t simple anymore, if it ever was, and you have to
learn to live with contradictions.
Comment by AdC:
Heh Bruce,
I like it. Particularly the part about the record companies.
Interestingly enough, it wasn’t a lack of imagination on their part, it
was pure greed. They simply didn’t want to share profits with a
technology partner – Lord knows, they were approached enough times.
The public domain issue is a challenging one – still the debate
continues although I find the more compelling argument on the side of
free access to knowledge. Given this, I read recently The Birth of
Plenty:
https://www.amazon.com/Birth-Plenty-Prosperity-Modern-Created/dp/0071421920
by William Bernstein.
His theory is that in order to prosper, a nation has to have four
conditions in place – one of them the right to own property. Of course,
he is referring to copyright ownership and the ability for the courts to
protect that ownership.
On the other side of the coin, there’s Chris Anderson of Long Tail
fame (he’s speaking at the Tulip Festival – a must see!) who suggests
(as you do) that business models, not encrypting software, need to catch
up to the Internet.
Ultimately, it is sad to think events such as Saturday night cannot
be archived and appreciated by more because of paperwork -there’s no
getting around that.
Cheers/AdC
AdC—I guess the real message is you need to be flexible and change as
required. This is one of the rules of life and evolutionary biology:
those creatures/institutions/businesses that don’t change over time, die
out. BMF
Prof Bruce @ 12:04 pm
Filed under:
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Rules? There are no rules in entrepreneurship.
Why You Should be Careful about Causality
Posted on
Friday 18 April 2008
This is an anecdote from Jeffrey S. Rosenthal’s excellent book, “Struck by Lightning—the Curious World of Probabilities”.
A Frog Experiment:
Frog with Four Legs
You Yell: “JUMP”
Distance Jumped by Frog
**********************************************
Frog with Two Hind Legs/One Foreleg
You Yell: “JUMP”
Distance Jumped by Frog
*********************************
Frog with Two Hind Legs/No Forelegs
You Yell: “JUMP”
Distance Jumped by Frog
**************
Frog with One Hind Leg
You Yell: “JUMP”
Distance Jumped by Frog
****
Frog with No Legs
You Yell: “JUMP”
Distance Jumped by Frog
–
From the above evidence, you conclude that a frog with no legs is deaf.
This always surprises me—I can’t believe the number of times I read a
research study done by reputable scientists and statisticians where the
suggested causality seems intuitively suspect to my untrained eye.
Suppose for example, a research study concluded that people who
practice yoga live, on average, three years longer than others who don’t
do yoga. I would shout: “Hurray” since I do yoga. But is it really true
that yoga causes longer life spans or is there something else going on?
Maybe people who do yoga, eat better, get more exercise, tend to not
smoke as much or at all, have less stress in their lives (not true in my
case BTW), take vitamins or are more aware of other health risks and
seek out treatment and prevention more.
Perhaps it isn’t any of these other variables at all—maybe it just
happens that people who do yoga have in something in their DNA brought
about through evolutionary biology that helps them live longer and all
the vitamin supplements in the world and those other things I mentioned
above don’t matter at all including practicing yoga.
After all, my mother smoked like a furnace for 50 years and lived a
long time (she was from tough Russian stock), so picking the right
parents might be more important than anything else you can do. (This is
not an argument for smoking—it seems proven beyond any doubt that
smoking hugely affects health and longevity and you are far more likely
to die a more hideous death than you can imagine if you are a smoker.)
Determining causality in medicine and biology is very tough; even in
business, it isn’t easy. I remember reading an article in Business Week
on why businesses fail
and I thought their conclusions were a bit off. The BW article said
that businesses fail because: a) they have too much debt (28%), b) they
have inadequate leadership (17%), c) poor planning (14%), d) failure to
change (11%), e) inexperienced management (9%) or f) not enough revenue
(8%). These six factors were thought to account for 87% of business
failures.
But I think the fundamental reason most businesses fail is: f) not enough revenues.
I have never seen a business with buoyant revenues fail; it may
change management, get new leaders, pay down debt, find new planners; it
might even file for bankruptcy protection because of mismanagement but
in all likelihood that business will not be liquidated and it will still
be around in a few years time. Businesses today with fast growing
revenues will attract financing and terrific leaders and managers—that
is where smart people want to be anyway.
