Richard Yong

Poker. Playing the hand you're dealt.

We cannot change the cards we are dealt, just how we play the hand.

- Randy Pausch, Carnegie Mellon University Professor, Disney Imagineer, The Last Lecture, and remarkable guy. Oh, he's also 47 and dying of pancreatic cancer.

1326

The number of starting card pairs in poker.

15

The number of hands worth playing.  That's just over 1% of all cards possibilities.

The hand doesn't change, but how you play your cards can.

Life is the same. How you play your cards can change everything.

Recently Dr. Adam Fraser from the Glucose Club shared a story  with me, about a business man. This man, had been brought up in family with a single mother, who had an extreme disability and very little money. From a young age, without a father, he became the sole caretaker and breadwinner for the house. By 16, he had started his own company, and is now a successful multi business owning, multi millionaire.

Surprised by his carefree, positive nature from such a stark horrible childhood, Adam asked him why hadn't he been stuck in his misery, poverty and pain of his terrible circumstance? He responded,

'You play the cards you're dealt.'

This resounded deeply with me, this guy understood that you can whinge, be jealous, sad and miserable about what you've got, or you can accept that life isn't always fair, and make the most of it.

Personally, I like the cards I've been dealt. I'm not going to apologise for them and I'm not going to be jealous of those who have more. Now this is the really difficult bit... I've just got to make the right bet.

flickr cred: Kevin Labianco

SMS and Mobile Calls. Kinda like Alcoholism.

There was a key message about my $50 a year mobile bill.

I had two bad habits that became normalised behaviour.

1. I called back any missed calls and made calls while walking between meetings or doing things I didn't need to concentrate on.

2. Replied by sms to any messages received, instantaneously.

The mobile phone companies thrive on because everyone thinks it's normal. Normal doesn't make it right. Or valuable.

The reality of communication is that almost nothing is required instantaneously. The world doesn't fall over because Bill in Accounts Receivable wanted to find out if you had the invoice for the taxi trip in your left pocket. Or your boss wants that budget sent to him ASAP.

So how do we stop normal but pointless expensive behaviour?

Habit change using filters.

Filters are quick rules to live by. Here are my filters for choosing to make a call from my mobile, and not when I reach a land line or PC.

• Can I personally do anything about it right at this very second? No? Then there is nothing to worry about.
• Even if a catastrophe has happened, could I do anything, or is it just more (useless) information?

The most powerful single change though was this question, if I'm using a mobile right now, and I've let myself be interrupted, is what I'm doing even that important? If it isn't important, why the heck am I wasting my attention, energy and ability.

These two filters mean that I don't react to missed information anymore. 99% of calls are made from home. I've had to fight the itch when I'm delayed 10 minutes by the pizza man to call my wife, because either way I'm late and if I make the mobile call, nothing changes (except i might as well have thrown some coins in the bin).

Mobile phones (and any bad habit) reminds me of the Alcoholics Anonymous Serenity Prayer.

God grant us the serenity to accept the things we cannot change,
courage to change the things we can,
and wisdom to know the difference

Flickr cred: Kian Esquire

Why Kinokuniya hates books, Apple hates computers and how to kill money.

Bear with me, this one isn't really about books, computers or about killing money.

Kinokuniya hates books.

Kinokuniya would rather have no books on its shelves. It's true. If they could have it their way, they would have a shop so small, it would only stock books that are looked at or sold. Unsold books sitting on shelves costs Kinokuniya big time and they don't like it one bit.

What cost, exactly? Every dollar spent buying, housing, presenting, packaging and transporting books is working capital not invested in growing or developing the business.

Apple hates computers.

Gil Amelio (ex-CEO) liquidated two billion dollars worth of Apple's computer inventory and turned it into one and a half billion dollars of cold hard cash. Why? Working capital. A dollar in his pocket is a dollar free to spend on decisions. Anything tied up in unsold computers sitting in warehouses is dying money.

Amelio realised the opportunity and freedom of working capital.

Okay. So this is basic business management 101 for any business with inventory right? Basic stuff right? Liquidity is king yadda yadda, right? Right. Well let's take a different look at working capital.

Consider working capital in our daily lives. Not a common water cooler topic I'm guessing, but bear with me.

