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My content isn’t free.

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I just received a tweet from a follower asking that I stop spamming him with ads. Do I spam with ads? Well, sort of. I’ve scheduled four tweets in the last week to go out advertising my upcoming Do-It Days™, interspersed with three or four times as many content-laden tweets.

Chapter 1 of my book is about “Living on Purpose.” It basically boils down to: “know why you’re doing something.” Let me be very clear: I’m not producing 1100 words of transcripts, a podcast, two free newsletters (my own and the Get-it-Done Guy), and providing ten years’ worth of blog posts and 12 years’ worth of articles every week because I feel a deep moral obligation to help the human race be more productive. This is my business, and as much as I like providing value for people, if the only rewards are spiritual, then I’m outta here so fast it’ll make your head spin. At some point, I actually need people to spend money with me, or I’ll go broke.

I have busted my butt creating more free, high-quality content in the last 12 years than most people produce in a lifetime. I’ve produced hundreds of podcasts, hundreds of newsletters, two books, and dozens of articles. All free, except the books, which economically haven’t even covered the cost of printing, yet. I’ve also produced a few for-profit products which have gotten great reviews on the free file-sharing sites of stolen content, but haven’t proven to attract the millions of dollars of income that I’d hoped.

If you like what I produce, please consider buying one of my for-profit information products, or attending a Do-It Day™. But for those who write, telling me how pissed you are that I spend too much time writing humor and (gasp) send 3 promotional tweets a week, please consider it from my point of view: I can’t afford to do this for free indefinitely. Either find a way to help me make money or I’ll have to stop. Complaining that my free material doesn’t meet your exacting specifications, however, is not the way to get my attention.

(If you pay for one of my products and it’s not what you want, however, I’ll listen quite closely.)

Thanks, Teachers, Firefighters & Others!

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Thank you, firefighters, soldiers, teachers, policemen, doctors, nurses, pipe fitters, teachers, civil servants, electricians, plumbers, utility workers, and people who keep our everyday lives running smoothly. Thank you, artists, dancers, actors, volunteers, and housewives. In terms of the actual value you provide and difference you make in my life, you trump 25-year-old billionaire tech entrepreneurs any day of the week. It’s just you do your job so well, and your jobs are so necessary, that it’s easy to forget that they’re the most fundamental to our well-being. (Please feel free to add to this list!)

Did I go too far with this response?

A publicist just pitched me a story about carbon monoxide detectors, which isn’t really a good fit for my podcast. I sent the following response. One person thinks I went a little too far. What do you think?

Hi!

Did you listen to my podcast before sending me the below pitch, or did you simply mass e-mail me? Either way, you’ve hit the nail on the head.

My podcast is about personal productivity, and occasionally features zombies. Most publicists pitch me on personal productivity. Since your pitch clearly has nothing to do with that, I assume you’re pursuing the zombie angle. Thank you! You’re the first publicist who has actually spent the time and effort to understand both aspects of my podcast.

After giving your pitch careful thought, I think we could feature your clients in an episode about their tragic deaths and rebirth as zombies. How did they come to grips with body parts that ooze pus and fall off? Was eating raw brains as satisfying as making Betty Crocker brownies (they died while cooking, after all)? I’ve always wanted to include a good zombie origin story.

The death scenes would be too boring, though. Carbon monoxide is odorless, colorless, and pretty much painless, but I’m sure Candace and Elizabeth wouldn’t mind us taking small liberties. Perhaps they needed to open the box of brownie mix, so they rushed to the basement to grab a chainsaw, and even though the light was burned out, they ran down the stairs and … Well, I’m sure I don’t need to tell you what happened next. We’ll capture the 13-18 year-old teenage male demographic for sure! Maybe we can even raffle off a free copy of “DeathSpank” by HotHead games.

This is going to be BIG!

What’s the best way to move forward from here?

Excitedly,

Stever “Stephanie Meyer Eat Your Heart Out” Robbins

If you want to reward your customers, reward them!

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I went shopping at RITE-AID today and saw one of my favorite products advertised as: “Buy 2, get $2 off your next purchase.” I grabbed two bottles and made my way to the register … where the clerk informed me that I could only get the deal if I had their frequent buyer card. To join the program, however, I had to give them personally identifiable information. I declined both the membership and the purchase.

