Learning about dealing with People and Business

Life is a constant classroom.

Along the way you pick up things that can majorly change your life and the way you deal with people and business. Most of the time it gets forgotten and your ego takes a hold and drives you the way it wants to, forgetting a lot of the lessons learned along the way.

This is especially true when in start-up mode. The ups and downs take you on such a ride that it is impossible not to fall back to your instinct and ego. When your ego takes over it is truly your personality that runs everything. If you have an abraisive personality, but have learned how to control it over the years, it will come out in full force while you are playing fight or flight trying to accomplish the things you set out to do.

There are three things that I would care to remind myself, so my personality or ego can never fully take over.

1) People are motivated by your energy and drive to do things. If you worry less about telling people to do things and lead with calculated example, pretty soon others will follow suit.

2) Constant improvement is instant worth. If you are the best at something, people will follow.

3) Only rely on people when they volunteer their resources and are ready and willing to do so. Trying to motivate someone who is unmotivated is completely worthless and will end up using more energy than if you did the task completely by yourself.

I realize this post is a little more abstract, but it is something I wish I could remind myself everyday.

Active-Passive Income?

I used to read a blog called Smart Passive Income A LOT a few years ago. It was amazing to me that this guy Pat could pull in $15k a month and probably sit on his ass (if he wanted to). I got inspired, and I came up with some ideas myself. Needless to say this didnt really work out.

What I was missing is that it wasn’t truly passive income. It was never a situation where he would have some trust fund and then did no work to receive big payouts for that investment. What he actually did was worked really, really hard by writing a review book for LEED and took advantage of the huge influx of people looking to pass the exam. From this point he was able to truly start out on his own. He quit his job and made it a full time job reporting on his passive income endeavors, all the while starting up more ideas. This to me is not passive income in the sense of the example of sitting back and collecting on a trust fund. Actually, It is working really hard on a project and then sitting back and collecting on that hard work – Active-Passive Income.

Currently, it seems like the LEED thing slowed down considerably, but now he makes a TON of money on his blog using Adsense and Affiliate advertising. I am extremely happy for him and a little jealous (obviously).

What I finally realized is that Pat really didnt make his money from “passive” income ideas, he made it because of his passions for LEED and sharing with the world his desire to be financially independant, and have the freedom to follow his passions. Without those passions he may have never put in the time to write the LEED E-book, or write about it on his blog. Pat is the epitome of what people want, people are sick and tired of working 9-5 for corporations, and he was able to capture their passions and make it a possibility, genius in my eyes.

I might go as far a calling Pat’s ideas truly active income, but I would hate to attempt to compare it to the typical 9-5 that everyone is used to. It is obviously much different than a 9-5 because he truly has the freedom to do what he wants.

If I have one goal with this blog, it is to inspire at least one person to be financially independent, follow their passions, and to donate $500 to me (that last one was a joke). Seriously though, inspiring someone to follow a path where they would do what they love and sit back and watch all the hard work they did pay off? Sounds like a great plan to me.

CPA Exam – My thoughts and feelings

I have literally invested a full 7 months of my life in this.

I study at least 3 hours a day 6 days a week on average, which is extremely tiring. Aside from the 7 months, I had to go back to school and take 24 units of accounting classes to qualify to sit for the exam. So technically 2 years.

Overall, I am ready to be done with this part of my life.

I have quite a few other items on my list that I would like to work on, but because of the sheer amounts of time and energy this takes, it has been quite difficult to start anything new.

That all will change on the 29th of November. I should be done with all of the tests. It will be my second time around taking the tests, and because of my close scores from the previous round, I am assuming (read: praying) that I will be done.

