Free the Animal

Life Preempts Blogging

Much as I love to blog -- indeed I do -- lots of life, 99% of it really fun at the moment, is getting in the way.

Lot's has to do with this.

Hard Money

Interested in becoming a banker? Now, you can, with several different avenues. The largest currently are Prosper and Lending Club. There's a few others, and a couple in startup and pre-startup (hint hint). Here's a cool ABC News story about Lending Club and a guy who got 15 bank rejections for his loan application for seed money for a business before 74 strangers on Lending Club listened to his pitch and chipped in for $25,000 total.

A few weeks back I opened accounts on both Prosper and LC and deposited $1,000 in each just to test it out. I've used the automated bidding mechanism to create a portfolio with a large chunk at moderate risk and a small bit (15% of portfolio) at higher risk. So far, Prosper has lent out $900 in 18 loans at an average rate of 15.59%. LC is more difficult to work with for the way I want automated bidding to work (I'm not interested in people's stories, only their credit grade, debt ratios, and so on -- all the classic criteria). Lending Club has now lent out $750 in 29 loans averaging 12.05%.

I'll be blogging much more about this in the future. The surface of what can be done with this in terms of risk management, creative hard-money finance, international arbitrage, and so on, has not even been scratched.

HT: Rate Ladder

Passion vs. Excellence

There's just no way I can't pay attention to Larry Winget. Honesty is just too refreshing, and he deals it every time. His latest blog entry is just such a treat and he's dead on in my opinion.

“Passion is a load of crap.” ... My point to him was that passion is little more than a starting place but true long term success is based on excellence and hard work. ...

I know many passionate people. They are passionately stupid, passionately wrong and passionately incompetent. Passion and success have about as much to do with each other as gravy and Raisin Bran. But this is the trash being dumped on us by the ill-informed motivational idiots who know little about true success but are quick to tell you how to achieve it. No business ever makes it based on passion. No successful business person every made it to the top based on passion.

It's funny, but I have often told people that I have no particular fondness for the business I'm in. I was at a place in 1992 where I was out of money, this opportunity presented itself, and though I never particularly liked it I was damn good at it. I still don't like it, much, but it has been very good to me and my family. This is much closer to what I have some passion for, and we'll see if I'm any good at it. It proceeds apace and one of these days I'll update you on it. We have had big breakthroughs in progress in the last few weeks and I'm meeting with the architect in three hours from now.

Be sure and read all of Larry's post.

Larry Winget

I'd heard something about this guy somewhere recently and made a mental note that he's someone I might have to take a second note of. Then I saw Jeff Michael (a very knowledgeable and responsible debt/credit guy) tout Winget's most recent book: You're Broke Because You Want to Be. So I'm taking a second note.

And, naturally, he has a blog. Go take a look at his last 10 posts and see if you don't think he's an honest straight shooter that deals in reality and facts; while ridiculing the standard-fare platitudes of conventional self-help. I do.

There are literally thousands of motivational speakers spouting ridiculous platitudes that do nothing more than make you feel good for the moment and have very little lasting effect. They sound good, but they don’t work. Let me prove it to you. I bet you’ve heard these lines:

“As long as you have a good, positive attitude everything will be all right.” Sorry, but that is a lie. I’ve had a positive attitude my entire life and had plenty of crap happen to me. So get a little negative. Get sick of the way things are so you will take action to change things. Get fed up; realize you deserve better and that you aren’t going to be satisfied with anything less than the best for yourself and your family. Remember: You have to get negative about your life before you can take positive action in your life.

“You can be whatever you want to be, do whatever you want to do and have whatever you want to have.” More lies. You can’t be whatever you want to be or do whatever you want to do. If you are short, fat and ugly, that supermodel thing probably isn’t going to work out for you. You can do what you have the talent for and are willing to dedicate the time and effort into becoming based on your innate potential. You can always do more than you think you can but you can’t do anything. And you certainly can’t have whatever you want. You can have whatever you believe you deserve and whatever you take action toward achieving, utilizing your abilities, your thoughts and your words.