There’s no reason a frequent buyer program needs to have my personally identifiable information. As long as all my purchases get charged to card #4234, they can print the offer coupons for card #4234 based on the purchase history of #4234. There is never any need to get my personally identifiable information unless they plan to sell it or cross-index it against other databases to find out more about me.

This seems like RITE-AID wanting to reward me as a frequent customer by giving me future deals that will encourage me to shop there more. In that, we’re aligned. I want to let them do that. But I’m not interested in giving them personally identifiable information that they can sell or use in ways other than encouraging me to shop there more.

If you want to reward your customers, find ways to reward them that does not infringe on them. Most people, if they like you as a merchant or service provider, will be happy to accept and respond to incentives. If you want fanatically loyal customers who rave about you, make it possible for people to have a great experience without stepping beyond the bounds where they stop being comfortable with the relationship. Otherwise, you end up with people like me blogging about your intrusion into their lives, instead of praising you for giving you such a great deal.

Be present: Put down your #@*($& phone!

I’ve noticed that more and more, people walk around with their phones glued to their ear or to their hands. They stand in the middle of hallways with the phone pressed against their ear, as if their life depended on it. They block stairways, staring entranced into their smartphone as it delivers some absolutely vital nugget of information or entertainment, without which their life would come to an abrupt and bloody end.

Not.

In a few short years, the cell phone has become the ultimate “Somewhere Else is Better Than Here” device. The problem with that is that you’re actually living here and now. Important things are happening here and now. When you’re in public, or around other people, get off your cell phone. Put it on vibrate. Even better, turn the darned thing off. Pay attention to what’s happening around you.

Friends of mine who are parents can’t do that. They literally can’t turn the phone off. They have all the symptoms of an anxiety attack at the thought of their kids being unable to reach them for more than three to five minutes. Really? You’re that worried about your kid? Why? Is he or she really so incapable of coping that you can’t turn your phone off? How will they survive when you die someday? It could be today. You could be chattering so intently on your cell phone that you step off the curb in front of an SUV going 90 miles per hour in an attempt to make it to a gas station before they run out of gas.

If you’re really worried about your kids, make sure they’re in a good school, surrounded by peers who will encourage and support them. If your local public schools suck, cancel your cell phone contract and use the money you save to put them in private school. Keep them away from swimming pools—kids mostly die in swimming pools, and their cell phones won’t work under water, so the cell phone won’t save them, anyway.

In short, come back. People are trying to walk by you as you stand transfixed playing Angry Birds in the middle of the hallway. The friends you came with are just two feet away (staring into their smartphones, too). Bring them back. You have a life. You have a world. And you’re missing it!

Creative deal structure–could it solve the housing crisis?

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One of the most essential negotiating skills is the ability to divide up the risk, reward, blame, and credit properly among the parties in a negotiation. One of the reasons many people are so outraged at the financial collapse brought about by the real estate bubble is that they (correctly) notice that the risk, rewards, blame, and credit were largely divided up in ways that people found unfair.

Many of the proposed solutions also leave a bad taste in people’s mouths. There is the sense that any solution should divide up both the pain and the responsibility for getting real estate back on its feet.

I recently met a remarkable woman, Kelle Sparta, of http://www.spartasuccess.com, who has been a real estate expert for years. She wrote an open letter to President Obama in which she laid out a plan for solving the housing crisis that, indeed, divides up the risks and rewards among all the players who made bad decisions in the first place.

Here is a copy of her letter. It isn’t a quick and easy read. Understanding her solution takes some concentration. It’s well worth it, however. Not only as a specific proposal to solve the housing crisis, but more importantly for our purposes, as an example of how deftly she has structured the solution so everyone involved—the banks, the homeowners, and the government—shares some of the costs and participates in the rewards.

Enjoy!
– Stever

Dear President Obama,

I recently received an email as part of a mailing to the leadership in the real estate industry asking us to consider how to solve the problems of the current housing crisis.

