The Startup: Best option for retirement.

So, I am 42. I have no retirement. I had some at one point, but had some brilliant idea that if I fixed my house up (cause otherwise it would have either fallen down or been condemned) then, it would be a pretty good place for my family to live and we would have a decent amount of equity built up. So I cashed out my retirement and by the time I got the place fixed up, most of our equity evaporated in the housing meltdown, and my company which serviced the real estate and mortgage industries kind of went with it. Fortunately, we were able to sell before we lost the place, but we got a lot less out then we had put in, even though we bought a major fixer-upper and it was a pretty decent place with a little bit of key work needing to be finished on it when we sold it.

I know, long sob story. I am not the only one who lost just about everything in this downturn. We moved to Texas looking for work, which never panned out, and ate through what little we had left. We finally ended up in my parents basement and I picked up an online consulting gig. We managed to pay off all of our debt with the consulting before I got a regular job. It doesn't pay that bad, all things considered. But it doesn't have any retirement benefits, no options, no future. I should probably have opened up a IRA or something by now, but I haven't cause we have been catching up on years without insurance other things where anything that could be put off was. So, back to where I started. I am 42, and have no retirement.

Funny thing. My father was exactly at this same point when he was my age. He went and got a job with a big mega corporation, that put a decent amount into a 401k. That lasted about 10 years, and then he got laid off in his early 50s. He was able to land a similar position with a much smaller company, but it was big enough to have 401k support as well. He put in his time there and retired at 62 1/2. Turns out, what he saved wasn't enough. They have social security, and a little bit from his retirement savings, but big things keep eating into their principal. He needed at least double what he put aside, if not triple.

So, here I am in a similar situation, only no 401k. I make enough, and have no debt, but I don't have much extra. I also have no equity in a home or real estate anywhere. So, I have been figuring what I am going to need for retirement. Trying to figure out what my best options are. Where I live is very close to work, but doesn't have the lowest cost of living. The schools are good, but still have the typical problems public schools have. In any other direction from my work at the same distance, the cost of living stays about the same, but the schools are not as good and some of the neighborhoods can be quite creepy. I have 6 daughters, so, I get a little paranoid about safety sometimes. I can lower my cost of living if I go far enough away, but then the commute becomes very long, and I don't really save much.

If I were to try to get a comparable job with another company in the area, I could probably get better pay and a 401k, but when I started to do the math, I found myself looking at the same situation my father has found himself in. He worked himself nearly to the bone and when he finally retired, he doesn't have enough. So, this led me to think about what my options are, and how each of those options might affect my eventual retirement. I looked at doing contract work and freelance work. I looked at setting up my own consultancy. One option was to find a better job I could do with a much lower cost of living. There were only 2 options I came up with that had an expected outcome that exceeded my expected needs. All of the other options would use up the next 20 years of my life and leave me short of what I need.

Both of the positive options had to do with startups. First, if I were to come on as a very early founding team member or early key-hire, and the company had a successful liquidity event after 3 to 5 years, I would probably have more than enough cashable equity to cover my needs and then some. This is even more the case with the second option, where I am the founder of the startup, and it also eventually gets to a liquidity event. If it were successful, it wouldn't have to take the next 20 years either. In both cases, it is not a sure thing, but it is a big risk.

I have done startups before, but there were lots of things wrong with how the business was set up. One of which, they were primarily service oriented where I was exchanging my time for money. There is only so much you can get when you exchange your time for money. Sure, there are a few (patent lawyers?, brain surgeons?, industrial spies?, former presidents?) that can charge very high rates, but I am not one of those. While I can make a decent living doing doing service oriented work, it will never create wealth like a successful startup that has a product can.

So, since startups are not a guaranteed route to success, and the other roads are dead ends, what is to be done? Well, make sure you pay attentions to the mistakes you make, and learn from them. The thing that makes startups the best option is that, you are not limited to one. Even successful startups have a tendency to be on a short time table. A solid liquidity event often is within the first 4- 7 years. Even when it isn't, startups are very quick to adapt compared to established companies. And, then there is the whole lean iterate and pivot approach. One startup, many shots on goal. If it isn't working, take what parts do work, and try something different with them. Sounds easy right. Well, if it was, there would be tons of successful startups out there. Oh, wait, there are. Still is easier said than done. Just don't quit. Kind of a bit harder with a large young family and a day job to support them. I guess my iterations just have to move slower. But, fortunately for me, I have never been short on great ideas. I just need to get one to the point that its greatness is readily apparent.

If I can do that, I am sure I can create enough wealth and get to an adequate liquidity event. That will take care of my retirement needs. Even if my retirement looks a lot the same as what got me there. The difference, I won't be financially dependent on it's outcome, and I might just get there a lot sooner.

Is growing income inequality inevitable?

