Purple Cow
Purple Cow is a marketing concept originally written about by Seth Godin. The theory starts with the presumption that marketing as we know it is broken, and that the only way now to gain attention in a market is to not only market a product in a remarkable manner, but also to have a remarkable product to market.
Marketing should begin with a differentiated product or service that gets attention (like a purple cow does among a field of brown ones). Be sure that those who care deeply about that differentiation learn about your product or service (as Krispy Kreme does by providing free donuts when it opens a new store). Those who care will e-mail and tell everyone they know (an idea virus). Keep adding new differentiated enhancements to your product or service (pretty soon you don't find a purple cow so interesting). Start looking for totally new business models that provide a breakthrough like your first purple cow did. Don't waste your time and money on advertising. Alternatively, it's dangerous not to do this because your product or service will be lost among all of the other brown cows (undifferentiated offerings).
Source: Donald Mitchell
Marketing should begin with a differentiated product or service that gets attention (like a purple cow does among a field of brown ones). Be sure that those who care deeply about that differentiation learn about your product or service (as Krispy Kreme does by providing free donuts when it opens a new store). Those who care will e-mail and tell everyone they know (an idea virus). Keep adding new differentiated enhancements to your product or service (pretty soon you don't find a purple cow so interesting). Start looking for totally new business models that provide a breakthrough like your first purple cow did. Don't waste your time and money on advertising. Alternatively, it's dangerous not to do this because your product or service will be lost among all of the other brown cows (undifferentiated offerings).
Source: Donald Mitchell
Mortgage-Backed Securities
Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity. The entity then issues securities that represent claims on the principal and interest payments made by borrowers on the loans in the pool, a process known as securitization.
Most MBSs are issued by the Government National Mortgage Association (Ginnie Mae), a U.S. government agency, or the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), U.S. government-sponsored enterprises. Ginnie Mae, backed by the full faith and credit of the U.S. government, guarantees that investors receive timely payments. Fannie Mae and Freddie Mac also provide certain guarantees and, while not backed by the full faith and credit of the U.S. government, have special authority to borrow from the U.S. Treasury. Some private institutions, such as brokerage firms, banks, and homebuilders, also securitize mortgages, known as "private-label" mortgage securities.
Mortgage-backed securities exhibit a variety of structures. The most basic types are pass-through participation certificates, which entitle the holder to a pro-rata share of all principal and interest payments made on the pool of loan assets. More complicated MBSs, known as collaterized mortgage obligations or mortgage derivatives, may be designed to protect investors from or expose investors to various types of risk. An important risk with regard to residential mortgages involves prepayments, typically because homeowners refinance when interest rates fall. Absent protection, such prepayments would return principal to investors precisely when their options for reinvesting those funds may be relatively unattractive.
Source: SEC.gov
APR vs. Rate
In all our financial activities, from our bank and credit card accounts to our loans and mortgages, we are faced with interest rates that are added to the actual amount that we have or that we owe to the financial institutions.
There are several types of interest rates that are applied to investments and loans. Two of them are the Annual Percentage Rate (APR) and the simple Interest Rate. Mortgages charge these two interest rates on their accounts.
Annual Percentage Rate
The annual percentage rate is the interest rate applied to a loan, deposit account or investment for the whole year. Note rates and headlines rates are usually added to the APR by some lenders.
APR has two types: Nominal APR, which computes simple interest for one year and Effective APR, which includes a fee plus a compounded interest rate.
APR can be computed in three ways. One is by compounding the interest rate for one year without considering the fees. Another is the inclusion of fees that are added to the balance due which will be the basis for the computation of the compounded interest rate. The third one is by amortizing the fees as a second loan.
APR is dependent on the period of time when the loan is calculated. It is used to show the impact of different payment schedules, when some would prefer bi-weekly payments rather than monthly payments. For loans that has a period of interest only payment, the APR is higher.
Example:
A $100 loan payable in one month with 5% interest and a $10 fee. If there is no fee, this loan will have an APR of 79% but if the fee is included, the APR becomes 435%.
Interest Rate
An interest rate is the rate that a person’s investment or deposit account earns or it can also be the rate that he has to pay the entity from which he borrowed money. It does not cover any additional fees or charges.
Banks offer a certain interest rate for the money that people deposit with them. They earn by offering the deposited amount as loan to other individuals or entities at a higher interest rate than they pay for the deposit accounts.
The money market, bond market and currency market also have their own interest rates that the money invested in them earns.
Interest rates can either be Real (calculated by taking inflation into account) or Nominal (amount of interest payable).
Example:
If a person deposits $100 in a bank for a period of one year, with an interest rate of 10% per annum., the total amount in his account at the end of the year should be $110.
Summary:
1. Annual Percentage Rate is more complex, while Interest Rate is simpler.
2. Annual Percentage Rate includes fees, while Interest Rate does not include fees.
3. Annual Percentage Rate assumes that the individual will keep a particular loan until it is paid off, while Interest Rate does not.
4. Annual Percentage Rate is usually higher than Interest Rate.
2. Annual Percentage Rate includes fees, while Interest Rate does not include fees.
3. Annual Percentage Rate assumes that the individual will keep a particular loan until it is paid off, while Interest Rate does not.
