How To Live Forever - credits James Altucher

How To Live Forever

• Posted by James Altucher
 
• on November 18th, 2010

Lets say you knew that on December 15, 2020, you were going to die in Springfield, Illinois. What would you do? Well, for starters you would probably prolong your life simply by avoiding Springfield, Illinois on December 15, 2020. It just so happens we can use statistics to see the future, and by doing so, can postpone death as long as possible.

I’m sick of the anti-aging industry. Basically, nothing fancy works. Dr. Oz recommends reservatrol but scientific studies only show that enormous amounts of it are what expands the lifespan of a mouse. There’s no way to take an equivalent amount as a human. Anti-aging expert Andrew Weil often suggests herbal remedies instead of pharmaceutical medicines but I think, again, the research is very unclear and it’s no secret that lifespans have gone up in general with the rise of more readily available, FDA-approved pharmaceuticals. There’s always a lot of discussion of homeopathic medicine but, again, the evidence is lacking.

My view is to take a very common sense view towards aging. By the way, I have never thought about anti-aging techniques before. But I’m 42-years-old now, and probably past the half-point of my life, so I’ve started to wonder about it. Common sense has served me well in most other areas of my life. Hippocrates, the father of modern medicine, puts it succinctly with “Do no harm” in his hippocratic oath. There’s a similar rule in the area of financial advice which I think applies here as well. It’s actually two rules, stated by Warren Buffett, the greatest investor ever: “Rule No. 1: Don’t Lose Money. Rule No. 2: Don’t Forget Rule #1.”

The Warren Buffett approach is appealing. Think about it from a financial perspective. Most of the reasons people go broke is not because they failed to make money but because they spent their hard-earned money on bad investments that went to zero. In other words, they broke Buffett’s rules. Much more important than figuring out how to add dollars to your net worth is how to avoid losing the dollars you’ve already accumulated. Applied to the anti-aging industry — don’t spend so much time figuring out how to add years to your lifespan. How about use common sense to make sure you don’t make additional decisions that cost you your health.

We know what the main killers are in life (this comes from the Centers for Disease Control, U.S. Government, data):

Top 10 Killers

Heart disease: 616,067
Cancer: 562,875
Stroke (cerebrovascular diseases): 135,952
Chronic lower respiratory diseases: 127,924
Accidents (unintentional injuries): 123,706
Alzheimer’s disease: 74,632
Diabetes: 71,382
Influenza and Pneumonia: 52,717
Nephritis, nephrotic syndrome, and nephrosis: 46,448
Septicemia: 34,828

So lets start by avoiding some of these diseases.

1. No Smoking. You only have to go to the American Heart Organization website to see their research on how smoking is related to heart disease.  A quote: “Smoking increases blood pressure, decreases exercise tolerance and increases the tendency for blood to clot. Smoking also increases the risk of recurrent coronary heart disease after bypass surgery.” That doesn’t sound good. There’s also numerous studies on the effects of smoking on cancer. Go to cancer.gov. Here’s a  quote: “Of the 250 known harmful chemicals in tobacco smoke, more than 50 have been found to cause cancer. These chemicals include:
arsenic (a heavy metal toxin)
benzene (a chemical found in gasoline)
beryllium (a toxic metal)
cadmium (a metal used in batteries)
chromium (a metallic element)
ethylene oxide (a chemical used to sterilize medical devices)
nickel (a metallic element)
polonium-210 (a chemical element that gives off radiation)
vinyl chloride (a toxic substance used in plastics manufacture)”

That’s pretty bad. I just have to read the first: “arsenic.” Who wants to put arsenic in their body? Don’t forget rule #1!

(smoker's lung on the left side of the image)

2. No Heavy Drinking. Note that I say “heavy” drinking and not drinking in general. In fact, many studies show that moderate drinking reduces the risk of heart attacks by up to 40 percent. Go to this link: http://www2.potsdam.edu/hansondj/HealthIssues/1109728149.html .It has a list of studies that show the types of cancers that moderate drinking actually help prevent. What is moderate versus heavy drinking? At cdc.goc, “drinking in moderation is defined as having no more than one drink per day for women and no more than two drinks per day for men.”

Heavy drinking, on the other hand, is lethal. Obviously, it increases your risk of having a fatal accident, but there’s numerous studies showing that heavy drinking is linked to various cancers, heart disease, and Alzheimer’s. Here’s a quote from Alzinfo.org: “In the study, researchers found that the combination of heavy drinking and heavy smoking sped up the age of onset of Alzheimer’s by six to seven years. That is a considerable number, making them among the most important preventable risk factors for Alzheimer’s disease.” Oh yeah, there’s that smoking thing again.

On heartdisease.about.com: “After their heart attacks, patients who had done any binge drinking during the previous year had a death rate that was 73 percent higher than patients who did not do any binge drinking. Even occasional binge drinking (as they defined that term in this study) increased the risk of death.” Binge drinking they define as having three or more beers in a day.

From the American Cancer Society: “Death from liver cancer is higher among heavy alcohol users than among people who do not drink.”

So it’s pretty simple. You can avoid accidents, heart disease and a bunch of cancers if you never drink more than two beers a day.

3. Sex. It doesn’t have to be all puritan. Maybe you like to smoke and drink a lot and now you’re pretty upset. How about taking up a more fun activity during the day, like sex. Here’s an article by Jonah Lehrer: “Sex is stressful but good for you.” (http://www.wired.com/wiredscience/2010/08/sex-is-stressful-but-good-for-you/)  Basically it shows that sex activates various hormones that increases your immune system, decreases your stress levels, reduces the risk of Alzheimer’s and all sorts of other good things. And it’s pretty much common sense that this is a good thing. Heck, the Bible recommends we do a lot of it.

There’s an article from WebMd on the 10 health benefits of sex. (http://www.webmd.com/sex-relationships/features/10-surprising-health-benefits-of-sex?page=2) One quote: “The researchers also found that having sex twice or more a week reduced the risk of fatal heart attack by half for the men, compared with those who had sex less than once a month.”

4. No snacking. Obesity is linked to high blood pressure, heart disease, diabetes, certain types of cancer, etc. There’s no shame in being obese. Over one-third of adult Americans are obese according to the Centers for Disease Control. And being overweight and enjoying food are not crimes. But if you stick to the basics you’ll avoid (reduce) being obese. Ugh, I’m really hungry right this second as I’m writing this. Since last year whenever the  market’s gone down I’ve felt an irresistible urge to eat. I’ll eat an apricot Danish, or a corn muffin, or a hot dog, Pringles, Doritos, or anything with Cajun spices. If you have some corned beef hash when I’m in this state, please send it over. I’ll eat all of it. I’m like a shovel working on Obama’s trillion dollars worth of road repairs, I’ll shove it all in.

This is not a healthy lifestyle and now that I’m about to breach  the age of 42 I have to think about my metabolism and how its beginning to weaken.  This happened to me once before, towards the tail end of the bear market of 2002. My entire life I’ve weighed my college weight except for that one time in 2002 when  I gained about 20 lbs. I read through all the diet books and nutrition sites but none of them made sense to me. So I came up with my own diet and it worked. What follows is the “James Altucher White Book Diet” as seen on Oprah, The View, the Today Show, Obama’s Inaugural speech, and other top Nielsen rated TV shows [note from ed.  Unable to verify] . It took me about two months to lose the 20 pounds once I started using this plan

1. No sodas. Ever. One can of coke contains 16 sugars. That’s just mindless calories.
2. No snacks between meals. Have a breakfast, lunch, and dinner. And that’s it.
3. No white at night. Meaning, no pasta, no ice cream, no cheese, no bread. Nothing white at night. Enjoy a steak and some asparagus.
4. One item for breakfast. Knock yourself out if you want a croissant. Or a bagel with cream cheese. Or a fruit cup. Or one Belgian waffle. But stick to only one item.

Do whatever you want for lunch. Doesn’t matter as long as you stick to the other rules above. And if you are also avoiding the heavy drinking then your calories will stay down and your weight might go down.

5. Exercise. I know, everyone says this. I don’t want to be boring so we’ll keep this simple and stick to the minimal basics. First off, its obvious that exercise and being in shape has health benefits. From the Mayo Clinic, there’s an article on the benefits of exercise. (http://www.mayoclinic.com/health/exercise/HQ01676) A quote: “Regular physical activity can help you prevent — or manage — high blood pressure. Your cholesterol will benefit, too. Regular physical activity boosts high-density lipoprotein (HDL), or good cholesterol while decreasing triglycerides. This one-two punch keeps your blood flowing smoothly by lowering the buildup of plaques in your arteries.”