I recently had a short twitter conversation with @RepBrianKing regarding wealth and income inequality. He had posted a link to this YouTube video that discusses the subject. I had responded that "our policies that have become more slanted towards so called socialism, have made things worse not better" and later that "Income inequality is a big threat, but neither socialist nor conservative approaches will work. They both make it worse." This led him to ask the question in the title of this post, "Is growing income inequality inevitable?" Well, the short answer echos the Lorax: "Unless.". The not quite as short answer is "It will be difficult to do, and certainly not guaranteed, and will require some very new approaches to government policy." The long answer needs a lot of explanation. I will first address the problems, then the solution, and then the challenges of implementing such a program.

THE PROBLEMS. (You can skip this section if you know all this already.)

1. Wealth and income inequalities. Wealth and income inequality are not the same and often get confused, but they are both problems. They affect everyone, but not in the same ways. Extreme wealth inequality will ultimately result is chaos, civil unrest, or even war, and perhaps even widespread slavery (think Roman or Mayan empire slavery, not just revolutionary war American slavery.) This is because ultimately, all the resources of an economy become concentrated in the hands of the very few, and the entire rest of the society ceases to have any stake in it, but become serfs in a new feudalism. We are not there yet, but it can happen. One of the most significant modern implosions of a strong society was the implosion of the Argentine economy in the early 1900s. It was a very robust and powerful economy, but the wealth had become concentrated. This led to war lords and ultimately the horrors that followed under years of political purges and dictatorship. Income inequality leads to wealth inequality, but it also has some immediate problems of its own. It has the tendency to lead to vast growing over-indebtedness.  Eventually all of that debt will turn into a massive default, which will wipe out the wealth of even most of the upper class (the 10% through 2%). True, they might maintain a slight income advantage over others, but their wealth will mostly be eliminated.

2. Broken safety nets. Today, we have social safety nets that are supposed to help keep the poor from abject poverty and misery. These include social security, medicare and medicaid, welfare, unemployment, disability, food stamps, and myriads of other lesser programs. Each of these are designed to address some specific ill or condition, but often contain elements that penalize real success at getting back on their feet again. For instance, unemployment provides up to 40% of what a person made (up to a cap), but if they happen to make a few dollars doing freelance or temporary work, it takes dollar for dollar from what they would be getting. They are immediately penalized for any small success, and the only incentive the unemployment provides is to not get a job or have any outside income. Any partial success they get immediately tears into what little safety net that they have. Also, some of these programs have cliff like cutoffs. One minute you have vital help, and as soon as you get a little success, the rug gets pulled out from underneath you. Another example is the minimum wage. Raising it does seem to help in the short term, but the prices on basic items, that have the smallest margins for businesses, get raised first and hit the poor the hardest, resulting in eventually lowering their standard of living.

3. Bad socialist policies. Socialist policies of tax the rich and redistribute it to the poor don't work either. They sound great in theory, but in practice, history has repeatedly shown it doesn't work. Look at Russia. After 70 years of the most stark socialist policies in history, their income and wealth inequality are worse than ours. Their rich are richer, and their poor are poorer. The reasons for this are complex and varied, but the fact is it doesn't work. 
(Why it doesn't work: instead of better equalizing the created wealth, it reduces the amount of wealth created while the distribution of that wealth doesn't actually improve. Instead it disappears into hidden, protected, or institutional holdings, and does so at an even higher rate. The rich and powerful find ways to position themselves within an even more influential power structure, and then become untouchable overlords. They only way to apply such a system is through extreme application of force, which dehumanizes both those being forced, and those doing the forcing, and doesn't end up being successful in the long run.)
4. Bad conservative policies. Conservative policies of flat taxation and minimal government regulation have a tendency to get blown out of proportion.  They turn into a wild west type scenario with the attitude of "You have have what you can take"  and the strongest, or best armed have a tendency to turn into thugs or robber barrons and they victimize others. Again, this dehumanizes both the victims and the victimizers. The reasons these conservative policies don't work are a little more clear than the socialist policies. They don't have the negative of reducing wealth creation, and it doesn't tend to hit the middle classes quite as hard, but the results are the same in the long run and those at the top end still get richer while everyone else gets poorer.
5. Corporate usurpation. Wealth and income inequality is made worse with institutionalization of the corporate mindset: a.  Our companies are too big to fail and  b.Employees aren't even slaves, they are numbers and calculations. Corporations are generally not affected by socialist policies as they generally are able to buy themselves an exception. They wield such unbelievable power in influence by the kind of wealth they can throw around, that only other corporations stand in their way. And yet, corporations keep getting bigger and more powerful. Too big to fail. They can nearly collapse our economy, and we will bail them out and transfer their liability to us, because we are too afraid of what happens if they go away. The individuals involved are part of that 1%, and they are untouchable. They can spend money that isn't even theirs to manipulate the world around them. If they do something repulsive or vile, they can hide behind their corporations and stand blameless. Our tax policies hardly touch them.