That is why I tell my students to focus on getting launch customers,
finding more clients, increasing revenues. That is usually the hard part
for most businesses whether they are tech startups or what have you. Do
the tough stuff and you will probably live to fight another day.
So these other variables are dependent variables not independent
variables, at least in my opinion—the independent variable is: not
enough revenue, hence, true causality is established.
I enjoyed the 1973 Woody Allen film, Sleeper, about a health
food store owner (played by a hapless Woody Allen) who goes into
hospital for a routine treatment and ends up being frozen for 200 years.
Waking up in 2173, Allen’s character tries to convince the doctors of
the day of the benefits of health food; they shake their heads knowingly
and say something like: “Imagine those poor ignorant people not
recognizing the health benefits of deep fat, steak or cream pies and hot
fudge—precisely the opposite of what we now know to be true.” I laughed
out loud in the theatre but no one else found it quite so funny but
even then I knew that one had to be a bit skeptical about studies based
on probabilistic theory and statistics.
Dr. Bruce
Prof Bruce @ 9:26 am
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Writing, Research and Experimentation
Why You Should be Careful with Statistics: A Haiku
Posted on
Friday 18 April 2008
“Did you know that 19.3% of all stats are made up on the spot?” Anon.
Prof Bruce @ 9:22 am
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Writing, Research and Experimentation
No Manager Has Time to Baby-sit Anymore
Posted on
Tuesday 15 April 2008
Or Why You Need to Bring some Entrepreneurial Skills to your JOB and
Become an Intrapreneur
By Dan Cardamore, Former Student and Tech Manager (dan@hld.ca)
A year ago I was interviewing students from an excellent university in
Canada for a software development position. The students ranged from
second year students to fourth year students so there was a large
delta in experience levels since these students would do a decent
amount of co-op work terms during their bachelor degree program.
After reading all their resumes, I realized that none of them had
relevant work experience to what we were doing, most students had
testing experience and we were looking for a developer role. This
isn’t to say that testers aren’t capable of developing software, but
these particular students hadn’t proven that they could in the past.
So, I decided that if we weren’t hiring experience, I’d like to find
someone who would set themselves apart from the crowd by being self
motivated. During ten interviews that we did over the phone, I asked a
very simple question: “Can you give an example of a time when you
were required to do something but decided to go beyond that?” I
would have been happy with anything, related to class work, work
terms, personal projects, anything really. What I ended up with
across the board was silence or a clear misunderstanding of the
question.
In my opinion, self motivated people do very well in their careers; it
is likely more important than any other skill one could have. Maybe the
problem is that most education focuses entire classes on performing
the same tasks as every other student and there really isn’t any reward for
going beyond the minimum requirements set out.
It may be a bit cheesy, but I’d like to end this thought with an
Einstein quote:
“Imagination is more important than knowledge. For knowledge is
limited to all we now know and understand, while imagination embraces
the entire world, and all there ever will be to know and understand.”
Prof Bruce @ 5:55 am
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Rules? There are no rules in entrepreneurship.
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Test your entrepreneurship skills – online quizzes
Posted on
Sunday 30 March 2008
The perfect machine is a machine with no moving parts. See
if you can solve the riddle of ‘NASA versus the Soviets’. Click on the
following link:
Dr. Bruce
Prof Bruce @ 11:52 am
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Writing, Research and Experimentation
What is the Value of Lunar Real Estate?
Posted on
Sunday 30 March 2008
A few years ago I took up the challenge: could I apply the
concepts of bootstrapping to something as far out as building a lunar
colony. In a subsequent thought experiment, I determined that, yes, I
could!
I felt that President Bush and later President Obama had failed to
capitalize on the opportunity that lies before us in this Solar System. I
wrote about that: Moon, Mars, Earth, Asteroid Plan, https://www.eqjournal.org/?p=829.
