Let Them Fail: Common Sense, Buffoon Style

A story today in the Wall Street Journal points to a sobering reality. According to the WSJ's analysis, lending activity by the banks receiving TARP funds decreased by a total of 4.7%, month over month, between January and February. This sounds a little ominous, but when you factor that out over 12 months (remember, that's a one month decline), you get a decrease in lending activity of 56.4%! That's huge! Essentially, we pumped billions of dollars into a bunch of banks in order to get them moving again. And what did they do? They DECREASED lending activity!

What a surprise!

The real question, though, is what does it mean?

First, despite all the bailout money we've pumped into the various banks, they are loaning even LESS money. And that's a problem. Because this house of cards our government is trying so valiantly to prop back up requires the loaning of money (not that I'm an advocate by any means; I'm merely trying to establish the fundamentals of the government's plan). We need to circulate more money in the economy, but people don't have money. So they need to borrow more from banks, which means the banks need to loan more. But the banks are broke, which means we need to give them some money to loan.

Which, after a great deal of analysis, brings us to this question: if we give the broke banks money to loan, and their lending activity DECREASES, what do we do next? The obvious answer is give the banks more money, right?

Wrong. The truth is, we're merely trying to prop up bad businesses. It's true of the auto companies, the banks and the insurers. They're poorly run, inefficient businesses--and the truth is, they can't compete with the rest of the world.

So why in the world would we want to throw more money at them? In the REAL world (the one that you and I live in), high performance is rewarded with returns; poor performance with failure.

Why would it be so terrible if the banks failed? I know: that comment qualifies me as an ignorant buffoon, right? I mean, think of the lost jobs, the lost money, the vacant high rises in New York (and the resultant plummeting NYC Class A rental rates). I'm just narrow-minded and downright ignorant.

Perhaps. But before you pass final judgment, consider this: according to statistics compiled by the Small Business Administration (SBA) over 50% of private sector employees in the U.S. are employed by a small business. Further, small business accounts for over 45% of the TOTAL PAYROLL across the U.S. (including private sector payroll). Even more remarkable is the fact that between 60-80% of all new jobs created over the last decade have been created by small businesses!

Profound numbers--all of them. And they seem to indicate that, first, small business is substantially more impactful on the economy than are these giants that are being bailed out. Additionally, small business is growing in proportion to big business (the lumbering giants are slowly but surely being overtaken by their swifter, more innovative and much smaller counterparts).

And I would contend that that's OK. Why not let these giants fail--and let the small businessmen (who are actually, based on the statistics above, GROWING our economy) keep that tax money, and put it to PRODUCTIVE use in their OWN firms?

Makes perfect sense to me.

But then, what do I know? I'm just an ignorant buffoon.

Invisible Hands & Free Markets

How is value created? The answer is rooted deep in human nature. Austrian economist Ludwig von Mises wrote in his “Human Action: A Treatise on Economics” that there is, inherent, in mankind a drive toward happiness (loosely defined as “having succeeded in attaining his ends”). Given that drive toward the highest degree of happiness, mankind is constantly looking for an attainable alternative to their current condition. That is, they’re looking to trade their current reality for some reasonably attainable BETTER reality—one which will, ultimately, make them happier.

This principle really begins to uncover the answer to the question “how is value created”. At the most fundamental level, value is created through trade.

Some time back, I decided to sell my car. I don’t recall what I had it listed for, but I had a number of offers. One guy offered me $12,000; I turned him down. Why? Because the car was more valuable than $12,000 to me; conversely, the car was LESS valuable than my asking price to him. I ultimately did sell it though-for $14,000 I think. Why? What caused the transaction to take place?

One would assume that he felt the car was worth $14,000, and that I did also, but that would be inaccurate. The truth is, he felt the car was worth MORE than the $14,000 he gave for it; on the other hand, I felt it was worth LESS than $14,000. If this weren’t the case, the trade wouldn’t have happened. Because rational beings only make an exchange when what they are getting is, to them, MORE VALUABLE than what they are giving. He received MORE value from the car than he was receiving from the $14,000 he had in his pocket; I received more value from the $14,000 than I was receiving from the car (you’d agree, by the way, if you’d owned that car).

So then, by virtue of an exchange between rational human beings, additional value was created. Further, the assets in play within that economy (namely the $14,000 and the car) were, through the trade, put to their highest and best use. So value was created not only for the individuals involved in the transaction, but also for the overall economy.

This is the “invisible hand” that Adam Smith, the eighteenth century Scottish philosopher and economist, wrote of. He said, in an oft-quoted passage from his noted work, “The Wealth of Nations”:

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.

He postulates that by pursuing our own individual best interests, in a free-market, we will naturally, through trade, arrive at an exchange that will maximize the value attained by all participants. By maximizing our own personal happiness, we, without trying, maximize the overall good to society. That's the invisible hand that brings us to the overall maximum value within an economy, WITHOUT excessive regulatory intervention by a government.