THE SOLUTIONS (Read carefully)
These solutions are NOT a cafeteria plan. Only a few will be effective without the others, and then, not very much. They all need to be there in support of each other.
1. We need a fair wage act. This act would replace our current wage laws. It is focuses on real earnings of employees in an organization. Organizations with employees generate wealth, and those involved in generating that wealth need to share in that. Organizations (companies, non-profits, government agencies, etc) should be subject to a policy that can be expressed as: the highest compensated individual's total pay can not exceed the organization multiple of the lowest compensated individual's total pay. The organization multiple is determined by organization size. The penalty could be a fine, a corporate tax, or whatever would incentivize organizations to follow the policy. In order to be effective, private contractors would have to be included in these calculations, and total pay would have to include bonuses, commissions, benefits, stock options and any other compensation that has monetary value. The only thing not included in this is dividends paid to stock holders. That is covered later.
2. A better Fair Tax. You may have heard of the fair tax. It is mostly backed by a bunch of tea-partier, anti-IRS types. Sometimes I wonder if they really understand what it is they claim to support. Anyway, they have several things right, and understanding why those are right, and how to use them is important. On the other hand, they have several things wrong, which would make things worse if not addressed and corrected. Things they have right: First, a prebate that is equal across all registered citizens and residents and their dependents which can make even the worst regressive tax system progressive. In fact, if done right, it can be the first tier of a safety net that doesn't penalize success. Second. Taxing income only serves to perpetuate the income divide. Those at the top of the wealth scale don't make income. They make dividends and capital gains, but not income. And often they can offset those by so-called loses. Taxing consumption can be applied more universally, with less tax evasion, and is effective at taxing even those who get around the income tax. It makes shifts foreign trade vastly in our favor, without subsidies or tariffs. Things they have wrong: They want to exclude education and investments. Having worked in the education industry for years, it is an industry. It needs to be taxed just like everything else. It spreads the burden more evenly, and takes away the advantage of those who can afford much better education without paying part of the tax burden. Even more so, investment has to be taxed. It is the primary method of perpetuation of wealth without paying their fair share. The tax level should not be so high as to destroy investment, but if they can pay 5 percent broker fees, surely they can afford to pay tax. They don't have to pay taxes on the gains, just on the investment. It becomes part of the cost of investing. By taxing everything, including education and investment, we can provide a larger prebate, maybe to double what they are currently proposing. That large of a prebate would act as a first safety net buffer to those who are poor. It could greatly improve their financial situation. For those who make more, they still get the prebate, but it is much less significant to them.
3. 20% Accounts. These accounts take care of a large portion of the rest of the social safety net. They are the first tier of unemployment. They help employees feel a little less trapped, and give them a fallback when the worst comes. They are funded by the employer as a 20% match for all compensation for all employees. Who manages them is less important than the fact that they are there. They could be managed by the individual, by investment professionals, or even government agencies. Also, regardless of who manages it, it needs to limit risk for the bulk of the principle while still trying to have some growth. These accounts are generally not tap-able unless the person is unemployed, retired, or in special circumstances as determined by regulation.
4. Inheritance and Gift limits per recipient.  Those with vast wealth perpetuate others with vast wealth. They may have earned it, but they don't help society by creating an upper echelon of society who become untouchable 1%'s. But, what if they were limited in how much they could give to any one person. It could be enough that the recipient could do anything, but not enough to do nothing, or enough to usurp control and power over society. Those with vast wealth would have to spread their wealth out enough to cause it to re-enter the economy. Those who inherit such large amounts might be able to repeat their progenitors success, or they might just live the high life. Either way, the wealth gets spread out, and directly affects wealth inequality for the better.
5. Corporate size and influence limits. We need to make sure no corporation is too big to fail, or even big enough to establish a non-competitive environment. There are many ways to do this. One way would be to limit the number of locations a company can have. This would not limit franchises, as those are generally owned by others, but it would keep them from getting too big. There are other ways to limit the size and scope of corporations, but their size needs to be vastly limited. Some few corporations are of a nature that their size would still surpass reasonable levels, and those should be subject to very rigid restrictions that keep them from engaging in anti-competitive or undesirable behaviors.
6. Self sufficiency programs. It is in individuals', society's, and the government's best interest for communities, families, and individuals to be as self sufficient as possible. This reduces dependency on both society and the government, increases self worth, creates a more stable economy, and improves the overall desirability of the American life. At the same time, self sufficiency is highly dependent on individual attitudes. Attitudes can not be legislated or even regulated. But they can be affected with public service campaigns, and it is well within the scope of government in all but the most minimalist libertarian schemes to perform public education and service programs. Additionally, government can inspire and help develop programs to facilitate the success of those who have this attitude.
7. Limited scope additional safety net programs. There are still those who will be subject to extreme circumstances that prevent them from living at an acceptable level. They will need additional programs for things like disabilities, catastrophic medial conditions, or natural disasters. These programs should be designed, where possible, to help people get back on their own feet as quickly as they can, and should be very carefully monitored and regulated so as to not become abused or ineffective.

