Sunday, November 27, 2016

Painlessly Traveling with International Data

We might waste time on our smart phones at home, but a data connection is a practical luxury when traveling. Wasting time on Facebook is the last thing on our mind on vacation. Our focus returns to the planet around us and to more practical needs. We might translate a menu, navigate to a hotel, or research how to get from Brussels to Maastricht.

Despite the benefits, many of us rely on cafe wifi instead of buying a local mobile plan. We don't want to waste time finding a shop and haggling over a SIM card in French. We want to go directly from our plane to the incredible spectacle of Sainte-Chapelle. We also don't want to pay our carrier expensive roaming fees and risk shocking overage fees.

I spent weeks researching solutions. I found many past-as-you-go international plans offered, but not many good reviews of them. Most of these providers make it difficult to understand how much they charge per megabyte and what kind of connection they provide. I would hate to pay more than my domestic carrier would charge for international roaming. I also want to have access to modern LTE speeds. I don't want to starve to death before finding a decent restaurant!

After a lot of digging, I ordered a GigSky SIM from Amazon. GigSky seemed to offer clear, reasonable rates and seemed to offer LTE connections in most countries. Other providers did offer lower “starting” rates, but I was unable to find documentation of the specific rates I would get. Very few of the other providers gave any indication that more than 3G speeds were available. I was astonished and skeptical that such basic information couldn’t be found for many providers.

In October 2016, I used the GigSky SIM in my unlocked iPhone 6s Plus in the Netherlands, Belgium, and Germany.

GigSky sells data by country. When I was in the Netherlands, I purchased data for that country. As my train to Brussels crossed into Belgium the data stopped. Data service in Belgium required a separate purchase.

As fussy as that may seem, GigSky accommodates even spontaneous travel. The GigSky SIM is configured to provide data to the GigSky app even before you buy data. This means you can purchase a plan without needing WiFi. Within minutes of payment, data is available to all other apps.

Aside from the national boundaries of the GigSky plans, there are also time limits and data caps. For the Netherlands, a $15 plan buys you 100MB of data that lasts 3 days. $25 equals 400 MB over 7 days, $35 is 800 MB for 14 days, and $50 gives you 3 GB lasting 30 days. Prices can vary by location, but this illustrates the trend. More expensive plans give you much more data per megabyte. You can find details on the pricing in each country here

During my travels I usually was able to get a fast LTE connection using GigSky, although occasionally I would have 3G in more remote areas. Aside from a few understandable situations in buildings with thick walls or in caves, the service never left me without data. I was quite thankful to have GigSky at one fancy hotel — the GigSky LTE connection was much faster than the crummy hotel WiFi.

To prepare for my trip, I took several steps to minimize my data consumption. First of all, I downloaded map data in the Google Maps app for most cities I would visit. Downloaded Google Maps lets you see your location and also the map data without any sort of data connection. It also means that when you do have a connection, less data will need to be downloaded when using the app. Despite the local map data, to get directions Google Maps still requires a data connection.

I also disabled background app refresh for all apps on my phone. Background fetch allows apps to fetch data even when you’re not using them — not something I wanted to pay for. I especially didn’t want to pay for social media apps to distract me on vacation.

The GigSky sim was fairly easy to use. I ejected the iPhone’s sim tray using a safety pin and swapped in the GigSky SIM as my 777 descended upon Amsterdam. The one tricky bit was adjusting the cellular settings after installing the SIM card. I saved the GigSky APN configuration file on my iPhone using an Evernote Premium offline notebook to make it easier. A few minutes after landing I was connected to the local carrier and able to buy data through the GigSky app. Seconds after clearing customs, I hailed an Uber.

When I returned to the US, I simply swapped the SIM cards back and my phone was back to normal.

My data usage for the entire ten-day trip averaged about 100 MB a day. Some days I used a little more data, others a little less. I took advantage of free wifi where possible, and I mostly used the data for directions, researching attractions, and communicating with people we were meeting.

My main frustration with GigSky was that the SIM only provides a data connection. If you’d like to send a text message or make a call, you’re (sorta) out of luck. I planned to meet a friend in the Netherlands, and I needed the ability to make phone calls and send SMS messages to make the rendezvous.

Although Skype will let you send cheap SMS messages and inexpensive international phone calls, you can’t receive text messages. Also, unless you buy a phone number from Skype, you can’t receive phone calls either. In both cases, the sending number is one just temporarily used for that purpose.

Other popular solutions for free international text messaging turned out to require verification through a traditional text message. Bah! The whole point was that I couldn’t SMS. Even a SMS app that I previously configured seemed to realize that my SIM had changed and wanted to re-verify by sending me a traditional SMS.

Ultimately I used Skype to communicate with my friend. I explained the odd phone situation so everything worked out.

Since Apple’s iMessage uses data instead of the SMS system to deliver messages to other iMessage users, it worked fine with GigSky. I did have one problem though: for some time I had been inadvertently saving my contacts to my SIM card instead of iCloud. Since I had removed my domestic SIM card, I lost access to many of my contacts. Many of the messages in the Messages app had been reduced to phone numbers. Everything worked fine when I returned to the US and installed my T-Mobile SIM. I’ve since migrated all my contacts off the SIM card.


  • Buying data is quick after the initial setup
  • Data is affordable in larger increments
  • GigSky offers flexibility — an impromptu crossing of borders isn’t a bit deal
  • No contracts
  • The cost of the GigSky SIM Card is offset by offering a free 100 MB plan in the first country you use it in (it expires in 3 days)
  • In most places I received fast LTE connections


  • You can’t use an iPhone as a wifi hotspot with GigSky
  • SMS messaging and Phone calls won’t work with the GigSky SIM card installed
  • You lose access to any contact information you store on your main carrier’s SIM card 
  • Initial configuration will take a little time — I suggest installing the app and activating the card before a trip
  • Smaller data plans are pricey and expire quickly
  • Data plans are tied to a single country
  • The GigSky instructional and marketing material can be confusing

*Moving Average Inc. is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Buying items through this link helps sustain this blog and is much appreciated!

