Searching for the Moon

Shannon Clark's rambles and conversations on food, geeks, San Francisco and occasionally economics

Archive for the ‘economics’ Category

When did millionaire shift from assets to income?

Posted by shannonclark on September 19, 2011

This is a political post – if you want to leave comments great but I have moderation turned on and I will delete any comments that are personal attacks or otherwise offensive.

When did millionaire shift from a measure of assets to a measure of income?

These are far from the same thing. Growing up I recall that a “millionaire” was someone who was worth over $1M dollars. This was notable and still fairly rare but it could and did include a lot of people who didn’t have a lot of income just, for example, the fortune to own a home in a state with high property values such as California.

But in the past few years, I’m not sure when this started, millionaires has started to be used to denote people with a yearly INCOME of greater than $1M. This is a very small number of people (though apparently the number of people in this category has grown in recent years as the very wealthiest people in the country have prospered even as nearly everyone else have not). But increasingly public policy is being dictated by folks who seem to think that changes that impact this small and exceptionally wealthy group of individuals are more important than policies that impact the majority of households. One party, the GOP, seems nearly entirely focused on preventing any tax increase of any form on anyone even as they simultaneously work to prevent a continuation of a tax break on most working families (the inherent contradiction in this position seems to have escaped them).

An individual or family earning over $1M a year is earning 20x the median income (roughly) of the typical American family. In fact they earn in a month what few families in the US earn in the entire year. When you are earning on that scale you likely have a mix of earned income (i.e. salaries) and capital gains (i.e. earnings on investments or things deemed by quirks of the tax law to be investments – such as VC’s earnings from their funds even though most of the money in those funds is investors’ money not most VC’s own personal funds). While most people don’t have a lot of control over when they get their salary (unless they quit their job) entrepreneurs, investors and money managers have a great deal of control over when they realize capital gains – since this occurs when they sell an investment at a profit or when their investments pay out a dividend (which in the case of many very high net worth individuals may be something they have enough control over that investment to dictate when and if that happens). And in many cases there are legal means to defer recognition of capital gains via reinvestment of those gains in similar investments or via offsetting losses (this gets complicated and I’m neither a lawyer or an accountant – in the case of real estate investments there are exchange rules that can come into play, in the case of financial investments investors may be able to sell off assets that have lost value when they also sell off assets that have gained value which does make sense as a legal means of offsetting gains but also allows investors to time and control how much income to recognize in a given timeframe)

But all of that complexity aside the question I’m curious about is when did millionaire become a term for folks earning $1M or more a year and why hasn’t this change been more emphasized in popular discourse and debate? It seems fundamentally different to earn $1M in a year than to be worth over $1M. The likely average net worth of individuals earning $1M (or more) each year is vastly greater than $1M – for example to earn $1M in interest payments would require assets of nearly $25-30M (3-4% interest earnings though with higher risk investments higher interest might be available but Treasuries pay even less than that at the moment). To earn $1M in rents from properties even in the current depressed real estate market would likely require $10M (or more) worth of properties and for that $1M to be income not gross rents would require even more (after paying for the upkeep of the properties, for real estate taxes, for professional management and all the other fees and costs with running such a large series of rental properties).

Very few small businesses have over $1m in gross annual sales, let alone have incomes of over $1M (where “income” is roughly defined as being gross income after costs of the goods/services sold by the business). Few businesses have gross margins greater than 30% – for gross income to be $1m implies gross sales of over $3M (roughly $3.3M actually). If someone is the owner of such a business they have a lot of legal means to control how (and if) that $1m in gross profits flows through the business to them as the owners. They can pay a portion of that as earned income, they can pay out much of it as a dividend (getting capital gains rates not income tax rates on that portion) and they can reinvest much of it into the business (or potentially other businesses) without having to pay personal taxes (or potentially much corporate taxes) on it. Though the details on all that depend on the legal structure of the business, the state they do business in and many other factors.

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Posted in economics, politics | 2 Comments »

Thoughts from The Future of Money 2011 in San Francisco

Posted by shannonclark on February 28, 2011

All day I will be attending the great Future of Money conference organized by my friend Brian Zisk. I have attended his previous conferences and am looking forward to today’s conference. I will update this post over the course of the day with some of my thoughts and reactions to the speakers and to conversations with my fellow attendees.

My interest in this conference is around my past studies of economics – how are the innovations happening in the payments and financial transactions spaces around the world illustrating (or perhaps not) my thoughts about how all of economics are networks. I have written about this in the past (though not much recently) a few of my past posts which are worth a reread are:

Stop complaining about capitalism and make it your bitch

$4.09 gasoline and other walking tales

The value of used a networked economics perspective

Startupcamp day 1 notes from my session on economic networks

 

Posted in economics, internet, networks | Tagged: | Leave a Comment »

Billion dollar ideas for the next decade

Posted by shannonclark on April 23, 2010

What will be the next set of Billion dollar industries?

In the past week one of the biggest angel investors in technology, Ron Conway, announced that he has closed a new venture fund and he spoke to TechCrunch about what he sees as the opportunities for the next few years, the opportunities he will be investing in with his new fund. He identified three “megatrends” – the real-time data, the social web and flash marketing.

I agree with Ron that these are big trends and that there are many companies already pursuing them but still many opportunities in these areas for new companies to be created and to succeed.

However I think there are a number of other very large opportunities which will be huge in the next decade, opportunities which will transform not just entire industries but how we (and by we I mean people around the globe) live. Some of these opportunities may require massive investments and infrastructure which means that the winners in these spaces will likely be existing large companies that navigate the transition to a new business model though there likely will be opportunities for large, venture backed (and eventually public IPO backed) companies to prosper in these spaces as well.

I’m sure there are other, very large opportunities, but here are a few which I have identified.