And there’s more. “Regular physical activity can help you prevent type 2 diabetes, osteoporosis and certain types of cancer.”

BAM! We avoid the two top killers and probably a bunch more.

If you are already an exercise fanatic, then this section isn’t for you. But if you are not really that into exercise or you get bored with it then we need to figure out how to trick your mind and body into getting motivated to exercise. Minimally, you want to do a half hour of exercise a day but that can be spread out. Some ideas:

1. Can you wake up 10 minutes earlier and do 30 push ups and 30 sit ups? If all you did was 100 push ups a day, spread out throughout the day (do 30 more during a commercial break, for instance), you’re going to get in good shape and build muscle.
2. Can you take the stairs instead of an escalator whenever you get the chance?
3. Can you park a little further from work and walk a half mile instead of parking right at the door?
4. Take a tango lesson once a week or ballroom dancing. Or play a couple of games of tennis or even ping pong. Anything that can get you to sweat a little bit.
5. Find a basketball court and just try to shoot 10 baskets. Just the jumping and shooting is decent exercise for 10 minutes and might be fun.
6. Get someone to show you two to four yoga poses. Do them every day.

The key is just to get the body moving in a way that’s new and a little more difficult than its usual movements (sitting down, sleeping and eating). And if you’re really motivated and just want to get through a half hour of solid exercise, just do 100 push ups, 100 sit ups, and 100 squats in a half hour period. Do it three times a week and you’re set for life.

7.Sleep a lot. Sleeping is great. For one thing, when you sleep, you probably won’t have a fatal accident. Nor will you be eating while you sleep. Or drinking heavily or smoking, or any of the other activities that can cause an inconveniently timed death. In fact, lack of sleep (meaning six hours or less on average) is linked to colon cancer, weight gain, strokes, heart disease, high blood pressure, high cholesterol, depression. Don’t we all like to sleep a little more? Certainly sleeping an extra hour a day has got to be a lot easier than exercising an hour a day.

So how much sleep do you need? Seven to eight hours a night. More than that is not even necessarily healthy. Statistics show that people who regularly sleep eight hours a night, no more and no less, live the longest.

I have insomnia. I’ve also been day trading for a living, on and off, for the past ten years. I’ve traded my own money and others. It’s an unpleasant way to live. The highs are very high and the lows are very low and painful. Whether you are at the highs or the lows you’re probably going to experience insomnia along with 32 million other people in this country that have insomnia.

When I have insomnia here is the form it takes: I have no problem falling asleep. But then at about 2 or 3am, I am awake and can’t get back to sleep. The worst is when I finally get back to sleep around 5:30 but by then I’m in trouble: I’ll wake up around 6:30 or 7 completely exhausted for the day.

This is no good for a day trader. You need to be focused, on your game, and not make mistakes which cost you your livelihood because you are simply too tired to be sharp. Imagine if you take out $5,000 and just drop it on the street and walk away. You would be stupid if you did that. It’s also stupid to let insomnia force you into mistakes that cost you many multiples more than $5,000.

Some of the suggestions below may seem harsh. And the correct solution for insomnia will be different for everyone. But if you do follow the suggestions below, I can safely say it’s unlikely you will have insomnia.

1. - No computer for the last hour of the day. Not only that, turn off the computer. There should be no computer sound or monitor light. The sound and light keeps you sucked into the virtual reality of the day trading world, where you live and die on every tick in the markets. You need to disengage from that world and enter back into the real world in order to sleep.
2. - No food after 7pm. I really meant to write 5pm but that might be unrealistic for most people. Sleep and digestion are closely linked. Studies show that many people with insomnia have either irritable bowel syndrome (IBS) or sensitive stomachs. Not eating past 5pm and drinking more liquids throughout the day can help you be cleaned out for your sleep. You want to eat easy-to-digest foods at night. No meat, not too much sugar. Vegetables and fruits.
3. - No alcohol. The sugar will pop you awake in the middle of the night.
4. - Exercise. This is directly related to what happens to your body when you day trade. Imagine if you were mugged. Adrenalin and stress hormones would get released in your body and you’d either fight or flight. Fighting or running would work off those stress hormones. When you day trade, it’s as if you are getting mugged all day long — but you are just sitting there. You aren’t working off the stress hormones. Those chemicals will keep you awake at night. Exercise (if done early in the day) will at first increase the stress hormones but then over the next few hours after exercise finishes, will work those hormones off.
5. - Clean your bedroom, your closet, your office, your kitchen, etc. Your mind and your living space need to be friends with each other. Clean mind equals clean living space. Cluttered space means cluttered mind. Cluttered mind leads to anxiety, nervousness, stress, and then those stress hormones are waking you up again in the middle of the night. Power down the computer and clean your room before you go to sleep.
6. - Put closure on the end of your work day. Make a list of the work related things you did that day. Write them down on a pad. Trades you made, articles you read that you remember, ideas you had, calls you made related to business. I write everything into an email I send to myself. It helps me to see how productive I was (or not), particularly on days that might not have been that good otherwise (i.e. if I lost money trading that day). It also helps me understand and analyze my trades a bit more. And finally, when I hit “send” on that email to myself, my day is over. Onwards to the next thing (talking to family, friends, etc).
7. - Meditate. You don’t need to get in the lotus position and start chanting for an hour or two. Most of the time during the day, particularly when you’re stressed, you may stop and notice that your breaths are short and uneven. Sit in a chair for ten minutes, with the lights out or on dim. Simply watch your breath. Don’t breathe too deeply but as deeply as is natural. Count the breaths to ten. Then start over. If you find you are losing your place too much (or slipping into “11..12..”) then just count to five and start over. Do that for just ten minutes in the evening. Ideally, do it in the morning also before you begin your day.
8. - Early to bed, early to rise. Ben Franklin is right. This will make you wealthy (maybe wise also but we’re focused on trading here). 5am is a good time to wake up, read the news, check futures, and plan your trades for the day. That gives you a little over 4 hours to get ready for the trading day. If you need 8 hours of sleep then backtrack from 5am to see when you need to get to sleep.
9. If you follow these guidelines you will be on your A game when you trade, you will sleep better, and you will wake up each morning refreshed and ready to go.

7. Regular Flow. You know what I mean: constipation is bad. Imagine keeping all that horrible bacteria in your body one more second than you have to. Get it out! What happens is that fecal matter builds up in your colon, causing an unvirtuous cycle: the more fecal matter that builds up, blocking the openings of the colon, the more fecal matter gets stuck up there, putrefying for years, leading to everything from colon cancer to a breakdown of the immune system: more flus, allergies, heart disease, etc. The key of all of this article is how to very simply avoid the leading causes of death. Keeping the inside of your body clean is the simplest. Going to the bathroom more than three times a week is key. Everyone varies in this but ideally, at least once a day is enough to keep the factory working.

How to avoid constipation:

1. Use it or lose it. When you have to go … GO!
2. High fiber diet: fruits, vegetables, high fiber cereals (Dr. John Harvey Kellog, the founder of Kellog’s cereal, invented his high-bran, high fiber cereal for just this purpose).
3. Lots of liquids
4. Avoid eating too much low-fiber foods. Obviously we all like our ice cream. But too march starch and sugar could be bad, particularly if you are currently suffering.

8. Feel Gratitude. Stress effects every aspect of your physical health and can cause every single one of the causes of death mentioned above. Every technique described above indirectly reduces stress. But dealing with stress also involves building your mental muscles. Mental muscles are like physical ones — they atrophy. If you are bedridden for a few months then you would have to engage in intense physical rehab in order to even walk because your muscles would’ve atrophied that severely and quickly.

Its the same with mental muscles. The muscle that prevents stress needs to be regularly exercised or you will succumb to the excesses of too much stress in your life and you won’t be able to climb out of the hole. Believe me, I know this. At different times in my life I’ve made and lost millions. Part of what I do is I daytrade for a living. While there are many stressful jobs out there, daytrading has to be among the top 10. When I’m in a big position and it starts moving against me I feel every heartbeat in my body pushing the blood all around. The stress permeates me and part of the daily routine of a daytrader is learning to deal with the stress.

Think of the human body when its mugged, or when a car is bearing down on it. The human body signals a flight or fight response. Your adrenalin pumps through and its almost as if you have superhuman powers as you either run the fastest you’ve ever run, or you jump out of the way of a car or, god hoping, you block a car from running over your baby, as has happened in extreme examples. In other words, in a normal response to stress you feel the stress, your body produces the adrenalin and hormones to deal with it, and you react, quickly working off the stress.