Sunday, October 30, 2016

A Popular System for Guaranteed Investment Losses

“This market sucks; I just sold all my stock.”
– A friend, first quarter of 2016.

My friend panicked because the stock market dug a hole in his net worth. In his frantic state, he sold all his stock thus purchasing the hole and moving in. 

He wasn't alone feeling dread. Analysts discussed what the drop meant for the economy and our portfolios. Maybe this was “the bubble” popping! Maybe this is a recession. Maybe none of us will ever be able to retire. Or maybe the market was “taking a break” for a while. In any case, I heard no positive interpretations.

Fear of loss damages our capacity for rational thought. My friend didn’t predict the market’s loss — he sold in the dip, not before it. His predictive powers missed the dip. Why did he try to predict again? Selling stock prophesies loss. You wouldn’t sell an asset if you thought the value would increase. He bet a second time on a skill that failed him once.

My friend was so worried about losing money that he didn’t honor the premise of long-term investing. Instead he looked at the trend of the last few days and extrapolated the future. He engaged in market timing – acting on a prediction of the future. My friend was scared of the market’s future.

I felt excited about the dip. Instead of catastrophe, I saw discounts. Now I could buy my favorite investments even cheaper. People like my friend were selling me their stock cheaper because they were nervous about the future.

I went on an index fund shopping spree. I had some extra cash that I didn’t need to spend or keep in my emergency fund. Instead of my scheduled, once a month investment, I accelerated my purchases to several times a week. I didn't use money I would need in the short term. I still invested for the long term. I just did it faster.

Was I timing the market? Yes, I was. I feel a little guilty about that. I invested more frequently because I predicted the market would eventually recover from the dip. I didn’t anticipate a date for a recovery, but a purist would still call it timing. Perhaps I am too emotional in the opposite direction of my friend. Better that than defeating my entire investment plan!

To mitigate my investment risks, I always spread my long-term investments over a variety of index funds owning a diverse collection of assets. If I owned mostly individual stocks and bonds, I may have felt differently. Sometimes individual companies continue to suffer even when the larger market recovers. Sometimes businesses or even nations have permanent problems they never recover from. But I had diversity across asset classes, markets, and sectors.

I also didn’t expect to need the money from my investments any time soon. If I did, I wouldn’t call it long-term investing. I don’t plan to retire in the next ten or twenty years. Barring a cataclysm, the market should be out of the dip before I'd want to retire. Even the Great Depression was over after a dozen years.

My net worth dropped by thousands of dollars. Perhaps that should worry me. Obviously I want the market to shoot up and make me rich, but fluctuation is a natural part of the stock market. Life means fluctuation and change. Seasons come and go. Unexpected events happen. Even the best cities can experience natural disaster. Hurricanes hit New York. San Francisco has earthquakes. Floods fill the basements of the Louvre.

But when the Seine jumps its banks, Parisians didn't sell their homes hoping to buy them back after the flood recedes. We instinctively understand the impracticalities of selling property during a disaster. Stock? Not so much. Investing in the stock market without a tolerance for a drop in value is a guaranteed recipe for losing money. Drops happen. To make money you need to sell with gains, not losses.

Even though we might not have an immediate need for the money, we hate watching our net worth falter. We feel a loss in our net worth much more painfully — and for longer — than an equivalent gain in our net worth. Investment success requires the right mentality.

Instead of thinking “losses”, think discount. Don’t worry about what investments you already have. Pretend you have no investments. Worry instead about whether at this new price you’d like to buy these investments. Or, if you’re capable of more rationality than I am, ignore it all and continue your investment plan unchanged.

Gains in the stock market come from steady growth, dividend re-investment, and occasional periods of rapid growth. Other than scheduled dividends, I know I can’t predict when gains would happen. I’ve lost money trying silly technical analysis ideas. I’ve also lost money reading quarterly reports and looking at fundamentals. I’ve lost money following expensive financial advice. None of that saved the the pain and embarrassment of bleeding money through short-term trading. Predictions have terrible track records.

Since I now admit I can’t predict the future, I no longer sell when things look bad. If I abandoned the market, I would transform my current losses into cash and risk missing out on market gains gains. Was I really prepared to skip dividends and a potential leap in the market? Not a chance. Instead of fleeing, I continue to add money when the markets are down.

My friend? His fear cost him dividends, gains during a fast climb out of the dip, and steady growth of the market to levels above the beginning of 2016. He probably locked in a 8% loss from the start of the year. Meanwhile the market has experienced about a 10% gain from January 1st 2016.

If he continued investing instead of selling when he felt the pain, he could have experienced an 18% gain on his new investments, along with the 10% gain on his previous investments. That’s a missed opportunity turned into a painful loss.

Do you intend your investments for the long term? Do you use a balanced, diverse index fund strategy? Do the research. Does it make sense to stay invested even when the markets are down and CNN is predicting the end of the world? Does it make sense to invest more money in that situation? I think so.

If you agree with me, be strategic. Arrange your investments so that fear won’t motivate the wrong decisions. Automate your investments. Ignore the financial news. Don’t invest money that you will need in the next ten years.*

* This isn’t personalized financial advice. Agree with me at your own risk. Do your own research, run some simulations in a spreadsheet, and consult with professionals who understand your financial situation. Beware brokers and “free” financial advisors. Use professionals who you directly compensate and who don’t have a conflict of interest!

