Tom’s Big Picture

We hear a lot these days about the outrages of CEO pay, of golden parachutes and the like.  This is natural enough in a system where a few at the top manage the assets of the many shareholders.  Democracy is a poor form of government and it leads to abuses, both in the private and public sectors.

The real mystery is why so many companies are public to begin with.  Why don’t the Fords still own all of Ford?  The reason is no one wants responsibility.  The descendants of great men who start great enterprises want the benefits of ownership but not its responsibilities.  And unethical men are more than willing to take a huge cut of the profits, sell rip-off common stock to the public and pocket the rest.  Common stock is a pyramid scheme at present, and its true value will be apparent when baby-boomer retirement forces investors to attempt to live on dividends instead of ephemeral capital gains.

These great men failed to nurture in their families the desire for ethical leadership and dominion over assets.  They produced trust fund babies.  Much of this can be chalked up to hyperindividualism, a defect of the post-Enlightenment West.  There is a construction company in Japan that has been in the same family for 1000 years.  The world’s largest cymbal company, Zildjian, has been in the same family for almost 400 years.

The inefficiency of the corporate form of ownership, on so many bases, should be an encouragement to those willing to take the task of wealth-building and child-rearing seriously.  Capital always flows to the hands best fit to manage it.  But we have to stop seeing wealth as a means to avoid responsibility (or worse, reject wealth as evil based on pietist nonsense) but an opportunity for stewardship.

I had an engineering professor at A&M who shared this tip, and so I will share it with you.

This professor was a conservative Christian and an elder at a large church in town, and taught me Engineering Economics.  It’s the class where I figured out I was a lot better at economics than engineering.  Whereas I was an average chemical engineer (i.e. about average among the 14% who start and finish a chemical engineering degree without washing out), in this class I did really well.

I found it amusing that people smarter than me in something like, oh say Mass Transfer Operations (distillation towers made my brain hurt), totally shut down when it came to financial calculations.  Garden-variety amortization was too much for some of them.

Anyway, this professor shared a particularly interesting tax strategy I’ve never heard anyone else talk about.  The key to his strategy is the fact that the state of Texas allows you to pay your property tax for a certain year in either December of the same year or January of the following year.  There’s no penalty, and when you pay is up to you.

He would pay last year’s property tax in January and this year’s property tax in December.  In that year, he would also double-tithe (or alternatively, save up last year’s tithe in an interest bearing account and give it in January of the “on” year).  Then, in the “off” year, he would take the standard deduction instead of itemizing, which is $10,700 this year.  If you’re in the 25% marginal bracket (typical middle class situation), then this is a savings of over $1000 per year in taxes!

One key part is that you might have to own your house to do this, as the mortgage company usually escrows and pays your property taxes on the same date every year.  And your charitable giving has to be such that you would exceed the standard deduction, otherwise it’s pointless.  So it’s really a strategy tailor-made for financially secure Christians whose incomes are not too high (as the gummint starts taking away deductions and such when you make too much money- if there’s anything that’ll make you want to start the revolution now, it’s when you meet fedgov’s little friend named AMT).

I shared this with a conservative Christian friend (who has since reformed his view to align with mine) after I heard it.  He thought it was neat, but was concerned that such maneuvering, while legal, might be sinful.

What’s sinful IMO is sending one more penny to the federal fetus butchers than the minimum absolutely required to keep them from unconstitutionally seizing your person and property.

But that’s just me.  I’m a moderate on the issue.

Baptist Press reports that Willow Creek Association’s own study shows their methodology is a failure:

Willow Creek has released the results of a multi-year study on the effectiveness of their programs and philosophy of ministry. The study’s findings are in a new book titled “Reveal: Where Are You?,” co-authored by Cally Parkinson and Greg Hawkins, executive pastor of Willow Creek Community Church. Hybels himself called the findings “ground breaking,” “earth shaking” and “mind blowing.” And no wonder: It seems that the “experts” were wrong.

The report reveals that most of what they have been doing for these many years and what they have taught millions of others to do is not producing solid disciples of Jesus Christ. Numbers yes, but not disciples.

I’ve often thought that the real problem with the “Church Growth” movement is not so much its insistence on metrics and research but rather its tendency to measure and optimize for precisely the wrong things. When we have a faith based on the “narrow way” it would make sense to measure something other than church budgets and total attendance. There are two reasons I think things went badly:

1. As covered in the recent pop-economy book The Tipping Point, studies have shown that groups can only grow to about 150 or so before new sub-groups form with stronger internal loyalty than the larger group. Thus, unity is easier to achieve below the level of about 150 individuals. Once you significantly exceed that, bureaucracy and factionalism take over, creating their own institutional imperatives. A church with a huge staff, payroll and building debt simply cannot optimize for anything but offerings and numbers.

2. Deeper measures of spiritual growth are harder to do. Thus, what’s easier to measure (numbers in attendance, offering income) becomes a proxy for what’s hard to measure. Unfortunately for the church in the last 30 years, that assumption was incorrect.

Proper measurement variables are essential for any business, and even more essential for the church. Businesses that optimize for market share, total sales, growth, or even profitability are destined to fail: total long-term risk-adjusted net-present-value profit is the only measure worth optimizing for. Just as sales growth is not the same as profit growth (and in fact can be detrimental), growth in attendance and fundraising does not mean spiritual growth.

Here’s an idea: maybe the whole idea of running a church like a business is fundamentally flawed.