But the normal daily grind that causes our stress almost never gets worked off. Its as if you are mugged all day long. And that leads to only bad things in the body (see all 10 killers above).

There are many ways to avoid stress but the one I’m focusing on in this technique is to exercise your gratitude muscle. Try it for just five minutes a day. List all of the things you are grateful for. Don’t think about anything else. You don’t need to meditate with the Dalai lama to reduce stress. All you have to do is for five minutes a day think about the things you are grateful for. Your kids. Your friends. The walk you took yesterday. The smile a stranger through your way this morning.

Once the muscle is exercised, then get it working again during the moments you feel stressed. If you are feeling stress about a family relationship, think about a time when that relationship was great in your life. If you are feeling stressed about money, remember that all things cycle and whatever you have this second is still enough for you to enjoy life. I know it sounds corny. But if you do that five minutes a day I can guarantee that you’ll be surprised at the new muscles you find.

9. Mental exercises. Nobody knows for sure how every detail of the brain works. But we do have a basic model. The brain has 100mm neurons, give or take, that communicate via synapses. When you learn something new, a bunch of neurons and their synapses fire up with traffic. The more traffic between neurons, the more their synapses strengthen. Like in the Gratitude section above, if we keep on strengthening the synapses between neurons all across the brain then we build up resistance to any illnesses that effect the brain, such as Alzheimer’s, the #6 killer above. Additionally, there are other benefits to keeping sharp: higher income, perhaps less stress, hopefully an ability to avoid accidents (like balancing your checkbook incorrectly), etc.

Some mental exercises you can do daily to keep sharp:

1. Play memory games. Exercise your memory
2. Get a book of brain teasers and puzzles and solve them.
3. Play chess, checkers, poker, any game that requires some strategic thought and memorization.
4. After meeting a person, try to remember everything he or she wore and said.
5. Try to eat lefty every once in awhile (or right-handed if you are left-handed).
6. Right now try to figure out what coins are in your pocket just by touch. Now do the same for bills (100 dollar bills are less worn than ones)
7. Play boggle or any other game which takes a set of letters and you try to see how many new words you can form from it.

Like physical exercise, if you do mental exercises for 20-30 minutes a day for five days a week you’ll see dramatic results in a very short time.

10. Avoid hospitals.

Something like 40,000 people die each year from infections they get in the hospital according the CDC. Essentially, hospitals are filled with bacteria and hospital staff (not in every hospital, but some) routinely ignore the basic steps required to insure that people do not pass infections to others.

1. Make sure anyone who touches you washes your hands first.
2. Don’t read the magazines (or, if you are a kid, play with the toys) in the waiting lounges at hospitals or doctor’s rooms.
3. Have an advocate with you preferably at all times.

A quick story: I was once pretending to be a respiratory therapist for a week in a hospital (long story) and I got to walk around with doctors, other respiratory therapists, etc on their routines. It wasn’t uncommon to hear a story such as “such and such nurse took the tracheotomy tube out but forgot to plug it up and the patient suffocated.” Again, not every hospital is like this but mistakes are made. There are millions of surgical procedures a year. Some complicated and some simple and all it takes is a tiny percentage of those to go wrong and the number of deaths from surgery accidents will far exceed the number of deaths from plane crashes each year. “The number of adverse events each year (is) equivalent to 13 jumbo jets crashing and killing all 350 passengers on board,” Kevin Rudd’s Australian National Health and Hospital Reform Commission says. An advocate every step of the way can insure that proper procedures are being followed.

1. Question all surgeries. If the doctor says “can you do surgery next Tuesday,” find out first if there’s any other non-surgical procedures. I hate to be blasphemous to the medical industry but first check with an acupuncturist (a good one that is recommended by friends who were actually helped by that acupuncturist) or a chiropractor. See if physical rehab can help first, or at least be tried without detrimental effects to the body part in question.

1. If you must do surgery make sure the surgeon has ample experience (no students!) and make sure a checklist is used durin the procedure (Atul Gawande has an excellent book on the topic of doctors using checklists.

1. You want to get out of the hospital as quickly as possible if you are having surgery there. Here’s a basic tip: Don”t have your surgery on a Thursday. Doctors don’t want to work on a weekend. You might be stuck there for the whole weekend if you just need to be in the hospital for a max two days.

1. If you are using a teaching hospital, try to avoid going there (if possible) during July. There is the notorious “July Effect” when interns become residents, residents become full-time doctors, etc. It’s the first time many of these new doctors are full time in their specialty and may not have the experience yet to accurately diagnose and prescribe the right medicines, etc. Here’s an article on the dangers of July in a hospital. (http://idiopathicmedicine.wordpress.com/2010/06/30/the-dangers-of-july-in-the-hospital/)

1. Make sure the doctor has clear handwriting on prescriptions. Believe it or not, the famous ability of pharmacists to read the handwriting of doctors is just not true. Here’s a recent article (http://www.time.com/time/health/article/0,8599,1578074,00.html) claiming that 7,000 deaths per year are caused by poor handwriting on prescriptions.

1. Avoid being plugged into an IV. If you can swallow liquids, drink the water, don’t have it put into you via a possibly contaminated IV unit.

11. Cleanliness. This one’s obvious. We collect bacteria throughout the day by touching doorknobs, staircase rails, elevator buttons, shaking hands, eating food, etc. Also, there’s the saying: “clean desk, clean mind.” In other words, keeping our environment clean is not only physically healthy but helps to reduce stress and makes you more productive. Reducing stress, as mentioned above, is key to avoiding many of the diseases that cause death.

1. Wash hands every time you go from outside to inside. Under the nails is one of the dirtiest parts of the entire body and once you take those nails and rub your eyes or scratch an itch, you are infecting yourself with any bacteria that grabbed onto the inside of those nails. Keep them short. Wash them regularly.
2. Brush your teeth. Bacteria is all over your mouth. Brushing after every meal is keep and before you go to sleep and after you wake up. It sounds annoying but brushing, flossing, and using a tongue scraper for anything that stays attached to your tongue will help prevent any disease and, of course, keep your breath clean.
3. Make your bed. Who doesn’t like to come home to a made bed.
4. Clean your desk.
5. This is a drag but shower every morning and night. When you go to sleep at night you have a whole day’s worth of bacteria on your. Why take that bacteria and put it all over your nice clean sheets when you can avoid it?

12. Avoid accidents. This almost seems like an oxymoron. The word “accident” implies there is some degree of luck involved. Like you were walking along outside of a building and something falls out of a high up window and hits you. That’s an accident that seems like just bad luck. Or is it. We know that 123,000 accidents a year occur. So lets break that down a little further.

About half the accidental deaths come from car accidents. So one thing we can do is simply avoid getting in cars. Now, that’s not always possible because we need cars to get to work. But a couple of thoughts:

- If you have a choice: live closer to work. Or take public transportation.
- If you don’t have a choice: try to avoid doing more than one activity at a time while in the car. Don’t eat, talk on the cell phone, don’t play with the radio.
- Don’t jaywalk (don’t be the recipient of a car accident if its easy to avoid).
- Wear a seat belt
- About 1/3 of accidents happen at home. Don’t get fancy and try to fix the TV antenna on the roof. Don’t get on a ladder if you don’t have to. Be careful when walking down stairs, etc.

The anti-aging industry makes billions trying to get you to take fancy pills., buy expensive equipment, do expensive medical tests, etc. But sometimes the simplest way to live longer is to avoid all the ways you were going to die.

The Hamster Wheel -Credits to Timothy Lee

The Hamster Wheel

Image via Wikipedia

If you talk to business travelers above a certain age, they’ll tell you about the good old days of airline travel. Airports used to be less crowded, the food was better, the service was more attentive, and the stewardesses were more attractive. This was because price controls kept fares high, and airlines competed for passengers with generous perks. The situation was great for the small minority of rich people and business travelers who could afford it because they didn’t have to deal with the hoi polloi clogging up the airports. But it sucked for everyone else, for whom an airplane flight was a rare luxury.

In the late 1970s, the law was changed to allow airlines to give consumers what they actually wanted, which was mostly lower prices. As fares fell, the airlines dropped most of the frills that once came with an airplane ticket. Today the food isn’t as good, service is mediocre and airports feature long lines and screaming children. But a lot more people can afford to fly home and visit their families, which is what’s really important.