4. Annual Percentage Rate is usually higher than Interest Rate.
Source: DifferenceBetween.net
How to Avoid the Idea Plateau
Ever find yourself jumping from idea to idea, hooked on the high of idea generation but never completing any one project? 99% Conference speaker Scott Belsky breaks down road-tested methods for seeing ideas through to the finish.
Source: Scott Belsky
Source: Scott Belsky
Straight-Line vs. Accelerated Depreciation
Depreciation
- Assigning an expected useful life to an asset is the first step in calculating depreciation. GAAP, or Generally Accepted Accounting Principals, assigns expected values to assets that can be used by companies when evaluating their assets. For example, the useful life of a computer is typically three years. Because depreciation shows as an expense on the balance sheet, there must be a contra account to balance out the journal entry. This account is called accumulated depreciation. As an asset depreciates over time, a debit is made to depreciation expense and a credit to accumulated depreciation on the balance sheet.
Straight-Line Depreciation
- Calculating depreciation is usually done by either straight line or accelerated methods. The straight-line depreciation method utilizes equal annual amounts of depreciation of the asset. To calculate straight-line depreciation the original cost of the asset minus the salvage value is divided by the useful life. Salvage value is the estimated amount that the asset could be sold for at the end of its useful life. An example of straight-line depreciation is as follows: a computer purchased by a company for $4,000 is expected to last for three years and then sell for $1,000. The calculation of depreciation is $4,000 minus $1,000, which equals $3,000. The $3,000 is divided by three, thus the depreciation per year is $1,000.
Accelerated Depreciation
- In the accelerated depreciation model, assets depreciate at a faster rate during the beginning of their lifetime and slow down near the end of the asset's life. The total depreciation amount remains the same as straight line, however, the depreciation expense is greater up front. There are many different ways to calculate accelerated depreciation, such as 125 percent declining balance, 150 percent declining balance and 200 percent declining balance, also known as double declining. One of the more common ways is to construct a table of declining yearly values.
Straight-Line vs. Accelerated
- Why use one method over the other? The most common reason for using accelerated depreciation is to lessen net income. Showing less income lowers the amount of income tax owed by a company. It is better to take income tax savings earlier in the life of an asset. Straight-line depreciation is easier to calculate and looks better for a company's financial statements. This is because accelerated depreciation shows less profit in the early years of asset acquisition. Most companies use straight-line depreciation for financial statements and accelerated depreciation for income tax returns. This is permissible under GAAP guidelines.
Source: eHow
Fibonacci Retracement
Fibonacci numbers were developed by Leonardo Fibonacci and it is simply a series of numbers that when you add the previous two numbers you come up with the next number in the sequence. Here is an example:
1, 2, 3, 5, 8, 13, 21, 34, 55
See how when you add 1 and 2 you get 3? Now add 2 and 3 and you get 5, and so on. So how does this sequence help you as a swing trader?
Well, the relationship between these numbers is what gives us the common Fibonacci retracements pattern in technical analysis.
Fibonacci Retracements Pattern
Stocks will often pull back or retrace a percentage of the previous move before reversing. These Fibonacci retracements often occur at three levels: 38.2%, 50%, and 61.8%. Actually, the 50% level really does not have anything to do with Fibonacci, but traders use this level because of the tendency of stocks to reverse after retracing half of the previous move. Here is an example using a graphic explaining the retracement pattern:
This picture shows a graphical representation of the reversal points for stocks in an uptrend. The pattern is reversed for stocks that are in down trends.
After a stock makes a move to the upside (A), it can then retrace a part of that move (B), before moving on again in the desired direction (C). These retracements or pullbacks are what you as a swing trader want to watch for when initiating long or short positions.
Once the stock begins to pull back (retrace), then you can plot these retracement levels on a chart to look for signs of a reversal. You do not automatically buy the stock just because it is at a common retracement level! Wait, and look for candlestick patterns to develop at the 38.2% area. If you do not see any signs of a reversal, then it may go down to the 50% area. Look for a reversal there. You do not know if or when the stock will reverse at a Fibonacci level! You just mark these areas on a chart and wait for signal to go long or short.
How To Draw A Fib Grid
So how do we identify Fibonacci patterns on a chart. Easy, we draw a Fibonacci grid (fib grid) using swing points. Here is an example:
Draw the fib grid from the swing point high and the swing point low of a swing. Your charting software should come with this feature. It is a standard option on most charting packages. If not, you can calculate it manually by using this formula:
Calculate the range from the swing point high to the swing point low.
Now multiply the range times a Fibonacci ratio: 38.2% (0.382), 50% (0.500), and 61.8% (0.618).
Finally, subtract that number from the swing point high. That will give you your Fibonacci levels.
This chart shows an actual trade that I made. HS pulled back into the TAZ and then formed a bullish engulfing candle right at the 50% level. That gave me the signal to go long. Nice trade!
Is It Useful?
Well...maybe...sometimes.
Most of the time, when you draw a fib grid on a chart, you will notice that the grid lines up with support and resistance areas that you would see anyway without drawing the lines in! So you really do not need to draw the lines in. Instead, you can just look at a chart and estimate where the levels are.
Look again at the chart above of HS. If you didn't draw the Fibonacci retracement lines in, you can still tell just by looking at the chart that the stock has retraced 50% of the previous move.