Businesses can be run on scientific metrics and experimentation because, frankly, it’s just money and the negative consequences are pretty tolerable if you get it wrong: you make less money than you otherwise would. I conduct scientific experiments daily in my business in the quest to optimize for total risk-adjusted profit.

I don’t do the same at home, i.e. I don’t perform experiments on my kids in real-time while raising them. Why? Because my kids are infinitely more valuable than mere profits or a business. For my children, I use the most conservative methodology possible, relying on traditional child-rearing methods developed over hundreds of years that slowly change.

As the Baptist Press article discusses using this very same analogy, parents who relied on so-called “scientific” child-centered methods for raising their children (as popularized by Dr. Spock in the 1950’s) had poor results. Those sticking to traditional methods had the better outcome.

Now we’re seeing the same result in the church: seeker-sensitive churches monkeyed with the proven traditions of the church and screwed up an entire generation of believers, just like trendy parents screwed up their kids with child-centered pop psychology.

Just like our kids, the church is too important for experimentation: much better to take the conservative strategy of tradition and incremental change over long periods of time.

But from what I can tell, the Willow Creek people still haven’t learned anything:

Perhaps the most shocking thing of all in this revelation coming out of Willow Creek is in a summary statement by Greg Hawkins:

“Our dream is that we fundamentally change the way we do church. That we take out a clean sheet of paper and we rethink all of our old assumptions. Replace it with new insights. Insights that are informed by research and rooted in Scripture. Our dream is really to discover what God is doing and how he’s asking us to transform this planet.”

The bureaucracy is too deeply entrenched to just pull down the tent and go home. If Hybels were truly sorry for the mess he’s made, he’d quit ministry and go sell cars or something. He’ll have a new book and a new forty-day study in a year or so, explaining what was missing in his former approach and the sure-fire way to fix it. And you can bet it won’t involve going back to what works and dismantling the resource-hungry bureaucracy of the megachurch movement he’s spawned.

2. With the crummy weather and red tide situation (the little one was very attracted to the dead fish), we spent the first morning at a nice little outdoor mall. Outdoor malls seem to be the new pattern, as they deprive the riff-raff who usually frequent malls of any air-conditioned common areas to waste time and annoy others. This is very pleasant for those of us with families who wish to get our business done and go home. In any case, my girls did the Build-a-Bear Workshop. This is an incredible business, and a lesson for me that confirms what I’ve already learned in business: never underestimate what people will pay for something, and in this case especially what yuppies will pay for an “experience” for their children. They vacuum-cleaned my wallet for $66 for two made-in-China stuffed animals. But their little faces were so happy…and of course from a daddy’s perspective that’s worth it: once or twice, on vacation.

We had one of those “black swan” experiences. Northwest Florida is apparently suffering from a severe drought, yet it rains 12 inches over the two full days we’re there. Simultaneously, the annual but unpredictable red tide comes in, washing up scores of dead fish on the beach while causing respiratory irritation within 1/2 mile of the beach, for which I paid extra for a direct-on-the-beach condo. We did our best to enjoy, and for my readers a few random observations, to syndicate over the next few days:

1. The Florida real estate bubble is bursting, but right now most people are still in denial. About 30-40% of the properties on some streets are for sale, but the asking prices seem exorbitant to me, at least based on fundamentals. Compare: a $120,000 house in Houston might rent for $1200 a month. The $2 million 3-bedroom beachside condominium I rented was $300 a night, or $9000 a month, but probably more like $7500 a month when one accounts for vacancies and real estate management fees. That would imply a value of about $750,000 for the condo, max $1 million if you discount the uncommonly efficient (though aesthetically distasteful) Houston builder machines. So while it’s amusing to see a real estate bubble bust in realtime (as those of us with more frugal, long-term strategies must also suffer through this sort of silliness every few years as it moves among various asset classes), the blood is not yet in the streets. When it does, it would be nice time to buy a condo. But for my money, renting is a bargain. Most vacation home purchases seem to me not a rational way of deploying excess capital but an irrational attempt to crystallize positive vacation experiences that have everything to do with locale and personnel and little to nothing to do with ownership vs. renting.

This morning I was struck when I watched the following video featuring former Tyco CEO Dennis Kozlowski.  Materialism, especially in a soulless alienating place like New York, can completely consume one’s identity.  Kozlowski was taken down on a technicality, avoiding sales tax by shipping art to New Hampshire instead of New York.  But his real crime was the ugly materialism- when you consume like he did, you make yourself a target.  The video also highlights the complete decadence of our elites- those who should be our leaders waste their time and money holding four-day parties complete with Jimmy Buffett.  We’ve come a long way from the days of Jefferson, when the wealthiest were often those most interested in projects, notably politics and education, to improve their state and country.

This video is a warning to anyone lucky or skilled enough to accumulate wealth- materialism has no upper limit, and I think there has to be a harsh judgment for someone who allows so many financial resources to be utterly wasted on meaningless stuff.  To him whom much is given, much is required.

In my last post in this series I described the paradox of millionaires as described in the book The Millionaire Next Door. The typical millionaire was an average student who now employs his more studious, academically superior peers. In the corporate world, brilliant engineers with stratospheric IQ’s work for $80,000 a year while the salesman CEO makes millions.