THE CHALLENGES ()

Obviously, it is easy to miss potential challenges. This list is certainly not exhaustive, but these are definitely some of the challenges.  It will take a lot of effort to overcome just these.
1. Entrenched Ideologies. The first challenge exists because we as a nation and culture have taken our eyes off of what we hope to ultimately achieve. We instead focus on pet issues, programs, and platitudes that have little real chance of reaching those goals. Each political party and faction has these sacred cows, and anything but their way is considered unacceptable. There is a lot of momentum in these false hopes, and to get people to stop and think, and to realize that the status-quo is quickly tearing our country apart, will take a lot of effort and self control to break from the fixed mindset we are currently in.
2. Educating the populace. Our populations are pretty ignorant of how government really works and affects their lives. Most of our people can quote campaign slogans, but have no idea how those would translate into whatever they think they are voting for. Except for the politically active, very few have taken the time and effort to understand much about these processes. Worse yet, they don't even want to know. Getting them to understand that these things will help them will take a lot of effort and patience.
3. Getting the idea out. Before we can address entrenched ideologies or ignorant populaces, first we have to get the idea out there. It will take a lot of people who really believe these policies will work and that these are problems that must be addressed.
4. Finding effective evangelists. Not everybody is equally effective at spreading the word. There are those who, by means of charisma, or public presence, or fame, or some other factor, are much more effective than most at getting others to both listen to what they say and to believe it. It will be critical to find those public opinion leaders who can help establish an effective movement for these proposals.
5. Critical mass. As with many things, there will probably be some sort of critical mass. Once enough espouse these ideas and policies, there will be a landslide to follow. Unfortunately, where that critical mass is and how to get there is generally unknown.
6. Vested interests. Obviously, if you are in the top 1%, these policies do not benefit you. You are powerful and influential and are going to do your best to see that these things never see the light of day. If you are not in the top 5%, chances are these polices will benefit you. These ideas are not designed to punish success, however, and getting those who are in the other 4 percent to see that will be difficult. Still, under these policies everyone can still enjoy the benefits of their success, but will not be able to just pass it on to create a dynasty. The top 1%'s kids will probably start off with a moderate competitive advantage, but not an insurmountable one. They will have to work for their own success just as their parents did.

In summary, these problems are serious and will destroy us as a nation and a culture if not effectively addressed. I have been thinking about these issues for years and have come up with the what I feel is the best policy proposals to address these things overall. Not being a very effective evangelist, I have been called everything from communist to robber baron to fascist when describing these ideas to people. I hope I have done a better job of describing these this time. These ideas are formulated for effectiveness, not for selling. They pass the economic, psychological, sociological, historical and mathematical evaluations I have tried them against. Having said that, these are new ideas, and implementation rarely mirrors theory. Even if implemented, there are likely to be many pitfalls in the way, but in years of searching for solutions to these problems, I haven't seen anything else which seems likely to work.

Conservative politics - big business capitalism = ?

With all this federal shutdown garbage and now the debt limit crisis and the completely unreasonable and unmoving positions of our elected representatives in our federal government, and in state governments across the country, I have been doing a lot of thinking. I totally agree with the whole fiscal conservatism thing, living beneath our means, paying off the debt, and limiting government... to a point. I completely disagree with subsidies of any kind, apart from the prebate in the FairTax. That should be the primary equalizer our government provides. Oh, and the prebate should be twice as big as in HR 25, and education should be fully taxed, and investment should be taxed on the public exchanges. Well, it should be taxed any time it is required to be registered with any public agency, whether publicly traded or not. I also think we should be transitioning away from Social Security and Medicare and the other social programs.

But, and here is where I part from the traditional cut and slash crowd, I think turning any of this over to big business is a huge mistake. Big companies should be automatically excluded from government contracts and prohibited from buying out smaller companies. Too big to fail is too big to be allowed. We need another round of trust busting, and it should hit any company with revenues over a billion, which means a lot of them. Ok, yeah, some companies by their natures will be bigger than that, only have1 product, and make tons on that 1 product. Great, they need to stick with that 1 product. Companies exist to provide service to the greater good, not for enriching the pockets of investors. I know, sounds really like I am off my rocker. I am all in favor of small business. With this caveat: Businesses of all levels need to be responsible contributors to society and provide solid and fair jobs for their employees. Wages should represent contributions of effort and skill. This whole executive pay garbage where they are making millions and tens of millions, and even sometimes hundreds of millions of dollars, all while paying employees less than subsistence level wages is criminal. And should be treated as such.

