A Meaningful Life

One of our Saasu customers optimises Web 2.0 in it’s original meaning. He uses 88miles.net for tracking time on projects against customers and uses Saasu.com for his accounting ledger, tax and so on. 88miles and Saasu’s API’s have a little chat during the day keeping all his stuff in line, like a couple of fax machines having a banter. bidi bidi bidi beeeeep bidi bidi bidi —– Don’t you love that, it’s not humans having to do it!

What the customer actually has is a virtual application. Two distinct applications developing and enhancing separately but operating as one. Very cool.

Portfolio managers use tools to optimise placement of investments. It’s all about rigour and hard maths. So to should we optimise how we spend our time. It’s all too easy to concentrate on money, it’s in your face day in and day out, but people forget to act on the well known truth that time is money. You cannot separate the two.

Myles Eftos of Madpilot Productions built the 88miles.net connector, so a hat tip to the mad pilot. Check out his blog he shoots from the hip which is just how I like it.

If I offered you a trip to Hawaii in a years time for filling in a two page form would you take it? There’s no privacy reveal, no obligation, no catches. Nearly everyone except those who think they are worth more than $1,000 an hour would.

Changing credit card providers can acheive just that. For many years I have run a Visa card with no frequent flyers on it. I couldn’t be bothered changing. Really the cost was filling in one of those forms, I seem to get nearly every single day in the mail from all sorts of reputable banks.

Seems like a no-brainer, but I still haven’t done it.

I love a lot of what 37 signals are about but I must say I don’t agree with David’s view that monetize is word we don’t need. Monetize doesn’t mean making money. Monetization is a conversion process, which is why I like the word (even though I use it sparingly because it is so misunderstood). For example you can monetize your house by selling it. That doesn’t make any money it just changes the form of the asset.

If people paid more attention to the process of monetization they can indirectly make some money. How you ask? Assets all fluctuate in value. Employing monetization when you want to convert unrealised asset value into realised asset value is key. Lack of asset liquidity is a problem that monetization techniques address, but strictly speaking it doesn’t make you any money, just realises the gains or losses. What you build, sell and do makes the money in reality. Landscape your house to make some money, sell it to monetise it.

For people without investment banking backgrounds this could make or save you a fortune. Worst case it might take the blinkers of your eyes around the topic of free or cheap options that are all around us.

There’s a simple test to see if something is like a option. Have you been given the right to do something for free or cheaply for a period of time. If so, then it’s an option and has financial value.

Here’s a few examples:

Quotation Option

Getting a quote is a chance to better a price. So each quote has value while a vendor has agreed (or implied to agree) to beat any other price.

Reverse Auction Option

I once bought a car from my desk. I called six dealers and told them I will buy the car specified in the fax I was sending them at 4:00pm that afternoon. I told them they were in competition and that my purchase was only about price. I repeated this to make it clear. I said that you only get one quote, no second chance. Five dealers faxed me their prices, one refused and one was extremely aggressive on pricing whom I ended up buying from. I removed variance in the product with my faxed instructions and specs. e.g. removing service location as a consideration. I saved 18% off the list price.

Pricing Mechanism Option

Continuing from above, I was told that this dealer network closed their sales books mid month (another option they had with their manufacturers where if they exceeded ‘x’ sales they had a jump in revenue payment to the dealer group). So the pricing mechanism was multifaceted. What they sold at wasn’t a clean equation. Towards this special date of theirs it wasn’t so much about profit but about vehicles sold. Vendors give you the option to chose when you buy from them. Again, that’s worth money.

Deposits On Goods (in some cases)

Sometimes you can legally walk away from a deposit, sometimes you can’t so make sure you have the vendor spell it out to you. I’d never do it personally for ethical reasons unless I’d checked they were ok with it in advance. The option here is to find something the same but far cheaper. This sounds lame but there are actually millions of dollars made and lost on this one alone by the big end of town.

The housing market is a classic example of it. Back in the 80’s and 90’s the deposit on a property bought of the plan was a cheap upside option on house prices. Developers didn’t always document the transaction as a full sale with delayed payments but instead they just asked for a forfeitable deposit of say 5% that you could walk away from. This doesn’t happen as much these days, but there are still anomalies even though more complex. The developers didn’t realise they were ‘writing’ call options on property prices extremely cheaply. Property markets were moving 10-30% per annum.

Some smart cookies ran around buying 5% options and just sat on them waiting for prices to go up. The downside was 5% and the upside was, well lets call it, the Moet outcome. The kicker was not having to fund the full price of property if they invested the traditional way. Some made fortunes. I was only a kid then

Decisions With Financial Impact

There are dozens of these, too many trade secrets I’m sorry, become a Saasu.com customer and I’ll reveal some One example is the right of Company Management to decide if a company wants to buy back its own shares from the market. There are multifaceted advantages in this ‘decision option’. Accordingly it has value when the circumstances are right.

The Time Extension

When someone is willing to sell you something and leaves a firm price with you for a day then they are giving you the right to accept or decline for 24hrs say. This is an option with very little time value. Accordingly it isn’t worth much. However if you ask for (or are offered) a time extension you are effectively being given money. That time has value. If the market price changes but you can still transact at the offered price per your agreement then you stand to save money or avoid losing money.

Either way you win in this situation so the option had value. I could go on for a while but I’ll save some for another day. If you have any share them and I’ll post and credit them to you next time around.

There are a lot of Squirrels out there. Squirrels run around collecting Acorns and storing them for winter. Just like people who try and save every last cent on a transaction. They also save for the rainy year in 2047. Squirrels won’t buy new socks until there’s at least two holes in the old pair. Today I caught myself being a Squirrel, which isn’t normal because I don’t like Squirrel mentality. I was choosing between two laptops for Saasu.com, trying to discern which was better value for my dollar. In the end I bought the more expensive one that had slightly more features and I based my final decision on time saved to me by those features (more memory and grunt, faster computer, less waiting). This took half an hour but could have taken two minutes. With hindsight, I should have immediately checked my feature needs and said I’ll buy this one (even if it was $100 more). The alternate cost was half an hour of time spent on the business. I think people who operate like the Acorn tree are generally much more successful at what they are doing. They tend to build a structure and a system for achieving their objective. In our example this is the “Tree”. The result is that it generates a lot of payoff in a multiplying format, the “Acorns”. While I was squirreling for value I can absolutely guarantee you one thing. There was a big boy of an Acorn tree out there producing hundreds of thousands of Acorns and feeding bucket loads of Squirrels. So the moral of this story is to be the Acorn tree not the Squirrel in life if you want to be successful at achieving your objectives.

Generally when you are in business you think about trading in terms of money. The reality however is that it’s time your are trading. You buy time, you sell time. You buy and sell it to do things or build things. For example you need to sell a car. It can be quantified in time just as much as it can be in dollars. The salesman spends 8 hours on average selling a car at $20 per hour pay say. You, being the Dealer Principal could have sold the car yourself but then you would have to hire someone into your role at $40 per hour. So you bought time at $20 rather than $40. So time in this case is the primary trading commodity and money is merely the quantitative realisation of time well traded. Trade in time and money will follow.

There is only three rules in managing your business finances: 1. Don’t get behind 2. Keep improving your system 3. Use the information it gives you !!!