Ryan Byrd’s Ramblings

Moments ago I posted an entry about the Four Hour Workweek. In that book author Tim Ferriss recommends starting your own business in a niche market and selling a product online. Maybe you’ve wondered how to get a business (an LLC specifically) up and running. Well, here are the steps (for Utah, at least):

• Get a mailbox at The UPS Store/Mail Boxes Etc (when writing the address use “new mailbox address, STE 1234″ instead of #1234– it looks more professional)
• Get a free service like http://www.grandcentral.com/ for your new office phone # (forwards to cell, emails voice mail, etc)
• Get a domain name and setup email forwarding and a quick homepage (GoDaddy)
• Register your business https://secure.utah.gov/osbr-user/user/welcome.html (request name $22 (wait a day), get EIN $30)
• Print out articles of incorporation and go get a business bank account– Washington Mutual (no fees, but $100 deposit at opening needed plus two forms of ID)
• Setup Paypal or Google checkout with that bank account so you can accept payments
• Setup an accounting system (like QuickBooks online) to manage finances

Why an LLC?

• Pass-through taxation (no double taxation like other corporations)
• Personal liability protection for members
• The ability of owners to deduct their share of the LLC’s net loss for the year on their personal return

Once you’ve got an LLC:

• Keep track of all business expenses (with receipts), and business income
• Don’t co-mingle funds (this can lead to someone potentially “piercing the corportate veil” and getting your personal assets)
• At tax time, file a 1040 schedule C for the LLC http://www.irs.gov/pub/irs-pdf/f1040sc.pdf (or 1065 and schedule K if the LLC is a partnership)

A brief history of time:

1- 1923- Vladimir Zworkin patented his iconscope TV camera tube which is basically the first electronic television

2- 1952 – Charles Paulson Ginsburg headed the team that invents the VCR

3- 1987 – Blockbuster is founded

4- 1988- Hollywood video is founded

5- 1996 – Brent Townshend invented the 56 kbit/s modem.

Viable businesses exist because they solve important problems. For consumers, the problem is that they want to be entertained, but that entertainment is displaced in time or location from them. For the last twenty years, the video rental business has had a blast capitalizing on this dilemma. They have been able to charge several dollars for each video rental and reap nice rewards by leaving heavy late penalties on their customers. With all that abuse, we keep coming back.
That lucrative time is over, and Blockbuster has realized it. For the past two years, they’ve been lowering their prices, reducing or eliminating late fees and introducing new programs that allow consumers to have videos out on a continual basis. Much of this change was prompted by the introduction of NetFlix in 1997 and it’s subsequent explosive growth (currently 6.7 million subscribers.) NetFlix, unburdened with expensive PP&E assets, is able to offer DVDs at a very low monthly subscription rate, undercutting competition. Blockbuster has been feeling the pain.

Not too long ago, Blockbluster also introduced a low monthly fee by mail and store service (Total Access) and spent considerable money informing everyone that they, with their stores, were now better than NetFlix.

Not to be outdone, NetFlix countered by offering downloads of movies (currently the selection is rather slim, and subscribers are hour limited.) Still, the ball is now in Blockbuster’s court.

During all of this Hollywood Video has done… absolutely nothing. My local Hollywood Video, in fact, just closed their doors last week. Goodbye!

Hollywood Video will likely be out of business in less than two years, but I predict that Blockbuster will be gone in under five. Here’s why: they are selling physical rental of electronic bits and that is becoming increasingly silly.

Renting bits made sense when they started two decades ago when sluggish 2400 baud modems were the only thing available, but high speed fiber is being laid at a fantastic rate across the country and soon, all your entertainment, in the highest quality will be streamed into your house, selected by your computer (or some other smart box) and then fed into your flat screen television.

Physically storing bits on plastic is so last century. Let’s move on.

A marketing audit is a “comprehensive, systematic, independent, and periodic analysis that a company uses to examine its strengths in relation to its current and potential market(s).” It is “a fundamental part of the marketing planning process.” The audit “clarifies opportunities and threats”, and identifies “neglected marketing activity and under-utilized marketing resources [in order to] generate recommendations for ways in which more effective use may be made of these resources.” It constructs a “clear picture of its current services and products, the many customers for them, and the methods used to market the services and products.” It’s the “starting-point for most considered courses of managerial action in marketing” and it “provides a framework for ongoing decision making, evaluation, and long-range planning.”