  1. Full lifecycle manufacturing – products which are designed to be recycled and reused. Yes, physical goods. As Moore’s Law continues to move forward the pace of technological change is rapidly increasing, manufacturing is increasingly global and nimble yet climate change concerns, the cost of transportation and energy and many other concerns suggests a need to reevaluate many products. My prediction is that across products from cars to toothpaste design for full-lifecycle use will inspire billions of dollars in new products and industry opportunities. Businesses designed to take products after the initial purchaser of the product is done with that good and reusing those products, at scale, to add value and reenter the value chain. This is much much more than just “recycling” it is an underlying shift in design. Done well this is highly “green” but will also be highly profitable with lower costs, multiple revenue streams and ongoing, engaged relationships with customers over the lifetime of the product – whether it is a car or toothpaste or a laptop computer.
  2. Renewal products to extend the usefulness and value of goods. Cars designed just two years ago have technology components which are already massively out of date and limited (20gb disks for the media players in the car). Laptops and desktop computers are typically out of date when you buy them and new models come out from most computer companies multiple times a year. And while the trend for the past few decades has been to replace our electronic devices (and indeed much of our consumer society) on a frequent basis, I think there is a huge opportunity for a new business of retrofitting and updating a wide array of devices. This opportunity is two-fold. The big but complicated part is retrofitting current products – such as cars made in the past decade with modernized electronics. The even bigger opportunity is when the design of products starts to shift to be designed for ongoing upgrades. This has happened in software in the past five years – both desktop and mobile applications (and to a degree server based applications) are almost all now designed to have ongoing and automatically checked for updates which allows these products to upgrade over time. My first generation iPhone is still useful over 3 years later as a result of having been designed to accept significant ongoing updates both for the core software of the device and for the dozens of applications I run upon it (which wasn’t even an option when I purchased the phone initially!)
  3. Many pieces loosely coupled. This is a trend which exists online and offline. In place of monolithic products whether software or hardware the next decade will see many more opportunities to integrate small discrete items together in ways they may have not been designed to be combined or expected to be used. In software the rise of widgets, such as Facebook’s recently announced Social Plugins is an example of this trend. In hardware this trend is a bit slower but there are examples of it in action in the home entertainment center changes of the past few years – the rise of Internet connected devices other than computers within many homes. Most Blue-ray players sold today, for example, come with wired or wireless Internet access and along with the ability to play Blue-Ray disks the ability to connect to Internet delivered services such as Pandora, NetFlix Streaming, Flickr and more. I predict that there are billion dollar opportunities for increasing the types of devices that can connect with each other and for more combinations of hardware and software working together. Specific short term opportunities I see are around Bluetooth devices that are more complex than keyboards, mice or headphones. Eye-fi’s line of wifi enabled SD cards is a great example of how a second part added to an existing device, say a basic digital camera, can transform the functionality of that device.
  4. Hyperlocal but global curated experiences. At first this may sound like a contradiction, how can an experience be both hyperlocal and global? What I mean by this is the emergence of new retail opportunities which combine deep connections and relationships with the local community around the retailer alongside of a global perspective and sourcing. The emergence of Third-wave coffee roasters over the past few years is one great case study. (here’s a list my favorite coffee places  in San Francisco). This trend is not limited to small, nimble entrepreneurs, even large corporations such as Walmart with their recent major switch to sourcing most of the fresh food they sell locally to each store is an example of this trend. But in the next decade I think there will be a major retailing shift & opportunity where hyperlocal smart retailers who deeply know the needs and interests of their local buyers connect to a global network and source parts of what they sell from across the globe, curate these elements carefully and present specific to their community goods and services. In many cases building and finishing these goods locally but sourcing parts and raw goods on a global scale. But increasingly not just sourcing from massive global businesses but buying nearly directly from global producers. Third Wave coffee roasters increasingly buy their green coffee directly from farmers across the globe. These small scale local retailers are able to afford to send buyers around the globe to source their beans and are building highly successful (and highly profitable businesses). Four Barrel Coffee here in San Francisco recently was quoted in a New York Times article on Coffee in San Francisco that their retail business alone is generating over $100,000 a month with a 45% profit margin. Add to that significant margin a large wholesale business and you have a highly successful new business. 45% margins in a retail business can sustain significant growth.
  5. Global brands, local products. New brands and businesses across the globe will with ever increasing frequency in the next decade expand outside of their initial “home” markets into a more competitive global market. The brands which will prosper in this new world will be ones which combine the best of global sourcing with local connections, resources and awareness. In the media space large media brands will emerge that translate media generated in one country & language into another. Viz Media in San Francisco, for example, translates highly successful Japanese media properties (Manga & Anima mostly) into English and has had great success. TOKYOPOP in LA is one of the most successful publishers (in any media) in the US with many of the bestsellers each year from their highly successful English language manga.

There are many other industries which are likely to generate new billion dollar businesses in the next decade but which I know a bit less about – a few of these are Cleantech, Biotechnology especially around drug design,  and Renewable energy.

What other Billion Dollar opportunities have I missed?

Which of these opportunities should I expand upon in future blog posts?

And yes, if you are a venture fund or investor and want to work with me on exploring these ideas in greater detail I’m available…

Posted in customer service, economics, Entrepreneurship, futureculture, geeks, internet, venture capital, web2.0, working | Tagged: , , , | Leave a Comment »

Tasks for a new startup – Radioki.com and Startup Weekend SF

Posted by shannonclark on April 5, 2009

Saturday was a busy day. Spent at Startup Weekend SF.

Today will be an even crazier day as in less than 24 hours I will be taking 4 pages of notes sketching out a whole application and putting together a mess of parts and web services into what will be a compelling and useful service for many people. After I post this, my evening (well early morning) will be reading API and data format specifications and working out how to build out our first functional pieces.

However just having a great working application is not all of the tasks that a modern, web 2.0, 2009 edition company needs to do to be successful. Here for my own use (and my teams) as well as I hope for many other entrepreneurs is a checklist of tasks we also will have to try to do this weekend. Please add anything I have missed in the comments below!

[and before you mention it – legal structure & incorporation, partnership agreements etc are indeed important and if as we hope it does Radioki takes off we will complete them, we are building this in the context of pre-existing friendships as well as the Startupweekend open & collaborative ethos]