You can read my self capitalization plan at:
https://www.eqjournal.org/?p=864
and
https://www.dramatispersonae.org/ThoughtExperimentValueOfLunarRealEstate.htm
Former student, Mike Stewart, also did a YouTube video of this but
unfortunately they were forced to take it down due to some of the music
he used in the video which was at: https://www.youtube.com/watch?v=9crQK3ReJHY
To colonize the moon using bootstrap capital, you would need to
pre-sell one million lunar condos, each of which cost $10 million and
you collected a 50% deposit. This would give you:
Pre-Sold Condos 1,000,000
Price Per Condo $10,000,000.00
Total Pre-Sales $10,000,000,000,000.00
Deposit 50%
Total Deposits $5,000,000,000,000.00
That is, $5 trillion dollars to work with! Not a
bad start. If you click on the first link, you can see that I have
calculated the value of all Lunar real estate at over $313 trillion
dollars (under certain circumstances)…
Dr. Bruce
Prof Bruce @ 11:08 am
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Monday 24 March 2008
“Be in trouble for what you do, not for what you don’t do,”
Ralph Shaw, Broker, Partners Advantage GMAC Realty, Carleton Place,
Ontario. Mr. Shaw is a consumate entrepreneur: you name it, he has tried
it. Here is a corollary: “Entrepreneurs would rather ask for
forgiveness than beg for permission,” Anon. Yoda also gave the same
lesson to a truculent, whiny Luke Skywalker: “Do or Do Not. Never Try.”
Prof Bruce @ 6:57 am
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Sunday 23 March 2008
Why have former student and really smart techie, Dan
Cardamore, current student and really terrific industrial designer, Rob
Sawatsky, horror writer Stephen King and University Prof and Broker,
Bruce Firestone all given up on their cell phones?
My story is pretty simple really—one day about six months ago my
youngest son told me that his cell phone wasn’t fully functional any
longer since it had taken a swim in our washing machine in one of the
pockets of his jeans courtesy of his Dad putting the jeans in there
without checking for cell phones first. Stupid of me.
So I gave him mine.
Haven’t had one since.
My life has improved a lot since then.
First of all, I am not a paramedic, a heart surgeon, a police
officer, a fire fighter or even one of those realtors who wants to be
able to provide his clients with one hour response time. I am available
to my clients six days a week anyway and I try to get back to everyone
the same day or, at worst, the next day. If that isn’t good enough, they
need to find another realtor or professor.
Now maybe that isn’t the right attitude and, if making money is the
number one thing in your life, maybe you should stop reading this essay
right now. But first maybe you should hear what Rob Sawatsky has to say.
“Rob here. I’d be happy to comment on the cell phone question. I’ve got one pro and three cons:
Pro – It’s great to have a cell phone so that you can call someone in
an emergency or to save yourself some time finding a payphone and the
number to call.
Con – Often times, I feel the need to preserve my personal space or
escape from people in general. I’ve had the same conversation with
anyone about cell phones when they call someone who doesn’t pick up:
[friend] “UGH! Why doesn’t so-and-so pick up their cell phone? What’s
the point of having one if they don’t pick up?” [me] “What if they don’t
want to talk to you?” [friend] “That’s so rude!”
Con – Having a cell phone is like keeping the servants’ bell in your
pocket that anyone can ring at any time and interrupt anything you’re
doing. If you have it, it’s a waste not to use it, but if you use it
people will be interrupting your meals, your conversations, and even
your bowel movements. I don’t want to interrupt anyone any more than I
want to be interrupted.
Con – The cost of a cell phone (from the vantage point of someone
who’s not interested in owning a cell phone, thus has not researched
them) is far more than the cost of a traditional land line. I pay $12.50
per month to talk on the phone and I don’t feel the need to pay or talk
any more than I do now.
Essentially though, I don’t have one because I don’t need one. Once I need one, I suppose I’ll have to get one.
Hope my opinion is of use to your blog,
Rob a. Sawatsky”
I think Rob’s comment about having a servant’s bell in your pocket is
exactly right. That’s the way it feels to me. My Dad, the late
Professor O. J. Firestone, was a fine person and someone I had a great
deal of respect for. But he was a slave to his office phone. I can’t
tell you how many family dinners and conversations were interrupted by
that phone and, frankly, I hated it.
It reminds me that we all spend way too much time on urgent but
unimportant things and, a lot of that is because of the phone. And, in
my view, cell phones make it much worse (and the Blackberry much, much
worse. I actually had a Blackberry for three and a half weeks before I
told our network guy to take it back and NEVER give me one again. Now my
clients wanted five minute response time instead of one hour!)
I realize that I am cheating in a way—I spend so much time with my
youngest son that my clients and family have figured out that by calling
him on what used to be my cell phone, they can usually get me. Also, if
we were closing an important deal (and aren’t all deals important?), I
could always borrow one of the eight (!) cell phones I pay for in my
famdamily.
