Sunday, May 31, 2009

Personal MBA Update

Personal MBA Update: The Bogleheads Guide To Investing by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf - I present you with yet another update along my Personal MBA journey. If you haven't read about the Personal MBA you can check it out here. I finished The Bogleheads Guide To Investing the other day and I must say it was pretty good. A lot of investing books are either get rich quick shock value investing scams or they are so boring and mind numbing that you fall asleep throughout the whole book without learning much of anything. This book provided a wealth of knowledge surrounding what I call "mindless investing" while still remaining viable from an entertainment standpoint. It is mindless in the sense in that they don't teach you be a day trader using intricate default credit option swaps or something. They preach low cost diversified mutual fund/bond fund investing based around a long term buy and hold strategy.

For those who don't know Mr. Bogle is the founder of Vanguard, the company that largely ushered in the new era of investor class through low cost passively managed index funds and online services. It's not often that investment books advise the majority of people to invest in index funds and total market index funds, especially when the company can profit from other investor behaviors like constant buying and selling and investing in actively managed funds with high expense ratios. It definitely says something about what Mr. Bogle and Vanguard stands for. The book preaches financial literacy and prudent do it yourself investing that is well advised for the majority of people out there.

I would definitely recommend the book to anyone who is interested in investing. I have read a lot of investing books and I still took away a lot from this book while touching up on the basics, and I think the novice investor would get a look at the broad topic that is investing as well. Here are the notes that I took while reading this book:

- Our financial markets are essentially closed systems in which an advantage garnered by a given investor comes at the disadvantage of other investors in the same market. As a group we investors are inevitably average, so beating the market is a zero sum game. After deducting investment costs its a losers game.
-Understanding that contrarian wisdom is the first step toward investment success
- "Choose a sound financial lifestyle. Start early and invest regularly. Know what you're buying. Preserve your buying power. Keep costs and taxes low. Diversify your portfolio."
- "In reality there is perhaps no one of our natural passions so hard to subdue as pride. Disguise it, struggle with it, beat it down, stifle it, mortify it as much as one pleases, it is still alive, and will every now and then peep out and show itself: you will see it perhaps often in my history; for even if I could conceive that I had completely overcome it; I should probably be proud of my humility." - John Bogle
- "Do not value money any more nor any less than its worth; it is a good servant but a bad master." Alexander Dumas
- "Drive in banks were established so most of the cars today could see their real owners." - E. Joseph Grossman
- Take 100 young Americans starting at age 25. By 65 one will be rich and four will be financially independent. The remaining 95 will reach the traditional retirement age unable to self sustain the lifestyle to which they have become accustomed.
- What is your financial lifestyle? The borrowers, the consumers, and the keepers
- 1. Graduate from the paycheck mentality to the net worth mentality 2. Pay off credit card and high interest debt 3. Establish an emergency fund
- Its not how much you make its how much you keep
- "Adding time to investing is like adding fertilizer to a garden: it makes everything grow." - Meg Green
- Late Actor George Raft explained how he blew about $10M this way: "Part of the money went to gambling, part for horses, and part for women. The rest I spent foolishly." All good wealth builders have one thing in common: they spend less than they earn.
- Nothing decreases your future net worth more than a new car every few years
- "When a man with experience meets a man with money, the man with the money gets the experience, and the man with experience gets the money"
- "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." - Warren Buffett
- Treasury issues are exempt from state and local taxes
1. Find a bond fund that matches your investment time horizon 2. Don't time interest rate hikes 3. Match your risk tolerance
- Bond vs Bond fund page 37
- "Ive found that when the markets going down and you buy funds wisely, at some point in the future you will be happy. You wont get there by reading, 'Now is the time to buy'." - Peter Lynch
- 10 advantages to investing in mutual funds: 1. Diversification 2. Professional Management 3. Low Minimums 4. No loads or commissions 5. Liquidity 6. Automatic reinvestment 7. Convenience 8. Customer service 9. Communications and record keeping 10. Variety
- ETFs basically mutual funds that trade like stocks on an exchange and are priced continuously throughout the day. Not good for buy and holders due to the brokerage costs
- "Control your destiny or someone else will." - Jack Welch
- Inflation stats on page 49 and table on page 51
- TIPS have real rate and rate adjusted for inflation 1.2+3=4.2 or 1.2+4=5.2% adjusted twice annually IRS taxes both rates
- Lower the tax bracket the higher the return - place in a tax deferred account
- I bonds are already tax deferred and TIPS aren't
- "You don't really need to begin saving for retirement before you reach 60. At that point simply save 250% of your income each year and you'll be able to retire comfortably at 70." - Jonathan Pond
- Factors for retirement:
1. The amount we save 2. Our current age 3. The age at which we plan to retire 4. How many years we will expect to live 5. Whether we plan to leave an estate 6. The expected rate of return 7. The rate of inflation 8. Whether we expect an inheritance 9. Other sources of income in retirement
- "There is a crucially important difference about playing the game of investing compared to virtually any other activity. Most of us have no chance of being as good as the average in any pursuit where others practice and hone their skills for many many hours. But we can be as good as the average investor in the stock market with no practice at all." - Jeremy Siegel Professor of Finance at U of Penn Wharton School
- Index funds beat 80% of all actively managed funds for one simple reason: rock bottom costs
- Page 81-86 quotes
- "The most fundamental decision of investing is the allocation of your assets: How much should you own in stocks? How much should you own in bonds? How much should you own in cash reserve?" - Jack Bogle
- Efficient market theory and modern portfolio theory
- Asset Allocation has greater impact on financial performance than anything Studies on page 92-93
- 1. What are your goals? 2. What is your time frame? 3. What is your risk tolerance? 4. What is your personal finance situation?
- "Never buy anything whose price you cant follow in the newspapers - and you shouldn't buy anything that is too complex to explain to the average 12 year old." - Jane Bryant Quinn
- "Bulls make money, bears make money, but hogs get slaughtered"
- Quotes on pages 105-107
- "The shortest route to top quartile performance is to be in the bottom quartile of expenses." - Jack Bogle
- 1926-2004 stocks returned 10.4% - 3.3% avg cost and its 7.1% nearly a third lost to expenses
- Page 117-118 quotes
- "The profound impact of taxes on fund returns is a subject too long ignored." - Jack Bogle
- Keep turnover low, use tax efficient funds in taxable accounts, avoid short term gains, buy shares after the distribution date, sell before the date, harvest losses
- "Of all the expenses investors pay taxes have the potential for taking the biggest bite out of total returns." - The Vanguard Group
- Invest in 401K to match amount, Roth to max, 401k to max, additional funds to tax efficient funds
- "Diversification is a protection against ignorance" - Warren Buffett
- Correlation for any two investments range from +1 to -1
- Over the past decade Morningstars five star equity funds have earned an average 5.7% against a 10.3$ return for the Wilshire 5000.
- Since the 1960's the average return of the top 20 mutual funds in each decade was less than the market index return in the next decade
- If you think timing the stock market is difficult timing the bond market is impossible. Of 14 bond timing systems tracked for the last five years only one beat a simple buy and hold strategy
- Wall st and financial media have a symbiotic relationship - The media wants readers viewers listeners and most of all Wall St's advertising dollars. Wall St also wants readers viewers listeners and most of all your dollars. Unfortunately these dollars come straight out of your investment returns.
- Pg 166-7 quotes
- "Economists report that a college education adds many thousands of dollars to a mans lifetime income -which he then spends sending his son to college." - Bill Vaughan
- Windfalls of money: Deposit the money in a safe account for at least 6 months, set a realistic estimate of what it can buy, make a wish list, get professional help
- "I helped put two children through Harvard-my brokers children." - Michael LeBoeuf
- "When someone buys or sells an investment the broker makes money and the brokerage house makes money, and two out of three ain't bad."
- Fee only advisers are the best they use a percentage of AUM assets under management
- "Foolproof systems don't take into account the ingenuity of fools." - Gene Brown
- Rebalancing is the act of bringing our portfolio back to our target asset allocation after market forces or life events have changed the percentage of our various asset classes
- use expansion bands to determine the need to rebalance +-5% example
- Rebalance in tax deferred accounts first because there is no tax consequence
- In 1980 only 6% owned mutual funds and today over half do. This increase has created an increase in the amount of noise out there
- There are only two ways to outperform the market: 1. Choosing superior investments 2. superior market timing
- Research shows the ability to do either consistently is so rare that it may as well be chalked up to chance
- Create simple diversified asset allocation plan, invest a part of each paycheck in no load index funds, rebalance when necessary and stay the course
- Investment pornography refers to excess advice and information but it is actually somewhat flattering. Real pornographers deliver what they promise!
- "I'd compare stock pickers to astrologers but I don't want to badmouth astrologers." - Eugene Fama
- There has never been a 15 year period when stocks lost money. That is all you need to know.
- 1. All forecasting is noise 2. Listen to the helpers ignore the hustlers 3. Be a skeptic and do your homework
- Investment experts fall in 3 categories:
1. Those who don't know what the market will do and know they don't know
2. Those who don't know what the market will do but they believe they do
3. Those who don't know what the market will do and get paid to pretend they know
- "Rich people plan for three generations. Poor people plan for Saturday night." - Gloria Steinem