How To Solve The Current Housing Crisis

I spent several weeks chewing on the thought. What would I say to you if you were to ask me how to solve this current crisis? I had mixed feelings on it. What it came down to for me is this: it’s not about saving the banks from bad investments, and it’s not about digging borrowers out of holes that they got themselves into. As a benevolent parent, the governments’ job is to stave off the catastrophic results the housing downturn is having on the economy as a whole and bring it down to just enough pain that we don’t do something this stupid again. At the same time, the government has to remember that not everyone is in the same situation and you have to be responsible to those who were not caught up in this buying frenzy as well. So, with that in mind, here is my thought.

Buy The Land Under The Houses

In most markets, we have fee simple land ownership that conveys with the house. On every street card, there is a value placed on the land and one on the building. If we’re going to bail people out and make things more affordable, then let’s do it by reducing the principle owed on the property without asking the bank to take a hard hit and without the owners losing their houses. The deal works like this:

  • The banks would have to forgive all late fees and rewrite the loans at no cost (after all, they are getting the benefit of not having to foreclose on a bad loan). They also have to agree to continue to collect the taxes on the land from the homeowner and pay them with the taxes on the home.

  • The government issues bonds to investors to raise the capital and then buys the land at current appraised market value.

  • The homeowner gets a deeded option to repurchase the land at a later date at the original price paid by the government or current market value – whichever is greater.

  • The money paid by the government would go to the bank to pay down the principal balance of the loan, allowing the bank to convert an impaired asset into a performing asset which boosts the bank’s asset rate and lessens reserve requirements, strengthening its balance sheet. This makes the bank more stable, reduces the stress on government resources, and ultimately increases the availability of funds for consumer loans.

  • The homeowners would then get a new loan issued by the bank for the lower principal amount and have to pay a reasonable monthly lease (1% per year) on the land. The homeowner would also still be responsible for paying the taxes on both the land and the home.

  • The bonds issued by the government for the purchase of the land would be backed by the land with dividends provided by the lease payments.

Here’s how it would work in an example case: Harry Homeowner has a house that he is behind on his payments on. He is in danger of foreclosure. The bank has charged him hundreds of dollars in late fees and there is no way he’s going to get on top of things again. What he needs is a fresh start.

Harry’s loan is for $300,000, but the property is only valued at $225,000 in the current market and he can’t sell it. The government offers to buy the land under Harry’s house. The land is valued at $85,000. Harry sells the land to the government and pays down his loan to the bank, leaving a balance of $215,000. The bank agrees to forgive the late fees and rewrite the note. It issues a new loan to Harry on the house only in the amount of $215,000 at a lower interest rate taking Harry’s principle and interest payment from his previous payment of $1871.61 at 6.375% down to a new payment amount of $1073.46 at 4.375%. Harry pays an additional $70.84 per month (1% per year of the purchase price of the land) in addition to his mortgage to cover the lease costs on the land. This makes Harry’s total monthly payment (not including taxes and insurance) $1143.51, saving him $728.81 per month. This savings allows Harry to keep his home and the bank to avoid foreclosure.

Ten years pass and Harry wants to sell his home. He puts the house on the market and finds a buyer who agrees to pay $350,000. Harry then exercises his option to repurchase the land from the government. Current appraised value for the land is $110,000. Harry’s attorney does a simultaneous closing on the property, with Harry purchasing the land back from the government for $110,000 and conveying the house and the land to the new owner for $350,000. The bank gets its loan of $215,000 paid off, the government gets the $110,000 and Harry Homeowner gets the balance of $25,000 (less closing costs).

The Results

Win: The bank didn’t foreclose and got the full amount of its loan repaid.

Win: Harry didn’t lose his house to foreclosure, saved his credit and came out the other end with a little money in his pocket.

Win: As an investment for the taxpayers and bond holders, the $85,000 has matured into $110,000, for a $25,000 increase. In addition, the government has also received interest in the form of lease payments on the land in the amount of 1% or $850 per year. Over ten years, this totals an additional return of $8500 for a total profit of $33,500, an ROI of 3.38% per year which is a better return than the 10 year Treasury Bond rate which was 2.77 as of close of business Friday last week. (Obviously, this is a little more complicated than this, but you get the idea.)

What Happens If Harry Homeowner Still Forecloses? In many areas, affordable housing is a big issue. It’s all local towns and municipalities can do to get developers to include affordable units in their developments. Those towns could change their local regulations to state that the affordable housing unit doesn’t have to be in the development itself – it can be provided in the same town but in a different location within that town. This would make developers tremendously motivated to buy any of the properties served under this plan that go to foreclosure since they would cost the homeowner up to a third less than the local area prices. Even if the builder had to take a loss on the purchase and resale of the home to get the monthly payments into the “affordable” level, it will likely be less than the gain of an extra new unit selling for full price. It’s a good trade.