Imagine, then, that in my example, there’d been some regulation that said that used cars of that make and model, for that year, could only be sold for $12,000. Suddenly, the situation changes. Assuming I wish to sell the car, I’m forced to sell it for LESS than I think it’s worth, and the guy that buys it walks away singing. I’m ROBBED of value, and the buyer gets an “obscene” deal on the car.

The idea of a regulation limiting the transfer price a used car is, of course, absurd (or maybe it’s not)—needless to say, it’s not reality. But governments do regularly intervene, and regulate trade (through various means, including tariffs, taxes, monopoly laws, minimum wage and price caps). What is the net affect of an “independent” authority involving itself in trade within an economy?

Consider this: imagine that, in my car sale example, the gentleman who wished to have my vehicle had cash at his disposal, as well as, say, a 9mm Glock pistol (loaded). Further, assume that there was no government authority that imposed a threat of punishment on those who used force, or the threat of force, to take other’s property against their free will. Assuming, again, that individuals are always looking to achieve the highest level of personal happiness (or, to have as much “stuff” in this example), what is the buyer likely to do? He’s as likely to use the gun and take the car for free as he is to pay me the $14,000 that I really require in order to willingly let it go. So in the absence of ANY regulation, we run the risk of allowing “weaker” parties in a transaction to be robbed of any and all value, potentially resulting in a net loss of value to the economy as a whole.

So there exists a need for, at the minimum, a set of societal norms—rules of engagement that provide general boundaries for our actions. Governmental regulation is generally effective at establishing and enforcing these boundaries.

Imagine though that you own a small business. You have a need for a single laborer to perform menial tasks, all manual labor. You place a "Help Wanted" ad in the front window, and in walks a 16 year-old young man.

"I'm looking for work," he says, "and I saw your sign. I'd like the job."

"Certainly," you say. "It's yours if we can make a deal happen. How much would you like to make?"

"Umm...I don't know; how about $5.00 per hour?"

"Perfect! That's exactly what I can afford," you say. "When can you start?"

"Tomorrow," the teen says, as he reaches out to shake your hand.

You shake his hand. As you turn to walk back to your desk, your gaze travels past the State Minimum Wage poster posted on the office bulletin board. Minimum Wage, it says, is now $8.00.

You stop short, and gaze at the poster. The teen is clueless.

"I'm sorry," you say, as you turn back to him, pained expression on his face. "I can't hire you; I can only afford $5.00/hour, and you'll work for that, but the state won't allow you to work for less than $8.00"

He walks away downcast; you scale back business. Neither of you win. You were both WILLING to make the trade, but due to regulatory restrictions, you weren't allowed, and so the net value created was LESS than it would have been were the trade allowed to happen, and not regulated away.

The greater the level of freedom in the marketplace (the lack of regulation), the greater the potential net value created across the marketplace. But there's one additional factor that contributes to overall net value. Choices. A vital element that exists in a true free market is the presence of choices, or options. A seller has multiple potential buyers; a buyer has multiple potential sellers to choose from, and even multiple potential alternative products.

Happiness is truly maximized when one feels as though they've made an equitable trade after evaluating all the options in the market. This is an earmark of a free market, and enable the "invisible hand" to operate most effectively.

The most prosperous economies are those that operate pursuant to the principles of a free-market, and encourage the pursuit of personal prosperity. This environment is most conducive to allowing the "invisible hand" to unwittingly build that individual and collective value across the economy. This is the environment that we must strive to cultivate, both in our national economy, and in our individual business economies. In doing so, we create value.

It is our purpose, to create value. The alternative is to diminish value. The application of human effort and energy enables the creation of value. Diminishing value, then, is tantamount to wasting--or taking--human life.

A prosperous Free Market: it is our purpose; it's our obligation.

Holes in the Earth

Yesterday when I got home from work, Gentry and Lex were in the front yard playing. They both had table spoons, and were squatting over a sizeable hole in the grass.

I walked over, and peered down into the hole. They were industriously hacking at the sides and bottom of a pit roughly the size and depth of a five gallon bucket, removing the dirt, spoonful by spoonful, and piling it in the grass off to the side.

I watched them for a moment. They ignored me.

"What are you guys doing?" I finally asked them. "Digging a hole to China?" I laughed.

They stopped digging, and slowly lifted their heads and looked at each other in that "we-know-something-he-doesn't" way.

"China?" Lex said, incredulously. "No, Dad!"

"Oh," I said. "I feel stupid now. I'm sorry. Well, what are you doing then?" I asked as they got back to their digging.

They stopped again and looked up at me, exasperated.

"Dad. You can't dig to China," Gentry said.

"Sure you can! We used to when we were kids!"

Lex tossed down her spoon, and stood and looked at me in disbelief. "No," she said, "you didn't. You MIGHT have dug a hole to the southern Indian Ocean, but not to China."

"Unless," Gentry said, "you gwew up in Costa Wica or somewhewe else in South Amewica."

"Um..." I said.

Lex grabbed my hand. "Come on." She dragged me into the house, jumped on the web, and navigated to a site that shows where, exectly, you'd pop out, if you dug right through, directily through the center of the earth, and straight out the other side.

