To celebrate my 2 year anniversary of working for Fast Company and Inc magazines, I decided to write 2 posts about entrepreneurship. Here’s the first one.
The owner of super awesome HMS Beekeeper store recently complained that people told her that she should close “because it’s ‘buy nothing day'”. I’m pretty sure that these people would have enjoyed my childhood in the Soviet Union, where most days were ‘buy nothing day’. Soviet Union was the kind of place where reporting your father to the secret police could make you a national hero, while engaging in business activity was a crime.
I was brought up in an environment where 99% of non-governmental commercial activity was outright illegal, and the allowed kind was considered extremely unwholesome by association. Just about any item produced by the Soviet industry would be stamped with a price in order to discourage illegal arbitrage, like this condom, for example:
These days outside of California it’s hard to imagine a society that considers this much commercial activity evil, but when I was a kid, any schoolchild caught engaging in commercial activity of any sort could get in a lot of trouble. Personal entrepreneurship was literally a criminal activity. This kind of an environment tended to produce excellent jet fighters, but pretty crummy condoms.
In America entrepreneurs get a lot of respect (outside of government and hippie circles), and they tend to start early. You always read about the likes of Warren Buffet and Bill Gates having business ventures in high school and college.
My former co-worker told me a story about his daughter who got into trouble for her entrepreneurial activities in 2nd grade. She and her friend decided to cash in on the popularity of Webkinz. They went into the business of selling hand-drawn counterfeit Webkinz trading cards. Surprisingly they were able to sell a good deal of those. The trouble came when the teachers noticed that they were engaged in market segmentation and variable pricing (which is a topic of one of my favorite Joel on Software articles). You see, the girls were selling cards at a discount to the popular kids and at inflated prices to unpopular ones.
This episode only increases my dislike of schoolteachers. If I were in their place I would have praised the girls for entrepreneurship, and explained to them that it’s copyright infringement that is problematic, while market segmentation is perfectly kosher, even if a little sneaky. I’d teach them about premium vs generic branding and how some people happily pay a lot more for identical items in different packaging.
When you are working with true professionals, one of the best things to do is to ask them to choose for you. Japanese have a special word for it – “omakase“. When you say “omakase onegaishimasu” in a sushi bar, the chef will create a custom meal for you, based on the freshest and the best ingredients available at the moment.
If you ever give your money to Warren Buffet, your hair to Jonathan Antin, your floundering computer maker to Steve Jobs, the choice of where and what to eat to Tony Burdain — they’ll do a good job. Doing the same with any stock broker (is likely to churn your investments or worse ), the Supercuts barber (might style you ala Gates) , Carly Fiorina (might make poor H and P spin in their graves some more) is a capitally bad idea.
For a while I’ve been running Amazon’s “omakaseTM” ads on my blog, and I’ve got to tell ya, they stink. I, personally, would fire the business dev suit running (or rather running into the ground) Amazon’s Associates program. This person is never going to be fired, because by it’s nature, Amazon Associates is an amazing thing, one of the best business ideas that Amazon ever implemented. It’s like an Abrams M1 tank – even a drunk moron can drive it around and do a lot of very impressive damage, but it takes a highly trained soldier to really unleash it’s true destructive capabilities.
I am very disappointed in Amazon Associates products, especially omakase, and because of that I am building my own Amazon Associates ad server in my spare time. Lately I haven’t had much spare time, so the project is moving rather slowly. I’ll be pulling omakase ads off though, and meanwhile I’ll replace it with a holiday gift for my readers.
I will replace the ads on my website with promos for some blogs and websites of my readers (as well as some of my favorites). Do you you have a site you’d like to promote? Comment here or send me an email. Suggest as many as you want. If you have some “creative” – that’ll help. And if you won’t suggest anything (as it usually happens when I ask for suggestions) and make me feel very sad, instead of promoting your sites, I’ll do the same with all the splogs that sometimes spam me. At least they take the time to leave a comment.
My investments remind me of this Seinfeld’s monologue :
“I’m not an investor. People always tell me, you should have your money working for you. I’ve decided I’ll do the work. I’m gonna let the money relax. You know what I mean? ‘Cause you send your money out there – working for you – a lot of times, it gets fired. You go back there, “What happened? I had my money. It was here, it was working for me.” “Yeah, I remember your money. Showing up late. Taking time off. We had to let him go.” “
The first stock that I ever bought was of a now defunct company called Molecular Biosystems that traded under the ticker symbol MB. Their only product was a special contrast agent for CAT scans or something like that. I bought the stock because of the name. It seemed cool. All scientific and such. And just two letters. I think the return on investment was something like -50%. I don’t remember.
Since then I’ve read a bunch of investment books, and was very impressed with Warren Buffet’s investment strategies. I decided I’d buy only a few stocks of companies that I liked, knew and understood.
The list came down to 4 companies. Palm [PALM] (actually 3COM when I bought it and later, after I’ve got PALM shares after the split I bought Handspring [HAND]), Gemstar[GMSTE] (I bought TV Guide shares, they were later converted to GMST shares), Krispy Kreme Donuts [KKD] and Berkshire Hathaway [BRKB].
Out of the four, I invested in 2. Palm and Gemstar. And here’s how I did:
Interestingly enough, at some point, when I was down about 15% (after being up 70%) I considered selling all the stocks and buying a La Marzocco instead. I didn’t.