Some of the items lined up for the future:

• Writing a Book – Fiction or CPA exam review – Either one, it will take a lot of work, and a lot of research and reading how-to books.
• Programming in C++ and/or other languages – Without a doubt, this will be tough, but I think if I spend a couple hours a day working on this, I will be ahead of the average programmer in a year or two.
• Building my business (empire… haha) – This is something that I just have not had the energy to do, I maintain it well while I am working on the CPA exam, but I need to focus on it, and build it up. There are many things that I can do to really get it going. I should write a whole post on it, but a few being offering some services for free to get some
• DIY – I used to love working on stuff with my hands, that all fell apart when I left college, I want to get back into – maybe starting with a backyard Rocket Mass Heater will be a good one.
• Music – I really want to start working on guitar and piano again, I would love to get a good understanding of music theory. I stopped working on this stuff because of my huge limitation with understanding notes, and theory, maybe if I get a better understanding of it, I may work on it more.
• Law School – This one is iffy – I’m not 100% sold on the school itself. It was attractive because the school is online and allows you to self pace. It is also only $300 per month to go to. The return on investment makes sense, and since I already have a really good understanding of tax law from work and the CPA exam, it may make sense to breeze through. Worst case scenario, I stop after taking the baby bar and leave with a Masters in Law.

Although all of these items seem like a lot, they are all accomplishable within 3-5 years. That is what I have learned from this CPA exam, I had absolutely no accounting background and I managed to get this far after 2 total years and 7 months of study. Yes this last paragraph was specifically designed to boost my ego, sometimes I need that.

What I Learned (and am Learning) about Start-Up Capital Sources

I read a lot of Hacker News and have learned by reading the many articles that you really dont need a great idea to get angel investors to fund your business. I see tech and internet start-up ideas that baffle me, and then I see that they just got a $1 million dollar round of funding. They must be somewhat successful though seeing how much success Y Combinator has. This whole concept is somewhat foreign to me, I wouldnt even know where to start, that is until recently.

Networking can apparently easily land an idea into a room full of investors. Of the articles that I have read, if you have the talent and an OK idea, angel investors will not only consider your idea, they are willing to risk hundreds of thousands of dollars to take a piece of your company and help you to bring it to a point where you can either make good profits or sell it. This seems to be the way that Y Combinator and many local angel investor organizations work. Networking plays a huge role, and is actually easy to do, I will write more about it in another post.

From an outside perspective, and someone who has never actually been through the process, it seems there would be positives and negatives of getting seed funding:

• A positive would be that you get to pay yourself and employees while you develop the product or service, jumpstarting your company so you are much further along the process
• A (big) negative would be that you are now accountable and responsible for returning the funds that were originally loaned to you. Not only that, but you are giving up part of your company to an outsider, which means you and your founders do not make 100% of the decisions anymore.

I may be a bit naive, but my vision of a start up is similar to those of Bill Gates, Michael Dell, Mark Cuban, and Steve Jobs. You gather a friend or two who have the same interests, you start from the ground up (sometimes below the ground up), and you work with them to build it up. All the while, you are doing what you love. This way seems to require a lot of work (which is good!) and a ton of networking, it also requires that the founders know a lot about their profession, programming, engineering, etc, because you cant just go out and hire someone to do it for you with no start-up capital. I think that this way also inspires people to learn more about their passions in order to provide something beneficial to the world.

Angel and Capital Seeding may be good because you skip a lot of the bull and get right to employing people and paying salaries, but I think that it takes a lot away from the start up. For some people, that may be a source of passion in their lives, building something up, then selling it. I’m not sure why, and I cant really relate to that. It could be similar to what I am doing with the CPA license, starting something that may not be exactly what you want to do in order to do what you really want to do… I guess it all depends on motivation.

I prefer to choose to own my business with myself and maybe some friends, not be accountable for someone else who only has an interest in the business because of money, and most importantly build that business and keep building, make it a part of myself.

Side Note: I am going to deservedly write a whole post about my philosophy with money. In short, if all you’re interested is in being a millionaire and all of the perks that come with it, this blog may not be for you. If your interested in finding a profession and doing what you love to do, and let the money naturally follow, that’s what this blog is all about.

Supplements – My Best Explanation for why I didn’t move ahead on this start-up

In this post, I will attempt to explain why I never moved ahead after massive amounts of planning and preparation making a supplement for endurance. AKA my “EnduraBoost Fiasco”.