“There are no problems, only opportunities.” This one is not only a lie - it’s just stupid. I have problems. Period. I bet you do too. And I find it insulting when someone tells me otherwise. Sometimes, there is no way to dress up the problem and call it an opportunity. Instead, face the problem. Acknowledge the problem for what it is. Then circle the wagons and tackle the problem head on.

My point? Be careful what you buy into and act upon. When you hear something, make sure it makes good sense, and then try it. If it works, run with it. If it doesn’t work, dump it and run from it.

"Music lessons"

From Seth Godin. There's a lot of wisdom, here.

Isn't it the truth?

"Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats."

— Howard Aiken, computing pioneer and innovator

Something New: moneygoround.net

Well, here you go. Domains are propagating for moneygoround.net, .info, and .us. That's just a canned design, for now. Already have people working on a cool logo design.

What's up? Well, that's going to be a commercial venture of mine. As you can see from the sponsor to the right (which I'm majority shareholder of), that's money related. We've been working for a year on something very new and innovative for the lending space (seed capital raised, working on angel and VC now). That's money related. I also have my trading, real-estate investing, I'm an entrepreneur, I blog, and I blog a lot about money matters -- even to include monetary policy and other educational aspects.

So the other day I'm thinking: of what I might do productive-wise as I wind down the day-to-day trading; and I'm like: Duh! I can't seem to resist blogging. Duh!

So there you have it. Obviously, the idea is to provide lots of free and interesting content about money and wealth building, attract an audience, be visible in the search engines owing to content, exposure, linkage, and make something of it through selling ad space and also benefit my other companies.

It's brilliant, of course. As to this blog, it'll be the same, except for the money stuff. So: politics, culture, and personal stuff, basically.

Cost Effective; Timely

You can be sure I'm not describing anything above the small-claims level of our court system. But I am describing a private, dispute resolution option. The National Arbitration Forum.

Back when I came up with the name Provanta for my company, back in about 1999, that domain was already registered to some electric company as a brand name for one of the services they provided to commercial clients. So, I registered provantacorp.com, and provanta.biz later, when .biz came available (it seems to have never caught on, and that's a shame, in my view). I wasn't watching closely enough, and the electric company dropped the product, and let their domain expire around the end of last year. Now, had it been picked up by someone for an unrelated service I'd have just let it go, but I was tooling around a couple of months ago, and what do I find (that'll only go to that "debt help" site for another couple of weeks)? Some company in Korea registered the domain, and from the nature of the site clearly knew what they were going to do with it (poach business with my name).

At any rate, the fee was about $1,300, took about 2 months from start to finish, and now the domain will be transfered to us and I never had to contact "the authorities."

Here's the logically laid out argument and decision (PDF). This ought to be the future of dispute resolution to every possible extent.

Reason TV

This should be fun.

Awsome People

Have you seen the billboards? Isn't is amazing how much value Google delivers for free? I don't think "awesome" is an overstatement.

All the while, focus will be turned over the next year to who you want next to dictate to everyone else some set of values closest to your own (unless you support Ron Paul). For such "great value," you'll be happy to hand over (under threat of force) upwards of half the values you produce.

You may not see that as quite the revealing juxtaposition, but I sure do.

Good Show

My brother alerts me to Virginia Tech geeks who take 1100 Apple G5 computers, interconnect them, and for $5.2 million create the world's third fastest supercomputer. Those in second and first place cost $215 million and $350 million, respectively.

Sure hope they ran it past Hillary!

Fresh Air

We could do with a few more like Ryanair's Michael O'Leary.

Forced Appreciation Update

Yea, we're about eight months behind "schedule" on my little project to force a bit of appreciation. Who wants to buy and hold property when you can buy and build, and achieve a leveraged return on investment of 100, 200% or more in a fraction of the time? Nothing wrong with doing either, of course, and the former -- provided you pay some attention to location, location, location -- is the closest thing to dummy-proof investing you're ever going to find.