"See Dad? We're on the opposite of the earth from the Indian Ocean, south of Madagascar. If you want to get to China, you have to start in South America."

I stared at them for a moment. They looked back at me briefly, then jumped up, and ran back outside. I was so dumbfounded that I couldn't think of anything else to say.

And, for the life of me, I can't imagine what it is they want to see at the Indian Ocean.

Oh yeah: be careful if you drive through town, if you go down our street, you might have some issues trying to navigate the huge pile of dirt that's creeping out into the road.

OK; that's not true. They didn't do that. But I WAS amazed to find on this website, last night, that if we were to dig that hole that we've all talked about since we were children, we'd end up nowhere near China. Lex was right; we'd pop up somewhere in the Indian Ocean, south of Madagascar.

I'm dejected, of course. It's strange isn't it, that you live your life hearing something that is, in hindsight, no more than a myth, and the evidence is right in front of us to prove that, but we readily accept it because we hear it so often.

You see, perception truly is reality. The truth really doesn't matter all that much when it comes to relating to other people; all that matters is what they BELIEVE to be the truth. I learned that lesson early on in business for myself. We started off with nothing (I wrote about it awhile back); no money, very little experience, and no real business to speak of. Only a passion and a vision for something great.

But we determined early on that we weren't going to show anyone the reality; we were going to show them what they wanted to see. And so we built a "brand"-a corporate identity, with a professional logo, nicely printed business cards, a website, nice shirts and logos on our truck. And I walked in to meet with prospective customers, having never built a home for a customer in my life, with my head up, a juanty walk, and a self-confident attitude. I listened to their questions, answered those that I knew the answers to, and made up answers to those that I didn't. All this, while we were operating our business out of a garage.

But it sold us. People believed it; they paid us good money to build houses for them. Why? Because that's what they wanted to believe. They WANTED an energetic, excited, professional and knowledgeable builder, who emanated experience, and most of all, security.

We were wise enough to recognize what it was that people who were looking to have a home built were TRULY wishing to buy. My job wasn't only to build houses. In fact, I think that my job, as a custom home builder, was to make people feel secure. To make them feel like it really is OK to pay these folks an enormous amount of money, and have them build me a home.

I guess maybe that made me a marketer; I prefer to think my job was to develop complimentary perceptions in the minds of our prospective customers.

In hindsight, maybe I messed up. We're, obviously not in business anymore. Why? A number of reasons. But I think that part of the reason is that, the whole time I was convincing our potential customers that we were a little more than we really were, I was slowly convincing myself. The job of a GOOD marketer is to build a perception in the mind of the customer that doesn't EXCEED the reality that the enterprise can create.

You see, I started to believe myself, and forgot my limitations. And reality went out the window. Why? For the same reason my customers did; because the picture that I painted for them was the picture that I wanted to see. And everytime I painted it, it became a little more real to me. Until it WAS the reality.

And that's where it all fell apart.

It pays to remember that, no matter how many people tell you that a deep enough hole will take you to China, if you act on it, you'll end up in the Indian Ocean.

The Curse of the Information Age

He hurries down the sidewalk, oblivious to the crowds surging around him. He carries a bulging brown leather briefcase, as he types with his thumbs on a Blackberry, and talks aloud to no one--or perhaps to the blinking gadget nestled in his right ear.

As he steps off the curb, an arm shoots out, and pulls him back--just as a bright yellow taxi speeds through the space he would have occupied had his benefactor not stopped him. He barely notices. He means to thank the guy, but the light changes, and the guy moves off across the street before he can "Uh-huh...uh-huh..." his way out of the conversation with the contraption in his ear.

Twenty minutes later, he sits in his red leather desk chair, phone to his ear, absently mumbling, "um hmm...ya...m hmm..." every few seconds as he types an email. His Blackberry buzzes; he picks it up, stares at it for a moment, and types something.

"Uh huh..." he says to the person on the telephone.

You've seen the guy before. Perhaps he's even you. He's certainly me (occasionally). The lexicon of the language of success begins with the word "multitask". It's a quality, to be sure; it's a must-have if you want your resume to warrant a second look.

Today's successful executive...scratch that; today's successful businessperson...nope, scratch that too; today's successful employee...uh uh; that's not quite right either. You fill in the blank: executive, businessperson, employee, mechanic, student, parent--they all fit. Today's successful individual is expected to multitask his way to success.

I'm reminded of a guy I saw once in the drivers seat of a car stopped next to me at a red light. He was a businessman, presumably on his way to work. He had his pop-tart on a napkin up on the dash, as he held his cell phone between his shoulder and ear, and shaved with an electric razor. I remember watching him in adulation, thinking that a guy who could juggle all of that while at a red light, must truly be a star performer, a success bar none. I aspired to that level of professional greatness.

I now believe I've arrived. I'm disenchanted.

A recent report entitled "Information Overload: We Have Met The Enemy and He is Us", published by Basex, a leading business research firm and expert in "Collaborative Business Environments", asks the question, "How much information can any one person manage at a given time?"

