Psychology Archives - Page 6 of 10

The Employee, Self-Employed, Business Owner and Investor

Who do you want to be? An employee, self-employed, a business owner or an investor?

Each is a significantly different way of viewing oneself. It is possible to be in more than one role too. Robert Kiyosaki describes these roles in Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom as:

Employee

A person who earns money by holding a job and working for someone else or a company.

The majority of a population has an employee mindset. They wake up, work hard, get a paycheck, and go to sleep. There’s nothing wrong with that; it’s a very honorable lifestyle. Unfortunately, it often leaves them financially insecure or, if they’re smart about saving up and investing appropriately, financially secure. While this role used to carry little risk, nowadays, layoffs have removed the guarantees this role used to afford.

Self-Employed

A person who earns money working for him/herself.

Some people decide to strike out on their own, to start their own business. They become self-employed entrepreneurs. Maybe they work alone as a freelance designer, business consultant, or financial accountant. Maybe they hire some employees and operate a cafe, a furniture store, or an ecommerce business. Whatever the case, they are now their own boss. Their lifestyle is characterized by lots of hard work and specialization in their chosen field. For their effort, the financial benefits can be greater than that of an employee; financial comfort is a more realistic goal. The risks are higher too. Self-employed entrepreneurs often leverage most or all of their personal savings to launch their business. If it fails, they risk bankruptcy.

Business Owner

A person who owns a business that generates money.

Few others decide to become business owners. This is more than just being a self-employed entrepreneur. The business owner entrepreneur has less control than the self-employed entrepreneur, because it involves sharing & delegating responsibilities & ownership with others. In some cases, business owners don’t even work on a day-to-day basis and have a manager run the operation. Although they don’t have to work very hard anymore, business owners need to be intelligent about how they structure their business. Fortunately, this extra free time allows them to strengthen their business acumen, which is where they apply their knowledge, as opposed to specializing in their chosen field. The financial rewards are high – financial comfort and financial wealth are in their grasp. The risks can be high too, though intelligent business owners learn how to shelter themselves appropriately. It is not easy to become a business owner. You have to work smart, not hard, to get here.

Investor

A person who earns money from their various investments – in other words, money that generates more money.

Even fewer others become full-time investors, such as angel investors and venture capitalists. The investor role, however, isn’t just about doing it full-time. Anyone can be an investor. It is not just about buying stocks. If you have money in a mutual fund or 401k plan, you are already an investor. This role is characterized by being able to assess a company’s or industry’s projected perceived performance. The financial rewards vary greatly; very few can make a living just being an investor. Those who do oftentimes got here because they were self-employed, owned a business, or were an employee of a young company that offered significant equity and later became wildly successful (which is extremely rare).

Personally, I’m shooting for the business owner role. I’m currently in the self-employed role in order to get my business off the ground. But that’s a temporary place to be, not a mindset I have.

Kiyosaki argues that being a business owner and investor is the way to financial security, comfort, and wealth. I totally agree.

It is not about working hard, it is about working smart. If you can structure your business intelligently such that it can operate without needing you everyday (by hiring and delegating appropriately), you will have extra time to think strategically and carry your business further. Or even have extra time for your family.

And that’s who I want to be. What about you?

How to Follow Your Dreams

Want to hear an amazing story?

I had coffee with a good buddy from Yahoo! (YHOO) this weekend, Jimmy Byrum. I tell you his name because he’s one of those guys who you just know will be famous one day. Then I can look back and say, “See, I called it!”

Jimmy was a rock star developer at Yahoo!. He wrote most of the HTML, CSS, and JavaScript code for a previous version of Yahoo!’s home page. The code was so well-written and optimized that an outside reviewer claimed it must have been written by a machine. (I wish I could find the article that stated that… anyone know the URL?)

A quick aside – code should never be prematurely optimized. It should be optimized for developers first (using good programming practices), then users second (using automated tools). Jimmy just happened to be one of those rare people who could optimize his own code better than the automated tools at the time.

But that isn’t the amazing story. The amazing story is that he dropped all that – a rising career, highly-desired technical skills, and a growing reputation – to travel throughout South America and teach English. He could easily be a recognized technical leader right now. Or working at a fantastic start-up. Or starting his own company. Instead, he chose to drop all that.

Why?

Because he chose to follow his dreams.

How many of us can say we’re ready to drop everything and follow our dreams? Yes, it is hard to turn your back on everything you’ve worked for. It’s scary as hell. But what if all that stuff wasn’t really what you wanted? What if your true dreams lie elsewhere? On your deathbed, are you going to look back at your life and say, “Boy, I’m glad I worked so many hours at the office and didn’t start a band like I always wanted”? Probably not. So what’s holding you back?

