No Support System – That is the Sacrifice for Risk Takers

I’m an advocate of entrepreneurship, working for oneself, and freelance work in general. I believe there is a performance improvement across the board in these situations. It could be quality or reliability or even creativity (customization). It’s the chance for the greatest amount of wealth creation and it requires the most sacrifice as well.

And when I say sacrifice it isn’t necessarily about the work. It is often about the support system, or lack of one, for these risk takers. Barbara Kiviat from the Curious Capitalist point this out to me in her blog entry called The Freelance Economy Turns South, Too. She uses the example of someone who cuts hair. How just if her clientèle lengthens their time between cuts by a week it results in a 20% decline in income. I wanted to use plumbers or carpenters as an example, but hair cutters work best because it is a routine need that normally doesn’t have much variability (the same person usually cuts the customer’s hair every month or so). Here is an excerpt:

Earlier today I was talking with Donald Grimes, an economist at the
University of Michigan, and we got to playing around with some data
from the Bureau of Economic Analysis.
He was making the argument that a lot of the things in the stimulus
bill meant to help people whose livelihoods are threatened—things like
extending unemployment benefits and COBRA healthcare coverage—do
nothing for the self-employed people out there whose incomes are
getting obliterated, too. Think about all those real estate agents. Or
even people like independent hairdressers. If all of your clients start
getting their hair cut once every five weeks instead of once every
four, there goes 20% of your income. This is a bigger problem than it
might otherwise be considering the shift over the past 15 or so years
towards a Freelance Economy—our increasing tendency to work as
consultants, free agents, project employees and other variations of
pay-as-you-go help.

So if you are willing to go on your own during these poor economic times, just be sure you can deal with changing revenue trends.

One other item I can’t let go of right now is something a friend of mine said to me in reference to a particular situation a few years ago. He said “Many jobs are treated like corporate welfare by the employee” or something akin to that. And it is true to a point. Only certain people really give it 100%. Others do the 9 to 5 and consider it a completely fair deal for both parties. Well, until layoffs come…

I’m an advocate of entrepreneurship, working for oneself, and freelance work in general…

20 Ideas for 2009 from the HBR

The Harvard Business Review, or HBR as some like to call it just redid its website. It is much easier to navigate now and I’ve ran across one segment that I want to highlight. It is called Breakthrough Ideas of 2009.

Here is the list of 20 ideas:

Just Because I’m nice, Don’t Assume I’m Dumb
Beware Global Cooling
Institutional Memory Goes Digital
Stumbling to a Longer Life
The Rise of Forensic Economics
State Capitalism Makes a Comeback
Now’s the Time to Invest in Africa
Consumer Safety for Consumer Credit
The Ikea Factor: When Labor leads to Love
Launching a Better Brain
A Central Nervous System for the Earth
A Looming American Diaspora
Harnessing Social Pressure
Western Union World
How Social Networks Network Best
Should You Outsource Your Brain
The Dynamics of Personal Influence
Forget Citibank, Borrow from Bob
The Business of Biomimicry
What you Need to Know about the Semantic Web

Many opportunities await.  I particularly like Launching a Better Brain because it reminds us that having fun learning stimulates the brain to develop new neurons and pathways.

Happy Chinese New Year and Era

Happy Chinese New Year. Today (01/26/09) is the first day of the year of the ox. Yes, the year of the ox. I don’t really know much about this except that there are several days of traditions. But it is important to note because China is not only facing a new year, but a new era.

That brings me to an article I read in the NY Times yesterday called College-Educated Chinese Feel Job Pinch by Edward Wong. Here are some excerpts I pulled. I particularly like the stats:







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Students applying for jobs at the same time the previous
year had gotten two or three offers by the winter, sometimes for a starting
salary 20 times the average Chinese annual income.

As this country lumbers into the Year of the Ox, a frisson
of anxiety is rippling through a generation of Chinese who had grown up
thinking that economic prosperity was guaranteed them.

“Under the current situation, new social conflicts will be
created nonstop,” Chen Jiping, deputy secretary general of the Communist
Party’s central political and legislative affairs committee, said this month in
Outlook, a magazine published by Xinhua, the state news agency.