  • Register your new brand domain. We did this Saturday afternoon. Nothing at Radioki.com yet, but that will change rapidly.
  • Sign up for Twitter for your new brand. I’ve set up @radioki follow us to get updates on our progress, access first and we hope a few other surprises.
  • Set up an internal tool for documentation and collaboration. We chose the very simple and easy to sign up for and use PB Wiki as a repository for our team notes, drafts, pseudo code, internally important data etc.
  • Establish a simple version control system. Even if you have just one developer, work with a version control system everywhere you can (which is pretty much most things). A wiki for internal team documentation gives you version controls & who made what change data tracking inherently (assuming you as I would suggest use a private tool for that collaboration)
  • Register for all of the relevant API keys your applications will require. These days this can be a very long list. In our case we have at least three major API’s which we will use, multiple web services, Javascript frameworks, web hosts, domain registrar and much more which we need to sign up for and use.
  • Establish early on (as in before we launch) customer support & feedback channels. Almost certainly in our case this means that we will create and set up a GetSatisfaction for Radioki (using the free version first until we have a business model to support more) – note, when we complete the next task, we have to go back to sites such as Twitter and GetSatisfaction and upload our logo there as well.
  • Design a logo and pick a basic design pattern. Be comfortable with this being basic and expect it to change, but to launch quickly create a simple (even text only) logo to use at your avatar image across the web, to use on your home page, and along with it a basic color palette and design style for your overall web presence. Expect to change this but spending a few minutes early on in the process helps you create a clean, consistent look across web services and sites.
  • Set up corporate email addresses. Even if all you do is have them auto-forward to your regular email, yourname@newcompany is useful and is used as proof of employee status by some sites such as GetSatisfaction.
  • Join the appropriate networks as the new corporation. In the case of Radioki this means Facebook but because we have a strong Music component also means active engagement with Myspace.com (and especially MySpace Music).
  • Update the personal sites and network profiles of all founders. When you launch your personal site and blogs should note this and the profiles of all of the founders (and early employees if you have any) should be updated to reflect involvement with the new company. This is a signal for people who follow you on each network or who read your blogs that you are working on something new.
  • Link back to and thank publically as well as privately all the services your new company uses and works with. Besides being just common politeness everyone who builds any service wants to see it used and welcome thanks and updates about how their solutions are being deployed. Also many API providers offer directories of applications using each API. Building relationships with each company your solution relies upon and works with can also lead to lots of helpful advice, guidance, updates about new features and opportunities for promotion.
  • Remember to add contact information and background to your new company site. Yes, focus on getting the service built and launched, but also remember to include who you are who are building the company as well as how to reach you and who to reach out to for any media who might want to contact you. Photos of the core founding team are great as are short bios. All serve to humanize what can often be a dehumanizing process (web applications for example). And yes, real names and a corporate mailing address do combine to give lawyers someplace to send stuff – but it also gives journalists, bloggers, investors and future business partners someone to talk with as well.
  • Build logging and analytics into your site and application from the beginning. Deploy Google Analytics or another similar product on your new domain from before you share the URL with anyone (hmm we’ve broken this one so have to fix this quickly) For your main application make sure that user actions are logged so you build up a history of interactions. In our case this means ensuring that every search query entered is captured. Ideally you also log what output (or if something failed what error messages) resulted from that interaction.
  • Reach out to your friends. A new project whether big or small is perhaps the best excuse to catch up with your friends old and new. In fact I love it nearly every time a friend sends me an update about new projects or companies. Often these updates are the first time I’ve heard from someone.
  • But don’t forget to also reach out to the media. Start with the media who are also your friends. If you friends also covers your space then reach out to them on a personal level. Don’t send your friends mass, blast emails if you can avoid it – if not, then follow up (or send in advance as well) a personalized note. Do not rely on your friends having your contact details handy – include a direct phone (cell phones are great) as well as your personal email address.

And those are just the relatively simple, basic stuff. When a new company is launched a whole additional set of tasks get added nearly immediately. A few things to think about relatively soon.

  • Corporate banking relationship. This will require legal incorporation in some form (or will require initially to work off a founder’s personal accounts – opening up reams of tax/legal complications. However such a relationship is a key part of being a real business – it gives you a way to sell to people via giving you a means of depositing checks.
  • Corporate legal relationship. Establishing a legal relationship, even if a relatively simple and low cost relationship is another part of being prepared to be a real business. A lawyer may early on be called upon to help with incorporation, reviewing various agreements and you hope reviewing customer contracts or investment documents (or best case both).
  • Building out the non-functional parts of your new site. What I mean here is collecting excerpts of blog posts and news articles & embedding audio or video coverage. This also includes keeping a new corporate blog up-to-date and continued use of the corporate Twitter account etc.
  • An ongoing PR relationship. Of course with a firm who knows your business area, with whom you can work closely and who gets your product as well as process. Great PR firms add incrediable value.
  • Telling a clear, updated and ongoing story. If you (or co-founders or early employees) are not great storytellers or public speakers then likely your PR firm (and perhaps other advisers) will need to help with this but especially early on it is vital to have a clear story about the company and your new, emergent brand. This story should be short and clear (oh and compelling)
  • Have a business model (or two or three or four). You do not have to implement the business model immediately, nor do you need to share it with anyone (though your co-founders should also know). But having a business model in mind can be exceptionally helpful as you evaluate what to use/not use, what to build/not build, what to track/not track

And yes, this list is long and incomplete.

I skipped over raising money, I skipped over legal incorporation (rarely a good reason not to just incorporate as a Delaware C corporation). i skipped entirely over office space. Until an income is generated a large number of boring but important tasks are delayed (salaries and benefits for example).

For now, sleep then back to work.

Posted in economics, Entrepreneurship, geeks, internet, meshforum, meshwalk, mobile, time, web2.0 | 7 Comments »

Why I buy local (and organic)

Posted by shannonclark on December 27, 2008

I buy almost everything locally, mostly from small, often independent (or at least local small scale chains) stores. Most of the food I eat and cook for my friends comes from local shops and for the most part local farmer’s markets. For the most part I buy organic produce, eggs, milk and other products including meat when I can. The rest of my meat is at a minimum free range and cage free (though as I noted in earlier blog posts I was against the recently passed Proposition 2 which mandates larger cages/cage free raising of poultry in CA).

However, when you talk about Organic (especially certified organic products) and the dilemma of large scale businesses starting to produce and others to sell organic products the arguments against buying organic usually assume that people buy organic because of health concerns (no pesticides etc) or from a belief that the flavor is better. And then an argument is made that the health claims are dubious and the flavor differences minor.

That is not, let me repeat, not why I buy organic or why I mostly shop locally.

I buy locally and buy organic for many other reasons. First and foremost I prefer to spend my money with people who care about what they do – who value their own labor and strive to be the best at what they make. I have to eat, I far prefer to spend my food dollars as directly as possible and with vendors who are passionate about what they grow and/or sell. That passion translates in no small part into a focus on selling high quality (and in the case of food usually great tasting) items.

Organic farming is also highly innovative farming. It is looking for creative and as importantly sustainable ways to grow and cultivate products. This innovation usually permeates all aspects of a good organic farm’s business – from the soil to the packaging they use to present the final products at the market.

I usually go to the Ferry Building Farmer’s Market run by CUESA (The Center for Urban Education about Sustainable Agriculture), a group well worth supporting if you have money to donate and/or employer matching funds to use before the end of the year.

At the market this morning, a smaller scale market between the Holidays, I spoke with one rancher who sells a wide range of meats they raise and slaughter themselves. Usually they have poultry but he said that they would not until the spring due to it being out of season for chicken at the moment. While that means that today they lost a bit of my business, it also is a reminder of the seasonality of all food and it encourages me to look at other proteins this month.

Another merchant, Frog Hollow Farms, who I personally think is one of the premier orchards in the entire US (and probably the whole world for that matter) unveiled new packaging they designed specifically for their pears. It suspends each pear in an individual sling of material so it neither touches other pears nor touches the overall packaging, they keeping their amazing pears fresher for longer and bruise free.