This came to mind as I was reading Jonathan Rauch’s latest:

Every time someone who could have done good science does sloppy science, or does worse journalism instead of better journalism, or mediocre writing instead of fine writing, it’s a loss. When resources are scarce—and of course human talent is the most scarce and precious resource of all—it matters if blogging is inducing ADD in many of our best writers and thinkers, or driving talent away altogether.

I watch with growing concern as young journalists get channeled into content mills where they post three, seven, who knows how many blog snippets a day. I spoke with one young guy who told me he puts up seven posts a day and would like to break into longer form by doing only three. One of the most promising young journalists I know couldn’t take it and quit for medical school. Another young writer tells me he longs to “get off the hamster wheel.”

As I mentioned last week, Jonathan Rauch is old enough to remember the pre-Internet media world. Because media outlets had few competitors, they tended to be extremely profitable. As Roger Cohen andJohn Podhoretz have written, this allowed them to offer their writers a variety of perks that are hard to come by today, including a generous salary and a light schedule that allowed them to put a lot of time and effort into each story.

It’s not hard to see why Rauch would want to return to that world, just as some business travelers wish they could go back to the 1970s. But it’s important to remember that the declining fortunes of elite publications is inextricably linked to the democratization of publishing. Incumbent publications are having trouble making ends meet because they’re facing a lot more competition than they used to. And that competition is a direct consequence of the fact that everyone now has a freedom to write for a national audience.

It would be silly to deny that this has disadvantages. The New York Timesreally does do good work, and it’s been sad to see them lay people off. Writers now have to work harder to make a living and sometimes they’re tempted to cut corners. There really is a lot more “sloppy science” and “mediocre writing” than there used to be.

But the collapsing barriers to entry has also had tremendous benefits. In 1990, if you didn’t snag a coveted job at a national publication, you essentially didn’t get to be a writer at all. Today, anyone can have a blog. This has made the national conversation livelier, richer, and more interactive. It has created opportunities for people with non-traditional backgrounds to reach readers who are intensely interested in what they have to say. People with deep interests in niche subjects—linguistics, feminism, patent law, knitting—have access to an unprecedented range of material on their favorite subjects.

This is an issue I take personally because I’m probably one of the riff raff who wouldn’t have made the cut in the pre-Internet media ecosystem. The publication I do most of my writing for could only exist online. It has thin margins and asks its writers to turn stories around relatively quickly. Maybe Rauch would look down his nose at the work we do.

Publish Post

I’d love to have a job at a publication that gave me weeks to work on a story, but so far none of them has offered me a job. And indeed, no conceivable economic system could offer that kind of job to everyone who wants one. The great thing about the Internet is that you don’t need a job at one of those publications to write about topics of public concern. This is understandably irritating to longtime members of the profession that used to hold a lucrative monopoly on soapboxes. But in my view the increase in freedom for everyone else is an overw

helmingly positive development.

A Crisis in Reporting? - All credits to Timothy Lee

Clay Shirky is one of my intellectual heroes (see my 2008 interview with him), so I read his latest post on the future of reporting with interest. He says that as readers have shifted online, newspapers have suffered from an “analog dollars to digital dimes” problem: the amount advertisers are willing to pay for online readers is dramatically less than what they used to pay for print readers. Shirky argues that news organizations are going to have to learn to live with dramatically lower revenue per reader.

He makes some sensible recommendations for how the news industry and the broader society should deal with the situation. But what stuck out for me was Shirky’s uncritical endorsement of the conventional wisdom that we’re in the midst of a grim “crisis in reporting,” which, he says, “isn’t something that might happen in the future. A 30% reduction in newsroom staff, with more to come, means this is the crisis, right now.”

Shirky is sometimes criticized for the rose-colored tint of his spectacles, but here I think he’s giving too much credence to the pessimistic conventional wisdom. It’s clear that newspapers are facing a crisis, and obviously if you’re a newspaper employee or shareholder you should be worried. But whether this is a problem for the broader society is far from clear.

To tell whether the decline of newspapers is just a normal story of disruptive innovation or something the rest of need to worry about, we need to look at outputs, not inputs. It wasn’t a “crisis in telephony” when the switch to automatic dialing allowed AT&T to lay off thousands of phone operators (unless you got laid off). It wasn’t a “crisis in computing” when the PC put minicomputer manufacturers like DEC out of business. By the same token, a 30 percent decline in newsroom staff might just reflect increased journalistic efficiency.

How could this be? A reporter’s job is to collect, organize, and summarize information about important events in the world. The more of the world’s information that comes pre-organized, the easier the reporter’s job will be. And the Internet is a gigantic information-organizing machine. Sites like Google, Wikipedia, and Twitter provide vast amounts of information “pre-digested.” Reporters still have to do some work to get the information they need from these tools and turn them into publishable copy. But more and more of the basic work is done for us.

For example, in my last post, I included some statistics about Microsoft and Google’s patents. Because the patent office has a searchable online patent database, this only took about 20 minutes. I also save a ton of time any time I’m covering legal stories because statutes, court opinions, and other primary documents are usually available as PDF downloads. Similarly, Matt Yglesias regularly writes posts like this where he graphs some kind of data pulled from a government website. This kind of information retrieval is now so easy that we barely even think of it as reporting. But in the pre-Internet world it would often have been a much bigger undertaking.

Another example: I get many of my story ideas from Twitter. Every couple of weeks I do a tweet like this asking what I should be writing about. More often than not, one or more people reply with great suggestions. I also follow a number of activists, academics, and think tankers who do work related to my beat. Their tweets frequently give me story ideas. As a result, I spend less time hunting for story ideas, and more time actually writing them.

The Internet is also reducing duplication of reporting effort. The 20th century newspaper industry had a lot of reporters covering identical beats in different cities. Obviously, each metro area needs its own reporters covering city hall. But a ton of stuff in the newspaper—technology and medicine, national business and politics, movie and book reviews—isn’t tied to any specific metropolitan area. As the Internet eliminates geographic boundaries, there’s no longer a good rationale for having so many people writing redundant content.

Another important way the Internet makes reporters more productive is by reducing bureaucracy. A significant part of a newspaper reporter’s job involves negotiating with her editor about which stories she should write, when they’ll run, and how much space they’ll get. Print reporters sometimes waste time on stories that get spiked, file under-reported stories to meet arbitrary deadlines, or cut out interesting material to save space.

Shirky has called this a “filter, then publish,” process. In contrast, Forbes bloggers like me operate on a “publish, then filter” model. We write whatever we want, the Forbes editors decide which content to promote on the Forbes home page, and we’re paid based on the traffic we receive. This is more efficient not only because we don’t have to waste time negotiating with our editors, but also because there are fewer perverse incentives: we get paid if and only if we write stuff people want to read.

I could go on, but you get the idea. Add all of these factors up and I think it’s entirely plausible that the news industry’s productivity has improved enough to offset that 30 percent fall in newsroom headcounts.

Many of us look back at the 1970s and find it hard to imagine a world with just 3 or 4 national television networks. I suspect that in the 2030s, people will look back at the 1990s with the same kind of astonishment that people were satisfied with the limited amount of news available from a single newspaper. So why do so many people today see the decline of monolithic newspapers as a calamity rather than a sign of progress? Partly it’s cultural inertia, but I suspect it also has something to do with the fact that the companies whose oxes are being gored own some of the nation’s tallest soapboxes.

Why Zynga Might be Worth $25 Billion in Five Weeks

By Conor Sen May 25, 2011 11:30 am

Houses and durable goods aren't the future of the US economy. Neither are commodities. It's the virtual world people are gravitating toward.

The point of this piece is to provide intellectual justification for how LinkedIn (LNKD) could be worth $25 billion in five years, and how Zynga might be worth $25 billion in five weeks. Yep, the maker of Farmville and Mafia Wars is looking to IPO, perhaps as soon as next month, and with roughly $1 billion in revenues and $500 million in profits over the past year, a $25 billion market cap is a possibility.

Kevin Depew wrote back in 2008 in Five Things You Need to Know: Social Mood Shift Brings Stark Changes about the re-pricing of financial and intangible assets that was likely to occur as a result of the socionomic shift of the last cycle:

But this mania has created the overvaluation of all financial assets. So what is left that is undervalued? Intangible assets; relationships, time, quietude, reflection -- objects/ideas that are difficult to define and whose value deflated in the mania of accumulation of all manner of consumables and financial assets.