The Sparta Plan Has Several Benefits

  • It will reduce the principle of the loans for the current homeowners allowing them a payment level they can afford to sustain.

  • Banks only have to eat the cost of refinancing the loans at a lower interest rate and forgiving the late fees, not the cost of foreclosing and reselling.

  • The payments from the land purchases to the banks would allow them to convert impaired assets into performing assets. This boosts the banks’ asset rates and lessens their reserve requirements, strengthening their balance sheets. This makes the banks more stable, reduces the stress on government resources, and ultimately increases the availability of funds for consumer loans. Freeing up additional funds for new loans and opening up credit lines for new spending would be a boon for the economy overall.

  • Property values won’t suffer as a result of the plan since any subsequent purchase of the property would be made including the land when the current seller exercises his/her option to purchase the land back prior to conveying it with the property.

  • It’s a purchase backed by real estate, which means it’s not going to contribute to the deflation of the dollar.

  • It provides a stable investment for older investors who need some way to hedge their bets in this uncertain economy.

  • For the purchases that don’t get paid for by bonds, the tax payers will see a return on their investment as the economy recovers and property values improve. At the very least, we are guaranteed to get our money back with the land lease payments as interest. At the best, the appreciation and the land lease costs will provide a tidy profit for the use of taxpayer monies.

  • It’s not a free ride for anyone. The banks lose out on the refinance and late fees as well as taking only a slightly more than break-even interest rate. The homeowners lose out on the appreciation of their land and have to pay conveyance taxes and closing costs on the land multiple times. In short – those who made bad decisions get a chance to pay for those bad decisions without being destroyed by them.

So, that’s the crux of the idea, Mr. President. It seems to me that it would work. I’d welcome the opportunity to discuss it with you. I also have some ideas on how to make it easier to be self-employed if you’re interested.

Sincerely,

Kelle Sparta
Author of The Consultative Real Estate Agent 
National Speaker, Trainer and Coach for the Real Estate Industry

What is dark matter, anyway?

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Last week, I suggested that we could use dark matter to organize our own cult and meet angels. I was joking. But it got me thinking… what is dark matter, anyway?

I’ve long held that human beings ignore a fundamental truth about how we perceive the world: we do it through our five senses. Our senses let us measure certain frequencies of light (vision), certain chemical reactions (smell, taste), speed of molecules (temperature), pressure (touch), and certain frequencies of air vibrations (hearing). That’s it. We developed physics by explaining what we experience with those senses. We expanded physics by expanding our senses with technology; we invested telescopes that let us see farther. While those technologies expanded our senses, they still measured pretty much the same phenomenon.

Humans are Like Frogs, Minus the Warts

But there’s nothing that says that those are the only phenomena that exist. Frogs, for example, can only see motion. They don’t see stationery objects. To a frog, an object appears when it’s moving and vanishes when it’s not. A frog would create a concept of physics that wouldn’t include stationery objects. A bug could be sitting right in front of a frog, and the frog wouldn’t know about it, as long as the bug stands still. This sucks for the frog, though it’s pretty awesome for the bug.

Maybe humans are frogs. Well, not totally, but mostly. Maybe there are phenomena that we simply don’t have the sensory apparatus to detect. Let’s call one of these “oobleck.” We’ve never built oobleck-detecting machines because we can’t even sense oobleck, so we don’t have any idea that oobleck exists, or what kind of machine might detect it.

Math Saves the Day!

Fortunately, we have math. Calculus and other sophisticated math was originally invented to help Newton with his work on physics and Leibniz with his work on intellectual property law1. The neat thing about math is that math can be used to produce a model of something we know about. For example, you can use math to create a model of how to tie a necktie. The math can then be used to extrapolate that model into realms it didn’t original model. Just a few years ago, math hypothesized the existence of many new necktie knots (85 total), which was then verified by actually tying them. The Pratt is my favorite.