Friday, May 29, 2009

Real Estate Investing: A Dialogue Amongst Friends

Here is another interesting back and forth (mostly forth on my part) between a friend and I. This friend is extremely smart, an awesome dude, and a very entrepreneurial person. Throughout the existence of BadskiBlog I have preached that there is no one set investment advice. That is why it is so important to know your goals and your strategy for achieving those goals. Because it is those goals that will dictate which investing advice you will take, and which you will leave for the next guy. Just because my friend and I do not have the same world view on this topic does not mean that I am right and he is wrong or vice versa. I would argue that we are both right given our goals and investing strategies. I have included my friends contributions in italics


See above link. Part of this discussion is why I am not big on buying homes unless you plan to live there for a long time....

Love Forever,


I just posted a blog post on the index yesterday. I think what the article fails to address is that the majority of the benefits of
being a property owner aren't Annual Return. And that return is skewed by not taking into account Cash on Cash return. If you buy $10K worth of stock, how much is that stock worth at that moment? $10K.....not a trick question. If you buy $10K worth of property how much is that property worth? It could be worth $100K or even $200K depending on financing. So if the price of that $100K property appreciates by the 1.5% the article claims after factoring the CPI then it would be worth $101,500.00. Not a great return. But you have to look at cash on cash return. You only put in $10K of your own money. $1,500 is a much more significant portion of $10K than $100,000; it's actually a 15% cash on cash return.

Leverage can work the opposite way as well but how many houses go out of business? Not many. And as I always say with both stocks and property, you only lock in losses if you sell.

After you look at the income potential from renting out a property, the tax advantages, and the control you have over the present value of your investment I think that property is a really good investment.

I do however agree completely with Reese that some people shouldn't own homes unless you live there for a while. The situation I am in getting moved to Boston has put me in a tough spot with my condo. However, I feel that I have the business sense and the stamina to become a landlord and continue building equity in my property. Each person's situation is different. Good read.

Thursday, May 28, 2009

'Pulling Out' Method Gets New Respect....

This article was honestly just too funny not to post! Check out the full article here which was featured today on What I find most interesting is the responses different groups of people have towards Mrs. Jones' scientific research. I guess this issue, like other polarizing issues, has the power to divide us no matter how many similarities we as humans have. For those too lazy to read the who thing here are some excerpts.

The act of withdrawal -- the male pulling out before ejaculation -- is a long controversial method of birth control, one many sex education classes have condemned as risky.

But Jones' findings, based on several studies and data from the Guttmacher Institute , a nonprofit organization focused on sexual and reproductive health where she is a senior research associate, were just the opposite.

Her studies found that in perfect use -- meaning the man pulls out every time -- withdrawal has a 4 percent failure rate, as compared to condoms, which have a 2 percent failure rate.

"Although withdrawal may not be as effective as some contraceptive methods, it is substantially more effective than nothing," said the report. "It is also convenient, requires no prior planning and there is no cost involved."

And more:
"I've grown used to promoters of abstinence only-until-marriage programs dismissing the effectiveness of contraception," said Jones. "However, I'm surprised to see such disparagement of withdrawal among a crowd that is presumably younger, more diverse and open-minded."

"Perhaps because most of us have been told for so long that withdrawal doesn't work, we are unable to embrace scientific evidence that counters what we 'know,'" said Jones.

Wednesday, May 27, 2009

The Shark Tank - A New Beauty Reality Show

I found this article about a new reality show that will be debuting soon called Shark Tank. The show is being produced by reality show guru Mark Burnett who has done show such as the Apprentice, Survivor, The Contender. The concept is very intriguing and it will likely be a show that I will be DVRing each week when it hits the tube.

Shark Tank, a forthcoming reality show on ABC, is looking for entrepreneurs with original business concepts and exceptional drive. Participants will be competing for serious start up capital, advice and support from five deep-pocketed business owners. Winners won't get a new car or a trip to Hawaii, but they will get their dream operations off the ground with, in some cases, seven-figure investments.

Most people look for drama in reality TV and to an extent I do as well. However I am most drawn to the reality shows that I can either learn something from, or shows that exemplify the human spirit. To me the drama and entertainment value is just a bonus. That is why I love shows like The Apprentice and The Biggest Loser, but never tune into I Love Money or Rock Of Love Bus (even though Bret Michaels is a classic 80's embodiment).

"In this situation we lined up five wealthy sharks who have the money to invest," he says. "Entrepreneurs come in one by one. There's no elimination. There's no game there. Each entrepreneur gives their business pitch - who they are, why they're worthy. Either the sharks are in or out. If all five say, 'I'm out,' the entrepreneur leaves empty handed. If more than one shark remains in, then there's blood in the water because then these sharks go against each other."

This show should be a beauty and a must see for all those interested in business. I am interested to see into the relatively cloaked world of venture capitalism, and to see how realistic it really is. Check out a video sneak peak here. If you think you have what it takes to be on the show you can apply here. Good Luck!

Housing Crisis Update

I read a few articles the other day (here and here) talking about the state of housing in our country. Home prices fell 19.1% in the first quarter compared to the previous year, the largest decline in the 21-year history of Standard & Poor’s Case-Shiller Home Price Index series. The national index covers almost all homes sold throughout the United States and is reported quarterly, while the 20-city index reports sales in 20 major metro areas and represents a cross section of the national market. The 20-city index comes out every month.

Paul Dales, U.S. economist for Capital Economics in Toronto, pointed out the massive home price gains from 2000 to 2006 have now vanished. Home prices have fallen back to 2002 levels in nominal terms, according to Case Shiller. But they’ve returned to 2000 levels when inflation is accounted for.

“We’ve had 6 years of massive appreciation wiped out in 3 years of sharp declines,” Dales said.

Home sales are improving, a sign that a bottom could be near. But home prices are likely to continue to fall for some time. Some cities have already overshot pre-boom price levels. Detroit, for example, is already at 1995 levels, even before inflation is accounted for.

