Tag Archives: theory

Can we all be rich?

I want you to be rich.

That’s why I’m writing this blog; in hopes that I can help you stop trying to make money from a dead-end soul-killing job, and figure out how to instead make money in a way that puts your income, schedule, and activities under your control. From there, you can use that capability to set your own goals, and change the world.

“But Raina”, I hear you cry, “We can’t all be rich!”

Ahh… but I think we can. And here’s why.

We are all rich

As the global standard of living creeps up, it’s easy to forget that it is creeping up. But if you go back far enough, it becomes obvious that it has. Let’s go back to 17th century Germany….

  • In most households, somewhere between 70% and 100% of the family income goes towards food
  • Most houses have one room. Maybe 2.
  • Dental care, antibiotics, and the germ theory of disease are all unknown (translation: doctors don’t wash their hands before operating on you.)
  • Water must be fetched from the well.

All of the following were luxuries available only to the rich:

  • Individual beds for family members and multi-room houses
  • A diet that varies from day to day
  • Glass in your windows
  • Water that doesn’t kill you
  • Chocolate
  • Multiple sets of clothing
  • Travel beyond, say, 10 miles
  • A means of transportation besides walking

And these weren’t available to anyone, no matter how rich:

  • Water at the twist of a handle
  • Indoor toilets
  • Double-paned storm windows
  • Insulated walls
  • Air conditioning / Central heating
  • Advil
  • Penicillin
  • Sudafed
  • Transportation that goes faster than 25 miles/hour

So it’s pretty obvious that in actuality, we are all rich. Every single person in the US and Europe, and many people in South America, Africa, and Asia.

But that doesn’t count… I mean someone has to be poor relative to others

Sure, but let’s take a step back here. Why would you even want to be rich?

Some people are competitive, and care about being richest. Fine; feel free — doesn’t bother me. But for most of us, being rich is not a goal in and of itself. We want to be rich in order to have the time and money to pursue what we really care about… whether that’s time with our family, deeper spiritual development, or saving the [insert disadvantaged lifeform here]s.

In fact, we’ve seen a transition over the last century towards a more equitable and level distribution of wealth: in terms of buying power, there’s no one as rich as Rockefeller and Carnegie were at the end of the 19th century, but there are a lot fewer people who are as poor as people were at the end of the 19th century. Some people think we’ve seen the end of the super-rich, and that the wealth distribution of the future will be between those with enough, and those with more than enough.

No, we can’t all be the richest person in the world. But we can all be rich enough.

But there’s just not that much money floating around

Not necessarily true, but let’s ignore that for the moment.

Maybe you won’t ever have a trillion dollars in your bank account. But again, take a step back and look at the reasons you want to be rich. I suspect you’ll find that Robert Kiyosaki’s approach is a better definition for you than any arbitrary net-worth figure:

“Rich” is not measured in money. It’s measured in time. How long could you go without working? That’s how rich you are

By this definition Thoreau, with his $0/year income, was rich, because he didn’t spend any time earning income. He could do whatever he wanted with his day, because he had no outside obligations.

Note that there’s no guarantee you’ll get to laze about all day: Thoreau actually had time constraints in growing the vegetables on which he lived and maintaining his house, and so on. But he was happy with the work he had to do, and could schedule his time however he liked, and so he was rich.

That’s what I want for you: to spend the day doing what you’d like; either because doing what you like makes you money, or because your earning money is independent of what you do all day. (Or some combination thereof). If you can earn your living by doing what you want, then I’m calling it “rich.”

We can all be rich

So yes, we can all be rich. There’s nothing unsustainable about it.

Resources for Further Reading
Is it evil to make money?
Eat Pancakes and Change the World
Forget the Lexus; Buy an Olive Tree
Homework: What do you care about?