I believe nothing happens by accident, and I happen to know this one from experience. Having talked to lots of people with engineering mindsets about entrepreneurship, and learning from my own mistakes, I think I understand why. Bluntly, most people with this mindset are gearheads who care more about technology, equipment, trivia, minutiae, etc than the far more boring, purely logistical things that have to be mastered to run a business.

To give you a couple of examples from my own experiences, I recently had occasion to purchase a laptop for someone who is going to work for me. Now, a decent laptop for full-time business use should cost about $1500; no matter where you buy, a good one should cost about that much (I like IBM Thinkpads based on bad experiences with the HP brand- plus Thinkpads have North American support- my last call into tech support had me talking football with a guy in Atlanta). However, something about the idea of configuring and purchasing a laptop triggered something in the “gearhead sector” of my brain. Instead of giving the employee a budget to work with and having him purchase and configure his own laptop (staying within the Thinkpad brand), I must have spent at least two hours of my time checking out specs, playing with configurations, and finally ordering the thing. It was a stupid waste of time, but my “gearhead sector”, the pleasure I get from interacting with machines and gear, overcame what should have been my better judgment.

Another example: until about six months ago, I used to program heavily. Now, I am NOT a trained programmer, but thanks to my level of interaction of Microsoft Excel (there’s some sort of Foxworthy-type joke here: if you open Excel twice as much as Word, you just might be an engineer…), and the fact my parents bought me a computer in the 4th grade where I proceeded to learn BASIC from the manual (thanks Mom and Dad- the $2000 in 1980’s dollars investment at Radio Shack is paying off nicely), I can hack my way around Visual Basic for Applications. Now, if you use Microsoft Office at all, VBA is like playing legos with the innards of the applications. You can do anything you can think of, automatically- MS Word and Excel can do almost anything you can imagine. You can see how this is going to work out badly for me in terms of time management.

So every now and then we have a programming need. If it were at all possible, I’d jump into it with enthusiasm, programming in VBA things that should never be in VBA; I even bought a book and considered learning PHP/MySQL to program tasks too complex for VBA. About six months ago, I came to my senses. I rediscovered a website I had used in the past called Scriptlance. This is a site, partially thanks to Bill Gates’ lobbying for a flood of H-1B visas to put American programmers out of work, where you can find genuine American programmers (I always try to favor my countrymen when possible, even if they’re more expensive) who are experts at programming and will work for $15 an hour (as an aside, I have discovered that all kinds of professionals will moonlight for much less than what they earn in their dayjobs- my guess it’s because of debt bondage, not necessarily unemployment, where they’ve tapped out their high-earning job and need a side job to make payments- yet another reminder that debt is slavery!). To continue, these guys will work for $15 an hour, and guarantee no overages- they quote a project cost at what they think it will take them to program it, and one rule of programming is that it always takes longer- but I only pay their project cost. The other benefit is that the freelance system bypasses the artificial credentialing rackets of the universities, as someone’s feedback profile on actual projects is more important than a diploma.

So while I was wasting weeks every year programming, I could have paid someone else who is better than I am at the task, and bought back my time very cheaply. Again, my “gearhead sector” got in the way of optimizing my time.

What causes the “gearhead sector”? Why is it that smart people with analytical minds get bogged down in meaningless details?

The answer is surprising. Two factors to consider:

1. The latest studies on autism and its milder cousin Asperger’s syndrome are revealing that genetics and the assortive mating of a highly mobile society are probably the driving factors behind the increase in autism over the past few decades. Specifically, autism hot spots in Silicon Valley tend to indicate that in areas with high levels of “geeky” genes, autism is more prevalent. In other words, when geeky guys have the chance to marry geeky girls, they tend to, and this results in higher prevalence of autism. Which probably indicates that…

2. The “engineering mindset” of analytical thinking ability is probably one point along a continuum between “normalcy” and autism. Many psychologists are now rejecting arbitrary category-based diagnoses, replacing discrete mental illnesses and syndromes with the concept of “shadow syndromes”, reflecting the reality of a continuum on nearly every measure of human personality.

Autism and Asperger’s, if you recall the Rain Man movie, can result in a sort of idiot savant behavior, where the sufferer is adept at specific tasks usually involving non-human objects like trivia, math, or even music. The two conditions are most marked in what they do not involve, specifically human expressions of emotion and an inability to deal with change.

I believe the “gearhead sector” I referred to earlier, whether this manifests itself in irrational obsessions with technology, machines, or even Lord of the Rings trivia, is an embryonic form of Asperger’s. It even could be that the “moral courage” of the engineering mindset that I referenced in my last post is really just a partial emotional numbness, an ability to resist peer pressure and the herding impulse because of an embryonic autistic mindset. However, whatever the cause, courage is as courage does- Robert E. Lee was himself an engineer by training.

So the reason smart people work for less-smart people is because the smart people have a mild mental condition that prevents proper focus. This condition must be managed, and it can only be managed if it is acknowledged to exist and prevented from biasing how everyday tasks are prioritized.

Personally, I’ve learned to manage my situation by compartmentalizing this part of my personality- in two ways. First, I allow myself to study technology as a hobby- I subscribe to PC Magazine, read technology news, etc, but only as a hobby for pleasure. Second, I find ways to make the “human element” abstract and object-like- for example, whether a sales process or politics, when human interaction is thought of at a high enough level, it reduces to just another engineering problem. And that’s the real secret to blowing past the salesmen types in business endeavors- whereas they are guided by their instincts, their natural charisma to get things done with people, if you can apply your “gearhead sector” thinking process to solving scalable interactions with people, you hit jackpot. Instead of making a sale, you have a sales system. Instead of buying ads, you have a marketing system, etc, etc.