"All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines."

What does this mean for you? It depends. For those who are looking to purchase a home this could be a very good thing. A necessary correction of sorts that will allow you purchase a home that does not make up an unreasonable amount of your overall spending. For those who are already homeowners it probably hurts a little bit more. But as I have said in previous BadskiBlog posts, losses and gains are only realized when you sell. As long as you can continue to pay your mortgage or have enough of an emergency fund built up in case you suffer the misfortune of a layoff you should be ok. The sky is not falling. The markets will correct themselves even if it is long, drawn out, and painful. I am learning first hand the difficulties associated with a market decline. Couple in a forced move in the military and I am getting a crash course in becoming a landlord. As an optimist, I am putting my head down and learning all I can as I work through this market. Who knows it may be the best thing to happen to me?

S&P/Case-Shiller 20-city home price index
Metro area 1-year change (%)
Phoenix -36.0%
Las Vegas -31.2%
San Francisco -30.1%
Miami -28.7%
Detroit -25.7%
Minneapolis -23.3%
Tampa -22.4%
Los Angeles -22.3%
San Diego -22.0%
Chicago -18.6%
Washington -18.4%
Seattle -16.4%
Atlanta -15.7%
Portland -15.3%
New York -11.8%
Charlotte -9.3%
Cleveland -9.0%
Boston -8.0%
Dallas -5.6%
Denver -5.5%
Composite-20 -18.7%

Tuesday, May 26, 2009

Meeting of the Minds - The Future of Capitalism

I watched a CNBC original called Meeting of the Minds The Future of Capitalism yesterday and it was very interesting. The show brought together some prominent business minds to talk about some of the issues surrounding our current environment.

What will capitalism look like going forward? What will prosperity mean? And ultimately, how will businesses navigate this uncharted landscape?

There were a few things that I found intriguing about the show. First and foremost, I always enjoy watching leaders interact with eachother. Who better to learn from than some of the finest business leaders our nation has to offer. I am always amazed at how much the topic of government is discussed when talking about business. I guess some of the questions were tailored to spark some discussion of the business/government dynamic, but I am sure it would have arisen regardless. The leaders, although all relatively similar with regard to their practicing of business, had political views that ran the gamit of the political spectrum. The short one hour program revealed quite a bit surrounding the leaders political views. Although their political views varied wildly from leader to leader, there was almost unanimous consensus that growth is the answer to get our nation out of the financial prediciment it is in today.

The leader that I found myself most drawn to was Jack Welch, former CEO of General Electric. I have listened to his audiobook before, but seeing him interact and share his views on this program solidified my belief that the guy is a real leader. Some people might not be able to look beyond his fiery personality, but many of the things he stands for resinate with me personally. In the program he used the word meritocracy. He spoke about how we need to not be ashamed to be business people. He said that the overwhelming majority of businesses and business people are inherently good. His answer for getting our nation out of the crisis was establishing and rewarding the winners while taking care of the losers. Not total cutthroat capitalism, yet a recognition that winners and the opportunity to succeed are what makes our country great. He really seems to celebrate personal responsibility and establishing systems that distinguish only based on merit; very noble ideals indeed. Check out some video footage of the show below. I highly recommend checking out the entire show.

Friday, May 22, 2009

A Point For Capitalism

With the economy the way it is, capitalism has taken a beating lately. Much to my amazement, people are starting to doubt that capitalism works. They seem to have forgotten that it is capitalism that has lifted the quality of life for so many across the globe. I came across this article on Andrew Sullivan's blog at The Atlantic that makes a push for capitalism.

With all the hits capitalism has taken lately its easy to forget that countries who reward innovation and the entrepreneurial spirit are rewarded with more entrepreneurs! It’s a perpetual cycle that increases the standard of living for all, not just those who are rewarded most heavily.

We all know the power of an Apple or a Google to create new business models and generate massive new wealth. But, long ago, the great economist Joseph Schumpeter argued that the formation of new entrepreneurs lies behind the great "gales of creative destruction" which set in place new firms and industries and revolutionize old ones.
The last couple of days, we've looked at how class effects economic growth and innovation. We now look at the relationship between class and entrepreneurship. In the graphs below, Charlotta Mellander compares countries' performance on the Global Entrepreneurship Index developed by economist Zoltan Acs to shares of the creative class and working class.
Again, the results speak for themselves. Entrepreneurial countries are creative class countries. Those with high percentages of the creative class have higher scores on the Global Entrepreneurship Index.

The opposite is true of countries with a large share of the working class. Their scores on the Global Entrepreneurship Index are considerably lower.

Interesting stuff that serves as a reminder that even in tough times we are standing on the shoulders of the achievements of many entrepreneurs who came before us. Your alarm clock, your toaster, that mass produced cereal you eat every morning are the fruits of the labors of entrepreneurs across the globe.


Tuesday, May 19, 2009

Only The Optimists Survive

I found this article in BusinessWeek today on leadership and how true leaders are optimists. The article is kind of fuzzy and subjective but it is a great reminder that amidst adversity there is only one option; to look forward and believe that better days are ahead.

"Only the paranoid survive" was the famous call to action by Intel pioneer Andy Grove, and that hypervigilant motto undeniably has worked wonders during his illustrious career.

For leaders in today's and tomorrow's business climate, however, I suspect that a far more appropriate motto would be: "Only the optimists survive."

I think this article is important because it talks about how optimists define their own reality. To me, that is the same as saying that optimists challenge and break out of the status quo. They do what is not normal and are therefore remarkable. People want to follow people who are unique, people who are extraordinary, people who will lead them confidently into the unknown and succeed regardless of the challenges faced.

New Blog Addition (And Bonus Cool Quotes)-The Art of Manliness

I have put yet another blog through the Badski trial run, and that blog is The Art of Manliness. Do not be deceived by the name. This isn't a blog about hunting and killing wild animals with your bare hands, or dressing like a lumberjack, or finding new ways disconnect from all things emotional and 'girly.' This site is aimed at restoring the glory that is manliness; what it used to and should represent.

The Art of Manliness is authored by husband and wife team, Brett and Kate McKay. It features articles on helping men be better husbands, better fathers, and better men. In our search to uncover the lost art of manliness, we’ll look to the past to find examples of manliness in action. We’ll analyze the lives of great men who knew what it meant to “man up” and hopefully learn from them. Every week we seek to uncover the essential skills and knowledge today’s man needs to know.

My idea for the Art of Manliness came about as I was reading Men’s Health magazine. It seemed to me that the magazine’s contents were continually going downhill, with more and more articles about sex and how to get six pack abs. Was this all there was to being a man? And as I looked around at the men my age, it seemed to me that many were shirking responsibility and refusing to grow up. They had lost the confidence, focus, skills, and virtues that men of the past had embodied and were a little lost. The feminism movement did some great things, but it also made men confused about their role and no longer proud of the virtues of manliness. This, coupled with the fact that many men were raised without the influence of a good father, has left a generation adrift as to what it means to be an honorable, well-rounded man.

Talking about honorable manliness was to me a niche seemingly not covered on the web or elsewhere, and I decided to start The Art of Manliness to talk about all things manly- both the serious and the fun, but with the ultimate eye toward encouraging readers to be better husbands, fathers, brothers, men.

I don’t claim to have all the answers, nor do I claim that I’m an expert on all things manly. I started this blog not because I had all the answers to being a man, but because I wanted to explore the questions with other men. Thankfully, I’ve found a whole community of men who wish to discover the lost art of manliness too.