The Chinese government reported Thursday that the growth
rate for the final quarter of last year fell to 6.8 percent, bringing the rate
for the full year down to 9 percent, the slowest pace in at least six years. In
2007, the economy expanded at a roaring 13 percent clip. Analysts say growth
could slow to 5 or 6 percent this year, which would be the slowest pace for
more than a decade.

Reliable unemployment statistics are hard to come by. The
official registered urban unemployment rate for the end of 2008 was 4.2
percent, up from 4 percent in 2007
; it was the first time the official rate had
risen after five consecutive years of decline.

About 670,000 businesses shut down and 6.7 million jobs
“evaporated” last year because of the economic downturn, Chen Quansheng, an
adviser to the Chinese cabinet, said in a magazine published by The People’s
Daily, the Communist Party’s mouthpiece.

Of 5.59 million college graduates in 2008, an estimated 27
were unable to find jobs by the end of the year, according to the
Chinese Academy of Social Sciences.

For the students, that meant the odds were dismal: every job
opening in the government had an average of 78 applicants.

I once read that it is estimated that for the US economy to generate jobs the GDP has to be approximately 2.5%or above. This is relational to the population size of the country. For China, the GDP has to be at least 7.5%.

Weekend Read – 6 Errors add to an Economic Crisis

I like weekend reading that is a little light and fresh with perspective. I want to learn something I didn’t know before without a lot effort. It is the weekend after all. Well, I ran across a good summation of the financial situation in the NY Times. It is in a piece by Alan Blinder called Six Errors on the Path to the Financial Crisis. Here are some excerpts:

WILD DERIVATIVES In 1998, when Brooksley E. Born, then chairwoman of the Commodity Futures Trading Commission,
sought to extend its regulatory reach into the derivatives world, top
officials of the Treasury Department, the Federal Reserve and the
Securities and Exchange Commission squelched the idea.

SKY-HIGH LEVERAGE The second error came in
2004, when the S.E.C. let securities firms raise their leverage
sharply. Before then, leverage of 12 to 1 was typical; afterward, it
shot up to more like 33 to 1.

A SUBPRIME SURGE The next error came in
stages, from 2004 to 2007, as subprime lending grew from a small corner
of the mortgage market into a large, dangerous one.

FIDDLING ON FORECLOSURES The government’s continuing failure to do anything large and serious to limit foreclosures is tragic.

LETTING LEHMAN GO The next whopper came in September, when Lehman Brothers, unlike Bear Stearns
before it, was allowed to fail. Perhaps it was a case of misjudgment by
officials who deemed Lehman neither too big nor too entangled — with
other financial institutions — to fail. Or perhaps they wanted to make
an offering to the moral-hazard gods. Regardless, everything fell apart
after Lehman. People in the market often say they can make money under any set of
rules, as long as they know what they are. Coming just six months after
Bear’s rescue, the Lehman decision tossed the presumed rule book out
the window.

TARP’S DETOUR The final major error is mismanagement of the Troubled Asset Relief Program, the $700 billion bailout fund. As I wrote here last month, decisions of Henry M. Paulson Jr., the former Treasury secretary, about using the TARP’s first $350 billion were an inconsistent mess.

The Value of Time and the Economy

I’m not as negative about the next year as others are. Many people in the know are saying 2009 is going to be dismal. I don’t think it will be good, but I think it is going to be poor for 6 months and then flat for 3 and then starting to pick up for another 3. I was signaling a coming recession in 2007 by looking at wage levels against debt levels. I didn’t see a credit situation arising, but I did know that the consumption rate was out of whack. And now I don’t see all the possible worst case scenarios coming to fruition either. The reason is time. Time is a good balance to the economy now. The hyper connectivity and resource allocation system that is in place now allows for anyone with money making ideas to act on them in a relatively fast manner. Time is more valuable now than it ever was. Does it make sense that time is currency?

Anyway, I ran across a good piece in the NY Times about inefficient meetings called Meetings Are a Matter of Precious Time by Reid Hastie. There is a profitable niche market in this area and some quirky book or training always breakthrough as winners. Here are some excerpts I like:

The main reason we don’t make meetings more productive is that we
don’t value our time properly. The people who call meetings and those
who attend them are not thinking about time as their most valuable

In business, we like to convert time to money, and the
reverse. But in practice, time and money are different. We can get more
money, save it, move it between accounts and use it on demand. These
operations don’t apply easily to time.

