Outsourcing Your Own Job

Anthony checks in with an article about a fellow who enterprisingly off-shored his own job.  Per Anthony:

"The employee, an "inoffensive and quiet" but talented man versed in several programming languages, "spent less than one fifth of his six-figure salary for a Chinese firm to do his job for him", Mr Valentine said.

"Authentication was no problem. He physically FedExed his RSA [security] token to China so that the third-party contractor could log-in under his credentials during the workday. It would appear that he was working an average nine-to-five work day," he added.

http://www.bbc.co.uk/news/technology-21043693

And he watched cat videos!  He could have started another business. 

Now this comports with the advice I have given here about no longer thinking of yourself as an employee, but of your employer as a "client."  I wonder if the fellow read my posts?  He seems to have organized the management of his "clients" projects well.  Admirable!

I am not sure why anyone is surprised by this, I heard of this sort of thing going on back in the 1980s.  I imagine it has blossomed wonderfully.  And it makes one wonder about the HB-1 visa program, that offers employment in USA to brilliant software engineers from overseas.  Perhaps aplenty of those brilliant software engineers who do the work of ten in fact have a posse of ten back home working away for 20% of a USA income.

If this is widespread, then I would understand how USA born and raised engineers would be miffed at the competitive advantage the HB-1 visa holder might have.  But this would be pusillanimous.  If it works, those USA-bed engineers should be lining up crews overseas to do their work, and be every bit as competitive as HB-1 visa holders.  Don't envy success, learn from it, adapt to it.

Now no doubt this fellow will lose his job and face possible sanctions.  Too bad!  We have so many people doing wonderful things, and then we prosecute them.  Like a nine year old kid who scammed his way onto airlines so he could go visit his grandpa, and the teen who eluded law-enforcement for years, sometimes by stealing airplanes he intuited how to fly!  I want to work with these people...  they should be teaching!  We ought not be prosecuting them!

So, again, stop thinking of yourself as an employee, and think of your employer as a client.  Do as much as you can for your client, for the least amount of money.  And think of this client as only one in a series you'll be serving as a customer employed independent contractor.   Who knows what brilliant plots you'll hatch.

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Online Import Export Start Up Seminar

My online course Import Export Now! begins next week and is open to anyone worldwide, who may enroll here.



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Branding Part One

One nice thing about teaching is reviewing basics with a new crop of participants.  The question of branding came up from two separate sources at once, so this monograph is a review informed by two separate questioners at the same time.

One of my theses is as a start up or mall business, stay away form branding, defined as :

A service or type of product manufactured by a company under a particular name; kind, grade, or make, as indicated by a stamp or trademark. 

Here is a more developed explanation, (link removed at request of website holder, who would rather suppress ideas than engage them) and the likely reason people consider branding:

To understand branding, it is important to know what brands are. A brand is the idea or image of a specific product or service that consumers connect with, by identifying the name, logo, slogan, or design of the company who owns the idea or image. 

So far so good, except I think it is pointless to “own” an image since in the real world others using “your” logo causes you the originator no distress.  But to continue,

Branding is when that idea or image is marketed so that it is recognizable by more and more people, and identified with a certain service or product 

There is the problem:  “image or idea is marketed so...” Marketing costs money, does it get you customers?  (The answer is no, as you will see.) 

So what, no marketing?  Correct! You have limited capacity as a small and start up business.  When you sell your product or service, you earn a profit.   You are working to get enough orders from customers collectively to cover the supplier’s minimum, in a workable amount of time, profitably.  This is necessary, and sufficient.  That effort builds business like no other, and that work creates the profit to do it again.  Get your product in your customer’s stores. If you have customers, and you are building a business, you are learning what your business is as you grow.    

How?  Get your product in front of customers and get their reaction.  

And then this:

when there are many other companies offering the same service or product. 

But we compete on design, we have no “same”  service or product. You learn, as you redesign each iteration, what it is customers believe you do for them.  Any belief you know what you provide to customers before you start is delusional.  After a few iterations, your understanding is rock solid.  Why risk branding a particular concept when you are likely wrong as to what you will be offering?

Why brand when it gets you nothing expect delusional potential?

Why brand when customer is necessary and sufficient.?

When you pay people to look at your logo (marketing) you get no profit.

I think part of the impetus toward branding is summed up in this paragraph:

Advertising professionals work on branding not only to build brand recognition, but also to build good reputations and a set of standards to which the company should strive to maintain or surpass. Branding is an important part of Internet commerce, as branding allows companies to build their reputations as well as expand beyond the original product and service, and add to the revenue generated by the original brand.