The answer to that question, it contends, or rather, how accurately companies can answer that question when it comes to their employees' activities, may, in fact, prove critical in ensuring their long-term success.

We have entered the technology age, where every desk has a computer and a telephone; where everyone (including some of my daughter's first-grade classmates) has a cell phone; where Internet is found not only in offices and homes, but in Starbucks', airports and McDonald's; where you can not only talk on your mobile phone, but email, text-message, and even listen to music and podcasts on it. This is, of course, progress; because each of these devices, each medium or mode of transmitting information, enables the "knowledge workplace", a critical earmark of any successful company hoping to compete in the fast-paced "knowledge economy", and wishing to attract top-tier "knowledge workers".

And so we, in the business realm, do our best to adequately equip our army of faithful "knowledge workers". We stream the highest speed Internet connection directly to their desk. We drop in a telephone system (replete with voicemail, call-forwarding and dial-in message retrieval features), and place a phone on every desk. We outfit them with Blackberry's and PDA's. And then we send them out to battle.

And for all our enormous investment in those, the essentials of "knowledge working", have they, our select group of knowledge workers, contributed any additional value? According to Basex, this brave new world of information at your fingertips has brought an unexpected side-effect. According to the report, their research has shown that knowledge workers have a tendency to address information immediately; they fail to differentiate between urgent, and time-insensitive information. Thus, when an email pops up, they have a tendency to drop whatever they happen to be working on, and read and respond-regardless the urgency of the original message. When the phone rings, they abandon their urgent task, and jump to answer.

The net result, though, is that we knowledge workers tend to get distracted often through the course of a typical workday. Emails, text messages and phone calls, bombarding us from all directions, tend to cause our attention to bounce about like a ping-pong ball, rarely allowing us even a few uninterrupted moments to focus on completing a single task. Consequently, according to the Basex report, interruptions of this sort now take up approximately 28% of the average knowledge workers' day. This translates into 28 billion lost man-hours per annum in the United States alone. Assuming an average wage of $21/hour, this adds up to a total cost of $588 billion to companies in the United States, per year, all attributable to the advances brought to us by the age of information.

Yes, multitasking is ineffective. And the more you multitask, the less you get done. Lest you think yourself an exception to the rule, consider this: in 2005, Glenn Wilson of the Institute of Psychiatry, University of London gave an IQ test to a group of people who were to do nothing but take the test. He then gave the same test to a group of people who, while taking the test, were distracted by emails and ringing telephones. The results showed that the group who weren't distracted at all, who focused entirely on the task at hand, scored, on the average, ten (10) points higher than the group who had the distraction of ringing phones, and emails.

He then gave the test to a third group. This group was allowed to take the test uninterrupted, but only after having smoked marijuana. This group scored, on the average, six (6) points higher than the group who was continuously interrupted (and only four (4) points lower than the focus group). The evidence strongly suggests that the lack of focus brought about by the constant distractions that come with this age of information has a tendency to detract from the quality of work product produced. In fact, we might be better suited in taking away our employee's cell phones and laptops, and simply allowing them to smoke a bit of marijuana before work (Disclaimer: don't try this at home folks-please! The ideas and concepts contained herein are NOT the author's--particularly if you go try it and get in trouble by your parents).

What to do, then? Few companies can afford the productivity of their employees to be consistently crippled by 28%. That's a large enough percentage to drain many companies, especially in labor intensive sectors. It's impractical to yank out our networks and Internet, to cancel our mobile phone contracts, and turn off our email servers. No, technology isn't the problem. The problem lies within us.

What if you were to, the next time you sit down at the desk to focus on something, turn off the email program, or ignore incoming voice messages until some designated time later in the day? What if you were to turn the cell phone on silent, and place it in a desk drawer until the current project is finished? What if you were to ignore text messages until a specified time during the day? Could you then retain most of the valuable benefits of this information age, yet refrain from participating in the great information overload drain?

But then, you run the risk of ignoring a bit of time-sensitive information that might actually increase efficiency, were it known. And that's a risk that, psychologically, we're unwilling to take, to our collective detriment.

In short, information overload has forced us, if we ever hope to conquer it, to face the fact that we, as working individuals, have a problem with dealing with multiple concurrent flows of information. It drags down our productivity, but we can't seem to stop ourselves from allowing it to continue. If we are to ever reclaim that lost territory, that $588 billion per year, we're going to have to discipline ourselves into maintaining focus, even in the face of an avalanche of information.

This increased personal discipline will, I believe, be crucial in laying the groundwork for long-term success. In the absence of a focused knowledge workforce, and with the perpetual advent of new information technologies, we'll continue to see diminishing returns from our employees.

It's been this way, though, for all of recorded history. Each time a brave explorer pushed into uncharted territories, he was faced, at some point in his quest, with an obstacle that challenged his will to explore the new land. But the truly great recognize the obstacle, and work through or around it, still striving for their prize. The advances possible in this, the Information Age, are great. Enormous potential lies, largely untapped, in harnessing the full power of the knowledge economy. But it can, too, be our downfall.