One of the few people I respect in the business advice world once said that it’s really difficult for “engineering types” as he called them to understand what’s really important in a given business, but once they do, and they apply that analytical ability directly to optimizing the revenue-limiting function of the business, the sky’s the limit for their success.

But what is important to think about in business? Where should your analytical skills be put to use, if definitely not in obsessing over laptop specifications, then where?

You’ll have to wait for the next in this series for my answer.

This is a new series of articles where I hope to share some of things I’ve learned in running my own business and successfully extricating myself from Corporate America. While I will not get into the specifics of my businesses, I think I can offer an analytical perspective (that is, information on the basis of facts and reality instead of wishful thinking) absent from most discussions of entrepreneurship. In particular, I have noticed that many of the conservative countercultural types like myself have “engineering” mindsets- it’s almost necessary, as being countercultural means that you can make independent decisions based on objective information, and that you have the moral courage to overcome the herding instinct and take action on your convictions. So that’s why I title the series “Engineers & Entrepreneurship”, because I have a typical engineer personality- but the information will be valuable for anyone of a similar mindset, independent of formal education.

One trend I have noticed is that your typical business owner, while certainly not stupid, is NOT analytically-minded, and more often than not is merely a mediocre study (the “pointy haired boss” in the Dilbert strips, like most stereotypes, is funny because it is a humorous exaggeration of a core truth). I think this is a shame, as the world would be a better place if more businesses were run on the basis of reality rather than the mish-mash of statistical and logical fallacies in your typical business book. If more of my fellow analytically-minded countercultural conservatives were liberated from the cubicle, I see a number of benefits:

A. Higher incomes and flexible schedules enable homeschooling, a positive social good. A higher income also makes it easier to support a large family, another social good among our people.

B. Higher incomes, especially incomes not dependent upon a single employer, can help relieve social status concerns regarding holding countercultural conservative convictions, and enable greater independence of thought, and greater confidence to avoid the herding instinct. While the herding instinct is usually healthy, in a toxic culture such as ours it is counterproductive.

C. The more of our people who are liberated from the cubicle, the more Corporate America will have to pay those that remain. Supply and demand. And the glad-handing salesmen types usually reaping most of the rewards in business cannot run their incredibly complex business empires without an army of engineers, programmers, and other analytical minds behind them. The former have been too richly rewarded relative to their contributions and the latter too stingily.  We see this same unfortunate trend in the church, as the retail salesmen of the faith (megachurch pastors/evangelists) are elevated beyond their capacities (see The Peter Principle) into teaching roles that should be reserved for engineering minds of the faith, or theologians.

D. Not everyone can or will own their own business. Not everyone should- I will even try and provide a framework for making that decision later. But those of us who do own our own businesses can employ similarly-minded people, offering an employment framework more in-line with a counterculturally conservative lifestyle.  This is especially important in light of the preponderance of self-appointed “thought police” who will harass people based on their politically incorrect views by trying to get them fired from their job.  How refreshing it would be for many to be able to speak their mind without fear of losing their job!

So without further introduction, my first offering on the subject:

Why do smart people work for others instead of running their own businesses? According to the book The Millionaire Next Door, the typical millionaire in our country is someone who runs a small business in a small-to-medium size community, who sometimes has a college degree, more often than not with a GPA of around 2.0. When questioned about academics, their attitude is often along the lines of “why try and be smart when you can hire smart people so cheaply?” Why do the 4.0 students end up working for the 2.0 students (even the 4.0 students who are self-employed tend to gravitate towards income-self-limiting trading-time-for-money high-stress occupations like medicine and law- so while some may earn as much as their lesser-skilled analogs in business, they’re working a lot harder for it)? A number of possible reasons:

• 1. First, and foremost, there is survivorship bias. Less intelligent people aren’t as skilled at appraising risk, and are generally more confident and optimistic (yes, ignorance is bliss!). For example, if 100 dumb people go into a risky business with a lot of debt, 95 of them might fail and declare bankruptcy; the other 5 will succeed spectacularly due to random factors. On average, this is a bad bet. However, we only hear about the 5% who succeed, who of course think their success is due to something innate in them, usually their ignorant “think positive” personality orientation, when in fact their success is just an atypically good roll of the dice. I think this is where a lot of the nonsense in the business book section of the bookstore comes from- only people unable (or morally irresponsible enough) to comprehend risk take big gambles, and the few of them who win big from the slot machine attribute it to their risk-taking orientation. Then they put on big seminars where they teach you to internalize their risk-taking orientation…which leads us to the other side of the coin…
• 2. Intelligent people in corporate jobs tend to underestimate their own risk and overestimate the risk of a business. There is no job security in large companies anymore; in fact, I would argue that a small businessperson with a broad base of customers is more secure in his income than a cubicle-dweller in the same industry; there is, of course, no way to prevent against systemic risks in a given industry- but a businessperson at least has the freedom to start another venture in a different, non-correlated industry. I had people tell me when I was first starting out that I was crazy to leave my corporate job because “you can’t get health insurance if you’re self-employed.” Of course, Blue Cross will sell you group health insurance (e.g. a husband and wife both working for the same business qualifies as a “group”- and in Texas at least, BC/BS and other companies are required by law to offer coverage to small groups at a non-discriminatory price) for the right price- a lot more expensive than $1000-a-year company-subsidized insurance, but as long as the income tradeoffs are right, the costs are irrelevant.
• 3. Irrational concerns about social status. As John Derbyshire notes*:

Towering over all these lesser scams is the college racket, a vast money-swollen credentialing machine for lower-middle-class worker bees. American parents are now all resigned to the fact that they must beggar themselves to purchase college diplomas for their offspring, so that said offspring can get low-paid outsource-able office jobs, instead of having to descend to high-paid, un-outsource-able work like plumbing, carpentry, or electrical installation.

