Friday, October 29, 2010

The wisdom of Sahlman

  1. More cash is better than less cash.
  2. Cash sooner is better than cash later.
  3. Less-risky cash is better than more-risky cash.
  4. NEVER run out of cash.

DSC00767 Stitch

Back in Cambridge for a few days, autumn settling in (above). Its the usual whirl of meetings before headed back to the Netherlands at the weekend.  I’ve pinned the future on the success of two deals, one financing a business, the other leveraging one, and both are taking longer than expected.  This puts a cash flow squeeze onto the contracted payments through my Dutch company, so I’m entering the Winter of Living Frugally.  It’s teaching a few lessons (in addition to hammering home the truth of Dr.Sahlman’s words for entrepreneurs, above):

  • The practical consequences of never selling myself short.

Conventional wisdom holds that you should either give your services away or sell them at full value: never at a discount.  When a client runs into financial squeeze, the logic is to keep billing full-rate, but be flexible on repayment.

I’ve learned to be flexible on the method (cash, stock, in-kind services) but not the timing.  Payment deferred is payment denied: invoices risk getting written off or converted at the deal’s close.  Make an arrangement and stick to the schedule.

Statue

  • A customer is a customer when you sell a service.

Reduced to its essentials, there’s not much difference between being an employee and being a consultant, contactor, or service provider.  I sell my time, abilities, network, and efforts; I am paid to meet customer specifications and expectations.

I had thought that this would be different outside the corporation, but it’s still all about satisfying the customer, which still means yielding control.  On the plus side, I can take the jobs that I want and keep what I bring in: I enjoy the creative and business freedom.  On the minus side, if my recommendations aren’t; accepted, I abandon them; if the report isn’t complete, I redo it.

There is no escape from this reality as long as I sell services to others.  The transition only comes when the business owns assets that others want.  The biggest change that I need to make in my business is to create asset-value rather than just reputation-value, creating and owning a product or process that stands independent of me.

Reaching for the cup

  • Knowing the limits of confidence and persistence.

In the beginning, I said that I would never fly this business into the ground, succumbing to the gambler’s sin of betting that the next roll will be the winner.  Instead, I’ve always believed that in sane times I should know my limit and I should know when to quit.

New businesses are built on confidence and persistence, belief in the vision and recovery after a setback.  So far, I’ve done that well.  But, as resources shrink and the finish line stays tantalizingly out of reach, I’ve begun to question the limits of both.  There’s the  conviction that holding out one more month, calling in one more favor, giving one last push will be enough; that the sunk costs justify the incremental expenditure.

It’s a seductive call, and it seems to me that this is the time that you need someone watching your back.  I’ve put a trusted and uninvolved friend into position to keep an eye on things, someone who can suggest when it’s time to let go, if I can’t see it. 

Indiana Jones photo credit

Thursday, October 28, 2010

Seeing the sights at Schiphol

DSC00758

‘A new-record 24 hours on flights from the US to Heathrow this week.  50 mph winds in the midwest forced flight cancellations and delays: the ticket agents advised me to hit the phones to Delta and see if I could get more help than they could give.  A routing through Canada and the Netherlands turned out to be the solution, long way around, but avoided paying an extra hotel night and racked up a few more moles (currently 111K towards the 125K I need for Diamond status).

I dropped into Schiphol bone-weary and jet-lagged; rather than head for the lounge, I decided to check out the sights along Holland Boulevard, the new Dutch Tourist area set up between concourses D and F.  Unfortunately, it’s too early for the annual Christmas light display, but there are lots of new features along the moving walkway that can really help pass time (inexpensively) during a layover.

DSC00753aThe Rijksmuseum art display is still a popular stop.  Tucked between the first and second floors, it has a small rotating collection of works gathered around a theme.  Generally, the displayed works are high quality and feature recognizable Dutch names (Rembrandt is always there somewhere).

DSC00752The new Airport Library is a sprawling collection of books about Holland’s history and culture.  Books can be checked out or read at worktables; there is a small set of computer workstations also available.  Books can be checked out and I imagine the collection will grow as passengers leave their travel reading as donations.

DSC00754Adjacent to the library is a ‘living room’ – dimly lit comfy-seating with backlit wall art.  More books and magazines, although this seems to be a favored place for napping, replacing the Quiet Area with lounge chairs and nature sounds that was formerlyDSC00753 located directly upstairs.  My favorite bit is the simulated fireplace, flickering red against the blowing blue background.  There is a Delft theme along the walls, along with pictures of Dutch scenery, that make this a nice retreat from the bustle elsewhere.

DSC00755The restaurant, located beyond the living room, has a variety of typical Dutch fare.  For an expat, the offerings are unremarkable, although they will charm visitors looking for an escape from the fast food along the concourses.  I like the tulip-tables and Delft-cup booths;  the whole Boulevard is a little slice of Netherlands hyperreality.

There is also a massage area, the Holland Casino, and numerous opportunities to sign up for a tour or buy a local souvenir.  It’s all good for about an hour between flights, and beats the average Chamber of Commerce display by a mile.