That’s an awful lot for one tool to do. Fortunately, here’s a rather good marketing audit template for you to start with.

An anonoymous tipster just emailed in this sweet nugget. A new executive at a growing local backup company wrote this on his personal blog:

I’ve initiated the mindset … to think, work, and act in a matrix so that we can be more cross-functional and efficient. I think if we start now and grow up that way we’ll see economies of scale with individual’s bandwidth and utilization.

If we were playing Business Buzzword Bingo, I might have won with just those two sentences!

I’m thinking of getting a tee-shirt made with the words: “let’s act in a matrix!” It would be motivational to everyone.

Talk of the Nations on NPR today interviewed Georgetown University law professor David Cole on his decision to ban laptops from his classroom. David wrote an op-ed piece for the Washington Post on Saturday describing the circumstances and effects of his no-laptop policy.

Says David,

Note-taking on a laptop encourages verbatim transcription. The note-taker tends to go into stenographic mode and no longer processes information in a way that is conducive to the give and take of classroom discussion. Because taking notes the old-fashioned way, by hand, is so much slower, one actually has to listen, think and prioritize the most important themes.

and,

In addition, laptops create temptation to surf the Web, check e-mail, shop for shoes or instant-message friends. That’s not only distracting to the student who is checking Red Sox statistics but for all those who see him, and many others, doing something besides being involved in class.

To back this up David states

95 percent admitted that they use their laptops in class for “purposes other than taking notes, such as surfing the Web, checking e-mail, instant messaging and the like.” Ninety-eight percent reported seeing fellow students do the same.

The results for David’s classroom experiment? according to an anonymous survey he conducted six weeks into the semester:

About 80 percent reported that they are more engaged in class discussion when they are laptop-free. Seventy percent said that, on balance, they liked the no-laptop policy.

At the University of Utah, where I have been an MBA student for the past two and 1/2 years, laptops are required for all students and are therefore seen in nearly every class. Recently however, a few teachers have asked us to shut them down after the end of classroom administrivia (assignments, announcements, scheduling etc) which is about 15 minutes into class.

Initially I was irked at this change. Though, shifting perspective, when teaching at UVSC I’ve had to teach students who had laptops open and I can attest how annoying that is from the professor’s point of view. It isn’t uncommon to have to repeat a question in order to get a response from the distracted students. Of course, for you non-academics, the immediate parallel to the classroom setting is in company meetings and that brings us to the question of the day, Should laptops be banned from company meetings?

I’ll summarize some more arguments for and against laptop bans in classes/meetings.

For the Ban

• Class time is for discussion and listening, not transcription of notes from professor to student. Professors should provide class notes.
• Laptops are the equivalent of taking a “bookshelf, mailbox, newspapers and a board game” to class, as such they are major distractions.
• “Doing five things at once on the laptop, students miss out on the unique educational experience of college, where the student’s sole responsibility is to learn as much as possible.”^*
• Something about writing notes forces the brain to work and results in better comprehension.

Against the Ban

• Banning laptops just means the added annoyance of typing class notes after class.
• Students are able to contribute better to class discussion by bringing in material from the web
• Some students have illegible handwriting, so hand writing notes doesn’t work.
• Some jobs require students to be online and available over IM.
• Just disable the local wireless to prevent people from surfing.
• Some classes are highly technical in nature and not discussion-centric. Students need to be able to take down what the teacher says verbatim.
• We have technology, we should be using it?
• Why require laptops only to ban them?
• College students are adults and are mature enough to make their own decisions about such matters.

What do you think?!?

Last semester I took a Business Strategy Class at the University of Utah and today I made some of the notes from that class available online, for your edification and enjoyment. Here are outlines for seven fundamental strategy papers. They cover works from Porter, Prahaland and Hamel and Mintzberg.

You’re welcome!