Book Review: Free – The Future of a Radical New Price

Free: The Future of a Radical New Price is the most recent book from Chris Anderson, the author of The Long Tail. It explores a relatively modern phenomenon: free products, services, and content. As he describes it:

I’m typing these words on a $250 “netbook” computer, which is the fastest-growing new category of laptop. The operating system happens to be a version of free Linux, although it doesn’t matter since I don’t run any programs but the free Firefox Web Browser. I’m not using Microsoft Word, but rather free Google Docs, which has the advantage of making my drafts available to me wherever I am, and I don’t have to worry about backing them up since Google takes care of that for me. Everything else I do on this computer is free, from my email to my Twitter feeds. Even the wireless access is free, thanks to the coffee shop I’m sitting in.

And yet Google is one of the most profitable companies in America, the “Linux ecosystem” is a $30 billion industry, and the coffee shop seems to be selling $3 lattes as fast as they can make them.

Therein lies the paradox of Free: People are making lots of money charging nothing. Not nothing for everything, but nothing for enough that we have essentially created an economy as big as a good-sized country around the price of $0.00. How did this happen and where is it going?

That’s the exploration he makes in Free. How do you make money without charging? And what are the consequences for us as consumers, us as business owners, and us as citizens?

Why you shouldn’t read Free

Starting back with my very first book review (Rich Dad, Poor Dad), I always start my reviews with the negative aspects of the book. And, like Rich Dad, Poor Dad, Free has had its share of angry detractors. I summarize here from Malcom Gladwell’s review of the book.

    1) Information doesn’t want anything
    Many a young hothead has justified piracy, wikileaks, and violations of non-disclosure agreements with the rather vacuous “Information wants to be free.” Their opponents point out that information doesn’t want anything. But Free puts the quote in context. As originally stated by Stewart Brand:

    On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other

    Free is a book about those two dynamics: should information be priced according to the cost of reproducing it, or according to its value? Which one is better for your business? If free is better for you, how can you leverage it? If charging is better for you, what are your options?

    2) Free is just another price
    Technically speaking, yes. Free is a price of $0.00. But people respond differently to $0.00 than they do to $0.01.

    Free has a discussion of the reasons for this phenomenon, and situations that illustrate it, but suffice to say that we don’t analyze our options as carefully when there’s no money involved. Which means you can spread your message farther and faster with Free than you can with Very Low Cost. And that makes it worth analyzing.

    3) Free often doesn’t work
    YouTube is losing money for Google (as Gladwell points out, at a rate that would qualify it for a bailout, were it a bank). Lots of artists and authors are giving stuff away and not becoming famous. Therefore free doesn’t work.

    I don’t expect that there’s anyone out there surprised that giving stuff away doesn’t always make you money. And no one ever claimed that giving stuff away would work every time, for every person.

    On the other hand, I expect there are some people who are surprised that anyone has made any money giving stuff away. It’s an interesting phenomenon, and it’s worth learning more about when and how and why it works.

Anderson is a bit of an academic. He’s certainly a geek. And his writing tends towards the analytical and theoretical. He’s looking for first causes and underlying reasons, and that may not be your cup of tea. So you may prefer to absorb this information through the (free) audiobook, or through Wikipedia, or through the videos I hope to someday make.

That being said, you need to absorb this information somehow, if you intend to make money in the upcoming decades. As it says in rule 7 of Abundance Thinking:

Whether through cross-subsidies or software, somebody in your business is going to find a way to give away what you charge for. It may not be exactly the same thing, but the price discount of 100 percent may matter more. Your choice: Match that price and sell something else, or ensure that the differences in quality overcome the differences in price.

Note that you don’t have to give away your value (although you can), just that you have to be prepared to handle competitors who give away theirs. And to do that, you’ll want to know all of your options.

Why you should read Free

So let’s move on to why you should read Free, since — as I’m sure you’ve guessed — I believe you should.

Free Works
Not always. The book is full of examples of “failed” free.

But that’s rather the point. If it were as simple as

    give stuff away -> Profit!

then you wouldn’t need any help figuring out how to make use of this “radical new price”. It’s because there are failures that it’s worth discussing the method.

There are also examples of successful free — Google loses $700 million on YouTube, but still makes $23.6 BILLION overall. Xiang Xiang wouldn’t charge for her songs even if she could. Skype has become a word in the Oxford English Dictionary.