Now, I’m not anti-college ideologically as some in homeschooling circles, as I do think a conservative liberal arts education is useful for exceptionally bright children, the top 10%, as college used to be. And it’s necessary for more technical occupations like engineering, medicine, etc. But for most people attending college these days, it’s a game of pretending to a middle-class lifestyle by sitting in a cube instead of making a very respectable living doing real work. This is about the silliest social status game that our people (who are very silly about social status games in general) have ever dreamed up.

An epiphany moment for me occurred in 2001. My wife and I were newlyweds living in Georgia, in an exburb of Atlanta, attending a middle-class church. Most of the young couples we knew had various jobs as middle managers in the highly-service-oriented Atlanta economy. We were first starting out in our little two-bedroom apartment, and most of the couples had been married a good bit longer than us (maybe 5 years or so) and had already bought their first home. We were quite impressed, of course, visiting their various homes, and amazed at the apparent debt people were willing to go into, as Georgia prices are significantly higher than Texas prices. Most of the couples in the class were clearly middle-class in their mannerisms and outlook on life (very focused on advancement up the corporate ladder, getting their MBA’s, etc)- and though I was raised in more of a hybrid working-and-middle class home, I found myself, especially with my new job right out of college as an engineer, adopting this mindset as well. I was very impressed when I heard that just two steps up the management food chain from where I started, someone could make over $100k per year; of course, they worked 90 hours a week, but I wasn’t thinking about that.

Anyway, there was one person in the class who didn’t fit the middle class mold (his wife did, but he didn’t); this person was Jim, who was the third-generation owner of a local tire shop. Jim was about 28-30 years old, and definitely had more “working class” mannerisms and outlooks on life. Jim’s tire shop was the very epitome of a local tire shop- stacks of papers everywhere, grease stains on the floor, five-year-old Car and Driver issues next to an even older coffee pot in the waiting area, with burnt Folgers and a grainy 1980’s-era color TV mounted on the wall. Jim’s shop also offered a “drop off” service for customers where one of his employees would drive you in one of their beater cars (a luxurious chauffeured experience in a 1984 Accord, all the while with the driver smoking a cigarette out the front window) to the local mall or wherever while your car was being worked on. In other words, Jim’s business was about as non-middle-class as you can get.

Well, one day we were invited to Jim’s house for a social. As we followed the directions to get to his house, we immediately noticed something telling about his neighborhood: Jim’s house was on the lake, which in this area meant the lot itself started at $100,000 (this was 2001, so probably more now). And then we pulled in his driveway- huge didn’t even begin to describe the size of the house, at least to my two-bedroom-apartment acclimated eyes back then. After I recovered from the cognitive dissonance of seeing my entire middle-class outlook on life shattered, I eventually got around to asking Jim about his business later that night. I’m sure I wasn’t nearly as slick as I wanted to be, but after Jim dropped some numbers about the number of tires he sells and some simple arithmetic when I got home, I figured a rough estimate of an income of $400,000 per year from his tire shop; that’s income, not sales.

Jim helped me “get my mind right” about the debt-driven middle-class go-to-college-to-get-a-job-so-you-can-earn-and-consume treadmill- there are too many mice eating that cheese. Just by sticking my head out of the cube, he showed me a whole new world of possibilities for those willing to let go of middle class pretensions about social status.

Later that year, I heard some of the men make a couple of snide comments about Jim’s business, from a snooty social status point of view. I didn’t bother to defend Jim, as they just needed to soothe their middle class egos by making fun of him a little bit; he was laughing all the way to the bank anyway.

Which do you value more when it comes down to it?  The social respectability of you middle class salaried job, or your financial freedom?  Most realistic entrepreneurial opportunities will not allow you to retain both.  After all, doesn’t it feel good to claim to work for such-and-such company, to be part of a large organization?  Are you really mentally prepared to be your own employer?  Or is this just an escape fantasy for bad weeks at the office?  Only a burning desire to help plow through the hard work, and a good bit of luck, will suffice.

More to follow…questions/comments welcome.

*Regarding the Derbyshire article linked to: I disagree with Derbyshire’s critical comments about teachers.  Teachers are as much the victims of the problems of our educational system as students.  The benefits accrue to the administrators, union bosses and various other bureaucrats who claim to have “educational” jobs (usually very high-paying ones relative to teachers) that conveniently don’t involve directly interacting with students.

I recently helped my wife transition our family’s digital photos and movies from ad-hoc directories spread across several computers into a unified library on her Mac’s excellent iPhoto software. While I still find the Apple operating system a bit awkward (it’s prettier, more stable, easier-to-use and more secure than Windows for the average user, but it doesn’t offer any really breakthrough additional functionality and taxes me with my Windows-optimized computer instincts), the real treat of owning a Mac is Apple’s software. It’s well-designed and it works. Particularly interesting was the scrolling function when looking at the entire library. As you scroll down chronologically, the software superimposes the month and year over your screen. I was a bit taken aback as I started scrolling down- we have so many photos over only six short years of time as a couple. At last count, I think there are 12.8 gigabytes worth of photo and video (we take short video snapshots with our digital camera that I edit into an annual DVD as an alternative to the awkward omnipresence of a video camera, whose footage is never watched).