Sunday, September 18, 2016

Recommended Books and Educational Resources from The 2016 Business of Software Conference

Update: 20 Sept, 2016: added Predictable Revenue and Selling with Noble Purpose.

I'd rather read a cereal box than most business books. They either put me to sleep faster than an antihistamine overdose, or retell the same wilted business ideas. Who has time for that?

Now I only read books recommended by people I admire. People like those at the Business of Software Conference. They consume an elephant's weight in books every year, so they make a great filter for recommendations.

Every year, I ask the folks at the conference what books they've read in the last year that really made an impression on them. Most of these suggestions come from attendees, but a few were mentioned in the talks too. If one of the books below catches your eye, it will almost certainly be worth your time.

Oversubscribed: How to Get People Lining Up to Do Business with You by Daniel Priestley.

Thinking, Fast and Slow, by Daniel Kahneman.

Predictably Irrational, The Hidden Forces that Shape Our Decisions, by Dan Ariely.

Gut Feelings: The Intelligence of the Unconscious, by Gerd Gigerenzer.

Everybody Writes: Your Go-To Guide to Creating Ridiculously Good Content, by Ann Handley.

Made to Stick: Why Some Ideas Survive and Others Die, by Chip Heath.

Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant, by W. Chan Kim.

Shoe Dog: A Memoir by the Creator of Nike, by Phil Knight.

Tribe: On Homecoming and Belonging, by Sebastian Junger

The Chimp Paradox: The Mind Management Program to Help You Achieve Success, Confidence, and Happiness, by Dr. Steve Peters.

The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business, by Clayton M. Christensen.

Consumption Economics: The New Rules of Tech, by J.B. Wood.

Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers, by Geoffrey A. Moore.

The Advantage: Why Organizational Health Trumps Everything Else In Business, by Patrick M. Lencioni.

Badass: Making Users Awesome, by Kathy Sierra. If you want to improve anything, you probably need to read this book. Or watch Kathy's Business of Software talks. Not only does Badass tell you how to get your customers great results, it teaches you how learn skills. 

Predictable Revenue: Turn Your Business Into a Sales Machine with the $100 Million Best Practices of, by Aaron Ross and Marylou Tyler.

Selling with Noble Purpose: How to Drive Revenue and Do Work That Makes You Proud, by Lisa Earle McLeod.

*Moving Average Inc. is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Buying items through this link helps sustain my outrageous reading habit and is much appreciated!

Tuesday, September 6, 2016

Revisiting the Lightest Camera Bag

Are you tired of hauling around a camera bag that weighs more than your camera does? Did you spend a lot on lenses, but avoid carrying them because of a sore and sweaty back?

You're not alone. I enjoy photography, but I hate feeling like a pack animal. I also felt dumb traveling with a camera luggage advertisement on my back. Expensive camera inside! That's the last thing I want strangers to think as I explore Barcelona.

I started testing different bags more than four years ago. Camera equipment has changed a lot since then, but the core of my solution remains the same: a light, unpadded bag and separate padding for the camera and lenses. The unpadded bag I use and recommend is the Patagonia Lightweight Travel Courier Bag. My courier bag has traveled the world. Taipei, Boston, Barcelona, Cologne, Amsterdam. It''s still in great shape, and still my favorite container for camera gear.

Over the past few years, the design of the bag has changed, but it still weights very little: only 8.2 oz. There are different colors available, and it appears the there are now two smaller zippered compartments on the front rather than one. Also, the zipper pulls appear to be attached by knots rather than a bit of plastic.

The bag's strap adjusts length with a nylon toggle, and the excess strap feeds into the bag so nothing dangles. The strap is made of a mesh that offers a little padding and allows your shoulder to breath. Breathability matters in the Texas summer. On each end of the bag there are elastic pockets useful for water bottles, sunglasses, or a compact umbrella. The exterior zipper pockets are great for carrying spare camera batteries or memory cards.

The travel courier easily repels a light rain,. A surprise deluge in Venice taught me that a heavy downpour will get through the zippers and seams of the bag. Fortunately my guidebook soaked up most of the rain, sparing my electronics. The new bag claims to be weather-resistant, but I'd still carry an umbrella or plastic bag to protect anything sensitive.

The bag has enough space to squeeze in my camera, two lenses, a jacket, and a pouch containing extra batteries, a Lens Pen, charging cables, and spare memory cards.When I carry a jacket, I put my camera and lenses on top to enjoy a little extra padding. A benefit of a bag without built-in padding is that it actually takes up less space when you carry less gear.

The bag is designed in such way that the main compartment is unlikely to spill while being worn over the shoulder. I often use the interior of the bag to hold my lenses as I change them to reduce the chances of dropping anything on the ground.

If you don't have a pouch for your camera accessories, I highly recommend the Tom Bihn clear organizer pouches.  They're well made and make it easy to find your gizmos without spilling them on the floor. I put all my camera essentials into a medium pouch so I can easily transfer my phone charger, cables, camera batteries, and SD Card Wallet between bags without forgetting anything.

Over the past year, I've sold both of my Canon cameras and most of my Canon lenses. dSLRs are great for weddings and sports events, but the size and weight make travel photography miserable. Recent mirrorless cameras now match or exceed the quality of typical dSLRs, with a fraction of the weight and bulk.

Today I carry a Sony Alpha a7II Mirrorless Digital Camera body with the Sony Zeiss 55mm f1.8 lens attached. You can read more about this camera and lens combination in my review here. Depending on my plans, I sometimes carry a second lens in the bag - usually the Sony 28-70 lens.

The decision to go mirrorless shrank my equipment weight and bulk. I have plenty of room in the courier bag to add a lens pen,  pocket umbrella, cheap sunglasses, spare batteries,  USB backup batteries, and sometimes a jacket or coat.