But now social mood is shifting. As a consequence of that shift many intangible assets will be re-priced.

Little did we realize how right he was -- Facebook, LinkedIn, and Zynga were hard at work building multi-billion dollar businesses around the idea of virtual, or intangible, assets, and relationships.

This is the future, what Professor Pinch and I are calling the data economy, and what I intend to keep writing about until it becomes widely accepted.

That brings us to this morning's durable goods print, which was weak, falling 3.6% vs a consensus drop of 3.0%. This comes on the heels of yesterday's new home sales report, which shows the housing market continuing to bounce along the bottom. Who cares? Houses and durable goods aren't the future of the US economy. Neither are commodities. Rick Bookstaber put it better than I, noting:

People who are staring at a tsunami of demand for commodities from the developing world and predicting a doomsday of $400 oil and $4000 gold are missing the longer-term retreating tide of demand as citizens of the developed world actually demand decreasing amounts of energy, large goods, and heavy infrastructure. We won't be packing up and moving to Mars, as the science fiction solutions to resource depletion propose. We will pack up and move into the virtual world.

That brings us to a final point, on credit and interest rates. Rising economic themes are capital-light. Food trucks and CSA (community-supported agriculture) programs instead restaurant chains and global agrobusiness. Cloud computing and tablets/smartphones instead of a large IT footprint. Renting instead of owning. Why are people worried about a spike in interest rates and the damage it will have on the economy when our lives will increasingly demand less and less credit? Why can't the government run large deficits for a few more years in this environment?

Sounds crazy, I know. Sort of like saying the US could have the biggest boom it ever had without a corresponding increase in per-capita oil consumption.

The Groupon IPO!

Groupon is Effectively Insolvent
By Conor Sen

Investors beware -- the company owes $230 million more than it has, appears to be burning through $100 million or more a quarter, and is using money raised from later investors to pay back early investors.


I'll start by tipping my hat to Andrew Mason. He caught social mood just right, creating a coupon/local/flashmob hybrid business model at the perfect time, and has created the fastest-growing company on a revenue basis in American history. That being said, it's operating like a Ponzi scheme that needs constant infusions of cash to stay afloat as it's hemorrhaging money.

We'll start by looking at the balance sheet, which is typically a waste of time for hypergrowth companies. However, for Groupon there are all kinds of red flags. They have $290 million in current assets ($208 million in cash) and $520 million in current liabilities -- current assets minus current liabilities puts them $230 million in the hole. This wouldn't be a problem except for the fact that they're wildly unprofitable, which we'll get to in a moment. Another concerning part of their current liabilities is that $290 million of it is "accrued merchant payables" -- in the US they take up to 60 days to repay merchants. So that $290 million is merchants who have rendered services waiting to get repaid by Groupon. Not exactly the best merchant experience. Oh, and by comparison, LinkedIn (LNKD) has current assets well in excess of current liabilities, and isn't losing money.

The income statement is even worse. In Q1 of last year they had net income of $8.5 million on $44.2 million in revenue, for a profit margin of nearly 20%. Not bad! At some point around that time, they decided to abandon a profitable growth strategy and went for the hypergrowth revenue strategy. For the remainder of the year they had $669 million in revenue (simply staggering), but had a net loss attributable to Groupon of $398 million. This year, Q1 results showed revenue growth continuing to soar, with revenues of $644 million, but a net loss attributable to Groupon of $102 million.

They lost $49 million in Q3, $313 million in Q4, and $102 million in Q1, with revenue leaping from $185 million to $396 million to $644 million, so it's incredibly difficult to have any idea what Q2 will look like let alone what the business will look like 6-12 months from now. That being said, the most likely reason why they're going public now is because they desperately need the cash, plain and simple.

There are all kinds of questions about the business. How can they possibly sustain this kind of revenue growth? Can they get costs under control? What about merchant and customer fatigue? How about deep-pocketed and savvy competition, either doing exactly what they're doing (LivingSocial) or coming to the table with a ton of customer data, i.e., Facebook and Google (GOOG)? The Daily Deal I got offered today was for a restaurant 30 miles away: how does that make sense either for the customer or merchant? How can you possible build a sustainable business by going from 0 to 8,000 employees in two years? Why did the COO and CTO both leave the company in late March, barely two months ago? How do you value a business that could do $3 billion in revenue this year but might not be able to keep the lights on in 12 months?

Follow Conor Sen on Twitter @conorsen
Most concerning of all, however, might be how their most recent capital raises have been handled. Their Series F and G capital raises, which occurred in April and December of 2010, raised a combined $1.08 billion. Of that $1.08 billion, $150 million went to the company for working capital purposes. The other $930 million? Paid back to founders and early backers by buying their shares from them.

So a company that owes $230 million more than it has, and appears to be burning through $100 million or more a quarter, is using money raised from later investors to pay back early investors? Sounds vaguely familiar. I'm not accusing Groupon of doing anything illegal or unethical. Ponzi, Enron, and Madoff all swindled their investors by misleading them about the financial health of their enterprises. As Minyanville's Todd Harrison likes to say, "The only difference between intervention and manipulation is communication." Groupon is telling you exactly what they are in their filing forms and by their actions. Invest at your own risk.

When Managing Complexity, Less is More

When Managing Complexity, Less is More-- Justin Fox

The answer is to make things simple, says Bill Allen, head of Group Human Resources at Copenhagen-based A.P. Moller-Maersk. He contends that activities at the group level — beyond public company requirements like reporting numbers to investors — should be restricted to a core set of five that enable and enhance business performance.

Those five group-level activities are
(1) portfolio management (deciding which businesses should be part of the group);
(2) performance management (setting ambitious goals and holding business managers accountable for achieving them);
(3) capital allocation (making investments in the businesses where they can produce the greatest returns);
(4) executive talent management (making sure that the best people are working the mission-critical jobs); and
(5) synergy capture (for very large opportunities that cross the businesses).

Other than that, individual businesses are in charge of delivering their results as they see fit. Because of this simple operating system, Maersk was able to bounce back quickly from the effects of the global recession so that 2010 results were the best in company history.

Even if you aren't managing a conglomerate like Maersk, sometimes the best way to address the most complex management challenge is to do less, not more. Select the handful of critical leverage points that will have the biggest impact on success and relentlessly focus on doing them better — without getting distracted by anything else. By following this principle, Maersk reduced headcount at its corporate headquarters by 40% in two years and did a better job of enabling the businesses to produce results. The Group HR function alone went from 87 to 23 people, and according to Allen is much more effective.

The reality is that without ruthless prioritization, smart workers will always identify new opportunities, therefore perpetuating a cycle of increasing activity that is difficult to break. And this is where much of the complexity comes from in organizations, both at the corporate level and within business units. This doesn't mean that these activities are not useful, value-added, or worthwhile — but unless they are absolutely critical for achieving strategic goals, they need to be questioned or eliminated.

Here's a quick example: In one large consumer products company, the CEO insisted on having detailed operational reports rolled up every month to the corporate level, which she then used for a monthly review meeting with business heads and corporate staff. Creating these reports required a small army of corporate financial analysts while also creating a cascade of work within all of the business units. And since the financial analysts were not always busy with the monthly reports, they also generated additional activities for the businesses that they thought were value-added. When the CEO retired, her successor decided that these detailed operational reports were unnecessary since each business unit already reported its key numbers — and the big review meetings never resulted in substantial decisions anyway. In other words, he quickly determined that this form of operational roll-up was not critical to the company's success and it was eliminated (along with the small army of financial analysts and the additional work they spawned).

All of us have a tendency to take on additional work, lose focus, and feel overloaded — whether we work in the C-suite, at a desk, or on a shop floor. The key is not to repeat that pattern by adding more work. Instead, take an inventory of everything you're trying to do, pick out the few things that will make the most difference (to your job, your career, or your life), and put everything else at the bottom of the pile or eliminate it altogether. Prioritize, prioritize, prioritize — and you may find that you'll get more done by doing less. If a highly complex company like Maersk can do it, why can't you?

Why Bankers Need to Be Put Into Little Boxes

Why Bankers Need to Be Put Into Little Boxes
Justin Fox


There's a beguiling little moment in the financial-crisis documentary Inside Job where hedge fund billionaire George Soros describes the principles of oil tanker design. If a tanker consisted of one big tank of oil, the sloshing liquid would soon capsize the vessel, Soros explains. So tankers are comprised of lots of smaller, separate tanks, which keeps the sloshing in check and the ships afloat.