Businesses of all level should be highly regulated. Not burdened, but regulated in a way to keep the playing field level and make sure they are being good citizens. I feel that most of our current regulation is either ineffective, or misdirected. Corporations, well, all registered businesses for that matter, should have to regularly report on their activities. Maybe if they cannot show they are being good corporate citizens, then they could be entered into receivership, and possibly dissolved and the liquidated assets distributed to creditors and shareholders. The only question is, how do you keep the regulatory environment from being a bully, and limit interventions to only the truly problem companies?

So, as you can see, conservative politics minus big business capitalism equals ... what? I don't know. Maybe the regulation I dreamed up here as I typed is a bad idea. But, would it be any worse than becoming economic slaves to the Fortune 500?

Local sustainability

Some time ago, shortly after I started this blog, I created a whole list of topics that I wanted to do posts on. Today, I realized that I still had a few that were not done, so I am finishing all the posts I had sitting in my backlog. Then I can move on with some other ideas that I have.

One of the ideas I wanted to write about is what I call local sustainability. The idea of local sustainability is that a locality, whether a city or a town or a county or what ever distinction it might have, should be able to provide for its own needs, and not depend on outside resources for the necessities of life. It has been a long time since this sort of thing actually was common, but I don't know that it is necessarily a bad idea. Lets evaluate why.

First, lets look at what our current situation is. We mostly live in large cities. Our cities mostly provide services, with a few very large concentrations of finished goods manufacturing. Our cities certainly, with very few exceptions, do not provide raw materials. In some degree, they do process raw materials into finished goods (or some form of intermediate goods). People in cities mostly consume, and produce little. Our raw materials and even most of our finished goods come from elsewhere. Lately, most of it seems to be coming from China, but there have been other sources at other times. Our food doesn't come from where people live either. We have an estimated 3 days of food on shelves in most American and Industrialized cities. Our energy is generally not locally produced either. Some power plants are thousands of miles from the cities where the energy produced is used. Much of our oil and finished products now comes from overseas. Even most of the oil and finished products that are produced domestically still has to be shipped thousands of miles.

There are benefits to our current situation which unless maintained, would not make a switch to local sustainability an acceptable choice to most people. In our current system, we have very low cost, high end or high tech goods that are available from a large variety of sources. We can get almost anything we want nearly instantaneously if we have the means to pay for them, and even for those with smaller means, the amount of goods in their economic reach far exceed anything available in past eras.

In order to make a switch to local sustainability one of two things has to happen. The most likely and least desirable of these is some form of economic collapse affecting infrastructure, and lowering the availability of goods to crisis levels. The variety of goods would shrink 100 fold, and the costs would out pace all but the wealthiest of people for anything but the most basic goods. Famine and death would be rampant and most of us would die or wish we were dead.

The other option would be a new set of technology, business, and regulatory developments which when functioning jointly, would enable localities, or at least city sized regions to become able to produce 95% of what is consumed in those cities, using either directly produced or recycled raw materials or at the very least, with raw materials being primarily the goods being shipped into the cities from multi-regional or semi local supply sources. These developments would have to be able to produce almost anything on demand. The one thing that would be truly global would be the designs and manufacturing blueprints use by flexible micro manufacturing facilities which would need to be able to produce anything within a very large range of materials. For instance, there would need to be a electronics manufacturing facility that could use designs and blueprints from any developer to produce whatever the local consumer wanted, and produce it on demand.

In order for this to work, there would also have to be certain green space requirements primarily concerned with organic food production. The food production would have to have a much greater level of automation in its production, but instead of the mammoth machines currently being used by agricorps, these would require smart, possibly robotic, cultivators which would be able to produce higher quality and healthier crops in relatively small spaces. They would also need to be able to cultivate a wide variety of crops simultaneously, and with a minimum of pesticides and other chemicals. Larger green zones would also be needed for the raising of animal crops, with other more novel approaches facilitating the raising of the animals. Energy would have to be a local product, but with photovoltaic, wind power, and other systems becoming more efficient and less expensive all the time, this is become a real possibility today.

Of course, this kind of development would take a huge effort, but it would also have huge payoffs for just about everyone, from rich to poor, government, business, and just the lay consumer. The question is, who is willing to devote time, effort, and resources to the development of such a system.

Industry Acceptable Innovation

A while back, I was talking with a friend of mine that is almost always got his fingers in some form of disruptive innovation or other. Since then, I have thought a lot about some of the things he told me, and I think I have come up with a new (or at least, new to me) concept, relating to innovation and what could be successful or not. In any industry, there are major forces at work fighting innovation. I am not talking about incremental evolutionary changes, I am talking about the big, in your face, revolutionary innovations. There are many of these forces, some of them from somewhat surprising sources.