Shopping at the farmer’s market, which I do nearly every Saturday morning, gives me a real appreciation of the seasons here in northern CA, by going to the market without planned recipies or menus most of the time I have learned to buy just what looks the best at the moment. I also always talk with the farmers about what is really good at the moment, usually they offer samples, and I then adjust my menus. At the moment there are some great pears, lots of citrus, still great brocolli and caulliflower and indeed quite a range of other flavorful vegetables.

By being flexible I am also able to spend not much more (indeed less usually) than I would if I were shopping at a large, national supermarket chain. Today one of the butchers at the Ferry Building had a special on Sirloin Tip steaks (free range and locally raised and very very good, I’ve had them before) offering 5 individual steaks – ranging between 1/2 to 3/4 of a lb each for $20. I don’t eat a lot of red meat, but that is 5 quick and tasty dinners or lunches in the next week (or longer if i freeze a few) for $4 a meal. And these steaks cook in about 5-6 minutes total in my cast iron skillet on the range top.

For the most part I buy my meats from my local butcher’s shop, a store which has been there since 1889 (making it probably the oldest continously open butcher’s shop in CA), Drewes Bros. Christmas Eve there was a line of over 60 people waiting to pick up holiday turkeys, hams and standing rib roasts. They only sell extremely high quality, mostly local products from passionate producers and offer great service and very fair prices (often cheaper than large supermarkets in fact). Plus they greet me by name when I enter or stop by.

I would much rather that my spending support such a fantastic, local treasure, than to help pad the profit margin of a large supermarket chain such as Safeway (and full disclosure, I say this as someone who does in fact own a few shares of Safeway).

I choose to buy mostly organic because to grow vegetables or to raise animals in an organic manner requires a lot of attention to detail, it requires a committment on the part of the farmer and most of the time it also involves returning to a focus on seasonality and on techniques such as crop rotation and multiple use farming. By “mulitiple use” which isn’t quite the right term I mean techniques such as raising both crops and animals and via rotation grazing those animals on some fields for a few years, then alternating with growing crops on those fields taking advantage of the natural fertilizer from the grazing animals.

When I do shop at larger stores a Safeway or a Trader Joes, I try to mostly buy organic, seasonal, and when possible local products from those stores as well. While I prefer to buy closer to the actual producer, such purchases do help shift large dollars to organic methods – and in turn that means more people working on innovation around large scale, organic agriculture. That, in turn, lowers costs (for the farmers as well as consumers) and should draw more and more farmers and farmland into organic methods.

In the long run that should also have an impact on US (and other countries) agricultural policies which currently prevent many of the simplest and in fact easiest forms of organic techniques – such as wide scale crop rotation or cover crops (which US policy prohibits on farms recieving certain forms of subsidies such as corn or wheat – they can’t use fallow fields to grow market crops such as vegetables or fruits).

From a health standpoint one of the best aspects of buying seasonally and fresh is I can spend around the same amount as I would at a big chain, but instead of getting lots of calories from say processed baked goods, I can get far fewer calories but much more flavor from a perfectly ripe local pear.

I’ve chosen to emphasize quality over quantity in my food buying.

So please do go out and sample your local farmer’s market (there are new markets opening up and extending their seasons all throughout the country). Also when you are choosing where to live, look to live somewhere where you can walk to a local shop to buy great quality local foods. Since my butcher’s shop is literally on my way home (it is across the street from the Muni stop I use to get downtown most days) I can pick up a piece of meat or fish for my dinner and walk home – with less effort and time than navigating the parking lot of a big supermarket (if I had a car which I do not). And for produce, when I can’t make it to the farmer’s market or when I need something midweek, there is a great local produce market also on the same few blocks across from the same muni stop.

Many a night I have picked up some vegetables, a loaf of bread baked that day, and some great meat of fish on my way home. All for less than the cost of a single dinner out at a low cost restaurant and usually (day before xmas excepted) taking far less time than just waiting to pay at a big chain supermarket.

the photo above is a shot I took of a drink from Blue Bottle, a local coffee roaster and cafe who import their own beans directly and roast them here in the Bay Area in the East Bay

Posted in economics, futureculture, personal, photos, San Francisco | Leave a Comment »

Two models of retail – the Dollar store vs the Apple store

Posted by shannonclark on December 14, 2008

DUDES + DOLLAR STORE = VISALIA 07'Apple Mini Retail Store - Stanford Shopping Center

I contend that there are two primary models of reatail, at least in the US (there is a third model I’ll mention at the end which is rarely seen in the US).

In the title I called these The Dollar Store and the Apple Store but more accurately these are the “everything and the kitchen sink” versus the sparse and mostly open. 

In the first model, call it the Kitchen Sink model the buisness model is to have everything that someone might possibly be looking for, to have a surplus of choice and options, to fill most available space with products for sale and to, in theory, sell a lot to everyone who comes through the door. Typically these models combine having everything (or trying to appear to have everything) with a lot of emphasis on price. 

The logical extreme of this model is the Big Box Retailers such as Walmart, Costco, Home Depot, Target and countless others overwhelming the suburban malls of the US (and occaisonally making inroads into he urban centers as well). Typically these stores attempt to have most active inventory right on the store shelves with the customers pulling their own products as they shop. Employees restock the shelves, sometimes help guide customers to the right aisle, and only in select departments of the store (if at all) have a direct customer service role, often taking custom orders for those products which the store does not keep in stock. 

Though in many of these models the store deemphsizes such products in favor of products which can be kept in stock on the stoor “floor”.

In contrastthe other model of retail is the Curated Experience, of which The Apple Stores are a fantastic example. In this model the emphasis is less on keeping a wide selection of products in stock, but rather on highly currating what is avialable for sale. 

Typically these stores have displays which highlight the products which are available but the full inventory of the store is not on the main storeroom floor but rather is kept in the back in a storeroom, off limits to the customers. Most (non-Payless) shoe stores operate in this manner. As do most higher end designer clothing stores. But the Apple Store is an example which many more people have likely experienced directly.

In many ways this is a very old fashioned retail model, this is how, for example, the old fashioned grocery stores operated in the days before the grocery cart and customer self service. Speciality food shops occasionally still operate in this manner, with all the products behind displays and cases and only available via a direct interaction between the customes and the shopkeepers. 

This model of retail is labor intensive, most of the staff has to be able to inteact with and literally serve the customers. It is also built upon the taste and curatiatorial skill of the store’s buyers. In place of trying to have everything that anyone might possibly want this model of store posits that they can choose between those goods (or services) people should want and those which they should not. 