Consider every single thing you own as inventory. Also consider that your money might be dying.

Consider that for the lucky person, you have two eyes, two ears, two arms, two legs and two feet. Anything you own or use can only be used one at a time. Every single thing outside of your senses is not being used (let's call it 'warehoused').

Anything you own has a value, and if unused or under utilised, it's dead money. Heck, even if you sold something you didn't use for ten cents and stuck it in the bank, it'd be doing more than money being warehoused to die.

A good example of unused stuff is my library of over 100 books, lots of books I've bought over the years have been read once and shelved. Wasted working capital. First, it's a waste of my money, second and more importantly is it's selfish. If it's sitting on my shelf, nobody else can read it either. Dead, warehoused books. I've trimmed it down to about 25 now.

Apart from unused stuff, there is under utilised stuff too, a $1500 fish tank that I used to look at for 5 minutes a day and clean for one hour a week. I've stuck it on sale. That $1500 buys a heck load of entries to the best aquarium in Australia (over 55 visits actually) and no more cleaning!

When I look around now at the stuff I own (at least what's left of it) I see piles of unused capital or things I value highly. I spent over a thousand bucks on a camera, and have not regretted a single penny, but I regret buying my unused Playstation 3 (but don't worry I'll be selling it at a profit).

So why would anyone personally want working capital? I mean we're not walking, talking businesses.

Well, personal working capital buys opportunity and freedom.   

Working capital for the urban battler means freedom to choose what you do with your career, your time, your entertainment and your education. Nothing is warehoused and wasted. Your resources are either used to make great decisions, or invested into things of value. It's shedding the exuviae of life.

So what if we don't have working capital? Well... no freedom and mental slavery. Being forced to do things we don't want because we have no choice. The kicker is, it almost doesn't matter how much you earn. Just look at some companies who earned a lot, but didn't have any freedom to choose (Apple and IBM are great examples of companies who turned those ships around).

Many people have asked me if I'll be okay for money. I'll be fine. I'm no millionaire (yet), and it's got nothing to do with how much I earn, or how many assets I own, It's about the fact that I've set myself up with enough working capital to make free decisions.

Working capital buys opportunity and freedom. Warehousing does everything but that. It's not just me saying it, but successful businesses, everywhere. Don't resign your money to a cold lonely death!

Flickr cred to paul+photos=moody

Meditations Monday: We're just human.

The pain of labour for hand or foot is not contrary to nature, as long as the foot is doing the work of a foot and the hand the work of a hand. So lifewise for a man, qua man, there is nothing contrary to nature in pain, as long as he is doing the work of a man.'

- Marcus Aurelius - Meditations 6:33

We're just human.

I will only ever have two eyes, two ears, two hands, two legs and two feet (If I'm lucky). No matter how much stuff I own, I can only ever be doing one thing at a time. No matter how much stuff I own, I'll still only have 24 hours a day.

This works two fold.

1. I appreciate what I have more. Everyday I see people with perfectly normal legs catching the escalator up from the train station. I love to walk up them. While I've got them, I'll be walking everywhere I can, if I lose them, I guess it's time to catch the escalator.

2. I'm careful about what I own. With my limited time and my physical human limitations, I can only use so much at a time. So why have anymore than I need?

In the quest for more, we're still just human, bound by physical boundaries equal to all men.

Cut the overhead. Sleep better. How I pay $50 a year in mobile phone bills.

I've met corporate workers with no time,a frenzied schedule of things to do and a life on schedule. I've also met unemployed people with bucket loads of time, but nothing to do. So it's a a conundrum, how can you work, afford the things you want and have the time to do what you want? It's simple, if a little audacious:

Do what you want, as work.

It seems crazy, there are bills to pay, and the work you want might never pay the bills. The phone, the car, the mortgage, the credit card, the vet, the doctor, the this, the that, the, the, the. the list goes on.

I don't disagree at all. Money is a concern, but how much is enough? a lot less than most people think, but you need to think first. Most people go to work, then spend what they earn. I propose a better solution. Work out how much you need to spend (and invest), then go and earn it. It doesn't matter whether or not you love your work, because once you reach enough, the rest is a bonus, and buys you freedom of choice. You work on your terms, terms of what you do, where you do it, how you do it and when.