If drawing the lines in helps you to better visualize the fib levels, then by all means use it! The choice is up to you.
Source: Swing Trading Guide
How To Get Good At Making Money - Jason Fried
A few years ago, I decided I wanted to learn to play the drums. I've always loved the drums. Whenever I listen to music, I hear the drums first. I can listen to a great jazz drummer like Art Blakey for hours on end. I'd give up almost anything to be as good as Glenn Kotche of Wilco.
The path to learning the drums is pretty clear. You sign up for some lessons, you get some pads, you get some sticks, you learn some drills, and you practice. And you keep practicing. Every surface—your desk, your leg, your steering wheel—becomes a drum. You get better over time, but you never really stop practicing.
This is how we learn most things. Whether you want to be a writer or a musician or a painter or a baker or an accountant, the way to get there is fairly clear. Not everyone's going to be as good as he or she would like to be, but at least you know where to start. Lessons, classes, books, internships, workshops... All of these things are accessible to most people who want them.
One of the interesting things about picking up the drums was that I realized it had been some time since I had actually tried to learn something new. We spend most of our childhoods learning new things. But as you get older, the frequency with which you develop new talents slows down. Sometimes it stops completely.
That said, when I first started playing, I was bad. I sounded like someone was tripping over a drum set and knocking it on the floor. When you suck so badly at something new, it's comforting to know there are other things that you actually are good at. And being bad at drums reminded me of what I have gotten pretty good at: making money.
Today, I run 37signals, a software and design firm that I co-founded in 1999. Sales have grown at double-digit rates every year for the past decade; so have profits. (Like many private companies, we don't disclose revenue.) How did I learn how to do this? I have a degree in finance, but I don't remember taking any classes that even remotely taught me how to make money. I've read plenty of business books. Same thing—lots of talk about money, but not much about how to actually make the stuff.
One thing I do know is that making money is not the same as starting a business. For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money. You can be the most creative software designer in the world. But if you don't know how to make money, you're never going to have much of a business or a whole lot of autonomy.
This is not about getting rich (though there's certainly nothing wrong with that). Instead, for me, making money is about freedom. When you owe people money, they own you—or, at least, they own your schedule. As long as you remain profitable, the timeline is yours to create.
It took me a long time to figure out how to make money. Here's how the lessons unfolded.
Shoes, Tennis Rackets, and More Shoes
Understanding the buyer is the key to being a strong seller
It started when I was about 14. In Illinois, that's when you can start working (with your parents' permission). So I went with my dad to get a worker's permit and got a summer job at the local grocery store. I don't remember learning much there. But a year later, at my next summer job, the lessons flowed.
I was working at Shelby's Pro Shop, a golf and tennis retailer in Deerfield, where I grew up. I sold shoes and tennis rackets. I didn't play tennis, but I learned how to be a very good tennis-shoe and tennis-racket salesman. That's because I made the discovery that people's reasons for buying things often don't match up with the company's reason for selling them.
Manufacturers used to dispatch reps to the pro shop to educate us on their latest and greatest technologies. They'd tell us about the new ethylene vinyl acetate midsoles that made shoes more comfortable; the Goodyear-brand rubber outsoles that made the shoes more durable; the new variation of Nike Air that was miles ahead of the competition.
They thought they were arming us with facts that would impress the customers. But, it turned out, none of that stuff mattered. In fact, it had a negative effect. When you describe things in terms people don't understand, they tend not to trust you as much. Trust is important. You can bluff your way into money, but for only so long.
Once I stopped slinging the technical terms, I realized that when customers shop for shoes, they do three things. They consider the look and style. They try them on to see if they're comfortable. And they consider the price. Endorsements by famous athletes help a lot, too. But the technology, the features, the special-testing labs—I can't remember a single customer who cared. I sold a boatload of shoes and tennis rackets that summer.
Understanding what people really want to know—and how that differs from what you want to tell them—is a fundamental tenet of sales. And you can't get good at making money unless you get good at selling.
I learned this as a teenage shoe salesman, and it still drives how I operate.
To be sure, this is hardly a unique insight. But judging by the number of companies and products that totally miss the mark, day after day, it's a lesson that needs to be learned again and again.
The Middleman Years
In which I sell electronics, knives, and throwing stars—and learn that it's all about passion
After a couple more summers at the pro shop, I decided to start my own business. It hadn't taken long to notice that retail was pretty simple: The store bought stuff from distributors, marked it up, and sold it at a profit. Why couldn't I do that, too? It turned out, I could. I got a reseller's license from the state of Illinois. This allowed me to buy stuff cheaply from distributors.
This is where I learned my second key lesson: Sell only things you'd want to buy for yourself.
I originally got the reseller's license so I could buy stereo equipment, computer equipment, a cordless phone, and a radar detector. (My rusted-out Datsun 510 was held together by bungee cords and duct tape, but I still liked to drive fast.) I soon realized that if I wanted these things, my friends probably did, too. I could sell them stuff below what they'd pay in the store and still make a profit. So I picked some prices that seemed reasonable, pitched my peers, and the orders came in. I didn't sell a lot, but picking up an extra $100 here and there is a big deal when you're a teenager.