It is the model of a bookstore which instead of cramming every available inch with books stacked upon books (and often barely if at all sorted) is highly seletive with what they buy, turning away more books then they choose to purchase (here I’m describing mostly a used bookstore but the same model also holds for new bookstores to a lesser degree). 

IMAGE_142

In my experience though I occasionally will suffer the cramped, overly full bookstores, it is the stores such as Aardvark Books here in San Francisco which I return to time and time again, and from whom I buy many books over the course of a given year (in 2008 I’d guess around 100+ books perhaps). What often draws me into the store is a carefully currated window display of the latest used book purchases of the store – almost always hardcovers, in perfect (or nearly so) condition, and not infrequently books which I had recently read reviews of in national publications (I’m fairly certain that they buy books from a number of locals who receive review copies as nearly every book which is getting active reviews ends up in their store window within a month or so of publication). 

The curatorial model is not limited to physical retail stores, if anything it has even more value online. It may seem paradoxical, as online it is technically possible for many stores (especially any store selling digital goods) to have nearly infinite inventory. And I’m not arguing that there is not a place for such mega stores (call them the Amazons of this world) but there is equally a great deal of value in culling away the cruft and of practicing great curation to only highlight a select group of pruducts.

Buyers will then shop such stores less on pure price comparisions and more on an appreciation of the service offered in making them (the buyers) aware of products that they should own and enjoy. 

A short sidenote here. A few days ago I was at a local seasonal market, the Mission Market, which was an experiment where a number of local vendors (many without physical stores) had a booth at a converted Armory in the Mission district of San Francisco. One of these merchants sold music, mostly CDs. Now I have not bought a lot of physical CDs in the past few years (though I have bought more music in the past years than ever before). But I ended up buying two fantastic CDs from this man, entirely because he had a very select collection of works for sale, all clearly curated with care. And of the works he had in genres I enjoyed (which were nearly all of the genres of music he stocked) I already owned a pretty large portion of the works he was selling. 

And not just owned the works, but these were among my favorite albums of the past few years, music which exactly defined what I like.

So I was immediately favorably inclined towards him and especially towards the works which he had for sale that I did not already own – assuming, correctly as it were, that since clearly our tastes overlapped considerably, the works he also chose to stock would quite likely also be works I would enjoy.

And indeed that was exactly the case.

And that, in short, is the Curatorial Retail model. 

At the start of this post I mentioned that there is a third retail model, but one which is rarely seen in the US. That model is the Bazaar Model which can be a variation of either the Kitchen Sink or the Curatorial model but with the addition of a highly variable price. In many parts of the world this is the dominant model, where price is nearly infinitely negotiable and most (though not all) goods and services are subject to rounds of bargaining before a price is agreed upon. 

In the US this is not a common retail model, though to a degree the proliferation of discount codes (especially online) and complex sales at larger stores (Macy’s for example) combined with loyalty cards/store credit cards sometimes creates an environment which feels like every price is variable and subject to many factors. Online the purest form of Ebay historically was intended to be this exact model with the buyers competing to offer the best price to the seller. 

However what the pure auction does not capture in the true Bazaar model is that most of the time the negotiation is not multiparty (i.e. an auction with many buyers and only one seller) but one-on-one. One buyer, one seller who negotiate between themselves about a transaction which can either happen at a price, not happen at all, or be modified (expanded to include other products, shrunk to be something smaller).  The buyer always has the option of walking away (and the seller of simply not agreeing to sell).

With the exception of most tourists to such markets (who usually get the worst prices in part as a result of my next point) buyers and sellers who have a history with each other, who expect to do additiona business in the future (sometimes with the roles reversed) have more complex incentives in the negotiation process than just maximizing revenue/minimizing expense on a given transaction. 

Instead when there is an expectation of repeat business many other factors come into play. 

It is here, in part, that curation can add value, considerable value in fact, to even the Bazaar model of retail. A buyer who trusts the tastes and instincts (and fair dealing) of a seller will often value that the seller put something aside for that buyer over getting the lowest possible price for the product. 

It is my view that in the long term success will depend more on curation than on stocking the kitchen sink. 

And I mean this for both online retailers and for physcial stores. 

Posted in customer service, economics, Entrepreneurship | Tagged: , , , | Leave a Comment »

brainstorming about business opportunities

Posted by shannonclark on December 3, 2008

Exit

I am an entrepreneur. When I dream, I dream in business models (seriously, though not every night). That said, I need to find a way (or more likely many ways) to make money in the current economic environment. Projects or businesses which will prosper now and as the economy turns around will have many growth opportunities. Businesses which may have some “exit” in mind – though my dream exit is less an exit and more a route to enduring success and sustainable growth.

What do I mean by that?

I don’t particularly want to build something to sell it – even to sell it to the public (i.e. via an IPO). Rather in my ideal world I build something which can stay private, but can also grow into a large and comprehensive entity, with ongoing growth into new opportunities while building on a solid base. A business which would employ a lot of people, share great rewards with those people (as well as with partners and customers) and in turn have a large impact on the world.

Why would I want to keep such a business private? Well first and foremost when I think of great companies only a handful of them are public – and if anything being public limits them in a wide range of ways. I think a very well run, private company, has much greater flexibility than a public company and can more often place long term bets (which admittedly is not always doable in the tech world – but then again my fantasy company though almost certainly driven in part by technology is not a pure tech company). Yes, being private means that as a company you have to be a bit more creative with how you reward your employees – and with how as the owners you diversify your own finances – and with how you obtain the resources to grow and build the future.

So unlike some of my peers here in the valley, my goal is not to build something to sell it, or to make a “quick hit” for myself (though certainly I wouldn’t complain about that) instead I want to build a business (or likely related businesses) which give me a base to explore lots of ideas and a platform from which to have a big and oversized impact on the world. Starting by the customers I serve, the business partners I help, the employees (and their families) I help support.

On a personal level money matters to me – but only up to a point – what matters more is the freedom and flexibility to have a big impact on the world. I want to travel a lot – not just to be elsewhere – but experience a lot. I want to spend a lot of time around the smartest and most impactful people in the world – from formal experiences and conferences – and less formally at lunches, dinners, salons, and meetings all over the world. At somepoint in my life I want to live in many different cities (including outside of the US) and even when I have (as I hope to sometime not all that far from now) a family I would hope to raise that family in multiple cities and countries – and to expose my future children to many cultures and ways of engaging with the world.

So with that as my goal(s) what opportunities should I be pursuing in 2009 (and the rest of 2008)?