Time is the most
perishable good in the world, and it is not replenishable. You can’t
earn an extra hour to use on a busy day. Nonetheless, we usually have a
vague feeling that there is plenty of time — somewhere in the future —
so we waste it now and carelessly steal time from our families, friends
or ourselves when we come up short at the end of a workday and need to
stay an extra hour.

Probably most important, we are blind to
lost time opportunities. When we choose where to invest our time, as
opposed to where to invest money, we are more likely to neglect what
else we could have done with it.

After productive or unproductive meetings, assign credit or blame to the person in charge.

Then, if people have track records of leading ineffective meetings,
don’t let them lead future sessions. When their expertise is essential,
make them subordinate to an effective meeting leader.

The Future is Bright – R & openFrameworks

Stanley Bing is a writer for He provides a business viewpoint with a crusty tint to it. It is fun to read. The other day he wrote about a time when he was young. Several classmates went with him to see a farm and the they learned a life lesson – chickens run around after their head is chopped off. There is blood and there is twitching. The story was an analogy for the US economy and being graphic was intentional. I agree with what his viewpoint is, except it assumes there is only one chicken. But there isn’t. There are many chickens and life goes on. The point I’m trying to make is that there are a lot of great ideas in the US economy right now and these ideas are not simple “wouldn’t it be great” fluf” either. The future is bright.

Two examples of technologies I think are ready to launch:

The R Programming Language
It is making large amounts of data much easier to work with and not just for those that watched Stargate either. The language is fairly easy to pick up once you need to apply it. And that is what I see as most valuable. A new segment of the population is dealing with very large sets of data that before had to use an intermediary. This empowers them and it makes the challenge of ever increasing data scalable. Here are a few links to more information:

R (programming language) – Wikipedia
Data Analysts Captivated by R’s Power
– A NY Times article
R You Ready for R? – A NY Times blog entry
The R Project for Statistical Computing – An application of R

The Open Frameworks
This labels itself as “creative coding” and I have to agree. It names itself OF. Just watch the video and check the links below it.
made with openFrameworks from openFrameworks on Vimeo.

openFrameworks – Wikipedia
openFrameworks – Home
openFrameworks – Wiki

President Obama Paraphernalia

Today is the inauguration of the new President of the United States of America. The peaceful transfer of executive power is what makes America so great.

But what is the deal with all the President Obama paraphernalia? There are coins, plates, t-shirts, hats, mugs, teddy bears, camcorders, and snuggies. OK, I’m joking about the snuggies, but they advertise often. But for a country in the middle of a terrible recession some business men believe consumers will spend for their new President.

Which makes me recall something that I’ve stated about a year ago. There are terrific deals to be had right now. You can get a car for dirt cheap. You can get housing for a major discount. You can vacation for far less than you probably believe. I’ve been harping on the jobs report as the key indicator of when the economy will change for the better. My theory is that once we are on the other side of the mountain the economy will pick up fairly quickly. My main rational for this is the efficiency of personnel resources within corporate America. Adding to that is the prospect of a stimulus. *

What I forgot to include in my reasons is there is a huge cash bubble right now. The everyman is suffering because he works for corporate America, but the super rich do not. Their long term wealth is improved by making deals that are timely. The stock market gets a lot of attention as a means to prosperity, but real affluence comes from taking advantage of times like right now. A year ago I called them the real estate vultures because I thought they would buy up sets of lots. Now it goes way beyond real estate. Everything is on sale and there are plenty of people with the means to get it on the cheap.

Barak Obama may be President and folks want a piece of that, but capitalism is still king and an astute few will be aquiring kingdoms. 

*Side note – there is a notion that stimulus packages don’t work
because they take affect after the tough stretch is over and facts back
this up. But this misses the point. Just declaring a stimulus gets the
economy moving. Businesses prepare for this coming infusion and this
preparation is what gets transactions happening. Without the stimulus there
isn’t a prompt to get commerce moving again. For example is shingles.
The cost of shingles should be decreasing because inventories are built
up, but they aren’t falling in price as you expect. The reason is
ingredients used in making shingles are also used to make roads. One of
the major stimulus targets is infrastructure. The supply and demand
rules are already adjusting to a stimulus that doesn’t even formally
exist yet.

“I have a Dream” Speech

I am happy to join with you today in what will go down in history as the greatest demonstration for freedom in the history of our nation.