Our charge is simply to discipline ourselves, and to maintain focus. In doing so, we'll most effectively channel all of the potential power at our very fingertips.


The Basex report is downloadable by clicking this link: http://www.basex.com/web/webdownloads.nsf/io?OpenForm

The Sheriff Called

Shawna woke me last night from the dark, dreamless NyQuil induced sleep of the dead. I looked up at the ceiling; we have one of those clocks that projects the time in enormous red numbers on whatever surface you aim it at. We pointed at the ceiling-not sure why. It's not the ideal place if you happen to be an insomniac (I sleep fine; Shawna doesn't sleep nearly as soundly); there's nothing worse than lying in bed, trying desperately to fall asleep, and watching the minutes tick away directly above you. It was 2:23.

"That was the sheriff's office."

"What'd they want," I asked, barely awake.

"They asked to talk to you."

"Oh," I said, hoping beyond hope that they'd at least have the decency to wait until morning to come pick me up for whatever crime I'd committed.

"I told them that you weren't available."

Apparently she wanted them to wait until morning too.

"Oh."

"They said they found your car."

"WHAT?!?!" I asked, wide awake now. "Which car?"

"The Honda," she said. We've only had the thing three weeks or so. Thing was, it was right out front when I'd fallen asleep a few hours earlier. If I'd thought for a moment, I'd have realized that it couldn't be that car; we haven't yet registered it in our name.

"I asked them which Honda, 'cuz ours is still out front," she said. "They said it's a '96 green Honda Accord."

We sold that three years ago. To a girl who goes to church with us.

"Oh," I said. "Let's go back to sleep."

"I told them we haven't owned that car for awhile," she said. "They asked if I was sure. I told them that I was pretty sure. They said they'd get back to us."

You'd think law enforcement would have access to current Department of Motor Vehicles records.

She text messaged the girl who now owns the car. She replied a few minutes later that the car was fine. It hadn't been stolen; she'd left it in the church parking lot the evening before, and our diligent law enforcement agency "found" it for her a few hours later. They drove down to the church parking lot and picked it up, safe and intact, at 2:30 in the morning.

I told Shawna to come back to bed; she was standing at the bedroom window staring out at our cars, as if they were in increased danger. She came to bed; she lay there shaking-adrenaline pumping, for a few minutes. I fell asleep. This sleep wasn't dark and dreamless.

In the dream, I was reading a newspaper story that quoted me. The quote was something like:

"Ah don't rahtly know, t'be awnest witcha. Ah reckon that they'll get some of thar money-ah shore do hope so."

The story then pointed out, apparently to support the reporters' supposition that I'm unlearned and ignorant, that I did not know what colors were in the US flag; nor did I know that California and Mexico each had their own flag.

I woke up in a sweat, cursing Donald Trump vehemently (well, I sort of silently cursed him, minus expletives, as I don't curse).

The newspaper story was chronicling the rise and fall of the business that I'd been a partner in-well, really, it was chronicling the fall because that's what sells papers (and, perhaps, because it was my dream, and thoughts of that fall are what eat away at my sanity, day after day). It was telling about a project that we'd worked on, the project that was to be our crowning achievement. And it was telling how we'd ran out of money, and had to walk away from the project. It was telling the story of how we'd had to pursue legal action against the developer, who promised to pay us. And it was telling the story of thirty or so homeowners with partially completed homes, left in the lurch when that same developer who owed us money, filed bankruptcy, leaving them without the means to finish their homes.

And it was making me out to be the dummy who charged in like a fool, and caused the whole house of cards to collapse.

I can't recall, but I'd guess that if I'd searched for the byline on that newspaper story, it would have had my name in it. After all, it was my dream wasn't it?

But then, I'm telling the last chapter first, aren't I?

It really started back in 2002 when Dad, my brother-in-law and I went into business for ourselves. In hindsight it was foolhardy, if not downright stupid. We were each in debt personally, and none of us had any cash (about $4,000 to our names-collectively). Nor did we have any business (that is, we had no customers).

Dad had carried a California General Contractor's license for a little over twenty years, and had quite a bit of on-and-off building experience. We'd talked, half-jokingly, for a number of years, of starting our own home-building business, but had never progressed past the talking point. Then, suddenly, circumstances changed, and the stars were suddenly aligned. So we made the plunge.

Our first job was, strangely enough, installing linoleum on the top of four cash register stands in a newly remodeled grocery store. We bid it at $700. It cost us $900 to get a professional to come in and fix our mistakes.

Our second job was to tile a shower. We got smart and charged what the job was worth this time-$900. Three full weekends later, the shower was tiled (to a tile bill of about $400-leaving $500 to cover our combined labor for three weekends; as best I can figure, it worked out to about $4.50/hour for each of us). That paid for our new logo and business cards.

We were in business!