Not only does the blog have an awesome mission statement that falls right in line with BadskiBlog's underlying theme of self improvement and passion for life, it has some incredibly useful and entertaining content as well. I recently discovered that a guy I went to college with is a contributing writer for the blog as well. He is a good dude who is practicing what he preaches. Small world.

I thought this latest post was perfect to give you a taste of what The Art of Manliness is all about. You know the annoying posters that say some inherently good trait that all people think they have? Like when they say "attitude" and then it has some cheesy advice below and a picture of some stream or a waterfall. Yeah those posters. Well they dedicated an entire series of posters to Teddy Roosevelt and put some of his finest quotes on them. Great lessons learned from quite a manly man.

No one preached the art of manliness more ardently or lived it more fervently than TR. To start your week off with a swift kick in the pants of manly inspiration, we’ve created some TR-themed motivational posters. Each poster includes a picture of Roosevelt living the strenuous life, along with a motivational quote from the man himself.

Sunday, May 17, 2009

Landlord Chronicles - An Update

Just checking in to give an update on how things are going on my newest undertaking; becoming a landlord. As for lessons learned thus far, I would have to say the biggest lesson is that your personal network of friends and connections is one of the most powerful things you have access to. If you don't know someone who can help you with something chances are someone you know knows someone.

In my last post I detailed about how my primary concern was marketing my place. Well I have a hockey buddy named Bob who owns his own photography business. The company name is Lorusso Studios and if you ever need anything regarding photography I strongly recommend his work. I got Bob to come and shoot some pictures of my place. They turned out great and are serving as the basis of my marketing push which will hit the web full force on Monday. Click here to see my Postlets profile which can be inserted into any classified ad or social networking site. I think it really makes the home stand out amongst a myriad of postings on different sites. I knew the Postlets profile was a great start but I didn't feel as though it told the story of our home, so I created a blog just for our place. The blog allows me to direct potential rental applicants to a site with multiple pictures so they instantly know whether my rental is for them or not. Its like promotion and potential applicant screening all in one. I know when I was searching for our place and other rental properties I didn't even think to check out a place without a picture. The more pictures the better. People love information and a picture is one of the quickest and easiest ways to tell someone the story of your property. I have made it easier for people to gain access to my property's story.

After working my way through some of the sexier aspects of my new venture like taking the pictures, marketing, etc. I knew that there were some details that I needed to tend to. Once again a few good buddies led me to the answers and resources I was looking for. My buddy Eric has a brother in law who has quite a few rental properties and he had his brother in law call me. We talked for a bit and he was extremely helpful. He even shared his lease agreement with me, which I thought was pretty cool because a lot of experience goes into building those things and he has never even met me. I also touched base with an old roller hockey buddy back in Oregon who I knew did a bit of real estate investing. I asked him if he has any tenants and how he screens them etc. He put me in touch with another roller hockey kid's girlfriend who works at a credit/background screening company. I called her up and that issue was solved. It's pretty amazing how small the world is becoming.

So far it has been a great learning experience. Pretty stressful, but a good experience regardless. I will continue to post updates down the road to landlord land, and if you think you have any leads to fill my property let me know!

Friday, May 15, 2009

Where's My Party?!?

I try not to get too political on BadskiBlog but I must say that I wish I had paid more attention to Ron Paul before the election. My beliefs in meritocracy and the role of government always had me siding slightly to the right of the political spectrum…especially with regard to business and the role of government. However, I am so disenfranchised with the republican party and all they stand for socially and with regard to the moral high ground approach to governance that I can't associate myself with them either. On one hand you have a party that picks and chooses which interest groups are entitled to our nation's tax dollars and on the other hand you have a hypocritical party that screams low taxes and small government but seeks to limit individual liberties because it is "morally" justified or in the interest of national security. WHERE'S MY PARTY? The more I hear and am exposed to libertarian views the more interested I become.

Watch Ron Paul and tell me that he doesn’t make a hell of a lot of sense. As for running a successful campaign against the two front runners of the democratic and republican party, I don’t really know how feasible victory is Ron Paul. Couple taking on the two de facto parties with the fact he comes across as a little nerdy and I think it is an uphill battle. But I must say I am beginning to like the way this guy thinks. Instead of arguing about who's right and who's wrong on some of the most divisive issues our country battles over, Ron Paul is looking at whether government even has the right to decide on those issues in the first place. I think some of his arguments really put things into perspective. If you look at the evolution of the federal government since its inception it is pretty frightening to see how it has gradually yet consistently encroached upon the rights which the states initially held sacred.

I may just be overly optimistic, but I imagine that I am not the only one who feels this way; especially amongst the younger generation. With the increased access to information in today's world, more and more young people will begin to become interested and exposed to politics. Like my own journey, I imagine more and more youth will become frustrated with the "leaders" who are serving our nation. If for nothing other than to explore something different than the traditional party views on government I feel that many will explore the libertarian party. Love him or hate him Barack Obama has opened the door to breaching the status quo. However there is a large void that remains unfilled. If a party or candidate can figure out how to fill that void I believe there will be a significant shift in American politics in the years to come. I could be wrong. What do I know? I am just an average young American who is paying attention. One thing that I do know is that I am not the only young American who has recently begun to pay attention. Watch the video and I would love to read some respectful and exploratory discussion in the comments section, especially those with a different world view.

Thursday, May 14, 2009

Creative Marketing From The Swedes

A recent string of articles I have been coming across and writing about illustrate that as human beings information isn’t always enough. Just because we are presented with all the facts and reasons we should behave a certain way does not mean we will do so. Check out this article on

We all know taking the bus is better for the environment. Why don't all of us take the bus then? Part of it is convenience. Yes, but I know there are times where we could take the bus and we don't. Is it because we aren't inspired to take the bus? Well one Swedish company is trying to do just that; to inspire us to utilize their service which in turn lets us live the story of being environmentally conscious.

Swedish advertising company, Acne, put together a rather eye-catching advertising campaign for Flygbussarna, an airport coach bus service, to inspire individual car drivers to take the coach bus instead. An installation made up of 50 wrecked cars resembling a Flygbussarna coach bus was placed next to the highway leading to the Swedish airport. Acne used 50 cars to emphasize that a coach bus can seat up to 50 people whereas, on average, an individual car has only 1.2 people. Consider that with the fact that a coach bus releases no more carbon than 4 cars. The campaign also included a website where visitors could watch cars whizz past the installation. The website tracked the number of cars that drove by and how much carbon could have been saved if those drivers had taken a bus instead.

This isn't Green Peace. I am not pushing an aggressive radical environmental agenda. The point of the post is to illustrate remarkable marketing that goes beyond paying for a 30 second TV spot or a full page ad in a magazine. These traditional advertising methods continue to have less and less leverage as the world continues to become more interconnected. Instead of pushing the same status quo message this Swedish ad agency did something worth taking about. They showed environmental impact visually and created a story worth spreading. Very impressive!

Wednesday, May 13, 2009

Checking For Charity Corporation - A Journey In The Formation Of A Movement

Checking For Charity Movement is now on Facebook. If you are interested in joining look it up on Facebook or leave me your email via the comments section or a direct email. Not all charitable contributions are monetary, and in the case of Checking For Charity one of the most valuable things you can do is make others aware. The charity started out as a bunch of hockey guys who wanted to throw together a tournament. Now it has become a story that represents everyone who wants to be a part of something that contributes. Join us.

Tuesday, May 12, 2009

The Real Problem With Credit Cards Is...You!