I think it works out to about 3000 total photos. They are stored digitally, will never degrade, and will look as good 500 years from now as they do today.

If I did my best, I might be able to find 50-100 photos total of any of my grandparents (3 of whom are passed away). The tiny bit of video is on 20-year-old degrading VHS tapes that badly need to be archived. In essence, I have a few pictures, a bit of video, fading memories. That’s it.

For every child born today, it will be far different. When my second child is a great-grandmother, maybe 50 years after I have passed away, she will have a perfect digital copy of video taken moments after her birth- and perfect archives of her father and mother. How they talked. What they looked like. Their mannerisms and the silly things said to them when they were a child.

But the implications are far more significant than just emotional connections to dead relatives that can be recalled upon command. Perhaps a bit of historical context on this subject:

In medieval England, one of the goals of the aristocracy was to preserve the unity of family wealth over time. Many of them left wills that essentially said “my oldest son inherits all of my wealth; he may do anything he wishes with the income generated from it, but may not deplete one penny of principal or sell one acre of land.” Over time, land and money became tied up in a few hands as the “dead hand” of the past restricted the living from doing what they wished with their estates. The law eventually recognized this problem and created a legal principle called the “rule against perpetuities”. The rule essentially states that for a contract or will to be valid it must be provable that it will terminate within 21 years after the death of someone alive at the time of its origination. So for example, an older British patriarch could only tie up property for the maximum of the lifetime of any one person alive at the time of his death plus twenty one years. Still a lot of time, but it freed up a lot of land and removed the oppressive regulations of long-dead ancestors.

The efforts of these aristocrats to control the future dealings of their heirs illustrate the natural desire of any father or mother to influence what comes after them. Many of them wrote long, detailed letters concerning life to their children, for example the very popular (in the 1800’s) writings of Lord Chesterton to his son or Robert E. Lee’s affectionate letters to his children, first published in the early 1900’s.

I believe our opportunity for such influence is many times that of our ancestors. Thanks to digital technology, our photos and videos will survive indefinitely, and our descendents can have the opportunity to feel like they really know us. Feeling like they know us as people, they are more apt to take our ideas seriously, even those passed down in written form.

Recently I listened to Vision Forum’s Entrepreneurial Bootcamp CD’s (as an aside, they were excellent, with more practical business content than the typical secular “think positive” business cow pattie seminar; I don’t think I ever understood the whole venture capital build-it-to-sell-it process until I heard one of the guys speak, as I’m more naturally interested in building cash cows to have and to hold than capturing market share as bait for a potential buyout). One of the more, shall we say, “intense” speakers shared that he had a 200-year plan for his family- actually written out! Now that may sound really strange, but he remarked that in his lifetime since he wrote the plan, 20% of 200 years will have passed.

To our hyper-individualistic culture this sounds insane- the typical parent is just looking to get the kid out of the house and self-supporting. But to most people in healthy cultures (including our own before not too long ago), long-range planning is a desirable goal. One of the reasons the Japanese outperform us in many areas is their extreme long-term perspective- Sony and Toyota are reported to have business plans looking up to 500 years into the future! Meanwhile, GM is studying how to save $1 on a piece of plastic to boost earnings next quarter.

So we shouldn’t be shocked or ridicule someone with a long-range plan, but rather consider how such a plan, enabled by the priceless technological gifts of our time, fits into OUR vision for OUR family. I also think we have to start thinking tribally, in terms of our extended future kinship network, not only our immediate nuclear family.

These thoughts are very much in-process, but I will briefly summarize some of the opportunities available:

1. A longer lifespan will enable more long-term-oriented thinking for our families, and more impact on grandchildren. One of the challenges affecting any successful parent is a statistical demographic reality called regression to the mean. Even if a husband and wife are both above-average in ability, the children of such a union will tend to regress back towards the population mean (or IQ=100 for European peoples); the parental IQ is the best indicator of the highly heritable trait of general intelligence (i.e. smarter parents have smarter kids), but like height or any other inherited trait, extreme values tend to get smoothed back down to the average. If you’re smarter than average for your population group, your children will tend to, on average, regress down to the mean (this is a statistically probabilistic statement- it is certainly possible to have all children be smarter, in fact, if you have enough children, it becomes likely that at least one will be smarter). Likewise, those below the average will have children who regress back up to it. Thankfully, IQ is not nearly as important as moral and spiritual development (though, as The Bell Curve demonstrates, they do correlate together in a rather Calvinistic way), but if we want to have an extended kinship network with a visible leader (as committees are the worst way to govern anything), especially when we’re talking about running a continuing family business, we want this person to be at least as talented as the previous generation. The Italians have a word for this concept, called virtu’, that combines the traits of high intelligence, high moral standards and an action-oriented mindset. We want a leader for our extended family or business who is smart (practically smart, not primarily a self-absorbed geeky intelligence), highly moral (as fairness is the only way to ensure the long-term unity and stability of the extended family unit) and a man of action. In other words, someone with the essential virtu’. The only solution to finding this leader is to cast a wide net by having lots of children and grandchildren. The long lifespans afforded by current medicine (which is worlds better than it was even twenty years ago at helping us maintain a higher quality of life) can enable us to not only have more a of multigenerational impact on our grandchildren, but also to see the track record of performance of our children and grandchildren over a longer period of time, which can give greater peace of mind when the time comes to pass the baton to a new leader of the extended family.