I began offering more items. Somehow I got hold of some military-supply and sporting-goods catalogs. I cut out the pictures of the stuff that looked cool—butterfly knives, throwing stars, pocketknives, and some other things I'd prefer not to mention—and created my own catalog, which I photocopied and gave to my friends. The stuff, as they say, sold itself.
I didn't have a credit card—remember, I was in high school at the time. So I ordered the items COD, cash on delivery. I'd learn when UPS would be coming and feign illness so I could stay home from school. The delivery guy rang the doorbell, I gave him the cash, and he handed over the boxes. I don't know if they do COD anymore, but man, was it exciting back then. No one got rich—and I don't think anyone was injured—but it was a great education. And the lesson stuck.
That'll Be $20, Please
How, and why, to charge real money for real products
Around my senior year of high school, I started getting interested in computers. I also liked music. My collection of tapes and CDs was growing, and I wanted a better way to keep track of what I had and what I'd loaned out to friends.
This was before the World Wide Web. So I tossed one of those junk mail AOL CDs in the computer, installed the program, and convinced my parents it was worth the monthly fee. ("It'll help me research and study!" I argued.) I started searching for tools to help organize a music collection.
There were a ton of them. Most were made with software called FileMaker Pro, a program that makes it easy to create simple databases without really knowing how to program. FileMaker also lets you design your own interface, so you can make things look any way you'd like. Most of the music-organization programs were free and pretty lousy—ugly, hard to use, loaded with unnecessary features.
I decided to figure out how to make my own. I got FileMaker Pro (I paid for it with the stash I'd saved up selling stuff to my friends) and started messing around. After a few months, I had solved the problems I had with organizing my music. I knew what music I had, where it was, whom I had loaned it to, how much I paid for it. The solution was elegant and easy to use. I called it Audiofile.
Most of the music-collection products on AOL's file section were freeware. Download them, install them, and you don't owe the author a dime. There were a few shareware options (you pay if you use them, but it's mostly an honor system), but most were free.
I'd already learned that I really enjoyed making money. And I thought that Audiofile was good. And even then, I thought that if something was good, then it was worth paying for. So before making it available to other AOL users, I added a limit in the program—people could file 25 CDs for free; after that, it would cost $20 to unlock Audiofile and remove the limit.
I remember my first customer. One day my parents gave me an envelope. It came from Germany and had those airmail stripes at the top. I opened it up, found a screenshot of Audiofile printed on a piece of paper—and a crisp $20 bill. More envelopes rolled in. Over the next few years, Audiofile probably generated $50,000—not bad for a kid in college in the early '90s.
The lesson: People are happy to pay for things that work well. Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love.
This lesson is at the core of 37signals. There are plenty of free project management tools. There are plenty of free contact managers and customer relationship management tools. There are plenty of free chat tools and organization tools. There are plenty of free conferences and workshops. Free is everywhere. But we charge for our products. And our customers are happy to pay for them.
There's another lesson in here: Charging for something makes you want to make it better. I've found this to be really important. It's a great lesson if you want to learn how to make money.
After all, paying for something is one of the most intimate things that can occur between two people. One person is offering something for sale, and the other person is spending hard-earned cash to buy it. Both have worked hard to be able to offer the other something he or she wants. That's trust—and, dare I say, intimacy. For customers, paying for something sets a high expectation.
When you put a price on something, you get really honest feedback from customers. When entrepreneurs ask me how to get customers to tell us what they really think, I respond with two words: Charge them. They'll tell you what they think, demand excellence, and take the product seriously in a way they never would if they were just using it for free.
As an entrepreneur, you should welcome that pressure. You should want to be forced to be good at what you do.
Model Madness
There are different pathways to the same dollar
Don't just charge. Try as many different pricing models as you can. That's a great way to get better at making money.
Before I launched 37signals, I worked as a freelance Web designer. I charged clients by the hour. I work quickly. But I soon realized that charging hourly penalizes efficiency. If I can finish something in an hour that might take someone else three or four hours, why should I be penalized? So when we launched 37signals in 1999, we charged clients by the project.
Source: Inc.
The path to learning the drums is pretty clear. You sign up for some lessons, you get some pads, you get some sticks, you learn some drills, and you practice. And you keep practicing. Every surface—your desk, your leg, your steering wheel—becomes a drum. You get better over time, but you never really stop practicing.
This is how we learn most things. Whether you want to be a writer or a musician or a painter or a baker or an accountant, the way to get there is fairly clear. Not everyone's going to be as good as he or she would like to be, but at least you know where to start. Lessons, classes, books, internships, workshops... All of these things are accessible to most people who want them.
One of the interesting things about picking up the drums was that I realized it had been some time since I had actually tried to learn something new. We spend most of our childhoods learning new things. But as you get older, the frequency with which you develop new talents slows down. Sometimes it stops completely.
That said, when I first started playing, I was bad. I sounded like someone was tripping over a drum set and knocking it on the floor. When you suck so badly at something new, it's comforting to know there are other things that you actually are good at. And being bad at drums reminded me of what I have gotten pretty good at: making money.
Today, I run 37signals, a software and design firm that I co-founded in 1999. Sales have grown at double-digit rates every year for the past decade; so have profits. (Like many private companies, we don't disclose revenue.) How did I learn how to do this? I have a degree in finance, but I don't remember taking any classes that even remotely taught me how to make money. I've read plenty of business books. Same thing—lots of talk about money, but not much about how to actually make the stuff.