I came across this article in Time magazine today talking about some interesting events and trends surrounding the credit card industry. The gist of the article is that although it is easy to blame the credit card industry for America's debt problem, it is not very accurate.

Credit-card companies, though, may not be the only ones we need to be protected from. Every penny of Americans' nearly $1 trillion in revolving debt started with someone — some individual person — whipping out a piece of plastic and making a decision to use it. We could consider that free will and just call it a day, but there's plenty of reason to believe the story isn't so simple. There are piles of evidence that people are bad decision makers when it comes to how they use credit cards. Even when presented with full and fair information, they often make decisions that are not in their own economic best interest — a reality only partly taken into account by the new rules and pending legislation.

The reason this article caught my attention is that it does a great job of addressing the psychology behind our money decisions. The economic right answer isn't the answer we as humans always make. And when poor decisions are made where do we point the finger? Generally not towards ourselves which, as illustrated by this article, is a problem.

The lack of personal responsibility regarding credit cards (and/or most other issues for that matter) brings to light an inherent flaw in the way of thinking we have towards government. Whenever something happens socially we feel the need to add legislation to "fix" the problem. The problem is that legislating lenders does nothing to change the behavior of the consumer which is ultimately the root cause of the problem to begin with. A lender with atrocious terms and no willing borrows is pretty harmless. Much of the legislation seeks greater disclosure so people can make better educated decisions but that doesn't seem to help either.

"There have been a lot of disclosure policies over the past 20 years, but they've had a limited effect on improving the market," says the University of Maryland's Ausubel. "The problem isn't in the availability of information. The problem is in the processing of the information."

I think that most people suffer from information overload. If you step back for a second, all you really need to know about a credit card is that you need to pay back whatever you borrow or you will begin to pay interest. That interest can compound in just the same way your investments can, only in the wrong direction! APR's, teaser rates, etc. don't really matter if you pay off your balance.

Inherently people know this simple truth. As a kid not many people grow up taking more out of their piggy bank than they put in thinking they are becoming rich. However, knowing is not enough. It is doing that truly matters. If knowing how to stay out of credit card debt was the answer then I would argue that most people wouldn't have any credit card debt. It's a lot more difficult to do than merely to know.

Monday, May 11, 2009

My Next Venture - Becoming a Landlord

With news of my impending departure from the Garden State came the news that I am now taking on a new venture, that of the landlord. I guess it is time to put my proverbial money where my mouth is. I have long been a proponent of real estate both as a homeowner and an investor. Having faced high rental rates when I moved to New Jersey, it was a no brainer for me to buy a condo. Even though conventional wisdom always says not to buy if you aren't planning on living in the property for at least 5 years, I cringed at the thought of throwing so much money away on rent when I could spend a few hundred dollars more and own.

My timing wasn't the greatest and although I didn't buy at the peak I bought far from the bottom (if we have reached a bottom). But as I have said on BadskiBlog before, losses (and gains) are only realized when you sell. I don't want to realize a loss so I am not going to sell. It's that simple for me. Will I break even or better yet make money renting my place? I am not sure. It depends on the rent I can command and my refinancing analysis. Hopefully I will have time to update the status of this recently acquired venture and thoughtfully justify my decisions as I go along. Regardless I am willing to take a few hundred dollar a month loss while building equity and avoiding a much larger loss by selling. No one likes to lose money, especially me. However I am looking at it like this: I am paying $200 a month to have someone else pay the majority of my mortgage and continue to build equity in my place. Once the market recovers I can sell and realize a gain, or I may just hold onto a cash flowing property forever. Only time will tell.

My first concern with my new venture wasn't leases, tenant laws, or pet policies; it was marketing. I started thinking back to my mindset when I purchased the condo and to how I feel when I enter open houses or other people's homes. I don't think about square footage and room sizes, I think about the way home makes me feel, the story it tells. I am convinced that most people purchase homes based on the impression they get from the first five minutes they are in the home. If you think I am crazy you are wrong. There is no other way to put it, you are plain wrong. Over the last three years Heidi and I have continued to go to open houses throughout the neighborhood to see what is on the market, how much they are going for, and to steal a few decorating ideas. This practice has validated my first five minute emotional decision theory. I have probably gone through 50 condos with the same exact layout over the last three years. Over those three years I have seen all those condos with the same layout command sale prices with ranges upwards of $40,000. How can this be? They are the same condo! The answer is the story that condo portrays. People want to envision themselves in a home not a condo. They want to envision their lives in their new home. The easier you make it for them to envision their life in your property the higher the premium they are willing to pay. When I look back I could have bought a horrifically decorated condo with terrible furniture and ugly carpet for thousands and thousands of dollars cheaper than I paid for mine. But I didn't. I bought a condo from a young couple with similar tastes to mine, who probably lived a similar life to mine, whose home told a story that I wanted to live. I am trying to figure out how to paint that picture for a lucky renter who will enjoy my condo as much as I have.

My first step seems simple and easy but I am convinced it will make a difference. I am trying to set my marketing apart. One way I have found (thanks to Jessica for the help) is using is a service that spices up your posts on Craigslist and other sites that allow html posting. I am also having my friend who owns his own photography business (check out his awesome site here) come by to take some professional pictures to provide every detail the prospective renter needs to choose my property as their next home. All things being equal, which post would you rather pursue? The standard Craiglist notepad-esque format or the professional organized information packed Postlets template? The answer is simple. I am also considering setting up a blog just to promote my rental property. People want information and I am willing to put in the extra time and effort to prove to them that my lovely home can become their lovely home. I will continue to update as I progress along in my new venture and hopefully I find a tenant soon who is as excited to live my story as I was when I bought it.

Saturday, May 9, 2009

Is Drinking An Investment?

Today a friend stopped by for a drink and to BS for a bit. After he left I got to thinking about two topics that rarely intersect; alcohol and personal finance. There are a million finance pundits and gurus out there who preach the uberfrugal approach to personal finance and want you to live on tuna and wonder bread. To these finance "experts," anything that does not directly improve your net worth is a financial sin and therefore must avoided at all costs. Something like buying a case of beer everything month is viewed as an unnecessary expense and nothing more. I am stepping on my virtual soapbox today not to advocate drinking, but to challenge that lifeless view on personal finance and propose a slightly refracted viewpoint on the subject.

I am not a scientist, but I imagine that the devastating effects of alcohol abuse can affect all human beings regardless of race, religion, gender, etc. It is the same non discriminating factor that makes alcohol so dangerous that also serves as the source of my argument that even drinking can be an investment. All kinds of people drink. Having a drink serves as common ground and a social expression across the globe.

Our lives revolve around social connections. We are social creatures that thrive on interaction with other human beings. Having a drink serves as a common action or reason to meet up. How many times have you said to even your best of friends, "we should get together to talk tonight." A little awkward especially for males. Getting together to have a drink is the lowest common denominator excuse for getting together for no reason other than to converse. Through communication we build relationships that not only open the doors for opportunities in the future, but make our lives enjoyable and worth living in the first place.

Is it that far of a stretch to say that having a beer is not only the farthest thing from a waste of money, but an investment into the quality of your life and the expansion of your social network? I can here the anti alcohol police coming at me from a mile away, but alcohol is not the point. The point is that the traditional approach to how you spend your hard earned dollar is typically a linear thought process that realistically just isn't that simple. You can substitute the alcohol with dinner, running, racquetball, or anything else that is an expense financially yet an investment socially. Being a guy that loves business and finance yet hates numbers and math I find that the status quo advice is often way too calculated. Let's blur the lines, lets get a little fuzzy, lets talk about the art instead of the science. If everything was linear or a calculation then it would just be "the way." The fact is as humans our lives are based on emotions, on our worldview, on biases, on the information at hand, on relationships. Invest in things that make you a better person to be around and things that facilitate your interaction with other people. Not only will it make your life more enjoyable, the intangible benefits are bountiful as well.