2. We are entering a new era of fathers taking responsibility for leadership of their families; could this be formalized? I’ve considered the idea of a “Family Constitution”, some sort of internal document delineating reasonable objective standards of behavior that define who we are, to minimize the “drift” of future generations. Of course it would be unenforceable, but so are Biblical standards of behavior in our times- but no one would say the Bible has no impact.

3. On issues that we care about (say a certain perspective on history, or a theological opinion not compatible with the spirit of our age), we could make simple videos explaining our position to our children and grandchildren. Imagine how difficult it would be for the Supreme Court to twist the opinions of the Founding Fathers if there had been C-SPAN at the Constitutional Convention! In the same way, a video can provide concrete evidence of your opinion, not watered down or compromised in any way. This can help your descendants resist any future liberalizing influences.

These are just a few fairly random thoughts at this point. But the possibilities are endless, for good and evil, with the technological revolution we are experiencing.

This year has seen a remarkable improvement in my personal productivity in my work, which as an entrepreneur is self-directed and thus prone to inefficiency by default from time-to-time. I have no problem with inefficiency by choice, which I call a time dividend (i.e. instead of compensating myself with money, I give myself free-time, which is also not taxed- yet), but it is the unintentional inefficiency in my work that I knew was costing me a good bit.

Now, I wasn’t a slacker or lazy by any means, but I came to a realization that our time is literally all we have in our mortal life and to waste it was possibly the worst form of stewardship of God’s gifts short of willingly taking on massive debt. Yet, I had no system or way of doing things that gave me the security of knowing that I was being as productive as humanly possible, or at least close enough to have a peace about it.

That changed when I read an interesting New York Times article about productivity earlier this year. Basically, our lives are too complicated and there’s magic in imposing an iron discipline of simplicity to how we conduct our day. What I’ve learned and how I’ve implemented:

The Multitasking Fallacy

Multi-tasking is a myth, as numerous studies have shown how much working on multiple tasks at once causes us to be less efficient than working on one thing at a time. In fact, I would argue that multitasking is doubly damning, as even IF we were equally efficient at multiple tasks, the work would be self-evidently sub-optimal. Let’s say I have three projects, each worth $500 a month to me in cost savings or new revenue; each project will take three weeks to complete. If I work on them in tandem (1/3 of the time), it will take 9 weeks (actually longer, due to multitasking inefficiency) to complete all three. That means $1500 in monthly profit is 9 weeks out from consummation. However, if I had done each project one-at-a-time, I would have started booking $500 a month in profit at 3 weeks, and another $500 at 6 weeks. Over the comparable 9 weeks, and saying a month equals 4.33 weeks, my calculations show that I would have gained $1039 in profit by working on the projects sequentially instead of in parallel.

But “multitasking” sounds sexy to business consultants, it makes people feel important by making them feel busy and stressed, and appeals to employers who reap false economies in lower headcount by putting multiple jobs on the same person. Thus, one of the ways I manage myself and the people who work for me is to try and minimize multitasking, making everything a narrowly defined task to maximize efficiency. Of course, reality is never this kind, but the realization that multitasking is an enemy, not a friend, helps me to work to minimize its effect on my efficiency.

Knowing that single-tasking is the ideal in a world of cell phones, email, and a million other distractions, I had to find a way to direct the single-tasking, or of managing my work. This is a two-part process: 1) minimize worry and distraction by cataloging and 2) optimize work by prioritizing. I will talk first about cataloging.

Cataloging What Needs to Get Done

One of the greatest benefits of cataloging what we need to get done is that it removes a good bit of mental “weight” from our everyday routine. The weight I speak of is the gnawing feeling that there is something I need to get done that isn’t getting done. The human brain is a remarkable machine, but one thing it is not good at is remembering large lists of information. Fortunately, our computer friends (and the old standby, pen and paper) are very good at keeping lists. Thus, I can remove the “weight” by writing everything down in one central location. The two keywords in that sentence are EVERYTHING and ONE- if you only write a few things and not everything, the weight will still haunt you, and if you don’t put everything in the same location then you are unlikely to use the system.

The NYT article found that the most productive people used a simple computer text file (i.e. notepad in windows) to keep information about tasks, in combination with using emails sent to oneself to spur reminders. Personally, I use an Excel spreadsheet to facilitate this. Again, keeping things simple, I use a four-column spreadsheet. The first column is the most important and in my opinion is the most critical part of the system- this column is the physical context for the task. If I need to make a phone call during business hours, the context is labeled as “DayPhone”. If I need to drop something off at the cleaners or pick something up at the store, it is labeled “Errands”. This is key: since we always exist in some physical context, our to-do lists ought to be in subcategories based on where we are at any given time. I only have a few contexts: DayPhone (means a business hours phonecall), Computer (just something I can do in front of any computer with an Internet connection, even at home), Office (a task usually involving the computer, but requires more concentration than what I can do elsewhere), Errands (random things that have to be done in town), EveningPhone (phone calls in the evening time at home), Home (things that need to be done at home), Waiting (things that require someone else to finish before I can move forward), and Someday (tasks that I’d like to do at some point but I have chosen to postpone). By batching tasks based on physical context, efficiency is maximized- much easier to make four phone calls in a row that suffer random interruptions in your work as you remember to make them.