It's not about ascetism. I'm ambitious about my financial goals. It's about doing what you need, even if it's not that great to meet the necessities, then having the time, energy and resources to focus on the important. This is different for each person, everyone has unique dreams of building a business, spending half the year surfing, travelling the world, spending time loving and nurturing children and family or giving time to charity. I've seen too many people drained, with great financial resources but so much overhead that they ran out of energy to live, be healthy, be loving, be good people, let alone dream.

Well here is another audacious idea. Cut the overhead. AKA cut the crap. I recently spoke to Anthony Herro of Herro Solicitors in Sydney, and he said the single biggest factor of struggle in small businesses is overhead.

Here is how I've gone to a minimum overhead life, and these rules apply as much to business as they apply to life.

• Say no to fixed costs. In business, fixed costs are the devil, they are unavoidable costs that come whether or not your business is making money. These become an expectation of your income. For businesses, these are things like rent, for people, these are the cable TV bills, the 24 month mobile phone plans and the devil of all fixed costs, personal loans (cars, holidays, whatever.) These are the bills that enslave you to work to continue servicing them. Ouch.
• Say yes to variable costs. In business, variable costs are those that change with your level of revenue. These are things like raw materials and utility bills. Personally these are things like charges per use and buying outright. No financial ties. Not using it? Don't pay for it. It's dodging the monthly repayment contracts for the internet, phones, cars and any other expenses.

In reality, it's difficult to always kill off all fixed costs and move to variable costs, but you can reduce them. Here are ways:

• Don't subscribe to anything. Cable TV sucks. Mobile phone plans suck. Leases, loans anything with the word 'repayment' or 'instalments' suck.
• Maximise your pay per use services. Pay by the call and you'll start using your mobile less (contrary to popular belief, you don't need to call every missed call back or reply to every single sms). I've gone to $50 a year prepaid mobile service, and I use Skype and VOIP for my calls. I pay less for calls, and I only pay what I use. It's scalable to use.

Fixed cost is the whip that send you to work, there will always be a minimal amount, and it's different for each person (rental, mortgage, food, hygiene, etc.) Variable cost is the stuff you can say no to unless you use it.

Cut the overhead. Be scalable and be free.

Persistence and carrying 74.6 Big Macs

Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan "press on" has solved and always will solve the problems of the human race

Calvin Coolidge, 30th President of the USA

Yes, I've said it's a false belief to believe thats it's always true that you have to work very hard to be successful.

No, it's not true either that being lazy is going to get you success.

It's about working persistently on the right things.

It's about focus and working only on the valuable. I'm not talking about the corporate doublespeak of 'adding value to our customers/clients.' I'm talking about a complete shift of focus from let's do it better by increments to should we be doing something entirely else?

The pain of not doing the valuable is evident in the politics and infighting of nearly everything. For example, labourers in Australia have worked so hard, but are now trying to keep their jobs in car manufacturing plants, when it's fundamentally not valuable to do it here.

Big businesses that have eaten 'working hard but not on the valuable pill' include giants like IBM, Microsoft and Apple. Because while they were running hard up the mountain, someone moved the peak.

It really comes down to value per awesome.  You can be closer to success if you spend your time on the value (awesome) work instead of the flurry of not so awesome work. Sounds simple, but in reality we go through a masochistic habit of doing painful things for little or not gain, working in jobs we might not like so much, surrounding ourselves with distractions. Then we tell ourselves stories about how it's what we do to live. The risk of this reasoning, is that you never really end up anywhere you want to be.

So if we've got the right goals now what?

Persistence.

The art of self discipline. It's not about being perfect, it's about being on mission critical 80% of the time. I learned a lot about persistence a few years ago.

In one year of work and university I put on 15 kilos. That's like carrying 3 bags of oranges, 15 bags of frozen vegetables or 74.6 Big Macs all the time. A 20% increase in my body weight, I was 1/5th more Richard. Something was wrong, and it was a mixture of sleep, nutrition and exercise. I had to have a plan.