Information Is Not Created Equal

I read this article the other day and thought I would share it with all the BadskiBlog readers. The article is about the number of motorcycle deaths amongst military members.

Pentagon brass got an eye-opener when they examined 2008 casualty figures: More Marines died stateside on motorcycles than were killed in Iraq or Afghanistan.

"That was a wake-up call," says Rear Adm. Arthur Johnson, commander of the Naval Safety Center. "It focuses your attention on what your real issues are."

Most people are probably extremely shocked by this article. I am, and I am not. On the one hand I am a little shocked that there are more deaths via motorcycles than there are from the war. Anyone who reads that is likely to be shocked. On the other hand I am not surprised by the large number of motorcycle deaths amongst military members. I have seen a ton of motorcycle riders at every base I have ever been at or visited, and the majority of them are crotch rocket riders. I am not saying people shouldn't ride motorcycles, I am just saying that there isn't much room for error on those things. The demographics of military members also lend themselves to being at higher risk of motorcycle accidents as discussed in the article. Most are male and young. Young males are more likely to ride motorcycles, and therefore there are likely going to be more deaths as a result of motorcycles.

What I find most interesting about the article is the disparity in attention that the mainstream media and people of our country place on different types of tragedies. Obviously one death is one too many during a time of war and I think that those who make the ultimate sacrifice for our country deserve all the attention and respect they get. With that being said I think that the media sometimes paints a picture that is more representative of World War II era warfare than that of today. This is not, I repeat not, to disrespect our fallen heroes in any way. I just think this article as well as any illustrates the power that the media has over what is covered. I think that influence is declining as I have mentioned in previous posts, but it is significant nonetheless. This articles serves as a reminder to me to research what you read and build your own view because all information is not created equal; profitable information will always get the spotlight and in turn will have a greater impact on society at large.

Thursday, May 7, 2009

Cool Quotes Happiness Edition

It has been a rough few weeks for me and Heidi with the pending move, so I thought Cool Quotes around the topic of happiness would be appropriate. Great advice for anyone who is facing a little adversity.

“Being happy doesn't mean that everything is perfect. It means that you've decided to look beyond the imperfections.” - Unknown

“Happiness is the meaning and the purpose of life, the whole aim and end of human existence” - Aristotle (Ancient Greek Philosopher, Scientist and Physician, 384 BC-322 BC)

“Be happy. It's one way of being wise.” - Sidonie Gabrielle

“Love is the condition in which the happiness of another person is essential to your own.” - Robert Heinlein (American science-fiction writer,1907-1988)

“We tend to forget that happiness doesn't come as a result of getting something we don't have, but rather of recognizing and appreciating what we do have.” - Frederick Keonig

“People love others not for who they are but for how they make them feel” - Irwin Federman

Wednesday, May 6, 2009

Checking For Charity Corporation - A Journey In The Formation Of A Movement

Yesterday the paperwork went through for the formation of my first company. Oddly with all my posts about personal finance and business, my first venture is a non profit. I never really planned to have my first company be a non profit but it just kind of worked out that way and I am excited to see how it goes. Combine learning about business with a great cause and I couldn't be any more excited to make this journey a success. For all you BadskiBlog readers I plan to update you on the successes and struggles associated with the formation and creation of the Checking For Charity movement.

Since I moved to New Jersey I have played men's league hockey. Having finished a Division I college hockey career just prior to the move, I was looking for something to fill the void. About the time I arrived something interesting was beginning to form amongst the hockey has beens (and never was') in our area. A Sunday skate rental began to grow into very tight knit group of guys that formed their own little hockey community; a tribe if you will. After skates we would all hang out and drink a few barley pops and barbecue. A powerful network was formed.

I don't know how it happened but I came up with the idea of putting on a hockey tournament. I thought I could start a business surrounding something I was familiar with, hockey. I could learn something and maybe make a few bucks in the process. Then I thought it would be cool to donate some of the profits to charity. As I started messing around with the numbers I realized that the profit margins of a typical hockey tournament aren't the greatest, especially if you aren't the owner of the ice, and a small percentage of the profits would also be quite a small monetary portion as well. Well why not make it where we donate all the money to charity?

I started tooling around with the idea of how we could get creative with a charity tournament and thought that each team could declare a charity that they were going to play for. Each team would receive money for their charity and all teams would have the opportunity to win more of a percentage based on how they finished in tournament play. I thought it was a pretty cool idea that would add some competition to a good cause. I also thought it would incentivize each team to hit the donation push. Team's would be more likely to tell their friends, coworkers, and neighborhood businesses to donate to a tournament in which they have a vested interest; their cause. To be honest I just didn't want to be the only one out their drumming up donations for the tournament pot. I felt that this was the easiest way to get everyone involved. I brought it up to a few friends and they thought it was a cool idea so I mentioned it to the Sunday hockey guys. That is when things really started to get interesting. Guys started volunteering to help out. People started soliciting ideas to make the tournament better. People basically appointed themselves to the tournament committee. The whole idea just started to take off. It truly was and continues to be a pleasure to be surrounded with people who are willing to step up and create something special. We are only in the beginning stages but already professionals such as lawyers, bankers, and everything in between are offering their services for free just to be a part of this idea.

Not only is the volunteer base growing, but the scope of possibility surrounding what Checking For Charity is all about it growing. It went from being some little tournament to something bigger, something that feels a little bit more exciting. I think that it is turning into a movement, and I really hope that I am right. I think this is the story of a bunch of guys who feel lucky and blessed enough to live a life where they can play the game they love, drink some beers, and hang out with good dudes. The story of normal people who want to create something larger than themselves. I don't want to give away all the surprises on the first Checking For Charity update, but my gut tells me that this thing is brewing and it may well turn into something worth talking about. If you feel the same forward this post, digg this article, spread the word.

Badski's Consumer Report - Toms Shoes

Badski's Consumer Report - Today I watched a show I DVR'd about two months ago called The Entrepreneurs. The show airs on CNBC and features two cool entrepreneurs each in a short half hour segment. I have seen it before but when I watched it today there was one brand that caught my attention. That brand is Toms shoes.

Toms shoes has a simple mantra; one for one. For every pair of shoes that is purchased the company donates a pair of shoes to a child in need of shoes. This socially conscious business model is something I have become very interested in lately. The concept is very appealing to me. The business raises money for charity that wouldn't have been raised otherwise and they are rewarded with business and profit from people who are seeking a simple way to make a difference. To me this is the way of business in the future. It almost serves as a competitive advantage to give some of your money to a worthy cause as there is a certain buzz around your product or service that traditional companies just don't have. I think the younger generations embrace this concept more so than previous generations and I look forward to hopefully creating a socially conscious for profit of my own some day (I am currently working on my first non profit).

In 2006 an American traveler, Blake Mycoskie, befriended children in Argentina and found they had no shoes to protect their feet. Wanting to help, he created a company that would match every pair of shoes sold with a pair given to a child in need. One for One. Blake returned to Argentina with a group of family, friends and staff later that year with 10,000 pairs of shoes made possible by caring TOMS customers.

Since our beginning, TOMS has given over 140,000* pairs of shoes to children in need through the One for One model. Because of your support, TOMS plans to give over 300,000 pairs of shoes to children in need around the world in 2009.