One thing I do know is that making money is not the same as starting a business. For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money. You can be the most creative software designer in the world. But if you don't know how to make money, you're never going to have much of a business or a whole lot of autonomy.
This is not about getting rich (though there's certainly nothing wrong with that). Instead, for me, making money is about freedom. When you owe people money, they own you—or, at least, they own your schedule. As long as you remain profitable, the timeline is yours to create.
It took me a long time to figure out how to make money. Here's how the lessons unfolded.
Shoes, Tennis Rackets, and More Shoes
Understanding the buyer is the key to being a strong seller
It started when I was about 14. In Illinois, that's when you can start working (with your parents' permission). So I went with my dad to get a worker's permit and got a summer job at the local grocery store. I don't remember learning much there. But a year later, at my next summer job, the lessons flowed.
I was working at Shelby's Pro Shop, a golf and tennis retailer in Deerfield, where I grew up. I sold shoes and tennis rackets. I didn't play tennis, but I learned how to be a very good tennis-shoe and tennis-racket salesman. That's because I made the discovery that people's reasons for buying things often don't match up with the company's reason for selling them.
Manufacturers used to dispatch reps to the pro shop to educate us on their latest and greatest technologies. They'd tell us about the new ethylene vinyl acetate midsoles that made shoes more comfortable; the Goodyear-brand rubber outsoles that made the shoes more durable; the new variation of Nike Air that was miles ahead of the competition.
They thought they were arming us with facts that would impress the customers. But, it turned out, none of that stuff mattered. In fact, it had a negative effect. When you describe things in terms people don't understand, they tend not to trust you as much. Trust is important. You can bluff your way into money, but for only so long.
Once I stopped slinging the technical terms, I realized that when customers shop for shoes, they do three things. They consider the look and style. They try them on to see if they're comfortable. And they consider the price. Endorsements by famous athletes help a lot, too. But the technology, the features, the special-testing labs—I can't remember a single customer who cared. I sold a boatload of shoes and tennis rackets that summer.
Understanding what people really want to know—and how that differs from what you want to tell them—is a fundamental tenet of sales. And you can't get good at making money unless you get good at selling.
I learned this as a teenage shoe salesman, and it still drives how I operate.
To be sure, this is hardly a unique insight. But judging by the number of companies and products that totally miss the mark, day after day, it's a lesson that needs to be learned again and again.
The Middleman Years
In which I sell electronics, knives, and throwing stars—and learn that it's all about passion
After a couple more summers at the pro shop, I decided to start my own business. It hadn't taken long to notice that retail was pretty simple: The store bought stuff from distributors, marked it up, and sold it at a profit. Why couldn't I do that, too? It turned out, I could. I got a reseller's license from the state of Illinois. This allowed me to buy stuff cheaply from distributors.
This is where I learned my second key lesson: Sell only things you'd want to buy for yourself.
I originally got the reseller's license so I could buy stereo equipment, computer equipment, a cordless phone, and a radar detector. (My rusted-out Datsun 510 was held together by bungee cords and duct tape, but I still liked to drive fast.) I soon realized that if I wanted these things, my friends probably did, too. I could sell them stuff below what they'd pay in the store and still make a profit. So I picked some prices that seemed reasonable, pitched my peers, and the orders came in. I didn't sell a lot, but picking up an extra $100 here and there is a big deal when you're a teenager.
I began offering more items. Somehow I got hold of some military-supply and sporting-goods catalogs. I cut out the pictures of the stuff that looked cool—butterfly knives, throwing stars, pocketknives, and some other things I'd prefer not to mention—and created my own catalog, which I photocopied and gave to my friends. The stuff, as they say, sold itself.
I didn't have a credit card—remember, I was in high school at the time. So I ordered the items COD, cash on delivery. I'd learn when UPS would be coming and feign illness so I could stay home from school. The delivery guy rang the doorbell, I gave him the cash, and he handed over the boxes. I don't know if they do COD anymore, but man, was it exciting back then. No one got rich—and I don't think anyone was injured—but it was a great education. And the lesson stuck.
That'll Be $20, Please
How, and why, to charge real money for real products
Around my senior year of high school, I started getting interested in computers. I also liked music. My collection of tapes and CDs was growing, and I wanted a better way to keep track of what I had and what I'd loaned out to friends.
This was before the World Wide Web. So I tossed one of those junk mail AOL CDs in the computer, installed the program, and convinced my parents it was worth the monthly fee. ("It'll help me research and study!" I argued.) I started searching for tools to help organize a music collection.
There were a ton of them. Most were made with software called FileMaker Pro, a program that makes it easy to create simple databases without really knowing how to program. FileMaker also lets you design your own interface, so you can make things look any way you'd like. Most of the music-organization programs were free and pretty lousy—ugly, hard to use, loaded with unnecessary features.
I decided to figure out how to make my own. I got FileMaker Pro (I paid for it with the stash I'd saved up selling stuff to my friends) and started messing around. After a few months, I had solved the problems I had with organizing my music. I knew what music I had, where it was, whom I had loaned it to, how much I paid for it. The solution was elegant and easy to use. I called it Audiofile.