Here's what one of the two buildings is going to look like, which we're certain is far superior to those units we modeled this project after (and which are pictured at that link, above). Those units have all sold now, and for prices that would provide us with excellent returns if we only do that well. (Click on the image for the larger version.)

Needless to say, I'm pretty jazzed about all this. Just today, we received the first of two bids by well-known, recommended, verified competent (I stood in one of their current projects last Friday) contractors and the price knocked me over. It's very nearly as low as our wildest dream price and far below our make or break.

Early on, I decided to take my sweet time on this. Even still, I made mistakes that total at least $10,000 in needless expense. Had I rushed it, I can easily see that being $50,000 of tuition expense.

Onward.

Memo Out

To: Those Concerned
From: Richard Nikoley

Subj: Doing Business With Me

As a general rule, it's very simple.

1. Don't Fuck Things Up.

2. When something is fucked up, all I want to hear is: "This is Fucked Up." I don't necessarily want to hear why it's fucked up or how it was in any way beyond your control (excuses). If there are lessons to be learned for future reference, chances are I already know them or they can come later if I have any questions.

3. Proceed with all Haste and Vigor to get it unFucked Up. Otherwise, I will do so myself, it will be as a terrible swift sword, and I will not care in the slightest about feelings or heads or limbs.

As I said: simple.

Silly Me

My email reply just now, upon receiving sound legal advice that I ought not do something nice and just for someone, because it could come back to bite me, given the status of current employment law litigation.

Yea, OK.

Pardon my lapse. For a second there, I was living in a fantasy world where officers, directors, and shareholders actually had more moral authority in matters of business practices than disgruntled ex-employees, trial lawyers, courts, and society at large.

Silly me.

The Project

So I finally, finally closed on that project. The land and its Grapes of Wrath style apartments are mine. Here's what it looks like now:

And here's what it will look like in about a year's time (same architect, same design, though probably a different color, eh). In the immediate, I've got to spend about the next six months in supplication to the various local commissars -- seeing as they are doubtless all very wise, experienced and successful real estate developers themselves.

Progress reports to follow.

Notes From 10-Year-Olds

I've got a number of pressing matters right now, but they'll have to wait a few more minutes. As I blogged a few weeks back, I was a teacher for a week. I was surprised how much I enjoyed it. Don't tell the Junior Achievement folks, but I followed the curriculum only peripherally. There are a million places where these kids can learn the mechanics of business. At their young ages, fundamental principles are key. Accordingly, I spent a week on various aspects of three principle topics:

1. Business as the three primary resources (natural, human, capital) applied to trade and why trade happens (both parties are better off -- period)
2. Time leverage (employees; human resources; beautiful minds)
3. Financial leverage (capital)

It was great to see eyes as light bulbs upon simple realizations like: Sam buys Ali's bag of apples for $5 because Sam wants the apples more than she wants $5 and Ali wants the $5 more than he wants the bag of apples, and -- and -- that Vinesh thinks it's a ripoff is his opinion, but not his business. Or: I work 200 hours per day (can you guess how?). And: though your dear grandparents might applaud you for paying cash for a house, making 10% per year on your investment, you can buy five or 10 houses for the same money and make 100% per year on your investment.

I should point out that these are exceptional children. I was both shocked and very pleased with some of the brilliance I observed. Of course, we're talking about mostly Chinese and Indians. The school is near a sub-division where the average house is well over 3,000 square feet and will sell for between $1.5 and $2 million. No, not estates. Just plain old nice tract houses. The parents are mostly immigrants, mostly working in Silicon Valley as hardware and software engineers and such. They think education is important, and it shows in their kids. Not many white faces at all. You know, there are video games that need playing, and more often than not, dad is playing the video games rather than educating his kids.

One wonders what another generation will bring. If this is how whites become the second-class citizen, bring it on. I love justice, regardless of the skin color or shape of the eye.

So I'm holding a folder of thank you letters addressed to Mr. Nikoley. Some excerpts:

"I learned many things that have to do with money. I also learned what time leverage can do." - Sabrina

"...some things were confusing and it took the long way into my head." - Christina

"My future plans are working for my dad. He might even let me be manager." - Timothy

"My future plans for my job would be to be an employee instead [...] because it seems a lot easier." - Madison (she encloses a drawing of a snow cone relabeled as shaved ice; can you guess why?)