The second column is the column describing the task, or what I’d normally put in a normal to-do list, like “Order a new computer.” The third column is the second most important and is called “Next Action”. The system is highly focused on physical realities, first the physical context of the task, and then the literal, physical next action. If this is “Order a new computer”, the next action would be “Visit Dell(dot)com, hp(dot)com and gateway(dot)com, compare prices and choose a vendor”. Without a literal instruction as to what’s needed next, our brains can fool us into making a task overly complex. Most things we do are quite linear.

The fourth column is simply a notes field where information such as the progress of the project, contact names and phone numbers, etc, can be stored.

The main advantages of a spreadsheet are that A) the information can be sorted easily, B) complex projects can be broken out to a separate worksheet, C) reference information can be stored in a separate worksheet, and D) complete tasks can be cut and pasted onto a “Done” worksheet.

All of this fits into one file that could easily be stored on a pen drive. In my case, I subscribed this year to beinsync(dot)com, a service that automatically syncs files across computers.

Prioritization of Tasks

Once all tasks have been cataloged, prioritization becomes somewhat automatic. This is the beauty and breakthrough of this system: for too long, productivity systems have been built on a top-down approach of defining values, setting goals, prioritizing tasks, etc. Much of this is based on the all-too-common business fallacy of wishful thinking. The wishful part is the idea that if we define our goals, somehow all of the other commitments we have will magically get out of the way and let us work toward them. What we need is not prioritization, but rather increased productivity and efficiency. We are much more likely to reach a goal if it is physically possible to reach due to increased efficiency- and this increased physical possibility is much more significant than the mere act of setting the goal.

So once I had all of my tasks cataloged and grouped by physical context and tagged with the next physical action, my productivity increased and reaching goals became a lot easier. And when you start reaching goals quickly, setting them is pretty easy to do. All in all, I started with about 75 to-do items, and the list was rather quickly worked down to about 30 core projects as easy tasks were completed and moved off the radar.

The key is to review ALL of the tasks weekly, and the comfort of knowing all of the tasks are written down in one place. And if I’m not getting something done, it’s not gnawing at me, but rather I’ve made a conscious decision to do something else instead and can justify that choice based on rational criteria; the alternative (and my guess as to how most of us work) is just working on whatever pops into my head or reacting to the day’s events to choose a task and worrying about what’s not getting done while I’m working on whatever I’ve chosen to prioritize for the day.

Other Tips for Productivity

Other random tips from my experiences this year:

1) Buy a larger monitor. I spent $600 earlier this year on a Dell 24″ widescreen LCD- worth every penny if you do any significant amount of work on a computer. Since a computer screen only holds about 1/3 the amount of information as a printed page, you need a screen about 3 times the size of the equivalent piece of paper for a given task. 24″ is a nice size, though I am tempted by the 30″, esp. as it comes below $1000. The article mentions productivity jumps of 40% with a large monitor.

2) Learn to use your bank’s online billpay if you haven’t already. I can’t believe they’ll write a check and pay the postage for free- amazing!

3) Stop listening to the radio in the car, including talk radio; Rush isn’t going to say anything that interesting. Use audiobooks, an mp3 player or something to make productive use of commuting time. My commute is only 7 minutes one-way and I’m amazed at how quickly I am able to make my way through sermons, audiobooks or other informational audio material I’ve downloaded and burned to a CD. All of that time would have been wasted listening to useless summaries of news events or bad music (as public radio is not playing classical at commuting time, but rather giving us the Communist News Review featuring narratives of left-handed vegan multiracial performance artists and their emotional struggle with their mother’s addiction problems and getting taxpayer funding for their work in oppressive capitalistic post-modern racist sexist theocratic homophobic America, ad nauseum).

4) Don’t check email as often to maximize your solitude for single-tasking. And for goodness sake, don’t let it beep at you to distract you from the task. Check email every two hours or so, clear it out, and then get back to work. Similarly, if you receive a lot of phone calls, turn your phones off for discrete periods and check voicemail later.

5) A tip I have not implemented, but should help: for difficult or unpleasant tasks, set a timer to work on that task continuously. I’ve heard of one person who set a timer for 48 minutes every day in the morning, and did nothing but write during that time. This person is able to put out many articles and books every year with this simple discipline.

6) Another goal: I do not yet know how to type correctly. I can type pretty fast, but I know it could be faster. I currently have my own self-developed method of using my middle finger on my right hand along with my index finger on my left hand. I use those two fingers to type- not hunt-and-peck, as I’ve been doing it for fifteen years or more, and I’ve memorized key positions. However, I know I could do better with all ten fingers than just two. I’ll try to make an effort this year to learn to type correctly, which should increase my speed. I’ve also heard that the dictating software is getting better all the time, and now Dragon Dictate gets 99% of words and is up to three times faster than typing. Since I have a lot of writing to do, I need to check out both options and see which would be more efficient- of course, dictating removes some of the privacy of typing, and would require me to work alone to avoid annoying others in the same room.

That’s all I can think of right now, but I’ll comment if anything else occurs to me. I can’t stress enough the level of control I now feel over my work relative to where I was a year ago using this system. As a somewhat naturally disorganized person, this may be more significant for me than for someone who defaults to an organized way of doing things.