But the Zen of it is that:
a) Who wants to be a slave?
b) Do you want to have some time to yourself on occasion?
c) Do you need some uninterrupted time to be creative, to problem solve
and to think about the important things in your life—both personal and
business?
d) Are you better off doing one thing at a time and doing that one thing really well?
e) Do you want to schedule every minute of your day or do you want to do what you can do well on any given day and no more?
OK, so what does Dan Cardamore have to say about cell phones?
“I was paying more for it than I liked to and in Canada cell phone
plans are terrible, more on that in a sec. I was receiving more calls
than making and most of the calls I received were ones I would have
preferred not to get (can you work on ‘X’ now, ‘X’ isn’t working can you
fix it, etc).
I tend to make plans with friends and family in advance over email
rather than last minute trying to track down friends at grocery stores
to make plans.
Essentially, it was my company’s leash on me, which I was paying for.
As far as cell phone plans go in Canada, they are terrible compared
to the US. I like data, less interested in voice. In Canada data plans
are absolutely horrible. There have been many comparisons done of the
$59 US AT&T iPhone plan costing Canadians an equivalent $847 with
_____ (large Canadian Telecom, Ed.). In addition there is the $6.95
service fee which you pay with all cell phone plans (in some cases that
can almost double your cost) and this was to cover the gov’t. tax for
air wave frequencies. Well, it turns out that the gov’t. stopped
charging carriers for this about a decade ago but the carriers (all of
them) still charge the public with this small print disclaimer that you
would be charged this extra cost. There is a class action lawsuit
against it now.
I’m hoping that Apple will force _____ (large Canadian Telecom, Ed.)
to sell a decent data plan rate in Canada like they did in the States
and the rest of the world. Or the new cell phone frequency that the
gov’t. is selling now will introduce truly competitive carriers.
Dan”
Now I would imagine that Stephen King probably doesn’t like cell
phones either—I deduced that from: a) the fact that he doesn’t own one
and b) in his new book, CELL, everyone who owns a cell phone have their
brains wiped leaving only base human impulses in place while everyone
who doesn’t own one escapes this fate…
A friend of mine in construction told me one day: “Look here, Bruce, I
don’t own a Blackberry, no sirree Bob, not me. Sheesh, I own something a
darn sight better—I got me a Strawberry.”
“What’s that?” I said.
“Well, a Strawberry is this here spiral notepad where I write down
everything I gotta do today and all the telephone numbers I got to call
with this here pencil. See this pencil—it’ll write even if the
temperature is minus 20 and my Strawberry, well, it don’t break and, if
it gets a bit wet, I can still use it and, well, you know I never made a
million in this here business but I saved six anywho.”
Dr. Bruce
Prof Bruce @ 4:41 pm
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Monday 17 March 2008
I had an experience recently that suggested to me again that
the law and ethics are not the same—ethics is a higher calling and sets
a higher standard than the law does, in my view.
I was making a case in front of judge to have a commission paid to
the Company I used to work for. For his own reasons, the client decided
not to pay the commission owing to the firm despite having agreed to do
so in writing. We sued (something I almost never do) both the client
(Bill, not his real name) and his lawyer (Shelly, also not her real
name).
Shelly hired a lawyer (naturally) to represent her (Ken). Ken argued
that Shelly was simply following her client’s lawful instruction not to
pay the commission and, therefore, if we had any claim, it was against
Bill and not Bill’s lawyer in this transaction. The judge made it clear
that he tended to agree with Ken…
Shelly had paid the entire proceeds (less her fee!) to the client and washed her hands of the matter.
My argument went something like this:
“I am an engineer not a lawyer so I am prepared to take Ken’s word
for it that Shelly, by following her client’s instructions, was acting
in accordance with the law. But you know I have closed both smaller
transactions than this and larger ones and I am pretty sure that almost
all the lawyers I have dealt with would have said something to me like:
‘Bruce, you signed this Agreement of Purchase and Sale—isn’t that your
signature? You contracted to pay a commission and now you have changed
your mind. Are you sure you want to do this?’
If I persisted, they would have probably given me two options—a.