"You taught me a lot about money and business. [...] I never knew you could buy a $1 million house for only $100,000. I thought you had to pay a full million. [...] I also learned how to make a business plan." - Vinesh (he encloses a drawing of a house with a $1 million price tag and one stick figure saying to the other: "I've got $200,000. I'll buy it.")

"I learned how to plan a business." - Steven

"Now I know how to start a job, buy a house, and run a business." - Conor

"I could get rich. I loved learning time leverage." - Christopher

"Ever since you taught me about business life, my life will never be the same. [...] Thank you for opening my eyes to the business world. Now, thanks to you, I want to make my own computer company like Apple. I want to be an entrepreneur to make millions of dollars by making a start-up company of my own. After making millions of dollars from my company, I want to use my money to invest in real property to make more money. I shall buy low and sell high with residential and commercial real property." - Francis

"I learned that businesses are much more complex than I thought. Also, I never really thought about where to get the money." - Sylvie

"I now know more about business and finance than my grandma." - Brian

"I learned a lot about business. [...] I also learned that being the boss is good because you can go and relax and you will still be working. My future plans are to make up a business, hire people to work for me and make a lot of money." - Agam

"It was very interesting to learn how a business grows." - Dylan

"My future plans are very fun. I'm going to become a business major and take over my dad's business. He owns clubs and restaurants and a poker website. [...] It will run for generations." - Alison

"Thank you for teaching us about bank loans and how to get people to buy your product. I learned very much about business and ads, etc. Now I know more about what my dad does at work all day long." - Samantha

"...It really helped me understand the pros and cons of every business. You also helped me analyze resources, all three types -- matter, human, and capital. It also helps to understand about the resources and how they interact with each other. My business is to be a landowner. I will build a building and lease to anybody (shops below, apartments on top). Then, I'll gain the money and try to expand it. Pretty soon I'll try to make a city out of dust." - Mathew (my human calculator in the class)

"I also learned about the two kinds of leverage, time & financial." - Kabir

10-year-olds, folx.

Interestingly, for as many oaths as there were to one day start a business, there were even more expressing a desire to be an employee instead. And that's perfectly fine. Those who expressed such desire typically did so because they say they don't want the complexity or responsibility.

I'll be wishing that they remember that while the current culture is hell-bent on making sure they feel they are just unfortunate victims of life, never having any meaningful choices.

Me: School Teacher

That's right. All next week, an hour per day. My wife's 5th grade class. For years she's been telling me about the Junior Achievement program to bring business and economics to the classroom. There's a different curriculum for each grade level and upon a cursory review of the 5th grade material, it's pretty good. Of course, I'll be adding an insight or two of my own <grin>.

We'll see how it goes and I shall report.

Sent Items

This just out in email to a group of business colleagues and associates.

Bill wrote:

Why do we keep talking about fee caps?  TASC should be taking the position that free enterprise, for-profit companies don't have to have price controls.  Do collection agencies have fee caps?  COMPETITION will keep fees down IF SETTLEMENT COMPANIES ARE GIVEN THE FREEDOM TO TAKE ROOT AND GROW without price controls.

Bill is absolutely right, of course. And he's right on two levels, the first of which can be summed up in the phrase "this is America," and all it used to imply. Unfortunately, one is sooner going to hear an argument for freedom on the basis of individual rights and private property in the parliaments of Russia and India than in the legislative halls of "enlightened" America--or Europe for that matter--anymore.

So no one wants to hear about that, anymore. It's a dead, DEAD horse. We have come to accept that literally anything and everything is perfectly subject to regulation, legislation, 'governation,' 'bureaucraticization' ... and instead of a battle of ideas--individualism vs. collectivism--we have the battle of the slide rules: which side can calculate "the greatest good for the greatest number."