Most of the music-collection products on AOL's file section were freeware. Download them, install them, and you don't owe the author a dime. There were a few shareware options (you pay if you use them, but it's mostly an honor system), but most were free.
I'd already learned that I really enjoyed making money. And I thought that Audiofile was good. And even then, I thought that if something was good, then it was worth paying for. So before making it available to other AOL users, I added a limit in the program—people could file 25 CDs for free; after that, it would cost $20 to unlock Audiofile and remove the limit.
I remember my first customer. One day my parents gave me an envelope. It came from Germany and had those airmail stripes at the top. I opened it up, found a screenshot of Audiofile printed on a piece of paper—and a crisp $20 bill. More envelopes rolled in. Over the next few years, Audiofile probably generated $50,000—not bad for a kid in college in the early '90s.
The lesson: People are happy to pay for things that work well. Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love.
This lesson is at the core of 37signals. There are plenty of free project management tools. There are plenty of free contact managers and customer relationship management tools. There are plenty of free chat tools and organization tools. There are plenty of free conferences and workshops. Free is everywhere. But we charge for our products. And our customers are happy to pay for them.
There's another lesson in here: Charging for something makes you want to make it better. I've found this to be really important. It's a great lesson if you want to learn how to make money.
After all, paying for something is one of the most intimate things that can occur between two people. One person is offering something for sale, and the other person is spending hard-earned cash to buy it. Both have worked hard to be able to offer the other something he or she wants. That's trust—and, dare I say, intimacy. For customers, paying for something sets a high expectation.
When you put a price on something, you get really honest feedback from customers. When entrepreneurs ask me how to get customers to tell us what they really think, I respond with two words: Charge them. They'll tell you what they think, demand excellence, and take the product seriously in a way they never would if they were just using it for free.
As an entrepreneur, you should welcome that pressure. You should want to be forced to be good at what you do.
Model Madness
There are different pathways to the same dollar
Don't just charge. Try as many different pricing models as you can. That's a great way to get better at making money.
Before I launched 37signals, I worked as a freelance Web designer. I charged clients by the hour. I work quickly. But I soon realized that charging hourly penalizes efficiency. If I can finish something in an hour that might take someone else three or four hours, why should I be penalized? So when we launched 37signals in 1999, we charged clients by the project.
Source: Inc.
Leading vs. Managing
The differences between leading and managing are subtle. What do you think of with these two words?
Here are some key differences annunciated in “On Becoming a Leader” by Warren Bennis:
“The manager administers; the leader innovates.
The manager focuses on systems and structure; the leader focuses on people.
The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.
The manager does things right; the leader does the right thing.”
Covey uses the analogy of a company trying to plow through the rainforest. A manager is constantly sharpening blades, researching new cutting strategies, and encouraging people to work harder. The leader climbs up the tallest tree and realizes they are in the wrong forest!
To lead you must be different. Bennis in the same book talks about effective U.S. presidents and how the good leaders were ones that didn’t do great things by dwelling on their limitations, but by “focusing on their possibilities” (Sounds a lot like the Wednesday Word on Strengths from a few weeks back!).
So I would encourage us to think and act uniquely! The most recent issue of Bloomberg mentioned a man who offers a few high school students $100k to skip college and start a business. A little extreme perhaps, but he’s doing things differently. If all that college has taught us is to think the “right way” or similar to everyone else, has our education really been worthwhile? Let me know what you think.
Source: Will May
Here are some key differences annunciated in “On Becoming a Leader” by Warren Bennis:
“The manager administers; the leader innovates.
The manager focuses on systems and structure; the leader focuses on people.
The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.
The manager does things right; the leader does the right thing.”
Covey uses the analogy of a company trying to plow through the rainforest. A manager is constantly sharpening blades, researching new cutting strategies, and encouraging people to work harder. The leader climbs up the tallest tree and realizes they are in the wrong forest!
To lead you must be different. Bennis in the same book talks about effective U.S. presidents and how the good leaders were ones that didn’t do great things by dwelling on their limitations, but by “focusing on their possibilities” (Sounds a lot like the Wednesday Word on Strengths from a few weeks back!).
So I would encourage us to think and act uniquely! The most recent issue of Bloomberg mentioned a man who offers a few high school students $100k to skip college and start a business. A little extreme perhaps, but he’s doing things differently. If all that college has taught us is to think the “right way” or similar to everyone else, has our education really been worthwhile? Let me know what you think.
Source: Will May
How To Read A Candlestick Chart
Candlestick charts are one of the two most popular trading charts, because of the range of trading information that they represent, and their ease of reading and interpretation.
Candlestick charts consist of a wide vertical line, and a narrow vertical line. Each candlestick includes the open, high, low, and close, of the timeframe, and also shows the direction (upward or downward), and the range of the timeframe.
Candlestick charts are read and interpreted during trading as follows:
Difficulty: Easy
Time Required: 5 Minutes
Here's How:
Open - The open is the first price traded during the candlestick, and is indicated by either the top or bottom of the wide vertical line (the bottom for an upward candlestick, and the top for a downward candlestick). In the example chart, the upward candlesticks are colored green, and the downward candlesticks are colored red.
High - The high is the highest price traded during the candlestick, and is indicated by the top of the thin vertical bar (the wick of the candlestick).