Lets say you were to invent a megawatt wind power generator that cost less than say, $5,000. That would be a very disruptive development. Why? Because it would require changes on the part of almost every other aspect of the energy industry. The current cost of approximately $1Million per 1 megawatt wind power generator unit tells you that things would change immensely. In this case, no longer would the investment for such generation unit be limited to major power players, investors, and idealistic billionaires. At that cost, they would be springing up all over the place, putting thousands and tens of thousands of people in the current energy industry out of work. Not that the industry would stand idly by. They would refuse to connect them to the power grid, and even then, they would require new wind generator users to pay for costly upgrades to the power grid. If that didn't work (and they probably wouldn't wait to see if it did), they would seek all sorts of legislation to make it both much more costly to own and run such a unit, and much more difficult to produce. It would be in their interest to make your supplies and manufacturing process much more costly and inefficient. They also would want a piece of the action as a way to hedge their bets, but with this much disruption, they would be more encouraged to buy up the technology rights and hide them (maybe use them, but only to the degree that it doesn't negatively affect their bottom line). What most innovators seem to forget, is that energy companies are not in the business of making energy, but in the business of making money.

One more example. Lets say I created a new ERP system that increased productivity by 10 times for those implemented it. Lets say I created it in such a way that it was 10 times easier to install. Now, lets say I price it very closely to the existing systems. Sounds like a no-brainer, right? Well, maybe. Most companies love increases in productivity. They especially like it in little bites. 10 to 40 percent productivity gains make a company just thrilled. But what would it mean to have 1000% productivity gains. Well, they are either producing 10 times the product or need 1/10th the workforce to produce it. The might decide to produce only twice as much with only 1/5th of the workforce, but the changes are extreme. People, and companies, do not like that much change. It hurts. It is uncomfortable. Not to mention, existing ERP providers wouldn't like my creation of such a new disruptive presence in their market. They would scramble to develop enhancements of their products to make them more competitive, but again, as we are talking about dollars being the main purpose and not product effectiveness, it would probably come to an attempted buy-out situation or extensive use of legislation, courts, and negative marketing.

Beyond the items listed in each example, I have heard that some companies or executives (but not most) get even dirtier, and do things like economic or social or even literal assassination to get the people involved to stop ruining their party. I have never been shown any incontrovertible evidence that this has happened, but I have heard at least one businessman say that he had taken out a contract on the life of someone they found particularly troublesome. Now, whether or not this is a common consequence of radically disruptive innovation isn't really the point. The point is that there is a limit to how radical an innovation can be in any given industry and any given point before it is too radical for acceptance by the industry and consumers. It therefore follows that there might be an optimal level of innovation for any industry at any specific point in time, and that the more that optimal level is exceeded, the more difficulty there will be in turning the innovation into successful products. Most industry sponsored innovation will usually be well within that acceptable innovation limit, and generally moves much slower than that.

HP WebOS

So, you may have noticed, I haven't posted in about two weeks. I have been out and about the country. I realize I missed a wonderful opportunity to add my voice to the chorus of others throwing in their commentary on the HP-Palm connection. And really, I hope HP does something wonderful. I am not getting my hopes up, not because I don't like HP. This post is being written on an HP laptop. I love my laptop. The problem is that HP rarely does anything really innovative or revolutionary. They do a great job adding polish to existing innovations. They make good quality products. Their support could use some help, but most companies need this as well. Many of the things HP does, it does really well.

What it doesn't do well, or at least not very often, is create innovative and revolutionary products and break ground where others haven't. Palm's WebOS is a great piece of programming, but it doesn't go far enough, and I doubt that HP will have the self restraint to let go of control and let it become what it needs to be. In case they missed it, they should check out my post on a Smart Phone Dream Machine.

Public Spectrum WiMax Mesh

Ok, I have held onto this one for a while, but I have talked it around, and even got a wireless services guy at AT&T to listen to it. His objective was that it wouldn't fit the business model, even though it would work and be awesome. He also said that their investment into their current technology was far too high to want to try a different approach. His last objection, although, he wanted this off the record, was that AT&T would view this as a big potential loss of control and don't want people to have options cause they wouldn't make as much.

Well, this one is good enough that we don't need a big brother type company to implement it, but whoever did would make bank on it cause the mentality of all the other players would keep them out of the market for too long.

The idea is that we use WiMax or some similar wireless broadband technology, but configure it to use public spectrum and build low cost wireless repeater mesh units to provide internet connectivity to anyone wanting to participate. Now, it would be best if there was some kind of backbone access control system that made sure that every so often, one of these repeater units was plugged into a fiber line. Otherwise, likely there would be too many freeloaders wanting free access, but really, once figured out, one of these units should be able to be made for less than a couple hundred dollars, and the cost would really come down over time.