We picked up a remodel job in a nearby city. The homeowner wanted to remove a number of walls, install a brand new kitchen (maple cabinetry, granite counters, recessed lighting-the "Architectural Digest" package). We quoted somewhere around $17,000. I think, in hindsight, if we'd finished the project, the cabinetry alone would have cost us $17,000. We didn't, though. Somewhere between removing the various walls, and installing a 38' long engineering beam in the ceiling, with ceiling and walls exposed, insulation removed, and electrical wires hanging like spaghetti from the ceiling (all to the tune of about $6,000 worth of billing-unpaid), the owner found out that his bank loan wasn't going to happen. He had a total of $11,000 to complete this project that we'd already started, and he decided he didn't want to pay us the $6,000 that we'd not yet billed.

This was my introduction to the world of small business. Small business, in my experience, is not glamorous; it's not even very fun most of the time. It's hand-to-mouth; you eat what you make. You sometimes chase checks to the bank. You borrow a nice suit and tie, and a respectable vehicle, from a friend, so that you can present a decent image to some prospective customer who likely wouldn't pay you a dime if they knew that your checking account had $27 in it. You meet customers at their home-and tell them it's a "value-added" service, when in reality, it's because your office doubles as your garage.

And when a customer decides he doesn't want to pay you for work you've already completed, you come home, and realize that you have two children who probably won't eat tomorrow if you don't get some money from someone. So you call that customer, and you grit your teeth, and you, in the steeliest tone you can muster, explain all the state contractor's codes, and the various penalties for non-payment, and you reference all the court cases you can find (and some that you've made up, to boot) in which non-paying customers are punished severely by our prudent justice system. And you explain how, if there's not a check waiting first thing in the morning, you'll drive down to the building department, and tell them about this guy who's doing a major remodel without a building permit.

And then you hate yourself. But you cry and laugh all the same as you hang up the phone, because he tells you, with fear and resignation in his voice, that first thing in the morning, there'll be a check waiting.

I slept well that night, for the first time in a few months. Our first real payday was tomorrow; tomorrow it would all begin to pay off.

We laughed and joked on the way to pick up the check. Just as he'd said, the check was waiting. We took it to the bank, hoping there were funds to cover it. It was good. We almost laughed out loud standing there in the bank.

For the first time since we'd opened the business checking account, we sat down that night to do the books with smiles on our faces.

We jumped in, mentally tallying up our individual paychecks. We joked as we organized various receipts and invoices. Then we started tallying them up. By the time the Accounts Payable were fully tallied, none of us were smiling. Mother, I think, might have been crying softly. It didn't leave more than $400 or so to go around. Our first paycheck since we'd been in business, and the three of us (no other real income between us, to speak of) had to find a way to split $400.

"Paul, what are we going to do?" Mother asked Dad, as I recall.

"God will take care of us Becky," he told her. "He always has."

And He did. He always has.

There's more to the story; I'll tell it, perhaps, over the next few weeks. It really is an interesting story. And while I KNOW it doesn't seem to relate AT ALL with my dream from last night, it will all come together-including why I don't like Donald Trump. But I realize now that I'd have avoided a little heartache if, in all my reading, I'd spent some time reading the best business book ever written:

"But don't begin until you count the cost. For who would begin construction of a building without first getting estimates and then checking to see if there is enough money to pay the bills? Otherwise, you might complete only the foundation before running out of funds. And then how everyone would laugh at you! They would say, `There's the person who started that building and ran out of money before it was finished!'

-Luke 14:28-30 (NLT)

I imagine a few people laughed at us and said things like, "There are those guys who started that construction project, and lost money on it! They've not had a paycheck in four months!" I know that, lying in bed that sleepless night, after learning that I would have to scramble to find some cash, I berated myself. I lay there, heart beating a hole in my chest, fear holding the sleep at bay, wondering how Shawna could still love me, how she could ever stay with a person who couldn't adequately provide for his family.

She knew. She could tell what was going through my mind. She pulled me close and held me. And I cried, ashamed of myself. And she told me not to worry, that she loved me, and that it would all be OK.

And it was.

-to be continued...

Business Travel

I'm traveling again. On business. Which, I've decided, I detest.

No offense to my colleagues who happen to read MyndFood; I don't dislike what I do at all, and I enjoy all of you that I work with. But business, in my (admittedly jaded) estimation, is 20% actual productive activity, and 80% people trying to uncover some obscure problem in order to justify their existence (or in the absence of an actual problem, inventing some new, revolutionary business concept that then-due to it's conspicuous absence within the organization in question-becomes a problem).

Hear me out-please.

I'm at a two-day seminar. I know what I paid for the seminar (it wasn't inexpensive, by any measure), and at the price I paid, multiplied by the number of attendees (thirty, give or take), the seminar tuition alone cost the attending companies about $100K. Add to that the cost of a hotel stay for two nights ($179 a night-a bargain, to be sure), parking ($15 to self-park; $20 for valet-per night, that is), and travel (I'd guess $600 per person, on average), you could probably tack on another $40 to the total pricetag of the seminar. Not to mention the opportunity cost associated with 30 or so highly paid professionals sitting in a room on the coast of California for two full days. Assuming the average person in the room makes $130K per year, that would add up to somewhere in the neighborhood of another $45,000.

For a grand total cost of around $185,000.