• I ate nothing but oats for breakfast, yoghurt and nuts as snacks, and lean chicken with steamed vegetables for lunch for a few years. But once a week, cheat day, I would flip out and gorge. 10 chocolate self saucing puddings? sure why not...
• Scheduled gym time between lectures. Contracted in, no matter how tired I was, I would just turn up, change into my gym clothes and do it. To be honest, I think the biggest obstacle to exercising is a gym membership (I don't have one now).

The plan wasn't so simple to keep. But I ignored emotion, headfaked it. Persistence goes beyond emotion. It's all about the mission. Happy, sad, anxious, upset, tired, gym membership or not. It never matters. You just do it.

So what is persistence?

• Focusing and working on mission critical tasks only.
• Forgeting emotion, emotion doesn't get things done.
• Reflecting often on what mission critical is. Cut the distractions.

I dropped down to 78kgs, sometimes I falter, but never long.

I'd put a caveat here and say that, sometimes, work is a job, and if it lets you find freedom, pays the bills and can let you get on with the best bits in life, then it's well worth it.

Happy Easter, and press on... on the right things!

Richard

   

Flickr courtesy of lakshmi.prabala

Meditation's Monday - Freedom

'How then, can you secure an everlasting spring & not a cistern? By keeping yourself at all times intent on freedom' - Marcus Aurelius, Meditations 8:51

For a long time I wasn't sure exactly what I wanted. When I was a teenager, I was set on being the richest, wealthiest man in the world. As I've grown, I've realised a different kind of wealth, the wealth of freedom. Financial, work and time freedom. Time is a funny one, we try to kill or pass, but in the end, we realise that's all we ever had.

For a long time I looked for the answers to success, and I looked at my peers and seniors. But I'm not sure I ever found the answers there.

I have a sneaking suspicion that the story I used to tell myself was that freedom was when you could afford to have more, or when you reached some vague level of financial and material wealth. While I'm very much commercially minded, I think there is a clear separation between being commercially driven and being selfish or greedy.

I recently caught up with Dr. Adam Fraser from the Glucose Club, and he told me a story about a wealthy businessman, who said his two keys of running a business wasn't by being about the money, but about helping others and keeping your employees happy. Here was a man who has found financial freedom and is also free of being attached to money.

So my mission critical is  being free. That's the balcony view... Now I've got to dance. 

Freedom is not idleness, freedom is not about doing nothing. It about being the sole arbiter of what one does, and what one does not do. - Some random French movie

Flicky credit: abnelgonzalez

Fish in a barrel and Jewellery.

Shooting fish in a barrel and selling luxury jewellery have eerie similarities. Take a look at today's Sydney Morning Herald.

'Couples Hit By Gold Spike' - Smiling couple bemoan price increase of $400, paying $2200 for groom's white gold ring. Jewellers cite price of gold.

I'm going to rename the article. 'Couples Hit By Stupidity.'

Yes. The price of gold has gone up. Incredibly.
Yes. Your ring uses gold.
No. It does not justify the price. Not even close.

Here's the 'back of the napkin' analysis.

If the 18ct white gold ring is 10 grams, 7.5 grams of it is pure gold.  Today, that's $270USD of gold ($1000USD/ounce). Back in November it would have cost $216USD ($800/ounce).

A $54USD change, does not, a $400AUD price increase make.

Price rise gouging aside, that's about a $1900AUD premium they paid on a 'simple wedding band'. That's about 80 hours worth of work for the average Aussie. If it was down to craftmanship, exotic design or any esoteric reason I might bite, but from experience of the industry... It's a brand premium. It's the Tiffany's phenomenon. 

Don't get me wrong, I love to buy nice things and I'd say a wedding is a pretty darn good time to buy nice things. But no matter what sales people might say, the luxury and brand price premium on jewellery will never represent your love for anyone.

While the ring itself might represent your love, the cash, dearly departed, has more similarities to ceremoniously standing around a toilet, putting bundles of crisp fifty dollar notes in and hitting flush. It might just buy your jeweller his next Ferrari too.

I'm no stranger to expensive tastes. I've paid more for a single fish (as in swimming around in a fish tank), a watch and other assorted dross... But always at fair market value.

It seems people don't want to be rich anymore. They just want to look rich.