My padding has changed with my camera choice. I no longer use the Domke wraps to pad the camera. Now I protect the camera with the LensCoat LCBBLBK BodyBag with Lens (Black). It's a neoprene shell shaped roughly like a camera with lens attached.
LensCoat BodyBag with Lens
The BodyBag has a flap that comes over the top and back of the camera that secures with velcro. Your camera straps poke out of the sides of the shell, so you can still carry the camera over your shoulder. I frequently wear the camera in the BodyBag over my shoulder when it's not in the courier bag. It offers protection from bumps in crowded places and a little shelter from dust and rain.
LensCoat BodyBag with Lens open to reveal a Sony Alpha a7II
Inside the BodyBag, there is a small loop of material that opens with a snap -- a leash to attach the BodyBag to your camera strap. You can see it peeking out of the middle of the BodyBag in the photo above. When you want to used the camera, you just open the velcro, peel off the BodyBag, and let it dangle from the strap. If you prefer, remove the BodyBag completely and stuff it into your pocket.

Inside the "snout" of the BodyBag, the part that sits in front of your lens, the LensCoat folks thoughtfully built a small pocket containing a disc of rigid foam. The foam gives another layer of protection to one of the most vulnerable parts of your camera: the front lens element.

I hate missing shots, so I store my camera setup in the BodyBag with the lens cap off. Who wants to suffer the embarrassment of trying to take photos with the lens cap on?

I store the lens cap in the same pocket BodyBag pocket that contains that disc of foam. That way I'll won't have misplaced my lens cap when it comes time to swap lenses. Please use common sense if you copy this technique. I always have a lens hood installed on my lens,  creating some extra space between that pocket and the front element of my lens. I wouldn't recommend storing anything hard like a lens cap where the glass of your lens might rub against it.

This setup with the BodyBag just fits my Sony Alpha A7 II with the Sony Zeiss 55mm f1.8 lens. It fits snugly with the lens hood installed in the extended position. It looks like a tailored fit, which I love since this is my favorite lens on my favorite camera. LensCoat offers different sizes of the BodyBag; I suggest comparing your camera measurements to the measurements of the BodyBags. The BodyBags have a small amount of stretch.

To carry a second lens, I've adapted an different LensCoat BodyBag. This one was designed for holding a dSLR body without a lens attached. My 28-70mm lens fits in it fine, but a properly-sized LensCoat lens pouch is probably a better bet if you're buying something new. The lens-specific models feature a disc of hard foam to protect the front glass of your lens. They offer a variety of different size neoprene Lens Pouches.
Patagonia Lightweight Travel Courier Bag with my LensCoat BodyBag with Lens on top
For walking around town, I feel like the BodyBag plus the Travel Courier offers a perfect compromise between convenience and protection. It doesn't provide a half-inch-thick foam sarcophagus around my camera, but it also doesn't weigh ten pounds.

When I travel by air, I empty the courier bag and put it with my clothes (the courier stuffs into it's own interior pocket). The camera and lenses I leave in their LensCoat bags and jam into my well-padded Think Tank Photo Urban Disguise 60 v2 bag. The LensCoat padding works fine for a long hike, but not for getting thrown around by TSA officers, squeezing under airplane seats, and getting rammed by rolling suitcases. That's where you want an expensive foam sarcophagus like my Think Tank.

Once I'm at my destination, I move my camera equipment back to my lightweight courier for exploring.

This camera bag setup has changed my life. I take so many more photos now.


*Moving Average Inc. is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to We also participate in Patagonia's affiliate program. Buying items through this link helps sustain this blog and is much appreciated!

Sunday, August 7, 2016

Recommended Books and Educational Resources from MicroConf Europe 2016

Update: 7 August 2016: added Lazy Leadership. 8 August 2016: added Crucial Conversations. 9 August 2016: added Startup Madlibs.

The folks who attend Microconf tear through great piles of books every year. They are particularly well informed. They attend many conferences, listen to (and produce) podcasts, and are involved in many different communities. They sit at the top of the reader food-chain. My kind of people!

At MicroConf Europe 2016, I asked as many people as possible: which books have had the biggest impact on you in the past year?

Here are their answers, plus a few books that were mentioned in the talks:

Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing by Roger Dooley.

The Single Founder Handbook by Mike Taber

Instant Cashflow by Bradley Sugars (James Kennedy described this book as “tacky”)

Lean Analytics by Alistair Croll and Benjamin Yoskovitz (James Kennedy called this one awesome)

Built to Sell: Creating a Business That Can Thrive Without You by John Warrillow

Finish Big: How Great Entrepreneurs Exit Their Companies on Top by Bo Burlingham

Everybody Writes: Your Go-To Guide to Creating Ridiculously Good Content by Ann Handley

Double Double: How to Double Your Revenue and Profit in 3 Years or Less by Cameron Herold

Design for Hackers: Reverse Engineering Beauty by David Kadavy

The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field by Mike Michalowicz

Start with Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek

It's Not All About Me: The Top Ten Techniques for Building Quick Rapport with Anyone by Robin Dreeke

Badass: Making Users Awesome by Kathy Sierra

Lazy Leadership by Andrew Wilkinson (blog post)

Crucial Conversations: Tools for Talking When Stakes Are High by Kerry Patterson

Startup Madlibs: Perfecting Your One Sentence Pitch by Adeo Ressi

Like this list? Be sure to also see recommended books from MicroConf USA 2016.

If you're a reader, you might also consider looking at my free app Passages. Passages is a journaling app for your reading. It's a place to store the important quotes and snippets that you want to learn. It's also a tool to help you internalize that knowledge.

*Moving Average Inc. is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Buying items through this link helps sustain my outrageous reading habit and is much appreciated!