If someone can make free work, wouldn’t you like there to at least be a possibility that it’s you?

Free is more complex than you’d think
Leaving aside that the English word “free” covers two distinct concepts (freedom, liberty, aka “free like speech” vs no charge, gratis, aka “free like beer”), Anderson still identifies four different methods of generating “free” value.

    1) Direct Cross-Subsidies
    This is the kind of “free” that we’re most familiar with: the one where they offer you a free lunch if you buy a drink, or a free kids’ admission if you buy an adult’s ticket, or a free laptop if you sign up for 2 years of Verizon’s data package.

    Sometimes this is a fancy version of bait-and-switch (that laptop ended up costing you more than $1400, for which you could have gotten a really nice laptop). Sometimes it’s really a good deal for both the business and the consumer (like when the museum still makes money on the adult admission, but you still get a nice outing with all the kids at an affordable price). But when Heinlein fans say “TANSTAAFL” (There Ain’t No Such Thing As A Free Lunch”) this is the kind of hidden cost they’re usually thinking of.

    2) Three-Party Market
    We’re all familiar with this one too: it’s the “free” of television and radio. The stations produce content and broadcast it for free. Advertisers pay them for the right to interrupt the content and market to us. We pay advertisers by buying their products.

    TANSTAAFLists are still happy, since we’re paying more for our consumer goods than we would in a world without TV advertising.

    3) Freemium
    A contraction of “free” and “premium”, freemium products are anything that are free to basic users and have a premium paid version. Skype is freemium: Skype-to-Skype calls are free, and you pay for Skype-to-Phone. Almost all smartphone apps are freemium: there’s a basic free version, and a version that costs $1.99 with more features (or takes away the annoying ads). Most video games will let you play a couple of levels for free, and charge you for the whole game.

    4) Non-monetary Markets
    Wikipedia, a lot of the blogosphere, and MIT’s OpenCourseWare are all examples of this: the value is free because its creator values something (reputation as being an expert, self-expression, or the opportunity to show off) more than they value money. In many cases the artists could charge for what they’re producing, but they’ve made a conscious choice to take their payoff in wider distribution, reputation, or whatever.

Free is changing
Anderson notes that as he was researching and writing the books, he found two very different opinions of “free”. As a broad generalization, those over 30 were generally TANSTAAFLists — when someone starts talking about “free”, it’s time to make sure your wallet is protected. These are the people who grew up with the 20th Century Free, which was almost always of the direct-cross-subsidy type, and very often of the bait-and-switch type. Since the “free” samples cost the companies money, the companies had to more than make up that cost in the cross-subsidized products.

Again as a broad generalization, the under-30 crowd was so comfortable with the idea of free economy that they were surprised anyone would write a book on it. These are the people who grew up with the 21st Century Free, which includes some really high quality stuff at the cost of some ads, some reputation, or the understanding that you’ll subsidize it if you’re able. Because these “free” samples really are costing the company nothing (or next-to-nothing), they’re not as determined to make their money back from genuine customers, and so there’s more room for genuine win-win arrangements.

Summary

The fact that we now can distribute information and digital products for free has a profound effect on how we can make money. It means you can try business models for very low risk: $10 or less. It means you can reach millions of people for very little money. It means you can help hundreds of thousands of people, even if only a tiny percentage of them pay you back.

The same factors that Anderson analyzes in this book are the factors that make it possible for you to monetize your hobbies and passions. It’s worth knowing what they are.

Buy Free: The Future of a Radical New Price while simultaneously helping African children get an education. (Learn More).

Resources for Further Reading
Monetize Yourself Media: share your expertise for free
Distillery Tours and Alternate Monetization

Opportunity cost: more is not always better

Every Easter, my fiancĂ©’s family goes to Grand Junction, which is out on the western edge of Colorado and shares a climate zone with the deserts of New Mexico.

The city doesn’t have any snowplows because (contrary to your vision of Colorado) they get less than two feet of snow a year, and what they do get melts within a day or two because it’s a desert, and snowy days are followed by hot, dry days.