Flickr credit: Paul Watson

Investing

The idea of someone else going out and making money for me is very tasty. That's why I love investing.

Many people I've talked to about investing who don't invest themselves seem to tell themselves stories about investing, just like a job, they think it's too hard, it's gambling or you need to know too much. Sure there is some learning, but it's not rocket science.

I first invested in the share market at 16. It was the summer of 2000 and I'd earned my first grand from two weeks working in a factory polishing and soldering electric thingamibobs onto printed circuit boards for  ten and a half hours a day. It introduced me to hard work, but I loved it.

My plans were to buy a massive fish tank but my plans were put on standby when my dad told me about something called the share market. The next weeks were spent carefully researching, and I invested half in IT security, and half in petroleum. I doubled my money in a month, it was the tech boom. I sold out before the bubble burst.

Everyone has an opinion, but here are mine for the next few months.

I expect aggressive acquisitions of fundamentally profitable companies by cashed up companies. The share market has reacted violently and indiscriminately, especially in Australia where very few companies are exposed in a big way to the sub prime and credit crisis. This means that a few jewels in the market are being sold at a massive discount compared to what they should be worth. If I was buying a company... I'd be watching the market very carefully...

I would look for stocks that are easy pickings for aggressive takeover actions, those trading with extremely high dividend yields, earnings consistency and very low P/E ratios. I won't buy vapour stock based on analytics alone, they have to be a strong business. I'm either going to be using short term trades to  profit on volatility, or long term holds to profit on long term capital gains, tax concessions and dividend yields (at least 1 year). It'll take fortitude to take a long term hold on any counter in this market though...

After working in many listed companies, I've found out they differ like chalk and cheese, some you would trust to look after your grandma, others you wouldn't touch with a ten foot pole... These days, almost anyone with enough capital and nouse can launch a 'company' on the markets, so make sure you know more than just the ratio and trend analyses.

Other investments I would consider would be long term positions in listed investment companies trading at discounts to their net tangible assets (what the shareholder would theoretically get if the company sold all assets).

My other investment interest at the moment is in China. Everyone knows the Ren Min Bi is trading at a huge discount, and the economy is kicking along at ~9% growth this year... The share markets have taken a beating, but what about the fundamentals? Time to invest long term? The indicators are right, strong economic growth, discounted securities, incredible trade surplus and an artificially discounted currency. One thing I could feel when I was in China was the buzz.

As a final note on trading, one thing I've found over the last 8 years of trading though, is what everyone knows seems to be very different from what everyone is doing.

15/03 update, if you're interested in more detailed reasons, a fantastic article interviewing Mike Tilley the CEO of Challenger is up on businessspectator.com.au - here's a taster

Retail pricing has very little relativity to the underlying value of the assets, so you’ve seen these funds really take a hammering and from a personal investment perspective I think that many of them offer enormous value at the moment because the underlying quality of the assets is such that you’re able to buy through some of the retail funds into assets that in the wholesale market will trade at 30, 40, 50 percent premiums to the look-through value that’s on offer in the retail market.

Flickr credit: Rednuht

The dance or the balcony?

Dancing or watching?

Rosamund Christie, executive coach and adjunct professor at the Australian Graduate School of Management recently spoke on cultural diversity and team building. She raised an interesting study by Ronald Heifetz (author of Leadership without easy answers) at Harvard, on the challenge of adaptive leadership and how team members and managers can perform with more awareness and direction.

The concept of the balcony and the dance floor is explored by Heifetz, the distraction, the bright lights and the constant action of the dance floor is the metaphor for the day to day 'on the ground' flurry of work and meetings that lead us astray of our goals. Heifetz believes most leaders spend too much time in the dance. The balcony view, is the step back approach, looking from a far, seeing the big picture and making sure everyone is dancing to the same tune.

Dancing and watching can happen at the same time.

By being mindful while in the flurry of activity, a more strategic view can be taken. It gives more meaning to our day to day actions and there is a plan and direction to our individual actions. The dancers are the individual bricks, and the balcony view is the blue print. You can't have one without the other.

It's easy to get caught up in the minutiae of to-do lists but take a step back and ask, is the ship even going in the right direction?

Flickr credit: Lillian3000