Friday, April 15, 2016

Tools Mentioned at MicroConf 2016

MicroConfers love tools: tools to make money, to automate business processes, to make life better, to build businesses around. I'm sure that many businesses are only successful because of the boost in efficiency they get from the right tools. These are the tools that I heard mentioned at MicroConf:
  • Zencastr - web-based podcast recording
  • Zoom - video conferencing, screen sharing, etc.
  • Speaky - an app for reading web articles to you
  • Personal Capital - a more investment-oriented Mint competitor
  • Zapier - an web automation tool and competitor to ifttt
  • Hire Otto - another web automation tool, this one aimed at businesses
  • Pluralsight - a place to get royalties from technical tutorials
  • Ulysses - a tool for writing
  • Scrivener - a tool for writing
  • Remarq - creates well-designed documents from markdown
  • Trello - a tool for project and process management
  • - Steli Efti's Sales tool / CRM
  • Pipedrive - a Sales CRM
  • - automated email
  • - Mike Taber's new automated email tool
  • MastermindJam - a Mastermind matching service (if you have a business you need a mastermind group)
Self-promo: the app I'm working on, Passages. :)

Thursday, April 14, 2016

How to Build Wealth Dinner at MicroConf 2016

Update: "Abe" contacted me to clarify my notes and with some new information about how his financial advisor is paid. I also got some feedback that my commentary on the financial advisor's fee was confusing. I improved the wording (I hope). Update 2: I edited my commentary on the fees to appear under "Bob" for clarity now that we know "Abe" pays a flat fee. Thanks "Abe"!

Do you have a financial plan? Does it go beyond owning your own business? Entrepreneurship and wealth building are two different activities, even if two seem linked. You could build a successful company without ever becoming wealthy.

These notes are from an attendee-organized dinner at MicroConf. Although most of us would call ourselves entrepreneurs, most of these attendees recognize that there is more to wealth than making money with software.

We began our meal by going around the table and introducing ourselves and what each of us hoped to get from the dinner. We had quite the spectrum of wealthiness. Three of us were financially independent and no longer needed to work for income. Some of us were doing fairly well. Some of us have not built much wealth, or had lots of debt. Some of us had made great financial wealth and then lost it all investing it into their failing business.

The three wealthy folks among us had systems for building and maintaining that wealth. A few of the rest of us had systems as well. There were a few followers of Mr. Money Mustache in the group. Quite a few of the group seemed interested in starting a system, but it wasn't clear what they were currently doing.

After our introductions, the organizer asked the three financially independent folks to share their financial insights with us. Not surprisingly, we pelted them with questions. This took the remainder of the time allotted to dinner.

Lets call the first speaker "Abe." Abe had built wealth through his business and used a financial advisor who managed the bulk of his assets. The speaker didn't share specific number, but characterized himself as a member of the "two comma club" in terms of liquid assets. That means more than 1 million USD, but less than 1 billion USD.

Abe considered himself financially conservative and cautious about who managed his money. He picked his advisor based on a personal recommendation. He trusts the advisor also because his advisor and he have a very similar shared philosophy around investment.

Abe meets with his advisor once a quarter, although it sounded like he was in regular contact. He even said that he has given trade instructions over the phone, which is surprising to me. It seems contradictory to have a financial planner manage your investments only to override their decisions.* I wish I had the time to get a clarification. Update: "Abe" clarifies that he has only done this twice in the past five years to take advantage of specific events.

His advisor was affiliated with Ameriprise and he had all most of his assets deposited with them. He was charged for his initial consultation with his advisor (about $1,000) and is charged an annual fee based on a percentage of the assets under management. Update: Abe looked into it. He mis-remembered. His advisor charges a flat fee.

Abe did not know the fee, but was quite happy with the value he got for the fees he pays. He claimed that his account was up by 4% during the down market that started in the middle of 2015.

One interesting thing Abe noted: he uses Google Finance to track his portfolio performance. Why? It sounds like Ameriprise doesn't do a good job of it.

My Thoughts: Update: Abe's fee is flat after all (see above). I've moved my thoughts about percentage-based advisor fee's to Bob's commentary below.

Abe's use of a flat-fee financial advisor makes a lot of sense to me. He could do all the work of managing a portfolio himself, like I do. That would save him a couple thousand dollars a year. But if you have retired with a big nest egg, does that use of your time align with your priorities?

Also, Abe may not enjoy managing a portfolio. I enjoy herding ETFs in my brokerage account. But I don't enjoy taxes; I pay an accountant to handle them for me. When the economics make sense, why not let someone else handle the things that cause you stress or distract from your goals?

I worry that Abe isn't calculating his portfolio performance correctly if he is using Google Finance to do it. Maybe he is. But maybe he is forgetting his fees and any tax implications if his advisor is actively trading. Since Abe is using his account for income, this is less of a concern: the value of his account and the income checks will make it obvious when something goes wrong. If you're aiming for growth, tracking performance and fees becomes more important: over a long enough time period tiny losses really add up.

As for his 4% gain in the down market, I wish I could have gotten more details. It is easy to cherry-pick dates, or make other errors that imply a more amazing portfolio than the reality. I did well coming out of that market simply by increasing the amount I invested each month as the market dropped. If I had looked at the same situation at the bottom of that market, I would have shown large losses.

We'll call the second speaker Bob. Like Abe, he also pays a financial advisor to manage his nest egg. Unlike Abe, his advisor is compensated with annual percentage fee against his assets under management. He lives off the income. Except in how he pays has financial advisor, his methods align with Abe.

To that he adds that we should all invest in ourselves, saying "You are your best asset." I take that to mean that we should invest in our education, our mental and physical health, and our aspirations.

My Thoughts: Abe and Bob both use advisors. It makes me think: these two are delegating. In business they probably used accountants, book keepers, and attorneys to make their business run smoother and free up their time for higher priorities. In Bob's case the compensation of his advisor isn't like the professionals he might have used in his business; those professionals aren't paid based on the book value of a client company.