Except last year.

Last year, when we arrived on Good Friday, all the roads were icy, snow-packed or both. It seems they’d had a pretty heavy snowfall — 6+ inches — and then a string of cold days. And all that frozen water was sitting in the roads, because Grand Junction has no snowplows.

What does it cost?

You could tell that the citizens of Grand Junction had been grumbling rather loudly, because the entire back page of the newspaper was a letter from the City explaining that this kind of thing happens only 4 times a century, and that Grand Junction doesn’t spend taxpayer money on snowplows that would only be needed once every 25 years.

Is Denver’s snow removal better than Grand Junction’s? Kind of. Denver’s snow removal is faster. But Denver spends a lot of money buying snowplows, maintaining snowplows, hiring snowplow drivers, buying salt/gravel/magnesium chloride and distributing it, then cleaning the groundwater that has salt and mag chloride contamination.

Grand Junction doesn’t pay for any of that. They spend the money on textbooks and school lunches, public playgrounds, firefighters and policemen, or really nice wide sidewalks and a beautiful pedestrian mall. And for 9124 days out of 9131, it’s a great deal. On the other 7 days, getting around town is kind of a pain.

Both cities have snow removal that’s appropriate to their situation.

What’s appropriate to your situation?

It’s common for people to beat themselves up because they don’t keep “good records” — not like that gal down the hall who has every receipt, every transaction, every bill, all filed in alphabetical order.

But do you need all that? What does it cost you when you can’t find a receipt? And what is it costing her to alphabetize every single one?

Software companies fall into this trap all the time: they add on as many features as possible so that the back of the box has lots of bullet points on it.

How often have you been frustrated by software that seems to do everything except the one thing you want it to do? And how many sales is the company missing by not releasing the software early?

I don’t have a “good” laptop. I have a laptop with a tiny screen (13″ diagonal), a tiny keyboard, a tiny processor, a terrible sound card, and a hard drive that is considered small by the standards of the industry. But the tiny hardware fits in my tiny backpack, I don’t do anything that requires an awesome processor, and I’m using just over 1/3 of my hard drive. Oh, and it came at a 66% discount off a “good” laptop.

More != Better (More does not equal better)

Especially here in the US, we tend to associate bigger with better. More is better. Stronger, more powerful, more detailed, more thorough. But “bigger” and “more” come at a cost. And very often that cost is not worth it.

What can you do less?

If your house was a little messier, would you have time to create a blog?

If your DVD or shoe or gizmo collection was a little smaller, would you have the money to start a business?

If your product had fewer bullet points, could you ship it right now?

What can you do with less?

Define Monetize

Since the name of this site is “Monetize Yourself”, I suppose I should define monetize, in the interests of completeness.

    To Monetize (v): to make money from something

    “My website used to be an expense, but I monetized it and now it more than pays for itself.”

    “The number of Twitter users may be growing at 1385%, but if Twitter can’t monetize that, the company is still worth nothing.”

Monetization is the process of making money from something. It originally meant the process of making something into money, ie molding gold into gold coins, but it got co-opted, and is used today primarily in relation to websites and blogs: lots of people have websites and blogs, but if you want to be a professional blogger, you need to monetize your blog.

Let’s take a closer look at how you go about doing that…

Step 1: Identify an asset

Monetization is something that’s only done to an asset. Before you can monetize, you must have something — a skill, a location, an item, a gold mine, whatever — that’s valuable to other people.

Sometimes this is obvious: if you’ve got an apple orchard, then you can provide value to other people in the form of apples. Everyone needs to eat, so that value is fairly easy to spot.

Sometimes it’s less obvious: the Middle East, for a long time, was valuable not for anything it had (it was always fairly desert-y), but for where it was: at the intersection of Europe, Asia, and Africa. To get from one place to another, you had to pass through Persia.

Sometimes it’s really obscure: John Elway, here in Denver, realized that he had an obvious asset: the ability to play American Football really well. But he also realized that he had another, less obvious asset: the fact that he was well known for playing football really well, and that people (especially here in Denver, where we adore our football team) really liked that.