Sometimes, math extrapolates things that don’t seem to make any sense. For example, you can use math to describe creating a funnel that has finite volume and infinite surface area. We tried very hard to make such a funnel in college, but were never able to create the physical object. We had to use a traditional funnel instead.

What’s happened in physics is that the math didn’t quite work. So they added a fudge factor and called it “dark matter.” I’m sure it began as one of those late night ideas you come up with after you have that party involving funnels. Physicists are always plugging in fudge factors and giving them cool names. Einstein came up with a fudge factor that he called “the cosmological constant.” Is that a cool name, or what?

But the reason physicists call themselves scientists is that once they recover from their hangovers, they go observe the universe and find out whether it matches what the math said it should match. If it matches, it means the math may have detected something that our senses couldn’t detect on our own. If we can figure out enough about how this strange thing behaves, we might be able to build machines to detect it. It would be like giving a frog an implant to detect bugs that are standing still. The frog still couldn’t directly see a stationery bug, but the technology could extend its senses in a way that would give it easy access to dinner. This sucks for the bug, though it’s pretty awesome for the frog.

Thus, dark matter.

I think dark matter is really neat. I think it could be the human equivalent of a stationery bug. Sure, it might be merely a place where our current understanding of the universe isn’t complete. Maybe it just means we got our equations wrong. But maybe it’s more. Much more. It could be a signpost into an entire realm of physical phenomena that our senses weren’t built to detect. It seems bizarre, incomprehensible, and magical to us, but it could result in a complete change in our understanding of reality. And who knows where it might lead? It’s a great, unexplored frontier. We just might find out we’re frogs, about to discover there’s such a thing as a bug that’s standing still. If that happens, there will be great rejoicing, and we’ll feast like frogs2!

It’s just a thought.

1 This is a joke. If you don’t get it, Google until you do.

2 Notice how optimistically I’ve skipped over the scenario where we discover that dark matter is the frog and we’re the stationery fly? I’ve been working on improving my optimistic outlook. I think it’s working.

Physics used to justify wishful thinking

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[Today’s note is a bit of humorous whimsy, completely unrelated to anything I usually blog about.]

I’ve been thinking about the two-part Get-it-Done Guy episode on visualization, and it’s given me an idea. There’s a long history of people misunderstanding physics and using the misunderstanding to promote whatever their belief system of the moment is. Physics brings legitimacy, and the belief system of the moment brings wish fulfillment and the bonus of not having to think too hard. (After all, the math you need to understand real physics… Oy! So complicated!)

Quantum mechanics is where this happen the most. The Copenhagen interpretation of quantum mechanics—that the universe is simultaneously many different states until an observer measures it—become the New Age justification for the belief “You can wish for what you want and it will happen magically and without any effort on your part.”

Last night I was watching a physics documentary and realized that no one’s built a cult around Dark Matter, yet. Let’s start now1:

There’s a universe full of dark matter that we can’t see or interact with. In fact, the vast majority of the universe is dark matter. Though it’s called “dark,” it’s actually where God, angels and heaven, are. Think of it as just another dimension, as proven by the quantum mechanics “multiple universe” hypothesis. Send me $19.97 and I’ll send you an official Dark Matter Contact Certificate that is guaranteed to attract your angels from the nearest dark matter hub. With your angels at your back, you can do anything! Bake a perfect upside-down cake! Become rich and famous! Live in mansions and drive Bentleys! Drive the wrong way down one-way streets! Jump out of airplanes without a parachute! Even go scuba diving without the tank!!!2

Quantum mechanics is USEFUL! Physics is FUN! And potentially profitable!

1 It worked for L. Ron Hubbard, it can work for us!

2 Any actions undertaken by you are entirely your responsibility. We make no claims of any sort as to the safety of taking dark-matter-inspired action. After all, if your angels don’t like you, or decide that they want you to join them, that sky-diving expedition could end badly. That would be the angels’ fault, and yours, for trusting your angels in the first place.

Income Distribution and the Ultra-Rich

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A friend wrote to a group I’m part of:

Some folks I know who are at pre-IPO companies are really opposed to Warren Buffett’s support of raising taxes on the ultra-rich, saying that Buffett is helping keep a glass ceiling in place between them and being super rich.