My biggest concern about Bob's setup is the percentage-based fee. Bob didn't mention what the percentage was, but 1% seems typical. Years ago, when I was first learning about investment, 1% didn't seem like much. In fact, it seemed good: yay, the advisors fee is aligned with my success!

I was naive. If you're trying to grow your net worth, the percentage-based fee can add up: that fee will compound along with your net worth. Remember: compounding is the magic of investing. That's great for the advisor: their fee grows. Meanwhile, you're missing a chunk of your magic. 

Bob's advisor is charging a percentage of assets under management. Even if there are losses or no gains, the advisor gets a percentage for that year. How is that aligned? Using my imagination: an aligned incentive might be paying 1% of your investment gains. No gains would mean no fees in that case. Or just charge me for the advisor's time -- it works for Abe's advisor, it works for my accountant!

What additional do you get for the growing fee? Nothing. The math for balancing a portfolio is the same if you have $1,000,000 or if you have $1,000 to invest. At a million dollars, you might qualify for some new kinds of assets (e.g. expensive hedge funds), but so what?

Well, what about trading fees? Those fees go down relative to the size of the portfolio: you can trade for less than $10 no matter how many shares you trade.

Worse, if you're still working, you're still contributing to your net worth. If you deposit it with your advisor, they get to take 1% of it that year. Your advisor gets to take 1% of all the salary you earn and save each year!

Presumably some of the assets your advisor buys will also have annual percentage-based fees: all mutual funds and ETFs do (the best are measured in hundredths of a percent). Hedge funds are known for huge fees. In that case, the advisor needs to be able to provide significant benefits over a self-managed set of investments. And it can't just be convenience: Wealthfront is more convenient and has a 0.25% annual fee (for funds beyond $10,000).

All of this is to say: paying a percentage of your net worth to an advisor makes no sense to me. Worse, I consider asking folks to pay an annual percentage of their managed assets bad financial advice. 

One thing: If you're using your nest egg to generate income, a percentage if assets under management fee might not be as big of a deal. In that situation your net worth might be consistent, and you'd pay around the same fee each year. 

But if you're trying to grow your net worth, a 1% or greater annual fee works against that goal.

Both Bob and Abe are using their managed assets for income, not growth. How did they grow wealth? They built a valuable company. Entrepreneurs need to keep the distinction in mind and pick a wealth-building strategy that fits their stage in that process, their timeline, and their wealth goals.

The final speaker was John Sonmez, and unlike the others, he gave explicit permission to share his identity. John spoke passionately about his wealth building system and shared tons of details. I was pounding notes into Evernote at maximum speed. Apologies if some of the details aren't clear or if I get some details wrong. You can find some of this same information on John's blog.

John's story starts when he was 19. He got his first tech job and was making around $170,000. Unlike how I imagine most 19-year-olds, he felt grateful. He knew he was making really good money, and he wanted to make the most of it.

John did some simple math based on his tax rate and minimal expenses. He figured he could save, and with typical investing returns have a million dollars in ten years. Ten years sounded like way too long to buy his freedom.

John started researching different investment strategies. To him, everything he read, all his simulations pointed towards buying residential rental properties. Real estate. He started buying properties at the rate of one per year.

Why real estate? Leverage: you can buy a property with a loan for 80% of the cost of the property. It only ties up 1/5 of the cost of the asset -- and if things work out properly, the rental income pays off the loan. When trading stocks, the most margin you can have is 50% - you have to put down 1/2 the cost of the asset. And with stocks, you can run into problems if the value of that stock drops too much.

Real estate can also have tax advantages: you can depreciate the property over a long period of time. Stock doesn't work that way. You can also deduct interest and all fees.

Finally, John says that Real Estate benefits from inflation.

John offers this real estate advice:
  • Don't speculate. Don't buy in "hot" markets, or markets that are cyclical.
  • Invest in the central areas of a city
  • Put 30% down on your first property to reduce the leverage
  • Put at least 20% down when you buy to avoid PPI, etc.
  • Pad your rental income estimates: assume 10% for property management, 10% maintenance, 10% for the unit being unoccupied
  • Look for a rent to price ratio of 1 or greater: (monthly rent) / (price / 1000) [note: this sounds like a simplified Capitalization Rate]
  • Put each property into it's own LLC
  • Before buying a property, ask property managers if they would service it (it's a bad sign if they don't service a particular neighborhood)
  • Use the crankiest real estate inspector you can find. How do you find a cranky inspector? Look for someone with lots of negative reviews from realtors. 
  • Have umbrella insurance
  • Don't speculate on the value of the property increasing, don't sell; the goal is income
  • Use multi-family units to reduce the number of transactions and simplify finding renters. He likes four-plexes.
  • The only Real Estate investing book he likes is the The Millionaire Real Estate Investor by Gary Keller
How has this worked for John? He owns $3 million in real estate. $2.2 million is paid off. He currently makes $10,000 - $12,000 in passive real estate income monthly. He had no issues in the 2008 real estate crisis.

One of the attendees asked John: what about the Tesla/Google/Apple/Uber autonomous cars? Won't that hurt your strategy? Won't real estate values in city centers go down when commuting isn't such a big deal? John's reply: he thinks that's a long way off.

I'd also point out that there are many parts of the world where there already is "autonomous" transportation. The San Francisco Bay Area already has BART and Caltrain and Uber. Depending on your employer, there are also Google, Yahoo, etc buses. Do people still want to live in city centers there? Housing prices says yes.

Another attendee asked: what about all the fees and expenses? John pointed out that the goal is to keep the properties for rental income, not sell the properties. He buys the properties so that the rental income, with a conservative margin, will pay for the fees in addition to bringing him income.