In the past few weeks I’ve blogged about a number of business opportunities and ideas I have had: Radio Schedules 2.0, a new(ish) approach to local media, the future of media being curation, and what I would have submitted to the Knight Foundation

A common theme to many of my current ideas have been some degree of rethinking of media – both on and offline – as well as a newish approach to how commercial content plays a role in the media – more than it does currently online but in somewhat different ways than it does offline.

I am still also passionately interested in the core idea which led me to start Nearness Function over a year ago, ideas around how a new form of advertising network could function as a buffer and valueable partner for software and new media firms and a valued partner for advertisers and their agentcies and media buyers. At the core of my belief is that brands matter – more so now than perhaps ever – and that to build great brands requires sustained, ongoing investment and engagement – and that as attention shifts to the “web” (or more accurately to services and communities woven together largely over and via the web) brands will have to engage with audiences via these same services.

And unlike many in Silicon Valley I do not find this inherently a bad thing – if anything I think it is inherently a good thing – that great brands at all scales of brands serve a very valuable and useful purpose. A few months back I launched a new blog, which I need to update more regularly, Slow Brand to discuss my views on branding (and occasionally food) though I need to blog there on a more consistent basis to build up that blog and get my voice out more often.

My friend Tim Ferris (yes of the 4 hour workweek fame and who is launching a new TV show Trial by Fire this week on the History Channel) talks about Lifehacking and indeed to a degree I should implement many of his lessons and suggestions, but my goals are not entirely (or at least not solely) about myself – my body, my life experiences – but are also very much about what I can do for others, what I can build and help create.

As I think about what I want to do I find myself pulled in a number of not entirely complementary directions.

  1. I am a very value-adding consultant. My primary skill being to brainstorm with people, especially senior management/founders/investors asking tough questions and helping explore business models, potential partnerships, avenues forward and technical evaluations and decisions. I’ve been told by one VC friend that my 1 hour, emailed evaluation of a company they were looking at, entirely on the basis of public data about the firm, came to the same conclusions it had taken them over 1 month to reach. Now, there are challenges packing up and promoting my consulting and much of what I have done in the past has been on a fairly informal basis – I’d love to do much more of this type of advising/consulting, for a high but fair fee (mostly $ but in some cases perhaps also equity). I think I’d also be very valuable for an investor or M&A person in helping evaluate potential deals.
  2. I am a skilled facilitator. I’ve been doing “open space” events since the mid-90’s and have become skilled at the art of facilitating open space events and meetings, as well as the related skill of helping curate other forms of events. This is an art – done well my role almost disappears into the background – achieved by means of the invitations, the settings, the structures lightly imposed upon the event and the group, and gentle nudges and one-on-one conversations and slight changes to the schedule made on the fly. I enjoy such work – whether for a non-profit event or for for-profit businesses and I would like to do more. Especially events which might involve the MeshWalk format I’ve used many times quite successfully. I’ve organized dozens of evening events, helped with lots of weekend and multi-day conferences, and organized a couple three+ day conferences on my own. (The first of which was over 20+ years ago when I was in high school, a science fiction convention which still occurs to this day in no small part because we designed into it a great sustainable structure & financial model)
  3. I am a writer. In the past years I’ve written hundreds of blog posts and lengthy emails to mailing lists, not to mention over 7000 tweets. My non-fiction writing has blossomed in the past few years, occasionally even earning me if not direct income then some value in trade (conference passes and access for example). I have multiple non-fiction as well as fiction book ideas, just a few weeks ago in fact I started a new fiction book which is going well so far (though as I write this post it is still early, about 4000 words written but it is going quickly and I have much to write). I also have a major piece of non-fiction I want to write on Networked Economics a topic I have been thinking about since at least 2004 and which I started and ran multiple conferences in no small part to help myself learn.
  4. I enjoy connecting people and businesses and serving as a translator between industries. Yes, I am a geek, I wrote my first application when I was about 8, am the 3rd generation of my family to write software (my grandfather was one of the first employees of Rand Corporation and then later at Aerospace Corporation he oversaw the deployment of early IBM mainframes to detect nucluer explosions, my mother has been a programmer since the late-60’s and I would do her student’s flowcharting homework as a child). I’ve had a server on the Internet since about 1991, served as an editor of some IETF standards. In short I have deep and extensive “geek cred”. But I am also passionately interested in business and economics – in topics such as branding and business and process innovation which are non-technical. I find that I can offer a lot of value bridging between the possibilities of technology and the needs of business.
  5. I come up with business opportunities. However though I have, I think, had many great ideas I also need to work with others to implement my ideas. While I have many skills I do not have every skill needed to build a successful business (or at least have not had them all so far – still working on it). I have ideas about technology and design which are best implemented by others. While I can and have sold at a very high level, my sales process is too slow and sporadic for sustained growth – I need to work with others to keep myself closing (and/or to help close and implement deals). I will keep practicing the art of the close and of selling – it is a necessary part of being a successful business person, but I also know that my value is multidimensional and that in many ways I would make more money with the right partners than I could alone.

So those are where my thoughts are at the moment. I have many opportunities I’m working on and many ideas (probably too many ideas) but I am faced with the dilemna of evaluating which to pursue now and how to best go from my current state of not enough income to one of a surplus of resources – cash but also other resources such as great staff & partners.

I welcome suggestions and opportunities.

Posted in advertising, digital bedouin, economics, Entrepreneurship, personal, San Francisco, venture capital, web2.0, working | Tagged: , , , , , , | 1 Comment »

The Future of Media is Curation

Posted by shannonclark on November 18, 2008

I can has Cheezeburger at Zoo I kan have a mashabul? Robert Scoble

Much has been written in the past few years about the Future of Media, dozens (perhaps hundreds) of conferences and discussions have occurred and there has been a lot of mashing of teeth, a lot of posturing, volleys of lawsuits on the behalf of some parts of the media landscape (RIAA I’m looking at you!), at least one major strike (Writer’s Union), numerous failing and flailing businesses and much confusion about what the future holds.

Starting with a shifting and varied definition of just what “media” is anyway. 

Without picking a particular definition, though I’ll try, here are a few of the many sources of what I include as “media” – books, magazines, journals, weekly newspapers, daily newspapers, radio, TV, blogs, online video, podcasts, Internet radio and other streaming audio, electronic books, online magazines, games (console, computer, online/web, even mobile), art (a broad category indeed).

And almost certainly there is someone, somewhere, creating a new form of content and experience which should be included in my list above.

So with so many variations what isn’t media?

Short answer – increasingly many things not previously part of the “media” have some aspects of the media – Gap’s recent Vote for t-shirt campaign for example, the ads are fairly traditional “media” – albeit delivered online, but the shirts themselves were also a form of media and self expression.