And, so, if we must break out the slide rules, let's do so; even if it means trampling down a few for the "greater good" of the many. After all, making that luscious social omelet shall require cracking a few skulls; but we oughtn't be too worried about that.

Price controls don't work on a practical level, which is to say: they have always failed to achieve the desired ends; since the dawn of human civilization. Where they are intended to do "good for many" at the "expense of a few" (well, that is the intention) they have never achieved it. Instead, they do worse for the many at the expense of the few. Of course, they keep getting tried time and time again because of the one constant: the expense of the few. That's always a hands-down 'good' political move, dontcha know.

http://www.mises.org/econsense/ch34.asp

http://www.mises.org/etexts/Modig.pdf

http://www.mises.org/story/1894

http://www.econlib.org/library/Enc/PriceControls.html

In fact, it's very difficult to find any scholarly work that argues for price controls.

Alright, then. There you have it.

--
Richard Nikoley, CEO
Provanta Corporation
www.provantacorp.com

Capitalism in One Lesson

Perhaps you've heard of the announcement by BB&T not to take part in commercial lending on projects that involve eminent domain. Good for them. Better late than never, in this case.

One of the links in that article linked to above is to BB&T's vision, mission and purpose page. Go read that and tell me it's not just one great concise package on what capitalism is all about. Every essential and implication is right there.

Update: OK, I just did a bit more digging. Go read BB&T's values page. Keep in mind that we're not talking about some mom & pop, here. BB&T is the nation's 9th largest holding bank with $109 billion in assets. I would venture that there in no company in the world of this import that has anything even remotely like this on their website. It is at once sad and encouraging. Well, that does it. I am contacting them to begin both a personal banking relationship and a business one as well.

2631 Atlas

Today I took a drive up to Sacramento to check in on a new little project. 2631 Atlas.

Well, this is California, so the beat-up house you see was actually acquired for the price of about $200,000. Yes, the stories you hear are true. It's insane. But guess what's more insane? You can still buy a high-priced fixer-upper and sell it for an even higher price. Which means, rather than being scared off by the insane California prices, you can embrace them and make more money than those comfortably paying $50,000 for a beater-upper and making a whopping $5,000 in the fix-&-flip.

It's all numbers. If you're doing your math correctly, you walk away from any potential deal that doesn't offer a comfortable 10% return on your investment, i.e., the purchase price. If you're leveraged, i.e., take a loan on the property, then your cash-on-cash return will be significantly higher. It could be upwards of 100%, provided you can qualify for the loan. The numbers here are that it was a probate property put under contract by a friend of mine, not for the asking price of $235,000, but for $190,000. I then paid him $9,000 for the contract. Comparable sales for similar houses selling in the neighborhood that are in good shape are around $265,000. It will take around $20,000 to make the house pretty. Do the math. Depending on how the spring market takes off in Sacramento, I'll do anywhere from $20,000 (10% return) to $40,000 if everything goes wonderfully.

My brother, Dave, is handling the rehab details. I won't generally touch general contractors. First off, you pay 20% of the total of the subs right on the top, as a given, but in my experience, they hide stuff and they don't manage a project as your own project manager would. We're going direct to all the trades.

I'll post some before and afters once we get it done and back on the market. Should be about a month or two. Since the extra work the windows will require just wiped out my landscaping budget, we've got to get it on the market while the grass is still green.

The Things We Learn From Others

One of the greatest things about running a company with employees is that I have such opportunities to learn. I believe I've always been successful in leadership roles, going back to my days in the Navy, principally because I'm always interested in learning. I learn things all the time. Sometimes it's a principle, sometimes a rule, and sometimes just an operational fact; but it all ties in.

I just said to someone in an email:

This is why sensory perception and reason are primary, which is to say, they supersede and overrule faith. Otherwise, you would obviously be dead.

Since sensory perception and reason overrule faith anyway, I have absolutely no need of it. Every exercise of it is a detriment to happiness and success in my life. I loath the human propensity to exercise faith, which I firmly believe is rooted in nothing more than abject laziness. It is one of our greatest vices as human beings. It's anti human-life. Straight from the devil, if you ask me.