I hear this kind of argument, and if you read it carefully, you see it is incoherent.  “branding... to build good reputations”? A reputation may become associated with a brand, but a brand cannot build a reputation.  So note there is another run at this idea “branding allows companies ... expand beyond the original product and service...”  In other words, once you have a good name as epitomized by your brand, then it is easier to sell new things to your old customers and old things to new customers.   But that begs the question, how did we build the brand name?  

Did we pay for a winning logo and marketing?

Or did we pursue a series of successful sales and reorder and redesign, working with the first rate in all efforts, and build a company, like say Apple?

I think people throw logo and branding in with “business license, cpa, lawyer, bank account...” all sorts of things they’ve always heard they need, so they assume it is true.  No it is not.  You need customers.  They are the most important thing.  Get them first.  Getting the product or service right  is the hardest thing, you get those with the customers.  There is so much to do along these lines that you should not put one minute nor one dime into logo, branding, image, licenses, lawyers, etc.

Seth Godin is felicitous:

Here's my definition: A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another. If the consumer (whether it’s a business, a buyer, a voter or a donor) doesn’t pay a premium, make a selection or spread the word, then no brand value exists for that consumer. 

A brand's value is merely the sum total of how much extra people will pay, or how often they choose, the expectations, memories, stories and relationships of one brand over the alternatives.

Design is essential but design is not brand.

That’s why Seth Godin is rich: well said.  But note this assumes, again, that one is selling undifferentiated product. And we are selling differentiated products, we compete on design.  and what is Seth’s parting comment?

Design is essential but design is not brand.

Right.  

We build brand by selling product, build brand one customer at a time at the beginning.  We get customers by design of the product, not by logo or brand or image.  With each sale we have further established our reputation and image, etc, and we have turned a profit.  Branding obliges us to pay for putative image and reputation, which is unlikely, but it can be formed as a hypothesis:

People say branding and advertising increases sales.

Prove it.

Ogilvy branded and marketed for a living, and demanded any such hypothesis be proven.  if you follow Ogilvy, the only advertising, branding etc you will do is that which gets you immediate return, at least ten times your investment.  Which means you will do nearly no advertising in business.

If not, then what?  Selling into first rate stores is necessary and sufficient.

Is the problem start-ups assume their ideas will sell well immediately, yet wonder reasonably “why would anyone buy from me, when I have no experience?  If that is the question, then the answer may be “brand.”    “Bob’s Better Buttons”  “Advanced Accounting Systems”  There, that should beat out the competition!

People working from this premise also often answer “i will compete on quality” or “service” on the absurd premise that those in the business presently fail to meet the customers requirement for service or quality.  Place an ad that shows a logo and says “We offer better service and quality than our competition..  Remember that!”  Good luck.

One cannot compete on service or quality since they are standard elements, not competitive elements.  You can only compete on price or design.  If you offer less quality or service than your competitors, then you an charge a lesser  price since your costs are lower.  Indeed, less service is one way Walmart got big, and they did cut the price concomitantly.  but  you’d have to time-travel back to July 2, 1962, when Sam Walton opened the first Walmart store in Rogers, Ark. to recreate the conditions where you can compete on price as a small business and grow, the right time and the right place, where the interstate freeway system provided for the gigantism that led to Walmarts success.

End of part one.

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Seminar in the LA Area

Orange Coast College, February 9th, 9am - 5pm Saturday

2701 Fairview Road 

Costa Mesa, California 92626 

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The Brand Is You

So personalize your business card... like this wine dealer... it is competing on design...






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De Anza Seminar

I'll be teaching an in-person eight hour all-day seminar on starting up am import/export business in Curpertino California on February 23, from 9 am to 5pm at De Anza College. You may register here.


21250 Stevens Creek Boulevard, Cupertino, CA 95014

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International Competition, Chinese Autos

Why, when we think of all we import from China, the mind runs to trade barriers to save our economy.  “Let’s stop letting the Chinese sell so much to USA!”

So how much of what we buy comes from China?  Anyone want to guess?  It is less than 3%  2.96% per cent to be exact.  This is USA dept of commerce data, that when reported caused a bit of a stir, and the numbers were rechecked by many independent sources. I checked them too.  Yep, less than 3%.