Financial markets are like that, Soros goes on. If they're compartmentalized, the risk of crisis is much lower than if all sorts of financial products and institutions are allowed to mix together in a giant sloshfest.

It's a nice analogy. That doesn't mean it perfectly describes the workings of financial markets (it's an analogy), but it certainly gets at some aspects not hinted at in the general equilibrium model that long dominated financial economics — in which more "complete" and intertwined financial markets are supposed to lead to better economic outcomes. To mainstream economists the Glass-Steagall Act that separated the banking and securities industries looked like a competition-restricting, innovation-damping anachronism. To those knowledgeable about oil tankers, its repeal in 1999 must have been far more disturbing.

The tanker analogy kept coming back to me as I read this week through the collected works of Robert G. Wilmers, also known as his annual messages to the shareholders of Buffalo-based M&T Bank Corp., where he is CEO. Wilmers' most recent letter includes a long discourse on regulatory reform that has already been recommended by Warren Buffett at Berkshire Hathaway's annual meeting and lauded in Joe Nocera's New York Times column. It is good, and it piqued my interest in what Wilmers had been writing over the course of the financial crisis.

Clearly, the man has come to see the good side of being compartmentalized. Here he is in early 2009, explaining the bad parts of M&T's staggeringly good (for a bank in the middle of a global financial crisis) 2008 earnings report:
[T]he specific drags on our 2008 earnings ... largely represented departures from our traditional community banking model, a model based on lending in the markets where we live and work to people and enterprises whom we know. In contrast, the investments which proved problematic shared the following characteristics: they were transactional in nature, outside our market footprint, far from our branches and not associated with deposits.

Why did M&T make such out-of-character investments? From the same letter:
[N]o company operates in a vacuum. The once outsized profits of those financial services firms taking what turned out to be foolish levels of risk led to pressure on their competitors, including us. That we resisted the temptation to the extent that we did is a source of at least some consolation for me.
Wilmer hoped that lawmakers and regulators would see this, and take action to fence in the border-blurring, regulation-avoiding "shadow banking system" of derivatives and securitizations and special purpose vehicles that was at the heart of the financial crisis, restoring the primacy of actual banks that took deposits and made loans. His frustration, as expressed in his latest letter, is that something more like the opposite has happened.

The six biggest "banks" (Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley — although Wells looks more like a traditional bank than the others), Wilmers writes, make most of their money trading securities and derivatives, and are now able to do so with close-to-explicit government backing as too-big-to-fail institutions. Meanwhile, the rest of the country's banks, which make most of their money from banking, have a load of new consumer-protection rules to contend with, plus continued competition from the surviving parts of the shadow banking system. So basically (and I'm still paraphrasing Wilmers here), we've taken the part of the financial system that caused the crisis and put it back on its feet so it can go back to paying people staggering amounts of money for work of possibly negative economic value, while adding more burdens to the part of the financial system that didn't cause the crisis.
The inability to differentiate between Wall Street and Main Street by Washington, as well as by the public at large, has hurt the image of Main Street banks and increased their cost of operations. One has to question whether we haven't created the makings of the next financial crisis or, indeed, disrupted the balance in our society between rich and poor.
The funny thing is, in any other business, such talk would come across as whiny special pleading. Aggressive businesspeople who break down barriers between sectors are praised and their big financial rewards seen as just, while incumbents who lose out to the barrier busters are believed to have gotten what's coming to them. But M&T is actually doing really well — taking advantage of its relative health to make big acquisitions. And as the Panic of 2008 showed, the financial sector is different. It is at this point inextricably entwined with government, for one thing, so lawmakers and regulators are helping decide its winners and losers whether they mean to or not. And in an era when innovation is (rightly) celebrated, it is a sector where traditions — and compartments — serve a clear purpose.

http://blogs.hbr.org/fox/2011/06/why-bankers-need-to-be-put-int.html

Nine Things Successful People Do Differently

Nine Things Successful People Do Differently
8:58 AM Friday February 25, 2011
by Heidi Grant Halvorson

Why have you been so successful in reaching some of your goals, but not others? If you aren't sure, you are far from alone in your confusion. It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail. The intuitive answer — that you are born predisposed to certain talents and lacking in others — is really just one small piece of the puzzle. In fact, decades of research on achievement suggests that successful people reach their goals not simply because of who they are, but more often because of what they do.

1. Get specific. When you set yourself a goal, try to be as specific as possible. "Lose 5 pounds" is a better goal than "lose some weight," because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there. Also, think about the specific actions that need to be taken to reach your goal. Just promising you'll "eat less" or "sleep more" is too vague — be clear and precise. "I'll be in bed by 10pm on weeknights" leaves no room for doubt about what you need to do, and whether or not you've actually done it.

2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it's not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Did you really have no time to work out today? No chance at any point to return that phone call? Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.

To seize the moment, decide when and where you will take each action you want to take, in advance. Again, be as specific as possible (e.g., "If it's Monday, Wednesday, or Friday, I'll work out for 30 minutes before work.") Studies show that this kind of planning will help your brain to detect and seize the opportunity when it arises, increasing your chances of success by roughly 300%.

3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don't know how well you are doing, you can't adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.

4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don't underestimate how difficult it will be to reach your goal. Most goals worth achieving require time, planning, effort, and persistence. Studies show that thinking things will come to you easily and effortlessly leaves you ill-prepared for the journey ahead, and significantly increases the odds of failure.

5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Many of us believe that our intelligence, our personality, and our physical aptitudes are fixed — that no matter what we do, we won't improve. As a result, we focus on goals that are all about proving ourselves, rather than developing and acquiring new skills.

Fortunately, decades of research suggest that the belief in fixed ability is completely wrong — abilities of all kinds are profoundly malleable. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.

6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. Grit predicts which cadets will stick out their first grueling year at West Point. In fact, grit even predicts which round contestants will make it to at the Scripps National Spelling Bee.

The good news is, if you aren't particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don't have the innate abilities successful people have. If that describes your own thinking .... well, there's no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.

7. Build your willpower muscle. Your self-control "muscle" is just like the other muscles in your body — when it doesn't get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals.

To build willpower, take on a challenge that requires you to do something you'd honestly rather not do. Give up high-fat snacks, do 100 sit-ups a day, stand up straight when you catch yourself slouching, try to learn a new skill. When you find yourself wanting to give in, give up, or just not bother — don't. Start with just one activity, and make a plan for how you will deal with troubles when they occur ("If I have a craving for a snack, I will eat one piece of fresh or three pieces of dried fruit.") It will be hard in the beginning, but it will get easier, and that's the whole point. As your strength grows, you can take on more challenges and step-up your self-control workout.

8. Don't tempt fate. No matter how strong your willpower muscle becomes, it's important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don't try to take on two challenging tasks at once, if you can help it (like quitting smoking and dieting at the same time). And don't put yourself in harm's way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.

9. Focus on what you will do, not what you won't do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. Research on thought suppression (e.g., "Don't think about white bears!") has shown that trying to avoid a thought makes it even more active in your mind. The same holds true when it comes to behavior — by trying not to engage in a bad habit, our habits get strengthened rather than broken.
If you want change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like "If I am starting to feel angry, then I will take three deep breaths to calm down." By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.

It is my hope that, after reading about the nine things successful people do differently, you have gained some insight into all the things you have been doing right all along. Even more important, I hope are able to identify the mistakes that have derailed you, and use that knowledge to your advantage from now on. Remember, you don't need to become a different person to become a more successful one. It's never what you are, but what you do.

Heidi Grant Halvorson, Ph.D. is a motivational psychologist, and author of the new book Succeed: How We Can Reach Our Goals (Hudson Street Press, 2011). She is also an expert blogger on motivation and leadership for Fast Company and Psychology Today. Her personal blog, The Science of Success, can be found at www.heidigranthalvorson.com. Follow her on Twitter @hghalvorson

100 rules for being an entrepreneur

If you Google “entrepreneur” you get a lot of mindless cliches like “Think Big!” For me, being an “entrepreneur” doesn’t mean starting the next “Faceook”. Or even starting any business at all. It means finding the challenges you have in your ife, and determining creative ways to overcome those challenges. However, in this post I focus mostly on the issues that come up when you first start your company. These rules also apply if you are taking an entrepreneurial stance within a much larger company (which all employees should do).



(this is BS)
For me, I’ve started several businesses. As I’ve described in the rest of this blog, some have succeeded, many have failed. I’m invested in about 13 private companies. I’ve advised probably another 50 private companies. Along the way I’ve compiled a list of rules that have helped me deal with every aspect of being an entrepreneur in business and some in life.