Why People Don’t Follow Their Dreams

There are three major reasons why people don’t follow their dreams:

Too scared to drop everything for their dreams
Don’t have the ability to follow their dreams (e.g. family obligations, health issues, physical limitations, etc)
Don’t know how to follow their dreams

If you’re too scared to follow your dreams, then you have my sincerest condolences. You’ll probably be trapped in the rat race and either learn to accept your chosen lot in life, or end up a bitter old person.

If you don’t have the ability to follow your dreams, you also have my sincerest condolences. Sometimes there are situations beyond our control that limit our abilities. However, I’d like to introduce you to six-year-old Cody McCasland and former race car driver Alex Zanardi – both of whom are legless, yet still ran 26-mile marathons. They are proof that when you put your mind to something, anything can happen.

(By the way, if money is your limitation, that’s a lame excuse. Jimmy’s example below will prove that money isn’t a true limitation.)

If you don’t know how to drop everything and follow your dreams, let me tell you how:

Determine your end goal
Build a plan
Take each step one at a time
Stay focused
Continuously revise your plan as situations change
Reach your goal

Jimmy’s Example: Traveling the World

Sounds easy enough, right? Maybe too easy. Let me use Jimmy as an example.

Determine your end goal
Jimmy knew he wanted to travel the world and have new experiences.
Build a plan
Determining his end goal was easy enough. Building a realistic plan was much tougher. He didn’t sit down and type out a formal plan of any kind though; he followed his heart and his plan revealed itself to him. But if writing out a formal plan helps you, then you should definitely do it.

Traveling the world requires time, money, and guts. So years in advance, Jimmy began saving up. He lived frugally and taught himself how to maintain a strict budget. This required a lot of financial discipline, but he stuck to it.

To build up his comfort level, he took baby steps. He read vigorously and moved from the East Coast to the West Coast. This may not sound like much, but some people never leave their home towns. Moving across the country is a huge step.

Living on a budget and moving across the country gave him money and guts. And if he did this fast enough, he’d have time too, while he’s still young and healthy.
Take each step one at a time
Then he took his next step – he transferred to the London office. This still kept him within familiar boundaries: a steady paycheck, doing a job he knew, and an English speaking environment.

From there, he took his next series of steps and did what any North American in London would do – weekend excursions all over Europe, baby! Traveling around Europe and being in non-English speaking cultures further emboldened him to continue forward.
Stay focused
Many times, he was tempted with raises and offers at other great companies. But he stayed focused. He politely turned down each offer and continued saving his money.
Continuously revise your plan as situations change
Every once in a while, he adjusted his plans. Instead of traveling the world like Caine, he thought about other, more realistic alternatives. Friends taught him Spanish. Then somewhere along the way, he heard about a program teaching English in South America. That became his next step.

This way, he could maintain his financial capital, have room and board, learn the Spanish language and culture, and most importantly, contribute meaningfully to the world. And that’s just what he did.
Reach your goal
What’s he going to do next? You’ll just have to ask him. But you can bet it will be another step closer to his goal!

My Example: Becoming an Entrepreneur

You may be wondering what’s this got to do with business and entrepreneurship? Well, it has everything to do with business and entrepreneurship. Do you dream of being an entrepreneur one day? Of owning your own company? Of being your own boss? I did. So let me close with my example of how I’m following my dreams.

Determine your end goal
One of my end goals is to start my own business. Those who know me know I have many goals in life. This is just one of them.
Build a plan
I knew that being an entrepreneur involved a lot of risk and a wide range of knowledge. My specialty is the internet, so I knew I needed experience in technology, UI design, marketing, sales, business fundamentals, finance, project management, people management, leadership, etc.

My nature is to be conservative and risk-adverse, so I structured my career path to lead me to this goal. I applaud those who jump right into their own companies – I totally admire you guys. I don’t think there’s anything wrong with my approach; it’s just where my comfort level lies.
Take each step one at a time
My resume kind of reads like my plan. One of my first jobs was doing web design. Then web development. Then a technical management. Then a product management. Each pushed me outside my comfort zone and into new skills and experiences.
Stay focused
It would have been easy to stay in a particular role and become specialized. Changing roles didn’t always give me the highest salary. In fact, some role switches bumped me down in salary. But I did it anyways because it put me closer to my end goal.
Continuously revise your plan as situations change
Plans didn’t always go as smoothly as I liked. Originally, I wanted to start a company early this millennium, like every other dot-com hopeful. Then the dot-com bombed and I changed plans. I decided to grow my skills in a stable corporate environment that provided a steady paycheck.