Money well-spent if there's anything to be gained by participating.

But, invariably, I receive a flyer for some seminar, read through it, get excited, and register. I attend, and find myself agreeing-wholeheartedly-with almost everything they have to say. But also realizing that they're not really telling me anything I didn't already know. Not that I'm some business prodigy. The reality is, when you parse it all down, the basics of business are pretty intuitive. It doesn't take a genius to get the concepts right.

But common sense and intuition don't sell. So intellectuals (admittedly, very bright, competent and talented people) go out, wrap their suble flair around a common sense concept, develop a Powerpoint presentation, throw out business buzzwords, and charge a fortune to speak about them.

And then people like me come, nod their heads, smile, and go back, enthused, and make some sort of (hopefully positive) change.

Do you see, though? They're not really instructors; there's nothing there to instruct. They're cheerleaders. They exist to get us (the business community) excited about some concept, to get us enthused and pump us up, make us believe we can affect positive change (or, make us believe that we NEED to change-whether we do or not-THEN make us believe we can do it).

But, alas, I freely admit that I'm jaded and dejected. Because I sit here in a beautiful hotel room, overlooking a magnificent golf course, a stone's throw from a gorgeous beach-alone. You see, I'm projecting. There's probably some truth to that whole diatribe, but the simple fact is, I am of the firm opinion that the enjoyment in life is found in sharing experiences with those you love. Happiness doesn't exist in my world unless I have someone to share it with.

So, a beautiful hotel, the ocean, and even the opportunity to learn-none of them have any interest to me.

Because I'm alone.

I miss you...

Joel Maxwell

Joel Maxwell mentions me today in this post over at his blog.

I encourage you to stop in and pay him a visit. He has an incredibly inspiring story!

Why We Love Dilbert

An actual excerpt (virtually word-for-word) from a recent business conversation:

"The current corporate initiative is to achieve bottom line improvement, to a 'far-exceeds' level, across the diagonal, with no more than a thirty percent breakage. The question is, 'how sustainable is that'? We have created the diagnonal, and built in a thirty-percent breakage factor, but are now four months into the fiscal year, and have already exceeded our breakage. We've re-aligned our Ci assets, and have determined that the best course of action will be to incorporate FMEA's, along with various Poke Yoke and 5-S projects into the deck in order to recapture as much as possible."

Huh?

I'm Sorry, But I Have to go to Bed

I should be in Boise Idaho tonight.

I'm NOT-but I SHOULD be. Instead, I'm sitting in the very last hotel room available in Beaverton, Oregon. That's right-Beaverton, Oregon. Because the flight I was scheduled to be on was cancelled at the last minute. I complained to the gate agent about the cancelled flight, started in on some diatribe about poor management, about it being inexcusable.

He listened politely, and when I finally tired, he said, "Mechanical Problems." He told me though that, he understood where I was coming from, and after hearing me out, they were going to make an exception. If they could find a pilot, they'd make the flight-with only me aboard. I declined.

At any rate, it's been one of "those days." Apparently, the only excitement these guys ever see is when flights get cancelled, so they maximize the thrill-by getting as creative as possible in helping to create the passenger's "alternate itinerary." He enthusiastically began to search the flights, and I must say, if creativity was his goal, he's a champion. I don't recall exactly, but I think his first plan had me flying from Sacramento to Phoenix, with a 17 minute layover, then a flight from Phoenix to Seattle; Seattle to Boise (arriving Thursday evening, I think). The good news was that the airline would cover all of my meals (they gave me meal vouchers-worth $16), as well as hotel stays (they gave me a card to fill out and send in with receipts; the title on the card-I swear I'm not making this up-is, "Does Anyone Actually Read These Things?"). I declined (as I have meetings at 7 AM tomorrow just outside of Boise).

The agent finally tired, and grudgingly agreed to put us on a flight into Portland. I jumped on the phone, frantically searching for a hotel, only to find there are multiple conventions in town this week, and the closest hotel room was "10 miles away," in Beaverton; not too bad. I arrived-and promptly found out that Californians are to Oregonians as Americans are to the French. A gentlemen (who looked like he was from Berkeley; tie-dyed shirt, khaki shorts; long-hair; Birkenstocks), cordially asked if I was from Oregon. I said no, that I was from Central California. He froze, got a very angry look on his face and glared. I asked if that was a bad thing. He said, "Yes. Very bad."

I quickly moved on-only to, just moments later, while walking through the baggage claim area, find the same tie-dyed guy standing with a woman, long, straight hair with a braid on the side, wearing a tie-dyed gypsy skirt and a headband (I'm not making this up folks). He was pointing at me, glaring, and whispering in the woman's ear. When I got within hearing range, he said something about "stinkin Californians," about how we're the reason real estate is so expensive here. "I've lived here thirty years," he said, "and you arrogant people come here and jack up the home prices!"

"Um. I don't live here sir. I've never bought-or even TRIED to buy any real estate here! How could I have anything to do with your escalating property values?" He grumbled and shuffled off, dragging the woman behind him.

I've told everyone else I've met here that I'm from Arizona.