[Btw, Claudia thinks I shouldn’t put this post up. This is going to be a chapter in a book I am self-publishing in a week or so: “How to be the Luckiest Man Alive”. But I’m trying to price the book for free on Kindle so why not? Plus, once I write something, I can’t help myself. I have to put it up.]

Here’s the real rules:

A) It’s not fun. I’m not going to explain why it’s not fun. These are rules. Not theories. I don’t need to prove them. But there’s a strong chance you can hate yourself throughout the process of being an entrepreneur. Keep sharp objects and pills away during your worst moments. And you will have them. If you are an entrepreneur and agree with me, please note this in the comments below.

B) Try not to hire people. You’ll have to hire people to expand your business. But it’s a good discipline to really question if you need each and every hire.

C) Get a customer. This seems obvious. But it’s not. Get a customer before you start your business, if you can. (see, “the Easiest Way to Succeed as an Entrepreneur”)

CA) Follow me on Twitter.

D) If you are offering a service, call it a product. Oracle did it. They claimed they had a database. But if you “bought” their database they would send in a team of consultants to help you “install” the database to fit your needs. In other words, for the first several years of their existence, they claimed to have a product but they really were a consulting company. Don’t forget this story. Products are valued higher than services.

E) It’s OK to fail. Start over. Hopefully before you run out of money. Hopefully before you take in investor money. Or, don’t worry about it. Come up with new ideas. Start over.

F) Be profitable. Try to be profitable immediately. This seems obvious but it isn’t. Try not to raise money. That money is expensive.

G) When raising money: if it’s not easy then your idea is probably incapable of raising money. If its easy, then take as much as possible. If its TOO easy, then sell your company (unless you are Twitter, etc).


(if its too easy, sell your company)
H) The same goes for selling your company. If it’s not easy, then you need to build more. Then sell. To sell your company, start getting in front of your acquirers a year in advance. Send them monthly updates describing your progress. Then, when they need a company like yours, your company is the first one that comes to mind.

I) Competition is good. It turns you into a killer. It helps you judge progress. It shows that other people value the space you are in. Your competitors are also your potential acquirors.

J) Don’t use a PR firm. Except maybe as a secretary. You are the PR for your company. You are your companys brand. You personally.

K) Communicate with everyone. Employees. Customers. Investors. All the time. Every day.

L) Do everything for your customers. This is very important. Get them girlfriends or boyfriends. Speak at their charities. Visit their parents for Thanksgiving. Help them find other firms to meet their needs. Even introduce them to your competitors if you think a competitor can help them or if you think you are about to be fired. Always think first, “What’s going to make my customer happy?”

M) Your customer is not a company. There’s a human there. What will make my human customer happy? Make him laugh. You want your customer to be happy.

N) Show up. Go to breakfast/lunch/dinner with customers. Treat.

O) History. Know the history of your customers in every way. Company history, personal history, marketing history, investing history, etc.

P) Micro-manage software development. Nobody knows your product better than you do. If you aren’t a technical person, learn how to be very specific in your product specification so that your programmers can’t say: “well you didn’t say that!”

Q) Hire local. You need to be able to see and talk to your programmers. Don’t outsource to India. I love India. But I won’t hire programmers from there while I’m living in the US.

R) Sleep. Don’t buy into the 20 hours a day entrepreneur myth. You need to sleep 8 hours a day to have a focused mind.

S) Exercise. Same as above. If you are unhealthy, your product will be unhealthy.

T) Emotionally Fit. DON’T have dating problems and software development problems at the same time. VCs will smell this all over you.

U) Pray. You need to. Be grateful where you are. And pray for success. You deserve it. Pray for the success of your customers. Heck, pray for the success of your competitors. The better they do, it means the market is getting bigger. And if one of them breaks out, they can buy you.

V) Buy your employees gifts. Massages. Tickets. Whatever. I always imagined that at the end of each day my young, lesbian employees (for some reason, most employees at my first company were lesbian) would be calling their parents and their mom and dad would ask them: “Hi honey! How was your day today?” And I wanted them to be able to say: “It was the best!” Invite customers to masseuse day.



W) Treat your employees like they are your children. They need boundaries. They need to be told “no!” sometimes. And sometimes you need to hit them in the face (ha ha, just kidding). But within boundaries, let them play.

X) Don’t be greedy pricing your product. If your product is good and you price it cheap, people will buy. Then you can price upgrades, future products, and future services more expensive. Which goes along with the next rule.

Y) Distribution is everything. Branding is everything. Get your name out there, whatever it takes. The best distribution is of course word of mouth, which is why your initial pricing doesn’t matter.

YA) Follow me on Twitter.

Z) Don’t kill yourself. It’s not worth it. Your employees need you. Your children or future children need you. It seems odd to include this in a post about entrepreneurship but we’re also taking about keeping it real. Most books or “rules” for entrepreneurs talk about things like “think big”, “go after your dreams”. But often dreams turn into nightmares. I’ll repeat it again. Don’t kill yourself. Call me if things get too stressful. Or more importantly, make sure you take proper medication

AA) Give employees structure. Let each employee know how his or her path to success can be achieved. All of them will either leave you or replace you eventually. That’s OK. Give them the guidelines how that might happen. Tell them how they can get rich by working for you.

BB) Fire employees immediately. If an employee gets “the disease” he needs to be fired. If they ask for more money all the time. If they bad mouth you to other employees. If you even think they are talking behind your back, fire them. The disease has no cure. And it’s very contagious. Show no mercy. Show the employee the door. There are no second chances because the disease is incurable.

CC) Make friends with your landlord. If you ever have to sell your company, believe it or not, you are going to need his signature (because there’s going to be a new lease owner)

DD) Only move offices if you are so packed in that employees are sharing desks and there’s no room for people to walk.

EE) Have killer parties. But use your personal money. Not company money. Invite employees, customers, and investors. It’s not the worst thing in the world to also invite off duty prostitutes or models.

FF) If an employee comes to you crying, close the door or take him or her out of the building. Sit with him until it stops. Listen to what he has to say. If someone is crying then there’s been a major communication breakdown somewhere in the company. Listen to what it is and fix it. Don’t get angry at the culprit’s. Just fix the problem.


(you don't want your employees to be sad.)
GG) At Christmas, donate money to every customer’s favorite charity. But not for investors or employees.

HH) Have lunch with your competitors. Listen and try not to talk. One competitor (Bill Markel from Interactive once told me a story about how the CEO of Toys R Us returned his call. He was telling me this because I never returned Bill’s calls. Ok, Bill, lesson noted.

II) Ask advice a lot. Ask your customers advice on how you can be introduced into other parts of their company. Then they will help you. Because of the next rule…

JJ) Hire your customers. Or not. But always leave open the possibility. Let it always dangle in the air between you and them. They can get rich with you. Maybe. Possibly. If they play along. So play.

KK) On any demo or delivery, do one extra surprise thing that was not expected. Always add bells and whistles that the customer didn’t pay for.

LL) Understand the demographic changes that are changing the world. Where are marketing dollars flowing and can you be in the middle. What services do aging baby boomers need? Is the world running out of clean water? Are newspapers going to survive? Etc. Etc. Read every day to understand what is going on.

LLa) Don’t go to a lot of parties or “meetups” with other entrepreneurs. Work instead while they are partying.

MM) But, going along with the above rule, don’t listen to the doom and gloomers that are hogging the TV screen trying to tell you the world is over. They just want you to be scared so they can scoop up all the money.

NN) You have no more free time. In your free time you are thinking of new ideas for customers, new ideas for services to offer, new products.

OO) You have no more free time, part 2. In your free time, think of ideas for potential customers. Then send them emails: “I have 10 ideas for you. Would really like to show them to you. I think you will be blown away. Here’s five of them right now.”

OOa) Depressions, recessions, don’t matter. There’s $15 trillion in the economy. You’re allowed a piece of it:



PP) Talk. Tell everyone you ever knew what your company does. Your friends will help you find clients.

QQ) Always take someone with you to a meeting. You’re bad at following up. Because you have no free time. So, if you have another employee. Let them follow up. Plus, they will like to spend time with the boss. You’re going to be a mentor.

RR) If you are consumer focused: your advertisers are your customers. But always be thinking of new services for your consumers. Each new service has to make their life better. People’s lives are better if: they become healthier, richer, or have more sex. “Health” can be broadly defined.