‘Well, if you are going to renege on your promise, I am uncomfortable
acting further for you in this matter. When you find yourself another
lawyer who is willing to complete this transaction on this basis, let me
know who they are and we will transfer the funds from our trust account
to theirs. And, oh, by the way, we will be sending you our fee for
hours on this file to date.’ or b. ‘If you feel you have a legitimate
beef with the Realtor, why don’t we come to court with ‘clean hands’ and
pay the commission into court and then we can file a counter claim
against the realtor for the amount of the Commission plus any damages
you feel you have sustained. Of course, litigating the matter might cost
you more than simply paying the fee you agreed to but this at least
keeps you in good odour with the Court.’
So while Ken says that Shelly has no legal responsibility here, in my
opinion, she does have a moral and ethical responsibility to the Broker
in question.
It also struck me that we may hold lawyers to a lower standard than we do soldiers.
In a time of war, if your commanding officer gives you an order and
you don’t obey, you run a serious risk of court martial and maybe even a
sentence of death. But if your CO tells you to go over and torch a
village with innocent civilians in it and you do it, history has shown
that, while the order may have been ‘lawful’, the international court of
law will hold you accountable.
From the Nuremberg trials to the Mai Lai massacre to the Abu Ghraib prison scandal, experience shows us that the I-was-just-following-orders excuse doesn’t hold much water. Nor, in my view, should it.
What about your immortal soul (if you believe in such a thing) or the dignity of human life?
Lawyers tell you that: ‘Old consideration is no consideration.’
They tell a funny story to demonstrate the point—you are walking along
the bank of a river and you see a man drowning. You immediately go over
and pull him out. He is profusely grateful and promises you a reward of
$1,000. “Gee,” you say, “that’s great. Here’s my address!”
A few weeks go by and you haven’t received the 1,000 bucks so you
give him a call. “Ah shucks, I didn’t really mean what I said. Sorry,
but I am not sending you the 1,000 dollars.”
Furious, you go see a lawyer. Your lawyer tells you, you have no
legal claim! Why? Not because it was a verbal agreement (verbal
agreements often have the power of contractual law except in the case of
real estate transactions which, at least in Ontario, MUST be in
writing.) You have no legal claim because you pulled him out of the
river (provided the service) before being offered any compensation. The
compensation was for nothing—you had already provided the service. A
contract consists of offer, acceptance and consideration. You
essentially had none of these.
But surely we would all agree that you have a moral right to your reward and he has an ethical duty to pay you.
But your lawyer will tell you: “Next time if you see him drowning,
ask him if he will give you $1,000 if you pull him out of the river
(offer).” If he says: “Yes (acceptance)” then yank him out and wait for
your consideration in the mail ($1,000).
Now that might make sense to a lawyer but it sure doesn’t make sense to me.
Now everyone, makes mistakes but the difference is between errors of
omission (I’m sorry, I don’t have the $1,000 to give you—I just lost my
job and my home…) versus errors of commission (Tough, I am wealthy and
alive (thanks to you!) but I just don’t want to give you the dough and
you don’t have any legal claim anyway—too bad, so sad.)
Now lawyers will argue that ethics means different things to
different people. This is called situational ethics. I get this. In some
cultures, it may be OK to deceive someone if that provides you with an
advantage in negotiations (just so long as you don’t get caught in a lie
and suffer embarrassment from that.) In other cultures, it may be OK to
take something that doesn’t belong to you because your culture has the
view that property should be community property and not individually
owned.
So a lawyer will argue that common law is an appropriate basis on
which to make sound judgments—based as it is on precedent. But within
most societies, most people have a pretty good grasp of what is ethical
and what isn’t, and if they believe in a Higher Power or have a strong
value system, those standards tend not to be relative—they don’t change
because you forgot to ask for a thousand dollars before you risked your
own life to save another’s with no thought of personal gain, the true
Good Samaritan.
Dr. Bruce
(Epilogue: They did settle the matter and an offer to pay the Company was made and the offer was accepted.)
(Post Script: I also raised the argument that, if they had planned not to pay the commission, why didn’t they tell the Brokerage this before
the transaction was completed? At least, that would have given the
Broker an opportunity to ask the Buyer to compensate them instead of
receiving no value for the work they did.)
(Post Post Script: It also occurred to me that the Seller had done
very well in the transaction—he had received a price that could be
demonstrated to have been as high or higher than the direct
comparables…)
March 17, 2008
Prof Bruce @ 2:59 pm
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