So little?  Of course!  You don’t buy your house form China, or your food or insurance, or health care.  What other big expenses?  Gas, not from China.    Some clothing.  You iphone came from China.  And there is where the misapprehension occurs.  You think nothing of paying $1000 a month for housing, but once eery 4 years you spend a $1000 at Apple, and you take a few days to decide, and you talk to people about it, and you play with the thing again and again.  You’ll take an hour to buy a shirt from China, but think nothing of writing a check ever month for $250 for utilities.  You belief that “everything comes from China” is delusional.

Once we get our facts straight, like a good marxist, we can begin to think clearly. Let’s look at automobiles for a second, and I quote auto industry sources:

Statistics from CCCME AUTO showed that China exported 849,900 vehicles, full sets of car spare parts and car chassis in 2011, up 49.96 percent from a year earlier and the largest figure seen since 2009. The exports were valued at 10.95 billion U.S. dollars, up 56.72 percent from 2010.

For comparison, Toyota exports from Japan

41,688,000 units worldwide

18,069,000 units USA

China exported automobiles to 190 countries and regions last year, with Russia, Brazil and Iran accounting for most of China's automobile export value, CCCME AUTO said.

How many of these cars were exported to USA?

Zero.  Not a single one.  How come?

So what is the plan?  Cut out market share for USA autos around the world, then come into USA.  So what is the USA response?

Well,  USA is suing China over Chinese auto exports.

Chinese automakers have been rapidly expanding their shares of markets in emerging markets in South America, for example, traditionally an area of strength for Detroit manufacturers. The W.T.O. case is aimed at all Chinese automotive subsidies regardless of whether the exports are going to the United States.

Wait!  What?  China has not yet exported a single car to USA and our response is to sue them?

Over what?  Well, apparently China bails out its automakers, which is an WTO rule violation.    And that is unfair.

And we would never do that.  O wait, we do.  That is the auto industry.  It is dying in USA

We’ve been bailing out the auto industry all along, decade after decade, long before the stupid bailout of Chrysler.  And when we refused to buy their risible cars, we had to give them our money anyway.  Here is the Detroit Renaissance Center from the 1980s, paid for by taxpayers.  

Here is Detroit today.  Shovel ready, but not in the politicians' sense.

How come when China wants to compete in certain areas, they get crushed by USA business?  Spielberg exports, he crushes the competition  And Steve Jobs, and Starbucks?  And Nike? Because they compete overseas. And they are not welfare queens in USA.  (WalMart failed where it mattered, Hong Kong.)

What is our strength?  Design.  Marketing.   We have a natural trade barrier.  It is called innovation.  Creativity. Michael Phelps wins the gold by 2 /10ths of a second.  It does not take much to win.  

We also cheat big time very often.  The Chinese learn from us, scandalously.  Lance Armstrong.

      

  

Hmmmm... 

We do not need to cheat, we do not need welfare.  We need only freedom.  There is not a single Chinese brand known worldwide outside of China.  One quarter of the world’s population, not a single brand.

The fact that there are fake Apple stores in China, problems with baby formula, refilled wine bottles, and Kelvin Klein jeans in China is not a problem for anyone in USA.  But it is a huge problem for the Chinese themselves.  Now, Communist party has called for a “clean business campaign.”  The communist party has a winning streak that is not likely to end soon.

A problem for chinese is the opportunity for you. USA is assumed to be clean business.   Jackie Chan is the first to point out that may not be so true. Jackie Chan got in trouble for sounding what John Wayne used to sound like when defending USA.

The Chinese advantage is they know they have a problem.  Our disadvantage is we are no longer depending on freedom, (why should we?  We have drones!).  The Chinese are getting their act together all over the world.  Competing with usa in the Congo, Brazil and Bulgaria.  

And then they will come here.  The Chinese have some work to do, and they know it.  

If USA autos want to win, they need to compete with China in Turkey. And we are, sort of. The best selling in USA ford truck is made in Turkey. Your bailout dollars at work.  it is not possible to tax a corporation, since the end user alway pays all taxes.  By moving production overseas a corporation at once avoids stupidly lain taxes and can otherwise launder money forever.  you want to see a renaissance in Detroit?  Eliminate all corporate taxes, eliminate all Government subsidies and protections.  We would crush China worldwide economically.

We have work to do as well.  But our only advantage is freedom.  The only work going on in politics today is curtailing freedom.  We can lose.  Lance Armstrong is not the only hero who has cheated.  name a single person in the commanding heights, private or public, in medicine, law, military, education, banking, industry, religion ot whatever who is not a hypocritical welfare queen, answering problems with less options and saying “show me the money, right wing every bit as bad as left wing.