This gave me time to build up my capital, as well as some other side benefits – growing my network, meeting some amazing people, and giving me invaluable knowledge and experience.
Reach your goal
Ultimately, I knew that starting my own company couldn’t happen while I had a steady paycheck. The hunger & fear of working without a safety net is a strong teacher. So I finally took the biggest step. I quit my job and became an entrepreneur. After a few false starts, I now have a profitable business (to be announced shortly, once we finish our website).

Dropping everything and following your dreams is scary. But it is possible. Very possible. Just look at Jimmy. He’s now gallivanting around the world with a big smile on his face. And look at me, owning a business and learning a great deal about entrepreneurship. What are you doing?

Photo by: James Byrum

The First 1.5 Years as an Entrepreneur

Hello again. It’s been a while since my last post, hasn’t it? The holidays have kept me busy, and now it’s 2009. Damn, time sure flies when you’re having fun.

It’s been two years since I started this blog and a year and a half since I struck out on my own. So I figured it was time to take stock of my first 1.5 years as an entrepreneur (like I did for my first four months). And I can sum it up in three bullet points:

It’s been fun
It’s been crazy
It’s been a tremendous learning opportunity

It’s Been Fun

Whoa boy it’s been fun! Setting up my own schedule, deciding what I want to do today, and where I want to do it. The sense of freedom is tremendous. Finally, I get to hang out in the city during the weekday – and do free stuff in San Francisco to boot!

With my office being any cafe with free wifi, this freedom and flexibility means I can work almost anywhere. San Francisco, Los Angeles, New York, Hong Kong, London, Florence, you get the point. Yup, life is good.

One odd thing to note: it’s funny to go shopping during the weekday. Sometimes I’m the only young guy walking around in the mall. Surrounding me are scores of housewives, work-at-home moms, and retired persons. And sometimes their babies too.

It’s Been Crazy

It isn’t all roses and peaches though. Without the cushion of a regular paycheck, monthly bills can become a source of stress. In between brainstorming business ideas, working in cafes, blogging, reading, writing, working on personal projects, consulting, and hanging out with friends, I’ve also been building a few businesses – one of which I’ll announce as soon as our website is up!

Yes, that’s a long list. That’s part of why it’s been so crazy & hectic.

The other part is the fact that most of those activities aren’t revenue-generating ones. Each month, I watched my bank account whittle away. Fortunately, a few consulting gigs helped pay some bills. But the fear of failure always loomed.

This fear both inspired me and wore me down. Ultimately, it inspired me. After all, I quit a six-year career at Yahoo! (YHOO) not because I hated the company, but because I didn’t want that the cushion of a regular paycheck anymore. I knew that I would never take a true entrepreneurial risk with that safety net below me.

So it’s been crazy. Despite my new-found freedom, I feel like I’m busier than ever. Fortunately, it’s a good kind of crazy – it’s exactly the kind of crazy I want.

It’s Been a Tremendous Learning Opportunity

I could have never learned what I’ve learned had I stayed at a large corporation. That doesn’t mean you can’t learn anything at a large corporation; you just learn different things at a large corporation than you would if you were an entrepreneur.

As an entrepreneur, you have to think about every aspect of a business. You’re not just writing the code, you’re writing the functional specs, setting up the business entity, outsourcing tasks that can and should be outsourced, interviewing CPAs, interviewing lawyers, interviewing insurance carriers, doing the marketing and sales, doing the quality assurance testing, designing the logo, setting up a bank account, keeping track of expenses & receipts, dealing with taxes… the list goes on and on.

Meanwhile, at a large corporation, you keep on doing the same job you were hired to do. That alone isn’t a bad thing. If you are good at a specific role, and want to continue doing it, there’s no reason you shouldn’t specialize. Even as an entrepreneur, doing everything yourself is impossible. You’ll need partners, employees, vendors, contractors, and others help you out.

Someone once told me about the T-Person concept. This concept explains that some people have a wide range of skills at a novice or intermediate level (represented by the top horizontal bar of the T), then specialize in one particular skill at a deep or expert level (represented by the middle vertical bar of the T). I like this concept. I think it explains an entrepreneur very well.

It is possible to be a T-Person at a large corporation, of course. I knew many who were at Yahoo!. However, the horizontal bar is wider as an entrepreneur. Arguably, the vertical bar could be deeper too, since you’re forced to delve further into the discipline to maintain your viability as an independent entity and aren’t encumbered by corporate politics.