They say we shouldn’t discuss politics in public, because then people won’t like us and we’ll die alone in a gutter. So after much deliberation, I decided to risk ending up in the gutter and posted my response to my friend’s post:

My Response

And thus we find the problem: the vanishingly small percentage of people who stand to benefit from low tax rates on the rich are vocally opposed to changes.

I’m surprised at how vehement and negative my reaction is to your friends’ outrage.

First of all, it’s stupid to complain about taxes and ignore the rest of the costs of their equity.

Tell your friends if they are concerned about increasing their take, they should lobby for the investment banking fees that get withheld from their IPO proceeds to get capped at some rational number. The banking fees are financial rape, but since they’re “standard,” no one bothers to protest. And they should read the prospectus carefully to see how badly their stock and options got diluted by sweetheart deals in the footnotes.

Speaking of which, do they track outstanding shares on a weekly basis and calculate their ongoing dilution? Or market fluctuations? If not, why not? Those effects can have far more effect than the tax rate differences. Did they quiz the founders on the dilution that last round of funding brought, and whether the return to your friends was negatively affected? Was that last round really necessary? Did those capital improvements really need to be made pre-IPO? Etc. Most people cry foul when the government wants a share, but ignore all the others who take a bite. They don’t ask whether those others are providing value for their money.

I’ve been through 4 IPOs and they’ve all been feeding frenzies. Of all the parties who lifted significant sums (sometimes many millions) out of the transaction, at least the government provides something in return:

  • A stable system of contracts, which makes IPO-able business possible in the first place.
  • A public infrastructure that gives them electricity, water, food, etc. so they can spend their time building their business instead of worrying about the logistics of running a server farm when power is spotty and only available for part of the day.
  • Financial markets that, no matter how corrupt individual players may be, at least provides liquidity for those IPO-bound friends.
  • A justice system that enforces the contracts allowing business to rely on them.
  • Etc.

Perhaps your friends should learn something called gratitude for having the privilege of living in one of the very few times in human history where we had an infrastructure that afforded them any chance at an IPO, combined with the incredible luck to be at a company that can viably go public (which only ~.02% of companies do).

On the other hand, I’ve been through 4 IPOs—all when the tax rate was a lot higher than it is now—and still have to work for a living. Maybe I’m just bitter and begrudge your friends a lifetime’s worth of free money without them having to contribute to the upkeep of the system that made it all possible.

How rich is an ultra-rich person?

Most people have no idea how truly ultra one must be to be one of the ultra-rich. Let’s tie the numbers to something real:

A million dollars is 25 years’ income for an American median family (median income is about $40K)

Ten million dollars is 250 years’ income.
100 million dollars is 2,500 years’ income.
A billion is 22,500 years’ income.
Ten billion is 225,000 years’ income.

John Chambers stashed four of those overseas to avoid taxes. Bill Gates has four of those in his bank account. In other words, enough money for a family of four to live at an American median standard of living for a million years, ten times as long as our species has existed.

Explain to me the value system in which there is any way to justify that concentration of wealth.

Yes, the mechanism of the system allows that to be accumulated by one person. But to argue that somehow we should be concerned about his tax rate seems bizarre. Honestly, a 100% marginal tax rate seems perfectly reasonable to me. He has enough to survive for a million years. No matter how hard he works, or what he contributes, he doesn’t need a single cent more.

(Nor do I believe his contribution to the human race approaches the contribution a family of four would make over a million year timespan, no matter how much one may like Windows.)

Tell your friends to use their after-tax proceeds to start another company that’s more successful, only they can do it in another country with a more favorable tax structure. I suggest Haiti. Port-a-Prince is looking for commerce.

Job hunting process

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As we’ve been developing JobTacToe.com, we’ve been discovering that most job hunters we’ve encountered don’t seem to have particularly good process in mind. They don’t know what they should do each day. They have no metrics set up to know if they’re making progress. They just do what they do, and hope that it works.

The challenge for us as a business is that people don’t know they have a lousy process. If they don’t know they’re disorganized, they won’t think to visit our site to help put structure around their search.

I’ve taken a stab at an initial page called “Give me Job!” (quoted from our JobTacToe caveman job hunter Zak) that lays out at least a skeleton of what’s required. If you have any suggestions, please send them along. It’s hard, being intimately familiar with the job search process, trying to figure out what will be useful to someone who doesn’t know much about what is and isn’t successful.