And keep in mind.  Right now, China has less than 3% share of what you buy.  When they get into exporting cars to USA, their share of what you will buy will jump.  China wants to get from 3% to 6%.  And we are not doing anything about it.  Suing China or other trade barriers is the worst possible response.  Turn the tax-slaves loose and let USA become number one in other things besides public assistance.

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All Hail Kofi Annan!

Wow!  Kofi Annan scores a perfect 100 on small business and new business development.  I'd love to hear more.

The Third World is "waiting for retail," Annan said, noting that six of the 10 fastest-growing economies are in Africa.

Companies entering these countries should work with small farmers and businesses in the region to best-reach the consumers, Annan said.

"I always tell big companies that they shouldn't need a law to offer fair wages or ensure that operations don't pollute drinking water," Annan said. "But I don't ultimately blame the companies, I blame the officials who let it happen."

It is a shame he threw away his best years leading the UN.

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Chili Redux

Anthony counters:

What if you slaved away perfecting your chili recipe for 12 months, expending time and money buying equipment, traveling to chili restaurants to get feedback from potential customers as you tried over 500 iterations before you reached perfection?   So it wasn't really "something for nothing" right?   Doesn't John's Wan Chai Chili Shack deserve some protection from "Anthony's Hong Kong Chili" with 25 locations who shamelessly took your Chili, ran it through a gas chromatograph and discovered your secret 10 spice, eel and snake meat recipe?    It cost you 1 year and $10,000,   Anthony spent $100 and waited 2 days for the result.   Why should you go through all the work knowing Anthony has the money to figure out your chili innovations and use them take your customers? 

My reply...

What if you slaved away perfecting your chili recipe for 12 months, expending time and money buying equipment, traveling to chili restaurants to get feedback from potential customers as you tried over 500 iterations before you reached perfection?  

1.  Why would John's personal choices oblige others to limit theirs?  Why does that oblige fifth parties to pay fourth parties to move on third parties who prefer to buy from second parties raher than John's Wan Chai Chili?  If I worked a billion years and people preferred Anthony's Discount Hong Kong Chili, then those who buy from Anthony never were nor never will be my customers.   Why, after all my work, do people prefer Anthony's?

So it wasn't really "something for nothing" right?   

2.  No one can judge what psychic satisfaction John got from all that work.  But it surely does not warrant blocking all others from making chili, even John's chili.  If people want to make money they must work, like the rest of us.  Buy ingredients, cook them, market them and sell them.

Doesn't John's Wan Chai Chili Shack deserve some protection from "Anthony's Hong Kong Chili" with 25 locations who shamelessly took your Chili, ran it through a gas chromatograph and discovered your secret 10 spice, eel and snake meat recipe? 

3. So customers must be forbidden to spend their money where they prefer?

   It cost you 1 year and $10,000,   Anthony spent $100 and waited 2 days for the result. 

4. Almost all benefits of invention and innovation in the history of mankind have been from people who never demanded exclusivity.  Almost all innovation is altruistic in that sense.  Why change a good thing now?  Anthony must buy the beans, spices, cook, market and sell the chili with all of the risks the real world can present, plus hope others prefer him to John, or at least serve customers John cannot reach or customers who will under no circumstances buy from John (because he is anti-IPR or whateer reason.)

  Why should you go through all the work knowing Anthony has the money to figure out your chili innovations and use them take your customers? 

5.  Because I want if for myself.  I have a passion for the perfect chili.  And when I have it, I'll sell as much as I can handle with the resources I have, to anyone who freely wants to buy from me. I ought not ruin my life just because Anthony is blessed with the means to reach more people with my chili recipe.   Yes, I must be content with what possibilities I have, and that a free market bring more better cheaper faster.

The alternative is where fifth parties pay fourth parties to move on third parties who prefer to buy from second parties than John's Wan Chai Chili.  The whole violence based system brings innovation to a screeching halt, just so John does not have to work for a living.

And you note your entire scenario is a straw man argument, because the problem you outline is not one based in IPR. The reality is patents are almost always today some quick idea hurried into the system to game the system.  Trademarks are delusional vanity plates and copyright does not apply to recipes.  In fact, as to food, no IPR applies (except in the odious practice of patenting frankenfoods.)

There is no rational nor moral basis for intellectual property rights, but we live under such a regime.  What can you do?  For my part, anyone can and people do steal my ideas and work and all sorts of things.  I am obliged, to be nonviolent, to be content with what I can scare up, and let others run their risks.  If I want to earn, I have to make things and sell them, or contract with people for my services, which I provide.  Anything more requires violence to make it work.