Five score years ago, a great American, in whose symbolic shadow we stand today, signed the Emancipation Proclamation. This momentous decree came as a great beacon light of hope to millions of Negro slaves who had been seared in the flames of withering injustice. It came as a joyous daybreak to end the long night of their captivity.

But one hundred years later, the Negro still is not free. One hundred years later, the life of the Negro is still sadly crippled by the manacles of segregation and the chains of discrimination. One hundred years later, the Negro lives on a lonely island of poverty in the midst of a vast ocean of material prosperity. One hundred years later, the Negro is still languished in the corners of American society and finds himself an exile in his own land. And so we’ve come here today to dramatize a shameful condition.

In a sense we’ve come to our nation’s capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the “unalienable Rights” of “Life, Liberty and the pursuit of Happiness.” It is obvious today that America has defaulted on this promissory note, insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked “insufficient funds.”

But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. And so, we’ve come to cash this check, a check that will give us upon demand the riches of freedom and the security of justice.

We have also come to this hallowed spot to remind America of the fierce urgency of Now. This is no time to engage in the luxury of cooling off or to take the tranquilizing drug of gradualism. Now is the time to make real the promises of democracy. Now is the time to rise from the dark and desolate valley of segregation to the sunlit path of racial justice. Now is the time to lift our nation from the quicksands of racial injustice to the solid rock of brotherhood. Now is the time to make justice a reality for all of God’s children.

It would be fatal for the nation to overlook the urgency of the moment. This sweltering summer of the Negro’s legitimate discontent will not pass until there is an invigorating autumn of freedom and equality. Nineteen sixty-three is not an end, but a beginning. And those who hope that the Negro needed to blow off steam and will now be content will have a rude awakening if the nation returns to business as usual. And there will be neither rest nor tranquility in America until the Negro is granted his citizenship rights. The whirlwinds of revolt will continue to shake the foundations of our nation until the bright day of justice emerges.

But there is something that I must say to my people, who stand on the warm threshold which leads into the palace of justice: In the process of gaining our rightful place, we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred. We must forever conduct our struggle on the high plane of dignity and discipline. We must not allow our creative protest to degenerate into physical violence. Again and again, we must rise to the majestic heights of meeting physical force with soul force.

The marvelous new militancy which has engulfed the Negro community must not lead us to a distrust of all white people, for many of our white brothers, as evidenced by their presence here today, have come to realize that their destiny is tied up with our destiny. And they have come to realize that their freedom is inextricably bound to our freedom.

We cannot walk alone.

And as we walk, we must make the pledge that we shall always march ahead.

We cannot turn back.

There are those who are asking the devotees of civil rights, “When will you be satisfied?” We can never be satisfied as long as the Negro is the victim of the unspeakable horrors of police brutality. We can never be satisfied as long as our bodies, heavy with the fatigue of travel, cannot gain lodging in the motels of the highways and the hotels of the cities. *We cannot be satisfied as long as the negro’s basic mobility is from a smaller ghetto to a larger one. We can never be satisfied as long as our children are stripped of their self-hood and robbed of their dignity by a sign stating: “For Whites Only.”* We cannot be satisfied as long as a Negro in Mississippi cannot vote and a Negro in New York believes he has nothing for which to vote. No, no, we are not satisfied, and we will not be satisfied until “justice rolls down like waters, and righteousness like a mighty stream.”¹

I am not unmindful that some of you have come here out of great trials and tribulations. Some of you have come fresh from narrow jail cells. And some of you have come from areas where your quest — quest for freedom left you battered by the storms of persecution and staggered by the winds of police brutality. You have been the veterans of creative suffering. Continue to work with the faith that unearned suffering is redemptive. Go back to Mississippi, go back to Alabama, go back to South Carolina, go back to Georgia, go back to Louisiana, go back to the slums and ghettos of our northern cities, knowing that somehow this situation can and will be changed.

Let us not wallow in the valley of despair, I say to you today, my friends.

And so even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream.

I have a dream that one day this nation will rise up and live out the true meaning of its creed: “We hold these truths to be self-evident, that all men are created equal.”

I have a dream that one day on the red hills of Georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood.

I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice.

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

I have a dream today!

I have a dream that one day, down in Alabama, with its vicious racists, with its governor having his lips dripping with the words of “interposition” and “nullification” — one day right there in Alabama little black boys and black girls will be able to join hands with little white boys and white girls as sisters and brothers.