Building on this expansive and highly inclusive definition of media – which includes media whose purpose is to entertain, media whose purpose is to inform, media which is intended to persuade, and media which is entirely personal and esoteric, what does the future hold for media?

I claim that the way forward for Media, at least the media which will have a sustainable and lasting future, media which will remain important as well as viable, is curation

What is Curation? 

In a way I am using an old word in a new way. I’m not, however, the first or the only person to use this broader usage. Originally curation referred entirely to what a curator did which, in turn, was to maintain a collection of art or artifacts, usually for a museum or art gallery. A curator would manage a museum’s collection, would put together a particular show or exhibition. That process might, occasionally, be referred to as curation. Virginia Postel made a similar point, though she used the term Age of the Editor back in 1994 in Reason Magazine

My meaning of curation is broader:

Curation – To select and highlight specific media usually ground in a particular point of view

Simple perhaps, but I think also something new – something different than Editing, though not unrelated to what a good editor does at a magazine. Indeed I would say that some editors are also acting in a curator role, though many are not. The key point, I think, is that curation is a process that filters, that selects a set of things to be highlighted, that is about less not more.

So why do i claim this is the Future of Media?

Because as we entered a world where everyone can (and most people will to at least some degree) create media the volume of media available to all of us is increasing at a rapid rate. The technology which only years ago was only available at great expense to a small set of highly trained people is now available for free or for very low cost – digital cameras often with video capabilities are most new cellphones to note just one key example. 

Thus “professional” and “amateur” content will continue to proliferate and expand – likely with the “amateur” content vastly exceeding in quantity the “professional”. But value will be created by curators, such as the founders of I Can Has Cheezburger, Pete Cashmore of Mashable and Robert Scoble of FastCompany who each filter through a huge amount of media and select a small set of content to present to their respective audiences. In some cases they create the content themselves, hire others to create content, or select and promote works created by a large pool of people. 

Some curators will be highly selective, highlighting only one work a day if that, others will create a large pool of content every day. Many will work in many different mediums each an avenue for different forms of interactions and media. 

A few other great examples of modern curation at work

  • Monocle magazine – a traditional print publication with a solid web presence, they look very much like a traditional if highly polished magazine, but they are also functioning as curators in many ways. They select a small set of physical goods which they sell customized versions of to their readers. In the content of the magazine itself they adopt a rich multimedia sensability – lots of photos and video on the web. See http://monocle.com
  • Jason Kottke –  For many years Jason has blogged as a curator of as he calls it “fine hypertext products” in short he links to the best stuff he finds across the web, often design related, but wide ranging, across many topics, and for his passionate audiance almost always of great interest. His audiance is passionate enough that he supports himself from his blog and he selects his advertisers with much the same care as the sites to which he links. See http://kottke.org/
  • WallBlank – A site that sells one print a day, five days a week, either a photograph or a print, always a limited edition and selected with care. One of a number of similar businesses which sell a small set of limited editions, usually only one or two works a day (or a week). See http://wallblank.com/ other similar businesses with some differences are Threadless, PleaseDress.me and 20×200.com 

Posted in economics, Entrepreneurship, internet, web2.0 | Tagged: , , , , | 3 Comments »

Mixing online & offline advertising – seeking examples

Posted by shannonclark on October 27, 2008

I have been following the move online of offline publications for over a decade (I’ve been on the Internet since 1991, went to my first websites via Gopher search) but something I have been wondering about since the mid-90’s and still almost never see is why so many publications who have offline publications (magazines or newspapers of any frequency) do not include their print advertisers as 1st level content in their online presenses.

And, in many cases have entirely different advertisers online vs. offline with little overlap and very limited even acknowledgement in the online presense of the offline advertisers at all.

Now there are 1000’s of publications around the world and I only read a few of them offline or online, so perhaps there are some great examples I have missed – please leave comments w/links to examples, especially those that do it very well.

And sure, I know there are objections from some that “ads” are not content (I’d argue that they most certainly are content) or that people would just ignore them online (though I’d ask if they have ever really be tested). To address the content question – there are entire magazines offline which are almost entirely based around the “content” of ads (the many highly profitable Vogue magazines for example) and other magazines such as The New Yorker where the ads make up a key part of the look and feel of the magazine (especially the small format ads) but in both cases the offline advertisers seem to have no part at all of the online presense.

I have been thinking about this as I have been looking at magazine and newspaper websites in preparation for thinking about a submission to the Knight Foundation’s $5M News Challenge (deadline is Nov 1st). Now I am at a slight disadvantage as many of the judges are friends of mine (so will have to recuse themselves while evaluating me) but I hope that the idea I have, whether I implement it or not may inspire many people to copy it in the future (it is geographically specific so I’m happy to see many people copy it in cities around the world – and even in the same cities as I think there is plenty of room for many).

But one part of my idea (among many) is to build relationships that extend from the online world to the offline aspects of my idea (which is not only online – it includes a print publication – working out the exact details) and not just the articles, reviews, calendar listings etc but also the content from the advertisers.

So as part of my research I’m looking for counterexamples, publications which are doing a good job of including their financial supporters (sponsors as well as more traditional advertisers) into all aspects of the publication – online and offline.

Posted in advertising, economics, geeks, networks, web2.0 | Tagged: , , | Leave a Comment »

Tips for surviving the downturn or how to live (well) like a grad student

Posted by shannonclark on October 12, 2008

I quit a very well paying job to start my first company in the early winter of 2000 just a month of two before the first (i.e. Web 1.0) bubble burst. Initially I was able to pay myself a reasonable (if lower than I had been earning previously) salary, but having not raised further rounds I cut then nearly eliminated my own salary. While I have earned money in the years since, it has not be large sums. Instead I have adapted a range of techniques to keep my cost of living quite low – and thus allow my resources to be mostly focused on developing my businesses. Many, perhaps all, of these suggestions may help you during the coming downturn.