Like those who went on Amazon to undercut me.  I discovered by their efforts a new market and price point for my book.   I then crushed them.  On Amazon.com.  And I took their income stream away.

Nonviolently.

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On Intellectual Property Rights

Today I cooked some Chili.  Quite good.  I copyrighted it.  Or Trademarked it, or whatever...  But in any event, from now on, anyone who makes a bowl of Chili needs to check with me first.  And they will have to get my permission and agree to conditions I set, for making Chili.  (Now I know there are some differences in the law between copyright, trademark and patent, but my point will stand.)

The better not make it or sell it.  Fifth parties - law enforcement agents, paid by fourth parties - that is taxpayers, will punish third parties - customers, for buying from second parties - chili cooks, that which I, the first party, own - chili.

I should be able to sit in my house and collect royalty checks for anyone who ever has a bowl of Chili.  What an extremely cool system for me, and the fifth parties.  But everyone else gets screwed.

So what if the second parties, the chili cooks, have to buy the beans, meat and spices, do all the prep work, make the chili, and develop the market for chili?  Who cares, I own chili!

That would be like saying anyone who copies a book has to buy paper and ink and create the book and market it.  Who cares?  The book is copyrighted and even if you have to buy paper and ink and create the book and market it, you are still stealing.  Just like you are stealing if you buy a bowl of chili for which I am not paid.  And it does not matter if they give you the bowl for free.  They still have to pay me.

So keep in mind, if you ever eat chili, and I did not get paid, you stole from me.  And I hope the feds give you the "Full Swartz."

What?  Why don't I just make chili and sell it, like all those other criminals?  Why don't I buy the materials, make the goods and build a market myself?  Why should I?  I invented chili, and I should get something for nothing.  That is what I love about America.

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On The Death or Aaron Swartz

It is not the hand you are dealt, it is how you play the cards.  The National Treasure who developed RSS, from which I personally benefit daily, committed suicide after being hounded by federal prosecutors.  Even a very rich and resourceful techie cannot face down the federal prosecutors.  The federal prosecutor wanted to give him 30 years for "stealing" IPR that was free anyway.

Now some people say "he knew the rules and can't complain when he pays the price."  Well, if he "knew the rules" we'd still be getting a news form Time magazine and he's be working in a government office like the people who say "he knew the rules."  Since he did not know the rules, he benefitted society immeasurably, something that cannot happen with those who sit around and look for rules with which to comply.

As to paying the price, the "victims" were so uninterested in the "crime" they failed to complain.  Sure Swartz knew there were rules against what he was doing, called "terms of service" but such rules are in such flux and what is now standing (but crumbling) is what is counterproductive.  There is an ancient legal principle: Lex dubia non obligat, natural law written on the heart.

Yet true true, he played his hand as best he could, and came across yet another federal prosecutor looking for a notch in his gun, and so no more National Treasure.  Swartz never asked anyone to praise him or respect him nor did he want any glory.  Swartz let his fruits speak for him.

On the other hand, the federal prosecutors and all patent attorneys want to be taken seriously and be praised for their work, not to mention compensated to a degree that is wildly unconnected to value provided in the market.

We all know intellectual property rights is a sham and a scam.    Sure, people check it out, and say "hmmmm... easy money, nice cars, be a player...  I can do this!"  That is just how some people play the cards they are dealt.  We all do this to some extent, look at the cards and play them to our best advantage.  No judging a man on how he plays his cards.  But when the man demands we pay him respect, and accept as he does that this silly thing we call IPR warrants ruining the economy, stifling innovation and driving people to suicide, he goes too far.

I met a drug dealer once, he'd killed some people, and worse - had some kids he was not raising properly, a Catholic boy, who was very up front about how he played his cards, and also made it clear he struggled with the fact what he did was wrong.  That murdering drug dealer is far more respectable than patent attorneys or federal prosecutors, because when he does wrong he admits it.  He does not expect anyone to respect his actions.

Patent attorneys make money because fifth parties are taxed to pay fourth parties to arrest third parties for selling things they make to second parties because putatively some first party owns "intellectual property rights."    This is absolutely madness.  There is a simple solution: let the first party defend their markets by listening to customers.  Eliminate intellectual property regime.

But no.  Too many people, too much money, too much control.  Sure, IPR attorneys, you looked at your cards, you played your hand and you've done well for yourself.  No judging a man for that.

But the next time you cash your paycheck, visualize Aaron Swartz hanging in his apartment, his destroyed family, and the loss of National Treasure.  Enjoy your Starbucks, but just don't expect us to respect your work.  That is going too far.

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