My Thoughts: John's speech pumped me up. At the same time: real estate really frightens me. My parents struggled to sell their house during the real estate crisis. I lived a thousand miles away and it still left a scar.

As a home owner, I also know that homes have a lot of hidden costs: property taxes, maintenance, insurance, inspections, realtor commissions, etc. These costs can add up, even if you can deduct them from your taxes. Some, like paying a realtor, only happen once per property if you never sell. 

I feel conflicted. On one hand: wow, John has really accomplished something. On the other: wow, it would take me a lot of time, research, and perhaps soul-searching for me to feel comfortable to buy a rental property. Would it be worth that time? Or would it be more valuable for me to build my own software company and invest my wealth into index funds?

My other concern with a 100% real estate approach (and John didn't say if he was 100% real estate) is the liquidity issue. If you need a huge chunk of money for, say, cancer treatments for a loved one, how would you get it? Real estate can take years to sell in the wrong environment -- or maybe you can't sell it at all if you live somewhere like Detroit. On top of that, the commissions are large. Index Funds you can sell in seconds on any trading day for less than $10 per fund.

However, real estate might be more liquid than a small business, which most of us are also investing in. In good markets, selling a house within 30 days is reasonable. For a small business, it could take six months even if you find a buyer quickly. 

One unifying thought for all of this: how you invest and what you invest in is a personal decision. For some people, giving control to an advisor would be impossible. Others want to enjoy life and don't care about the costs or the details as long as they get enough income to maintain their lifestyle worry-free. Real estate might be a lot of fun for some folks. For others, it might feel too risky or unconventional.

Start with Bob's advice: invest in yourself. Research what is best for you. Definitely don't blindly rely on Abe, Bob, or John's advice for riches. Also remember that there are financial advisors who charge flat fees or by the hour. You can also have a discussion with your accountant. I often ask mine about new investment ideas I hear. He has seen enough clients try things that he knows what works, what fails, and why. 

Want more? Read the Unlucky Engineer's Guide to Wealth.

*I'm guilty of similar inconsistencies. My system is built around index funds -- not individual stocks. I still break the rules and occasionally buy small amounts of individual companies I like. It's fun.

†Moving Average Inc. is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Buying items through this link helps sustain my outrageous reading habit and is much appreciated!

Monday, April 11, 2016

Recommended Books and Educational Resources from MicroConf 2016

MicroConfers read a lot. This is one of the reasons I've created Passages: to help people maximize their return on their reading investment. Here are some of the books I heard mentioned, or that I mentioned to other attendees.

Ask: The Counterintuitive Online Formula to Discover Exactly What Your Customers Want to Buy...Create a Mass of Raving Fans...and Take Any Business to the Next Level

Will It Fly? How to Test Your Next Business Idea So You Don't Waste Your Time and Money

Secrets of Power Negotiating, 15th Anniversary Edition: Inside Secrets from a Master Negotiator I suggested this book to a few attendees who run agencies. I found this book to be a really fun read. I have not read it yet, but I've heard Getting to Yes: Negotiating Agreement Without Giving In is quite good as well.

The Charisma Myth: How Anyone Can Master the Art and Science of Personal Magnetism Another fascinating book that I suggested to my new MicroConf friends.

Gail Goodman, Constant Contact. How to negotiate the Long, Slow, SaaS Ramp of Death A Business of Software talk that every SaaS business owner needs to hear.

Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values

Become a Technical Marketer: A Guide to Working Faster, Accelerating Growth, Automating Marketing Tasks, and More

The Personal MBA: Master the Art of Business

The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you

Kopywriting Kourse

The Brain Audit: Why Customers Buy (and Why They Don't)

The Call to Action

Finally, Jason Swett shared this list of the top books of 2015 with me.

*Moving Average Inc. is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Buying items through this link helps sustain my outrageous reading habit and is much appreciated!

Sunday, April 10, 2016

Trends at MicroConf 2016

You can learn a lot by chatting with folks at MicroConf. Here are a few patterns I noticed in the talks and talking with attendees. Perhaps you'll find something to help your business take off!

Shopify. I talked to a few folks doing consulting work or building plugins (or Apps, as Shopify calls them) for Shopify. At least one person said that the market for Shopify products and services was still small. It's probably true, but the amount of interest makes you wonder how fast the Shopify ecosystem will grow in the next year or two.

Email marketing tools. Drip. Bluetick. ConvertKit. Many folks are building and using these tools. You probably should be too.

Pre-paid consulting. Some agencies and consultants are not accepting net-90 payment terms. Depending on the client or their own inclinations, they are charging in advanced, or requiring payment at pre-defined milestones for the project to continue. Not offering your clients credit seems like a great way to remove some risk from a consultancy.

Payroll tools. Some of the MicroConf attendees own products that help customers run payroll. At least one of them used Dwolla to transfer the funds. Paying employees and contractors is a pain even for one employee. Big payroll providers are expensive and difficult. Perhaps this is a growing market.

Customer personas. Many MicroConfers build customer personas to have a better idea of the different type of people they are marketing to, building products for, and are trying to retain. Done correctly, this helps the businesses make better decisions in all areas. Speaker Patrick Campbell claimed that 98% of successful companies had quantified buyer personas. Get on it! 

Customer on-boarding. Speakers Ben Orenstein, Des Traynor, and Lars Lofgren all praised a robust on-boarding process for new customers. Des wisely reminded us that the on-boarding process is the only part of your product that all users are guaranteed to do. Ben spent hours watching new users trying to use his product. Ben polished his on-boarding until each user slid into the app like a clumsy penguin into the Ross Sea. Lars discussed on-boarding in the context of customer churn, one of the key metrics in growing a SAAS business.