All of this has been a tremendous learning opportunity. So much so that, despite the uncertain economy, it is hard for me to imagine going back to a large corporation again. That’s not to say it’s impossible, but I sure can’t see it in the near future. Being an entrepreneur is just too fun, crazy, and educational!

Silicon Valley vs Los Angeles Tech Entrepreneurs

I’m moving to Southern California in a few months. Knowing this, a friend pointed me to Jason Nazar’s latest blog entry, “A Tale of Two Tech Cities – Silicon Valley vs. Los Angeles“.

Nazar, the founder of Santa Monica start-up Docstoc.com, compares the web & technology entrepreneurs he’s met in Silicon Valley with those he’s met in Los Angeles. While they are only his opinions and generalizations (a disclaimer he clearly notes), they are interesting opinions and generalizations. Perhaps fodder to what I should expect when I make the move?

Silicon Vally Tech Founders	Los Angeles Tech Founders
“Bay area founders are amazing technologists. They build obsessively user focused products, do a fantastic job at virally driving a ton of traffic, but usually have their head up their ass when it comes to making money.” “At parties in the Bay people talk about Twitter, Friend Feed, what’s being written on Valleywag and Techcrunch, and kickball games between VC’s and entrepreneurs.” “Folks in the Bay are generally way more obsessive about their products, work harder/longer, can be a bit snobby about their accomplishments and tend to be clique-ish.”	“Los Angles founders are hustlers and deal makers. They are more focused on the bottom line and care more about their P&L than their products, which tend to be messy.” “At parties in Los Angeles people talk about a media deal they’re “closing”, what TV star is at the party, and some “gray hat” spam-like technique that made them an extra 100K last month.” “Folks in Los Angeles are shrewder business people, have better interpersonal skills, but are more full of shit and two faced, and struggle to build products that get virally adopted.”

Silicon Vally Tech Founders

Los Angeles Tech Founders

“Bay area founders are amazing technologists. They build obsessively user focused products, do a fantastic job at virally driving a ton of traffic, but usually have their head up their ass when it comes to making money.”

“At parties in the Bay people talk about Twitter, Friend Feed, what’s being written on Valleywag and Techcrunch, and kickball games between VC’s and entrepreneurs.”

“Folks in the Bay are generally way more obsessive about their products, work harder/longer, can be a bit snobby about their accomplishments and tend to be clique-ish.”

“Los Angles founders are hustlers and deal makers. They are more focused on the bottom line and care more about their P&L than their products, which tend to be messy.”

“At parties in Los Angeles people talk about a media deal they’re “closing”, what TV star is at the party, and some “gray hat” spam-like technique that made them an extra 100K last month.”

“Folks in Los Angeles are shrewder business people, have better interpersonal skills, but are more full of shit and two faced, and struggle to build products that get virally adopted.”

Utter bullshit? Hint of truth? What do you think?

Photo by: Unobtanium

How To Save & Make Money in a Recession

Much of what I hear about the economy today is doom and gloom. But personally, I’m hopeful. The market is cyclical. It’s always been this way, for as long as it’s been around. That means it’ll rebound someday.

In the meantime, there are ways to take advantage of this falling economy. There are lots of ways to save money – and even make money!

Here are 10 tips on how to do that:

Short Sell the Market
Short selling is a method of making money when something loses value. For instance, you could “short” a stock and make money when its stock price falls. And as you can see, lots of stock prices are falling right now. However, the SEC can sometimes place temporary restrictions against short selling, which it did earlier this season.
Buy Low
Prices fall in recessions. That means you can make some great buys at great prices! Assuming you’ve got the money, of course. But if you do, this is a fantastic time to pick up some choice stocks. Then, when the market rebounds, you can sell those stocks for a tidy profit. Buy low, sell high!
Negotiate Your Credit Card Rates
Lots of credit card companies will give you a lower interest rate if you just ask. It helps if you have a good credit history and have been a long-time customer though. But even saving a few ounces of a percentage point can add up in the long run, so it’s worth asking. Then, if you must use a credit card, use those with the lowest interest rates first.
Trim the Fat
Review your bills and pay attention to where you could tighten up your belt. You might be paying a recurring fee for something you don’t really use. Maybe your barely-used gym membership could be ditched in favor of joining a weekly running group. Or maybe all those extra cable channels aren’t really necessary.
Buy Used Items
If you can make do with a used item instead of a brand-spanking-new one, do it. Lots of people are selling their stuff now – especially on eBay (EBAY) and Craigslist. That means lots of potentially great bargains. A recession is a great time for bargain hunting and finding cheap, high-quality stuff.
Sell Your Stuff
And speaking of used items, if you have a bunch of stuff lying around that you’ll never use, sell it. If there’s absolutely no more use for it, why not squeeze a buck or three out of it? The downside is that you won’t be able to fetch as great a price if the economy was better. But if you need cash right now, this can help. You’ll be able to clean up some of that clutter in your room too.
Buy Bulk
You can often get more value for your dollar if you buy from wholesalers and discount warehouses like Costco (COST). If you’re a single person living alone, this might not be worth it because of the annual fees, but if you’re in a family or multi-person household, the savings can add up over time.
Do It Yourself
There are lots of things you can do yourself. Wash your own car, make your own lunch, fix your own plumbing, etc. Search online or check out your library for a do-it-yourself guide for any task. You’ll gain the added benefit of learning new skills too. The downside is that this can take up a lot of time, which may not be feasible for everyone.
Do Free Activities
There are lots of ways to spend your time without spending a dime. I’ve got a long list of free stuff to do in San Francisco. I’m sure there are similar lists for your city too. If not, some common options are parks, museums, and art galleries. And if you love to read, check out your local library too.
Prioritize, Prioritize, Prioritize
Finally, be strict about your true priorities. What is absolutely critical to you? Every decision you make has trade-offs. If it is absolutely necessary that you splurge on that new sofa, then you’ll have to hold back on dining out every Friday night. Or, if money is that tight and simply putting food on the table is a priority, then cut back on all family vacations.

I hope these tips help. Do you have any more money-saving or money-making tips?

The Advertiser/Customer Break Up

Now for some Friday fun. What happens when advertisers and customers start getting intimate? Miscommunication. Trouble. And eventually, a break up.

Here’s an oldie, but a goodie:

This video was created by Geert Desager, a Trade Marketing Manager South East Asia for Microsoft (wow, that title is a mouthful), and the Belgium-based ad agency Openhere. They also created a companion blog called Bring the love back. This was all part of a marketing campaign from Microsoft Digital Advertising Solutions to promote their search engine advertising products.

It has since been followed up by a second movie, which stars the Advertiser, CEO, and Creative Director (with the last “R” turned backwards for extra irreverence), and a companion blog called Get Inspired Here. Unfortunately, I didn’t find the second movie as, uh, inspiring. The first one was hilarious. A great play on a couple’s break up. The second one, eh. What was it a play on? A corporate meeting with executives and marketing personnel? That’s just not as funny.

I think they’re working on a third one right now. Hopefully it’ll be better. Good luck guys!

The First Rule of Marketing

The first rule of marketing: you do not talk about marketing… Oh wait, wrong club.

The first rule of marketing: you are not your customer.

It sounds obvious when you hear it. But violating it is as easy as jaywalking down a Manhattan street. You may do it sometimes without even thinking about it.

This past week, I’ve heard two colleagues argue endlessly about one of their product offerings – a series of content articles. They disagreed with the topics in a third colleague’s articles. “Low brow”, “poorly targeted”, and “aimed at the wrong people” were criticisms they lobbied.

That’s fine and all. But the third colleague’s articles were the most popular offering they had. Their customers clearly loved these topics.

“These are the wrong customers,” continued the first two. “The ones we want don’t want content like this.”

Cursory market research into the current customers indicated that… well… these are the customers they’re targeting. They fall squarely within their target demographic.

“Well, we don’t want those particular customers. They are the wrong people for us!”

Huh. Since when did a business not want it’s current customers? It’s hard enough to get customers, but once you have some, who in their right mind wouldn’t want them anymore?

“Well, okay, then our customers just don’t know what they want. They don’t want these topics. They don’t need these articles.”

Ah. Since when do marketers know what their customers want better than the customers do? Remember the first rule of marketing: you are not your customer. You don’t know exactly what they want.

How is such an impasse solved? By market research, talking to your customers, and getting to know them well. Marketing shouldn’t be driven by your own opinions. It should be driven by objective research.

Use surveys, interviews, comment forms, something – anything – to get actual customer feedback. You may be surprised by what you hear. And you may learn something about your true customers too.

Web Surfers Don’t Read Very Much

You know this already. Most people don’t read website text very closely. According to usability guru Jakob Nielsen, they just scan the text.

Well, Nielsen’s team just provided further proof of this with an eyetracking study. They’ve also shown that web surfers only read about 20% of the text.

I’d say more, but you probably won’t read it.