Sunday, July 22, 2012

Cash pumps, cash machines, governments and investors

Government needs money.
Taxes are how government get the money.
Taxes are paid when money move from one hand to another.
In other words, the more exchanges there is, the more taxes are paid.
In other words, government wants high cash flow.
If you want to increase water flow, you buy a water pump.
The government wants to increase cash flow so they buy cash pumps.

The trick is that : Your president will support cash pumps, and doesn't care about profitability.

When you understand that, you understand how use leverage from your government.
In other words, you understand how to pay almost no taxes and maybe how to get money from them.

Cash machines are for investors, cash pumps are for governments.
If you want to pay less taxes, become a cash pumps.

Tuesday, July 17, 2012

Work and investment definition

-How much do you work every day in average ?
-3 hours
-Wow what are you doing after that, are you bored ?
-I read books, follow courses on udacity, and I code interesting things and write on it.
-So you work more than 3 hours  !

Where comes from this difference of perception ?

For employees, work is any activity you could do at your company's cubicle.
For me work is exactly that : Direct exchange of time against money.
On the other hand, I call investment an Indirect exchange of time against money. (Exchanging your time for something that will makes money for you)

Educating myself, coding for free and writing on codeproject is not working.
It is not investing either because nothing will make money for me after my new article is released.

Working and investing are not defined by activities, but by the end (money) and the method (direct or indirect).

Monday, July 16, 2012

Simple math for work security

I am an independant developer and trainer, and sometimes people tells me that I am lucky for now and I should have some job security.

I respond that even though I have no job, I have work security let's do the math :
If people spends in average between 10 and 20 years in their jobs, then it means that they have 5% chance to be fired every year.
If you are independant, chances are that you work for many customers.

 My question is the following : what is the most secure work between a secure job of 5% chance to get fired every year OR an insecure job with N customers that will fire you with a probability of 40% ?

Let's calculate "N" together:
N    %to get fired
1    40%
2    16% (40% * 40%)
3    6.4% (16% * 40%)
4    2.5% (6.4% * 40%)

In other words, knowing 3 differents customers will give you as much work security than a secure job. What is magic with that ?
  • Having one more customer is a linear problem. 
  • Having one more customer improve your work security exponentially.
In other words :
  • Having five customers is as hard as getting 5 times one customer. 
  • Having five customers improve your work security 16 times more than one customer.
Why so much people are attached to job security, when work security is what they need the most ?
It hurts me to see great people begging for a job when I see so much work opportunities waiting for them.

Saturday, July 14, 2012

Invest in yourself

Someone asked to Warren Buffet :

“If you were 30 years old and had no dependents but a full-time job that precluded full-time investing, how would you invest your first million dollars, assuming that you can cover 18 months of expenses with other savings? Thank you in advance for being as specific as possible with asset classes and allocation percentage.”

Buffett let out a small laugh and began. “I’d put it all in a low-cost index fund that tracks the S&P 500 and get back to work…”

What is the most important part ? I thought that the most important part was  :
“I’d put it all in a low-cost index fund that tracks the S&P 500 and get back to work…”

Actually, the most important part of Buffet's response is : "Buffett let out a small laugh".

His advice makes sense, diversification is the wall against ignorance.
Ignorance is exactly what happens to someone that would have "30 years old and had no dependents but a full-time job that precluded full-time investing".

The advice of Buffet makes perfect sense.

"Buffett let out a small laugh" is the most important .Buffet knows that someone within this state of mind can't be rich. This person is a producer and given the current monetary system, the producer's fate is to dilapide his million to banks.

Buffet is right, given the problem boundaries, the solution is perfect. But the boundaries of this problem does not exist in the state of mind of the rich:
  • The rich does not have a full-time job .
  • The rich is financially literate and so does not use diversification.
  • The rich does not necessary have "the first million dollars". (Thanks to some some financial magic)
Become financially literate, stop your job, and  invest in yourself for real assets, might be the first step to be rich.