Our ongoing community events and Shoe Drop Tours allow TOMS supporters and enthusiasts to be part of our One for One movement. Join us.

Mycoskie explained in the feature I watched how they use very little advertising to further their brand. They rely heavily on their story to spread and through celebrity endorsements. Having read a few Seth Godin books lately (see Personal MBA Updates), I can tell that Mycoskie gets it. He is a proven entrepreneur and with Toms he is a living how to guide for the new era of business. He has created a tribe, a movement to spread his story. Yeah his shoes are cool and they are based on the native shoe design of the very people he started out helping in Argentina, but people can get shoes anywhere. He has created a movement, even calling it such on their website. Their shoe drop tours allow consumers to help deliver shoes to needy kids. Not only do they deliver they shoes, every shoe is placed on the feet of those children. That is commitment to a cause; that is a movement. He has laid out a vision for the future, taken the lead, and empowered others to spread the word. What the company does not spend in advertising allows them to carry out their one for one mantra and still remain profitable. Their story is remarkable and therefore it will spread. Mycoskie gets it. Still don't believe me? Check out the video below and you will see why this isn't a shoe company, but a movement.

Although this isn't the typical Badski Consumer Report, I felt I had to showcase an excellent business model that is the embodiment of many of the lessons I have been reading about lately in my personal education quest. I plan to purchase my first pair of Toms in the next week or so, but even more powerful than purchasing shoes is spreading the word about a great idea. Hopefully my soon to be unveiled non profit venture can emulate some of what the Toms movement has created. Hopefully our story will create a movement.

Tuesday, May 5, 2009

Personal MBA Update

Personal MBA Update "All Marketers Are Liars" by Seth Godin - Alas, another update on my quest to complete the Personal MBA. If you are interested in learning what the Personal MBA is all about check it out here and begin your quest of self education. This is the second book I have read by Seth Godin in a matter of weeks and although it wasn't as enthralling as Tribes, it was a good book nonetheless and definitely a must read for marketers.

Seth Godin delivered yet another well thought out book that detailed the realities of the new world we live in. The book talks about how marketing has and continues to change the world. The main premise is that all marketers are liars. Well kind of. Actually the main premise is that marketers are storytellers that are most effective when they tell the stories that we want to believe. The book basically reveals that marketers aren't liars as the title would foreshadow, they are merely storytellers. It is the consumers that are liars, and they are merely lying to themselves. And those liars are willing to pay for a story or experience that enables them to believe the lie they are already telling themselves. It is pretty intriguing really.

Once again, Seth lays out the book in a myriad of chapters that somehow coherently intertwine and portray the main points and concepts he wishes to illustrate. I took a lot of notes and I think that, although it wasn't my favorite work of his, I got the overall point of the book; the story if you will. Here are the notes from the book.

- Either you will tell stories that spread or you will become irrelevant
- Marketers lie to the consumer because consumers demand it
- Marketers profit because consumers buy what they want not what they need
- Successful marketers are just the providers of stories that consumers choose to believe
- People only believe the story and lie to themselves if you tell them the truth
- This is what makes it all work in complete dedication to and embrace of your story
- Marketing is about spreading ideas and spreading ideas is the single most important output of our society
- How marketing works (when it works)
1. Their worldview and frames got there before you did
2. People only notice the new and make a guess
3. First impressions start the story
4. Great marketers tell stories we believe
5. Marketers with authenticity thrive
- You the marketer are not in charge
- Marketing succeeds when enough people with similar worldviews come together in a way that allows marketers to reach them cost effectively
- Worldview affects:
1. Attention 2. Bias 3. Vernacular
- People clump together into common world views, and your job is to find previously clumped and frame a story for those people
- Speaking respectfully to a persons world view is the price of entry to get their attention. If your message is framed in a way that conflicts with their worldview you are invisible
- As a marketer you can no longer force people to pay attention
- People don't change their world view. They like it. They embrace it. They want and reinforce it.
- A worldview is the lens used to look at every decision a person is asked to make
- The desire to do what people we admire are doing is the glue that keeps our society together. Its secret ingredient in every successful marketing venture as well
- Every consumer has a world view that effects the product you want to sell. That world view alters the way to interpret everything you say and do. From your story in terms of what worldview and it will be heard.
- When we encounter something for the first time we compare it to the status quo. If its not different we ignore it
- Tree frog example
- In the face of random behavior people make their own lies
- People only notice stuff that's new and different and the moment they notice something new they start making guesses of what to expect next. Step 2
- You don't get much time to tell a story
- Most job interviews end in less that five minutes. That is why speed dating works.
- In order to survive the onslaught of choices consumers make snap judgements in a fraction of a second and once they've drawn that conclusion they resist changing it. Step 3
- Are you a marketer? I think you are. Every day all of us market. You re just not good at telling stories yet
- TV era marketing = advertising Today marketing = storytelling
- Stories only work because consumers buy what they don't need. When a person really needs something like food water shelter, they care about the essence of the purchase. When hungry the food is more important than package
- People buy stuff because the way it makes them feel
- But is utility of the product the main way people share their desires? No Way!
- Stories let us lie to ourselves and those lies satisfy our desires. Its the story not the good or the service that pleases the consumer. Step 4
- Banquet crock pot example pg 86. They tell the story that crock pot stuff is a family healthy meal not its a bunch of stuff preserved by chemicals, frozen, and reheated
- Growth starts with better questions, about storytelling not about commodities
- You don't just get to sit down and make up a story and expect people to believe it because you want them to
- In order to be believed you must present enough of a change that the consumer chooses to notice it. The process of discovery is more powerful than being told the right answer
- Expectations are the engines of our perceptions
- Stolen speakers lie at Harvard story on page 92. Company sold speakers out of the back of a van and sold a ton to students who believed they were getting stolen speakers at a discount. They were regular speakers that the store purchased.
- Speaker story unethical? People say we should buy products and services because of what it does instead of things we need to be told stories about. But we buy overpriced designer jeans, eat at trendy restaurants, etc.
- Storytelling works when it actually makes the product or service better
- A fib is based on facts, a fraud is based on little or nothing
- Just because people might believe your story doesn't give you the right to tell it
- Marketing isn't the problem, marketing is just a tool, people are the problem
- "The good new is clear: authentic marketing, from one human to another, is extremely powerful. Telling a story authentically, creating a product or service that actually does what you say it will leads to a different sort of endgame. The marketer wins and so do her customers. A story works combined with authenticity and minimized side effects builds a brand (and a business) for the ages."
- Belief in the lie must not harm the consumer because it if does you'll run out of consumers and credibility far too soon
- You don't get to make up the story. It happens with or without you
- The goal of every marketer is to create a purple cow, a product or experience so remarkable that people feel compelled to talk about it
- Once fooled a person will never repeat your story to someone else
- If you aren't authentic you get the benefit of 1 sale not 100
- People don't want to change their minds
- Some senses count more than others but all senses matter. Its the combination that convinces the skeptical consumer
- The problem is that once the consumer has bought someone elses story and believes the lie, persuading the consumer to switch is the same as persuading him to admit hes wrong and people hate to admit they are wrong
- Tell a different story!
- You cant just use any story. You cant just tell a selfish story from your point of view. You cant just invent an inauthentic story or tell an amazing story when the reality is banal
- The only stories that work, the only stories with impact, the only stories that spread are the "I cant believe that!" stories. These are the stories that aren't just repeatable: these are the stories that demand to be repeated
- You succeed by being an extremist in your storytelling, then gracefully moving your product or service to the middle so it becomes more palatable to audiences that are persuaded by their friends not you!
- That is why he chose the title of the book
- Your goal should not (must not) be to create a story that is quick, involves no risks and is without controversy. Boredom will not help you grow
- There are no small stories. Only small marketers. If your story is too small its not a story its an annoying interruption
- Little miss match socks example. Company sells only mismatch socks to young girls. Its a story worth taking about
- Sirius radio got Howard Stern and broke traditional radio for millions of listeners
- If cheap is what you want you can buy cheap cheaper somewhere else. Cheap is not marketing
- Blue Nile diamond example. They market to men and expose the lie of a Tiffany's
- Nothing is static. Nothing stays the same as it was and everything you build or design or market is going to change the marketplace
- Four reasons why your new release fails:
1. No one noticed it
2. People noticed it but they didn't want to try it
3. People tried it but they decided not to keep using it
4. People liked it but didn't tell their friends
- Most of us have a very simple default frame: if its not remarkable or exceptional, ignore it. If someone tries to sell you something decline
- I'm just looking
- The same bias that pushed them to try your product is pushing them to try someone else's tomorrow. Persuade that it is the answer to all their prayers
- Google AdWords finds and pairs the marketer with the right worldview
- Dancing on the bar example. The bar made the bar shorter and made discreet handles to grab on the ceiling. Simply putting a sign that said dance here would not work. People dance on the bar and tell all their friends what an awesome time they had at that resort
- Do you have a storytelling plan?
- Which worldview are you addressing?
- Which frame are you using?
- What is the story that is worth noticing?
- How will you live your story?
- What hard decisions are you willing to make in order to keep your story real pure and authentic? Compromise is the enemy of authenticity
- What are the shortcuts your fans can use to tell the story to their friends? How can you help them frame that story?
- How can you radically change your product or service so the story is natural and obvious and easy to tell?
- Whats the value of your permission asset?
- "I was lying to you when I named this book. Marketers aren't liars. They are just storytellers. Its the consumers who are liars. As consumers, we lie to ourselves every day. We lie to ourselves about what we wear, where we live, how we vote and what we do at work. Successful marketers are just the providers of stories that consumers choose to believe. A good story is where genuine customer satisfaction comes from. Its the source of growth and profit and its the future of your organization. This is what makes it all work: A complete dedication to and embrace of your story."