Low - The low is the lowest price traded during the candlestick, and is indicated by the bottom of the thin vertical bar (the upside down wick of the candlestick).
Close - The close is the last price traded during the candlestick, and is indicated by either the top or bottom of the wide vertical line (the top for an upward candlestick, and the bottom for a downward candlestick). In the example chart, the upward candlesticks are colored green, and the downward candlesticks are colored red.
Direction - The direction of the candlestick is indicated by the color of the candlestick (specifically the wide vertical line). Usually, if the candlestick is green, the candlestick is an upward candlestick, and if the candlestick is red, the candlestick is a downward candlestick, but these colors can usually be customized. In the example chart, the upward candlesticks are colored green, and the downward candlesticks are colored red.
Range - The range of the candlestick is indicated by the locations of the top and bottom of the thin vertical line (the wicks). The range is calculated by subtracting the low from the high (Range = High - Low).
Source: About.com
Candlestick charts consist of a wide vertical line, and a narrow vertical line. Each candlestick includes the open, high, low, and close, of the timeframe, and also shows the direction (upward or downward), and the range of the timeframe.
Candlestick charts are read and interpreted during trading as follows:
Difficulty: Easy
Time Required: 5 Minutes
Here's How:
Open - The open is the first price traded during the candlestick, and is indicated by either the top or bottom of the wide vertical line (the bottom for an upward candlestick, and the top for a downward candlestick). In the example chart, the upward candlesticks are colored green, and the downward candlesticks are colored red.
High - The high is the highest price traded during the candlestick, and is indicated by the top of the thin vertical bar (the wick of the candlestick).
Low - The low is the lowest price traded during the candlestick, and is indicated by the bottom of the thin vertical bar (the upside down wick of the candlestick).
Close - The close is the last price traded during the candlestick, and is indicated by either the top or bottom of the wide vertical line (the top for an upward candlestick, and the bottom for a downward candlestick). In the example chart, the upward candlesticks are colored green, and the downward candlesticks are colored red.
Direction - The direction of the candlestick is indicated by the color of the candlestick (specifically the wide vertical line). Usually, if the candlestick is green, the candlestick is an upward candlestick, and if the candlestick is red, the candlestick is a downward candlestick, but these colors can usually be customized. In the example chart, the upward candlesticks are colored green, and the downward candlesticks are colored red.
Range - The range of the candlestick is indicated by the locations of the top and bottom of the thin vertical line (the wicks). The range is calculated by subtracting the low from the high (Range = High - Low).
Source: About.com
Stagflation
In economics, stagflation is the situation when both the inflation rate and theunemployment rate are persistently high. It is a difficult economic condition for a country, because when inflation and economic stagnation are occurring simultaneously, a policy dilemma results since actions that are meant to assist with fighting inflation might worsen economic stagnation and vice versa. Theportmanteau stagflation is generally attributed to British politician Iain Macleod, who used the term in a speech to Parliament in 1965.
The concept is notable partly because, in postwar macroeconomic theory, inflation and recession were regarded as mutually exclusive, and also because stagflation has generally proven to be difficult and, in human terms as well as budget deficits, very costly to eradicate once it starts.
In the political arena one measure of Stagflation termed the Misery Index (derived by the simple addition of the inflation rate to the unemployment rate) was used to swing Presidential elections in the United States in 1976 and 1980.
Source: Wikipedia
Do You Zoom?
What sets successful soloists apart? It's a thinking process I call zooming.
After working solo for more than two decades, I recently experienced an "a-ha" about what sets successful soloists apart. I believe it comes down to a single skill -- one that determines business success beyond all others. Is it the ability to sell? One's financial acumen? Surely it must be marketing, you say.
Actually, it's not a sales, marketing or financial skill, although those decidedly are key to creating and maintaining a profitable one-person venture. Rather, it's a meta-skill, part of a mindset that overarches both the activities and the attitudes of a successful soloist. This cognitive ability is a thinking process I call zooming.
Zooming implies several things. There's the appealing thrill of speed, of course -- just ask auto manufacturer Mazda, who has imprinted our brains with the audio brand of that young boy's voice whispering "Zoom, zoom, zoom..." But my notion of zooming embraces more than fast-paced action and response.
Zooming can also point to one's facility to adapt to change. In fact, entrepreneurial gadfly and change agent Seth Godin writes of "zoometry" and the knack to "embrace change without pain." Again, this flexibility is an indispensable talent for soloists -- but not as vital as my definition, I suspect.
Adopt the Power of a Google Map
My concept of zooming centers on the capacity to shift rapidly -- and repeatedly -- between a macro-view and a micro-view of one's business. Think of it as having the power of a Google map: in one instance you're at 30,000 feet, dealing with the long-range vision of your company; the next you're on ground level, addressing daily tasks and deadlines; then -- zoom! -- you're back at 30,000 feet again. This facility for blink-of-the-eye refocusing is crucial for soloists who are often faced with major decisions about the future of their company one minute, then turn and confront the puzzle of which toner cartridge to buy the next.
Reams have been written about the multiple hats that soloists must wear in running a successful one-person business: CEO, marketing director, customer relations, product development manager, IT specialist, janitor, and more. What's been missing, however, is acknowledgement that these hats often need to be slipped on and off in seconds, and repeatedly, throughout the day. Such demands can create an exceptionally stressful environment and diffuse the energy of even the most organized soloist.