So, now, I'm lying in a hotel room (10 miles away-but an $89 each way taxi ride-from the airport), readying myself for bed, because I have to wake at the ungodly hour of 4 AM (typically, I'm going to sleep at that hour).

Which is why I don't have the time or the energy to post tonight. I'm sorry.

To Think: We Used to Want to Fill Our Gas Tanks With Water!

PepsiCo recently released a statement that, due to increasing pressure from the environmental and political communities, they will begin including the words "Public Water Source" on their bottled water labels. For those of you who don't grasp the significance (don't feel bad: without the explanation, It's sufficiently obscure that, if I didn't know the entire story, I likely wouldn't catch the point either), it means that the water in the bottle is plain old tap water.

That's right-tap water.

Now they do something to it I guess. I don't entirely understand the process, but it's tantamount to putting a charcoal filter on the hose bibb in the front yard, then filling up plastic bottles with the water, and selling it-for $1.29 per bottle!

I did some rough calculating, and, at $1.29/20 oz. bottle, the retail price for that bottled water is $8.25/gallon. I filled up my car this afternoon with premium (high-octane) gasoline, and paid exactly $3.05/gallon-and it pained me.

I find it fascinating that the American public is so fixated on rising fuel prices as a socio-political issue. I'd guess that in the last week, I've heard or read about escalating fuel prices at least six times. And, I challenge you: bring up "big oil" in a conversation with a large group of people, and see if there isn't at least one or two people who don't start ranting about corporate thievery, and government being in the pocket of the oil companies. And you know what? I don't relish the thought of paying $3.05/gallon for gas. I drive quite a bit, and I have to admit: it hits the old pocketbook. But I do think that we, as a society, have lost perspective. Because, think about it: how much must it cost to deliver that single gallon of premuim gasoline to me? I'm definitely no expert, but consider for a moment: the fixed costs associated with drilling wells, installing pumping equipment, and storage tanks. Then the costs of filling barrels with crude oil, loading it on tankers bound for the United States (from some middle-eastern country, I presume), and then shipping it here. Then finally off-loading it, refining it, putting it into a tanker truck, trucking it here to Kerman, and filling the tank here at my local gas station. And, let's not forget the cost of running the equipment to pump the fuel from the tank to my car, the fixed costs associated with running the gas station, and the variable costs (like the ignorant guy with the ring in his nose who acts like I'm bothering him if I run in to ask for a receipt, because the little screen on the pump says "Paper out. See cashier"). Oh, and don't forget the .36 cents per gallon the goes to our county, state and federal government.

And that doesn't even include profit!

Not knowing the exact costs of each of these, I can't say for sure, but my guess is that there's very little left for Mr. Exxon, or Mr. Valero. The long and short of it is, while it's painful, and seems excessive, the price tag doesn't seem so exorbitant that the only conclusion that we can draw is that the oil companies are robbing us blind. My guess is that they're making a reasonable margin, all things considered.

Let's contrast this with Aquafina. Put charcoal filter on hose bibb, buy a bunch of plastic bottles with Aquafina labels, fill up bottles, put cap on, load them up into a truck, and haul to Fastrip in Kerman. Ok, I'm oversimplifying the process, I know. It's more complex than that, I admit. But it's still just water! Which costs virtually nothing!

But, that's not really the point of this post. There's an economic theory that is foundational at the company I work for. It's based on the idea that we are entrusted with certain economic resources, to do with as we see fit. Those economic resources are the product of human effort (that is, the mental and physical energies that we exert as human beings generate those economic resources). Thus, the imprudent (or innefficient) use of economic resources is tantamount to the wasting-or taking-of human life. Which leads me to my point: when I realize that I pay $8.25/gallon for bottled water, which does absolutely nothing (but slate my thirst), yet I pay only $3.05/gallon for fuel-which in turn allows me to travel (thereby, conceptually at least, enabling me to work, and generate further economic resources), it becomes apparent to me that, in purchasing bottled water, I am being exceptionally wasteful, which is tantamount to murder (that is, I'm simply throwing away the "energy" that was used to generate those funds that I've used to purchase the water). Think about it for a moment: water provides no energy, no nutrients, and really, very little enjoyment. There is really no substantive benefit, economic or otherwise associated with drinking water (filtered or non-filtered). And, in fact, I recall a story recently where a woman, participating in some radio station contest (trying to win a gaming console), died after drinking three gallons of water. So, not only does water not provide any benefit, it can kill you!

That's an extreme example, to be sure, but you get my point! Gasoline, comparitively (despite our protestations regarding the price of the stuff), is a bargain! Think about it: for just over a third the price of bottled water (which does nothing), you get the ability to travel (along with as many folks as you can fit in your vehicle), somewhere between 17-34 miles!

Which brings me around to my real point: I'm not going to boycott or rant against the bottled water industry. They're just filling a desire or need in the market. That's the market economy at work. But I WILL chastise you, intelligent readers, for wasting economic resources (and, in turn, human life) by purchasing bottled water!

You're better off buying Diet Pepsi.