Basic suggestions for living (well) like a grad student

  1. Eliminate as many regular monthly expenses as possible, especially those that also create stress. In my case the biggest monthly net gain came when in 2004 I sold my car and did not replace it. Immediately I dropped from my monthly budget nearly $1000 in monthly costs (car payment, cost of a monthly parking space, gas back when it was still <$2/gallon, oil changes, occasional parking tickets, car repairs, new tires etc). I reduced stress by avoiding having to find parking spaces, dealing with rush hour traffic etc. To make this work I did have the advantage of choosing an office (when I had one) which was in walking distance of my home. I also added to my monthly budget a monthly public transit pass, took taxis as needed and occasionally rented a car or used a carshare service. When I moved to San Francisco a few years ago, I did not move my TV, which meant that I also do not have a monthly cable or satellite bill. Again, instead I buy the occasional series via iTunes, watch other series online (with minimal ads), or occasionaly rent a DVD (Netflix might be another option)
  2. Do use services which save you considerable time for a reasonable price. Two main services I would not give up are a business mailbox which is a few blocks from my home and which means I never have to be home to pick up packages (giving me flexibility and security, for $100/year it is money very well spent). And the second is I let the cleaners across the street from me do my laundry – for $1/lb they wash, sort and fold my laundry and I can pick it up usually the next day. The cost is not much more than it would be for me to use a laundromat (which since my apartment does not have a laundry machine would be my only option). Even if I did have a laundry machine, this way all my laundry gets done at once – instead of me having to waste many, many hours on sorting, loads one after the other, drying and then folding, not to mention the energy costs plus the costs of the laundry machine itself.
  3. Cook at home. I am a serious cook and foodie, so I do like to eat out (a bit more on how I make that work on a budget below) but I also cook an increasing number of my meals at home. One very valuable thing I suggest it make sure you always have enough food options at home that in a pinch you could feed yourself for at least a week, ideally a few weeks, without needing to do much if any shopping. A few boxes of instant oatmeal, pasta, sauces, tortillas and beans etc all mean you have the comfort of knowing you have, in a pinch, food to eat (and then either drink water or make tea). But most weeks I shop for fresh foods, usually from local farmers markets.So how do I make that work on a budget?First, I shop for quality over quantity and focus on a few, highly seasonal items. What is most seasonal is usually also what is in the greatest abundance (and thus usually even at a higher end farmers market reasonably priced).

    Second, I look for bargains and usually shop without a specific menu in mind. At the Ferry Building here in San Francisco, for example, one of the amazing local, organic, free range butchers often has some specials. Recently I bought nearly 2lbs of amazing free range steaks, each vacuum sealed, for <$10, more than enough for two great meals. When I get to the farmers market towards closing the farmers often offer deep discounts to sell produce that would otherwise go unused, if I expect to be able to cook it, I try to take them up on the offers.

    Third, something I don’t do much currently but could let you get even better deals (and more on this point below) is to shop with others and share your purchases. Frog Hollow Farms is a phenomenal local organic orchard, all of their fruit is usually $4/lb (so pricey but very tasty), however they will sell a 10+lb case for a flat rate that is much lower (I think $25/case) if you can share that case with even one or two friends, it is a great bargain. Many local farms also have CSA (Community Supported Agriculture) which offers a wide selection of seasonal produce, often delivered right to your door (i.e. to your mailbox where someone will sign for it for you) every week or every other week. For a single person however this can be a bit much, but shared with a few others it could be a great deal.

    But the key is to be flexible in what you eat and cook as well as to emphasize vegetables and relatively limited amounts of protein. I’m an omnivore but I try to eat a diet rich in vegetables and fruits, in turn this is both cheaper and healthier.

    A final food tip, splurge on spices and oils, great spices and olive oils will make a huge difference in the quality of your food and the cost of amazing spices is actually not much more than the random and poor spices found in most stores. I buy nearly all of my spices from The Spice House which delivers anywhere in the country.

  4. Share. Living with others will be cheaper per person than living alone (I live alone, having a girlfriend who shared my space would cut my costs by a lot). Instead of every unit in your apartment building having a wifi connnection, consider pooling resources with your neighbors, buying a single very fast connection and splitting the costs (assuming the wifi will reach everyone). Of course this has some risk – you have to trust your neighbors won’t abuse the network. Go in with some friends on getting a CostCo (or Sams Club if you prefer, though I think CostCo is the supperior company) and then take advantage of bulk purchases of staples – split amongst your friends. Better still, avoid as much as you can the purchase of new non-perishables (electronics, furniture, even clothing) and instead by from resale shops, local merchants, off Craigslist etc. But you will need toilet paper and why not buy it in bulk, take only one car trip, and share the time & expenses with others.
  5. Do not cut corners on the tools you need for your job or what you truly need for your own sanity. For me this means that I have a serious laptop and decent desktop computer and an iPhone – without both I would be severely restricting my ability to do my job (and if you have been reading my blog for long, or my twitter feeds, even having spent a lot of money on my laptop doesn’t mean it is ideal for the job, I anticipate replacing it in the next year). For my own sanity I do indulge my interest in books. I have and buy a lot of books – mostly used, but new books from authors I really like (or as is more often the case these days also know personally). For me reading (and reading widely) keeps me sane and focused. For others this indulgance might be your favorite music (though think seriously about a nearly “all you can eat” plan such as Rhapsody in that case) and/or live concerts. For others it might be your gym membership etc. Don’t go overboard, do look for bargains when you can find them (and when taking them doesn’t negate your values). For me, though I do like to save money when I can, I don’t mind paying nearly full price for books from my favorite bookstore by the authors I really love and support. However I do buy many other books from used bookstores (and do buy used copies from my favorite bookstore when they have one of a book I’m looking for) when I care more about the content of the book than supporting that author (i.e. business books not by friends of mine).

Underlying all of my suggestions is an assumption that you have a good general grasp of everything which you spend money on each year, each month, and most weeks. People may disagree with my final suggestion and there are certainly valid arguments against it, for example if you are in the rare category of people who take good advantage of credit card points programs, but I suggest living a mostly cash based life. To do this I withdraw cash from an ATM only a few times each month and then use that cash for almost all of my costs of living (other than rent, phone, etc). My food, transportation, personal purchases, cleaning, entertainment etc all for the most part come out of the cash I withdraw. This allows me to have a lot of personal flexibility but also emphasizes relatively low cost but high impact rewards to myself – great coffee or a good book – but makes me slower to spend lots on a meal or larger purchases. Lots of small credit card purchases can very rapidly add up, incur interest charges, but more critically inure you from the full impact of your choices by delaying that impact until the next billing cycle.

A mostly cash lifestyle, in contrast, gives you simple measures of how rapidly you are spending money. Your wallet shrinks and you find yourself seeking out your bank’s ATMs with greater frequency.

I always use my own bank’s ATM. Not just because I hate on principle the idea of paying any fees to get my own money but because by forcing myself to make that extra effort I raise the pain threshold for getting out cash. I also generally always withdraw the same amount of money with each visit, this allows me to have a rough gauge of how much I am spending in a month by thinking back to how often I went to ATMs or looking at the receipts in my wallet. I try to visit the ATM fewer times a month than there are weeks in that month, the weeks when I have to visit the ATM once during the week and again over the weekend are generally times I am spending more money than I really should be spending.

I hope these tips help you, please add other suggestions in the comments.

Posted in banking, economics, personal, working | Tagged: , , , | 1 Comment »