Naturally, the repeater density in metropolitan areas would greatly exceed that in suburbs and rural areas, and, there might be a slightly higher cost per user in rural areas, but I can picture that monthly internet access could easily be as low as 10 to 15 dollars for near unlimited access. (Oh, sure, I can also picture a bandwidth cap or a tiered system, but for most of us, like, 99% of us, we would be on the bottom tier, cause we just don't use that much.)

How about it people, should we do this? It would take some time and resources, but it would be a great solution. (I can picture all the neighborhoods and HOA's out there providing this as part of their services). Once it started becoming common, all the devices would start being made with the capability built in. Then, we really could get great access from everywhere, and the money grubbing, control freak big brother companies like AT&T could be gone, and we wouldn't miss them one bit. How great would that be?

Local Economies

I read an article about Walmart today that kind of surprised me. I have been in the anit-Walmart camp for quite a few years, but I have not been so rabid that I don't shop there. I have a brother who won't shop there if it kills him. Anyway, Walmart is a big corporation focused on it's profits and whatever effects it has on the individual, it generally doesn't care about. It really isn't all that different any other major corporation. The difference is, when it puts its stores in small towns, it decimates their economies, and puts lots of people out of work. It gives people a dead end existence, and leaves no capacity for the local economy to support itself. The small towns then are completely dependent upon large employers, most often multinational corporations such as Walmart and it's most major suppliers.

Some might say, "So, what is that problem with that? It is just capitalism at work." Well, the problem is that it ties these small economies to the downs of the global economy. Due to the nature of multinational corporations, the end production workers and the towns they live in do not benefit from the ups of the global economy, but they are the first to feel the effects of the downs. In the past, if one local economy was badly affected by some economic or environmental event or condition, the effect was limited in its scope. A local economy that was well run and whose participants were wise and careful could almost always ride the ups and downs of larger economic cycles, with the exception of extreme events of nature.

Now, all of our economies are tied to each other to such an extent, that it is almost impossible to run a local economy well enough to be not hammered when the global economy turns bad. It doesn't matter how well the local businesses are run, and how good the decisions made by the local participants are, the bad decisions made by individuals and groups in other locations ultimately lead to the natural consequences of bad decisions and drag the whole economy down, including those of well run localities. Talk about killing incentive for making good business decisions. Take your quick profit now and run. It encourages us all to be unethical and immoral.

Enter Walmart. Well, I guess I should say, Re-enter Walmart. They have this program that is encouraging local production of certain types of produce. Not that produce and food is the core of a local economy, but it has always been a vital component. Now Walmart has learned they can get better goods going to the local economy for things. Not everything mind you, but as much as makes business sense. I realize this is a fragile step in the right direction, and could easily be undone, but encouraging nonetheless.

Ok, here is the thing and a piece of advice to Walmart. Take this approach further. Take a little time to develop the means for a small community to produce a much larger percentage of what they consume. I am not just talking food. This could mean textiles, toys, electronics, tools, personal products. Once you figure out the basic components for local production of each class of goods, don't just push your way into all the towns, co-venture. Take a page from the Leavitt Group of insurance companies. They have tons of insurance agencies, each one operated locally, with policies and support from the parent company, but with a significant, albeit minority, ownership stake by the local operators. Just think Walmart, you could be the primary owners of the majority of production companies in the whole world. The local economies would be much more resilient against outside economic conditions. And, to say the least, your profit would come out smelling like roses, year in and year out. Pretty hard to beat that.

Integrators

I predict that there will someday arise a whole class of integrator websites. What I mean by an integrator website is a site that addresses a specific market or class of websites, and pulls all the major ones out there into a single place, while making sure that the content providing sites are still benefited by actions done on the site.

An example of this would be a Job search integrator. It would integrate with all the big job search sites out there. It would also integrate with as many major employment providers and major corporations as it could. It would need to have some kind of supporting niche that it either provides or that it advertises for, like resume building, technical training, or certification providers (in order to provide revenue). It would have to be well designed so that the sites that contribute to it (or that it grabs data from) are not disadvantaged by it, and even are promoted by it. It would need tools so that one resume experience there would populate and extend to all the contributing companies, so monster.com and careerbuilder.com would both get updated at the same time.

Other types of sites for which this could happen are shopping sites (Amazon kind of has already started this), social networking sites, blogs, software code sites, product review sites, deal sites, etc. I think when these sites are fully functional, they will make life a little (or a lot) easier for those of us who just want to live life. I can see some sites refuse to use the integrators, but only those who want you to be their captive customer.