If you didnt read part 1 of my update, I started working on an endurance supplement in 2008 that would boost endurance temporarily in athletic individuals. It actually had some promising clinical trials of its ingredients, and I believed in it.

I created a website, business cards, a formula, labels, pretty much everything you would need to start it up. Everything except a product.

The dilemma I faced was that when you outsource a supplement to a contract manufacturer, you have to buy a large amount of that supplement. Including encapsulating, bottling, labeling, packaging, I was looking at around $10,000 for a minimum run. As a side note, contract supplement providers will tell you that they can do “small runs”, but the cost per bottle is typically so high, it really makes no sense. Also, because I was so honest, I didnt want to use crappy ingredient substitutes and screw over my customer.

So here I was, with $2000 in my bank account and a $10,000 (minimum) start up cost. My breakeven by doing this would be to sell about 500 bottles. This worried me, so I tried other options first, options which ended up dragging on and on until eventually burned me out and I ended up shutting it all down.

The first option I tried was to presell the product. Not my smartest moment. I would call and email retailers and tell them about the product, show them all of the nice stuff I made for it like labels, and websites, and hope that they would either buy the product at wholesale or even consign the product. I pretty much got no response.

I used the technique in Tim Ferriss’s book “The Four Hour Workweek” by setting up a website and adwords account and trying to “test sell” the product to see if anyone was interested in buying it, no luck there. I later learned that this technique was pretty much made obsolete by the fact that modern Google Adwords is pretty much impossible to use efficiently for the average Joe, and I even spent months researching adwords (I will write a post on this explaining more).

I had considered that this was a product that may not have demand, but I looked a sales numbers of similar products, most of which didn’t have the clinical trials to back it up like mine did, and there was definitely a niche market.

I realized then that I probably couldnt sell the product without the product itself, and local stores/events/promotion is that way to go, so I looked into manufacturing it myself. This was the nail in the coffin. I spent years researching how to buy the ingredients, buy the bottles, buy the printable labels, good ways to encapsulate, good ways to seal the bottles, then package them. It was absolutely rediculous.

I spent $300 on basic equipment and ingredients, and got to the point where I could make 20 bottles of the stuff, including labeling and packaging it. I was so burned out at that point that I never followed through. I’m not really sure why. Maybe because the finished product was not that nice, and I was embarrassed to try and sell it. Maybe because I wasnt interested in spending 1 hour per bottle manufacturing them until I had enough money and customers to pay for the large-run manufacturing. Maybe because I felt I could never really sell them. At this time, I realized how rediculously competitive the supplement industry was. There were web sites like Swansons, and companies like Now, who dominated the industry.

Something that I would probably like to ignore is that I think a fear of failure played a role in me quitting as well.

Looking at it now, I would have probably embraced my passion for health and supplements, saved up the money and paid to have the supplements made. It would have lit a fire under me, and forced me to go to marathons, walk into MMA facilities, give away free product for promotion. All of these things may, or may not have worked, but at least I would have went all in.

This is why I think capital is important in start-ups, it gives you that edge necessary to jump start it all, bypass the riff-raff, and get to networking and selling, the most important parts of getting your product or service off the ground.

The Enconomy Sucks (you all knew that!)

A good friend just got “laid off” today. Well, more like the company forced him out.

Very similar to what happened to me two years ago.

For me, it was a good thing, it made me realize what I really wanted in life. For him, I am hoping the same thing will happen. Unfortunately he has a wife and two kids to feed, so it may not be as easy for him.

These events provoke my constant evaluation of where I am in life and what makes me really happy.

There will always be roadblocks and you will always have to do things you dont want to do. Whether you work for a company or if you work for yourself. Personally,  I hate walking in to businesses to sell my rings, but I do it because I know that the result will truly make me happy: More people will enjoy my rings and I will be more financially sound.

If you are happy even though you have to do those things, that is the best thing you can do for yourself, your family and your friends.