Diversification is protection against ignorance... but what if you just kill ignorance ?

Friday, July 13, 2012

Habit and addiction for productivity

As an independant developer working at home, I had the bad habit to procrastinate instead of working.
Until the day I learned how to leverage the power of habit and addiction in my advantage.

I took the habit to use a to-do list for all my work, every time I need to do something I put it in the list.
Every day the first action was to check the list, and for every tasks 3 actions are possible:
  • Doing it ,
  • Delegating with a new task for following up,
  • Defering it and sending calls or emails when I need more information
Now, this habit has become an addiction, and I can't stand seeing anything in my list... And as always, I have only 3 choices possible for every task.
Making it an addiction push me to work in the direction I set without willpower.

I learned this system with Getting things done, and people might think that you need discipline to follow these advices... Actually you only need discipline in the beginning... then it becomes an habit, then an addiction.

When it is an addiction, you need discipline only if you want to stop doing it.

Have you ever felt times when you know you need to do something but you actually did not because of whatever reason on earth ?
Now it does not happen anymore for me, when I feel the need to do something, I just add it to my list and then my addiction pushs me to cross the task out of my view.

Habit and addiction are powerful tools, with it, you don't need willpower and discipline to move forward. (... or backward if you don't use it wisely)

Wednesday, July 11, 2012

The story of data

I'm a big believer of Wikileaks, a publisher of raw leaked data about companies and government corruption.
Wikileaks publishes raw data and hands it to the press that sort and summarize it.

When data was scarse, the press could easily summarize data, write the general idea and spread it to the world.
Now, there is so much data that I believe the press should stop working on summarizing data, and concentrate efforts on writing the general idea and spread it.

From wikileaks on the Syria leak :
The database comprises 2,434,899 emails from the 680 domains. There are 678,752 different email addresses that have sent emails and 1,082,447 different recipients. There are a number of different languages in the set, including around 400,000 emails in Arabic and 68,000 emails in Russian.

How can you ask a journalist to summarize so much data and grasp the general idea ?

Data tells a story, but now we can't read the story without computers, there is just too much data.
There is a missing piece between Wikileaks and the press. The world needs data mining and data visualization experts.
These jobs were only accessible through research and big companies. They were the only place were we could find enough data and enough processing power.

Thanks to cloud computing advances, processing power is accessible to any independant developer. And Wikileaks give us the data to play with.
This domain will be a new play field for developers.

Sunday, July 8, 2012

Opportunity cost

It might seems strange at first that freelancers are refusing well paid work ahead of time. But when you are billing every minutes of your work, it becomes clear that saying 'yes' can cost you more than saying 'no'.

With every 'yes' comes a commitment, and you might be tempted to think that you are doing a two way commitment. Actually, most of the time the commitment is one way, that is : if your customer does not need you after all, you will not work. That is the definition of freelancer : with time comes uncertainty.

The problem is that since you made a commitment you closed many doors that opened along the way. And if you are not aware, it might cost you a lot. (and not always in terms of money)

Commitment is not something to take lightly, and, as a freelancer you have to know that this is often a one way commitment. So protect your time it is your most precious asset.

The chinese way

I often advice people to learn things by the chinese way.

There is no disrespect about the chinese people, it is just that china is well known for their ability to take good idea and replicate them. And I think that this is the way the world should work without any shame. Too much emphasize is make to the inventor... whereas the most important should be to solve problems and make people life better, not to invent.

In .NET programming the best documentation is not the official microsoft one (MSDN). The best documentation is the code itself reverse engineered with tools like IlSpy.

And I think that the same process is true about entrepreneurship. We should spend less time reading book and more time talking to people that succeed, and reverse engineer what make them successful.

I have the chance to meet lots of smart people with my work, and even when I am the trainer, I always learn what make them amazing.

Too much time is spent dreaming being successful and getting the best idea, this time should be spent copying (or reverse engineering) what work and applying it to your environment.