A few days ago I blogged about the 400 richest Americans. Perhaps while reading that entry, you said to yourself, “I wouldn’t mind being rich!” Perhaps you envisioned, if only for a moment, how your life would change if your life was free from financial worries. Maybe you imagined the consequent big houses, or the luxury cars, or the fabulous vacations you might take. It’s not unlikely that in this daydream you saw yourself throwing outrageous parties where you mingled with crowds of the beautiful, the famous, the influential, and the decision makers of the world. And then, if my reader demographics are correct, you realized not only that you’re poor, but that it was time for fifth period physics class. Hello High School Students of Seattle Washington!

For some people (the Walton widow and the four Walton children), wealth came as a result of Daddy passing it along. For the rest of us, careful planning and work is required. It goes almost without saying that it is easier to make a million dollars once you already have a million, still, for us non-millionaires, there is hope. The big secret to financial success: you must make money while you sleep (Rich Dad/Poor Dad); that is, your money must work to make you more money. But how do you do that? How do you put your money to work? Here following are your options. Not all are created equal.

• 1. Savings account
• 2. CDs
• 3. Bonds
• 4. Stocks
• 5. Mutual funds
• 6. Start a business
• 7. Buy/sell real estate
• 8. License creative works (write a book (like “the Entrepreneur Story“), compose/play music, code software)
• 9. Rental properties

You should know that rich people have more opportunities: (because they are Accredited Investors)

• 1. Everything poor people can do PLUS:
• 2. Invest in companies and high return (and risk) ventures

Secrets to staying poor:

• 1. Join an MLM
• 2. Carry a balance on a credit card
• 3. Borrow money to buy something
• 4. Day trade
• 5. Gamble
• 6. Buy things on impulse
• 7. Have a negative savings rate
• 8. Buy new cars
• 9. Bad investments: baseball cards, diamonds, stamps, coins, other collectibles
• 10. Convince yourself that because “money can’t buy happiness”, that you’re better off without it.
• 11. Ask for donations on your website.

Further Reading

• The very rich in America: “The kind of money you cannot comprehend”
• The World’s Billionaires
• Almanac of American Wealth

How are you making money tonight while you sleep?

Economics tells us that a producer wants to exact the “maximum willingness to pay” from the consumer (or at least something close to the maximum.) But that’s tricky because consumers often fall into “willingness categories” and the producer would like to charge each category their maximum. If, for example, you’ve just paid $4,000 on an international plane ticket to fly into Salt Lake City, you’re not going care whether the lift ticket is 60 or 80 dollars. In comparison to the $4,000, a 20 dollar difference is insignificant. Those high rolling, first-class-flying, foreign vacationers are “insensitive to price” in that low range. On the other hand, whether a ticket is $60 or $80 might very well determine if a local, starving college student goes skiing or not. Obviously, the resort would like to get $60 from the student without lowering the $80 charged to the vacationer. The resort needs to segment their consumer base.

Some types of explicit customer segmentation might be illegal, so business try the implicit routes. Illustration: a ski resort will often not publicize the “locals only discount” targeted towards students and rely, instead, on word of mouth to spread the news. At Brighton, for example, simply showing a freely available X96 key chain gets one in for 1/2 price. Don’t let the Germans know!

This principle of segmentation is why senior citizens get into movies for a discount. They, as a whole, are perceived to be more price sensitive and as having a lower willingness to pay. Theaters still want their money, but don’t want to lower the price for everyone. Instead, they seem to be genuinely concerned about our seniors. See, business isn’t all about making money! Oh, wait…

So, with the blind assumption that all three of my readers are local, starving college students, here is the skinny:

Brighton is a resort at the top of Big Cottonwood canyon (take I-215 E from I-15, take the 3000E/6200S exit, and then follow the signs). Check with them first, but as of this “printing”, a night pass (from 5-9pm) costs only 30 dollars. As mentioned, if you have an X-96 radio station key chain fob (which is free for the taking at the X-96 offices in SLC), you get two for one. Snowboard rentals cost 21 dollars. If you have your own gear, or can beg/borrow it from a friend, you can snowboard for 15 dollars! That’s awesome and that’s what I did on Friday night. Wednesday night lift tickets are $25 or $12.50 with a 2 for 1 coupon from Arctic Circle.