I have a dream today!

I have a dream that one day every valley shall be exalted, and every hill and mountain shall be made low, the rough places will be made plain, and the crooked places will be made straight; “and the glory of the Lord shall be revealed and all flesh shall see it together.”²

This is our hope, and this is the faith that I go back to the South with.

With this faith, we will be able to hew out of the mountain of despair a stone of hope. With this faith, we will be able to transform the jangling discords of our nation into a beautiful symphony of brotherhood. With this faith, we will be able to work together, to pray together, to struggle together, to go to jail together, to stand up for freedom together, knowing that we will be free one day.

And this will be the day — this will be the day when all of God’s children will be able to sing with new meaning:

My country ’tis of thee, sweet land of liberty, of thee I sing.
Land where my fathers died, land of the Pilgrim’s pride,

From every mountainside, let freedom ring!

And if America is to be a great nation, this must become true.

And so let freedom ring from the prodigious hilltops of New Hampshire.

Let freedom ring from the mighty mountains of New York.

Let freedom ring from the heightening Alleghenies of Pennsylvania.

Let freedom ring from the snow-capped Rockies of Colorado.

Let freedom ring from the curvaceous slopes of California.

But not only that:

Let freedom ring from Stone Mountain of Georgia.

Let freedom ring from Lookout Mountain of Tennessee.

Let freedom ring from every hill and molehill of Mississippi.

From every mountainside, let freedom ring.

And when this happens, when we allow freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God’s children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual:

Free at last! Free at last!

Thank God Almighty, we are free at last!

President Obama and My Four Components to the Future

This blog has really helped develop my sense of the economic future or at least a future I would like to see. It has four components to it. Two are tactical and very achievable and two are conceptual and high level.

They are:
Energy Innovation
Health Care Efficiency
Information Value
People Insight

I try to hit on these topics as much as I can as they related to the working world. For instance, I believe Energy Innovation and Health Care Efficiency are two areas ready to explode in growth. Smart entrepreneurs should be marshaling their resources in those two directions. The next five years are pivotal as to who the next big businesses are. Information Value and People Insight are skills that will be make or break for the next generation of leaders.

So, other than the obvious, what does this have to do with President Obama? His campaign and stimulus both hint at taking these four directions. For instance, here is an excerpt from his recent speech on January 8th, 2009:

And this plan begins with — this plan must begin today, a plan I am
confident will save or create at least 3 million jobs over the next few
years. It is not just another public-works program; it’s a plan that
recognizes both the paradox and the promise of this moment — the fact
that there are millions of Americans trying to find work even as, all
around the country, there’s so much work to be done. And that’s why
we’ll invest in priorities like energy and education; health care and a
new infrastructure that are necessary to keep us strong and competitive
in the 21st century. That’s why the overwhelming majority of the jobs
created will be in the private sector, while our plan will save the
public sector jobs of teachers, police officers, firefighters and
others who provide vital services.

To finally spark the creation of a clean-energy economy, we will double
the production of alternative energy in the next three years. We will
modernize more than 75 percent of federal buildings and improve the
energy efficiency of 2 million American homes, saving consumers and
taxpayers billions on our energy bills. In the process, we will put
Americans to work in new jobs that pay well and can’t be outsourced —
jobs building solar panels and wind turbines, constructing
fuel-efficient cars and buildings, and developing the new energy
technologies that will lead to even more jobs, more savings, and a
cleaner, safer planet in the bargain.

To improve the quality of our health care while lowering its cost, we
will make the immediate investments necessary to ensure that within
five years all of America’s medical records are computerized. This will
cut waste, eliminate red tape, and reduce the need to repeat expensive
medical tests. But it just won’t save billions of dollars and thousands
of jobs, it will save lives by reducing the deadly but preventable
medical errors that pervade our health care system.

Strangely, the undertone I most agree with is the idea that a 21st century economy begins with shovel and dirt. For too long we’ve become too elitist to attend to bridges, dams, and road projects correctly. But these areas are foundational and multipliers for the more advanced work that is sought.

I’m looking forward to what President Obama says at his inauguration. It is rare that someone gets the chance to be legendary… and knows it.

Two Writers I like being Interviewed: Dan Pink and Geoff Colvin