Monday, May 4, 2009

A Lesson In Change

The last few months have been an interesting time for me. I have been working two jobs. One that seeks to embrace and encourage change through continuous process improvement, and one that knowingly or not stifles change and creativity. As frustrating and unique it has been to work in two completely different environments at times, the experience has been valuable. Earlier this week I was informed that I will be shipping out to a different base (destination unknown) by the end of the summer. It was pretty shocking and it caught my wife and I off guard. These recent experiences all share a common thread and that thread is change.

“The only thing constant in life is change” - Fran├žois de la Rochefoucauld (French classical author, leading exponent of the Maxime, 1613-1680)

All of the experiences got me thinking about how we as human beings deal with change. When animals don’t change they die, as in they become extinct as a species. Humans aren’t attune to thinking in terms of a species. We think in terms of individuality. We embrace who we are as a person. However I would argue that we too die if we do not change, yet the effects are harder to see as the scope of change is typically only defined as that individual's lifespan.

We all like to latch onto the concept and buzz about embracing change and seeing it as an opportunity. However, in practice this is rarely the case. I would argue that this tendency might be some form of a survival instinct. If we find something that works we continue to do it; it really is quite rational. What we often fail to realize is that the world around us is constantly changing and therefore doing the same thing over time is ignorant and more risky than constantly changing and adapting.

I have found, and verified through my recent string of experiences, that empowerment and choice are key elements in determining how people with deal with change. As a continuous process improvement facilitator for the Air Force, I work in a lot of Rapid Improvement Events (RIE’s). Over time you start to see patterns with regard to human behavior even though the participants change. There are always people who come in pissed off that they have to participate, that they have been voluntold to participate, and they say that the stuff doesn’t work. The RIE’s typically last about 3-5 days and I can comfortably say that the majority of those types of people leave feeling that they have positively affected their process and changed something that they didn’t think they could and/or would want to change. How does this consistently happen? How does one go from Scrooge to DCC in a matter of days? The answer is empowerment.

When people are empowered to make change they embrace change. Not only do they embrace it, they see it as a important force in their personal development and their day to day happiness. RIE’s are a proven way to form a team of key players and to empower them with the ability and resources to make change. Even if they come in as antagonists they are inspired to create something. I really believe that it is an innate human desire to create.

Contrast this example with my recent relocation blindside. When I learned I was moving I was floored. This wasn’t part of my plan. I am not supposed to move yet. This ruins everything. Blah blah blah. I was not empowered to make the change, I was told. I did not go through a buy in process to verify that this change is for the better, therefore I resisted. The fear of the unknown is a powerful thing, and often when you are forced to change you are being forced into the unknown. As you can imagine this doesn’t get too many people excited.

As I work through accepting the fact that I am moving I can begin to rationalize that the change is not automatically the root of all evil. Being an optimist I even tell myself that this is going to work out to be a good thing in the end. However, positive thinking and rationality still do not change how people (or myself for that matter) react to the prospect of change. Becoming empowered to make change is the catalyst that shapes future behaviors regarding change. If you can get used to working through dealing with and creating change you are in essence familiarizing yourself with confronting the unknown. And that confrontation takes courage. Become a courageous change agent, alliteration aside it is a valuable lesson that will better your life.

Sunday, May 3, 2009

Long Run Short Post

Today Heidi and I ran in the 30th Annual Broad Street Run through downtown Philadelphia. It was a 10 mile run that we have been training for, for more than two months now. The run set the record for the largest run of its distance with more than 26 thousand people showing up for today's event.

Kenya's Linus Maiyo and Jane Murage paced a record crowd of more than 26,000 to win Philadelphia's Broad Street Run in soggy conditions on Sunday.
Maiyo, 26, completed the 10-mile course in 47 minutes, 21 seconds, scoring a four-second victory over Worku Beyi of Bronx, N.Y. Murage, 22, defended her 2008 title with a time of 53:31, finishing 13 seconds ahead of Buznesh Deba of Bronx, N.Y.

The runners braved sporadic and sometimes heavy showers making for slick road conditions. Maiyo took the lead at about the three-mile mark but was closely trailed by Beyi until the last quarter-mile, when he broke away.

"The crowds were cheery and the course was flat. I loved it," Maiyo said. "This is my biggest win of the year and I'm happy about it."

The weather could have been better but the rain held off until the end of the race at which time it poured. Needless to say Heidi and I didn't finish in 47 minutes but we enjoyed the race nonetheless and accomplished all three of our goals; to finish, to run the entire race, and to finish in an hour and a half.

The main thing I took away from the race was the community vibe that runners have. Over 26 thousand people in one place and from my perspective there were no major issues. I cannot imagine too many other events that have that kind of crowd and don't have some fights or some kind of disturbance. In fact as I was running I was amazed at the propensity of people to come together. We as humans seem to highlight situations where we segregate ourselves. Situations where people categorize and exclude those who are not like them. That did not take place at this event and I would argue that given something people can believe in people are not prone to segregate and form small groups; they are drawn to each other. People lined the streets cheering on the runners, giving high fives, and celebrating the magnificence of the event. People of all age, color, religion (I would guess), and socially defined group were drawn to this event and they got behind the cause and spirit of it to support complete strangers. People want to become integrated, they want the cause, the cup is half full. It was pretty remarkable and a great experience and I look forward to my next run, but not necessarily training for the next run.