All businesses solve problems in containers. Money changes hands when an empowered decision maker recognises the problem someone is offering to solve, as one they have. When that problem is “the problem” that decision maker wants solved now. The challenge is understanding, articulating, and having the competence, skills, and knowledge to offer solutions. *Only then* building the trust is more difficult. It is a chicken and egg dilemma. Shared problems within the context of established relationships are easy. There is trust that has deep soaked as an underlying platform for everything else that happens. Community is that platform. Community allows us to genuinely understand each other’s problems. To have a vested interest in the solution. Skin in the game. To really believe that the solution isn’t simply that money swaps hands. To really believe that there is fundamental value creation going on. Nothing happens without trust. Build trust first.
Wednesday, October 16, 2019
Tuesday, October 15, 2019
The danger of elevating and separating thinking and work lies where we become disembodied. As Ken Robinson warns, when you start treating your body “as a form of transport for your head”. I read and write regularly about building endurance, resilience, and creativity. A base for this is financial security. There is truth in the saying that there isn’t a special entrepreneurial gene, most wildly successful entrepreneurs are just rich kids with safety nets. Safety nets aren’t just financial. Our physical health, community support, and an embodied approach to life is just as, if not more, important than a good idea and starting capital. There are good ideas, and there are good business ideas. Some are both. We destroy some good ideas by trying to filter them through the constraints that make them good business ideas. We also destroy some business ideas by not partnering them with good ideas that provide the qualitative environment for the lives we are trying to build. Even the things that aren’t connected, are connected.
Monday, October 14, 2019
A Stokvel is an invitation-only club which can serve as a rotating credit union (pool money and take turns to get the pot) or a savings scheme (pool the money to reduce the costs of saving and investing). I am a Soutie. One foot in South Africa, and one foot in the United Kingdom (my wife is British)… so my interest in Stokvels seems appropriate. The name (but not the idea of group saving) comes from the rotating cattle auctions of English Settlers to the Eastern Cape in South Africa (“stock fairs”). Stokvels have a Constitution which dictates who contributes, how much, what gets done with the money, and how it gets paid out. A Community Wealth Fund could be a Stokvel that pays a Universal Basic Income to all the members of the community. A Universal Basic Income is a periodic payment delivered to all on an individual basis without means test or work requirement. This could be funded partly through redistribution, and partly through building a long-term solution in the form of Capital. We can talk about the kind of world we believe in, or we can build it together. Starting with agreement, and following through with action.
Friday, October 11, 2019
“Enough to do anything, but not enough to do nothing”. That is what Buffett believes wealthy parents should give their kids. The keyword there is enough. What is enough, to remove obstacles? What is enough, to remove our fire? The world is wealthier than it has ever been, and the tools required to create wealth have been passed down. Money is made by identifying, understanding, and solving problems for a community of people with a similar need. A Universal Basic Income would serve two clear purposes. First, making everyone have “enough” for their community’s problems to be identified as a target for solving. Second, ensuring everyone has enough to raise their eyes from their own problems. Basic. A base from which to explore. A base from which to create. A base from which to thrive.
Thursday, October 10, 2019
Interest rates are the price of money. Lowering interest rates is a direct transfer of wealth from savers to borrowers. There should be a floor to this. If people have bought into the concept of building Capital and delaying their consumption, plans can be scuppered by interest rates falling to silly levels. Especially if they stay at those silly levels. Pensioners and those invested in “safe” assets with predictable interest rates are hit hardest. Borrowers (who can prove they don’t need to borrow) can leverage up their ability to buy assets that do actually earn money (with money they get for almost free). I am a loud and persistent activist encouraging the building of Engines made of Capital. But what that Capital is doing matters. If that Capital is working for free, for someone else, and being eaten away by inflation, then something is rotten in the state of Denmark. We need to look through the smoke, mirrors, and ghosts and see what is actually being done, how well, and for who. Fundamental, Investing.
Wednesday, October 09, 2019
Not all money decisions are born equal, even if they have the same price. Price is a photograph of the edges, rather than a movie of the life. The angle, lighting, and perspective of the viewer all have an effect. When money changes hands, it can be to (1) consume, (2) buy, or (3) invest. After consuming, the buyer has nothing, and the money is gone. After buying, the buyer has a passive thing that may or may not hold its value. The money may, or may not, be retrieved. After investing, the buyer has “nothing” but their money is working. If the money does something useful, its price will grow or it will get a stream of income. Passive Things are easier to price. Especially if they are tangible, simple, and with steady supply and demand where the price is confirmed by swapping hands. Investments are based on potential. The work they will do in the future. The price is a quote for a piece of that potential, and gets affected by waves of short-term uncertainty. Long-term investors don’t swap their investments regularly, so the price is distorted to amplify the voice of short-term gamblers. Price is not value. What something does matters significantly more to value. A single frame doesn’t make a movie.
Tuesday, October 08, 2019
Hans Rosling divided the world up into 4 income levels which he argued were more useful than the traditional Developed-Developing perspective. I am interested in the transitions. How does someone get from Level 1 to Level 2 ($2), 2 to 3 ($8), and 3 to 4 ($32). A challenge we face is that the first step of building a business is finding a community (with money) with a problem you know how to solve. Money attracts problem-solving through supply and demand. 1 Billion of us consume more than $32 a day, and the majority of money will be directed at solving our problems. Putting cash in the hands of the Billion people who consume less than $2/day will suddenly make solving that set of problems a bigger priority. The best decision-maker of what problems need solving would be the person with the problem. The best provider of a solution is likely someone who has recently had the same problem. Not someone projecting their Level 4 “competence” onto a world they know little about.
Friday, October 04, 2019
Part of why I shifted gears in my career was a recognition of where my energy was being directed. Aside from the technical and business part of investing, I spent a lot of time building relationships. I enjoyed that. Understanding the context and psychology of how clients saw the world. Finding the frequently asked questions, and interesting new angles, and digging into clearer answers. Acting more as an “Investment Philosopher” than a salesmen. People trust people who are clearly on their side, rather than pimping a product. The problem for me was I was directing all this energy to clients, and significantly less to friends and family. Colleagues and Clients were my community. Friendships were becoming something I gave my leftover energy to. If there was any. The first step of any business is finding a community that needs to be served, and understanding their needs. I wanted to find a way of constructing that community consciously and with intent.