Navigating the Zoom
Zooming doesn't need to be chaotic and relentless, however. Here are three ways to help build your zooming skills:
Recognize the reality.
As you craft your weekly, monthly or longer-term goals and projects, increase your awareness of the full range of decisions that will be placed upon you. Many times just increasing your sensitivity to the "height" of the decisions (e.g., ground level, 10,000 feet, 30,000 feet) helps clarify the process and reduces the stress level.
Play to your strengths.
Most soloists are stronger at one end of the zooming spectrum. In my years of advising soloists, I've seen many for whom allocating thousands of dollars for next year's marketing strategy is a piece of cake, while choosing a color for their Web site becomes a thorny problem. Make a frank assessment of your zooming strengths and weaknesses. Are you a big-picture person comfortable with 30,000-foot decisions? Or do you prefer to focus on micro-tasks? Recognize that successful zooming requires both -- and determine how best to enhance your weak side.
Cluster your decisions.
To augment your new-found awareness of zooming, try to cluster your decision making so that you are formulating judgments and choices of similar "heights" concurrently. For example, group ground-level tasks or 30,000-foot strategic decisions at different parts of the day, ideally at a time that coincides with the energy available to tackle them.
Although continually zooming from high-level to mundane decisions and back again may be both mentally and physically draining, the sense of accomplishment you'll feel from checking off both the miniscule and the titanic from your To-Do list can be invigorating. With practice, you'll be zooming as effortlessly as Google's servers allow us to switch between macro and micro landscapes -- and the map you'll be charting points the way to your solo business success.
Source: Terri Lonier
After working solo for more than two decades, I recently experienced an "a-ha" about what sets successful soloists apart. I believe it comes down to a single skill -- one that determines business success beyond all others. Is it the ability to sell? One's financial acumen? Surely it must be marketing, you say.
Actually, it's not a sales, marketing or financial skill, although those decidedly are key to creating and maintaining a profitable one-person venture. Rather, it's a meta-skill, part of a mindset that overarches both the activities and the attitudes of a successful soloist. This cognitive ability is a thinking process I call zooming.
Zooming implies several things. There's the appealing thrill of speed, of course -- just ask auto manufacturer Mazda, who has imprinted our brains with the audio brand of that young boy's voice whispering "Zoom, zoom, zoom..." But my notion of zooming embraces more than fast-paced action and response.
Zooming can also point to one's facility to adapt to change. In fact, entrepreneurial gadfly and change agent Seth Godin writes of "zoometry" and the knack to "embrace change without pain." Again, this flexibility is an indispensable talent for soloists -- but not as vital as my definition, I suspect.
Adopt the Power of a Google Map
My concept of zooming centers on the capacity to shift rapidly -- and repeatedly -- between a macro-view and a micro-view of one's business. Think of it as having the power of a Google map: in one instance you're at 30,000 feet, dealing with the long-range vision of your company; the next you're on ground level, addressing daily tasks and deadlines; then -- zoom! -- you're back at 30,000 feet again. This facility for blink-of-the-eye refocusing is crucial for soloists who are often faced with major decisions about the future of their company one minute, then turn and confront the puzzle of which toner cartridge to buy the next.
Reams have been written about the multiple hats that soloists must wear in running a successful one-person business: CEO, marketing director, customer relations, product development manager, IT specialist, janitor, and more. What's been missing, however, is acknowledgement that these hats often need to be slipped on and off in seconds, and repeatedly, throughout the day. Such demands can create an exceptionally stressful environment and diffuse the energy of even the most organized soloist.
Navigating the Zoom
Zooming doesn't need to be chaotic and relentless, however. Here are three ways to help build your zooming skills:
Recognize the reality.
As you craft your weekly, monthly or longer-term goals and projects, increase your awareness of the full range of decisions that will be placed upon you. Many times just increasing your sensitivity to the "height" of the decisions (e.g., ground level, 10,000 feet, 30,000 feet) helps clarify the process and reduces the stress level.
Play to your strengths.
Most soloists are stronger at one end of the zooming spectrum. In my years of advising soloists, I've seen many for whom allocating thousands of dollars for next year's marketing strategy is a piece of cake, while choosing a color for their Web site becomes a thorny problem. Make a frank assessment of your zooming strengths and weaknesses. Are you a big-picture person comfortable with 30,000-foot decisions? Or do you prefer to focus on micro-tasks? Recognize that successful zooming requires both -- and determine how best to enhance your weak side.
Cluster your decisions.
To augment your new-found awareness of zooming, try to cluster your decision making so that you are formulating judgments and choices of similar "heights" concurrently. For example, group ground-level tasks or 30,000-foot strategic decisions at different parts of the day, ideally at a time that coincides with the energy available to tackle them.
Although continually zooming from high-level to mundane decisions and back again may be both mentally and physically draining, the sense of accomplishment you'll feel from checking off both the miniscule and the titanic from your To-Do list can be invigorating. With practice, you'll be zooming as effortlessly as Google's servers allow us to switch between macro and micro landscapes -- and the map you'll be charting points the way to your solo business success.
Source: Terri Lonier
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