Then it was on to Heathrow, then a meandering bus ride across East Anglia towards Cambridge.  My luggage, unfortunately did not arrive alongside: despite the traveler’s maxim that bags never transfer on-time at Schipol, the problem was US-based.  Somehow, it was headed to New York as I winged over the Atlantic, another 30 hours before it, too, arrived home.

Monday, October 25, 2010

You’re connected…

1.1… maybe more than you thought.

I tend to segregate my social networks, creating small walled gardens of friends and colleagues around different purposes.   So, for example, Facebook holds personal friends, while LinkedIn is for professional colleagues.  There are probably half a dozen services that I populate with different kinds of content (status, text, photos, reviews), each accessible to different groups.

Maybe it seems a bit obsessive, but it keeps private things private and avoids showing status messages to colleagues and exposing geolocations to strangers.  There’s nothing worse than having a professional contact inquire about my health based on my book recommendation to a troubled friend (yes, it happened).

YoonoIn the last few weeks, I received service upgrades from Skype and Windows Live, and cautiously opened some of their recommended linkages to Facebook, Linkedin, and other media and social services.  The idea is a good one: bring all of your friends and content to a single point where it can be access by mobile devices.  I see the value of being able to bring up contacts and photos, references and mail, from across my network without having to hunt through them, remembering who and what I put where.

However…

1.21)  When everything is blended together, it makes for a tsunami of stuff. 

My phone contacts multiplied from 40 frequently called numbers to hundreds of never-called people.  There were conflicts to resolve among e-mail addresses.  The phone chirped constantly with new status messages, things I would have skipped on Facebook ,but that now arrive with  SMS urgency.

Sorting and filtering are going to have to get much better.  This may require me to tag individuals or create groups to set their access priority: people who can interrupt me vs. people I only want to ask about; people who’s personal details are of interest vs. people that I only want to know  if they change jobs.

It seems daunting to set access at that level across hundreds of people.  We’ll need semi-automatic methods,. perhaps based on the source of the contact or the frequency that I interact with.  Maybe it just needs a ‘tell me more’, ‘tell me less’ button for each ‘push’ from someone.

1.32)  When personal information flows across boundaries,  unintended consequences follow.

The links allow information to flow directly between sites, with status and updates on one service propagating to others.  As they copy, they inherently lose privacy and context.  Eventually, they emerge onto the general Internet where details can be indexed, abstracted, and served to a much wider audience than ever intended.

The only solution seems to be to block the export of personal information across the links, not allowing sharing of personal information with applications in general and prohibiting access or broadcast of information across services.  The alternative might be to restrict aggregation to a single blackboard under my control: other applications would only access this hub and not one another.

I already manage my personal narrative on FriendFeed a bit like this(Yoono is another) and like the general idea of being able to review what’s shared.  Once I have control and transparency, then I’m able to filter the feed by subscriber at a service or individual level. 

Art from Visual Complexity, cataloguing visual representations of complex information.

Sunday, October 24, 2010

Health insurance choices

healthinsurance

The linkage between having a job and having health insurance is much stronger in the United States than in the Netherlands.  As a result, the process for buying insurance from the free market becomes very distorted.

First, there is the cost distortion. When I worked for a corporation, my family health plan cost $400 per month: the company paid the rest.  I think that the total was $900 per month for a family of three, $300 each.

When I took severance, my existing benefits continued for 18 months under the government’s COBRA rules. However, I paid the full cost, rising to about $1200 per month by the end, $400 per person.

With COBRA benefits ending, I now have to buy insurance as a self-employed person ($500 per person) or pay ex-corporate rates to continue my present plan ( $700 per person).

It’s an amazing escalation, and baffling.  Why is my cost, as same person in the same plan, changing so fast?  Why does ‘being an employee’ vs. ‘being a former employee’ change my rates when the underlying risk pool is the same? Why is the corporate plan now $200 more than a comparable alternative?

In contrast, in the Netherlands, the cost differences among various insurers were less than 5%, and the overall cost for basic insurance was $150 per person per month.  The premium has moved less than 5% year to year.  It feels much more in line with our yearly costs of consuming health care.

The second distortion is in selecting features and services.

In the US, I select among prepackaged plans: HSA (lowest premiums, higher payments for everyday care, bonuses for getting preventative care), EPO (lower premiums in exchange for limiting care to a particular physician network), or PPO (highest premiums, but use any doctor.  It’s not a logical breakdown and hard to compare features vs. costs.

In contrast, the Dutch insurance is a la carte:  I buy the services I need beyond basic costs: I can choose physical therapy or dental vs. pregnancy and childcare.  It was very easy to ’tick the boxes’ for my needs and risks.

Finally, I always have an eye over my shoulder watching for the effect of preexisting conditions.  In the US, it can lead to a disastrous cancellation of coverage when I need it most, it’s not a concern in the Netherlands.

In the end, I make conservative choices in the US, staying with a known policy and paying higher premiums because it’s safe, not because it’s right or the most cost-effective alternative.  In the Netherlands, I assembled a plan, priced it across alternative companies, and selected the best choice from a free market.

As the silly season rolls across the US political landscape, television ads railing against ‘Obamacare’ and threatening seniors, I wonder how this happened.  We have a bad system, but people fight hard against reasonable alternatives.  The market in information is as distorted as the market for plans.

Maybe it’s transitional, but it looks insane.