Let me ask you this: if you have faith, what need do you have of learning anything from anyone? How can it possibly matter? What it is tied to; grounded in? How can it be verified as truth, when belief is the standard and not evidence and reality? Faith and truth, in fact, are oxymoronic in nature. It's when your adherence is not to the truth that you are in most need of faith.

Almost a year and a half ago, I hired a sales manager that was grossly overqualified. Due to some relevant circumstances, I hired him anyway, and I've learned a lot from him, particularly about how to hire good people. I've always been aware of the management credo of "finding good people." What I've learned is that there's finding good people, and then there's finding good people. It's just like anything else. It's hard, excruciating work. There's almost nothing I loathe more than sifting through stacks of hyped resumes full of BS. But I'll tell you what: there is nothing more profound in an organization, particularly a small one, than the difference between a really great employee and an adequate, OK employee.

Let me give you an example of a great employee. Today, I had the lead sales person (hired by the new sales manager) uncharacteristically come into my office (she's always working), and I thought she was going to burst into tears with gratitude. You see, some months back, she fell some dozens of feet from a cliff into a shallow pool of water while hiking in Hawaii. Very lucky she wasn't killed. Fairly sever injuries. I believe she was at home for more than a month. Turns out that in spite of the severe back and neck pain, she began making sales calls from home as soon as she could. Racked up a telephone bill in excess of $1000. She also paid to extend her health insurance from her previous employer instead of going on ours at her 90-day point.

Now, mind you, these expenses were months ago by now, and she never said anything. But it eventually got out, and then I found out. When I did, I ordered that she be immediately reimbursed for not only the phone expenses, but her insurance premiums as well, since she'd delayed going on our health coverage due to the extent of the injuries.

Contrast that with a person who milks the injury for everything they can, makes sure we get invoices for every possible reimbursement as soon as possible--with copies in triplicate to the union rep and local labor department. Contrast that with the job I'm most likely to get when that person's at work.

Believe me. There is very little in the hiring process to which you can be subjected that isn't worth going that extra mile for a really great employee. Never, ever, go it on faith. I certainly never will again.

Carts Before Horses

I'm asked, in reference to this, if It's not just the economics of employee retention that causes me act as I do with reference to pay and benefits.

I was just talking with my General Manager and Controller about this very thing this morning. It's both, really. There's the goodwill, plus the business economics that indicate it's usually the best strategy because turnover and training can be very costly as well. I've always believed that this business could be done with reasonable benefits to employees. I also recognize that all industries are different, and I don't suppose to second-guess the business requirements of others, which is a peripheral reason for why I'm against any form of regulatory control over offering benefits of any kind, minimum wages, or working conditions.

The market is perfectly suited to determine these things--not to mention that the government telling me what I can and can't do with my business, or taxing my business, is theft--but that's another subject altogether.

But none of this really addresses my original point either, from the post cited above. Philanthropists are always hailed as great benefactors of society, especially if they didn't earn the money themselves; like an heir who did absolutely squat to create the wealth; has little or no appreciation of the efforts that went into its creation; often feels guilty about being rich; and so gives a lot away to atone for the sin of being wealthy. At the same time, the greatest builders of values, jobs and wealth from which all philanthropic giving emanates are recorded in history as "Robber Barons." Ingrates.

Without the sound investment and management of capital; without the vision; without the long torturous hard work; without the job creation that created the wealth in the first place, there would be no philanthropy. And we'd all be dirt poor spending our days scrounging for food, clothing and shelter from the elements. We wouldn’t know philanthropy.

We have our values and priorities ass-backwards, in my view, and it's been that way for a long time. Moreover, the Democrat party, to whom so many pay allegiance in the global pastime of biting the hand is the prime source and instigator of this vile, evil, and ungrateful disgrace, and I will never, ever forgive them for that; nor will I forget it.

It's a Wrap

After many years of having a minimalist website for my company, and now that we're getting to be upwards of 40 employees, it was time to do a complete redesign.

You can view it here.