SS) If your customers are advertisers: find sponsorship opportunities for them that drive customers straight into their arms. These are the most lucrative ad deals (see rule above). Ad inventory is a horrible business model. Sponsorships are better. Then you are talking to your customer.

TT) No friction. The harder it is for a consumer to sign up, the less consumers you will have. No confirmation emails, sign up forms, etc. The easier the better.

TTA) No fiction, part 2. If you are making a website, have as much content as you can on the front page. You don’t want people to have to click to a second or third page if you can avoid it. Stuff that first page with content. You aren’t Google. (And, 10 Unusual Things You Didn’t Know About Google)

UU) No friction, part 3. Say “yes” to any opportunity that gets you in a room with a big decision maker. Doesn’t matter if it costs you money.

VV) Sell your company two years before you sell it. Get in the offices of the potential buyers of your company and start updating them on your progress every month. Ask their advice on a regular basis in the guise of just an “industry catch-up”

WW) If you sell your company for stock, sell the stock as soon as you can. If you are selling your company for stock it means:

a. The market is such that lots of companies are being sold for stock.
b. AND, companies are using stock to buy other companies because they value their stock less than they value cash.
c. WHICH MEANS, that when everyone’s lockup period ends, EVERYONE will be selling stock across the country. So sell yours first.
XX) Ideas are worthless. If you have an idea worth pursuing, then just make it. You can build any website for cheap. Hire a programmer and make a demo. Get at least one person to sign up and use your service. If you want to make Facebook pages for plumbers, find one plumber who will give you $10 to make his Facebook page. Just do it.

YY) Don’t use a PR firm, part II. Set up a blog. Tell your personal stories (see “33 tips to being a better writer” ). Let the customer know you are human, approachable, and have a real vision as to why they need to use you. Become the voice for your industry, the advocate for your products. If you make skin care products, tell your customers every day how they can be even more beautiful than they currently are and have more sex than they are currently getting. Blog your way to PR success. Be honest and bloody.

ZZ) Don’t save the world. If your product sounds too good to be true, then you are a liar.

ZZa) Your company is always for sale.



AAA) Frame the first check. I’m staring at mine right now.

BBB) No free time, part 3. Pick a random customer. Find five ideas for them that have nothing to do with your business. Call them and say, “I’ve been thinking about you. Have you tried this?”

CCC) No resale deals. Nobody cares about reselling your service. Those are always bad deals.

DDD) Your lawyer or accountant is not going to introduce you to any of their other clients. Those meetings are always a waste of time.

EEE) Celebrate every success. Your employees need it. They need a massage also. Get a professional masseuse in every Friday afternoon. Nobody leaves a job where there is a masseuse.

FFF) Sell your first company. Don’t take any chances. You don’t need to be Mark Zuckerberg. Sell your first company as quick as you can. You now have money in the bank and a notch on your belt. Make a billion on your next company.

GGG) Pay your employees before you pay yourself.

HHH) Give equity to get the first customer. If you have no product yet and no money, then give equity to a good partner in exchange for them being a paying customer. Note: don’t blindly give equity. If you develop a product that someone asked for, don’t give them equity. Sell it to them. But if you want to get a big distribution partner whose funds can keep you going forever, then give equity to nail the deal.

III) Don’t worry about anyone stealing your ideas. Ideas are worthless anyway. It’s OK to steal something that’s worthless.

IIIA) Follow me on twitter.

Questions from Readers

Question: You say no free time but you also say keep emotionally fit, physically fit, etc. How do I do this if I’m constantly thinking of ideas for old and potential customers?

Answer: It’s not easy or everyone would be rich.

Question: if I get really stressed about clients paying, how do I get sleep at night?

Answer: medication

Question: how do I cold-call clients?

Answer: email them. Email 40 of them. It’s OK if only 1 answers. Email 40 a day but make sure you have something of value to offer.

Question: how can I find cheap programmers or designers?

Answer: if you don’t know any and you want to be cheap: use scriptlance.com, elance.com, or craigslist. But don’t hire them if they are from another country. You need to communicate with them even if it costs more money.

Question: should I hire programmers?

Answer: first…freelance. Then hire.

Question: what if I build my product but I’m not getting customers?

Answer: develop a service loosely based on your product and offer that to customers. But I hope you didn’t make a product without talking to customers to begin with?

Question: I have the best idea in the world, but for it to work it requires a lot of people to already be using it. Like Twitter.

Answer: if you’re not baked into the Silicon Valley ecosystem, then find distribution and offer equity if you have to. Zuckerberg had Harvard. MySpace had the fans of all the local bands they set up with MySpace pages. I (in my own small way) had Thestreet.com when I set up Stockpickr.com. I also had 10 paying clients when i did my first successful business fulltime.

Question: I just lost my biggest customer and now I have to fire people. I’ve never done this before. How do I do it?

Answer: one on meetings. Be Kind. State the facts. Say you have to let people go and that everyone is hurting but you want to keep in touch because they are a great employee. It was an honor to work with them and when business comes back you hope you can convince them come back. Then ask them if they have any questions. Your reputation and the reputation of your company are on the line here. You want to be a good guy. But you want them out of your office within 15 minutes. It’s a termination, not a negotiation. This is one reason why it’s good to start with freelancers.

Question: I have a great idea. How do I attract VCs?

Answer: build the product. Get a customer. Get money from customer. Get more customers. Build more services in the product. Get VC. Chances are by this point, the VCs are calling you.

Question: I want to build a business day trading.

Answer: bad idea

Question: I want to start a business but don’t know what my passion is:

Answer: skip to the post: “How to be the luckiest person alive”. Do the Daily Practice. Within six months your life will be completely different.

Question: I want to leave my job but I’m scared.

Answer: same as above question. The Daily Practice turns you into a healthy Idea Machine. Plus luck will flow in from every direction.

Final rule: Things change. Every day. The title of this post, for instance, says “100 Rules”. But I gave about 70 rules (including the Q&A). Things change midway through. Be ready for it every day. In fact, every day figure out what you can change just slightly to shake things up and improve your product and company.

Throughout the rest of this blog I have examples, ideas, rules, etc. In fact, it adds up to a lot more than 100 rules. Many of the rules above are repeated in other posts ahead but use this post as a cheat sheet. If you can think of more rules for me, add them to the comments. I’ll try and put them in the upcoming book.

Alignment!

Long-term brands and relationships are built on alignment. Here are a few examples ("I" is the royal I, not me in particular):

A perfect relationship: I want your company to help me, and your company wants to help me. We're both focused on helping the same person.

The Walmart relationship: I want the cheapest possible prices and Walmart wants to (actually works hard to) give me the cheapest possible prices. That's why there's little pushback about customer service or employee respect... the goals are aligned.

The Apple relationship: I want Apple to be cool. Apple wants to be cool. That's why there's little pushback on pricing or obsolence or disappointing developers.

The demagogue politician relationship: I will feel more powerful if you get elected and get your way. You will feel more powerful if you get elected and get your way.

The search engine relationship (when it's working): I want to find what I'm looking for. You want me to find what I'm looking for, regardless of the short-term income possibilities.

The Mercedes (formerly Cadillac) relationship: I want a prestige product that reliably delivers an expensive label that's unattainable to many. They want to reliably and consistently charge a lot for a car that sends a message to everyone else.

The farmer's market relationship: I want to eat sustainable foods that make me feel good. You want to grow sustainable foods that make me feel good.

Compare these to the ultimately doomed relationships (if not doomed, then tense) in which goals don't align, relationships where the brand took advantage of an opening but then grows out of the initial deal and wants to change it:

The Dell relationship: I want a cheap, boring, reliable computer. You want to make more profit.

The hip designer relationship: I want the new thing no one else has yet. You want to be around for years.

The search engine relationship (when it doesn't work): I want to find what I'm looking for. You want to distract me and take money to send me places I actually don't want to go.

The reluctant purchaser relationship: I don't want to waste money on something I didn't know I wanted. You want to make a commission.

The troll relationship: I want to laugh at a buffoon who doesn't realize he's making a fool of himself. You want to be respected by the mainstream.

The young actor relationship: I want the fresh-faced young movie star. You want a career that lasts more than a year.

The typical media relationship: I want to see the shows, you want to interrupt with ads.

Alignment isn't something you say. It's something you do. Alignment is demonstrated when you make the tough calls, when you see if the thing that matters the most to you is also the thing that matters the most to the other person.

The tension that comes from misalignment can work for a while, but it's when alignment kicks in that the enterprise really scales.