Needed: Idea Marketplace

In case you haven't noticed it, Marketplaces are the latest Next Big Thing. I am not sure, but I think the latest trend started with the iPhone App Store, but has quickly picked up pace, inspiring the Android market place, and half a dozen or so other ripoff clones. Then a few people decided to take it a little further, and make other marketplace sites. One of the latest is the Google App Marketplace.

The concept is simple enough. Provide a single place where both sellers and buyers can get together to buy and sell software. Ok, sounds a lot like eBay, but for non-tangibles. One of the keys to making these marketplaces is specialization, which is why eBay isn't included as the the start of this latest thing. eBay was for old junk, but these marketplaces are where you go for specific things you can't get elsewhere, or, at least, stuff that isn't readily available elsewhere.

While it is true that you can get iPhone apps elsewhere, there are barriers to entry (you have to void your warranty by jailbreaking your phone). The upside is that the store and it's almost exclusive nature brings a large number of buyers together, and that just about anyone who can program can put together an app and get it on there. The down side is that you don't control all the terms. If you are willing to play by the rules of the marketplace operators, you can benefit considerably.

What I would like to see is a marketplace for ideas. Well, not exactly, cause there are lots of people with ideas that could flood the place with junk. Finding quality ideas amidst all that junk would make it in-effective. Another problem is, how do you sell your ideas without telling the buyer what your idea is before he pays for it.

If an Idea Marketplace were to work, it would have to entice and protect both buyer and seller. For it to entice buyers, the ideas would have to be more than vague notions. They would be more like complete business plans with complete product specification documents. We are talking about quite a bit of work required before the idea would be allowed on the site. There would be a submission process, with the marketplace ensuring completeness and viability (similar to what Ventureworthy tries to do). There would obviously need to be categories and search tools to make finding the right idea very easy. This would also protect the buyers, because they would be getting a well developed concept that would then be more easily developed.

The enticement to the seller is that the buyers are there. In order to protect the seller, the buyer would be able to limit access to specific information, and maybe there would be some kind of agreement not to steal ideas from the system (this last idea would be a tough sell for those in the market to buy ideas). Once the buyer was interested in an idea, they could schedule a pitch/introduction/demo much like VC's do now. The pitch would of course be the same kind of thing that those seeking venture capital already do, with perhaps, slightly more robust media content using the marketplace tools.

I have no idea how to go about initiating such an idea. It would almost need a bunch of VC's and Angel Investors to get together to promote it. The trick in operating it is in maintaining quality in terms of complete idea packages. They would need to have a lot of tutorial material to demonstrate how to make sure your idea is complete. The system would also need to have some kind of negotiation system built right in, that would allow complex investment/purchase agreements (with multiple investors getting different levels of ownership and control). If any of you want to start something like this, or if there is one that I don't know about, let me know. I would love to use it.

Non processes

Some years back, I worked at a public agency that was attached to a public university. The university implemented a new education based ERP that while having tons of features, and tons of capability, and so on and so forth, it really created a drag on a lot of processes, like purchasing and ordering, and all sorts of institutionalized policies that should have only been applied in specific cases and not across the board. Over time, I suppose they did start getting the rougher edges cleaned up and functioning a little better, but I left before it really became usable like it was supposedly going to be. One thing it did try to do, although doing an awful job of it, is try to make sure the chain of command was followed on things like purchasing.

Compare this to another experiences I have had, where companies didn't have anything in place, and in order to do something, individuals had to take specific initiative to get things done. I suppose it works better to just do it manually in situations when you have a small staff, and everyone knows everyone else, and all the major aspects of the company budgets can be kept in the heads of one or two finance types. The problem then becomes individuals taking specific initiative. If they don't want it bad enough, it doesn't happen. Even if their higher ups want it, but not badly enough to make sure that specific initiative is had by those in the trenches, it still wont happen. The solution would seem to be some sort of ERP solution.

However, ERP solutions are ridiculously expensive, painful, clunky and awkward on their best days, and extremely costly to support in both time and money. I have seen very large fortune 500 companies with very large staffs assigned to supporting SAP or Oracle or other ERP implementations that seem to have no end of problems with them. A complex solution to a complex problem, that seems to breed yet more complex problems. But hey, I hear your ERP vendors have more complex solutions to those complex problems. They are only [insert a six or seven figure number] and will only cost [insert an even bigger number] to support.

There is a better way. I haven't seen anyone really hit this one out of the ballpark, but Infoworld had a good write-up on it a while back. I guess one of the major questions is whether not having an automated process or even having a non process is better than an expensive or poorly implemented automated process. I have recently run into a troublesome non-process. A good automated process, or even partially automated process would be very helpful about now. All the big ERP solutions are not even remotely solutions in this case, and it wouldn't be up to me, but a good low cost process automation tool would be really nice for these guys, even if it is too late for me to benefit.