Step 2: Make money from it

Once you’ve identified what value your asset can provide, you have to figure out how to get money in exchange for that asset. Again, in many cases this is pretty clear: you have apples, you exchange them for money. No problem.

Persia was a little harder, and no one, simple solution suffices. Instead, Persia made use of its central location by

  • Selling services directly to tourists and merchants (guides, maps, advice, translation, etc)
  • Taxing trade that passed through the area (in times and locations where they were strong enough to enforce that)
  • Setting up marketplaces and trusting that the traffic from those markets would spill over into local businesses like restaurants and hotels
  • Serving as a home base for merchants who ran trade routes through it

John Elway monetized his football skill by playing football for the Denver Broncos. But, having taken business classes in college, and aware that the football gig is only good for a few years, he also monetized his football-related fame… by starting a series of car dealerships in the Denver area. They were as good as any other dealerships (sometimes better) and you got to drive a car with John Elway on the back, so they made quite a good profit for him.

You are an asset

So that’s how I define monetize yourself.

Notice that when I tell you to monetize yourself, I am claiming that you are an asset. And so I believe. Furthermore, I believe you are an asset that’s worth more than the brainless-labor hourly rate that you currently get paid.

I believe that there are better ways to monetize yourself than to sell the precious hours that make up your life to an uncaring boss. Your assets are worth more than that, and we need more from you than 45 years of labor.

How can you monetize yourself without getting a lame job?

Resources for Further Reading
HomeworK: Figuring out what to do
The slightly smaller big picture: how to monetize yourself
What do you want to be when you grow up? A stupid question
Finding Your Niche

What would you do if you could live forever?

Many people — almost everyone, actually — when they’re trying to encourage you to dream big, asks you what you would do if you had one day (one week, one month, one year) left to live. This is supposed to take away your fear of failure, because if you’re going to die tomorrow (next week, next month, next year) you failure theoretically doesn’t matter. And if that works for you, awesome. Keep using that, because their point (that failure actually doesn’t matter anyway) is spot-on.

But I’ve never found it particularly useful. If I knew I was going to die in 1 (unit of time), I would stop planning for the future — and that’s clearly not a good idea. I would spend my last (unit of time) doing crazy stuff I’ve always wanted to do — blowing all my money for a trip to Nepal to climb Mt. Everest, riding all of the scary roller coasters at the local amusement park, or whatever, depending on how much “all my money” constituted. And since I’m not (to the best of my knowledge) going to die in the next (unit of time), it’s a better idea to keep my savings built up.

And what I certainly would not do is to set off on a course to change the world by teaching people how to spend less time working and more time doing things they care about. That’s a mission I’m not sure I can accomplish in my lifetime. I know I couldn’t accomplish it in a day/week/month/year.

So here’s the question that inspires me:

What would you do if you knew you would have a century?

What if you knew that you wouldn’t die for another 100 years? Or another 200 years? What if you knew that you would live forever?

Well, sure, you’d stop worrying about your cholesterol and you’d gorge on sugar and caffeine, just like if you knew you were going to die soon. And you’d do all kinds of crazy dangerous stuff, just the same. But what about after that? I mean, how long can you really enjoy a life of chocolate cake and bungee jumping? I bet you couldn’t last a month, but let’s give you plenty of time and say it takes a year to get all that out of your system.

Now you’ve got 99 years. What would you do with them?

    What problem do you see in the world that you would work to eliminate, but know that it’s too big a problem for you to solve?

    What people would you like to reach out to and help up, if only you could find the time?

    Where do you see troubles that you could ease, but in such small amounts that it’s probably not even worth bothering?

The problem I see is that most of the world is focused on employment to the exclusion of everything else, but

    a) employment is becoming less and less viable
    b) most people hate employment

I want to let people know that they have other options, and give them the tools to explore those options, before they launch headlong into a job that they don’t want and that won’t fulfill their needs. And even though I probably don’t have another century in which to do it, even though it may not be completed in my lifetime, I still choose to start.