Sales demos were a popular topic as well. Speaker Anna Jacobsen revealed a big ah-ha moment as she shared what she learned from a year of product demos at Drip. The process she developed involves live, one-on-one demos with each potential customer. As she guides them through Drip, she customizes a new account tailored to the customer's workflow. At the end of the demo, she offers to let them use it as a trial account in exchange for a credit card number. Bam: her demo-to-trial hack turns a sales demo into on-boarding.

Pricing research, experimentation, and Value based pricing. I heard lots of folks talking about pricing, especially after the pricing insights from Claire Lew, Lars Lofgren, Patrick Campbell, Amir Khella, and Ben Orenstein. Claire's Know Your Company charges clients $100 per employee. Unusually for a web-based app, the charge happens just once. It works because it aligns Know Your Company's revenue to it's results. As clients grow, they add employees and pay to do so.

Lars reinforced the concept of picking the right pricing metrics: ones that would expand with customer success, but not invite cheating. Patrick went into great detail on how to price, and encouraged us all to never stop evaluating your pricing. Ben advocated for the ability to change pricing without pushing any new code. Amir explained his pricing formula based on how much money he estimated his product will save customers.

Talking to customers. Many MicroConfers believe that their customers know what problems they have, and what products they would pay for. The best of them use customer communications to improve their products, customer engagement, and to find new opportunities for making revenue. Which brings us to...

Expansion revenue. Sometimes it is better to make more money from existing customers rather than simply trying to acquire new customers. Increase that Lifetime Value. Lower your LTV/CAC ratio.

Customer funding. Some of the businesses at MicroConf paid for product development costs by charging customers before the product existed. In exchange for the early vote of confidence, these customers get first dibs on the product. Getting money before a product exists shows that you've discovered a problem that people will pay to solve.

Building free tools to acquire customers. Speakers Amir Khella and Christopher Gimmer both built free tools into real online businesses. Patrick McKenzie tweeted the benefits of this strategy

Shipping real MVPs. Des Traynor suggests that a good MVP includes only the features that all your customers would use all the time. Building an MVP means shipping painfully early, which was another theme.

Sales calls / demos. If you're wondering how folks are getting customers without spending jillions on AdWords, this is one way. I bet fear of person-to-person interaction generates lots of ad revenue! See also: talking to customers.

Cold emailing. B-to-B businesses do this all the time, and it's not spam (done properly, at least). Another way to acquire customers without huge costs. 

Podcasting. Speaker Kai Davis talked about podcast tours. That's not touring podcast studios (they probably look pretty boring). This means campaigning to become a guest on someone else's podcast. Rinse and repeat. His incredible fact: 17% of Americans listened to a podcast in the past month. It looks like podcasting is growing fast. Several of the attendees had podcasts.

Portland. There were many people from Portland, and even a few attendees who are moving there. Although it is smaller in both area and population than Austin, I can tell that ATX is jealous. Does Portlandia count as content marketing?

Tesla. Sure, Elon Musk is a great entrepreneur. Whatever. What MicroConfers seem to really care about is how dang cool the Model S. Some folks were considering speculating on the Model 3, which was just announced. Considering the demand for the Model 3, why not pre-order a loaded one and sell it for a big markup?

What do you think? What did I miss?

Sunday, January 24, 2016

Pitch Anything: The Book Review

Engineers believe in meritocracy. We think that if we work harder or do better work than others, we will be rewarded.

It is nonsense. There are plenty of engineers who do lovely work and still get fewer rewards than less-skilled counterparts.

Negotiation and salesmanship (salespersonship?) are key skills for engineers who want to get ahead. We like to think that engineering is a lovely pure place where talent and hard work determine outcomes. The reality: social skills are just as important as technical skills. Sometimes you need to use persuasion to get what you want.

Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal is strong medicine for the merit-oriented mind. Avoiding analysis is a key piece of Oren Klaff’s sales techniques. The technical details are where deals become boring and look like commodities. Oren focuses on relationships and social dynamics instead of analytical details.

His tools are framing, story-telling, relationships, and social cues.

Oren's stories will scald your engineer eyes. Oren has no problems violating social norms in order to achieve his goals. He helps himself to an investor’s partially eaten apple. He snatches an executive’s bored doodle. He confiscates his marketing materials from the executives he just pitched to. These are some of his techniques for disrupting the implicit social order.

The stories are amazing — and dangerous — because they would be so difficult for most engineers to pull off. They are acts that require humor and charisma to pull off without getting punched in the ear. Oren makes the necessity of humor clear, although he has limited advice in this area. I’m not convinced that the book teaches you the right skills to avoid a dented head. 

His are the type of tactics that need coaching and some low-stakes experimentation. He does make that clear, so it's not a criticism so much as a warning. Some skills require more than reading. With enough practice, maybe someday you’ll be able to get results with lines like:

“Your lips are moving, but I’m not listening to a single word. Your words have no meaning. Stop talking. Start transferring money.”

Not to worry: Oren also has advice that won’t risk bodily harm. When selling an idea, he suggests setting the stage by describing economic, social, and technology trends that support the idea. This lets you create an image of the stars aligning for a limited-time opportunity.

Oren also suggests that you present your idea as being a part of a motion. Instead of presenting the end-goal of your idea, you should explain how it will change, over time, the current way of doing things. Make your idea a film rather than a snapshot.

If you’re interested in giving presentations or will be involved in sales, I think you’ll get value from the book. Oren has unique ideas. You’ll probably also get a thrill if you’re interested in persuasion or negotiation.

I’ll leave you with this judo chop to the rational mind:

"Strong frames are impervious to rational arguments. Weak arguments, made up of logical discussions and facts, just bounce off strong frames.”

*Moving Average Inc. is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Buying items through this link helps sustain my outrageous reading habit and is much appreciated!